2025-08-18 16:33:34
During the Biden years, I wrote a lot about U.S.-China competition. Like many other analysts, I was pretty convinced that the next decade or two would be shaped by geostrategic, military, technological, and economic competition between these two giant nations and their respective coalitions of allies. This seemed like a reasonable assumption, because of the political actions of the people in charge of the two nations. Xi Jinping seemed dead set on having China supplant the U.S. as the world’s dominant power, while both the first Trump administration and the Biden administration made competition with China a primary policy goal. Export controls, tariffs, industrial policy, and most other economic policy innovations in the U.S. all seemed oriented around the same goal: competing with China.
Most of the structural preconditions for a Cold War style confrontation seemed in place — territorial flashpoints, intractable ideological and institutional differences, competing tech ecosystems. Opinions of China in the U.S. and elsewhere plunged around 2019, adding fuel to the fire. The Ukraine war increasingly felt like a proxy war between China and NATO. On top of all that, we had the Second China Shock, as China’s post-pandemic industrial policy flooded the world with cheap goods and threatened manufacturers in every other country.
When Trump returned to power, many people predicted that the competition between the two countries would intensify. But I was suspicious of that narrative. Trump had already come out against the TikTok divestment bill, and denounced the Biden-era industrial policies that were giving the U.S. a chance of competing with China in strategic industries like semiconductors and EVs. Furthermore, prominent China hawks like Matt Pottinger seemed to have been purged from the Trump orbit.
The simplest explanation, in my view, was that Trump had simply chosen to change America’s alignment to a neutral, isolationist stance. He seemed to want to revive Charles Lindbergh’s idea of dividing the world into regional spheres of influence, ceding influence in Asia to China and influence in Europe to Russia.
After 7 months of the Trump presidency, however, I’m starting to gravitate toward a different theory. It now seems to me that the U.S. and China have simply mutually decided to pause their incipient rivalry in order to focus on domestic issues. In America’s case, this manifests as a combination of popular exhaustion and elite distraction; China, meanwhile, seems to be focusing more on its economic problems.
2025-08-17 11:53:11
Today I saw my friend Noor Siddiqui getting some grief on the internet. Noor is the founder and CEO of Orchid, a company that will select your embryos for IVF in order to avoid passing on genetic diseases. As someone with a number of friends who have genetic disorders, this seems highly appealing — I think most parents would want their child not to have to suffer the same innate handicaps that they suffered. Noor was recently interviewed about her company by Ross Douthat of the New York Times.
When she tweeted out a link to the interview, Noor asked:
What if your baby never walks? What if they are never able to live independently? What if you could have stopped it… but chose not to? That’s the question @OrchidInc’s embryo screening forces. You optimize everything…career, diet, skincare…but you’re going to chance it on your child’s genome, one of the most significant determinants of their health?
A lot of people on X got mad at this, calling it “eugenics”, claiming that it invalidated the life of people born with genetic disorders, and generally saying that Noor’s vision of healthy babies is dystopian.
The argument reminded me of one of my favorite essays that I’ve ever written — my New Year’s post in January 2024. It was about how lots of people have the instinct to value human suffering, and to disdain technological solutions that make the struggles of the past obsolete. I thought I’d repost it, because I think it applies to the controversy over embryo screening as well.
“I would love to live to be 50 years old.” — Keith Haring
Yes, this post starts with the latest ridiculous contretemps on the social media platform formerly known as Twitter. But I promise, it gets more interesting!
The latest contretemps revolves around a famous painting: Keith Haring’s Unfinished Painting. Painted in 1989, it represented the artist’s impending death from AIDS. Haring died the following year, at the age of 31.
It’s an incredibly haunting, tragic image. The streaks of paint falling from the fragment of a pattern immediately evoke tears, blood, disintegration, futility; they emphasize just how much of the canvas was left blank. It’s a reminder of how much of our potential as individuals is wasted, and of an almost-forgotten pandemic that claimed 700,000 lives in the U.S. alone.
The other day, a pseudonymous account named DonnelVillager1 posted an AI-generated image that “completes” the pattern in the upper left of Haring’s painting:
DonnelVillager’s post — perfectly calculated to simulate ingenuousness, while actually poking fun at art appreciators — was itself a masterwork of internet pranksterism. It was instantly condemned by tens of thousands of angry Twitter users for “desecrating” Haring’s art. Defenders responded that DonnelVillager’s trollish tweet was itself a work of art, and that the furious response proved that AI art has the potential to be transgressive and to tweak the cultural orthodoxy’s tail.
Normally I would just shake my head at one more social media food fight and move on. But this reply by my friend Daniel caught my eye:
Of course, Daniel is also poking fun, but in a very important way, he’s right. If AIDS had never existed — or if HIV treatments had come just a little sooner — Haring might have created something like DonnelVillager’s AI image. After all, a fair amount of Haring’s other work did look like that.
