Quotulatiousness

July 28, 2025

The AI threat to the laptop classes

Filed under: Business, Economics, Media, Politics, Technology, USA — Tags: , , , — Nicholas @ 05:00

Warren at Coyote Blog responds to a recent Gato Malo post on the way artificial intelligence (however described) will continue to disrupt the workplace especially as it begins to threaten the “laptop class” workers:

I agree with Gato that AI has a huge potential to disrupt current work patterns, in the same way that the industrial revolution did. The 19th century disruptions were severe, and many people suffered as their experience and skill set no longer matched the new economy. But eventually everyone, from the poorest to the rich, were better off for letting the industrial revolution run its course.

But in the 19th century, the disrupted were essentially powerless. What happens this time around, though, when the disrupted are the ruling elite themselves? These potentially disrupted professions include lawyers and doctors who already have shown themselves very willing to organize to block innovation, squash competition, and protect their high pay. Just look at the history of the attempts by Congress to reduce Medicare reimbursements to doctors. And that was minor compared to the potential AI disruption. Let me give you another example of the powerful resisting a technological change that should have disrupted their businesses.

When TV first was being rolled out, the industry coalesced around a network of local broadcast stations, many of whom became affiliates of a network like NBC or CBS. Why this model? Mainly it was driven by technology — the farthest a TV signal could reasonably be broadcast was about 50-75 miles. Thus everyone by necessity got their TV through three or four TV stations in their metropolitan area, each its own small business.

Now fast forward to today. There are multiple ways to broadcast a TV signal nationwide — there are several satellite options and many streaming internet approaches. So now when we watch DirecTV or Youtube TV, we just watch the national NBC or ABC feed, right? Nope. Federal law requires that whatever service you use MUST serve up NBC, for example, via the local affiliate. That is why your streaming TV service harasses you when you travel, because it is worried about violating the law by showing you the Phoenix CBS affiliate when you are staying overnight in Atlanta (gasp).

This is hugely costly. In order to be able to provide NBC among its stations, Youtube TV must gather the feeds from 235 different stations. In the Internet streaming era this is costly but in the satellite era it was insane. DirecTV, with its limited bandwidth, had to simultaneously broadcast 235 stations, most showing identical content, just to legally provide you with NBC. So why this crazy, expensive, insane effort? I am sure you have guessed — pound for pound local TV stations are among the most powerful lobbyists in the country. First, they have money and a massive incentive to defend their local geographic monopoly — Car dealers and alcohol distributors are much the same, which is why every potential innovation is resisted in those markets. But TV stations have one extra card to play — nearly every Congressman in the House likely depends on the three or four TV stations in one major metropolitan area for a huge part of their publicity and coverage. No politician is going to screw with that. At the end of the day, local stations did not get disrupted, they actually became more valuable with this government-enforced distribution of their product.

This is a small example of the fight that is coming in AI. Congressmen will couch their arguments in fear-charged terminology as if their real fear is some Terminator-like AI apocalypse. But the real concern will be from the influential elite who are being disrupted. What would have happened to the Industrial Revolution if the hand-loom weavers were the children of the nobility? Would the government have allowed the revolution to proceed? We are about to find out.

On a cheerier note (if you’re an AI), here’s Ted Gioia‘s most recent concerns about AI getting more evil as it gets more capable:

I hate to be the bearer of bad news, but AI doesn’t make ethical decisions like a human being. And none of the reasons why people avoid evil apply to AI.

Okay, I’m no software guru. But I did spend years studying moral philosophy at Oxford. That gave me useful tools in understanding how people choose good over evil.

And this is relevant expertise in the current moment.

So let’s look at the eight main reasons why people resist evil impulses. These cover a wide range — from fear of going to jail to religious faith to Darwinian natural selection.

You will see that none of them apply to AI.

Do you see what this means? You and I have plenty of reasons to choose good over evil. But an AI bot is like the honey badger in a famous meme — and just don’t care.

So sci-fi writers have good reason to fear AI. And so do we. The moral compass that drives human behavior has no influence over a bot. As it gets smarter, it will increasingly resemble a Bond villain. That’s what we should expect.

Anyone who tries to forecast the future of AI must take this into account. I certainly do.

And even though I’d like to think that I’m a fearless predictor, I must admit that what I see playing out over the next few years is very, very very troubling.

Here’s my hypothesis: Let’s call it Ted’s Unruly Rules of Robotics:

  1. Smart machines will have an inherent tendency to evil—because human moral or legal or religious or evolutionary tendencies to goodness don’t apply to them.
  2. The only way to stop this is through human intervention.
  3. But as the machines get smarter, this intervention will increasingly fail.

July 26, 2025

QotD: The accumulated friction of bureaucratic growth

Filed under: Bureaucracy, Economics, Europe, Government, History, Military, Quotations — Tags: , , , , , , — Nicholas @ 01:00

Bureaucracies all succumb very quickly to some kind of “Malthusian progression”. I’m not sure what to call it, I suck at naming stuff (please take your shot in the comments), but you all know what I mean: A bureaucracy’s tasks increase arithmetically, but the amount of effort each task requires increases geometrically.

[…] In the early Republic, raising a legion was as simple as a patrician calling his clients to service, or the Senate issuing a conscription decree. One task: the summoning of free men, with their own equipment, and there you go — Legio I Hypothetica.

