2026-01-22 18:35:22
Take a look at the marvel that is modern China. The endless gleaming lines of bullet trains. The air taxis and the drone delivery services and the driverless cars. The bubble tea franchises and the cavernous malls and the fast fashion and the pay-with-your-face apps and the robot waiters and the automated factories. The Shanghai clubs and the side streets of Chongqing and the manicured parks of Shenzhen.
You are looking at the peak. China will continue to be a spectacular, world-leading civilization for a couple more decades, but sometime around the century’s halfway point, demographic decline will begin to sap its vitality. Sometime around the mid-2010s, China’s birth rate fell off a cliff, and has not stopped falling since:
It’s difficult to state just how stark and catastrophic of a collapse this is. The number of births in China fell by 17% in just the last year. In fact, as economist Jesús Fernández-Villaverde recently pointed out, China had fewer births in 2025 than in 1776, when its population was less than a fifth of what it is now.
China’s total fertility rate now stands at around 0.93, less than half the replacement level. At that rate, every four grandparents will have fewer than one grandchild. Fernández-Villaverde explains what this means for the future of China’s population:
[I]f China could somehow sustain 7.92 million births per year from now on, its population would eventually stabilize at roughly 625 million, far below today’s 1.405 billion. In reality, as smaller cohorts reach childbearing age, births will fall well below 7.92 million. Hence, 625 million is a very generous upper bound[.]
But this isn’t a post about China; it’s about the whole world. Those who expect China’s low fertility to end its bid to dominate the globe are in for a severe disappointment, since fertility is falling in the rest of the world as well. It’s true that China is an especially severe case — a TFR of less than 1.0 puts it in a special category with Korea, Taiwan, Singapore, and Thailand (Japan, interestingly, is still slightly higher). But over the past decade, fertility has begun collapsing all over the world, much faster than it had been declining before.
Fernández-Villaverde has a good set of slides from 2023 explaining why the new fertility crisis is different and more urgent than traditional concerns. In earlier times, fertility tended to gently decline in each country until it was just under the replacement rate — the kind of baby deficit that seemed like it could be fixed with reasonable policies. But since the mid-2010s, the fertility decline has accelerated, and there seems to be no bottom to the new collapse; every year, statistical agencies revise their already negative projections downward even more.
When they confront these stark numbers, there are several things that people tell themselves (or shout on social media) to try to cope with the notion of a shrinking humanity. I’ll go through the most common of these coping statements, and explain why each of them is wrong.
People who say this forget that a shrinking population is also an aging population. Old people can work longer, but eventually their bodies and minds break down and they need to be supported by younger workers. Here’s what I wrote in 2024:
[With an aging population] every working-age adult has to toil harder and consume less in order to support a growing number of people who are too old to work…In the 1990s and 2000s, there were more than 5 working-age Americans (age 15-64) for every elderly American (64+). By 2021, there were fewer than 4. That means that the economic burden of supporting each elderly American is now shared among only 4 people instead of 5…And in other rich countries, it’s even worse. In France, there are only 3 working-age people for every elderly person. In Japan, there are only two[.]
And here’s what I wrote in 2023:
[A] shrinking population means that profitable investments will be a lot harder to come by…[I]f there are more old people and fewer younger people, then demand for the assets of the old is going to have to be split among more sellers. And that will mean a lower price. In other words…people will have to save more and more during their working years in order to make it to a comfortable retirement.
And here’s the upshot:
So in general, the shrinking world will be a world of toil. Working people will have to bear the burdens of higher taxes, more eldercare, and longer working lives. And despite working more, they will have to be thrifty and ascetic, saving more money for their own retirements.
On top of all this, a shrinking population creates a problem for physical infrastructure. Road systems, sewer systems, electrical grids, and so on were built to support a certain size of population; cut the population in half, and there won’t be enough people to support all that infrastructure in any given area. We tend to forget just how quickly human structures depreciate and fall into ruin, and how much human maintenance they require to remain usable.
You can try to consolidate people into fewer towns and smaller areas, but human mobility is not infinite; some people will be stuck in decaying towns, rotting away in despair.
It’s true that if you raise total factor productivity, it will compensate for a shrinking work force. But there are three big problems here. The first is that with a few exceptions, every country is already trying as hard as it can to raise productivity, so there’s no button you can press that says “raise productivity even more” when your labor force starts to shrink.
The second problem is that shrinking workforces also shrink the number of people who are available to work on improving productivity. Chad Jones models this out in a 2022 paper, which shows some potentially dire consequences from a shrinking pool of researchers.
The third problem is that aging populations tend to have lower productivity growth:
And this is from Ozimek et al. (2018):
The aggregate data show a clear relationship between an older workforce and lower productivity at the state-industry level, in both cross-section and panel models. The results are confirmed using employer-employee linked data…that show having older coworkers reduces an individual’s wages.
So low fertility will actually make it harder to raise productivity to compensate for low fertility.
I encounter this one a lot these days. But this is also a coping statement rather than a solution. For one thing, we have no idea if it’s true or not. So far, AI systems are able to do some things very well and other things not very well, meaning there’s still a lot of need for human labor.1 That might change — we might develop AI systems that do everything well, allowing technology to replace labor instead of complementing it. But we don’t know if we’ll be able to do that, and it’s foolish of us to place all our hopes in that one possibility.
On top of that, total replacement of the human labor force with AI would just be a different kind of posthuman future. It would be an incredibly disruptive event for societies as they are currently set up. At the very least it would require massive labor reallocation of the type that we haven’t proven very good at in the past, creating a vast dispossessed underclass almost overnight. It could also drive up prices for electricity, land, and water to the point where humans are essentially driven to starvation, requiring large-scale redistribution of capital income in order to keep the human population alive. That would disrupt every political system on Earth, possibly causing disruptions more severe than occurred during the Industrial Revolution.
In other words, this is not a scenario to comfort ourselves with.
When I warn about low fertility on social media, I inevitably encounter a few progressives telling me not to worry, because:
Concerns about low fertility are actually just concerns about low white fertility, and
Concerns about low fertility are excuses to enslave women and turn them into baby-making machines.
The first of these is just flat-out false. Asian fertility is lower than white fertility, for one thing. But fertility rates are also collapsing at an accelerating rate throughout the entire world, including Africa, Latin America, India, and poor countries in general:
As for sexism, I haven’t seen anyone contemplate turning society into The Handmaid’s Tale, and even deeply religious Muslim countries have seen stark fertility decline. So enslaving women doesn’t seem to be on the list of policy responses to the population crisis.
Paying people to have more kids does “work”, in the sense that people do have more kids when you pay them to do so. The problem is that they don’t have very many more kids; the effect sizes are so small that the amount of money required to boost fertility to near replacement levels would be prohibitive.
China has been trying to boost fertility with economic support for years, with no apparent result. Hungary tried to pay people to have more kids, with no lasting results at all. South Korea implemented a very substantial “baby bonus”, equivalent to about $700 per month, and it had the effect of reducing the fertility decline by 4.7% — not nearly enough to offset the catastrophic declines of recent years.
