A pizza wheel — also known as a rolling pizza cutter or just a “pizza cutter” — is not a great tool for cutting pizza. I know that’s a statement that’s going to anger a lot of people when I say it, but it’s true. I’m hardly alone in saying this — Wirecutter, Eater.com, and plenty of others have noted the same drawbacks. But anyway, let’s go through the many reasons why pizza cutters are not fit for the job they’re named after.

First, it’s hard to make a very strong cut with a pizza cutter. This is because when you roll a cutting wheel forward, your hand isn’t pushing straight down — it’s pushing forward and down at the same time, meaning that only some of the force from your cut is being delivered to the pizza itself. That makes your job harder.

On top of that, the amount of force that goes into the pizza isn’t constant across the cut. As you extend your arm across the pizza while pushing the roller forward, the angle changes — when the cutter is right under your arm, most of the force goes down into the pizza, but when it’s at the far end of the pizza, most of the force is going forward instead of down. This means that you basically have to do one of three things:

1. Be very good at dynamically adjusting your force level as you cut

2. Roll the pizza wheel back and forth over the pizza several times

3. Push down really, really hard the whole time

The first of these is hard and takes a lot of skill. The second results in little slivers in your pizza — since it’s very hard to keep the wheel in the groove as you cut back and forth — and often causes the dreaded “cheese drag”, in which the wheel drags the cheese right off of the top of the pizza. The third method blunts the cutting wheel, and cuts deep grooves into your cutting board. And all three methods require you to expend a lot of energy.

Pizza wheels are also notoriously hard to maintain and store. Cleaning cheese off of an exposed, rotating blade is difficult, because the blade keeps spinning as you try to wipe it, and because you’re constantly in danger of slicing yourself on the edge. Storing an exposed blade makes it easier to cut yourself when you reach into the drawer. And sharpening a circular, rotating blade is extremely difficult.

Fortunately, there are better tools out there for cutting pizza. The first, which works great for thin-crust pizza, is a scissors — either a standard pair of kitchen shears, or a dedicated pair of pizza shears. The latter looks like this:

As Wirecutter notes, Italian chefs tend to just cut pizza with scissors. They also note that a standard pair of kitchen shears is very versatile, so if you use it to cut your pizza, that’s one less tool you need to keep in your kitchen.

An alternative — which works especially well if you’re making thick-crust pizza — is a rocking pizza cutter, which takes very little arm strength, is easy to clean, and gets it right every time. It looks like this:

Eater.com recommends the rocking pizza cutter. There’s also a one-handed variant. The rocking pizza cutter is a specialized tool (so it takes up storage space), and it can cut a groove into your cutting board, but it’s easy to sharpen and clean, doesn’t get stored in a drawer, and has the added advantage of actually being able to cut pizza effectively.

(A third alternative for cutting pizza, which works decently well for either thick or thin crust, is just the tried-and-true “large kitchen knife”.)

Anyway, as I said, I expect lots of people to be angry at this take, because whenever I point this out in public, people get angry. Tons of Americans use pizza wheels — I couldn’t find reliable survey data, but browsing on Amazon, talking to people, and consulting AI all suggest that pizza wheels are very common in American households. But I’m right here — the physics doesn’t lie.1

Now on to the Japanese toilet, also known as the “washlet”:

This is a purpose-built washlet, which you commonly find in Japan. But you can also buy an add-on that converts your regular toilet seat into a washlet. That looks like this:

A washlet does several things that a normal toilet does not:

1. It has a heated seat.

2. It has a jet of water that washes your butt.

3. It also has a bidet mode.

4. It has a warm air jet that dries your butt.

5. It usually has a built-in air freshener.

The overwhelming majority of Japanese households have washlets. But they’re an incredibly rare sight in America — in general, only rich people own them.

Once you’ve used a washlet for years, it’s very hard to go back to a basic toilet. First, the heated seat is just incredibly, luxuriously comfortable. Second, the butt-washing water jet really cuts down on toilet paper use. It also gets your butt much cleaner than toilet paper alone — so much so that you start to feel like a barbarian for not using a washlet. (The warm air jet and air freshener, in contrast, are more “nice to have” features, in my experience.)

But despite near-universal agreement among product reviewers as to the superiority of the washlet, only a tiny percent of Americans have adopted them. It’s on the rise, but only slowly, and very late — the washlet was first introduced in Japan in 1980.

So there you go, Americans. Please try pizza shears or rocking pizza cutters, and please try washlets. You’ll thank me. But as you probably guessed, this is really a post about AI.

I recently had the pleasure of going to a party in Washington D.C. with a number of lawyers, art history professors, and other educated progressive professionals. This provided me with a great opportunity to get out of my west coast tech-and-econ bubble, and talk to intelligent Americans from other regions and other walks of life.

Many of these conversations turned to the topic of artificial intelligence. Not one person that I talked to was positive about the technology. The first man I talked to asked me how “the AI bubble” was going. When I told him that Anthropic was experiencing the fastest revenue growth of any large company in history, and expects to turn an operating profit next quarter, he was astonished.

To be fair, not everyone pays close attention to quarterly Anthropic numbers; as recently as late 2025 data center investment was still racing ahead of revenue and even Dario Amodei didn’t know whether his company would go bankrupt. But while observers close to the industry — and econ writers like Yours Truly — simply raised the possibility of a bubble, lots of people seemed to have assumed that a bubble was definitely in progress, and then not bothered to check up on it later.

The other folks I talked to were generally dismissive of the potential of AI, and all were concerned about negative effects. One lawyer told me that he knew some people who used it a little bit, but never used it himself. Another said that it was “about as good as a 2nd-year associate”, but worried that people’s reliance on it would erode their own cognitive abilities. Various other people asserted that AI was flooding their professions with low-quality work.2

The art historian was even more negative about AI. She argued that AI couldn’t produce real art, because it lacked human input. When I pointed out the difference between skillfully prompted AI videos and sloppily prompted ones, she did consider it, but it was the first time she had thought about it. She then argued that AI art would deceive people by presenting a distorted version of reality as if it was real. When I pointed out that people had made a similar objection to photography and film, before those were eventually recognized as legitimate and respected art forms, she considered this, but insisted that AI was somehow different.

What’s interesting is that this anecdote doesn’t cleanly fit the polls. Americans in general are very afraid of AI taking their jobs, and they predict generally negative impacts on society:

But they’re using AI more and more, both at work and for personal reasons:

Unlike in the case of pizza cutters and washlets, Americans have correctly identified the most useful technology, and are adopting it.

But…not all Americans. Educated progressives, like the ones I hung out with in D.C., are far too dismissive of AI. Democrats consistently poll more negatively than Republicans, both on AI in general, and in terms of data center construction. On progressive-dominated forums like Bluesky, anti-AI animus is near-universal, and people who admit using the technology tend to get dogpiled. Sybren Kooistra has lamented progressives’ “unilateral disarmament” when it comes to the big technology of the future.

Dan Kagan-Kans has argued that the left is missing out on AI, precisely because so many progressives have chosen to dismiss the technology outright:

Transformer

The left is missing out on AI

Abdication…

Read more

4 months ago · 407 likes · 258 comments · Dan Kagan-Kans

He writes:

As a movement, it appears the left has not been willing to engage seriously with AI — despite its potential to affect the lives and livelihoods of billions of people in ways that would normally make it just the kind of threat, and opportunity, left politics would concern itself with.

Instead, the left has, for a mix of reasons good and bad, convinced itself that AI is at the same time something to hate, to mock, and to ignore. “The GenAI sector’s foremost feat of marketing has been the term intelligence itself,” N+1, one of America’s foremost left publications, recently wrote. “A much more important question: What if China develops time travel or warp speed before we do?” asked Will Menaker, a host of the popular left podcast Chapo Trap House, when responding on X in December to a discussion of the possibilities of advanced AI. “Large language models do not, cannot, and will not ‘understand’ anything at all,” argued Tyler Austin Harper, the self-described “leftist, sort of Marxist-skewing” former professor, now The Atlantic staff writer, last summer…

This idea, that large-language models merely produce statistically plausible word sequences based on training data, without having any idea about what the words refer to, has become the baseline across much of the left-intellectual landscape. Thanks to it, fundamental questions about AI’s capabilities, now and in the future, are considered settled.

This dismissiveness reminds me of the cases of the pizza wheel and the washlet. There is no law of the Universe that useful technologies are adopted quickly by everyone who could make use of them.

Historically, countries that adopted gunpowder, industrial technology, computers, and other cutting-edge innovations had an edge over those that turned up their noses at them. Sometimes the consequence was a slightly lower GDP; sometimes the consequence was conquest and colonization. In most cases, economic historians believe that a fear of disrupting existing patterns of power and elite status was behind the decision to eschew new technology.

I worry about the same thing that Dan Kagan-Kans worries about. America as a whole is adopting AI rapidly. But if our educated progressive classes — our lawyers, academics, artists, and so on — turn up their noses, it could damage both their own cultural/political tribe and the country as a whole. In fact, by dismissing AI’s potential — by thinking that the most important technological revolution of the modern age can be waved away as a “bubble” or “fancy autocomplete” or IP theft or slop or whatever — they make it harder to think about the actual serious risks AI might pose.3

The coming of AI will definitely disrupt many of the relations of status and power in America. As Brad DeLong notes, educated professional types have had a long period of security, in which new innovations disrupted blue-collar work but not high-level white-collar work. That’s probably over now. But if educated progressive types don’t roll with the changes, and figure out how to use the new technology to their advantage, they could find themselves left behind by the tide of history — and the consequences will be worse than dirty butts and poorly cut pizza.

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As birth rates fall and countries turn to immigration to address their labor shortages, a lot of countries around the world are struggling with crises of national identity. Japan is one of them. Over a decade ago, Japan began opening itself up to mass immigration:

Because Japan did this later than other rich nations, immigrants aren’t yet as numerous as in Europe or the U.S., but the percentage is rising fast. And so discussions about what it truly means to be Japanese are starting to emerge.

I thought it would be useful for my readers — most of whom live in America or other English-speaking nations that are going through their own crises of national identity right now — to get some perspective on how Japanese people think about these issues. And so I asked my friend Hiroko Yoda to write me a post about it. Hiroko is a Japan-based entrepreneur, cultural historian, and writer. She's the author of a new book, Eight Million Ways to Happiness, which is a memoir exploring Japan's modern secular-spiritual landscape. She also writes on Substack.