By the late Empire, though, all those freeholds had been turned into slave-worked Latifundia, so the effort of raising a legion increased enormously. Now the bureaucracy had to go out and hire freemen (if it could even find them), equip them at State expense, train them (again at State expense), and so on. In itself, the number of tasks isn’t that large — we’ve identified three — and they only increase at the rate of n+1.

But the effort each task requires increases to the power of n, such that if you could somehow express the effort expended in physical terms — joules or kilowatts or whatever — you’d see that the creation of Legio I Hypothetica under Scipio Africanus took 10 kilowatts, while raising the same legion under Diocletian took 10,000,000.

This isn’t (just) corruption. Sure, everyone at every level of the Imperial Bureaucracy was getting his beak wet, that goes without saying, but it’s the nature of bureaucracy itself that’s most to blame.

Severian, “Collapse II”, Founding Questions, 2021-12-09.

July 24, 2025

The vicious competition for Indian civil service jobs

Filed under: Bureaucracy, Economics, Education, Government, India — Tags: , , , , , — Nicholas @ 05:00

Once upon a time in most of the Anglosphere, the advantage of civil service jobs was that they were nearly impossible to get fired from and had a relatively good pension at the end of a long career. Private sector jobs were far less permanent, but paid more, had better benefits, and more prestige. Over the last fifty years, little of that is still true — civil servants still have fantastic job security, but they’re also better paid, have better benefits, and for many there are opportunities to retire and get re-hired back into a similar position with even higher pay while collecting a generous pension. The private sector no longer pays better nor offers significantly better benefits, so lots of people look to get into the civil service who once would have shunned positions like that.

It’s apparently much worse in India:

In India, government jobs pay far more than equivalent jobs in the private sector — so much so that the entire labor market and educational system have become grossly distorted by rent-seeking to obtain these jobs. Teachers in the public sector, for example, are paid at least five times more than in the private sector. It’s not just the salary. When accounting for lifetime tenure, generous perks, and potentially remunerative possibilities for corruption, a government job’s total value can be up to 10 times that of an equivalent private sector job. (See also here.)

As a result, it’s not uncommon for thousands of people to apply for every government job — a ratio far higher than in the private sector. In one famous example, 2.3 million people submitted applications for 368 “office boy” positions in Uttar Pradesh.

The consequences of this intense competition for government jobs are severe. First, as Karthik Muralildharan argues, the Indian government can’t afford to pay for all the workers it needs. India has all the laws of, say, the United States, but about one-fifth the number of government workers per capita, leading to low state capacity.

But there is a second problem which may be even more serious. Competition to obtain government jobs wastes tremendous amounts of resources and distorts the labor and educational market.

If jobs were allocated randomly, applications would be like lottery tickets, with few social costs. Government jobs, however, are often allocated by exam performance. Thus, obtaining a government job requires an “investment” in exam preparation. Many young people spend years out of the workforce studying for exams that, for nearly all of them, will yield nothing. In Tamil Nadu alone, between one to two million people apply annually for government jobs, but far fewer than 1% are hired. Despite the long odds, the rewards are so large that applicants leave the workforce to compete. Kunal Mangal estimates that around 80% of the unemployed in Tamil Nadu are studying for government exams.

Classical rent-seeking logic predicts full dissipation: if a prize is worth a certain amount, rational individuals will collectively spend resources up to that amount attempting to win it. When the prize is a government job, the “spending” is not cash, but years of a young person’s productive life. Mangal calculates that the total opportunity cost (time out of the workforce) that job applicants “spend” in Tamil Nadu is worth more than the combined lifetime salaries of the available jobs (recall that jobs are worth more than salaries, so this is consistent with theory). Simply put, for every ₹100 the government spends on salaries, Indian society burns ₹168 in a collective effort of rent-seeking just to decide who gets them.

The winners are happy but the loss to Indian society — of unemployed young, educated workers who do nothing but study for government exams — is in the billions. Indeed, India spends about 3.86% of GDP on state salaries (27% of state revenues times 14.3% of GDP). If we take Mangal’s numbers from Tamil Nadu, a conservative (multiplier of 1 instead of 1.68) back-of-the-envelope estimate suggests that India could be wasting on the order of 1.4% of GDP annually on rent-seeking. (Multiply 3.86% of GDP by 15 (30 years at 5% discount) to get lifetime value, and take 0.025 as annual worker turnover.) Take this with a grain of salt, but regardless, the number is large.

July 23, 2025

Javier Milei is delivering “a man-made miracle” for Argentina

Filed under: Americas, Economics, Government, Liberty — Tags: , , , , , , , — Nicholas @ 03:00

Niall Ferguson‘s thread on the social media site formerly known as Twitter, thanks to the Thread Reader App:

While the world fixates on Donald Trump’s populist cocktail of reciprocal tariffs and big, beautiful deficits, @JMilei is delivering a man-made miracle that should gladden the heart of every classical economist and quicken the pulse of all political libertarians.