And yes, without AIDS, Haring very well might never produced anything as haunting or evocative as Unfinished Painting. His art might have remained forever cheerful and whimsical, peppered with the occasional political statement. This June, William Poundstone wrote that “Everybody loves Keith Haring, but nobody takes him seriously…The [latest] exhibition does not exactly demolish the notion that Haring was repetitious.” The AI image that DonnelVillager created is an incredibly shallow thing — an unthinking regurgitation of meaningless patterns in a Haring-like style by a large statistical model. But without the pressure of a life cut short, Haring’s art might never have been as deep as it was.
Yet that would have been a good trade. Unfinished Painting is a great work of art, but it wasn’t worth the price of Haring’s life. Without AIDS, the world might have been a bit shallower, with less tragedy for humans to struggle against. But no one in their right mind wishes for tragedies to continue just so that human life can continue to be filled with pathos. Adversity is not worth the price of adversity. Even a world where Keith Haring lived to old age, but every one of his paintings was pointless AI-generated crap, would have been preferable to the world we actually got.
This got me thinking about the meaning of progress.
One of my grandfathers was a bombardier in the European theater of World War 2. He came back uninjured, but the stress of so many near-death experiences, and so many dead friends, drove him to lifelong alcoholism. Once, in the 1990s, I heard a conservative pundit claim that young Americans had become soft and weak because they had never had to face adversity like the World War 2 generation did. I asked my grandfather what he thought of that. After uttering something unprintable, he said: “I did that [stuff] so you wouldn’t have to.”
In a letter to his wife in 1780, John Adams, one of America’s founders, expressed a sentiment that was very similar to what my grandfather felt — and with which many veterans undoubtedly agree. He wrote:
I must study politics and war, that our sons may have liberty to study mathematics and philosophy. Our sons ought to study mathematics and philosophy, geography, natural history and naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.
Embedded in these statements is the belief that the trials and challenges of the world are potentially impermanent; that rather than something to be endured again and again ad infinitum, they are something that can and should be conquered and put behind us forever. It’s the belief that with effort, we can create a durably better world.
That’s not a trivial assumption. Humans have always dreamed of creating a better world, but for most of our history, the world stubbornly refused to get better at anything faster than a snail’s pace. A human in China or Europe or the Middle East in the year 1400 didn’t live a significantly better life than one in 400 B.C. Civilizations would rise, but then they would fall, smashed back to earth by something that looked suspiciously like a Malthusian ceiling. As a Frenchman in the year 1000 you could dream of creating God’s kingdom on Earth, but short of supernatural intervention, you could not reasonably dream of a world without smallpox, bedbugs, or senile erectile dysfunction.
Then, of course, something changed. By now you’ve all seen the graph where world GDP creeps along and then explodes upward like a hockey stick; I won’t post it again. Instead I’ll post this one:
For American women to die from pregnancy used to be a normal occurrence; then in the 1930s and 1940s it became an extreme rarity. Suddenly, a fundamental fact of human suffering that had stubbornly resisted change since time immemorial simply gave way. We fought and lost, and fought and lost, and then one day we fought and won.
The proximate reason for the abrupt decline in maternal mortality was the invention of antibiotics in 1928, and the development of medical practices like blood transfusions whose safety depends on antibiotics. But although penicillin was discovered by accident, it didn’t simply appear out of nowhere; its discovery required the edifice of an industrial society that took centuries to build. The victory over maternal mortality was achieved by a long struggle, not by a happy accident. (In fact, in some countries, maternal mortality began to fall in the 1800s, thanks to the wealth created by industrialization.)
A romantic could argue, if they were so inclined, that the conquest of maternal mortality has made the world a shallower place. In the early 1800s, you could tell stories whose emotional power rested — explicitly or silently — on the universal knowledge that childbirth meant mortal danger. Today, our high school English teachers have to explain this to us when we read Jane Austen or Emily Brontë, just so we understand, on an intellectual level, how brave the women in their novels were.
Such conquests have become commonplace. HIV was a death sentence in 1995; the next year, David Ho and his team unveiled a new combination drug therapy that turned it into a manageable chronic disease. And now, almost three decades later, Unfinished Painting is already becoming something that most people need explained to them; we still understand the meaning of terminal disease, but the context of AIDS, and especially what it meant to gay people in the political climate of the 1980s, is already fading from living memory into dry history.
As the world becomes safer — as one after another edifice of human suffering crumbles before the collective might of science, technology, and industrial society — it becomes harder to harness the emotional power of tragedy, risk, adversity, and heroism. The lives of more individuals become childlike, pure, and unmarked — or at least a little bit more so than before.
I first realized this years ago, while watching Disney’s The Little Mermaid. In the original 1837 Danish fairy tale, the mermaid wagers her life on a chance to win the love of a prince; she fails, and her life is forfeit to the evil sea witch. In the 1989 Disney movie, the same exact thing happens — except instead of passively accepting defeat, the mermaid and the prince simply stab the sea witch in the chest with the broken prow of a ship, and live happily ever after.
