What would be the impact of such a policy?
We cannot know exactly, because we would struggle to find a real-world example of it in a comparable country. But we could think of it as, effectively, a 100% marginal tax rate on incomes above £100,000. We could then look at the empirical literature on how responsive top earners are to tax incentives, and extrapolate from that.
We know from previous studies that the behaviour of top earners is quite sensitive to tax changes. Last year, the Institute for Fiscal Studies (IFS) tried to model the impact of a proposal to increase the tax burden on the top 5% of earners. In this case, the proposal was to lower the threshold for the 45% additional rate of income tax from £150,000 to £80,000 per annum, and to introduce an “additional additional rate” of 50% for incomes above £125,000.
If nobody changed their behaviour, such a policy would increase tax revenue by just over £9 billion per annum. But people would, of course, change their behaviour. Some top earners would switch to less demanding positions, some would retire earlier, some would reduce working hours, some would engage in more proactive tax planning (i.e. legal tax avoidance), some would simply emigrate, and so on.
We know for certain that responses of that kind exist. But we cannot exactly quantify them. So the IFS came up with a range of plausible outcomes rather than one definite number. It turns out that at the most optimistic end of the spectrum, behavioural changes would still knock over a third off the potential additional tax revenue, reducing it from over £9 billion to under £6 billion. At the most pessimistic end of the spectrum, the policy would fail to raise any additional tax revenue – it would, in fact, reduce revenue by almost £1 billion. (Stop smirking, Dr Laffer.)
If a tax rate of 50% can be predicted to trigger such strong behavioural responses, you can guess how much damage an implicit rate of 100% would do.
Kristian Niemietz, “The public love it, so what’s wrong with the idea of a maximum wage?”, Institute of Economic Affairs, 2020-10-14.
July 28, 2026
QotD: Projecting the effect of a maximum wage law
July 24, 2026
To Zohran Mamdani, “working class” means earning less than a million a year
Rob Henderson coined the fantastically useful phrase “luxury beliefs”, and regularly points out examples of people expressing beliefs that allow them to virtue signal at little or no cost, yet if the ideas were implemented would harm those not as privileged as the speaker:
New York City mayor Zohran Mamdani, 10 February 2024.
Photo by Kara McCurdy via Wikimedia Commons.
In a recent New York Times interview, Zohran Mamdani, New York City’s socialist mayor, struggled to define “working class”.
At one point he was asked point-blank, “How do you define the working class?”
Mamdani replied, “I think if you have to work to pay your bills, I think that that is one definition of being a part of the working class”.
After some pushback from the interviewer, Mamdani said he would draw the line at “about a million dollars a year”. I have no idea how he can say that without any embarrassment, but that’s why he’s a politician and I’m not. Say what you will about him, but the man knows his base. These are the people who claim to be the champions of women yet — and please forgive what has now become a hackneyed line — can’t define what a woman is, and they claim to be the champions of the working class, yet can’t define what the working class is. Or they redefine both terms to be so expansive that they could potentially encompass just about everyone.
This is where the luxury belief class has steered us.
Anyone who isn’t a millionaire gets to be working class now. It sounds absurd but that’s where we’re at now. Remember during the primaries in 2015, Bernie Sanders said that “the millionaires and the billionaires” need to pay their fair share? At some point over the past decade, he dropped “millionaires” because he became one. Now you see the millionaires condemning only the billionaires. Mark my words, at some point in the not-too-distant future, you will see the billionaires disparaging the trillionaires. Maybe inflation will hasten that phenomenon.
Anyway, in that Mamdani interview, the focus on defining class by money is revealing.
People often conflate social class with economic class. This allows us to talk about the former while pretending we are talking about the latter.
It is easier to discuss income than educational pedigree, accent, hairstyle, clothing, taste, or zip code.
But education usually signals social class more clearly than income does.
Research has found that parental educational attainment is the most important objective indicator of social class. This is because, compared with parental income, parental education is a more powerful predictor of a child’s future lifestyle, tastes, and opinions. If your parents went to college but you didn’t, you’re still middle-class or higher. Not working class.
Education shapes habits, networks, and outlook long after the degree is earned. Higher education bestows cultural capital: patterns of speech, tastes, opinions, and expectations about life. Income may rise and fall over a lifetime. The worldview formed in selective institutions usually endures. By that standard, college graduates, regardless of earnings, are not working class.
Education also shapes political views more strongly than income does.
In 2021, Ezra Klein pointed out that “We tend to think of class as driven by income” but that “A high school dropout who owns a successful pest extermination company in the Houston exurbs might have an income that looks a lot like a software engineer’s at Google, while an adjunct professor’s will look more like an apprentice plumber’s. But in terms of class experience — who they know, what they believe, where they’ve lived, what they watch, who they marry and how they vote, act and protest — the software engineer is more like the adjunct professor.”
Plainly, a PhD who takes a job driving a taxi will tend to vote like other PhDs, not like other taxi drivers, especially if he or she also has a parent with a college degree.
It was so much easier to recognize the British classes, at least back in the 1960s that is:
John Cleese, Ronnie Barker, and Ronnie Corbet as the avatars of the British upper, middle, and lower classes
Original version from The Frost Report, 7 April 1966.
Brian Lilley: “Carney has run out of time”
While Prime Minister Mark Carney has been playing to the anti-American crowd at home, President Donald Trump has pretty clearly run out of patience with Canada’s dilly-dallying:
🚨 Trump just dropped a tariff ultimatum on Mark Carney — and Canada’s PM is officially out of time. Instead of cutting a real deal, Carney’s played delay tactics: dodge serious talks and pray Democrats win midterms to weaken Trump.
Foolish strategy. Here’s why it’s blowing up 👇
Trump’s threat: 50% tariffs on $28 BILLION in Canadian exports (hockey sticks to whisky, honey to flowers) unless Canada brings real solutions by Aug. 19.