@JMilei has brought monthly inflation down from 13% to 2%. The economy is now growing at an annual rate of 7%. Investors no longer shun Argentine bonds and stocks — indeed, they were among the best investments you could have made over the past two years. After a brief upward jump, the poverty rate has fallen from 42%, when Milei was elected, to 31%

These are astonishing feats. And they have ramifications that go far beyond South America. Free-market economics and political libertarianism are sometimes dismissed as a fad of the “neoliberal” 1980s, long ago superseded by the new populisms of the left and the right. Not so. The world has never seen a government more radically libertarian than @JMilei. But the amazing thing is not that it is working economically. The true miracle is that Milei’s shock therapy is working politically.

With his leather jacket and late ’60s mop top, @JMilei is part–rock star, part–mad professor, dancing, singing, and screaming his catch phrase: ¡Viva la libertad, carajo! — “Long live liberty, damn it!” It’s as if Joe Cocker had gone onstage at Woodstock and sung “I’ll Get By with a Little Help from My Friedman”. Never in the history of democracy has a tribune of the people won power this way.

July 21, 2025

Was Juan Perón a Fascist? The Cold War Origins of Peronism – W2W 037

Filed under: Americas, Economics, History, Media, Politics — Tags: , , , , , , , — Nicholas @ 04:00

TimeGhost History
Published 20 Jul 2025

Was Juan Perón really a fascist, a socialist, or something entirely different? In this episode of War 2 War, we explore the rise of Peronism in post–World War II Argentina and how Perón tried to position his country between the superpowers of the Cold War.

Through labour reforms, nationalist rhetoric, media control, and brutal repression of dissent, Juan and Eva Perón created a powerful populist regime that borrowed ideas from both fascism and socialism, while claiming to reject both. From Argentina’s “Third Way” to its complicated ties with the US, USSR, and even Nazi fugitives, we examine the ideology, contradictions, and legacy of Peronist rule.

Was Peronism a unique form of authoritarian populism, or just another face of fascism?

Join us as we uncover the foundations of Argentina’s Cold War identity and the true political nature of Juan Perón.
(more…)

QotD: The parasitic classes

Filed under: Bureaucracy, Economics, Education, Government, Quotations — Tags: , , , , — Nicholas @ 01:00

A parallel case may be found in the “civil” services, regulating authorities, non-profits, &c. Jobs in these areas, which command high salaries and pensions, and present delicious opportunities for graft, are outwardly the opposite of productive. They parasitically consume, on a colossal scale, the resources of the productive.

Look into almost any kind of “charitable” activity, such as social work, and one will find that only a tiny proportion of the cash “trickles down” to the characteristically desperate “clients”. And when it does, they use it to buy not only drugs and licker, but truly useless things, such as lottery tickets.

“Education” systems, in the modern West, exist chiefly to enrich semi-literate, unionized schoolteachers. In many parts of Ontario, for instance, a teacher will make at least double what the average parents make, and therefore feel justified in sneering. The teachers naturally consider that the little ones belong to them, for they are the necessary source of their income. What rights should parents have to interfere in their upbringing?

My best argument for the parasite class (always granting that some may be sincere), is that they protect society from gathering excessive wealth, or living lives of too much ease. Without them, we might easily suffer from the vices associated with too much freedom.

How I preferred the deadbeat, layabout, very English London of the Labour Party, when I lived there in the ‘seventies — to the cosmopolitan, rich, over-swept London of the Thatcher years. There are some advantages to socialism.

And there are other arguments, too, for putting depraved Leftists in power, though on examination they reveal special pleading. For instance, teachers may claim to offer child-minding services, so that mothers, especially, can go to work. But it is because heavy taxation requires the dual income, or women to do horrible and demeaning paid work when their husbands run away, that these services were ever made necessary.

The government does, arguably, “create” employment. Among the most farcical examples are the tax lawyers and consultants. Taxpayers need these to navigate incredibly elaborate tax codes, for their own protection. Only a professional can find the loopholes. Whereas, a comprehensible, flat tax system would put all these “experts” out of business. It would shrink revenue departments spectacularly, and by extension, threaten to shrink taxes. To a professional politician, this would never do. It would shrink his power.

David Warren, “Answering to a ‘need'”, Essays in Idleness, 2020-06-18.

July 18, 2025

The Napoleonic-era Royal Navy

Filed under: Books, Britain, Economics, History, Military — Tags: , , , , — Nicholas @ 04:00

David Friedman on some of the aspects of Britain’s Royal Navy in the late eighteenth and early nineteenth century which may be incomprehensible to modern readers who encounter it in works of historical fiction (like the books of C.S. Forester or Patrick O’Brian):

“HMS Victory in Portsmouth Harbour”
Painting by Charles Edward Dixon (1872-1934) via Wikimedia Commons.

I have read and enjoyed several series of novels set in the British navy during the Napoleonic wars, most recently one by Naomi Novik that departs a little further from history than its predecessors by providing the British and their enemies with dragons. The internal structure and the associated rules and customs of the navy seem very strange to a modern eye, yet it was a strikingly successful institution.

One feature likely to catch an economist’s eye was prize money. If a naval vessel captured a legitimate prize, an enemy warship or merchantman, and brought it back to port, the vessel and its contents were sold and the money distributed among those responsible. One large chunk went to the captain, another was distributed among his officers, a third among the crew, a fourth to the admiral under whose orders he was operating.