Perhaps this is the kind of resolution that could only feel natural and satisfying in America, a country that grew up after the Industrial Revolution. Some call Hollywood endings shallow, but they reflect our everyday reality in the modern world; what is David Ho’s defeat of AIDS, but the stabbing of an evil sea witch in the chest?
Nor, I think, are we simply on a temporary upswing. Some romanticists imagine that society is a cycle, where hard times create strong men, who create good times, which creates weak men, who create hard times. But whether or not that sort of institutional cycle exists, the technologies discovered during the last upswing will be preserved. Countries may collapse, but humanity will not forget antibiotics.
Nor is there any sign that this process will be naturally limited by humans’ inability to appreciate the improvements in their material lives. There is no upper limit on the correlation between life satisfaction and GDP. Contrary to popular myth, suicide rates tend strongly to fall as countries become richer. The higher measured rate of depression in developed nations is likely due not to ennui, but to better diagnosis.
Some romanticists feel the urge to knock over the edifice of industrial society intentionally, in order to kick against the seeming shallowness of modern life — to return humanity to a world of toil and struggle, in order to ennoble us. But these dark romantics are rightfully recognized in fiction and public discourse as villains. The heroes of our stories are the people like David Ho — the ones who fought to hoist humanity up from the muck so that future generations could be a little more childlike, the ones who studied politics and war so that our grandchildren may study statuary, tapestry, and porcelain.
Romanticists need to accept that the nobility of suffering has always been a coping mechanism — a way to sustain hope through the long twilight of apparent futility. And they need to accept that heroism is always inherently self-destroying — that saving the world requires that the world is worth having been saved.
And they must at least try to understand that in a more general sense, happiness isn’t truly shallow — it just has a different kind of depth. The passions of people raised in a kinder, gentler world may be alien and incomprehensible to the older generation, but they are no less intense, and the culture around them is no less complex. Adversity forces us to rise to its challenge, but abundance allows us to discover who we might become, and that is a different sort of adventure.
Looking back on my own life so far, I remember the happy child I was, before clinical depression changed me. Depression is horrible, but it added a richness and depth to the person I am today, and I appreciate the value of those changes. But if that happy child had gotten a chance to grow up without depression, I think he would have been changed in different ways, and under the tutelage of gentler teachers, would have become no less worthwhile and interesting of a person.
So it must be with humanity. The modern world of push-button marvels has lost something, but it has gained more than it has lost. By celebrating it, we honor the countless millennia of heroes who worked in some small way to bring it about, even as we dedicate ourselves to continuing their great enterprise. Our legacy is to fill the Universe with children who laugh more than we were allowed to.
Interestingly, DonnelVillager’s handle is one of the things that inspired me to write this post. It’s a reference to one of my favorite video games, Fire Emblem: Awakening. The character Donnel is a simple villager who is forced to go fight in an apocalyptic war after his father is killed by bandits. If you take care to level him up, he becomes a very powerful hero, but at the end of the war he goes back to his farming village and lives out a simple life, giving up fighting and adventure forever. His story serves as a reminder that struggle is not done for struggle’s sake.
2025-08-15 18:30:12
Americans who go to Tokyo or Paris or Seoul or London are often wowed by the efficient train systems, dense housing, and walkable city streets lined with shops and restaurants. And yet in these countries, many secondary cities also have these attractive features. Go to Nagoya or Fukuoka, and the trains will be almost as convenient, the houses almost as dense, and the streets almost as attractive as in Tokyo.
The U.S. is very different. We have New York City, and that’s about it. People from Chicago or Boston may protest that their own cities are also walkable, but transit use statistics show just how big the gap is between NYC and everybody else:
Chicago, Boston, and the rest have their old urban cores with a few train lines and some shopping streets. But for the most part, even these cities are car-centric sprawl. You can also see this in the population density numbers; New York simply towers over all the rest:1
There’s simply no other town in America that looks and feels like NYC.
Some of the reasons for this are historical. NYC became a big city before the rise of the mass-market passenger car, so it had to use transit to move people around; many cities, like L.A., Houston, and Phoenix, saw their growth happen later. America’s car-friendly policies, abundant land, and desire for suburban living created the car-centric development pattern that we see in many cities in the West and South today.
But many older cities don’t have this excuse. For example, take Philadelphia. In 1910, NYC was only three times bigger than Philly; by 1960 it was almost four times as big, and by 2010 it was five times as big. In other words, Philadelphia had its big growth spurt earlier than NYC did, but its outcome in terms of walkability and transit is just much weaker, with fewer than 20% of Philadelphians using transit for their commute. Very little of downtown Philly looks like Manhattan.