U.S. Trade Rep Jamieson Greer: This is about forcing real negotiations.
Carney says he’s “intensifying” talks. But sources on BOTH sides say Canada’s offers are just vague “promises to discuss”. No substance.
Insiders call it “ragging the puck” — stalling in hopes a weaker Trump post-midterms gives Canada a sweeter deal.
Meanwhile, manufacturing jobs are bleeding: 17K lost last month alone. Over 50K since Carney became PM.
Ordinary Canadians are paying the price while politicians play games. 😡
Carney’s team hasn’t even used obvious bargaining chips:
* Provincial bans on U.S. booze (keep ’em in place, but not leveraged)
* Preferred access to Canada’s critical minerals
* Fixing cheese import disputesThese could be packaged to get tariffs lifted. Why sit on them?
Reality check on dependency:
🇨🇦 Canadian exports to U.S. = 19.9% of our GDP
🇺🇸 U.S. exports to Canada = just 1.4% of their GDPTrump’s claim Canada “needs us to survive” is exaggerated — but we’re far more exposed.
Delaying hurts us way more.
Why the foot-dragging?
Carney has little incentive to end the fight. Angry Canadians at Trump = more Liberal votes.
Politics over prosperity. Classic.
Question for Canadians:
Should Carney drop the delay tactics, use our leverage, and get a deal done ASAP? Or keep waiting for U.S. midterms?
What’s your take?
Reply below 👇
Who’s really paying for this? Workers or politicians?
Jen Gerson points out that by being relative pushovers every time it’s clear that Trump really means something, it’s confirming American belief that we’ll always be pushovers:
Parody cover of Mark Carney’s Value(s) seen on the net.
This week’s announcement of 50 per cent tariffs on a raft of goods is more proof that the Liberals’ ironclad strategy of “say tough things in public but then capitulate quietly on issue after issue” isn’t panning out. And I write that knowing full well that the statute being used to implement the tariffs is old, tenuous, and may not hold up. I’m not talking about them, for a moment. I’m talking about us.
Where do we even start with Prime Minister Elbows Up? Dropping the Digital Services Tax and retaliatory tariffs? The apology for the terrible sin of running a Ronald Reagan ad? And now we have the business of the Gordie Howe Bridge: to recap, Canada fronted $6.4 billion to build the span between Windsor and Detroit, which was to be paid back over decades through bridge tolls. At the last minute — and presumably at the behest of the rich MAGA donor who owns the competing bridge — Donald Trump announced the bridge would not open until the U.S. got a better deal. After more quiet negotiations, such a deal was struck.
Initially, Carney claimed that the U.S. would take a split of the operating profits — but only after the debt was paid off, something which was expected to bring real profits down to a very small amount. Effectively, he said the deal would give the Americans chump change.
Subsequent reporting suggested this wasn’t the case at all; that the Americans are to take their cut from operating revenue, which presumably will have the effect of dramatically extending our payback period.
In short, it’s a major concession, made worse by the fact that Carney appears to have lied.
And, frankly, I’m not sure which of these two pills is harder to swallow. Regular press conferences aside, Team Canada has been rather shockingly non-communicative about what the hell is going on with USMCA re-negotiations. I give the government some credit for the need to maintain “strategic silence” in order to pursue “strategic patience”, but if your entire brilliant communications strategy for rallying the Canadian public in the face of unprecedented American economic aggression amounts to “Shush. Just trust us. Carney’s super smart. He’s got this,” well, then, you really can’t lie and be dumb about it.
Carney came to power 18 months ago with an explicit “Elbows Up” promise that is deteriorating into a punch line. I don’t object to choosing not to rise to the bait of every provocation. But when “doing nothing” is accompanied by caving on everything, what you have is no longer “strategic patience.” It looks a lot more like “showing the Americans that we have no appetite for retaliation.” We’ve indicated with crystal clarity that aside from the odd mean speech, and the fact that Canadians are Big Mad, we will extract no material consequence for anything they choose to do. And absent consequence, they will continue to escalate past the point of diminishing returns.
Why?
Because they can.
Because they don’t care.
Because they take delight in their own contempt for our demonstrated weakness.
July 23, 2026
DSA: Trump doesn’t respect political norms. Also DSA: Let’s abolish the current system
On Substack, Chris Bray attempts to establish what the nascent Democratic Socialists of America actually stand for — and what they stand against:
Democrats are racing left, sprinting faster and faster toward abject authoritarian idiocy. Democratic socialists are defeating old Democrats in Congress and governing our big cities to death, and the DSA now offers an explicitly post-capitalist future in which everything is “free”, the one thing that resources can’t actually ever be:
You have no debt. You don’t need health insurance. You don’t pay a mortgage or have a landlord, because comfortable housing is a human right. Your retirement is publicly funded. Food, education, energy, medicine, and transportation aren’t for-profit businesses; they are common goods and utilities.
You get as much food, energy, and everything else as you feel that you need, and labor is no longer imposed on anyone. Should work well.
Meanwhile, after years of dire warnings that Evil Trump doesn’t respect our Constitution, here’s an actual headline today from one of the mindless institutions of the Democratic Party’s narrative-making apparatus:
They also propose the replacement of the Supreme Court, the restructuring of the presidency, and the elimination of the Electoral College, but other than that they’re really mad that Trump doesn’t respect our political norms. Trump is very bad, because he’s tearing down our political system, and also we demand the destruction of our political system.
Why are they moving left, moving left, and then moving left some more? Why doesn’t anything ever hold them in check?
Because there’s no anchor on the right to hold the left anywhere near the center. There’s no force in American politics pulling consistently and effectively in the other direction. They’re unopposed and unanchored, so nothing holds them. Mixing metaphors, it’s like gravity ceased to exist, so the moon is floating away. Political centering is the product of a contest. Bad ideas are punished and rejected through debate. And we increasingly don’t have that. Here’s a Republican congressman bragging about getting his measure passed to make home repairs a federally funded giveaway:
Democrats think the federal government should just give you whatever you need as a government handout, while Republicans think the federal government should, how can I put this, just give you whatever you need as a government handout. Your bathroom faucet broke? Don’t worry, that’s a federal program.