Even under optimistic assumptions, the sums of money required to restore non-collapsing fertility through baby bonuses are astronomical. This is from Lyman Stone, who studies this issue:
In 2020, the total fertility rate is probably around 1.71 children per woman. Thus, to reach 2.07, we would need a 21% increase in birth rates. To accomplish this, we would need the present value of child benefits to increase by somewhere between 52% and 400% of household income. For the median woman, this would mean providing a child benefit for the first 18 years of a child’s life worth approximately $5,300 per year in addition to currently-provided benefits, with the range running from $2,800 more per year to $23,000 more per year.
$23,000 per year, or even $10,000 per year, is an incredibly large sum of money — much more than any current welfare proposals, and enough to require gargantuan tax hikes that would no doubt prove politically toxic. But even this would not be enough — not even close.
Since Stone wrote that post, the U.S. TFR has fallen again, to 1.62. There is no reason to think it won’t fall more. This means that even under extremely optimistic assumptions about the power of baby bonuses, the amount we’d have to pay to get fertility back up to near replacement is just a complete political non-starter. For countries like China and Korea, the gap is far greater still, and baby bonuses are looking like they have only a very small effect.
Back in 2012, there were policies available that might have raised fertility to sustainable levels in many rich countries. As of 2026, in the face of the catastrophic and ongoing acceleration in the fertility decline, we have no known policy capable of addressing the problem.
Immigration is good, but sadly it won’t solve the population problem. First, fertility is falling across the entire world, even in the poorest countries of Africa. In the world as a whole, fertility rates are approaching replacement level and may already be there.
There is no other planet to get immigrants from.
Rich countries, of course, can continue to dull the pains of population aging and shrinkage by taking people from poor countries. But as Fernández-Villaverde notes, it’s not that simple, because those rich countries have strong welfare states. Poor immigrants are going to use lots of welfare benefits, ultimately canceling out much of their economic contribution to the nation. And because immigrants themselves age, they’re eventually going to contribute to population aging, especially because many of them come when they’re already middle-aged.
So anyway, there is a massive amount of coping on this issue, because people see a grave and possibly even existential threat coming inexorably in their direction, and they don’t think there’s anything they can do to stop it, so they need something to tell themselves in order to stop worrying. But this sort of self-reassurance won’t solve the actual problem or avert the actual threat.
In fact, we mustn’t bury our heads in the sand on this issue, or tell ourselves that it’s all going to work out. Instead, we have to face up to the problem, so that we can start looking for ways to solve it.
Humanity has always relied on technical solutions to get us out of our worst problems. It was research into green energy that has given us hope of stopping climate change. Vaccine research has given us hope of stopping pandemics. The Green Revolution staved off mass starvation from population growth, and so on.
Collapsing fertility is a bit different from those other problems, because it’s fundamentally a social problem rather than a physical threat like climate change, disease, or starvation. Social science research is typically much more expensive and much less conclusive than research in the physical sciences.
But despite that big hurdle, it stands to reason that the human race should be doing lots and lots of research on how to avert this imminent and nearly existential threat. I propose a Fertility Policy Research Center, gathering together top researchers in experimental economics and development economics, epidemiologists, quantitative sociologists, and so on. The goal would be to find a solution to the problem of long-term stabilization of the fertility at or near the replacement rate of 2.0.
The center’s activities could include:
Epidemiological and observational research on the causes of fertility drops
Randomized controlled trials of policy interventions to raise fertility
Trials of technological interventions for increasing fertility
The first and third of these won’t be that expensive. It’s the second of these — RCTs for policy interventions to raise fertility — that will cost a lot of money and take a lot of time. A single study can cost millions of dollars.
The funding for fertility policy research will thus have to be in the billions of dollars. That’s outside of the range of modern philanthropic research, but not by much — the ARC Institute has pledged grants of $650 million, and CERN’s Future Circular Collider has $1 billion, all from private sources. It’s not out of the realm of possibility that a group of billionaires might be willing to pool their resources and endow a Fertility Policy Research Institute with $5 billion or even $10 billion.
Take Elon Musk, for instance. The world’s richest man has clearly identified ultra-low birth rates as an existential threat:
Musk’s net worth is now over $750 billion. Just one percent of his wealth could fully endow a Fertility Policy Research Center with all of the money it would likely need for at least two decades. Five percent of his wealth could endow the center with all the money it would ever need. Isn’t solving an existential threat worth five percent of one man’s wealth?
Anyway, there is no dearth of hypotheses to consider here. Big questions for the research center might include:
Is social media causing the recent acceleration in the decline of fertility rates? Would restrictions on social media use be sufficient to raise TFR by a significant amount?
Does geographically concentrating people with high fertility rates tend to increase or decrease society-wide birth rates?
Does living space per person affect fertility rates?
How does economic security affect fertility rates?
Which is more cost-effective for raising fertility: cash payments or in-kind benefits like free child care?
Would AI nannies or tutors relieve some of the burden of child care, thus increasing people’s desire to have children?
How do maternal and paternal leave affect fertility rates?
Does gender equality in household chores affect fertility?
How do norms of higher and lower fertility get transmitted? Can these norms be influenced by deliberate media campaigns or other informational interventions?
Are there interventions that encourage couple formation earlier in life?
Are there any public health factors affecting fertility rates to a significant degree?
These are just a few hypotheses off of the top of my head. Putting $50 million toward investigating each of these would use up only 0.065% of Elon Musk’s wealth, while the payoff from even one important, usable finding could be absolutely huge.
It would be even better, of course, if governments could get involved with the funding effort. This could be tricky, since government grants usually go through laborious and slow processes. In the U.S., a special research project — similar to the Human Genome Project — might be able to circumvent some of those procedural hurdles. And since fertility decline is such a worldwide problem, there are probably plenty of governments who would contribute some funding to the center — many without onerous red tape. China, in particular, seems like it would want to fund a crash program for solving the birth rate problem.
Government support will be especially crucial when scaling up policy interventions from RCTs to actual government policy. This can be very tricky and very expensive, since many interventions don’t scale up. Government support, both logistical and in terms of funding, would often be essential — but it would also probably be forthcoming.
It’s kind of insane that nobody has done this yet, and it speaks to the power of the six coping statements that I listed above. A lot of people have managed to convince themselves that the problem of low fertility is no big deal, or that it’s easily solved, or that even viewing it as a problem is illegitimate. They are all wrong. It’s a huge problem, and we need to be attacking it with the same tool — scientific research — that we’ve used to defeat so many adversaries in the past.
This is a stochastic version of Moravec’s Paradox.
2026-01-20 09:49:45
Hi, fellow Americans! Would you like our country to become an authoritarian police state? A nation where federal agents can knock on your door and search your home without a warrant? A nation where everyone has to carry around their proof of citizenship at all times, or risk being arrested by federal agents on the street and thrown into a dungeon? A nation where peaceful protesters are at risk of being maimed or even killed in the street? A nation where the President invokes emergency powers to crush protests with troops?