The reason NYC is so much bigger than every other city in America is partly mathematical — every country tends to have one city that towers over the rest in terms of total population. And it’s partly economic — Ed Glaeser has a great essay on the industrial history of NYC. But those reasons can’t explain why NYC is so much denser than other cities. In fact, because NYC includes such an unusually large percent of its metropolitan area (44%, compared to less than 33% for other major cities), you might naively expect it to be less dense — San Francisco is just the tiny metropolitan core of the Bay Area, while NYC includes Staten Island and other outlying areas. Yet NYC is still far denser than SF or any other large American city.
The reason NYC is America’s only truly dense large city is due to policy. Other cities have restrictive zoning codes that limit floor-area ratios, impose citywide height limits, impose parking minimums, and restrict certain areas to single-family homes.2 For example, here’s a map showing just how much of San Francisco’s land (in pink) is zoned to allow only single-family homes:
Keep in mind that this is America’s second-densest big city. New York City really stands alone, in terms of allowing tall buildings.
New York City is also unique in having an extensive subway system. In terms of miles of rail, NYC has more than other cities, but just as important is the shape of the network. NYC’s subway is a dense grid that covers all of Manhattan and much of Brooklyn; other cities tend to have commuter rail systems that connect the city center directly to outlying areas but which aren’t as useful for getting around within the central city. For example, here are train maps for NYC, San Francisco, and Boston:
American cities are no longer able to build subways. This is partly because we’ve outlawed the cheap methods used to build them:
But a lot of it is because of the same problems of low state capacity and excessive citizen input that block every other construction project in America.
In other words, America has only one New York because no other American city wants to become like New York. Throughout the country, “Manhattanization” is a scary term that gets thrown at any developer who wants to increase density.
And yet the number of Americans who want to live in NYC is not small; it’s huge. NYC 1-bedroom rents have been soaring, even as they stagnate nationwide:
Someone wants to live in NYC, obviously. Partly that’s because of the enormous consumption benefits for the young wealthy childless people who love living in cities. And partly that’s because dense cities allow industrial clustering effects — everyone knows that if you want to hire good employees in banking, publishing, corporate law, and so on, it helps to be in NYC.
Is one city enough to hold all of the Americans who want to live in big, dense cities, as well as all of the Americans who need to live there for work? It is not. The middle class is being pushed out of NYC at a rapid clip. Americans are trying to pile into other cities, but NIMBYism isn’t letting those cities build many new houses to accommodate them; as a result, rents in other cities go up faster than wages.
America needs more than one NYC. It needs Chicago, Philadelphia, and other big old cities with existing walkable urban cores to step up and Manhattanize themselves, so that the country won’t just have one Manhattan.
How can this be done? The first step is simply to adopt NYC-style big floor-area ratios, as well as all the city’s other permissive building policies. Allow more density, and some density will get built.
The second thing these cities can do is to build more trains. Because the “cut and cover” policies that build subways cheaply are always very unpopular, this probably also means building elevated trains and surface rail. NIMBYism will have to be overcome, but that’s true of just about anything that anyone wants to get done. Cities should also focus on building trains that allow their residents to get around the city, rather than just get into and out of the city; this means constructing trains in a grid or web pattern.
Another idea is that if other big cities can reduce crime, their citizens will be less apprehensive about allowing more density and transit. NYC is one of America’s safest big cities, with a homicide of less than 4 per 100,000 population as of 2024. Chicago, in contrast, was at 17.5, and Philadelphia at 16.9. San Francisco has a fairly low homicide rate of 6.4, but it still has a big problem of public disorder, including fentanyl use, homeless encampments, store raids, and general lawlessness. Reducing this public disorder — as well as crime in general — would make it far more appealing to live in a dense area, to walk down shop-lined streets, to take the train, and so on.
Some Americans instinctively recoil from calls to make more cities like NYC. They prefer their single-family homes, their cars, their strip-malls and lawns. Fine. But those people should consider that if America had one or two more New York-style cities, the people who want to live in that sort of city would move there, freeing up more space for everyone else.
The U.S. needs both dense cities and suburbs, in order to satisfy all the different Americans who want different lifestyles. We are overweight on Los Angeles type cities, and underweight on NYC type cities. We need to restore balance, by converting more of our big old cities into gleaming new Manhattans.
This is not true of, say, Japanese cities. Osaka is actually about twice as dense as Tokyo. That’s partly an artifact of how density is measured; Tokyo is more of an office town, where people commute in from residential areas outside the city proper.
NYC has a few other innovative policies that allow it to achieve greater density. These include density bonuses, special-purpose districts, as-of-right development, and the ability to sell unused floor-area ratio so that nearby buildings can use it.
2025-08-13 16:29:06
Donald Trump is choking off U.S. manufacturing with tariffs, replacing statistical agency personnel with apparatchiks who will manipulate data to make the President look good, and so on. Yet some progressives remain convinced that the key to winning back the country is to harness a wave of populist anger by attacking big corporations. I’m not sure I see the political logic there, but I guess I’m not much of an expert on politics.