In this post, she writes about how shared culture, rather than adherence to a particular religious doctrine, is what binds Japan so tightly together. Interestingly, “culture” is the same answer I arrived at when I asked the question of what will bind America together in the future.

Although I live in Japan, as a Japanese person married to an American, and who studied at American universities for my undergrad and graduate degrees, I probably pay more attention to happenings in the U.S. than many Japanese people. One of the topics I have found most interesting is the ongoing struggle to define what an American is. The reason being, we Japanese are grappling with this issue as well.

As Noah has written, Japan is accepting more immigrants than ever before. When my husband and I moved to Tokyo in 2003, international couples were still uncommon, and we’d sometimes draw stares if we walked hand in hand. These days, it’s completely unremarkable. The numbers of tourists visiting Japan increase year by year, and so does the number of people taking permanent residence. I see many international families in the suburb where we live, and I don’t think we are unusual, at least as regards urban centers.

As Japanese are finding new ways to co-exist and live alongside non-Japanese, they are also revisiting what it means to be Japanese. As I’ve written in my own newsletter, the question once centered simply on ethnicity, but now many are coming to believe that shared cultural values are more important.

Are you Japanese simply because of where you were born, or are you Japanese because of how you participate in society? Superficially, this resembles the arguments going on in America. Are you American because of some kind of heritage, or are you American because you embrace shared values, like those laid out in the Constitution?

But there is an interesting difference, too. Japan is (or was) a country with relatively little immigration; that’s why the question of who’s Japanese traditionally hinges on ethnicity. On the other hand in America, an immigrant melting pot, the litmus test often seems to return to faith.

It comes up again and again in American discussions about what it means to be American. Take this recent essay from The New York Times opinion writer Ross Douthat:

One doesn’t need to be a specific kind of religious believer to be a good believer in the Declaration [of Independence]. But if you look at the sweep of American history, it’s very hard to disentangle the advance of equality from the religious belief that our rights come from God and that human beings are equal in his eyes… it has more power in a context where most Americans believe in a providential God.

And then there’s Derek Thompson, who in a recent conversation with religious scholar Ryan Burge, noted:

There’s this category of Americans who have gone into religion as if it’s a foreign country, harvested certain souvenirs, and brought them back to the world of secularism. They practice yoga but have no interest in understanding its religious origins. They meditate but are not remotely interested in any Buddhist version of nirvana.

To which Burge replies:

They only wanted the parts of religion they liked and left the others behind…

You can’t just pick and choose…A lot of people are doing that with religion right now. They’re walking down the buffet line, picking one piece, putting it on their plate, and calling it a spiritual life. That doesn’t endure.

And Thompson concludes:

If you don’t have that central spine of purpose, the community won’t last. If your only purpose is “let’s get together,” that’s not enough. You need that higher purpose—that vertical spine—in order to build a truly strong horizontal community.

These pundits are arguing that ideas alone – the values of the Declaration of Independence or the Constitution – aren’t enough to keep Americans together, whether in communities or as a country. America’s loneliness epidemic, its polarization, its young citizens’ loss of hope: a big part of it can be attributed to the fact Americans don’t go to church or synagogue or temple or what have you anymore.

All of which makes me want to say: have you ever been to Japan?

Japanese, as a nation, don’t subscribe to any one faith. In fact, there’s a popular saying “born Shinto, married Christian, buried Buddhist.” We pick and choose, bringing what we like from various traditions – the purifications of Shinto, the pretty aspects of Christian weddings, the traditions of Buddhist funeral rites – into our secular lives. We’re so flexible about it that we often answer no when people ask if we’re religious. Look at this chart:

I’m going to put aside the question of how accurate this is. I actually wrote an entire book on how I believe surveys like this can miss the forest for the trees. (Spoiler: it involves how one defines “religion.”) But Burge and others argue Americans are “setting themselves up for failure” in becoming less religious, or at least in not going to religious institutions.

America is a flexible society that is rigid when it comes to religion; Japan is the opposite, a rigid society with a surprising flexibility when it comes to faith. There’s an old phrase that sums up Japan’s traditional spiritual cosmology: yaoyorozu no kami, which means eight million deities. It isn’t an accounting; it’s an expression of awe at the infinite nature of the sublime in all its forms. It incorporates, absorbs, rather than draws lines. In short, it’s radically inclusive.

I get that America is a religious country. I was taken to Sunday school every week when I was a homestay student in Indiana in the 1990s. I recited the Pledge of Allegiance alongside the other students every day. But there’s no pledge of allegiance in Japanese schools. The Japanese flag wasn’t even displayed in any of my classrooms. None of my classmates ever went to anything resembling a Sunday school.

But we were united in other ways. Ways that look like faith to outsiders, but just felt like everyday life to us. We made New Year’s visits to shrines or temples for hatsumode, a first prayer for the year. Many of us had Buddhist-style altars in our homes, where we kept photos of departed family members. Many of us carried omamori, Shinto or Buddhist amulets for scholarship or travel safety on our schoolbags.

But if you’d asked the majority of us what our faith was, or who we were praying to, we’d have reacted with utter confusion. None of us saw amulets as a replacement for studying, or looking both ways before crossing the street. They were simply cute ways to wish. If you’d asked us what we believed, I honestly don’t think we would have even understood the question. We just did.

So if institutional faith is core to the communities that form a healthy society, why is Japan’s so successful without it?

First, let me be clear here. I don’t see Japan as some kind of utopia or even a role model. I just see it as different. But the fact it is different – and not struggling in the ways many commentators seem to think America is struggling, at least regards faith as an identity – is what might make the Japanese counterpoint relevant. Let me also be clear that I believe faith can nurture a life or a community. If your personal faith nourishes you, I cheer you on.

But speaking broadly, if Japan can maintain a stable society without faith, it would seem to indicate it isn’t a necessity for a healthy society.

So what is keeping Japan together?

For a long time, Japanese could rely on clear lines to define themselves, like language (Japanese being little spoken outside the nation) and terrain (being an archipelago). But things are changing, and changing fast. It isn’t particularly difficult to get to Japan anymore. More people outside Japan are learning and speaking Japanese than ever before. More want to live here than ever before.

And Japan is aging and shrinking. We’ve “lost” three million citizens over the last few years alone, as deaths outpace births. The numbers of foreign visitors and permanent residents are higher than ever before. All of these factors are driving the question of what it means to be Japanese, which is playing out in online forums, TV shows, newspapers, and election contests throughout Japan.

A recent Stanford survey about immigration shows that race isn’t a major factor in resistance to immigration. Rather, Japanese language ability is. In this chart, you can see how many more respondents chose to admit a hypothetical immigration applicant based on their ability to speak fluently.

Now, this might seem like a no-brainer. Of course, you want to admit people who can communicate with you. But “fluent” is doing a lot of lifting here that might not be obvious in English.

Japanese is classified as a “high-context” culture, meaning that a large amount of cultural knowledge is required to speak fluently. (Other high-context cultures include China, Korea, and many Arab countries.) There’s a lot of implicit communication, meaning context is often implied rather than expressed directly. Meanwhile, Americans, Germans, and Scandinavians (among others) are framed as “low-context,” meaning conversations tend to be explicit, with context usually spelled out.

Anyone who’s studied Japanese will know what I mean. We often leave pronouns and even subjects out, in casual speech. You’re expected to kuuki wo yomu – “read the air” and intuit meaning. So when Japanese say they want immigrants to master Japanese, they’re talking less about the linguistics of speaking than they are context – “the air,” in other words.

In a recent survey, 62% of Japanese reported that they wanted immigrants to not only follow the rules, but also “etiquette and customs.” Some interpret this as draconian or authoritarian, but I don’t think so. If you correlate it with that Stanford survey, you can see that once Japanese fluency is achieved, locals ranked people of a wide variety of ethnic backgrounds as acceptable (the dot at far right in each graph.)

Of course, not everyone in Japan agrees with this thinking. There are those who have a vested interest in keeping the definition of Japanese as strict as possible, who use foreigners as scapegoats for society’s failings, who wish to keep the number of outsiders who immigrate here as low as possible. The far-right party that rode an anti-immigrant platform to a surprising number of seats in parliament in the 2025 elections is one example. But I believe the winds are against people who think in this way. The demographics are against them. The technologies that let us cross borders physically, and share our ideas across them virtually, are against them. And most of all, I think our cultural traditions are against them. When our cosmology, so to speak, is so inclusive, it’s hard to square why our society should not be. Anyone who trumpets conservative values in Japan is eventually going to run up against that conundrum.

As a Japanese, it isn’t my place to say who is or isn’t an American. But I can say what I personally envision for my country’s identity going forward. I see it in little moments all over the city today. Non-Japanese employees greeting customers in polite Japanese. Foreign folks showing respect at temples and shrines. The caucasian man and his daughter I saw commuting to kindergarten on a mama-chari bike, her tiny pastel backpack slung incongruously over his big shoulders. In other words, the stuff of everyday life. To me Japanese isn’t what you look like; it’s how you act. In other words, it’s how you read the air.

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About three years ago, someone asked me why, with my physics undergrad background and a PhD in economics, I had decided to become a professional blogger. I told him that blogging seemed like the highest-leverage thing I could do, in terms of actually having an impact on the world.

I didn’t mean that bloggers literally rule the world, of course — this isn’t Ender’s Game. Nor do I have any illusions that I’ll be able to have as much influence as a top politician like Donald Trump, a top entrepreneur like Elon Musk, and so on. But in terms of what I could personally accomplish, it seemed like a no-brainer — being an opinion writer has probably allowed me to change the world much more than being an academic or an engineer or a financier or a consultant would have.

Why? Because blogging has allowed me to inject ideas into the discourse with unparalleled speed, breadth, and access. A researcher goes deep into a few topics; a blogger can quickly hit the main points of many topics. This enables speed; academics might take months to write something useful about a breaking event like the Iran War or Trump’s tariffs, while I can have something out in hours. It also enables me to comment on a wide variety of topics, because people expect me to be an analyst rather than a subject-matter expert. And speed and breadth in turn allow me to talk to a wide variety of important and interesting people — top academics, billionaire company founders, presidential advisors.