Another feature of the system was the role of patronage, political influence both within the navy and outside it in the career of an officer, especially a young officer. The critical step of promotion from lieutenant to captain depended in part on performance, in particular on the opinion of the captain under whom a lieutenant was serving. But it depended also on things that seem, to us, irrelevant.

One of Patrick O’Brien’s novels contains a conversation between Maturin, one of his protagonists, and a friend, a young officer of aristocratic birth. The officer has been having an affair with the separated wife of a high naval official and wants to know whether he should live openly with her. Maturin’s response is that, moral issues aside, it might be imprudent for him to offend a powerful official and so risk his future career. His friend replies that he has considered that matter but his family controls a significant number of seats in both houses of parliament and he thinks their influence will be sufficient to balance that of the man he will be offending.

Neither party sees anything strange in either the assumption that giving personal offense to someone within the bureaucracy will make it harder for a competent officer to be promoted or that having a politically influential family will make it easier; that is just part of how the system works. It was a system that produced extraordinarily successful results, a navy that, from the late 18th century to the early 20th won almost every ship to ship or fleet to fleet battle it fought at anything close to even odds.1

A third feature was the seniority system. Once a lieutenant was promoted to captain, his future rank depended only on how long he survived. His name was on the list of captains, the list was ordered by strict seniority, and the next captain to be promoted to admiral would be the one at the top of the list. When two or more captains were working together it was the senior who commanded. That provided an unambiguous rule for allocating command, since every captain knew where he was on the list and knew, or could readily find out, where any other captain was. But it was a rule that had nothing to do with the relative competence of two officers of the same nominal rank.

Promotion beyond captain was entirely determined by seniority; what the officer got to do with his rank was not. An insufficiently competent captain who made it to admiral would end up as an admiral of the yellow, an admiral without a fleet, effectively retired on half pay. A sufficiently competent captain could be assigned particularly important duties, including the command of a group of ships with the temporary position of commodore — provided none of the other captains in the squadron was senior to him. A sufficiently incompetent captain could end up without a ship, on half pay with no chance of prize money. In peacetime, when there was no shortage of competent captains, a minor failing might do it.

[…]

Consider the case of the pre-modern British navy. Prize money was a property solution. The admiralty wanted captains to have an incentive to capture enemy merchant ships, defeat and capture enemy warships, even at risk to their lives. Most of the relevant decisions were made by the captain, so he got the largest part of the reward, but other people, including the admiral whose orders determined what opportunities the captain had to earn prize money, got some of it. A pattern that shows up in the novels, and presumably in the real history, is an admiral who puts an unusually competent and aggressive captain in places where he is likely to encounter enemy warships not because he likes the captain but because he hopes to profit from successful encounters.

Allen argues that prize money was an imperfect property solution because capturing a warship was much riskier, more likely to get the captain killed, than capturing a merchant ship, but prize money was awarded for both. One puzzle he does not consider is why the navy did not solve the problem of misaligned incentives by lowering the prize money awarded for merchant ships or raising it for warships, which should have been easy enough to do.

Allen offers the imperfect alignment of incentives, such as the temptation for a captain in a fleet action to hang back and let other ships and their captains take the risk, as a reason why the property solution had to be supplemented with elements of the other two systems. The admiralty had detailed information on what a captain did through a system of three different logs, one by the captain, one by his first lieutenant, one by the sailing master, the ship’s senior warrant officer. A captain whose career showed him to be incompetent or too inclined to go after merchant ships and avoid warships might end up spending the rest of his career on shore with no ship, hence no opportunity for prize money. A captain who declined a clear opportunity for combat with a ship of the same class was subject to trial by court martial; one admiral ended up convicted and executed for failing to pursue the enemy fleet after an engagement.

    1. With the possible exception of the War of 1812.

Argentina’s self-described anarcho-capitalist president

Filed under: Americas, Economics, Government, Media, Politics — Tags: , , , , — Nicholas @ 03:00

J.D. Tuccille says that Argentinian President Javier Milei may be the politician who has most successfully “defied the expectations of the chattering class” by not only winning the presidency but also by the completely unexpected turnaround of the national economy:

Drawing on official data, Reuters reports that Argentina’s “economic activity rose 7.7 per cent in April compared with the same month last year”. That was higher than expected and a welcome addition to news that the economy had grown by 5.8 per cent during the full first quarter relative to the same quarter the previous year. Early numbers put Argentina’s second-quarter growth at 7.6 per cent. By contrast, Canada’s economy grew at an annual 2.2 percent in the first quarter and the U.S. economy shrank a bit.

In equally encouraging news, Argentina’s “monthly inflation rate has fallen below two per cent for the first time in five years,” according to the Financial Times. That’s still high in North American terms, but Argentina’s governments have a history of wildly expanding the money supply to pay off debt and finance expenditures, resulting in inflation rates in the hundreds and even thousands per cent per year. Inflation slowed somewhat in recent years, but it was over 200 per cent in 2023 and Milei was elected on a promise to stabilize prices — even if it meant adopting the U.S. dollar as the country’s official currency.

Importantly, the poverty rate in Argentina has also fallen to 38.1 per cent of the population at the end of 2024 from 41.7 per cent when Milei took office. Again, that remains very high, but it’s an improvement in a country where politicians have long seemed committed to keeping people poor and dependent on the state.