Those all sound like lurid exaggerations when I type them out — the kind of thing crazy Resistance Libs would rant about on Bluesky. And yet consider the most recent news from America’s immigration crackdown:
Homeland Security Secretary Kristi Noem is defending reports that people have been asked by federal agents to prove their citizenship status as Immigration and Customs Enforcement operations continue in cities across America…
On Jan. 3, a Texas detainee died in ICE custody in what a medical examiner is likely to rule a homicide, according to The Washington Post; on Jan. 7, Minneapolis resident Renee Nicole Good was shot four times by an ICE agent while attempting to drive away from officers, and was soon pronounced dead; on Jan. 9, a 21-year-old anti-ICE protester was permanently blinded and allegedly mocked by agents after he was shot at close range by non-lethal ammunition, according to his aunt; and on Jan. 14, a Venezuelan man was shot in the leg during a struggle with ICE officers.
Footage of agents clashing with protesters, crashing into vehicles and going up to homes in cities like Minneapolis [has] spread through social media, and Trump has threatened to invoke the Insurrection Act in Minnesota to squash anti-ICE protests with military force.
The truth is that some Americans probably do like this. There is no freedom gene that courses through the blood of those whose ancestors fought in the Civil War. A deep reverence for liberty does not flow from the water of the Mississippi River. There are some who quietly nod their heads and grin when they see protesters beaten savagely by government thugs, relishing the thought that “the left” is being put in its place. There are those who smile at the notion that an invasion by the anti-White hordes of the Third World is being finally turned back by our valiant Boys in Masks.
But there are fewer of these than before. The furor over the killing of Renee Good and the ICE raids in Minnesota and elsewhere has not died down and vanished into the bottomless pit of the news cycle like almost every other outrage during the long Trump Era A recent poll found that 82% of Americans have seen the video of Good’s killing, and by and large they agree with the obvious interpretation that the killing doesn’t look like self-defense. Many more Americans say the shooting was unjustified than say it was justified:
Those numbers are just the tip of the iceberg. America is getting increasingly fed up with Trump’s immigration policy in general:
ICE’s name is becoming toxic, with a majority of white voters and even 25% of Republicans disapproving of the agency:
Trump’s internal polls appear to show the same. Here’s reporting from Axios:
President Trump's team recently reviewed private GOP polling that showed support for his immigration policies falling. The results, reflected in public surveys, bolstered internal concern about the administration's confrontational enforcement tactics…
The private polling suggested a rupturing of the coalition of independent, moderate and minority voters who were key parts of Trump’s victory in 2024. Such voters will play a big role in determining whether Republicans keep their slim House majority in November’s midterms…
60% of independent voters and 58% of undecided voters said Trump was “too focused” on deporting illegal immigrants, the poll viewed by Trump’s team found.
Joe Rogan, the nation’s most popular talk show host and a prominent Trump supporter in 2024, is among those for whom the stormtrooper tactics of the immigration crackdown have gone too far:
Nor is the ICE storm the only thing that Americans despise about the second Trump presidency. Even most Republicans are opposed to Trump’s threat to seize Greenland from America’s allies:
And Trump’s already-dismal numbers on the economy continue to deteriorate.
To many Democrats and progressives, the news that America is turning against Trump comes as a balm of reassurance amid the otherwise grim drumbeat of headlines. Resistance Liberalism was right about Trump — he was a corrupt, brutal authoritarian at the head of a fundamentally racist movement. Media bullshit can deceive some of the people some of the time, but in the end, being right about things tends to shine through.
Many Dems no doubt hope to ride the wave of dissatisfaction with Trump to victory in November, and perhaps in the 2028 presidential election as well. Polls show that Dems have surged past the GOP in terms of party identification, and that a record-high 28% of Americans label themselves ideologically “liberal”. Gen Z is ideologically more progressive than Millennials on most issues.
Perhaps the American people, bamboozled by right-wing media narratives, simply had to discover the error of their 2024 choice the hard way, and Democrats simply need to sit and wait for the masses to come home.
Look more closely, though, and you can see that neither Trump, nor Trumpism, nor the Republican party is collapsing, the way support for George W. Bush’s presidency collapsed at the end of his second term. The Resistance Libs were completely right about Trump, but they still haven’t managed to come up with a compelling alternative, either ideologically or in terms of a plan for governance. And this is probably putting a ceiling on support for the Democrats.
First let’s look at some numbers, and then let’s talk about some principles and ideas.
2026-01-18 17:50:26
The biblical story called the Judgement of Solomon isn’t just meant to illustrate what a wise king Solomon was. It’s also supposed to demonstrate a central principle of economics, and of society in general — that the world isn’t a fixed lump of resources waiting to be divided up. In the story, two women are arguing over which one is the real mother of a baby; Solomon proposes to cut the baby in half and give half to each woman, causing the baby’s actual mother to be instantly horrified. The lesson is that a baby is much more than the sum of two halves of a baby.
I feel like modern American leaders and intellectuals often forget this important lesson. There are plenty of thinkers and leaders on both the right and the left who think of society’s main task as slicing up and handing out a lump of “resources”. And yet when they make economic policy based on this idea, it keeps failing.
A prime example is Trump’s immigration crackdown. During the 2024 presidential campaign, Trump and his people swore up and down that kicking millions of illegal immigrants out of the country would result in a bonanza of jobs for the native-born. They probably still believe this. But people are now flowing out of the United States on net, and native-born employment rates haven’t risen:
In fact, native-born unemployment has risen, even as immigrant unemployment has fallen slightly:
This isn’t just because immigrant laborers are becoming more scarce, either. In fact, despite Trump’s successful crackdown, the number of jobs held by immigrants actually rose in December, while the number of jobs held by native-born Americans fell:
If the Trump administration had bothered to ask economists, they would have replied that the overwhelming majority of the empirical evidence indicates that immigration — even low-skilled immigration — doesn’t take jobs from Americans. Immigrants also produce goods and services, growing the pie and creating labor demand that helps provide work for native-born workers. But the only economist they seem to have bothered to ask was George Borjas, a man who has spent his life unsuccessfully trying to prove that immigration is bad for America. The new jobs numbers illustrate the failures of Borjas’ zero-sum economics.1
Tariffs are another example. Trump and his people swore that tariffs would bring manufacturing jobs back to America, by reducing foreign competition. But while we do see a few heavily protected industries like steelmaking adding jobs, most manufacturing industries in the U.S. are hemorrhaging workers:
Joe Weisenthal notes how broad the pain in American manufacturing is:
It's not just that total manufacturing employment is shrinking. The number of manufacturing sub-sectors that are adding jobs is rapidly shrinking. Of the 72 different types of manufacturing tracked by the BLS, just 38.2% are still adding jobs. A year ago it was 47.2%.