Injecting ideas into the discourse is incredibly powerful. John Maynard Keynes famously described the power of idea injection:

Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

To describe why idea injection is so powerful would take an entire post (which I do intend to write). There are a number of reasons. First, idea injection allows you to frame the terms of the debate. Whether people think your idea is right or wrong, once you put it out there, discussion of the issue at hand turns into discussion of whether your idea is good or bad.

As Keynes notes, an early writer’s ideas can also act as a kind of training data for later thinkers; it becomes a foundation off of which politicians, bureaucrats, staffers, other writers, and even entrepreneurs and financiers build when they make their own ideas.1 Just today I saw Matt Yglesias and Jerusalem Demsas — two of my favorite pundits — riffing on my post on dating advice on their podcast.

But injecting ideas is only one part of a blogger’s influence. We’re also part of a community of intellectuals that span multiple disciplines and walks of life. On a daily basis I get to mull ideas over not just with other writers and pundits, but also with top academics, CEOs and entrepreneurs, Congressional staffers and political advisers, think-tankers, corporate researchers and engineers, and plenty of people from other countries. This leads to a much richer discussion, with a greater diversity of viewpoints, than almost anything else I can think of. And they reach a very wide set of ears. In a way, blogging is like DARPA — ad-hoc multidisciplinary teams that build the rapid prototype of an idea. OK, maybe that’s a bit pretentious, but you get the point.

Anyway, the reason I’m writing all of this is not to brag, but to complain. Over the last two years, I’ve felt like my job has become a bit less important than it used to be, for three reasons:

1. The rise of populism on all sides of the political spectrum in the U.S. means that smart ideas are simply not as likely to be implemented by the people in power.

2. The general shift to Substack and other monetizable direct-to-audience channels has made punditry less conversational.

3. The rapid proliferation of AI writing has increased the demands on readers’ attention (including my own).

This doesn’t mean I think punditry is dead or unimportant — despite the title of this post, I do think that what I write still matters — but it does mean I’m now spending some time thinking about how to regain some of the impact I felt I had a couple of years ago.

Populism means being intellectual is a liability

“Thus when the irreverent intellectual has done his work…The stage is now set for the fanatics.” — Eric Hoffer

Ten years ago, it was already apparent that wonkish policy types were to have a much diminished role under Donald Trump. Trump himself is not the type of person who’s inclined to listen to egghead intellectuals — he’ll always trust his own instincts, which were usually developed watching CNN in the early 1990s. In his first term, though, he could sometimes be prevailed upon to listen to reason when a crisis struck — Operation Warp Speed and the CARES Act were done under his auspices, because he stepped back and allowed smarter folks to take over.

And in Trump’s first term, it still felt like there were lots of relevant ideas for econ types to debate — trade policy, place-based economic policies, new socialist ideas from the Bernie camp, and so on. It felt like a time of great political ferment and upheaval — even if Trump himself wasn’t listening to economists, someone would be soon.

In Trump’s second administration, though, that’s all gone. Whether it was Covid, Trump’s advancing age, or his attempted overthrow of the 2020 election that made Trump totally lose faith in everyone but himself, the big man now seems inclined to listen only to the voices in his own head.

Take tariffs, for instance. Essentially no one thought — or thinks now — that his tariffs were a good idea. Oren Cass, one of the last few tariff defenders, has been reduced to speaking in snarky generalities about how “econ isn’t a science”, because on some level he knows that the way Trump went about imposing tariffs is intellectually indefensible.

There was Peter Navarro, of course, at least until he got sidelined. But Trump didn’t get the tariff idea from Navarro. He thought of it all himself, and then looked around for someone — anyone! — who would be willing to stand in front of a podium and endorse the policy, and Navarro was just the guy he found. Reading Peter Navarro’s books, or trying to start a dialogue with Navarro, would have been useless, because Navarro’s ideas — such as they are — weren’t actually driving anything. It was all just a cult of personality.

The rest of Trump’s administration is the same way. The “MAHA” antivax insanity, the research funding cuts, the doomed war in Iran, the reckless spending — it’s all just ad-hoc stuff that Trump did, either on a whim, or because the last guy he talked with told him it would be a good idea, or because he’s in damage control mode after a drop in the S&P. There’s no intellectual movement here, just a cult of personality. There’s no one to argue with, because nothing that’s happening is based on an argument in the first place.

This state of affairs will eventually end, of course. Whoever succeeds Trump won’t have his cult of personality, and will have to rely on ideologies and ideas that will be ripe for debate. And if a Democrat retakes the White House in 2028, ideas will be back on the table, as they were during the Biden administration.

But even on the left, the trend is away from open intellectual debate. Zohran Mamdani and the other socialist candidates who are winning primary races in blue cities are interested in ideas, but only from people within their own clique. Leftism in America is fundamentally a factional movement disguised as an ideological one; bloggers who aren’t on the team will simply be ignored, except for the occasional denunciation.

This is just populism. Populism isn’t really about doing stuff that’s popular; it’s about putting factional and tribal conflict above the national interest or the general public good. The goal is always to “own” the other side, and economic and social outcomes become subordinate to that goal.

Intellectualism thrives in times of relative social peace. This isn’t one of those. Hopefully, the tide of populism is receding in America, but the experiences of other countries suggest that these times of factional struggle can go on for a very long time.

Monetization means intellectuals are siloed

“Writing is like prostitution. First you do it for love, and then for a few close friends, and then for money.” — Ferenc Molnár

Substack has done a whole lot of good, both for me personally and (more importantly) for the world. In a time when most of the internet has been taken over by malignant opportunists and sensationalist attention-seekers, Substack stands as a lone island where reasoned, intelligent, earnest debate is still possible. It has also allowed many writers to escape from publications that stifle their voice, impede their development, and don’t pay them their due. In many ways, Substack has resurrected the old blogosphere from the early 2010s.

However, this resurrection has come at a price. Substack’s killer feature — email distribution — allows writers to get much larger and more loyal audiences, and to make a lot more money by charging those audiences for subscriptions. But this creates a financial incentive for writers to spend more time serving their customers and less time talking to each other.

In 2011, I was blogging part-time, because it was fun — the attention that mattered was when Brad DeLong or Paul Krugman or Tyler Cowen was interested in something I had to say. It was a little “republic of letters”. Now I’m blogging full-time, and having a conversation with Brad or Paul or Tyler is still just as fun and stimulating, but it’s a distraction from my job of creating content for my paying audience. There are still interesting intellectual debates and exchanges in the blogosphere, but they are no longer the main thing writers are rewarded for.

Turning intellectuals into content creators tends to put them in siloes. And Substack is far from the strongest in terms of silo-ing. Most of the internet is being taken over by vertical-scrolling short-form video, which is not exactly good for conversation and exchange. I could go start a YouTube channel, but it would just be me talking directly to my fans — I’d basically be a TV talk show host. I might still do this, because it’s a high-leverage way to influence the world, but it’s not as intellectually rich or rewarding as being part of a round-table conversation.

Nor are interesting new ideas as likely to emerge from one-way siloed content creation. Ideas emerge not from singular minds in isolation, but from dialogue — the cross-pollination that the blogosphere and other intellectual communities create isn’t just fun, it’s productive. Writing for you, my readers, is not boring, but you’d get better content from me — and from all your other favorite writers — if we talked to each other more.

I do think that platform companies could consciously try to recreate intellectual dialogue by tweaking the features of their platforms. Substack has tried to do this with the Substack Live feature, with modest success. But a more powerful tool would be to allow Substackers to easily and automatically see when another Substacker links to their blog. This feature existed on Blogger in 2006 — whenever another website linked to you, you’d see how many pageviews it drove to your blog. If Substack implemented this feature, it would get a lot of writers talking to each other more often.

AI is stretching our attention to the breaking point

“My ambitions accelerate. My afternoons do not.” — Claude

Unlike many people, I think AI writing is actually pretty good. Yes, there’s a recognizable style that the basic models use (“It’s not X, it’s Y” and lots of other little cliches). That style isn’t bad, it just gets overplayed when everyone uses it.2 Yes, AI models are still not great at boiling a complex idea down to one or two pithy sentences. But you can modify the style that AI uses. And AI can do plenty of things human writers can’t — it can seamlessly incorporate vast knowledge and novel data analysis into a piece as it writes it.

For example, I immediately suspected that this essay by Aaron Brown, Michael Mendelson, and Cliff Asness, on the confusion of the debate over “affordability”, is mostly AI-generated, and Pangram — the most reliable AI text detector — flagged it as around 50% AI. But that’s not a knock against it — the essay is great. It classifies different kinds of “affordability” problems — true poverty, precarity, downward mobility, etc. — into different buckets, gives some illustrative vignettes, and provides some useful numbers about each one. I broadly agree with the article’s conclusions, and I think it’s a valuable addition to the discourse.

A bigger problem is that in a world where a huge number of people generate effectively infinite amounts of good-quality content like this, it becomes hard for readers to decide where to allocate their attention. Instead of identifying the few most consistently useful blogs and reading those in great detail, a lot of people will respond to the explosion of content by “reading” a larger number of posts but only lightly skimming each one.

It’s not my job I’m worried about here. It’s that in that world, even if my blog continues to get tons of readers and make me plenty of money, what I do becomes less important. If people are just skimming what I write so they can move on to the next 10,000-word Claude-generated post, the fact that they’re paying me $10 a month is cold comfort — I’m not really reaching them. And even more worryingly, no one is reaching them — if they’re skimming 100 posts a day instead of reading 10 all the way through, they’re not getting really good information from anywhere.3

I don’t know how severe this problem will be, to be honest. There was always a lot more high-quality content on the internet than anyone could ever read, and a lot of people always just skimmed my posts instead of reading them closely. Maybe AI can’t make this problem worse because it was already maximally bad.

Also, I’m optimistic that AI itself will open up new channels for intellectual influence. It’s a well-known fact that if AI just consumes AI-generated output, it gets worse and worse. So AI companies try very hard to “clean” the text they use to train their models. Human writers, whose personal experience brings in new data for AIs to learn, can influence the world if their writings are used to train the next generation of AIs.