This wasn’t supposed to happen. In a November 2023 open letter, over 100 economists warned that Milei’s economic “proposals, rooted in the economy of laissez-faire and which include controversial ideas such as dollarization and significant reductions in public spending, are fraught with risks that make them potentially very harmful to the Argentine economy and people”.

The economists — including such academic luminaries as Thomas Piketty and Jayati Ghosh — warned of havoc if Milei implemented his free-market plans. Voters weren’t impressed by the forecast of doom; they chose the self-described “anarcho-capitalist” economist and his upstart political coalition over the standard-bearer of the dominant Justicialist Party.

The Justicialists have been the strongest force in Argentine politics since their launch in the 1940s by Juan Peron. Peron served as a military observer in Europe and apparently combined the worst ideas he encountered into a peculiarly Argentine ideology he called “justicialism”, better known as Peronism. At its heart, the ideology drops the pretense of any practical difference between socialism and fascism and promotes a brutal mélange of statist economic schemes. This means that, while most property and business activity is in private hands, it’s subject to government dictates, distortions, and control.

July 12, 2025

Noah Smith on how surprisingly well free market policies are working in Argentina

Filed under: Americas, Bureaucracy, Business, Economics, Government, Liberty — Tags: , , , , , , — Nicholas @ 05:00

In the headline, you should read the unstated “surprising to far too many mainstream economists and political commentators”, but full credit to Noah Smith for admitting that Milei’s radical agenda has started to make life much better for ordinary Argentinians:

Javier Milei at CPAC in National Harbor, Maryland 20 February, 2025.
Photo by Gage Skidmore via Wikimedia Commons.

So to be clear, when I say that criticism of free markets has been overdone, I’m partly talking to myself. A couple of months ago, horrified by Trump’s tariff policies, I wrote an apology to libertarians, admitting that I had failed to see the political usefulness of their project in terms of maintaining economic sanity on the Right.

But it’s not just the political benefits of free markets that have been undersold; I think the purely economic advantages are also too often ignored.

Exhibit A is Javier Milei’s track record in Argentina. A year and a half ago, when Milei was elected President of Argentina, a bunch of left-wing economists warned darkly that his radical free-market program would lead to economic devastation:

    The election of the radical rightwing economist Javier Milei as president of Argentina would probably inflict further economic “devastation” and social chaos on the South American country, a group of more than 100 leading economists has warned … [S]ignatories include influential economists such as France’s Thomas Piketty, India’s Jayati Ghosh, the Serbian-American Branko Milanović and Colombia’s former finance minister José Antonio Ocampo …

    The letter said Milei’s proposals – while presented as “a radical departure from traditional economic thinking” – were actually “rooted in laissez-faire economics” and “fraught with risks that make them potentially very harmful for the Argentine economy and the Argentine people” … [T]he economists warned that “a major reduction in government spending would increase already high levels of poverty and inequality, and could result in significantly increased social tensions and conflict.”

    “Javier Milei’s dollarization and fiscal austerity proposals overlook the complexities of modern economies, ignore lessons from historical crises, and open the door for accentuating already severe inequalities,” they wrote.

Milei won anyway. His first big policy, and the one the lefty economists fretted about the most, was deep fiscal austerity. Argentina’s long-standing economic model, created by dictator Juan Peron in the 1950s, involved a large and complex array of public works projects and subsidies for various consumer goods like energy and transportation. Milei slashed many of these, as well as cutting pensions, civil service employment, and transfers to provinces. Overall, he cut public spending by about 31%, resulting in a near-total elimination of Argentina’s chronic budget deficit:

The point of all this cutting wasn’t just to remove state intervention in the economy — it was to stop inflation. Basically, macroeconomic theory says that if deficits are high and persistent enough, then they convince everyone that the government will eventually inflate its debt away by printing money (which becomes a self-fulfilling prophecy). And most or all countries that experience hyperinflation end up escaping it only when they get their fiscal house in order. Perpetual deficits were part of Argentina’s “Peronist” system, and it’s probably a good bet that this has been responsible for the periodic bouts of hyperinflation that it experiences.

[…]

But still, Milei’s success so far should make us somewhat more confident about free-market policies — especially when we evaluate them against the new socialist ideas that have been gaining currency in the U.S. In the past, socialists and other left-leaning economic thinkers advocated central planning and nationalization of industry; in recent years, they have taken to calling for expansion of the state through fiscal policy, mixing macroeconomic justifications with micro. At all times, they call for deficit-financed expansion of social programs; when fiscal hawks want to tame the deficits, the lefties warn of the short-term macroeconomic harms of austerity.

If you’re always more terrified of austerity than you are of deficits, expansion of the state — and of the deficit — becomes a one-way ratchet. This approach is very different than Keynesianism, which advocates stimulus to overcome recessions, followed by austerity during boom times. You’ll recognize it as bearing a distinct similarity to MMT; that pseudo-theory has largely fallen out of favor, but there are plenty of more respectable progressive types whose ideas nonetheless have a lot of this “macroleftist” flavor.