Meanwhile, while Democrats demand the abolition of the Senate, the Supreme Court, the Electoral College, and private property, prominent Republicans are theatrically angry at … Donald Trump.
July 22, 2026
Andy Burnham’s “Manchesterism” at the national level
In The Critic, Shimeon Lee looks at Andy Burnham’s time as Mayor of Greater Manchester and what his record there says about how he will try to run Britain from No. 10:
Prime Minister Andy Burnham’s official MP portrait, July 2026.
© House of Commons via Wikimedia Commons.
Andy Burnham is now Prime Minister, and the country soon to discover what “Manchesterism” means when applied to the British state. Burnham’s nine years as mayor, alongside his earlier national record, offer a clear guide to the instincts he is likely to bring to No.10: a willingness to raise taxes, expand the state and prioritise policies that sound good but ultimately deliver poor value for money.
It is revealing that after being elected mayor in 2017, one of Burnham’s first acts was to impose a new charge on households in Greater Manchester. The new mayoral precept was initially set at £8 for the average band D property, funding the mayoral operation, including Burnham’s £110,000 salary. As so often happens with new charges, it did not remain modest for long. The charge more than doubled the following year, rising again in 2020-21, 2022-23, 2025-26 and 2026-27. By the time Burnham resigned to contest the Makerfield by-election, it had risen to £61.75, nearly eight times the original amount in less than a decade.
As residents paid more, the mayor built an increasingly elaborate network of advisers, commissioners and panels funded by taxpayers. These included a young person’s advisor paid £500 per day, a transport commissioner and an active travel commissioner each paid £650 per day, and an LGBTQ+ advisor paid £177 per day. He also established seven equality panels facilitated by “culturally appropriate organisations” which cost £392,435 a year. Taxpayers can only speculate how much larger that ecosystem could become when he takes control of Whitehall.
The mayoral precept was not the only tax rise implemented by Burnham. As mayor, he raised every tax under his control. The band D police precept rose from £162.30 when he entered office to £285.30 by the time he left, a 76 per cent increase. At the same time, the fire precept increased from £59.95 to £92.20, a 54 per cent increase. Both increases substantially outstripped cumulative inflation of 37.5 per cent during that period.
Even that understates his tax-raising ambition, as it only includes the charges he managed to implement. In 2019, Burnham proposed a clean air zone for Greater Manchester which would impose a daily charge on commercial vehicles that did not comply with environmental standards: £7.50 per day for taxis, £10 per day on vans and £60 per day on buses, coaches and heavy goods vehicles. These would have added thousands of pounds a year to local businesses’ costs.
July 20, 2026
Carneynomics in action
Even though the relic media are all singing from the government’s hymn book — because they might lose their generous subsidies if they don’t — a few dispiriting details about the real state of Canada’s economy still slip through:
This is the Carney economy in one picture.
He sold himself as the adult in the room. The banker. The international dealmaker. The man who could handle Trump and restore confidence.
Instead, Canadian manufacturers are preparing their exit.
According to the KPMG survey, 42% of manufacturers have already moved some production to the United States or are considering doing so. Another 36% are cutting investment, 12% have paused spending and 9% have cancelled projects altogether.
Manufacturing jobs are disappearing. Investment is drying up. Factories are moving south.
Businesses respond to incentives, costs and uncertainty. They do not remain in Canada because Mark Carney gives polished speeches about nation-building. They go where taxes, energy prices, regulation, labour costs and access to markets make production worthwhile.
Carney promised competence. What Canadians are getting is stalled trade talks, falling investment, disappearing jobs and another Liberal government that seems incapable of understanding how private-sector wealth is actually created.
A great many Canadians now see Carney as an incompetent ideologue in a good suit, surrounded by the same Liberal machine that helped create this mess.
And what consequences does he face?
Very few.
Carney is rich. His family is secure. His pension, investments and connections are intact. He will never worry about a mortgage payment, a grocery bill, a lost factory job or whether his children can afford a home.
The people who pay for his failures are workers, families, small-business owners and young Canadians whose futures are being shipped across the border.
That is the ugliest part of modern government. The people making the decisions are often insulated from the consequences. They can damage an economy, lose jobs, drive away investment and still retire wealthy, respected and welcomed back into corporate boardrooms.
A résumé is not an economic policy. A banker’s vocabulary cannot hide factories closing and investment leaving.
Canada is not being built. It is being hollowed out, while the people responsible remain comfortable.
This is why I thought the announcement on Friday that a Republican senator is calling for Carney’s assets in the US to be seized and to refuse him a visa … it’s beyond weird that a Canadian Prime Minister would have over 90% of his personal assets invested in the United States rather than in Canada. This gives Trump another handle on Carney, if he chooses to use it.
On her Substack, Melanie in Saskatchewan envisions how this may play out:
AI image from Melanie in Saskatchewan
So let me make a prediction: Any day now, your government will solemnly discover the importance of proper forest management.
There could be a task force, or a federal strategy, a minister standing solemnly in front of some trees. Perhaps an announcement that Ottawa has been “working around the clock” on a comprehensive plan that, by a miraculous coincidence, became urgent only after the American president threatened tariffs and a U.S. senator started talking about sanctions.
Should that happen, Canadians will be entitled to ask a very simple question: What finally changed Ottawa’s mind?
Was it concern for Canadians living through evacuations, destroyed communities and weeks of choking smoke? Was it the economic damage caused by recurring fire seasons? Was it pleas from provinces, northern communities and forestry workers for better prevention, mitigation and emergency capacity?
Or did the urgency arrive only when Washington threatened to slap another charge on Canadian exports and Senators possibly sanctioning Canadian officials like yourself? You personally have A LOT at stake if you are sanctioned since the majority of your wealth investment portfolio is in America.