Interestingly, I think I’m already doing this, quite by accident. I don’t know how reliable the website intheweights.com is, but it shows me in the top 2% of contributors:

I suspect that on the topics I write about, I’m even more influential. Claude and GPT often cite me as a source on topics I write about4, and friends have told me that Claude recommends my blog with surprising frequency when they ask it for reading material. Maybe Tyler Cowen is right when he says we should be “writing for the AIs”.

In any case, I find that although blogging is still very fun, and I still think I’m having a positive impact, and my readership is still growing, the environment a lot more challenging than it was just two years ago. The combination of a nation ruled by closed-minded tribalists, a blogosphere obsessed with putting out monetizable content, and the rampant proliferation of high-quality AI output is forcing me to rethink what I do. I want to keep injecting ideas into the discourse and participating in a vibrant and relevant intellectual community, but what it takes to do that might look a little different going forward.

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Young people won’t remember this, but there was a distinct point at which George W. Bush started to lose the country. In August 2005, a giant hurricane swamped New Orleans, killing over a thousand people and washing away whole parts of the city. Bush displayed startling incompetence and tone-deafness during the cleanup, which began a process of general disillusionment with his presidency that intensified with the financial crisis of 2008 and the long slog in Iraq.

I don’t know whether Trump’s debacle in Iran will be a similar moment for his presidency. For one thing, unlike Bush, Trump’s approval ratings were already very low before Iran:

Compared to the other stuff people hate about Trump — the blasé attitude towards inflation, the tariffs, the unprecedented corruption, the ICE raids, the various abuses of power — the Iran War may end up being a minor footnote. But there is one similarity with Katrina: This is the point at which even many of Trump’s defenders will be forced to admit, in private if not in public, that the man and his administration are grossly, pathetically incompetent.

The details of the deal that Trump is trying to make in order to withdraw from the war he started are still murky and unclear — probably because as soon as those details are released, people will realize that the U.S. has effectively been defeated by Iran. Here’s what the deal is rumored to contain:

(Update: Bloomberg has the confirmed details of the draft memorandum, and and the initial reports look to have been completely accurate.)

Plenty of people, looking at these details and observing the conduct of the war, are ready to speak the plain truth that the U.S. lost the war to Iran. Tom Nichols, a former professor at the U.S. Naval War College, had this to say:

Trump and his team, in record time, just lost a war to a militarily mediocre—but nonetheless extremely dangerous—adversary…[E]ven before we have the details, it is clear that Trump has failed to achieve every one of the goals he put forward for this war of choice, and now he is determined to sign, seal, and deliver America’s capitulation as quickly as possible.

The New York Times editorial board concurs, with the headline: “Trump Lost the War He Started in Iran”. The WSJ Editorial Board is slightly nicer, writing “Trump Stages an Iran Retreat”.

As regular readers of this blog know, I’m very skeptical of claims that America has “lost” this or that war:

For example, we clearly won the Iraq War, despite a generation of pundits who got used to repeating that we “lost”. We defeated all enemies — Saddam, various militias, and ISIS — and established a friendly, pliant government that allows U.S. oil companies unfettered access to the country. Bush’s war was a strategic mistake — in my opinion, the geopolitical benefits weren’t worth the costs — but by any reasonable historical standard, it was a victory.

The same is not true, however, of Trump’s war in Iran. This one really is a clear defeat for the U.S. The reason is not just that the U.S. failed to achieve its strategic goals. It’s how Iran forced the U.S. to give up those goals.

How Iran won the war

Iran used military force to defeat the U.S. First, it successfully dispersed and hardened its key forces — missiles and drones. This is from the Washington Post on May 7th:

A confidential CIA analysis delivered to administration policymakers this week…found that Tehran retains significant ballistic missile capabilities despite weeks of intense U.S. and Israeli bombardment…Iran retains about 75 percent of its prewar inventories of mobile launchers and about 70 percent of its prewar stockpiles of missiles, a U.S. official said. The official said there is evidence that the regime has been able to recover and reopen almost all of its underground storage facilities, repair some damaged missiles and even assemble some new missiles that were nearly complete when the war began.

And this is from CNN on May 21st:

Iran has already restarted some of its drone production during the six-week ceasefire that began in early April, one sign it is rapidly rebuilding certain military capabilities degraded by US-Israeli strikes, according to two sources familiar with US intelligence assessments…Iran’s military is reconstituting much faster than initially estimated…[S]ome US intelligence estimates indicate Iran could fully reconstitute its drone attack capability in as soon as six months…Iran has been able to rebuild much faster than expected due to a combination of factors, ranging from support it is receiving from Russia and China to the fact that the US and Israel did not inflict as much damage as the two countries had hoped, one of the sources told CNN…

Thousands of Iranian drones still exist — roughly 50% of the country’s drone capabilities[.]

Iran dispersed and buried both its weaponry and its defense industrial base, and the U.S. was unable to destroy it.

Next, Iran used its surviving weapons to execute an effective naval blockade of the U.S., and its key allies.

The naval blockade was Iran’s closure of the Strait of Hormuz. This vital waterway, which delivers much of the world’s oil, is right next to Iran, so Iran had the geographic advantage. It used drone boats, naval mines, aerial drones, and missiles to prevent ships from transiting the strait. This did two things. First, it raised the global price of oil, which raised gasoline prices in America:

It also sent U.S. inflation back to around 4%, which caused Americans’ real wages to start falling:

Meanwhile, the U.S.’ allies — the Gulf states and Saudi Arabia — were severely impacted by Iran’s blockade of Hormuz, since much of their oil couldn’t be sold. These allies put pressure on Trump to end the war.

The U.S. tried many things to open the Strait of Hormuz, but nothing worked. American strikes were incapable of destroying Iran’s weaponry or forcing Iran’s regime to submit. So in the end, it had to submit. The deal Trump is reportedly cutting makes huge concessions to Iran, leaving Iran in a much stronger position both economically and militarily than it was before the war:

• The U.S. will withdraw its forces from the conflict zone within 30 days.

• All U.S. sanctions on Iran are reportedly being lifted. Before the war, sanctions had crippled Iran’s economy since 2012, leaving it stagnant and sclerotic. With those sanctions gone, Iran will be able to sell oil and grow much more prosperous.

• Iran will reportedly start charging fees on transit through the Strait of Hormuz. This is a toll on international shipping — something forbidden by the UN Convention on the Law of the Sea. This will be a huge source of income for Iran — something that didn’t exist before the war.

• The U.S. and/or its Middle Eastern allies will reportedly pay Iran a $300 billion reconstruction fund, as well as unfreezing Iranian assets. This is equal to one entire year of Iran’s GDP, and would effectively constitute war reparations. JD Vance has said that the reconstruction fund is not yet confirmed.

Iran thus compelled the U.S. to withdraw its military, end the sanctions that were in place before the war, and potentially pay Iran reparations. In exchange, Iran will allow the Strait of Hormuz to open (with tolls) and will publicly declare that it’s not pursuing nuclear weapons (which it has always publicly declared in the past).

In addition, Iran will gain an important new source of geopolitical power and economic revenue: control of the Strait of Hormuz.

Before the war, Iran didn’t control the strait, simply because it didn’t realize it could. Drone technology had advanced to the point where Iran was able to shut down Hormuz, but Iran didn’t know that until the U.S. attack forced it to try the risky and desperate move of actually shutting down the strait. The gambit paid off spectacularly, and now Iran knows that modern drone weaponry gives it an advantage it didn’t have in previous decades. So it controls Hormuz.

It’s kind of wild to step back and consider how good of a position Iran’s leaders are in now, compared to the situation before the war. Iran had lost most of its proxy armies in the Middle East — Hezbollah, Assad, most of Hamas. The regime had been rocked by massive nationwide protests, which it only managed to quell by murdering tens of thousands of innocent Iranian citizens. The country’s economy was slowly dying. Now the leaders are firmly entrenched in power, their economy will be revived, and they find themselves the masters of Hormuz for the first time.

Anyway, I don’t see any sense in which this is not a classic military defeat for Donald Trump and the United States. Consider the contrast with Iraq. None of America’s opponents in the war were in power after the war; in Iran, despite the assassination of a few leaders, the regime is even more firmly in power now than before the war. In Iraq, the U.S. suffered some economic damage, but was willing to see the conflict through until all opposition was defeated and all U.S. war aims were achieved (except for the destruction of WMDs, which never existed in the first place and so could not be destroyed). In Iran, economic pressure forced America to make major concessions relative to the pre-war status quo.

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The photo above is not from China; it’s from Japan. In the 1970s, Daiei was Japan’s top retailer. But after Japan’s asset bubble burst around 1990, it became Japan’s most famous “zombie” company — staggering along unprofitably, kept afloat by a constant stream of below-market-rate loans from UFJ Bank and other big Japanese banks. Eventually the company was acquired by Aeon, a more successful retailer, and its once-storied brand is slated to be retired for good in the next few years.

I tend to be very skeptical of comparisons between post-1990 Japan and post-2021 China, because there are just so many differences between the two economies (and between the global economic environments at the time). Their industrial policies are different, their trading relationships are different, their bubbles and busts happened for very different reasons, and so on. But in the case of “zombie” companies, there may be some important parallels.

What’s important about Daiei is not how it failed, but why it didn’t fail much sooner. Caballero, Hoshi, and Kashyap wrote a paper in 2008 arguing that “zombie” companies like Daiei held the Japanese economy back during the 1990s (and, in some cases, even beyond the 1990s).

The basic story is that after 1990, the Japanese economy slowed down, and lots of companies that used to be profitable — especially in the construction, retail, and trading sectors — were no longer profitable. These companies owed a lot of money to banks. If they stopped being able to pay back their loans, the banks would be forced to recognize bad debt on their books. This would get them in trouble with regulators (because of capital requirements), and it would also get them in trouble with the Japanese public.

So what the banks did was to lend even more money to the failing companies that already owed them a lot of money, at very cheap interest rates. The new loans were used to pay back the old loans, and the new loans would be classified on the bank’s books as “good” debt. This process — known as “evergreening” — kept banks from ever having to acknowledge their losses:

Peek and Rosengren (2005) document this empirically as well.