If the administration had bothered to ask economists, they would have explained that since manufacturing uses a lot of intermediate goods, tariffs hurt American manufacturing more than they help. But the only economist Trump seemed to listen to on the topic was Peter Navarro, who seems to have a lot of gaps in his knowledge about trade.
Zero-sum thinking failed on immigration because the U.S. economy isn’t a lump of labor. It failed on tariffs because the global economy is not a lump of manufacturing.
Now it’s also probably going to fail Trump on geopolitics as well. Trump recently overthrew the leader of Venezuela, and he has made it clear in speeches and statements that one of the reasons he did this was to seize control of the country’s oil. Many of the less thoughtful figures on the right expect this move to deliver a bounty of mineral wealth to the United States:
But whether removing Maduro was the moral thing to do, it’s unlikely to result in significant economic windfalls for the U.S. Oil majors are reluctant to invest, given the ongoing political chaos in Venezuela. In fact, the history of conquering and seizing oil fields for economic gain is not encouraging — witness how the U.S. failed to reap significant benefits from the Iraq War.
Or consider Trump’s desire to conquer Greenland. Simply adding a large chunk of land to America’s map would not mean riches for the U.S. economy. The U.S. already has access to Greenland’s natural resources and shipping routes; conquering the island would simply earn the enmity of both the Europeans and of Greenland’s people themselves. The U.S.’s previous relationship with Greenland was positive-sum and cooperative; switching to zero-sum piracy would not be an improvement.
So far I’ve been talking about the Trump administration. But there are also plenty of people in the progressive movement who think that economic policy should be mainly about redistributing “resources”. For example, many progressives and leftists believe that industrialization happened because European countries stole mineral wealth from other nations; some even think that poor countries are still being kept poor to this day by Europe and the U.S. buying their minerals for artificially low prices.
But as I wrote back in 2023, the former hypothesis is extremely dubious:
Imperialism is very old — the Romans, the Persians, the Mongols, and many other empires all pillaged and plundered plenty of wealth. But despite all of that plunder, no country in the world was getting particularly rich, by modern standards, until the latter half of the 20th century…So the fabulous wealth of the modern day can’t be due to plunder alone…
[I]t’s pretty clear that imperialist extraction was neither necessary nor sufficient for a country to get rich. South Korea, Singapore, Sweden, Denmark, Finland, Switzerland, and a number of other countries have gotten rich without ever having colonial empires, while Germany only had a small one for a very short time. Meanwhile, Spain and Portugal, which had vast and highly extractive colonial empires, were economic underperformers for a long time, and are still poorer than much of Europe.
Here’s a good tweet that makes the argument even more succinctly:
And leftists’ argument that poor countries are poor today because America and Europe refuse to pay sufficiently high prices for rocks — is obvious nonsense:
[N]ow, commodity prices are generally set on the world markets…the price of copper Chilean miners get is going to be about the same as the price American or Australian miners get. Rich countries might use dirty tricks to lower the global price of commodities…but they’d have to be willing to hurt their own miners too…And this would also involve screwing over rich countries like Australia that are primarily commodity exporters. Australia is very obviously not a poor country, so if we’re screwing over Australia through suppression of global commodity prices, we’re not doing it very much…
The idea that commodity exporters chronically undervalue their currencies also doesn’t fit with the recent history of these countries. Commodity-exporting nations are known for overvaluing their own exchange rates, in order to afford more imports.
With a few small exceptions, countries simply don’t get rich from “resources”; they get rich from reshaping resources into useful goods and services using human ingenuity and hard work.
Closer to home, progressives constantly talk about “resources” — a language that clearly invokes a lump of wealth. And yet progressive policies often end up making cities poorer, by taxing productive businesses to send money to useless but politically well-connected nonprofit groups. The California High Speed Rail Authority has not managed to create any high-speed rail whatsoever despite billions of dollars in spending, but brags about how many jobs that spending has created. It’s all redistribution and no production.
Perhaps in a rich country like America, where the pie grows only slowly and there are lots of opportunities for redistribution, it’s natural for people on both the right and the left to start thinking of the world as a lump of “resources” to be divvied up. But in reality, it’s production that maintains our high standard of living, and which creates the wealth necessary for redistribution to occur. A dangerously large number of Americans seem to have forgotten that.
The jobs numbers do not PROVE, by themselves, that immigration is benign for native-born American workers. But the mountain of careful causal research showing that immigration doesn’t displace native-born workers is evidence enough.
2026-01-16 17:43:09
Interest rates have begun to come down. Inflation has mostly subsided, and the real economy is still doing decently well despite Trump’s tariffs. So why are American consumers more pessimistic than they were during the depths of the Great Recession or the inflation of the late 1970s?
It’s possible to spin all sorts of ad hoc hypotheses about why consumer sentiment has diverged from its traditional determinants. Perhaps Americans are upset about social issues and politics, and expressing this as dissatisfaction about the economy. Perhaps they’re mad that Trump seems to be trying to hurt the economy. Perhaps they’re scared that AI will take their jobs. And so on.
Here’s another hypothesis: Maybe Americans are down in the dumps because their perception of the “good life” is being warped by TikTok and Instagram.
I’ve been reading for many years about how social media would make Americans unhappier by prompting them to engage in more frequent social comparisons. In the 2010s, as happiness plummeted among young people, the standard story was that Facebook and Instagram were shoving our friends’ happiest moments in our faces — their smiling babies, their beautiful weddings, their exciting vacations — and instilling a sense of envy and inadequacy.
In fact, plenty of careful research found that using Facebook and Instagram made people at least temporarily unhappier, and there’s some evidence that social comparisons were the reason. Here’s Appel et al. (2016), reviewing the literature up to that point:
Cross-sectional evidence demonstrates a positive correlation between the amount of Facebook use and the frequency of social comparisons on Facebook…A similar pattern emerges for the impression of being inferior…Some of these studies…have documented an association between social comparison or envy and negative affective outcomes…
Causal relationships between Facebook use, social comparison, envy, and depression have also been established experimentally. For example, in a study about women's body image…women instructed to spend ten minutes looking at their Facebook page rated their mood lower than those looking at control websites. Furthermore, participants in the Facebook condition who had a strong tendency to compare their attractiveness to others were less satisfied with their physical appearance…
In summary, available evidence is largely consistent with the notion that Facebook use encourages unfavorable social comparisons and envy, which may in turn lead to depressed mood.
Note that during the 2010s, consumer confidence was high. Even if people were comparing their babies and vacations and boyfriends, this was not yet causing them to seethe with dissatisfaction over their material lifestyles. But social media today is very different than social media in the 2010s. It’s a lot more like television — young people nowadays spend very little time viewing content posted by their friends. Instead, they’re watching an algorithmic feed of strangers.
A lot of those strangers are “influencers” — people who either make a living or gain fame and popularity by posting about their lifestyles. And while some of those lifestyles might be humble and hardscrabble, in general they tend to be rich and leisurely.