Anyway, I’m sympathetic to the notion that monopoly power has increased in the U.S. economy since the turn of the century, and that this is making life harder for some Americans. But corporate power is simply not the cause of many of the problems regular Americans face — there are a lot of other things going on too. And because antitrust progressives insist on fitting every problem into the paradigm of corporate power, they end up believing a number of false things about the world. One example I’ve written about before is that of health insurers, whom antitrust progressives view as the chief architect of everything that’s wrong with the U.S. health system; in fact, these companies make almost no profits and are fairly efficient.
Another important example is the housing market. Overall, housing has not actually gotten more expensive throughout America; if you compare median personal income to the CPI measure for rent of primary residence, you’ll see that income has actually gone up slightly faster than rent since 1980:
But in the attractive cities where most people would like to live if they had the choice, rent has gone up much faster than in the decayed Rust Belt cities and small towns where most Americans would prefer not to live. The rental crisis is a local one, but it’s real.
Abundance liberals blame this problem on lack of housing supply, and support YIMBY policies to build more housing in cities. But although some progressives are coming around on this, many are strongly opposed to the abundance agenda. Instead, they want to blame high rents on powerful companies who buy up all the houses and then jack up prices.
A few years ago, this manifested as a panic about BlackRock buying up large amounts of the housing stock in America. This was a silly mistake; BlackRock doesn’t buy homes, except indirectly by investing in stocks called REITs. People were probably thinking of Blackstone, a much smaller asset manager with a similar name, which does buy up homes.
In addition to this silly mistake, the broader panic just wasn’t based on facts. In 2021, Derek Thompson did a great job of debunking the myth:
The U.S. has roughly 140 million housing units, a broad category that includes mansions, tiny townhouses, and apartments of all sizes. Of those 140 million units, about 80 million are stand-alone single-family homes. Of those 80 million, about 15 million are rental properties. Of those 15 million single-family rentals, institutional investors own about 300,000; most of the rest are owned by individual landlords. Of that 300,000, the real-estate rental company Invitation Homes—in which BlackRock is an investor—owns about 80,000. (To clear up a common confusion: The investment firm Blackstone, not BlackRock, established Invitation Homes. Don’t yell at me; I didn’t name them.)
Megacorps such as BlackRock, then, are not removing a large share of the market from individual ownership. Rental-home companies own less than half of one percent of all housing, even in states such as Texas, where they were actively buying up foreclosed properties after the Great Recession. Their recent buying has been small compared with the overall market.
The actual number of homes Blackstone (or BlackRock) was buying was tiny — far too tiny to affect rental prices in any significant way, except perhaps in a few very localized areas.
But somehow, despite its lack of connection to reality, the meme stuck around, and the size of the problem grew as the story was repeated around the internet. There are still people who think BlackRock is buying up much of the housing in America. In fact, even some right-wingers are convinced of this:
The exact form of the claim varies. Sometimes it’s 44% of the housing that the evil corporations are buying up, sometimes it’s just 20%. Sometimes it’s BlackRock alone that’s responsible, sometimes it’s the private equity industry:
But the meme remains false. Many news outlets have debunked it over the years. For example, Logan Mohtashami posted the following charts in Yahoo Finance in 2024:
The first of the two charts shows that institutional buyers — which includes private equity, BlackRock, etc. — own only a tiny sliver of the homes in America. The second chart shows that there was a corporate home-buying spree in 2022, but it never even hit 5% of home purchases at its peak — far lower than the rumors claim.
Kriston Capps also wrote a great debunking of the “corporate landlords” myth in 2024. Here was his chart:
Almost zero of the U.S. housing stock gets bought by owners who own more than 9 units. Corporate landlords just aren’t significant enough to be driving the rental crisis in America’s most desirable cities. (Of course, this doesn’t stop anticorporate types from mocking the very idea that high rents are caused by something other than market power.)
In fact, it gets even worse for the antitrust story here. It turns out that corporate landlords probably don’t even do what antitrust people think they do! The common story is that corporations buy up all the houses in an area, thus creating a local monopoly, and using that local monopoly to jack up rents — which in turn causes gentrification and pushes poor people and minorities out of the neighborhood.
Except Konhee Chang, an economics job market candidate, found evidence that corporate landlords actually make housing cheaper for lower-income folks, and lead to diversification instead of gentrification!
Using property-level data on tenants, home prices, rents, and acquisition timing, I show that increasing rental supply in American suburbs, where rentals are scarce and expensive relative to owner-occupied housing, reduces segregation by enabling lower-income, disproportionately non-White renters to move into neighborhoods where they otherwise could not afford to own. In response, nearby incumbent households are more likely to move out, perceiving renters as a disamenity. Large-scale landlords expand rental supply by converting owner-occupied homes into rentals, exploiting cost efficiencies from geographic concentration.