The timing on this matters a great deal. It matters whenever a government suddenly treats a long-standing domestic problem like a national emergency only after somebody powerful outside the country attaches a financial consequence to it.
Trump has accused Canada of “wilful negligence” in maintaining its forests and says he intends to ask you what Canada plans to do. Your emergency management minister responded that governments have invested billions in fire prevention and forest sustainability since 2020. That defence deserves to be examined very closely and very carefully, because Canadians can reasonably ask what those billions purchased, where they went and why so many communities remain frighteningly vulnerable. To say it plainly … Canadians simply do not see any value for the dollars spent.
You announced spending of $317 million to lease 10 water bombers and heavy helicopters for rapid deployment to provinces because the wait time for them to be built is too long. So, here’s a fun little arithmetic exercise for Ottawa: water bombers are built right here in Canada — jobs, sovereignty, the whole patriotic package you’ve been selling — yet the federal shopping list remains stubbornly empty.
With $317 million, you could buy three heavy scoopers and have pocket change left for spotter planes or a helicopter, or — and this is where it gets embarrassing — you could roll out 45 to 55 single-engine Fire Boss aircraft, scattering an actual national fleet across every province that needs one. But apparently the government prefers its firefighting budgets theoretical. It is here that I will remind you, Fort Mac, Jasper and Lytton should have already provoked this response to act years ago.
The United States is hardly in a position to lecture anyone without hypocrisy. It is enduring its own brutal wildfire season, and fires do not stop at customs booths to declare their country of origin. Climate, drought, lightning, forestry practices and emergency capacity all play a role. There is plenty of responsibility, contradiction and political theatre to go around here. America has somehow managed to turn airborne smoke into an international trade dispute, because apparently even oxygen now requires a customs declaration. But that doesn’t absolve Ottawa. Again … Fort Mac. Jasper. Lytton. The warnings were already there. The time to act was then, but Ottawa chose navel gazing instead. In my books, that means today’s consequences lie with the governing Liberals.
Markets reject Carney’s official carbon price, so Canadians have to pay more
Canada is one of the last remaining bastions of Net Zero zealotry … in fact, Prime Minister Mark Carney may be the only national leader trying to turn back the tide of economic reality over this:
AI image posted by L. Wayne Mathison on X.
Mark Carney wrote a book called Value(s) lecturing the world about fairness, responsibility, sustainability and humility. His real governing value appears to be this: when markets reject his climate scheme, force Canadians to rescue it.
Carney now admits the official carbon price is supposedly above $100 while actual credits have traded near $20. Any honest banker would recognize the message. The market does not believe these credits are worth the imaginary price politicians assigned to them.
Carney’s response is classic central-planner arrogance. He will not reconsider the product. He will rig the price, tighten the rules, compel companies to buy it and call the resulting coercion “investment certainty”.
He praised carbon pricing in Value(s) as one of the most important and effective ways to reduce emissions. Then the consumer carbon tax became politically poisonous, so he scrapped it. The industrial version survives because its costs are easier to bury inside electricity, transportation, groceries, construction materials, wages and lost investment.
Carney also boasts that Canada continues sending climate-finance money abroad while other G7 governments pull back. Canadian families are struggling with food, housing and energy, yet our philosopher-banker remains determined to finance his international reputation with their money.
His book preached humility. His government practises price fixing.
His book preached responsibility. His government transfers the risk to taxpayers.
His book preached fairness. His policies protect the climate-finance class while ordinary Canadians absorb the costs.
Carney spent years wrapping political ideology in the language of banking. Now the numbers are exposing the sales pitch. When a theoretical $100 asset trades for $20, the market has delivered its verdict. Ottawa can falsify the price, but it cannot manufacture genuine value.
Value(s) may be hundreds of pages long. Carney’s philosophy fits into one sentence:
When reality refuses to validate the climate fantasy, force Canadians to pay until it does.
July 19, 2026
The rise of the populist right in Australia
Celina outlines the conditions that allow populist movements to displace traditional centre-right parties as Australia’s One Nation under Pauline Hanson is in the process of displacing the Liberals:
Everyone has an opinion about why One Nation is surging. Most people argue it’s immigration. Others say it’s the cost of living, housing, or just a general distrust of politicians. And obviously all of those things are factors.
But of course, all of those explanations are just opinions, and more importantly, they don’t really explain why this is happening now.
One Nation isn’t the first party of its type to emerge, in fact, Australia is actually pretty late to this trend. We’ve already watched similar parties rise in Britain, the United States, Germany, France, Italy, the Netherlands, Sweden and across much of Western Europe.
[…]
So if immigration alone explains One Nation’s rise, why didn’t One Nation explode ten years ago?
The answer, according to a growing body of political science, isn’t simply that voters changed. It’s that the centre-right stopped functioning the way it used to. For decades, parties like the Liberal Party acted as gatekeepers. They bundled together free-market economics, cultural conservatism and a vague patriotism into one broad electoral coalition. But the Liberal Party has fractured rapidly and everything has changed.
This is exactly what happened with Trump and the Republican Party, with Brexit and then Reform UK in Britain, and with similar populist parties across Europe. The rise of the populist right isn’t just about people becoming more conservative, it’s about the collapse of the old centre-right policy formula. Australia is now going through exactly the same process.
As a comparison, Reform UK established itself as the dominant force on the British right rivaling the Tories whilst they were already crumbling, which allowed those voters to become apart of Reforms broader support base. Analyses of the 2024 election in the UK found that around 80% of Reform voters had voted Conservative in 2019. The same thing now seems to be happening with One Nation. Some of that growth comes from former Liberal voters. Some comes from people who previously supported smaller right-wing parties and have now consolidated behind One Nation because they think it’s the only party capable of replacing the Liberals. Some comes from Labor. But overwhelmingly, this is a story about the collapse of the centre-right rather than some sudden ideological revolution among Australians.
