2. Vasily Grossman, From the Front Line, Stalingrad-Treblinka-Berlin 1941-1945.  Self-recommending, the best third of this volume is just stunningly good.  You do not have to read the whole thing, as there is some degree of repetition.

3. Forough Farrokhzad, Let Us Believe in the Beginning of the Cold Season.  She died in a car crash in 1967 at the age of thirty-three, but it turns out she was an amazing poet.  I usually do not enjoy poetry in translation, but this is so fiery and full of passion that I am happy to recommend it.  Surely in the original Farsi it is better (and quite different?) yet.

4. André Breton, Nadja.  It is short, and fun enough to read.  But one learns most books from the past are not masterpieces, and that surrealism as a movement — most of all in painting — was more important than the literary outputs of surrealism.  Nadja, to me, sounds like a drag.  Which is fine.  But.  What does Breton really think he is immortalizing here?  At the end he writes “Beauty will be CONVULSIVE or not at all.”  I do appreciate Breton for his understanding of Mexico, and for his cultivation of Haitian art.

5. Emma Southon, Servus: How Slavery Made the Roman Empire.  A very good and aggressively readable book about how terrible slavery was in the Roman Empire.  A useful corrective to other sources as well.  While my general view is that interpretative disputes over antiquity are difficult to resolve, I find her interpretations more intuitive and more convincing than the other side of the debate.

The post What I’ve been reading appeared first on Marginal REVOLUTION.

      

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I had never before listened carefully to the lyrics.  I heard the “’39” reference at the beginning, the mention of volunteeers sailing away, and the general nostalgic British music hall mood to the piece, and assumed it concerned the Second World War.  But no, the volunteers sailing away are going to the stars, and their eventual return to the Earth will be for them a sad and tragic event, as everything they had known will be gone.  You can listen to the song here.

Here is one of the most direct excerpts:

In the year of ’39 came a ship in from the blue
The volunteers came home that day
And they bring good news of a world so newly born
Though their hearts so heavily weigh
For the Earth is old and grey, little darling, we’ll away
But my love, this cannot be
Oh, so many years have gone though I’m older but a year
Your mother’s eyes, from your eyes, cry to me

Here are the full lyrics.  Brian May, who wrote the song, is not only a wonderful guitarist but he has a PhD in astrophysics.

p.s. no synthesizers!

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2. “Books that Tyler Cowen probably would like.”

3. The tenure dismissal of Sanjay Reddy (NYT).

4. Dell and Rambachan NBER video on the economics of AI.  I have yet to view, but “self-recommending.”

5. Anton Leicht on AI and how the concentration of power will evolve.  Very good piece.

6. Universities would prefer not to.

7. Which polities can you really trust?

8. GPT 5.6 is working on social choice theory.

9. OpenAI 37-minute talk on the Book of Exodus.

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This paper studies the environmental effects of a specialised AI aeration-control system deployed across French wastewater treatment plants operated by a global leader in water supply services. Exploiting quasi-experimental variation in both the timing of adoption and outages, we estimate the causal impact of AI on electricity use, carbon emissions, and energy expenditures. We find that full-time AI control reduces plants’ electricity consumption and carbon emissions by 5.4% and 6% respectively, and energy expenditures by 8.2%, resulting in negative abatement costs, while also improving water effluent quality. The additional electricity demand generated by AI models represents less than 1% of these savings. Beyond these effects, AI-equipped plants prove more resilient to high operational stress during extreme meteorological events and chemical pollutant peaks. They also improve load management by reallocating electricity consumption from peak to off-peak hours. Finally, we use the DICE model to assess the aggregate implications of our findings
in three diffusion scenarios. We find substantial global welfare gains from the CO2 reductions associated with this industrial AI use case.

One annoyance: The authors frame the paper as a contrast to worries about AI’s energy use and environmental impact. But those objections are almost entirely innumerate and pretextual and casting the paper as a rebuttal lends them more credibility than they deserve.

One note: Don’t misread the “less than 1%” line as being in the same units as the 5.4%, 6%, and 8.2% figures above it — it isn’t a comparable percentage-point offset. It means the AI system’s own electricity draw is a rounding error next to the savings it generates.