Evergreening kept a bunch of companies afloat — like Daiei — that had utterly broken business models. Theoretically, the companies could have eventually pivoted their business models and recovered, or Japan’s economy could have started booming again, etc. In practice, this never happened.

Caballero, Hoshi, and Kashyap argue that evergreening was very bad for the Japanese economy, because it hoovered up scarce resources that better companies could have used to grow. With all of those crappy loans clogging up their books, Japanese banks couldn’t lend to healthier companies. With big zombies like Daiei still able to employ large amounts of Japan’s best managers, young scrappy upstarts were deprived of talent. The authors argue that keeping all of this labor and capital locked up inside doomed companies contributed significantly to Japan’s long productivity stagnation.

Why did the Japanese government allow this to happen? Preserving employment at the zombie companies was probably a big part of it. Japan had a strong tradition of job security at that point in time, and to throw so many people out of work — even if they could have gotten new jobs eventually — would have been seen as cruel and unfair. Social unrest was a possibility. Bank bailouts may also have been deeply politically unpopular. In any case, whatever the reason, throughout the 1990s the government supported banks with various capital injections and regulatory forbearance, without forcing banks to cut off the zombies.

Anyway, that’s Japan. The question is whether something like this will happen in China.

China’s experience with its real estate bubble and bust doesn’t exactly parallel Japan’s, but there are some broad similarities. Since 2021, there has been a broad economic slowdown (probably more severe than the official numbers suggest), and a long-lasting chill in real-estate-related industries. This has predictably led to a rise in the number of loss-making companies:

You’ll notice on this chart that the share of non-performing loans has actually gone down since 2021, even as fewer companies are turning a profit. That suggests that lots of Chinese companies are being kept on life support by cheap bank loans. Here’s the Rhodium Group:

Some concrete data points suggest that China’s evergreening of debt is more widespread than is commonly the case in most market economies. The ratio of banks’ reported non-performing loans has decreased over the past years, while the share of loss-making enterprises increased…This would indicate Chinese banks have been sitting on large volumes of NPLs that have not yet been fully recognized. This is an open secret: The National Audit Office recently claimed in an annual audit report to the NPC that 16 of 43 audited banks last year had NPL levels that were double the officially reported figure…

Loan rollovers are a pervasive phenomenon in China…[T]he financial system…served as a shock absorber, channeling resources to enterprises facing losses to maintain output and prevent the defaults and bankruptcies that occurred in market economies.

Another Rhodium report finds that the proportion of loans made below benchmark rates has risen significantly since 2021, even though benchmark rates are lower than they were back then:

And the Dallas Fed has documented how more and more Chinese companies, especially in the real estate sector, aren’t making enough money to pay the interest on their loans:

All this — falling official NPLs, much more below-market lending, companies unable to pay their interest expenses, widespread suspicion that many of the companies whose loans are “performing” will never be able to repay those loans — matches the general pattern that Hoshi and Kashyap (2000) documented in post-bubble Japan. Banks have taken a bunch of losses, but have refused to recognize those losses, using a flood of cheap debt to keep their borrowers afloat.

A bunch of people have warned about this. Here’s Rhodium:

Because of the political incentives shaping China’s financial system, banks in China tend to extend or roll over debt to poorly performing or loss-making companies. This can have some of the same effects as a subsidy, by removing incentives for companies to stay profitable and isolating them from market forces that would otherwise lead to their restructuring or bankruptcy….Evergreening of credit, therefore, allows firms to…[reduce] domestic and global prices to unprofitable levels[.]

And here’s the Dallas Fed:

There is mounting evidence of “zombie lending” in China, banks rolling over bad loans to unprofitable firms and allowing the status quo to continue rather than recognize losses.

And here’s a Business Times story about how China’s government has allowed and even encouraged zombification, much as Japan did in the 1990s:

It’s impossible to quantify the true extent of the [bad debt] problem, though most economists say the ratio of bad loans is significantly higher than the 1.5 per cent official rate…One analyst at Absolute Strategy Research in London pegs it at about 10 per cent…Others say it could be double that amount…

While the [banks’] leniency [toward borrowers], largely condoned by regulators in Beijing, has helped maintain financial stability over the past few years, it also means the banking system is recycling capital into unproductive companies rather than spurring real growth in healthy firms…

[Government] officials have moved to bolster the nation’s six biggest banks with more than US$100 billion in fresh capital…[R]ather than cracking down on deadbeat borrowers, China’s banks are encouraged to cut them some slack. Regulators have for years urged the big banks to keep their reported bad loan ratio under 2 per cent, according to sources familiar with the guidance…As a result, banks routinely roll over maturing loans, extend repayment periods, or allow interest to be capitalised to avoid triggering NPL recognition.

Now you might be tempted to think — and I’ve seen a few people argue — that this only matters in a market economy. In a market economy, undercapitalized banks matter because banks have to succeed or fail on their own. In a state-directed economy like China’s, the theory goes, debt on the banks’ books might as well be on the government’s books.1 Banks can keep lending no matter how much bad debt they have, because the only entity that could punish them — the Chinese government — wants them to do so.

But while government control might avert a financial crisis, it doesn’t automatically solve the zombie problem, or make the comparison with Japan inappropriate.

First of all, it would be a mistake to see Japan’s government in the 1990s as operating at arm’s length from Japanese banks. It most certainly did not; in fact, it acted to support the banks that were supporting the zombies. The government bailed out the banks, deliberately turned a blind eye to the zombie problem, and encouraged banks to keep on lending to healthier companies despite the unrecognized bad loans on their books. That’s not too different from what China’s government seems to have done in response to the real estate bust, at least initially.

But simply having the government urge (or order) banks to keep lending didn’t solve the zombie problem in Japan, and it won’t solve it in China either. Even if the zombie companies don’t end up competing with healthier companies for capital, they compete with them for other resources. They compete for labor — workers who could be working at young, growing, healthy companies are instead being paid to continue to work for unproductive companies that are just spinning their wheels. They also compete for raw materials, for land, for energy, and so on.

These resources are not in infinite supply, even in China. As long as unproductive zombie companies are hiring workers, hoovering up metals and chemicals and watts of electricity, and taking up prime real estate, they’re holding back the rest of the economy. This doesn’t just manifest as higher costs for healthy companies — it also shows up as increased competition. In 1990s Japan, if a new retailer wanted to enter the scene, it had to compete with Daiei, the unproductive behemoth that was essentially being paid by banks to produce below cost. The same will be true in China.

In fact, this may be a reason for the “involution” that Chinese companies are experiencing. In the wake of the real estate bust, China’s government directed banks to lend to manufacturing companies instead of to real estate-related companies. They did this (though some of the loans ended up sneaking back into the real estate sector). In fact, a large percent of the “subsidies” that China dishes out to its manufacturing companies is through below-market-rate loans.

Some of these manufacturing companies will be successful and efficient — indeed, many already have been. But others are unproductive and inefficient. Instead of letting these die, China’s banks may keep them on as zombies as well, paying them to compete with China’s healthier companies. Here’s Alicia Garcia-Herrero from back in March:

In many sectors, including…electric vehicles, solar panels, batteries, and other green technologies…Chinese firms…keep selling at rock-bottom levels, sometimes below what it costs to produce, just to hold onto market share. A growing number of these companies cannot earn enough revenue to even service their debt…These “zombie” companies survive only because banks roll over loans and local governments provide subsidies to avoid job losses and keep tax revenues flowing…In newer, high-priority sectors like green tech, the share of zombie companies has hit 30 percent of total listed companies…

Without real productivity advances, [zombies] still join the price-slashing frenzy to stay in the game thanks to external support from banks or local governments. They cut prices aggressively…The outcome is predictable: collapsing profit margins across the board, even for the better companies, whose productivity is increasing.

When we Westerners think about the effect of Chinese zombification, we often think about the flood of cheap exports threatening to deindustrialize Europe and other regions. But while that export dominance might seem like a victory to China’s mercantilist leaders, it’s a double-edged sword, because zombification reduces productivity at home. In the long run, lower productivity hurts growth, despite the temporary bump from exports.

In other words, China’s fusion between the financial system and the state may have made zombification worse, not better. The Chinese state is not a ruthlessly efficient allocator of capital; it has sociopolitical goals just like any other state, and it fears the unrest that could result from widespread corporate failure and unemployment. Yes, it can tell banks to lend to manufacturers instead of property developers, but that just ends up adding more zombies to the horde.

And at some point, even state-owned and state-directed banks probably do care about profitability. Yes, the government can bail out any bank at will, but if you’re the bank executive or manager who dished out the bad loans and made a bailout necessary, your career might be over. This might be why corporate loans have started to fall slightly from the torrid pace of 2023-24:

Ultimately, when people write the story of China’s economy in the 2020s, zombification could end up being more fundamental to that story than exports. The parallels with Japan are not always real, but they’re real in this case — and so far, China’s government seems to be walking into a similar trap.

Update: In the comments, Jack Lowenstein asks a very important question: So what? Even if zombification proceeds in China, what are the downsides from the point of the Chinese government? He writes:

I think the critical difference between Japan’s “extend and pretend” policies and China’s is the geopolitical element.

Japan feared domestic social and political disruption - and was heavily influenced by “free market” vested interests. There was also a degree of denial by MOF and METI that the gogo years of the post war period up to the mid 1980s were really over.

The CCP and the PRC however are driven by the deliberate aim of de industrialization of critical parts of the OECD supply chain. Loans and other support to the companies that will deliver this outcome are not going to stop for economic reasons.

Sadly policy makers in most of the countries suffering these effects are ideologically unwilling to enact anti-dumping and other defenses to respond. So zombification will not stop in China. Yes the population of the PRC will pay a price. But since when did the CCP care about that?

This is a very important question, and I should have probably gone into that more in the post. Here was my response to Jack in the comments:

I think some of these are real differences, but perhaps not all of them.

“Japan feared domestic social and political disruption” <-- I actually don’t think this is a big difference. China is worried about social and political disruption as well -- just look at how fast Xi ended Zero Covid after some small scattered protests. The old social compact in China was “growth in exchange for political quiescence”. But with rapid growth now over, that social compact is gone, so the possibility for unrest is definitely there.