So yes, immigration matters. Cost of living matters. Housing matters. But those things explain why voters became dissatisfied. They don’t explain why millions of those voters suddenly stopped expressing that dissatisfaction through the Liberal Party and started expressing it through One Nation instead. To answer that question, you need political science and when you look at the research, the rise of One Nation starts looking like Australia’s version of a much bigger political realignment that’s already transformed much of the Western world.
So, populist insurgencies are underway in Australia, Britain, France, Germany, Italy, and the Netherlands … so why not in Canada, where all of the conditions are at least as pro-populism as any of the others? My answer is propaganda. Most Canadians still get their daily news and opinions from traditional sources — almost all of whom are now directly on the government’s payroll. Most Canadians are as insulated from dissident voices as Germans were in the 1930s … and Canadians still trust their government more than most other westerners.
QotD: Obfuscated exchange
At this point, it’s worth digressing from Ashley’s work and laying out my own theory of obfuscated exchange before showing how Ashley applies the model to her data.2 So the starting point is to recognize that there are certain goods and services that may be more or less OK if you get them for free, but are gross, shameful, and/or illegal if you pay for them. For instance, payment transforms casual sex into prostitution and constituent service into bribery.
Now suppose you’re someone who has money, and who really wants to have no-strings sex with someone who isn’t really attracted to you, or to get a government service that the legislator or bureaucrat thinks you’re not entitled to. One way to handle this is you just do it anyway and break the taboo: you hire the prostitute or bribe the public official. Another way is you don’t do it: you think something like “I would gladly pay $200 for sex or $10,000 to get this zoning exemption, but that would be wrong and so I’m not doing it”. But what I find really interesting is when you find a way to have your cake and eat it too by buying the non-market good while obfuscating that you paid for it, hence obfuscated exchange.
In my 2014 Sociological Theory paper, I outline three forms of obfuscation:
- Gift exchange — I give you a gift and at some point in the future you give me a gift. There is a continuous tension between whether the gifts are traded for each other or are both expressions of a relationship.3 This ambiguity effectively allows gift exchange to trade goods that it would be immoral to directly exchange for one another. The classic example is that the difference between a sugar baby/sugar daddy relationship and a prostitute/john relationship is gift exchange vs cash on the barrelhead.
- Bundling — You and I engage in some type of innocuous commercial transaction, but we also have a relationship involving things that ought not to be sold. The classic example is a boss having sex with his worker, or a lawyer with his client.4 Is this just that two people with a business relationship also find one another irresistible, or is it quid pro quo sexual harassment? Interpreted as bundling, it is the latter, and there are some cases where it’s obviously little more than money laundering (as with the Congressman who went to prison for selling his house to a defense contractor, who immediately resold the house at a substantial loss).
- Brokerage — I hire someone to help me acquire something, and they pay the person I need it from, who then gives it to me. A majority of settlements under the Foreign Corrupt Practices Act look like this: AmericaCo is doing business in Corruptistan and hires LocalFixer who in turn just bribes PublicOfficial.
After that first paper, I introduced a fourth type, “pawning”, which is when an explicit debt is forgiven in exchange for a non-market good. This is how the mob gets gambling addicts to serve as co-conspirators in embezzlement and robbery. However Ashley didn’t find any pawning to speak of in her ethnography.
So back to Ashley, one of the things I love about her ethnography is you see three different obfuscation structures all at once. Again, at a fundamental level, what is happening is rich guys are paying for models to hang out with them, but not explicitly. Let’s start with the rich guys and work towards the models. What it says on the $30,000 credit card receipt is “champagne” or “vodka”. In theory the arm candy is incidental, even though that’s why the guys aren’t spending much less at BevMo and getting drunk in their hotel room. So the arm candy is bundled with the alcohol.
We might then think, OK, so the club provides the models, and in a sense they do, but the club doesn’t do this directly. Instead it pays a commission to night club promoters who arrange that the models be there in exchange for a commission on the table’s check. So the promoters act as brokers between the club and the models.
Now we might be thinking, OK, so the promoter gets a cut of the check and out of that he pays the models. Nope. As a rule promoters don’t pay models, and when they do it is widely seen as a death spiral desperation move. Rather, promoters recruit models through gift exchange. For reasons discussed in Ashley’s first book, models are constantly short on cash, and promoters will hang out in fashion districts looking for models who they can offer favors to and befriend. For instance, she talks about promoters who will drive SUVs around Manhattan offering models rides. A common pattern is to meet a group of models, identify the most popular girl in the clique, seduce her, and then get her to constantly mobilize her girlfriends to help you get paid by staying out until 4am, even though this means that they are so tired and hungover the next day that they miss their own auditions and photoshoots.
There is more than a little resemblance between the promoters and pimps. Aside from the vast moral difference that these guys don’t commit felonies and aren’t hyper-misogynists, they all come across as like Andrew Tate with their peacocking, their hustle mindsets, and the basic fact that their livelihood is based on leveraging their own charm into mobilizing pretty girls into making money for them from other men.
John Psmith and Gabriel Rossman, “GUEST JOINT REVIEW: Very Important People, by Ashley Mears”, Mr. and Mrs. Psmith’s Bookshelf, 2024-03-04.
- My other major research interest is diffusion, or how ideas and behaviors spread. This is the subject of my 2012 pop music radio book and my 2021 PNAS. The upshot of my take on diffusion is that you will be badly misled if you only pay attention to social contagion processes like word-of-mouth as it’s critical to consider the constant hazard (eg, advertising, government mandates, or the legitimacy that comes with a mature product category).