More generally, the effect of AI will be through many, many improvements of this nature.

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Julia joined Tyler to discuss why so many of Russia’s great constructivist painters were women, why the tsarist government established women’s medical courses in 1872, changing attitudes towards abortion and birth control in the 20^th century, why the Soviet regime turned prudish, how Khrushchev’s plan to “replace the dead” institutionalized single motherhood, Russian superwomen, why Jewish men were a prized commodity amid rampant antisemitism, the cultural significance of flowers, why a few Russian names still dominate, why Russian women think Western feminists have their priorities backwards, how gender attitudes and autocracy feed into each other, three underrated Russian novels, what she wants to write about next, and more.

Excerpt:

COWEN: I’m sure you’ve noticed that quite a few American men will marry Russian or Soviet women, but not so many American women want to marry Russian or Soviet men. It’s a kind of market test, right? Why exactly are the men so bad? Why are they such louts? Maybe that’s a rude way to put it, but surely in one’s mind, one asks that question, right?

IOFFE: It’s a question that a lot of us who were living in Moscow in the late aughts and the teens were asking that all the time. I remember a friend of mine, a male Western TV correspondent, saying, “The women are so gorgeous here, but the men are so ugly and unfashionable.” He had lived all over the place and worked all over the place, and he said, “I’ve never seen such disparity,” and it was true.

The women like me, Western women who were living and working in Moscow at the time, said, “We’ll just wait till we get home.” I think it’s because of what I talked about before, or what you and I talked about before, which is that so many men were killed in the first half of the 20th century, and so few demands were placed on them because they were seen as an endangered species, in general. They were a resource to be fought over and protected.

In 1968, when the West was undergoing a sexual revolution, and women were fighting for more rights, more equality, the Soviets were talking about saving the men, protecting the men, and saying, “We’ve done enough for the women, but our men die young.” That’s after a lifetime of alcohol abuse, smoking, being largely irrelevant in the home, and obviously politically, because it’s a totalitarian system, so let’s work on protecting them.

Soviet men, and then Russian men, became these coddled, spoiled children essentially, where on one hand, so little was asked of them that it’s the bigotry of low expectations. So little was asked of them, and very little was expected of them, and they rose to meet those very low expectations.

On top of that, the idea of what made a man a manly man in Russia is he’s physically strong, but he dies a young death, or he dies an early death. He drinks a lot, he smokes a lot, he’s reckless, he’s careless, and takes a lot of risk, and that usually means an early death. If you have fewer men to begin with, and as a Russian woman, you see them dying early, and you’re fighting over them, what is the impetus for men to take care of themselves, to act better, be better, if there’s always going to be a beautiful, super competent woman to take him if you don’t want him?

COWEN: These points you’re raising, historically, do you feel it’s been quite different for Soviet and Russian Jews or the same?

IOFFE: I think it’s a little bit different. The caveat is, and I hate that I have to say this, Jews are people too, and subject to the same social forces that everybody else is, but culturally, Soviet Jews were more educated as a rule, more urban, and culturally came from a very family-centric tradition. Russian women, actually, for all the intense antisemitism in the Soviet Union, in Russia, Jewish men were actually a prized commodity for Russian women.

COWEN: With ethnic Russian women?

IOFFE: Yes. Ethnic Ukrainian women, you name it, because the cultural stereotype was that Jewish men don’t drink, they don’t hit you, they are family-focused, family-oriented, they’re involved fathers, they bring their money home, they don’t waste it at the bar or on bottles of vodka with their buddies. That’s the kind of man you would want as a husband. Ironically, the same polls that will tell you that Russians would want their daughters to marry a Jew will tell you that they don’t want their president to be a Jew.

One of my favorite episodes of the year, interesting throughout, and I very much enjoyed Julia’s book Motherland: A Feminist History of Modern Russia.

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We’re proud to announce that Refine has signed partnerships with two leading publishers in economics. Both the American Economic Association and the Econometric Society now use Refine’s AI-assisted technical verification as part of their publication processes.

Here is the thread.  And more comments here.

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2. New publication on AI and institutions.  Good people involved.