Chang found that corporate landlords drive down rents and slightly raise the price of buying a house:
This is only to be expected, since what the corporate landlords are doing is buying up housing (which raises purchase prices because it increases demand) and converting it to rental units (which lowers rents because it increases supply).1
So as far as we can tell, corporate landlords — at least, right now — aren’t causing the harms that the antitrust progressives (and some right-wing pundits) claim. The cause of the housing crisis in desirable metro areas must lie elsewhere. The obvious culprit here is just supply limitations — i.e., land-use regulations and NIMBYism. And the obvious way to address that is the abundance agenda.2
For antitrust progressives, the problem with that conclusion is that it doesn’t place the blame on their class enemies. If corporate power isn’t the problem when it comes to high rents, then it means fewer opportunities for progressives to harness populist rage against the business class. In addition, antitrust progressives probably still believe that they can harness a wave of anticorporate populist sentiment to buoy Democrats back to victory. I would be very surprised if that strategy worked.
But in any case, the story that corporate landlords are making American housing unaffordable is simply false. It’s just another free-floating memetic myth that keeps getting in the way of our ability to solve our very real problems. And the zeal with which antitrust progressives have embraced and propagated that myth should make us a little more pessimistic about their ability to accomplish positive change in the current political economy.
This ought to be an open-and-shut case, but a progressive economist popped up to try to argue:
As I explained, the reason welfare goes down in the paper is that corporate landlords push down prices enough that poor Black and Hispanic people are able to move in to previously richer, whiter neighborhoods. Chang, the author of the paper, assumes — probably correctly — that rich white homeowners do not like to live next to poor Black and Hispanic renters. And so the rich white homeowners lose utility from corporate landlords, because they no longer get to exclude people from their neighborhoods along racial and class lines!
Somehow, this point was lost on the progressive economist, who ended up defending white flight as a socially desirable thing.
Of course, even the abundance agenda won’t totally be able to negate the local impacts of big increases in demand for housing in coastal cities. Demand for life in those cities is just extremely high. But supply increases will blunt those impacts, and create affordability further from the center of New York City, San Francisco, etc.
2025-08-12 17:32:17
I’ve got quite a few great podcasts for you today. One is this excellent live show that Erik Torenberg and I did with Dwarkesh Patel, in which we interview Dwarkesh about his thoughts on AI and the economy. The picture of me here is quite silly-looking, but the conversation was excellent:
I also went on Pascal-emmanuel Gobry’s podcast to debate him about illegal immigration:
And some Japanese media folks at a company called Glasp interviewed me about AI and jobs, and about foreign direct investment in Japan!
Finally, here’s an episode of Econ 102, where Erik and I discuss Javier Milei and various other topics:
Anyway, on to the roundup!
It’s practically conventional wisdom that AI is going to take jobs away from large numbers of humans, leaving them without anything useful to do in the economy. People are so convinced of this that they’ll jump at practically any hint in the data that allows them to believe that it’s happening. A little while ago I wrote a post about why both economists and popular commentators are getting way over their skis on this:
Anyway, Sarah Eckhardt and Nathan Goldschlag of the Economic Innovation Group have a good new report on this, which shows that as far as we can tell, AI isn’t taking jobs yet — at least, not on any measurable scale.
Eckhardt and Goldschlag start with a measure of predicted AI exposure for various jobs. These measures don’t tell you which jobs are going to be replaced by AI; instead, they just tell you which jobs currently involve more tasks that can probably be done by AI. These measures actually have a pretty good track record at predicting which workers will end up using AI.
Basically, Eckhardt and Goldschlag find no correlation — or even a negative correlation — between that measure of AI exposure and any measure of labor market distress. For example, here’s the unemployment rate of workers with varying degrees of predicted AI exposure (1 is the least exposed, 5 is the most exposed):
There has been a recent rise in unemployment, but it’s concentrated among the people who are least exposed to AI, while those who are the most exposed almost all still have jobs. The same is true when we look only at recent college graduates, who have been the focus of the most concern in the media:
And the same is true when we look at which workers are exiting the labor force completely:
And one more interesting finding is that the most-exposed workers are actually less likely to switch to less-exposed occupations than they were before generative AI hit the market! In other words, coders and paper-pushers are not becoming plumbers to protect themselves from AI:
The researchers also try using alternative measures of AI exposure, and they find pretty much the same thing.
In other words, AI job displacement just hasn’t happened yet. It may happen in the future, but so far, every time people have jumped at a particular data point to claim it’s finally happening, it has turned out to be a mirage.
Bernie Sanders and his followers deeply believe that America’s economy is in a prolonged state of crisis — that capitalist economic policies have steadily immiserated the American public, creating a country where regular people are economically drowning even as corporate fat cats enrich themselves. Their absolute faith in this narrative often leads them to interpret economic statistics in dubious or even ridiculous ways. The latest example of this is when Bernie Sanders posted a chart of housing versus wages:
This is a pretty ridiculous chart. Why would you plot home prices on the same y-axis as weekly income? Does anyone think these two things should be even remotely close to the same size? Do we think people should be able to afford a house on a single week of income? That’s ridiculous.