Rossman, Gabriel. 2012. Climbing the Charts. Princeton, NJ: Princeton University Press. https://www.google.com/books/edition/Climbing_the_Charts/E_37GZumy50C?hl=en
Rossman, Gabriel, and Jacob C. Fisher. 2021. “Network Hubs Cease to Be Influential in the Presence of Low Levels of Advertising”. Proceedings of the National Academy of Sciences 118(7). https://www.pnas.org/doi/10.1073/pnas.2013391118
- Rossman, Gabriel. 2014. “Obfuscatory Relational Work and Disreputable Exchange”. Sociological Theory 32(1):43–63. https://www.chapman.edu/research/institutes-and-centers/economic-science-institute/_files/ifree-papers-and-photos/obfuscatory-relational-work-and-disreputable-exchange.pdf
Rossman, Gabriel, Michael Munger, Alan Fiske, and Alex Tabarrok. 2016. “The Exchanges We Hide”. Cato Unbound. https://www.cato-unbound.org/issues/june-2016/exchanges-we-hide/
Schilke, Oliver, and Gabriel Rossman. 2018. “It’s Only Wrong If It’s Transactional: Moral Perceptions of Obfuscated Exchange”. American Sociological Review 83:1079–1107. https://www.oliverschilke.com/fileadmin/pdf/Schilke__Rossman._It_s_Only_Wrong_If_It_s_Transactional_-_Moral_Perceptions_of_Obfuscated_Exchange.pdf
Schilke, Oliver, and Gabriel Rossman. forthcoming. “Honor among crooks: the role of trust in obfuscated disreputable exchange”. American Sociological Review https://osf.io/6b793/
- Bourdieu, Pierre. 2000. Pascalian Meditations. Stanford, CA: Stanford University Press. especially “Twofold Truth of the Gift”
- Zelizer, Viviana A. 2005. The Purchase of Intimacy. Princeton, NJ: Princeton University Press.
July 18, 2026
Jevons and Baumol, and why they matter now
On the social media site formerly known as Twitter, Matt Ridley talks about the ideas of William Stanley Jevons and William Jack Baumol, whose ideas have become far more important over the last few decades:
English mystery novelist Agatha Christie (1890-1976) at Schiphol Airport in Amsterdam on 17 September, 1964.
Photo by Joop van Bilsen for Anefo via Wikimedia Commons.
Agatha Christie once remarked that she had never expected to grow rich enough to own a car or poor enough not to have servants.
The reason this strikes us as bizarre today boils down to two names that you hear invoked a lot in the tech industry: Jevons and Baumol. One is shorthand for the expansion of products or professions with rising efficiency, the other for the shrinkage of products or professions with stagnant efficiency.
There’s a pleasing chronological symmetry between these twin ideas: William Stanley Jevons coined the Jevons paradox in 1865; William Jack Baumol described Baumol’s cost disease exactly a century later in 1965.
… For every industry that experiences efficiency gains, there’s another that does not. And this latter industry inevitably becomes less affordable. Baumol’s first example was string quartets: violinists are no more productive but you have to pay them more to prevent them running off to become software engineers. The productive industries drive up the labour costs in the rest of the economy.
Marc Andreessen jokes that if a hole appears in the wall of your house in California these days it is probably cheaper to glue a flat-screen television over it than hire a builder to repair it: a Jevons-deflated cost beats a Baumol-inflated one.
The big question of our age is can AI drag Baumol-shaded industries back into the sunlight of Jevons? Can it make things like healthcare, education, or government switch from rising costs to falling costs?
I fear not in the case of government because of a bureaucratic version of the Jevons and Baumol effects. As Cyril Northcote Parkinson put it in an article in the Economist in 1955: “Politicians and taxpayers have assumed (with occasional phases of doubt) that a rising total in the number of civil servants must reflect a growing volume of work to be done. Cynics, in questioning this belief, have imagined that the multiplication of officials must have left some of them idle or all of them able to work for shorter hours. But this is a matter in which faith and doubt seem equally misplaced.”
Since 1997, the British public sector has seen zero increase in productivity. That is to say, the average civil servant generates about the same output today as he did three decades ago.
Think about this for a second. Thirty years ago fax machines were high-tech, the internet was in its infancy, emails were new, Wi-Fi was scarce, mobile phones were voice-only. How is it remotely possible to be no more productive today than then?
We know the answer. Each email is now copied to a dozen people, each report is pasted and copied till it is twice as long, each Zoom call has five times as many attendees, each mobile call is followed up by three times as many WhatsApp messages – and each day at the desk is interrupted by a training session on transgender anticolonial sustainability. That’s a sort of Jevons-Baumol effect: a Jevol?
July 17, 2026
Why solar power is not the answer for Britain
On the social media site formerly known as Twitter, Sama Hoole looks at a recent World Bank report that shows very clearly why solar power should not even be on the power options list for Britain:
The World Bank ranked every country on earth for practical solar potential.
Britain came second from bottom. Not second from bottom in Europe. On the planet. Out of everywhere they measured, the only place with worse conditions for a solar panel is Ireland. Norway is above us. Norway, where the sun clocks off entirely for part of the year, is a better bet than Lincolnshire.
The reasons are not a mystery. We sit at 53 degrees north, the same line as Edmonton, Alberta. The sun in December gets about as high as a first-floor window and then thinks better of it. And there’s the cloud, which is not a detail, it is the national personality. A square metre of London gets 0.52 kilowatt hours of sunlight a day in December and 4.74 in July, so the panel does nine times less work in the month your heating is on than in the month it isn’t. Across the whole of 2024, British solar ran at 9.5% of what it’s rated at. The other 90.5% is a photograph of a power station.
Now the other column.
The ground we’re bolting it to is Trent valley silt and Lincolnshire fen. Some of it took three hundred years to drain. It grows wheat at yields that most of the planet cannot get near, in a climate so reliably damp that grass grows here without anyone asking it to, which is the entire reason this island has cattle and cheese and a butcher.
So we are, measurably, one of the worst places on earth for sunlight and one of the best on earth for food.
And we’ve had a good long look at both of those numbers and gone with sunlight.
Somewhere in Namibia, which the same report ranked first, there is a patch of absolutely nothing, in full sun, wondering what it did wrong.