3. Chicago boys in Chile.

4. What kind of machine can a book make?

5. Longevity firms push for medical deregulation in Montana (WSJ).

6. OpenAI Economic Research Exchange.

7. Victor Niederhoffer obituary.  Do not forget Victor also was a world class checkers player, art collector, and a very good jazz bassist as well (yes I have heard him play) in addition to his other achievements.

8. David Wolpe now has a Substack.

9. The cyberattacks against the hedge funds.

The post Thursday assorted links appeared first on Marginal REVOLUTION.

       

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In 2010 an employment tribunal ruled that Birmingham City Council had discriminated against thousands of female workers — cooks, cleaners, care assistants, caretakers — who were denied bonuses paid to the mostly male binmen, gardeners, and gravediggers. Why were the binmen given bonuses? Well, refuse collection is filthy, heavy, outdoor work and not many people want to be gravediggers. Thus, these jobs command a premium for exactly the reason Adam Smith gave in 1776 — compensating differentials. Or was it sexism? Well, note first that there is nothing stopping women from becoming “binpersons” and indeed there are female binpersons and they earn the same bonuses as their male counterparts (just as with the Next case). Moreover, we can test the sexism versus compensating differentials theory. Let’s see what happened.

Here’s the problem, which contributed to Birmingham going bankrupt in 2023. The council employs roughly 400 binmen and something like 6,000 women in comparable graded roles. Every extra pound paid to a binman therefore implied about fifteen pounds owed to the cooks and cleaners. The council simply didn’t have the money to pay everyone binman wages so they cut the binmen’s wages. But the market wage for collecting rubbish is what it is, so when Birmingham finally deleted the premium in January 2025, the binmen went on strike — and they are still on strike, nearly eighteen months later. The rubbish piled up, 17,000 tonnes of it, and the city declared a major incident.

Here’s the most amazing part. The council hired an outside contractor to take over its rubbish collection and it now pays roughly triple its pre-strike outsourcing bill–more than it was paying its own employees. So much for sexism. Apparently the premium wasn’t a favor to men; it was the price of the job. If you want your rubbish picked up and your graves dug, you must pay the market wage. This was pure regulatory arbitrage, of course. Because the new binmen were contractors they legally had a different employer than the Council’s female caregivers and the Act’s comparator rules stop at the employer’s nexus.

The government mandarins, of course, want to close the “loophole” adding yet another bureaucratic requirement to push the equal pay madness up the supply chain. The rubbish piles up.

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Federal money flows to cities in three flavors: direct transfers, indirect transfers, and what we call fiscal dark matter. Direct transfers are exactly what they sound like — money sent directly from the federal government to various localities. These include funds disbursed through programs like the Community Development Block Grant (CDBG), which supports things like public infrastructure and neighborhood services.3 In 2022, direct transfers like the CDBG totaled $146.3 billion.4 That’s significant, but actually the smallest of the three categories.

Less visible are the indirect transfers. These monies are initially awarded to state governments, which then allocate funds to municipal-level programs and services in accordance with state prerogatives. The cleanest example is probably K-12 education, which receives federal Title I dollars to pay for teachers and programs, but federal highway dollars work essentially the same way. All told, in 2022, the federal government handed down $1.1 trillion to state governments. That amounted to 36% of overall state revenue for that year and, depending on the individual state, ranged from roughly 22% to 50% of state revenue. How much of that ultimately flowed down to cities is hard to say, which is itself a problem: it’s difficult to even establish how exposed local governments are to a pullback in federal support of state budgets.

The third category – our fiscal dark matter – is all the federal money spent into local communities that never shows up in a local budget. This includes housing subsidies like the Low-Income Housing Tax Credit (LIHTC) and Section 8. It also includes food support programs like SNAP and even some direct funding for local food banks.

Rightfully or not, when the flow of federal money in this category starts to dry up, the resulting problems will fall squarely on the mayor’s desk. After all, the median voter is never going to see increasing numbers of homeless encampments and think to blame the head of HUD.

Here is the full piece by Jeff Fong.