QotD: Ancient empires

Filed under: Economics, History, Quotations, Technology — Tags: , , , — Nicholas @ 01:00

The earliest “empires” were Security oriented. A band of hunter-gatherers — who had no concept of individual property, and just took whatever they needed from the environment — finally settled, and became farmers. Fencing and cultivating and irrigating, and building surpluses which could be traded for items that would improve living standards. (Farmers in areas that CAN’T store surplus — mainly tropical areas with year round crops — never made it further than village level agriculture, whereas farmers in areas with storable annual crops like grain — which can be stored and TAXED — went on to found empires …)

Unfortunately the initial problem with being farmers surrounded by hunter-gatherers who don’t understand property, is that such hunter-gatherers look at those nicely fenced grains and enclosed cows and sheep and goats as wonderfully convenient places to hunter-gather … (There is a reason the boundaries between hunter-gatherers and farmers are violent places, and all the crap written about “frontier wars” and extermination and the rest is just a shorthand for — these two cultures cannot co-exist peacefully … Nomads are different … they trade, therefore they understand property, therefore they can co-exist with farmers — though they will still raid where they can, be they Mongol or Viking!)

So farmers immediately face a law and order issue, which can only be solved if there is enough surplus available to provide a tax base that will allow an authority figure (chief, king, emperor, etc.) to employ people to provide protection. At village level that is usually a warrior caste who can keep the competition at bay, but once surplus gets to a level that allows higher tech, that will mean states or empires.

To put that in perspective, if your local community collects a surplus, and can afford a local chief/lord/king to provide protection, the resulting tax system is almost always (in recorded human cultures) based on a percentage of production. (In fact the earliest versions of written communication are almost always record keeping for crops and taxation.) This means that the local lord immediately has both the majority of excess funds locally, and a strong incentive to increase local production so his take will increase.

When I ask the average class of secondary school students what sorts of things the local lord could invest in to improve productivity, they get the idea pretty quickly. Irrigation for fields; animals for farm work; blacksmiths for tools and axles; wheelwrights; roads; bridges; mills; markets; guards; etc. This list is common to most parts of Europe, Africa, Asia, Central and South America and Australasia. The only places it never develops are the very early farming communities in places like New Guinea that have no storable or taxable food items to allow such a development.

So all early farming societies that can tax — without exception — become tax based hierarchical cultures. Some are even referred to as kingdoms or empires. And they are based on the idea of keeping the farmers safe, so they can be taxed.

These early empires are all Security empires. In the Middle East they are often shown as large sprawls across the map, but such sprawls are fairly fanciful. In practice they usually refer to rich farm based river valleys, with an extended hinterland based on nomadic tribes that are trading with/employed by/or paid tribute to by the “imperial authority” simply to keep other outsiders at bay.

Traditionally they fall when their hinterland nomadic allies are not strong enough to keep outsiders at bay, or become strong enough themselves to try a bit of conquest. At which point of course the conquerors find that they have to adopt the systems of the despised lowlanders they have just conquered if they are to keep the loot coming in and the system going. (One of my favourite historical analogies is the nomadic conquerors crucifying the old king on the walls of his palace and sneering that he could watch his city burn, only for him to point out that it isn’t his city anymore, it’s their city that’s burning …)

Nigel Davies, “Types of Empires: Security, Conquest, and Trade”, rethinking history, 2020-05-02.

July 9, 2025

Argentina after 18 months of Milei’s leadership

Filed under: Americas, Bureaucracy, Economics, Government, Liberty — Tags: , , , , , — Nicholas @ 05:00

All the mainstream media folks were predicting that Argentina would be an utter economic disaster after the election of Javier Milei. A few of them are starting to come around to admitting that Argentina seems to have made the right move:

What’s happening in Argentina is super impressive, but it’s not a miracle.

Yes, Milei’s reforms are generating great results, but that is exactly what libertarians and small-government conservatives said would happen.

Let’s start with this celebration of the amazing growth of private-sector wages since Milei took office in late 2023.

Or how about the astounding way that Milei has conquered inflation (I also like how this tweet mocks the statists like Piketty who frantically and erroneously warned that Milei’s election would produce an economic catastrophe).

[…]

Let’s close with another tweet.

Here’s Noah Smith, who is not a libertarian, shared two days ago.

Give him credit for acknowledging Milei’s success.

I’ll add two comments about this tweet, one about economic data and the other about predicting whether Milei would get great results.

Regarding data, I don’t think anyone should get overly excited by one month or one quarter of economic data. Even one year of data might create a misleading impression (which is why my Anti-Convergence Club is always based on decades of data). That being said, there is every reason to expect continuing strong results for Argentina.

Regarding predictions, Smith’s tweet asserts that libertarians didn’t expect Milei to be so wildly successful. At the risk of sounding like a politician, I agree and disagree.

  • The “agree” part is that many libertarians were worried at the beginning of Milei’s presidency that he might face immovable opposition from the Peronist-controlled legislature. We also worried that the special interest groups might launch massive – and successful – protests that would derail necessary reforms. So if you asked me in December 2023 for my prediction, I would not have been overflowing with optimism.
  • The “disagree” part is that I have always had total and absolute confidence that radical pro-market policies will produce great results, anywhere and everywhere. And I assume other libertarians (as well as Reagan-type conservatives) share my faith that good policies lead to good outcomes. So if I was told in December 2023 what Milei would have accomplished in his first 18 months, I would have fully expected the great news we now see.

In other words, what’s miraculous is that the reforms happened. The subsequent economic renaissance has been boringly inevitable (but totally wonderful).