July 16, 2026
“Only fans – Europe’s approach to air conditioning”
From the free-to-cheapskates portion of Ed West‘s most recent article on his Substack:
The EU may not actually believe this, but they thought you would …
Different climates have enjoyed advantages at different points in time. For most of history, industry and scholarship in southern Europe benefitted from significantly longer hours of sun and daylight much of the year compared to the north, allowing for more hours of work and study. James Belich noted in The World the Plague Made that this all changed with the expansion of the Basque whaling trade in the late medieval period, providing cheap wax for candles.
England and the Netherlands subsequently overtook the south in their levels of literacy, a transformation usually attributed to Protestantism, although this technical solution to a physical disadvantage certainly helped. As the northern countries grew richer, and were able to use more energy, so the climate came to be an advantage. Cooler areas of Europe in particular benefitted from a relative absence of vector-borne disease, dangerous insects and food poisoning, which made hotter regions of the world more lethal.
Yet the biggest curse of the lower latitudes is that heat makes us sluggish — since people struggle to work above 23° centigrade. As Maarten Boudry writes on his substack, “For every degree above 25°C (77°F), our cognitive performance declines by around two percent. And if synapses suffer, so does economic activity. At 30°C, office performance drops by almost 9 percent.”
I see that. I’ve been trying to write this in temperatures of up to 34°, which equates to a production level similar to a moderate hangover. If only there was some sort of technology that could make my home cooler.
Until relatively recently the world was dominated by a handful of relatively cold regions, and Paul Johnson observed in his history of the United States that human industry thrives in what Fahrenheit appreciators would call “the 60s”, a Goldilocks zone that turned New England and Greater Yankeedom into a powerhouse. The southern states, in contrast, were held back by higher mortality and the impossibility of productive work in the sweltering summer months, and until the mid-20th century were about 40 per cent poorer than the Union states.
The northerners were especially known for their work ethic and their inventiveness, a characteristic epitomised by the Boston-born Benjamin Franklin. Then in 1902, New York’s Willis Carrier changed everything with the one of the most world-changing inventions, the air conditioning unit; aircon has notably shifted population and power in the US southwards, but Dixieland is just part of a broader, global “sunshine belt”.
Among the most notable beneficiaries of this technology are the financial powerhouses of Dubai and Singapore. Lee Kuan Yew famously said of air conditioning that it was “perhaps one of the signal inventions of history. It changed the nature of civilization by making development possible in the tropics … The first thing I did upon becoming prime minister was to install air conditioners in buildings where the civil service worked.” Indeed, it has often been noted as characteristic of the city-state that the aircon is usually set to icy levels, reflecting their determination to be on work mode throughout the day.
While Singapore is the most famous beneficiary of Carrier’s invention, Japan has almost universal air conditioning, with 91 per cent of homes equipped, compared to 88 per cent in the US. China is home to more than 500 million aircon units, is the world’s largest manufacturer, and has also seen an economic shift towards the south. Vietnam, also likely to be a major economic power by mid-century, is as dependent on this technology as it is on its people’s ingenuity. The development of aircon, and medical breakthroughs in the treatment of tropical diseases, has shifted the centre of gravity away from the cold regions of the earth — just as the globe is warming up.
This year’s European heat wave, still ongoing, saw temperatures reach 37 last month in England, a June record. Many schools shut early, although one in Kent instead used air raid tunnels to teach children. London’s Central Line hit 39.4c, presenting a real risk of heat stroke.
Across Europe the hot weather has closed down not just schools but factories, offices and rail lines, and led to an estimated 10,000 deaths, with France top of the heat mortality charts. Indeed as Boudry writes, Europe has the worst heat-related excess deaths of any region — while fatalities in the US have declined by 75 per cent since the adoption of air conditioning.
Update, 17 July: Welcome, Instapundit readers! Have a look around at some of my other posts you may find of interest. I send out a daily summary of posts here through my Substack – https://substack.com/@nicholasrusson that you can subscribe to if you’d like to be informed of new posts in the future.
This is why so many of the kids are not “alright”
An interesting discussion at the social media site formerly known as Twitter, as Devon Eriksen responds to a comment from Stephen Fleming:
But don’t you understand?
There was a way. There was always a way.
We had it within our grasp, because we had already grasped it. The childhoods that you and your daughter had were available because you and your daughter had them.
All that the Boomers, and their parents, the eldest of the post WW2 generations, had to do was …
Nothing.
Just live in the paradise that their ancestors won for them, and make the minimum, the bare minimum, of effort that would have been required to actually sustain it.
That’s all.
Just keep things the way they were.
But they couldn’t handle that. Their fathers and grandfathers, the heroes that won WW2, made them jealous.
They wanted to be heroes, too.
So, for the sake of their own egos, they had to become Social Justice Warriors. They had to be Champions of Progress and Change.
They had to see the world they inherited as a pile of problems to be solved, rather than a pile of solutions to be cherished and preserved.
So they could feel like they were doing something important.
Almost all of the elder generations, even the ones who call themselves conservative and vote republican, are, in truth, socialist liberal progressives. Because they looked at paradise, and wanted to fix it instead of protect it.
That’s why the “republican” option was Reagan, the gun-ban guy, the social-welfare guy, the kiss-up-to-the-commies guy, the amnesty-for-foreign-invaders guy.
Reagan, the Hollywood liberal, the Obama of the 80s, instead of Joe McCarthy, Barry Goldwater, and Pat Buchanan.
Teens can’t have a summer job because elders had to be Third-World Compassion Heroes, and give us Hart-Cellar and eleventy-billion barbarians who don’t care about civilization, but will work cheap.
Teens can’t have a car because elders had to be Climate Emergency Heroes and give us emissions control laws and Cash for Clunkers.
Teens can’t have safe schools to learn at, because elders had to Anti-Racist Heroes and made it illegal to exclude violent thugs from our school districts. Just because those thugs generally come color-coded for your convenience.