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If unions raise worker wages, who pays? We provide a comprehensive assessment of firm responses to increased unionization, using changes in the tax deductibility of union dues in Norway as a quasi-exogenous source of variation in firm-level union density. In the average private sector firm, higher union density raises labor costs and leads firms to contract employment and production, lowering profits without increasing the labor share. The incidence is shared: consumers bear part of the cost through higher prices, shareholders through lower profits, and the remainder is offset by productivity improvements. The total wage bill falls, with losses concentrated among less-attached “outsider” workers. Firm responses vary systematically by the degree of market competition. In manufacturing, where firms operate in less competitive product and labor markets, the response is reversed: the average firm expands employment and production, reduces labor markdowns, and does not experience profit declines. Instead, higher labor costs are largely passed on to consumers through higher prices, with the remainder offset by productivity gains. Workers benefit as both wages and employment rise. These patterns suggest that unions can offset employer monopsony power and that firm responses–and therefore who ultimately bears the cost-depend importantly on market structure. Overall, unionization in this setting primarily redistributes from consumers rather than shareholders and has effects that differ sharply across firms, including a reallocation toward larger and more productive firms. We rationalize these patterns using a partial-equilibrium model of union bargaining with product- and labor-market power.

That is forthcoming in the QJE by Samuel Dodini, Anna Stansbury, and Alexander Willén.

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2. Jasmine Sun on why people do not want data centers.  And Jasmine Sun on Ezra Klein, on data centers (NYT).

3. A bot running an SF retail boutique? (NYT)

4. Elise Cawley, RIP.

5. On the NYC grocery store plan.

6. New credit card gives you tokens instead of miles.

7. Does AI mean the end of math heroes?  Some other heroes too?

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The dike is a public good. Once it stands, it protects everyone nearby, and a neighbor who contributed nothing cannot easily be excluded. That property is what makes it hard to finance.

Paul Samuelson defined public goods in 1954, and he was pessimistic about them. Each person does better by understating what the good is worth to him, so it is, in Samuelson’s words, “in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has.” From this he concluded that “no decentralized pricing system can serve to determine optimally these levels of collective consumption.” Public goods, on this view, are what governments are for. Refund bonuses challenge that conclusion.

Read the whole thing and here is my Rent Control Explainer.

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This paper investigates why China’s recurrent credit expansions have coincided with persistently weak inflation. We argue that this pattern reflects the country’s production-oriented monetary regime. At the aggregate level, faster monetary-financial expansion temporarily raises PPI inflation but depresses it over longer horizons. At the sectoral level, liability growth among listed industrial firms is followed by weaker producer prices, lower profitability, higher leverage, rising inventories, and reduced capacity utilization. We also find asymmetric supply-chain transmission: downstream liability growth raises upstream PPI inflation, while upstream liability growth does not generate a corresponding downstream price response. These findings indicate that credit expansion in China tends to sustain production and balance sheets rather than stimulate final demand. As a result, monetary policy operates less as a conventional tool for demand management and durable reflation, and more as a mechanism for preserving production capacity and supporting growth.

That is from a new paper by Jeffery (Jinfan) Chang & Wei Xiong.  I have to say I understand the result but not exactly the mechanism.  I am reminded of Milton Friedman’s dictum not to focus too much on the first-order effects of an increase in money supply.

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Behavioral interventions have become central to modern public policy, but their empirical promise remains contested because estimated treatment effects often appear small. We argue that a policy response is economically meaningful only relative to the response generated by alternative policies. We assemble more than 1,200 estimates from over 600 studies comparing “nudges” and traditional price interventions in the markets for cigarettes, alcohol, influenza vaccination, electricity, and residential water. Translating nudge effects into equivalent price changes, we find that behavioral interventions often correspond to enormous fiscal interventions, from an 11% tax on electricity to a 100% subsidy on influenza vaccinations. Nudges are also more cost-effective than price instruments in all markets, but cost-effectiveness does not predict the welfare ranking of policies. Using a behavioral extension of the Marginal Value of Public Funds, we show that nudges have high welfare returns at the margin, while price instruments often generate larger total surplus at scale.

That is from a new NBER working paper by John A. List, Matthias Rodemeier, Sutanuka Roy & Gregory K. Sun.

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