P.S. I am cautiously optimistic that Milei will get more allies in the legislature after Argentina’s mid-term elections later this year.

July 8, 2025

“One of the problems with being a writer is that all of your idiocies are still in print somewhere”

Filed under: Books, Economics, Humour, Liberty, Media, Politics, USA — Tags: , , , , , — Nicholas @ 03:00

At the Foundation for Economic Education, Itxu Díaz considers the work of P.J. O’Rourke:

Though P.J. O’Rourke passed away three years ago, his sharp wit and defense of freedom continue to resonate in a world still tempted by interventionist solutions. Reclaiming his work is more vital now than ever. What he told us through laughs and jabs in recent decades has proven to be one of the sharpest diagnoses of the dangers of postmodern left-wing ideology — and one of the most inspired reflections on why we must root our societies in individual liberty, private property, the free market, and the Judeo-Christian values that shaped the West for centuries.

Progressives want bigger government, and often conservatives don’t want it as small as we ought to like. O’Rourke knew all too well that the larger the state grows, the smaller individuals become. He devoted much of his work to explaining this in a way anyone could understand — even those not particularly interested in politics. His words resonate today in a new light, and fortunately, they remain easy to access: the Internet is full of O’Rourke’s articles, and all his books are still in print. The ideas, the jokes — the profound, the outdated, and even the ones that haven’t aged all that well — are still out there, waiting to be discovered by any digital wanderer with a sense of humor and a thirst for sharp thinking. It’s almost frightening to realize that some of O’Rourke’s tech-related jokes would go completely over a Millennial or Zoomer’s head today. And it’s even more pitiful to think that some of his old comments would be cancelled in today’s dull, hypersensitive postmodern world. Perhaps it’s because, as he once said, “One of the problems with being a writer is that all of your idiocies are still in print somewhere”. Incidentally, that’s where O’Rourke found his only point of agreement with environmentalists: “I strongly support paper recycling”.

The hippie student he was in the ’60s lost his enthusiasm for leftist ideas the following decade, as soon as he got his first paycheck from National Lampoon: a $300 check that filled him with joy — until he was told $140 would be deducted for taxes, health insurance, and Social Security. That day, he got mad at the government, and the grudge never faded. Before that, while still sporting what he called “a bad haircut” — think John Lennon’s worst style — he’d decided to tell his Republican grandmother he’d become a communist. Her response threw him off: “Well, at least you’re not a Democrat”.

O’Rourke was never one to romanticize his drug-fueled college days. “Oh God, the ’60s are back,” he wrote. “Good thing I’ve got a double-barreled 12-gauge with a chamber for three-inch magnum shells. And speaking strictly as a retired hippie and former beatnik, if the ’60s come my way, they won’t make it past the porch steps. They’ll be history. Which, for God’s sake, is what they’re supposed to be.”

From his time as editor-in-chief of National Lampoon in the ’70s, we got his account in The Hollywood Reporter, “How I Killed National Lampoon“. The job was a blast, but the environment was hell: “Having a bunch of humorists in one place is like having a bunch of cats in a sack”. As a satirical war correspondent covering every late-century conflict, O’Rourke filled countless pages describing the struggle to find a damn glass of whiskey in the burning countries at the “end of history”. His last dangerous assignment was in Iraq. “I’d been writing about overseas troubles of one kind or another for twenty-one years, in forty-some countries, none of them the nice ones. I had a happy marriage and cute kids. There wasn’t much happy or cute about Iraq,” he wrote in Holidays in Heck.

July 7, 2025

Why the Cold War Gave Us LEGO, Credit Cards, and Video Games – W2W 35

Filed under: Economics, Gaming, History, Technology, USA — Tags: , , , , , — Nicholas @ 04:00

TimeGhost History
Published 6 Jul 2025

Think the 1950s were all poodle skirts and jukeboxes? Think again! From the first credit cards and modems to LEGO bricks, video games, and even skateboards, discover the surprisingly futuristic side of the Cold War era.

In this episode of War to War by TimeGhost, Sparty dives into the forgotten innovations of the 1950s that still shape our daily lives in 2025.

Topics covered:
• The first commercial credit card (Diners Club)
• The birth of the computer modem
• The first microchip and the rise of computing
• “Tennis for Two” – the 1950s’ video game
• LEGO and the System of Play
• Skateboards before Marty McFly

The 50s were WAY more high-tech than you think!

#1950s #coldwar #inventions #historyyoudidntknow #SkateboardHistory #lego #timeghost #techhistory #Modem #microchips #creditcard #videogames
(more…)

The federal government’s EV mandate cannot stand

Filed under: Cancon, Economics, Government, Technology — Tags: , , , , , — Nicholas @ 03:00

Following its established pattern, the Canadian government will seek any possible path other than economic reality, especially when it comes to things like mandating that all vehicles sold in Canada must be EVs by 2035:

Nissan Leaf electric vehicle charging.
Photo by Nissan UK

It’s not always the unexpected that gets governments in trouble — often enough it’s their own bad judgement, poor timing or general clumsiness that gets in the way. But the unanticipated does happen a lot.