A non-ridiculous way to present this data would be to divide home prices by weekly earnings. That would show us how many weeks a typical worker would need to work in order to afford a home. But actually, the “median weekly earnings” number is for full-time workers only, so instead we should use median personal income, which counts everybody. Here’s what that looks like:
In the 80s and 90s, it took about 8 years of work to afford a home. Since then, the number has climbed to about 10 years — a significant and concerning drop in affordability, but not a catastrophic drop. A breakdown by the Economic Innovation Group shows that mortgages are about as affordable as they ever were, but down payments have gotten less affordable:
While the drop in housing affordability over the past half century is certainly a problem, it’s not the kind of crisis that Bernie paints it as. Using silly charts in service of alarmist narratives ultimately just weakens trust in your movement — or at least, it should.
The three most powerful countries in the world are now all ruled by strongmen. In China, Xi Jinping has subdued all rivals, and concentrated what used to be a dispersed bureaucratic oligarchy under his own personal rule. In Russia, Putin is effectively an emperor. The U.S. is still officially a democracy, but democratic norms and institutions are eroding rapidly, and in April a majority of Americans called Trump a “dictator”.
The question is what effect these personalistic regimes will have on the economy. China’s growth over the past four decades pretty much proves that democracy isn’t necessary for a strong or even dominant economy. But there’s a difference between countries ruled by a single strongman, and countries ruled by a system of elite institutions that distribute power among a number of oligarchs.
A new paper by Blattman, Gehlbach, and Yu shows that personalist regimes tend to experience lower economic growth than either democracies or autocracies with more distributed power. The difference isn’t huge, but you can see it on a graph:
It’s not clear which direction the causation runs here; it could be that countries with bad economies tend to turn to strongmen to save them. But Blattman et al. test for this using variables that tend to predict regime transitions, and they don’t find any change. That implies that personalist regimes actually make mistakes that slow down economic growth.
Xi, Putin, and Trump certainly don’t exactly seem to be violating that rule of thumb. China’s growth has slowed relentlessly under Xi, and his industrial policy seems to be simply driving Chinese companies into unprofitability rather than extricating the country from its economic slump. Putin’s war in Ukraine is slowly crushing the life out of the Russian economy, while Trump’s tariffs continue to wear down the resilient U.S. economy.
The trend toward strongmen is a bad one.
Does it ever seem like modern political discourse is dominated by crazy idiots? Well, that’s because it is. In a new paper entitled “Dark personalities in the digital arena: how psychopathy and narcissism shape online political participation”, Ahmed and Masood find that your intuition isn’t wrong:
This cross-national study investigates how psychopathy, narcissism, and fear of missing out (FoMO) influence online political participation, and how cognitive ability moderates these associations. Drawing on data from the United States and seven Asian countries, the findings reveal that individuals high in psychopathy and FoMO are consistently more likely to engage in online political activity….Conversely, higher cognitive ability is uniformly associated with lower levels of online political participation. Notably, the relationship between psychopathy and participation is stronger among individuals with lower cognitive ability in five countries, suggesting that those with both high psychopathy and low cognitive ability are the most actively involved in online political engagement.
Almost everyone blames recent political trends on their chosen enemy group, but the real culprit is social media, which has elevated the worst people in our society to positions of influence from which they were previously shut out.
What force can defeat the terrible power of social media and its armies of crazy idiots? In my Fourth of July post, I expressed hope that AI algorithms could be harnessed to defeat the hordes of humanity’s worst:
LLMs give platforms the ability to cheaply and quickly filter content according to sentiment. Simply having an LLM downrank angry content and uprank positive content would lean against the natural tendencies of social media technology. Call it Digital Walter Cronkite.
Of course, that solution would depend on the willingness of platform owners like Elon Musk to unleash algorithms in service of moderation and reasonability. That seems a bit like wishful thinking, I admit.
But there’s another possibility, which is that AI itself will simply naturally drive humans off of social media, by generating infinite amounts of slop. A new paper by Campante et al. finds evidence that AI-generated images nudge news consumers toward more trustworthy human-gatekept media:
We study how AI-generated misinformation affects demand for trustworthy news…Readers were randomly assigned to a treatment highlighting the challenge of distinguishing real from AI-generated images. The treatment raised concern with misinformation…and reduced trust in news…Importantly, it affected post-survey browsing behavior: daily visits to [the mainstream newspaper’s] digital content rose by 2.5%…[S]ubscriber retention increased by 1.1% after five months…Results are consistent with a model where the relative value of trustworthy news sources increases with the prevalence of misinformation, which may thus boost engagement with those sources even while lowering trust in news content.
A similar effect might happen with AI agents, which are already flooding social media with trash commentary. As X and other social media companies lose the battle against the bot swarms, human users may stop relying on those feeds for their window on the world. The psychopaths and attention-seekers might simply get drowned out in the automated cacophony.
That would be a weird end to the age of mass social media, but honestly it’s not the worst ending I could think of.