Teens can’t have safe public spaces to hang out in, because elders had to be Compassion for the Underclass Heroes, and release violent savages into society, again and again, with a lecture and a slap on the wrist.
Teens can’t have a healthy economy to inherit, because elders had to be Equality Heroes and make sure every corporation that actually did anything useful was punished for not being Diverse, Equitable, and Inclusive enough to suit the ideal universe that exists only in their heads.
Teens can’t have dates, because elders had to be Anti-Sexist Heroes, and let feminists spend forty years diminishing the social value of men, until you had to a be a billionaire rockstar adventurer to avoid being an unsexy loser by default.
Teens can’t even be fit, healthy, and pretty, because elders had to be Sex Equality Heroes, and move women into the corporate workforce in droves, leaving children to be fed by corporate industrial slop factories.
Teens can’t have sane, well-adjusted, unspoiled girlfriends and wives, because elders had to be Champions of Sexual Freedom, and normalize unlimited female promiscuity, all in exchange for the largely unfulfilled promise of a little unshaven free-love yeti snatch.
And worst, of all, the crowning irony, the final dead hamster in the water pipe, is that all of this would be fixable, perhaps in three to five election cycles …
Except.
Except the elders don’t understand that any of this of this is happening.
They haven’t had a child in the household since 1997. They haven’t looked for an entry-level job since 1973. They haven’t gone on a date since 1981. They haven’t been laid off … ever.
They are safe with their paid-off houses and their investments and their pensions from 45 years at the same company and their social security and their medical plans.
It’s affecting the youngest generations first and worst. While the elders sit on their cruise ship, surveying the short with binoculars, wondering who all these ragged distressed looking people standing on the shore are.
And why they are holding signs that say “HELP”, “THIS IS ALL YOUR FAULT”, and “YOU STOLE THE LIFE I WAS SUPPOSED TO HAVE”.
Then they shrug, conclude that these must be the whiny losers, and everyone further inland is probably just fine, and everything is fine, because they fixed everything and they are all heroes, and the Summer of Love was the end of the Problematic Era of History and the beginning of the Great Enlightenment.
And when I am 74 years old, and the elders are all safely tucked into their cemetery plots, I will be torn apart by an angry mob for having white hair, and therefore being “one of them”.
And the mob will not care that I didn’t get to cast a vote until 1992, for the Man Who Predicted All Of This.
He called it the “giant sucking sound”.
Which is apt because it’s why everything sucks now.
July 13, 2026
Canada’s performative “grand strategic pivot away from the United States”
On the social media site formerly known as Twitter, L. Wayne Mathison provides the statistics to show that Prime Minister Carney’s big meeting with the Saudi Arabians is much more sizzle than steak:
Mark Carney wants Canadians to believe that courting Saudi Arabia represents some grand strategic pivot away from the United States.
The numbers expose the performance.
Saudi Arabia purchased roughly $1.3 billion in Canadian goods in 2025. Canada exported about $779 billion worldwide. That makes Saudi Arabia approximately 0.17 per cent of Canadian exports. It is a rounding error being marketed as an economic transformation.
Meanwhile, the real Canadian economy is voting with its money.
A new KPMG survey found that 57 percent of Canadian manufacturers have paused, reduced or cancelled capital investments. 42 percent have moved production to the United States or are considering doing so. Nearly one-third have already shifted at least some production south, and 61 percent say their businesses cannot survive without access to the American market.
That is the real Carney record: photo opportunities with Saudi royalty while Canadian factories, investment and future production quietly head for the border.
Ottawa keeps talking about “diversification”, but markets do not follow Liberal press releases. Capital goes where taxes are competitive, regulations are predictable, projects can be approved, energy is affordable and customers are close.
The latest trade figures make the point painfully clear. Canadian exports rose for the fourth consecutive month in May, driven by a 1.5 percent increase in exports to the United States. American-bound exports reached their highest level since February 2025 and still represented almost 70 percent of everything Canada shipped abroad. Exports to non-U.S. markets continued to shrink.
Canada should absolutely pursue new customers. But Saudi Arabia cannot replace an integrated continental market of more than 330 million people sitting directly beside us.
You do not reduce dependence on the United States by weakening Canadian competitiveness and watching manufacturers relocate there. You build Canadian strength first, then expand outward from a position of confidence.
Carney and the Liberals are doing the opposite.
They are allowing Canada’s productive base to erode while selling diplomatic tourism as economic strategy. They are chasing Saudi sovereign wealth while Canadian capital sits idle, scales back or leaves.
That is not diversification.
It is economic decline wearing a tailored suit and carrying a diplomatic passport. 🤡🌎
July 9, 2026
QotD: The labels “capitalism” and “socialism”
It was not necessary to be an intellectual to be dismayed by the inequality of industrial society. The Welsh-born factory owner Robert Owen envisaged an alternative economic model based on cooperative production and utopian villages like the ones he founded at Orbiston in Scotland and New Harmony, Indiana. It was in a letter to Owen, written by Edward Cowper in 1822, that the word “socialism” in its modern sense first appears. An unidentified woman was, Cowper thought, “well adapted to become what my friend Jo. Applegath calls a Socialist”. Five years later, Owen himself argued that “the chief question … between the modern … Political Economists, and the Communionists or Socialists, is whether it is more beneficial that this capital should be individual or in common”. The term “capitalism” made its debut in an English periodical in April 1833 — in the London newspaper the Standard — in the phrase “tyranny of capitalism”, part of an article on “the ill consequences of that greatest curse that can exist amongst men, too much money-power in too few hands”. Fifteen years later, the Caledonian Mercury referred with similar aversion to “that sweeping tide of capitalism and money-loving which threatens our country with the horrors of a plutocracy”.
Niall Ferguson, “Capitalism, Socialism and Nationalism: Lessons from History”, 2020-02.