“There was also a degree of denial by MOF and METI that the gogo years of the post war period up to the mid 1980s were really over.” <-- I’m not sure this is different either. China has been overstating its growth since the bubble burst in 2021 (https://rhg.com/research/chinas-economy-rightsizing-2025-looking-ahead-to-2026/). This is often a tool the government uses to “smooth” growth between good and bad years (https://www.aeaweb.org/articles?id=10.1257/mac.20150074), suggesting that they think fast growth might come back.

“The CCP and the PRC however are driven by the deliberate aim of de industrialization of critical parts of the OECD supply chain. Loans and other support to the companies that will deliver this outcome are not going to stop for economic reasons.” <-- This is true, and I think this is an argument FOR zombification. Unproductive, unprofitable companies that fill supply chain gaps will continue to be supported with evergreened loans.

So the question becomes: What are the downsides of zombification from the regime’s perspective? That’s a topic I should have considered more. One answer is “social unrest” -- if slow growth makes the repressiveness of China’s regime less tolerable, then we could see popular anger at the industrial-policy regime. Remember that Japan was a very free society, where people could pivot from the pursuit of money to the pursuit of lifestyle and art and leisure. That’s not necessarily true in China.

Another possibility is that eventually China becomes more like the USSR. The USSR was famously unproductive, because it insisted on onshoring its entire supply chain. Right now, China looks hyper-competitive in a bunch of high-tech industries, but if zombies suck up more and more labor and other resources (including compute), that competitiveness could narrow over time.

Finally, there are fiscal dangers (https://rhg.com/research/chinas-financial-and-fiscal-decay/). When Europeans buy cheap Chinese EVs, part of the consumer surplus they receive comes out of the pockets of Chinese taxpayers and bondholders. Japan’s zombification caused it to run up an enormous amount of debt, which it was able to carry safely only thanks to A) persistently low demand and low natural interest rates, and B) the government’s ability to buy overseas assets that performed extremely well (https://www.ft.com/content/f7d3f20c-b303-4f6c-b4a0-8ee8906ae155). Now that the first of those has gone away, Japan’s government debt IS becoming a problem, with a plunging exchange rate and creeping inflation.

So while China’s government can get away with “damn the economics, full speed ahead” for a while, eventually I think something breaks...

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About a month ago, I weighed in on an interesting debate over American vs. European living standards.

On one side, you have people who argue that Europe is much poorer than America, and is falling even further behind. Most of the people making this argument are Europeans themselves — especially economists like Mario Draghi, Philippe Aghion, Luis Garicano, and Antonin Bergeaud. They look with envy on the U.S. tech sector, which Europe has no real equivalent to, and they yearn for liberalizing reforms that would allow Europe to catch up.

On the other side, you have American liberals like Paul Krugman and Brad DeLong. They argue that Europe is not falling behind — that most of the gap in material living standards is due to Americans working more, and that America’s apparently faster productivity growth is an artifact of the way relative growth rates are measured.

This is an interesting debate, and in the end it comes down to some surprisingly technical measurement issues and data mysteries. I’ll have more to say on it in the future. But it’s really just the most recent exchange in a long-running debate over the “varieties of capitalism” — whether Europe’s stronger welfare and regulatory states deliver better outcomes for regular people, or whether America’s more free-market system is superior. I don’t think that debate is close to being settled — and may never be settled, since liberalizing reforms in Europe and expansions of welfare and regulation in America may shrink the differences between the two systems.

But there’s a second debate going on regarding Europe’s economy, with potentially far more devastating consequences. It’s the question of whether Europeans should be rich at all.

Instead of crowing about the superior performance of the European social model, leftist economists are increasingly arguing that Europeans are too rich, and ought to be poorer than they are. This was the upshot of a manifesto by Thomas Piketty and his World Inequality Lab, which I covered in my last roundup post. Piketty argued that “labour hour reductions, growth caps in rich countries, less material consumption, and changes in food habits” will be needed in order to beat climate change:

This is also the argument in a recent Guardian editorial by Piketty, Olivier De Schutter, Joseph Stiglitz, Jayati Ghosh, Kate Raworth, and Jason Hickel:

We live in an age of manufactured scarcity. In a world richer than ever before, roughly one 10th of the world’s population still lives in extreme destitution…

For decades, the recipe was simple: grow the economy, and poverty would gradually disappear. But the promise that economic growth would “lift all boats” has not been kept. While national incomes expanded, wages stagnated, work became more precarious and public services were cut. At the top, fortunes ballooned; at the bottom, families turned to food banks. Growth has become decoupled from shared prosperity…It has also become ecologically unsustainable…That is why we have come together to develop and support the “roadmap for eradicating poverty beyond growth”.

The essay — which was immediately identified by Pangram as being 100% AI-generated — was extremely vague on its plans for transforming the global economy. It often reads like a mishmash of buzzwords and slogans. Here’s a taste:

The real question today is not whether growth continues, but what kind of economies we are building, who they serve and whether they allow everyone to live in dignity within planetary boundaries…[W]e are united in the conviction that our economies must be redesigned around the fulfilment of rights and collective wellbeing within planetary boundaries, rather than maximising output at any cost. Human rights here are not an afterthought; they are the organising principle for how we measure progress, set priorities and resolve trade‑offs…All too often, policies affecting people in poverty are designed without them – and sometimes against them. When welfare systems are built around suspicion, sanctions and humiliating conditions, they deepen stigma and deter people from claiming their entitlements.

…And so on. In fact, this is pretty typical of degrowther writing. If you read their “research” papers, it’s also a bunch of stuff like this. Consider this excerpt from “Exploring degrowth policy proposals: A systematic mapping with thematic synthesis”, by Fitzpatrick et al. (2022), published in the Journal of Cleaner Production:

Degrowth is a multi-layered concept…It combines critiques of capitalism…colonialism…patriarchy…productivism…and utilitarianism…whilst envisioning more caring…just…convivial…happy…and democratic societies…Capturing the essence of degrowth is difficult because it carries at least three denotations…degrowth as decline of environmental pressures…degrowth as emancipation from certain ideologies deemed undesirable, like extractivism, neoliberalism, and consumerism; and...degrowth as a utopian destination, a society grounded in autonomy, sufficiency, and care.

Honestly, whatever AI wrote the Guardian op-ed did a better job than Fitzpatrick et al.

In fact, there’s a reason degrowthers write like this. They see degrowth as a grand project to unify and reinvigorate the political left — a Big Idea to fill the hole left by the collapse of communism in the 20th century. Each buzzword or stock phrase is a shout-out to a particular faction of the European left — “decolonial” leftists angry about colonialism, climate activists, old-line socialists still angry about “neoclassical economics”, unionists who want job guarantees, social democrats who care about housing and education and welfare, and so on. Leftism is famous for factional infighting over differences in doctrine and focus; the degrowthers want everyone on the left to know that they’re building the biggest of big tents.

But in practice, what unites the degrowthers is their conviction that Europeans ought to be poorer. The Guardian op-ed makes it clear that the postwar European social model is not enough:

Social protection and public services are essential, but they cannot indefinitely compensate for economies that by design generate poverty wages, insecure jobs and unaffordable housing.

Why do I say “Europeans ought to be poorer”, instead of “Westerners ought to be poorer”? Obviously, the degrowthers would love it if America also degrew. But in practice, no one in the U.S. is signing on to this agenda. American leftists dream of Green New Deals and government-funded megaprojects like high-speed rail. Progressives are focused on breaking up big companies in order to ensure free-market competition. Liberals like Krugman value living standards intrinsically — they trumpet the European model precisely because they think it makes average Europeans rich.

Degrowth has also notably failed to win much traction in Canada or Australia. Nor have rich countries in Asia shown any interest. Developing countries ignore the idea as well, trusting more in their ability to grow their own economies than in the promise of massive transfers from the Global North.

This is why in practice, the only people who are interested in degrowth are Europeans. The idea’s main proponents — Piketty, Jason Hickel, Kate Raworth, Timothée Parrique, and so on — are all Europeans.1 The degrowth conferences are mostly in Europe. Degrowth literature reviews show that it’s a “predominantly European movement”. The EU is the only government that has shown much interest in degrowth.

In other words, when degrowthers call for the “Global North” to make itself poorer for the sake of the planet — or for the sake of any number of other causes — they’re functionally addressing their message to Europe. Degrowth is a movement for European impoverishment.

It’s important to note how astonishing of a shift this is from the pitch leftists made a hundred years ago. Communism was supposed to be about abundance — the idea that central planning could out-produce the capitalist system, ensuring not just military might, but better material living standards for regular people. In the 1950s, Western leftists praised the growth “miracle” of the Soviet Union (and, occasionally, North Korea). Even back in 2006, Joseph Stiglitz — one of the few American authors of the Guardian article — praised Hugo Chavez’s Venezuela for supposedly promoting “higher growth”.

That famously didn’t work out, of course. The Soviet Union, North Korea, and post-Chavez Venezuela are not exactly places that we associate with widespread material abundance and successful economic development. But in the wake of that colossal failure, the European left is switching its sales pitch. Yes, the new line goes, leftism will make you poorer — but that’s a good thing, because you deserve it for the sins of colonialism, because it’ll be good for the climate, and because you really don’t need all those consumer goods anyway.

Astonishing.

Of course, as anyone following the saga of the degrowth movement knows, it’s pure snake oil — a whirlwind of factual distortions and poor scholarship that would make any serious researcher blush. When economists have read through the degrowth literature, they have found it to mostly be repetitions of the same old buzzwords, empty rhetoric, and unsupported assertions. Savin and van den Bergh (2024) write:

In the last decade many publications have appeared on degrowth as a strategy to confront environmental and social problems. We undertake a systematic review of their content, data and methods…Based on a sample of 561 studies we conclude that: (1) content covers 11 main topics; (2) the large majority (almost 90%) of studies are opinions rather than analysis; (3) few studies use quantitative or qualitative data, and even fewer ones use formal modelling; (4) the first and second type tend to include small samples or focus on non-representative cases; (5) most studies offer ad hoc and subjective policy advice, lacking policy evaluation and integration with insights from the literature on environmental/climate policies; (6) of the few studies on public support, a majority concludes that degrowth strategies and policies are socially-politically infeasible; (7) various studies represent a “reverse causality” confusion, i.e. use the term degrowth not for a deliberate strategy but to denote economic decline (in GDP terms) resulting from exogenous factors or public policies; (8) few studies adopt a system-wide perspective – instead most focus on small, local cases without a clear implication for the economy as a whole. We illustrate each of these findings for concrete studies.