When I asked a social media-obsessed Millennial I know to give me an example of a rich influencer, she immediately mentioned Rebecca Ma, better known by her online nickname Becca Bloom. Here’s Becca’s spectacular wedding:
And here’s a video of her and her husband letting Microsoft Copilot decide where to fly their private jet:
Most of Becca’s Instagram account is pictures of her taking trips to gorgeous, scenic locations and showing off fancy clothes and other possessions. Another example I heard was Alix Earle, whose posts mix dance performances with exotic vacations.
To be very clear, I am not criticizing, decrying, or denouncing social media influencers like this. Becca Bloom looks like a nice person that I might go to a party with — and there’s absolutely nothing wrong with having a beautiful wedding, hanging out on the beach, or visiting cities in Europe. But how many Americans can afford to live that lifestyle? Becca Bloom comes from a super-rich Hong Kong family, a successful entrepreneur who sold her technology company in 2018. She’s top 0.01% for sure.
There were rich people like that in 1920, or 1960, or 1990. But you almost never saw them. Maybe you could read about them in People magazine or watch a TV show about them. But most people simply didn’t have contact with the super-rich. Now, thanks to social media, they do. And even if people don’t go hunting for “RichTok” videos, the algorithmic feed may occasionally throw some into their field of view. On a day-to-day basis, we are more aware of the Becca Blooms of this world than we were thirty years ago, or probably even ten years ago.
But even more subtle might be the influencers who are merely upper class rather than spectacularly rich. Since I don’t follow any lifestyle influencers, I asked AI for a few examples, and here are a few it mentioned:
These people aren’t living the lifestyle of a Becca Bloom, yet most of what you’re seeing in these photos and videos is economically out of reach for the average American. Most Americans can’t afford a big fancy house like Merritt Beck’s or Carly Riordan’s, a gorgeous European vacation like Jacey Duprie’s, or fancy dinner parties like Kate Arends’.
And yet these are not obviously rich people, either — they’re more like the 5% or the 1% than the 0.01%. Their lifestyles are out of reach for most, but not obviously out of reach. Looking at any of these videos, you might unconsciously wonder “Why don’t I live like that?”.
Americans were always shown examples of aspirational lifestyles. The house in the Brady Bunch and the apartments in Friends were more spacious and well-appointed than the average American residences at the time, and you’d see the same exaggerations in advertisements. Yet on some level, Americans might have realized that that was fiction; when you see a lifestyle influencer on TikTok or Instagram, you feel like you’re seeing simple, bare-bones reality. (And often, though not always, you are.)
I was talking to my friend David Marx about this, and he pointed out that the rise of social media influencers has scrambled our social reference points.
Humans have always compared ourselves to others, but before social media, we compared ourselves to the people around us — our coworkers, friends, family, and neighbors. “Keeping up with the Joneses” has always been a well-known concept, and many economists have documented the effect in real life. For example, here’s Card et al. (2012) on salary comparisons:
We study the effect of disclosing information on peers' salaries on workers' job satisfaction…Workers with salaries below the median for their pay unit and occupation report lower pay and job satisfaction and a significant increase in the likelihood of looking for a new job. Above-median earners are unaffected. Differences in pay rank matter more than differences in pay levels.
And here’s Luttmer (2005), finding that having richer neighbors makes you less happy:
This paper investigates whether individuals feel worse off when others around them earn more. In other words, do people care about relative position, and does “lagging behind the Joneses” diminish well-being?…I find that, controlling for an individual's own income, higher earnings of neighbors are associated with lower levels of self-reported happiness…There is suggestive evidence that the negative effect of increases in neighbors' earnings on own well-being is most likely caused by interpersonal preferences, that is, people having utility functions that depend on relative consumption in addition to absolute consumption.
But comparing yourself to neighbors, coworkers, family, and friends was different than comparing yourself to social media influencers, in at least a couple of important ways.
First, all of those classic reference points tended to be people who were roughly similar to us in income — maybe a little higher, maybe a little lower, but usually not hugely different, and certainly not Becca Bloom types. Housing markets, job markets, and all kinds of other forces tend to sort us into relatively homogeneous social classes. The rich and the poor were always fairly removed from the middle class, both geographically and socially.
But perhaps even more importantly — and this was a point that David Marx especially emphasized — we were able to explain the differences we saw. In 1995, if you knew a rich guy who owned a car dealership, you knew how he made his money. If you envied his big house and his nice car, you could tell yourself that he had those things because of hard work, natural ability, willingness to accept risk, and maybe luck. The “luck” part would rankle, but it was only one factor among many. And you knew that if you, too, opened a successful car dealership, you could have all of those same things.
But now consider looking at an upper-class social media influencer like the ones I cited above. It’s not immediately obvious what they do for work, or how they could afford all those nice things. Some of them have jobs or run businesses, but you don’t know what those are. Some might have inherited their wealth. Some of them make money only by showing off their lifestyles on social media!
Not only can you not explain the wealth you’re seeing on social media, but you probably don’t even think about explaining it. It’s just floating there, delocalized, in front of you — something that other people have that you don’t. Perhaps you make it your reference point by default, unconsciously and automatically, as if you’re looking at your sister’s house or your neighbor’s car.
I’m hardly the first person to think of this idea. Other writers are starting to use terms like “money dysmorphia” and “financial dysmorphia” to describe the vague sense of inadequacy that comes from being bombarded with deracinated free-floating images of wealth and comfort. A lot of people have taken note of a recent survey by the financial services company Empower, in which Gen Z reported a much higher threshold for considering themselves financially successful:
$588,000 is an absurd requirement for financial success. It’s in the top 1% of individual incomes. It’s thirteen times the median personal income in the United States, and more than five times the median family income.
Now, with surveys like this, you always have to worry about wording. It’s possible that terminology has changed, so that the phrase “financially successful” connotes “rich” to Gen Z, while it means “upper middle class” to older generations. But it’s also possible that Gen Z folks really do think they’re losers if they don’t make $588k. And this impression might come from TikTok and Instagram — many of the influencers I listed above look like they probably make in the ballpark of that amount.1
If social media comparison is really making middle-class Americans feel like financial losers, what do we do about it? It’s physically impossible to give every American an income anywhere near $588k, at least in the near future. We can redistribute more wealth and income, but taxing the top 5% down to a humble middle-class standard of living just to make social media consumers less grumpy is probably a political non-starter. We could have a communist revolution, but history shows that this is a bad idea.
And if social comparisons are getting Americans down, the Abundance agenda is likely to be less powerful than we might hope. Economic theory and common sense both tell us that even if people’s satisfaction depends on other people’s wealth, getting richer still makes them happier. But social comparisons can put a lid on how happy we can feasibly make people.
So neither redistribution nor growth nor any combination of the two will give regular folks the kind of lifestyle they see on TikTok and Instagram. Hopefully over time people will learn that influencer lifestyles aren’t a good barometer of reality — that fancy Europe trips and cavernous mansions are as rare now as having a giant apartment in Manhattan was in the 1990s.