The American and Chinese economies continue to decouple. Even though Trump keeps “pausing” his tariffs on China, China is selling less and less to America:
But you’ll notice that China’s exports to Europe and Southeast Asia are still growing strongly. This has led some commentators to claim that China is simply shipping its good through third-party countries, avoiding tariffs (or the threat of tariffs) by essentially just slapping a different “made in” label on stuff that was actually made in China.
Those claims are wrong. You can see that they’re wrong by looking at the actual products that China is selling to countries in Southeast Asia (the region usually accused of transshipping Chinese goods to the U.S.), versus the products it used to sell to the U.S. The two sets of products don’t match up very well, meaning that only a modest portion of Chinese trade with Southeast Asia could reflect diversion of trade from the U.S. Gerard DiPippo did this exercise:
Facing U.S. tariffs, China’s exports to the U.S. are down—while exports to Southeast Asia are up. Is that trade diversion and potential transshipment? My estimate: at most 34% of the increased PRC exports to SE Asia in Q2 could reflect trade diverted from the United States.
In fact, this is an upper bound. Many of the countries being accused of transshipping Chinese goods — Mexico, Vietnam, etc. — have their own industries as well, which export a lot to the U.S. Increased U.S. imports from those countries are likely to at least partially — or perhaps mostly — be locally made goods.
All this goes to show that you can’t draw conclusions about decoupling just from macro data.
There are a number of popular ideas out there about who marries whom. One is that rich men primarily want physically attractive wives and don’t care about social status, education, and so on. Another is that power couples tend to be dual earners.
In fact, both of these stereotypes are wrong. As Lyman Stone shows in a post for the Institute for Family Studies, rich men tend to marry highly educated, high-earning women women who become housewives after marriage. Here are some charts:
I don’t like the use of the word “overwhelmingly” in any of these charts, but the point is clear — rich men, who presumably have greater choice in who they marry, often tend to prefer women who are educated and high-income before marriage, but many of these women become homemakers after marriage. Call it the “power trad” couple.
2025-08-10 17:23:38
In a post a week ago, I shared some pretty startling numbers about the size of the AI-related capex boom:
In fact, this boom is so big that in 2025 so far, AI-related investment has contributed more to economic growth than all the growth in consumer spending combined. Since consumption is more than three times as big as investment overall, this is a really startling fact — it means that consumption is sluggish, while AI capex is sustaining economic growth all by itself. Paul Kedrosky calls this a “private sector stimulus program”, and he’s not wrong.
My last post asked whether a crash in the AI sector would hurt the U.S. economy. But there’s another important question here, which is who is actually going to make a profit from all this spending. Will it be the AI model companies themselves, like OpenAI, xAI, and Anthropic? Will it be the companies that provide the compute to train and run the AI models — Amazon, Microsoft, and Google? Will it just be the GPU companies like Nvidia that provide the physical infrastructure?
The profit question is an important one if you’re an investor, of course, since corporate valuations are (usually) based on how much profit companies make — not on how much they invest or how much total revenue they generate. But it’s also important if we want to understand the social impact of the AI boom — in particular, the question of whether AI will lead to extreme economic inequality.
There’s a narrative out there that after AI takes everyone’s jobs, the only people in society who will have money are the people who own the AI companies — the Sam Altmans and Elon Musks of the world, and perhaps the Satya Nadellas and Jensen Huangs. It’s possible to spin sci-fi scenarios where the mass of humanity is impoverished and starving, while a few Robot Lords order their pet AI gods to use all of Earth’s resources to colonize the Solar System.
In reality, those scenarios would run into political problems (i.e., war) long before they came to pass. But it’s important to ask whether that’s the direction in which our economic system is naturally heading. Thomas Piketty, for instance, wrote that inequality in society tends to increase until some sort of major political event — war, revolution, etc. — forces it back down. Some people worry whether the AI boom will represent the fulfillment of that dark vision.
It’s worth it to note that so far, stock markets don’t actually expect anything that extreme to happen. When you look at the price-to-earnings ratios of the major public AI-related companies, they’re somewhat high but not particularly astronomical:
If markets expected these companies to reap untold bonanzas of profit thanks to AI, they’d be valued at far greater ratios to their current earnings, because people would expect their earnings to grow very rapidly. As for OpenAI, xAI, and Anthropic, their combined valuation is still less than $1 trillion; for comparison, Nvidia’s current valuation is around $4.5 trillion. So markets also don’t currently expect the big AI labs to make untold profits, either. As for the broader market, the PE ratio of the S&P 500 is around 30 — historically somewhat high, but not astronomically high.
So we seem to have a disconnect between a popular narrative and market expectations. If AI is going to make all the money in the economy, why are markets not expecting companies to see truly wondrous profit growth? The answer, I think, is that markets are remembering something that popular commentary and folklore has forgotten — the importance of corporate competition in limiting capital income. Investors know that AI companies are going to compete with each other, and that this is going to limit how much they can profit from their creations.