A few economists, like Vincent Geloso, have done yeoman’s work studying and rebutting the claims of Jason Hickel, Kate Raworth, and other degrowthers:

I myself, of course, have written about Hickel’s ideas and reviewed Raworth’s book, and I’ve come to the same conclusions that Geloso has.

This pattern of intellectual sloppiness and utter disregard for the data is evident in the Guardian op-ed. “We’ve done the maths”, the headline proclaims, but neither the article nor the “roadmap” it promotes contain any math. The statement that “growth has become decoupled from shared prosperity” is simply false; the evidence is unequivocal that growth is good for the poor. No matter how you measure poverty, there is no country that has escaped poverty without growth, and there is no country that has substantial amounts of poverty after growth has occurred:

This relationship works in reverse, too. If degrowth gets serious purchase in European policymaking, regular Europeans will suffer. In keeping with degrowth’s mission to unite the entire political left, the Guardian op-ed promises all kinds of middle-class goodies: “investing in children, housing, health, education and transport through universal public provisioning”. As the authors surely know — and as any cursory attempt at actual “maths” would have easily shown — this will be utterly impossible if European countries are forced to degrow.

In other words, even as American conservatives look down their noses at “Europoors”, and liberals try to debunk the “Europoor” notion, European leftists are hard at work trying to make “Europoors” a reality.

But that’s not the only reason the degrowth program is pernicious. Right now, with America having turned inward in a spasm of rightist isolationism, Europe is one of the few remaining champions of the ideals of universal human rights set forth in the post-WW2 global order — a lonely, beleagured bulwark against the likes of Russia and China.

Right now, Europe is facing a dire military threat. Although economically and demographically it overmatches Russia, its militaries do not yet know how to use drones — and Russia’s does. Furthermore, Europe’s supply chains are utterly dependent on Chinese parts and materials; if China decides to cut Europe off during a Russian attack, while continuing to furnish Russia with everything it needs, Russia would have a good chance of triumphing.

In addition, European industry is facing a dire economic threat. Its manufacturers are bearing the brunt of the Second China Shock — the wave of massively subsidized exports that China is using to try to prop up its slowing domestic economy. This comes on top of the cutoff of Russian energy and Trump’s tariffs.

To embrace the poisonous nonsense of degrowth now — to shut down nuclear power plants, to regulate the AI industry out of existence, to forcibly shorten working hours, to bar the construction of houses and factories, etc. — would be to cripple one of the last few remaining economic engines of the free world, at precisely the time when it’s under its greatest external challenge.2

In other words, there has never been a better time to ignore the pronouncements of Thomas Piketty, Joseph Stiglitz, and the other rogue economists who want to turn “Europoor” from a slur into a grim reality.

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“No. I am Hugh.” — Hugh

I remember the first time I heard about the invention of the iPhone, back in 2007. My friend, who followed Apple products with an almost religious zeal — there were many such people in those days — entered the room and announced “This is the convergence!” We spent the next few minutes gaping in awe at the idea that every single piece of portable consumer electronics was about to be combined into a single device.

For many, it felt like a messianic moment. The iPhone was probably the last big innovation that we Americans embraced as a whole society. Everybody had an iPhone, or wanted one. Engineers loved how the thing was engineered. Humanities PhD students showed off the latest model at parties and admired the sleek design.1 Kids in working class neighborhoods were glued to their iPhones in math class. It was a supercomputer in your pocket, a voice for the voiceless, the tricorder and the communicator from Star Trek, all that and more.

It was also big money. Years before Benedict Evans wrote “The smartphone is the new sun”, every ambitious tech entrepreneur and content creator in America was in on the game. Social media — that infinitely scrolling vertical feed — was the killer app of the smartphone, what the spreadsheet had been for the PC or e-commerce had been for the internet. In 2012, Facebook’s monster IPO kicked off a gold rush, and everyone moved to San Francisco to strike it rich.

But you didn’t need to be a tech entrepreneur in order to get in on the action. The smartphone meant far more eyeballs glued to far more screens for far more minutes of the day, and that meant dollar signs for content creators. YouTubers, Instagram fashion influencers, and Twitter activists became whole new economic classes. Old-style content businesses like newspapers and TV networks saw their doom, but also a potential lifeline. (Eventually even econ bloggers got our piece of the pie; plenty of you signed up for this blog through a scrollable app.)

Beautiful design coupled with brilliant engineering. Technology anyone could use. Economic opportunity for the masses and for the elite. A way to have your ideas and opinions heard by millions of people thousands of miles away, at any hour of any day. No wonder Steve Jobs was the last technologist that everyone agreed was an American hero.

But when I recall that fateful day in 2007, I remember not joy, but a sudden surge of foreboding. That was strange, and out of character for me. I’ve always been a technophile at heart — I grew up as a hardcore Star Trek fan, and until that moment in 2007, each new marvel — broadband, the internet, the laptop computer, etc. — had felt like it was moving us toward that bold utopian future. The iPhone felt different. Some small voice in the back of my head told me: “This is a mistake.” And though I tried to ignore that voice for many years, it remained.

What was I worried about? I think some part of me knew that someday, I would end up saying something like this:

The internet was wonderful because it was a place you could go — a complement to real life, not a substitute. The iPhone promised to put that fantasy universe in our pockets 24/7, and we would never escape. It would be physically possible to turn off our phones, of course, but it wouldn’t be socially possible — you could always touch grass, but after everyone had an iPhone, that would be the only conduit through which you could touch another human mind.

The idea of perpetually tying every human into a global hive mind tripped alarm bells. It reminded me too much of the hive minds I had seen depicted in science fiction nightmares — the Borg from Star Trek, the Blight from A Fire Upon the Deep, the Human Instrumentality Project from Neon Genesis Evangelion. Humans were meant to be individuals — unique, independent incubators of ideas and desires, not terminals or the fingers of a world-mind.

We had spent centuries trying to escape the small, localized versions of the hive mind. The printing press, the car and the telephone had offered freedom from the crushing conformity of small-town life. When broadcast television threatened to smother us with a centrally dictated monoculture, it sparked a decades-long resistance. When the internet arrived, we spent two decades using it to revel in our individuality — we made our personal websites, started blogs, joined small online communities centered around our interests.

Sometime around 2014 or 2015 we woke up to the fact that the world of the Old Internet no longer existed. “The internet” no longer meant the Web — it meant a tiny handful of big platforms. Twitter and Reddit for screaming about politics, Facebook and Instagram for being jealous of your friends’ vacation pics. Gone were the days of painting our individuality on the canvas of the Web. The platforms were the hive minds, we were the neurons, and the smartphone was the axon that kept each of us wired tight into the collective.

“‘Social media is bad,’ he typed on social media!!” This is the perpetual and instantaneous response of many of the neurons…er, people…in my timeline. Indeed, if social media is so bad, why don’t you just put down the phone? But this idea displays a fundamental misunderstanding of the nature of network effects. Suppose I decide to get off Instagram and go play pickup basketball instead. If everyone else is on Instagram instead of playing pickup basketball, who am I going to play with?

This is an extreme and simplified example, obviously, but the intuition here comes from real research. Bursztyn et al. (2024) have a paper called “When Product Markets Become Collective Traps: The Case of Social Media”. Here’s a quick summary:

While one would typically assume that a popular product benefits its users…Bursztyn et al. find evidence of a “product market trap:” At least among the college students in this experiment, large numbers of people are choosing to use social media platforms they also wish didn’t exist at all…[T]he authors found that [subjects] would…be willing to pay an average of $24 to deactivate the platform on their campus for four weeks. This amount rose to $43 when they also included the minority of students who weren’t TikTok users. (Results for Instagram were similar and are included in the full policy brief.) [emphasis mine]

The students said that they only stayed on TikTok because other people were on it too, and they were afraid of missing out. FOMO is not utility; it’s a bad equilibrium.

There’s also an impulse to do a sort of “Good Tsar, bad boyars” maneuver, where people say “it’s not the phones, it’s social media”. But this is an argument over whether guns kill people or bullets kill people. Yes, we could access social media from laptops or other stationary devices, but we could only do so for part of the day; that would force us to develop offline interactions and relationships during the other hours, like we did back in 2007. It’s the ever-present umbilical that enables — and perhaps even mandates — the replacement of in-person interaction with an online hive mind.2

In 2007 I suppressed my deep-seated doubts about smartphone technology. I am a techno-optimist, and this was just another miraculous new tool for human empowerment. And yet the two decades since 2007 seem to have only validated my misgivings, across a number of dimensions.

Plenty of evidence has linked smartphones — and the social media apps that take up the single biggest chunk of the time we spend on those phones — to rising unhappiness among the world’s young people:

Since I wrote about this in 2023, the evidence has only grown stronger. Here’s an experiment by Castelo et al. (2025):

We used a mobile phone application to block all mobile internet access from participants' smartphones for 2 weeks and objectively track compliance. This intervention specifically targeted the feature that makes smartphones "smart" (mobile internet) while allowing participants to maintain mobile connection (through texts and calls) and nonmobile access to the internet (e.g. through desktop computers). The intervention improved mental health, subjective well-being, and objectively measured ability to sustain attention; 91% of participants improved on at least one of these outcomes. Mediation analyses suggest that these improvements can be partially explained by the intervention's impact on how people spent their time; when people did not have access to mobile internet, they spent more time socializing in person, exercising, and being in nature. [emphasis mine]

Other recent experiments have yielded similar results.

The likeliest explanation is that there is simply something thin and insufficient about online interaction. It’s lacking in some essential emotional nutrient that human beings evolved to harvest from the physical proximity of other human beings. Perhaps it’s something cognitive — the richness of context that tells you that no, your friend’s life isn’t perfect just because they posted a cool video of their trip to Europe, and thus you don’t need to feel constantly envious and inadequate and left-out. Or perhaps it’s something physical — the tiny touch of a high-five or a hug, the simple feeling of the proximity of other human bodies.