In the meantime, I suppose we can strive to make society more equal in other ways, so that lifestyle differences matter less. We can provide more public goods — nice parks, walkable streets, good transit, beautiful free public beaches. We might even be able to cultivate a culture like Japan’s, where most rich people are embarrassed to display too much wealth in public. And we can continue prodding young people to watch less TikTok and Instagram.
All of those solutions are, of course, predicated on social comparison actually being a major reason behind low economic satisfaction. It might not be. But it’s an important hypothesis we should consider.
There are some more modest middle-class influencers out there, like Emily Mariko, but the upper class seems to dominate — probably because people like looking at fancy expensive stuff.
2026-01-14 18:22:04
It’s a new year, so I’ve decided to change how I name these roundup posts. I’m retiring the name “At least five interesting things”, which is cumbersome and felt a little repetitive. Instead I’ll just call it “roundup”. I’m keeping the numbers for now, so people who want to link back to a specific roundup post can differentiate them.
Anyway, I’ve got a couple of fun podcasts for you, both about AI! The first is me and Liron Shapira on his podcast Doom Debates, talking about AI safety, and referencing my post on that topic from a few weeks ago:
The second podcast is with Jeff Schechtman, in which I make my case for techno-optimism and complain that Americans are too fearful of the future:
Anyway, on to this week’s roundup! Consistent with the theme of “Checking in on the bad guys”, let’s start with some items about the New Axis powers:
Everyone’s eyes are fixed on Iran’s protests and the regime’s brutal response to them, waiting to see if the Islamic Republic falls or manages to shoot its way out of this crisis. But it’s also interesting to take a look at the material roots of the unrest. Zineb Riboua has an article in The National Interest detailing some of the regime’s failures on the economic front. One key issue that relatively few outsiders seem to know about is the country’s water crisis:
Crucially, the regime’s failures are starkly visible in Iran’s accelerating water crisis, which has evolved from an environmental strain into a political fault line. A country of more than 90 million people is confronting its worst drought in over half a century, with collapsing aquifers, dried rivers, and water rationing spreading across cities and provinces. Instead of addressing decades of reckless dam construction and unsustainable agricultural policy, the regime has increasingly shifted blame outward. Iranian officials and state-aligned media have accused neighboring countries such as Turkey, the UAE, and Saudi Arabia of diverting rain clouds, and more recently have alleged that the United States and Israel are manipulating the weather.
Moreover, Iran’s water crisis directly contributes to prolonged power cuts that further intensify unrest. Power generation in Iran depends heavily on water-intensive infrastructure, leaving the grid vulnerable as reservoirs shrink. Chronic blackouts now disrupt daily life, turning infrastructure failure into immediate political anger and, alongside water shortages, accelerating mass unrest.
U.S. sanctions have also made a big impact. Iran has been forced into all kinds of alternative financing arrangements, and now sells most of its oil to China. This makes it a lot harder for Iran to pay for its military:
These constraints combined have produced a profoundly distorted budgetary structure. Iran’s national budget is effectively bifurcated between rial-denominated and crude-oil-denominated allocations. Because Iran cannot sell its oil through conventional financial channels, it increasingly uses oil as a substitute for cash, primarily to fund the security sector. The Ministry of Defense, for example, receives both rials and oil shipments, which it must then sell independently to finance weapons, operations, and support for proxy forces.
Sanctions have also forced Iran into a fairly classic currency crisis, with inflation spiraling out of control and causing all of the usual disruptions:
[I]nflation has reached crisis levels, with official data showing a rate of 42.2 percent in December 2025, up 1.8 percent from November, while food prices surged 72 percent and health and medical goods rose 50 percent year on year. Combined with a mismanaged water crisis, these pressures sharply raise the cost of basic necessities…[T]he erosion of pensions and savings forces households to abandon long-term planning and shift into survival mode…
Jared Malsin also has a good article in the WSJ about how the current economic unrest was triggered by a recent financial crisis:
Late last year, Ayandeh Bank, run by regime cronies and saddled with nearly $5 billion in losses on a pile of bad loans, went bust. The government folded the carcass into a state bank and printed a massive amount of money to try to paper over all the red ink…[T]he failure became both a symbol and an accelerant of an economic unraveling that ultimately triggered the protests…The country’s beleaguered currency, the rial, tipped into a new downward spiral the country had little ability to stop.
Both articles have plenty more interesting details.
In addition to a fascinating look into the anatomy of an emerging-market resource-exporter’s economic collapse, I think there are two big takeaways here. The first is that protracted sanctions on a country — especially a resource exporter — can succeed, but only after many years and a whole lot of pain and suffering. This has lessons for our sanctions on Russia — don’t expect quick results, and expect ordinary Russians to feel a lot of pain before it’s all over.
The second lesson is that broad-based unrest tends to require economic hardship. Students and urban middle classes may march in the streets for freedom and individual rights and democracy and such, but truly regime-threatening unrest, of the type we’re now seeing erupt all over Iran, typically requires the business class and the working class to both suffer hardship.
Last March I wrote about China’s attempts to kneecap Indian manufacturing. I linked to this Kyle Chan post:
India represents the most striking case of Beijing’s effort to shape the international behavior of Chinese firms…[A]cross a number of industries, Beijing seems to be discouraging Chinese firms making future plans to invest in India while also limiting the flow of workers and equipment…Beijing appears to be limiting Apple’s manufacturing partner Foxconn from bringing Chinese equipment and Chinese workers to India. Some of Foxconn’s Chinese workers in India were even told to return to China. This informal Chinese ban extends to other electronics firms working in India…Beijing has told Chinese automakers specifically not to invest in India…China has been reportedly blocking the export of Chinese solar equipment to India…[Tunnel boring machines] made in China by Germany’s Herrenknecht for export to India have been reportedly held up by Chinese customs.
In recent months, China has increasingly been using export controls — mostly on rare earth and battery technologies — to achieve its geopolitical and economic goals. Now it’s using these controls to try to prevent India from developing a battery industry:
Reliance Industries Ltd. has paused plans to make lithium-ion battery cells in India after failing to secure Chinese technology…The Mukesh Ambani-led oil-to-telecoms conglomerate, which had aimed to begin cell manufacturing this year, had been in discussions with a Chinese lithium iron phosphate supplier Xiamen Hithium Energy Storage Technology Co. to license cell technology…Those talks stalled after the Chinese company withdrew from the proposed partnership amid Beijing’s curbs on overseas technology transfers in key sectors…China has stepped up scrutiny of clean-energy technology deals as it seeks to protect strategic advantages in sectors.
This demonstrates, yet again, how batteries are an incredibly crucial strategic industry that much of the world has neglected. And it’s another example of how export controls are emerging as one of the most powerful tools of geoeconomics.
It also shows that despite all the BRICS talk, China views India as a strategic rival. China’s leaders are worried about India’s rise as a great power, given its huge size and its proximity to China. And since they view manufacturing as the font of all power — or at least, as their own key advantage — the idea that India could emerge as a rival manufacturing superpower keeps them up at night.