Parties and politicians put time and effort into concocting a set of policies aimed at winning votes by proposing remedies to problems identified as occupying top rungs of current voter concern. If they’re lucky they get elected, presumably intending to put those policies into effect at the earliest opportunity. Then the world shifts and pulls the rug from under them.

Former prime minister Justin Trudeau was a big fan of the attention-getting promise. Especially if it was a pledge timed well into the future when he was unlikely to still be around to be held responsible. Carbon reductions too ambitious to be realistic. Budget targets too unlikely to be believed. Statist planning projects that tended increasingly to the surreal.

Mark Carney is left with the detritus and the problem of what to do about it. As prime minister he’s already acted on a few of the problematic leftovers, ditching the carbon tax even though he’d previously supported it as a good idea; scrapping an increased tax on capital gains although the Treasury could certainly use the money; “caving,” as the Trump administration so tastefully put it, on a digital services tax that was a bad idea to begin with but pushed through by the Trudeau government anyway.

There’s an argument to be made, and not a bad one, that each retreat was the right move for the moment. And if there are mistakes that need abandoning, the early days of a new government is proverbially the best time to do it.

But righting wrongs has confronted Carney with a new predicament, in that there are so many Trudeau-era wrongs that need righting. Washington was still in the midst of its victory dance over its digital tax triumph when Canada’s auto industry came along to plead for similar treatment from Ottawa, insisting automakers couldn’t possibly meet previously-set electric vehicle targets and urging the new Liberal government to backtrack post haste.

Carney hosted the session with Canada’s chief executives for Ford, Stellantis and General Motors. Brian Kingston, chief executive of the Canadian Vehicle Manufacturers Association, was blunt in identifying the targets set for electric vehicle (EV) production as the main topic.

“The EV mandate itself is not sustainable. The targets that have been established cannot be met,” he said on arriving for the meeting. Afterwards he told Politico‘s online news site, “At a time when the industry is under immense pressure, the damaging and redundant ZEV mandate must be urgently removed”.

QotD: The mythological “perfect market” and “perfect competition”

Filed under: Economics, Government, Quotations — Tags: , , , , , — Nicholas @ 01:00

In modern neoclassical economics, the benchmark of analysis from which real-world markets are judged is the model of perfect competition, in which a homogenous good is bought and sold by a large group of buyers and sellers, respectively, none of whom have an influence on the price. Moreover, under such conditions, there exists free entry and exit of sellers in the marketplace, defined by perfect information.

The narrative that is constructed and logically follows from this model is that observed deviations from perfect competition in the marketplace are indicative of imperfections, also known as “market failures”, associated with the existence of monopoly power, pervasive externalities, the provision of public goods, and macroeconomic instability. According to this narrative, government intervention is the deus ex machina that saves the market from its own “imperfections” through regulations, taxes, subsides, and other public policy measures. Why? To use a quote from Frank Knight often used by James Buchanan, “to call a situation hopeless is to call it ideal”. The narrative that is constructed is one in which, outside the conditions of the ideal of perfect competition, there is no hope but for government intervention to save the market from itself. Anyone who has taken an economics course is well aware of what I’ve stated thus far, and therefore this should not be surprising.

But what is the implicit meaning of the word “imperfect” that is baked into the narrative, which is constructed into the model of perfect competition? What is implied when we postulate that markets are “imperfect” in comparison to the benchmark of perfect competition is that markets are flawed, non-ideal, or otherwise sub-optimal, and therefore in need of correction through government intervention. Who could dispute the logic of this narrative?

However, if we simply reinterpret our understanding of the word “imperfect”, not only will it reframe the narrative being told about the marketplace, but also the public policy implications that flow from this narrative. If we analyze the etymology of the word imperfect, breaking it down from its Latin origins, you will learn that “im” expresses the negation, “per” comes from the Latin word meaning “thoroughly” and “fect” comes from the Latin verb “facere“, meaning “to do”. Thus, rather than saying that something, or some state of affairs, is flawed, suboptimal, or non-ideal, another way to interpret the meaning of “imperfect” is an act or process that is not thoroughly done, or incomplete. In fact, from a quick perusal of the Merriam Webster’s Dictionary, you will find a similar definition of the word imperfect: “constituting a verb tense used to designate a continuing state or an incomplete action” (emphasis added).

Rather than regarding the market as a flawed or sub-optimal state of affairs, a better understanding of an “imperfect market” reveals that the market is a process of continuous tendency towards perfection, or completion, where are all the gains from trade are exhausted and all plans between buyers and sellers are perfectly coordinated. As Ludwig von Mises states in his magnum opus, Human Action, the “market process is the adjustment of the individual actions of the various members of the market society to the requirements of mutual cooperation” (1949 [2007]: 258).

Thus, markets will always be imperfect, but that is precisely why markets exist in the first place! Markets never conform to the “ideal” of perfect competition, but this is completely irrelevant, since under such state of affairs, markets are unnecessary and redundant, since all resources are already perfectly allocated to their most valued uses. Market processes exist precisely because to generate the information necessary to better coordinate the plans and purposes of individuals in a peaceful and productive manner. The entrepreneurial lure for profit and the discipline of loss is what guides such imperfect processes in a tendency towards the creation of more complete information between buyers and sellers.

Rosolino Candela, “Are Markets Imperfect? Of Course, But That’s The Point!”, Econlib.org, 2020-05-18.

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