The United States, Japan, Korea, and Europe should see it as a core interest to make sure that India develops world-class manufacturing industries as soon as possible. Anything that keeps China’s leaders up at night is something that we probably want more of. Indians, of course, deserve the higher incomes and greater security that a world-class manufacturing sector would bring them.
Russia’s economy temporarily recovered from the initial dip it took at the start of the Ukraine war in 2022, and even grew at impressive rates of over 4% in 2023 and 2024. This prompted a lot of people to think that Russia’s economy had some sort of secret sauce — perhaps some combination of Elvira Nabiullina’s wise macroeconomic management and the mighty efforts of a nation pulling together to boost war production. It also prompted a widespread narrative that America and Europe’s sanctions on Russia were ineffectual.
But perhaps there was less to Russia’s resilience than meets the eye. A recent report by PeaceRep alleges that Russia has been understating its official inflation figures by quite a lot. The authors argue that more realistic inflation numbers show that Russia’s economy has been shrinking, rather than growing, since the start of the war:
[O]fficial [Russian] statistics show an increase in GDP and the real i.e. inflation-adjusted incomes of the working population. According to official data, in 2021–2024, Russia’s GDP grew by +7.1%, and real household income grew by an unprecedented +24.8%. These figures are however based on questionable official estimates of inflation at between 7.4% and 11.9% per annum in 2022–2024. The very tight monetary policy of the Central Bank of Russia and the growth of the monetary supply imply this official rate is underestimated…The likelihood that the inflation rate is higher than publicly reported is further suggested by sources such as the analytical agency ROMIR, which until September 2024 monitored consumer inflation in Russia, estimated inflation in 2022 at 33%, compared to the official rate of 11%…For the present report an alternative estimate for the inflation rate in 2022–2024 was developed…The results showed that in this period Russia’s GDP fell by 1.5%, while real household incomes declined by 5.3%. [emphasis mine]
And here are two key charts:
Remember, the easiest way to overstate your country’s economic growth is to understate its inflation.
And remember that this data ends in 2024. In 2025, the Russian economy came under increasing strain, as oil prices continued to fall:
Ukraine, meanwhile, has been destroying many of Russia’s oil refineries with long-range drone strikes, and is now going after the tankers that let Russia sell crude oil to China. And as Martin Sandbu writes, all the natural strains of a wartime economy are beginning to add up — labor shortages, fiscal deficits, and so on.
Things will get increasingly tough for Russia’s economy if the war continues much longer. Whether that’s enough to get Russia to stop its campaign of conquest is anybody’s guess.
John Johnson has a cool post about American domestic migration. Americans don’t move around much these days compared to the past, but there are some pretty clear patterns regarding where they’re moving away from and where they’re moving to:
Most notably, Americans are moving away from three regions:
California
The Mississippi Delta
The western Great Plains
It probably doesn’t take a genius to figure out why Americans are moving away from (2) and (3) here. The Mississippi Delta (technically the Mississippi Embayment) is America’s poorest region, and thus not a great place to live. The western Great Plains are devoid of thriving big cities, so there aren’t so many jobs, and people who want to live interesting urban lives tend to move elsewhere.
California is the real puzzler here — and the real tragedy. The conventional wisdom is that people are moving out of California because of high housing costs. Indeed, the state stands out on a map of house prices relative to income:
This pretty closely mirrors how much rent costs in each state.
What’s interesting is that New York, Massachusetts, and New Jersey, where housing is almost as expensive, aren’t seeing big outflows right now. Maybe that’s because people already moved away in earlier decades, while Californians hung on for a while because of the nice weather.
Another possibility, though, is that something is going deeply wrong with California’s economy. Since the pandemic, the state has been bleeding tech jobs:
This could be due to high housing costs driving people out of the state, or it could be due to the rise of remote work. Or it could be due to the tech industry’s clustering effect weakening, as clustering effects once weakened in manufacturing. In any case, it’s something California’s leaders ought to be very concerned about. The days when California could just bomb its residents with high housing costs and high taxes, and depend on sunny weather and clustering effects to keep everyone in the state, might be ending.
Jed Kolko has an interesting thread about hiring. Employment rates are still high, but hiring rates have fallen off a cliff:
Jed argues that this is not due to either Trump or to AI:
It's not Trump policies, and it's not AI…Hiring has been very low since 2024, and has flattened out. If it were AI, the hiring slowdown would have accelerated in 2025, rather than plunging earlier. If it were Trump policy, the slowdown would have started in 2025.
I’m not sure either of those conclusions is warranted. It’s possible that companies could see how good AI was getting back in 2024, and held off on hiring out of caution about how much better it might get. This is just standard-looking forward expectations. On the other hand, it’s also possible that hiring would have rebounded in 2025 if not for Trump’s tariffs and immigrant deportations.
But anyway, Jed’s theory is that companies over-hired during the latter part of the pandemic — the bubble of 2021:
The pandemic broke the relationship between hires and unemployment. Pre-pandemic, low hiring = high unemployment. No longer. In pandemic recovery, there was lots of hiring, followed by a steep drop as some firms overhired…We are still feeling the effects of the pandemic.
That’s a plausible explanation, but as I said, I wouldn’t rule out either AI or Trump.
I’ve written a lot about Indian development, but I rarely talk about what this means for the people of India themselves, in human terms. But it’s really pretty incredible and transformative. Ravi and Penumarty have a new paper summarizing the changes in durable goods ownership in India from 2012 to 2024, which gives a fascinating peek into how economic growth is changing the life of regular Indians. Here’s an infographic based on their data:
Even relatively low-income people in India now tend to own a fridge, a motorbike (or car), a mobile phone, and a TV. That was not true a decade ago.
Remember, as much as certain smug intellectuals like to sneer at and dismiss the idea of economic growth and of GDP, for people in poor countries, GDP is everything, and growth is the utterly transformative. India has been doing a good job of transforming its people’s lives, and it deserves our praise, encouragement, and support.
I’ve often written about how nuclear power will be a niche power source in the future — not useless, but not the way we produce most of our electricity. It’s also worth mentioning that I think wind power will also be niche. A recent post by X user Cremieux sums up a bullet-pointed list of reasons why wind will probably be marginal in our final energy mix. Key excerpts:
The bad:
- Generation is…stochastic…not deterministic [like] solar which comes and goes at predictable intervals
- Decay half life is too long for short-term storage (batteries, most pumped hydro)
- Decentralization without robustness…depending on geographical circumstances very fragmented grid topology may ensue
- Very low power density, amassing too much wind power in a small area considerably lowers total harvest (see North Sea)
- Very high intensity in rare earth minerals…
- Rather mediocre synergy with nuclear (unlike PV)
- High transport requirements
Basically, you don’t know when the wind will blow, but you do know more or less when the sun will shine. You also can’t cluster windmills too close together, or you use up all the wind. Those are really the key factors that make wind problematic as a power source. To this I’d add that A) the scaling curve for wind is much shallower than the one for solar, meaning that solar will keep getting better and better relative to wind over time, and B) the total land use requirements for wind farms are huge, which makes siting and permitting difficult, even though you can use the land between the wind turbines for other stuff.
Ramez Naam, my favorite futurist, and the man who predicted the age of solar far in advance, agrees with Cremieux’s points, but argues convincingly that wind will retain an important niche role in our future energy mix:
The US has tremendously better wind resources on land than Germany or most of Europe…
Wind doesn't pair nearly as well as solar with short duration (hours) of storage. It does pair very well with natural gas, though, and ends up saving a lot in fuel costs…
As we electrify heat, the electricity system on almost every continent will move to having a peak of demand in winter as opposed to summer today (due to AC) for the US. That is a challenge for solar. Wind and solar and complementary over the scale of seasons. Wind is lowest in summer when solar is strongest. Wind is stronger in fall and winter, and at its strongest in spring.
So wind, like nuclear, will still have its uses.
Over the past decade, there has been a lot of work devoted to “metascience” — the idea that in order to re-accelerate scientific progress and make it cheaper, we ought to change the outdated way that we fund scientific research. The Institute for Progress has been at the forefront of documenting and pushing forward that intellectual enterprise.
Now, IFP’s Caleb Watney reports on a big initiative to turn some of those ideas into reality. The NSF is shifting some of its funding outside academia:
A new [National Science Foundation] initiative called Tech Labs will invest up to $1 billion over the next five years in large-scale long-term funding to teams of scientists working outside traditional university structures…
For most of the postwar era, federally funded science has been built around a simple model…small, project-based federal grants mostly to individual scientists…But the science that shapes our world, from particle physics to protein design to advanced materials, increasingly requires massive data sets, large integrated teams and sustained institutional support…
The current structure is built for discrete projects rather than missions. When research requires long-term continuity, interdisciplinary collaboration or substantial shared infrastructure, it’s often difficult for it to fit into this structure…Rather than funding isolated projects, the [Tech Labs funding structure] would provide flexible, multiyear institutional grants in the range of $10 million to $50 million a year to coordinated research organizations that operate outside the constraints of university bureaucracy. These could include university-adjacent entities such as the Arc Institute or fully independent teams with focused missions.
This is really promising, and I’m excited to see how it plays out.
But I’m also wondering if the rise of AI science will open up another parallel avenue for rapid innovation by lone scientists or small teams working outside the academy — such as when some people used AI to solve some difficult outstanding math problems this past week. Maybe the NSF should also try giving some people grants to see how far they can push ultra-fast small-scale independent research, too.
In any case, I’m just glad to see our institutions taking metascience seriously, and trying new things.
2026-01-13 17:40:38
“Damn it feels good to be a gangsta/ Gettin' voted into the White House” — Geto Boys
I recently listened to an audiobook about the Napoleonic Wars. Overall, the book wasn’t very good, but there was one interesting part where it described Napoleon’s ruling style as being mafia-like. His insistence that other European countries buy French exports, his attempts to shut Britain out of European trade, and a bunch of his other economic policies were fundamentally gangster-ish — they were ad hoc impositions of personal power, often with an eye toward taking revenge on personal enemies and entrenching his own authority.
I immediately recognized this as Donald Trump’s style of governance. Like Napoleon, Trump’s top priority isn’t creating durable institutions that will outlive him — indeed, he regards any such institutions as threats to his own personal power. Many observers have labeled this approach “personalism” or “patrimonialism”, but it’s really just gangsterism. Trump treats America like a mafia organization, and himself as the godfather.
That’s what I thought about when I watched this remarkable video from Fed Chair Jerome Powell:
Powell reveals that Trump’s Justice Department has been investigating the Fed, with an eye to pressuring the Fed to cut interest rates:
On Friday, the Department of Justice [threatened] a criminal indictment related to…a multi-year project to renovate historic Federal Reserve office buildings.
I have deep respect for the rule of law and for accountability in our democracy. No one—certainly not the chair of the Federal Reserve—is above the law. But…This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings…The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
This is remarkable and unprecedented. Nothing like this has ever happened in the history of the Federal Reserve. Powell is a consummate professional, who cares only about doing his job, and would only make a statement like this under extreme duress.
If a guy like Powell is accusing Trump of threatening lawsuits over interest rate policy, you know he’s not just going on a hunch or spinning a conspiracy theory — there must have been some very explicit backchannel communications from the White House indicating that the Fed could avoid a DOJ lawsuit by lowering interest rates.
This fulfills my pre-election prediction that Trump would spend much of his second term feuding with the nation’s institutions, and that the Fed would be a prime target. The shape of Trump’s strategy against the institutions is now clear. His two main weapons are A) executive orders, and B) DOJ lawsuits. He obeys the courts when they rule against him, but follows none of the traditional norms of the executive branch, using the DOJ and other administrative agencies as arms of his personal political machine. Trump has used this approach against law firms and media organizations that have challenged him, and now he’s running the same playbook against the Fed. It’s all very Napoleonic — which is a nice way of saying it’s gangster-ish.
The more interesting question is what Trump hopes to accomplish by forcing the Fed to cut rates. The conventional wisdom is that Trump is worried about a recession, possibly caused by his own tariffs, and wants rate cuts in order to boost the economy and employment. According to this theory, Trump is basically what I call a “macro-progressive” — he fears unemployment, and he doesn’t worry too much that low rates will cause inflation.
That’s consistent with Trump’s massive binge of deficit spending. Like the progressives at think tanks like the Roosevelt Institute, Trump may believe that inflation is best controlled with administrative measures, supply expansions, and price controls, rather than by the more traditional tools of high interest rates and fiscal austerity.
But I’m beginning to think there’s also something else going on here. Trump’s populist instincts are still strong. He knows that affordability, not jobs, is the American public’s main economic concern right now. For example, here’s a Gallup poll from last month:
General concern over “the economy” takes the top spot as usual, but worries about inflation and the cost of living top worries about unemployment, by a lot. In fact, inflation is the thing that voters seem to be most upset at Trump about, specifically:
Whether he’s concerned about the midterms, worried about his legacy, or intends to try for a third term, Trump knows that the best thing for his popularity would be to bring living costs down.
He also must know that this is easier said than done. Usually, reducing the cost of living means holding down the rate of inflation, so that wages outpace prices over time. But there’s evidence showing that many Americans expect the government to actually drive prices down, rather than just curbing the rate at which they go up:
Driving prices down is normally very hard to do without causing a recession. But a few weeks ago, I wrote a post about how there are actually some prices that the government could feasibly bring down:
I’m starting to think Trump read my post!1 The prices I mentioned are exactly the prices that Trump has targeted with a recent spate of highly unorthodox measures. The attacks on the Fed might be part of this strategy, because one of the items I mentioned is the price of credit.
In his own gangster-ish way, Trump may be trying to bring Americans the affordability they demand. The problem is that the gangster approach can have grave long-term costs in terms of economic stability and efficiency. Like Napoleon, Trump may be headed for a series of boondoggles and quagmires.