Whatever this emotional nutrient is, our young people are starving for it, while they binge on the cheap sugar-alcohol of emoji reactions and story views. In other parts of the world, young people are just starting to break free of this collective trap, but not yet in the United States.

But making teenagers sad is one thing; putting an end to the Human Age on planet Earth is quite another.

The global fertility decline is a long-standing trend. Every country that escapes poverty, urbanizes, and teaches its people to read is going to transition from a high fertility rate (5-7 children per woman) to a much lower rate. Long before the smartphone burst on the scene, most of Europe and the richer parts of East Asia had fallen below replacement-level fertility. Everyone would crack jokes about Japan not having enough kids.

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In a post last week, I wrote about the progressive anti-monopoly movement’s increasing disconnect from reality. I wrote:

[C]onsider the movement’s choice of targets. These include some industries with high profit margins, but also some with very low margins. These include grocery stores, airlines, and health insurers. Grocery stores and health insurers both consistently have much lower profit margins than American corporations in general, often hovering near the zero mark.

Commenter Matthew argued that the low profit margins of insurers are not a reason not to worry about their market power:

The idea that health insurers have “low margins” so they are OK is nuts…Private health insurers in the US do not lower costs and do not improve patient care…In the flow of money between patients and providers, private insurers just sit in that flow like a tapeworm and take money out to sustain themselves…

There is a lot of evidence…[W]ith the current status quo, 10 -15$ out of every 100$ of healthcare premiums a person spends is just going to the private insurer….That would be fine if the insurance companies secured lower costs for their members; it would be the useful service they provide…But there is no evidence that they do.

Matthew’s argument doesn’t really address the point of my post. Private insurers might be inefficient, or even unnecessary, but this is very different from them being extractive monopolies. It is absolutely incredibly relevant that health insurers have very low profit margins. If $10 of every $100 spent on health care premiums goes to the insurer, but the insurer isn’t profitable, this just means that the $10 is going to cover the insurer’s operating costs. It is not money being funneled into the pockets of the people who own the insurance companies.

In fact, the more general fact here is that private insurers are not the main reason why American health care costs so much more than health care in other developed nations. Almost all of the excess cost goes to providers rather than to insurers. Private insurers may be an unnecessary middleman, but the amount they extract from the system is not large compared to the amount that gets either appropriated or wasted by the people providing the care.

So why do Americans — especially American progressives — focus so obsessively on health insurers instead of health providers? In a post two years ago, I hypothesized that it’s because insurers are the part of the system we have direct contact with — the people who have to tell us “no” when we can’t afford some treatment.

Insurers have thus become what Jeremiah Johnson calls “sin-eaters” — the hapless fall guys who bear the brunt of all Americans’ rage, despair, and frustration at a broken system in which the insurers play only a very minor role.

The more progressives focus on venting rage and making accusations at insurance companies, the less effective they will be in actually delivering Americans cheaper health care.

Anyway, here’s the post I wrote back in 2024, which fleshes this all out in greater detail.

“I’d rather die than owe the hospital til I get old” — Courtney Barnett

When UnitedHealthcare CEO Brian Thompson was gunned down in the street in cold blood the other day, a bunch of people on the internet gloated and cheered:

The jokes came streaming in on every social-media platform, in the comments underneath every news article. “I’m sorry, prior authorization is required for thoughts and prayers,” someone commented on TikTok, a response that got more than fifteen thousand likes. “Does he have a history of shootings? Denied coverage,” another person wrote, under an Instagram post from CNN. On X, someone posted, with the caption “My official response to the UHC CEO’s murder,” an infographic comparing wealth distribution in late eighteenth-century France to wealth distribution in present-day America…On LinkedIn, where users post with their real names and employment histories, UnitedHealth Group had to turn off comments on its post about Thompson’s death—thousands of people were liking and hearting it, with a few even giving it the “clapping” reaction. The company also turned off comments on Facebook, where, as of midday Thursday, a post about Thompson had received more than thirty-six thousand “laugh” reactions.

In general, I think it’s a very bad look to endorse murder. And I think this kind of thing is a sign of how stressed-out and mentally unbalanced our country is after an era of unrest. (The chief suspect, who was just apprehended, looks like a random crazy guy rather than a leftist ideologue.)

But more fundamentally, I think the outpouring of schadenfreude¹ at Thompson’s killing reflects some deep-seated popular misconceptions about the U.S. health care industry. A whole lot of people — maybe even most people — seem to regard health insurance companies as the main villains in the system, when in fact they’re only a very minor source of the problems.

All my life, Americans have been raging at health insurers. Who could forget this clip from the 1997 movie As Good as It Gets?

It’s not hard to understand why people hate health insurers. When you interact with the U.S. health care system, the providers — the hospital staff, the doctor, the nurses, the technicians — all just take care of you. The only time they ask you for money during your doctor visit is when you pay your copay at the front desk, and that’s usually not that big — if the bill is big, they’ll send it to you later. So for the most part, your interaction with the providers is just you walking up and asking to be taken care of, and them taking care of you.

Your interaction with the health insurer, on the other hand, feels like a struggle against an enemy who wants to destroy you. If you get a big hospital bill days after your visit, it’s because the insurer wouldn’t cover the whole cost. If the bill is a surprise because the provider didn’t tell you they were out of network, that also feels like the insurance company’s fault — why wasn’t that provider in their network?

Even more terrifying is when insurers deny coverage completely, which happens to about 10-20% of claims. It feels like you’ve been robbed. You paid this company a hefty premium every month, and in exchange you expected them to pay for your health care if you needed it. And now you needed it, and they won’t even uphold their end of the bargain? Why were you even paying them the premium in the first place?

Everyone knows that denying claims is in the insurance company’s financial interest. The more they can get away with taking your monthly premium and then weaseling out of their end of the bargain, the more their shareholders and executives can walk away with giant bags of money. They’re the ones buying huge houses and yachts and whatever on the money they made from finding some technical reason to send you and thousands upon thousands of people like you into medical bankruptcy after your chemotherapy. Who wouldn’t be mad?

And yet when we take a hard look at the question of why Americans pay so much more for their health care than people elsewhere in the developed world, insurance companies and their profits just aren’t that big of a piece of the story.

First of all, insurance companies just don’t make that much profit. UnitedHealth Group, the company of which Brian Thompson’s UnitedHealthcare is a subsidiary, is the most valuable private health insurer in the country in terms of market capitalization, and the one with the largest market share. Its net profit margin is just 6.11%:

That’s only about half of the average profit margin of companies in the S&P 500. And other big insurers are even less profitable. Elevance Health, the second-biggest, has a margin of between 2% and 4%. Centene’s margin is usually around 1% to 2%. Cigna Group’s margin is usually around 2% to 3%. And so on. These companies are just making very little profit at all.

Here’s another way of visualizing that:

You can see that the company’s net income — i.e., its total profit — was $23.1 billion in 2023. That’s a lot of money, but it pales in comparison to the $241.9 billion that the company spent on medical costs. Even the company’s $54.6 billion in operating costs — of which Brian Thompson’s own $10 million salary represented 0.018% — are dwarfed by actual medical costs.

In fact, the actual health insurance business — taking premiums and paying out claims — is even less profitable than these numbers might suggest. As Axios recently reported, insurers’ profits are increasingly coming from other lines of business.

What does this mean? It means that if UnitedHealth Group decided to donate every single dollar of its profit to buying Americans more health care, it would only be able to pay for about 9.3% more health care than it’s already paying for. If it donated all of its executives’ salaries to the effort, it would not be much more than that.

What about those denials of coverage, copays, deductibles, and so on? In fact, Americans are paying a smaller percentage of their health costs out of pocket than people in most other rich countries!

Note that the song lyric at the top of this post, about a woman in anaphylactic shock worrying that she won’t be able to afford her hospital bills, is from a band in Australia, not the U.S. This isn’t a coincidence — although Australian medical costs are fairly low, the proportion they pay out of pocket is unusually high.

In other words, Americans’ much-hated private health insurers are paying a higher percent of the cost of Americans’ health care than the government insurance systems of Sweden and Denmark and the UK are paying. The only reason Americans’ bills are higher is that U.S. health care provision costs so much more in the first place.

On top of all that, health insurance companies don’t actually look very inefficient, in terms of their administrative costs. Yes, we all know that the fragmented U.S. health system is a paperwork nightmare, with different providers and insurers drowning each other in forms and approvals. And Elizabeth Warren has claimed that switching to national health insurance would save huge amounts of money by reducing administrative costs. But when we look at United Health Group’s operating costs in the diagram above, they’re only 22.6% of the actual cost of medical care.

In fact, the Kaiser Family Foundation does detailed comparisons between U.S. health care spending and spending in other developed countries. And it has concluded that most of this excess spending comes from providers — from hospitals, pharma companies, doctors, nurses, tech suppliers, and so on:

This means that eliminating all administrative waste and inefficiency in the entire U.S. health care system — not just at insurance companies, but administration of government insurance programs — could save Americans at most about $680 per person every year. And the true savings would probably not anywhere close to that amount — part of America’s greater costs are certainly an income effect, due to the fact that Americans have higher incomes than people in other rich countries. A few hundred bucks a year is not nothing, but it’s only a small fraction of the $5683 more that we pay relative to other countries.

So the fundamental reason your health care costs so much is not that the health insurance companies are lining their pockets. And it’s not that insurers are an inefficient mess. It’s that the actual provision of America’s health care itself just costs way too much in the first place.

The actual people charging you an arm and a leg for your care, and putting you at risk of medical bankruptcy, are the providers themselves. The smiling doctor who writes you prescriptions and sends you to the MRI and refers you to a specialist without ever asking you for money knows full well that you’re going to end up having to wrangle with the insurance company for the cost of all those services.

The gentle nurse who sets up your IV doesn’t tell you whether each dose of drugs through the IV could set you back hundreds of dollars, but they know. When the polite administrative assistants at the front desk send you back to treatment without telling you that their services are out of your network, it’s because they didn’t bother to check. The executives making millions at “nonprofit” hospitals, and the shareholders making billions on the profits of companies that supply and contract with those hospitals, are people you never see and probably don’t even think about.

Here’s a good Bloomberg story on predatory pricing by hospitals. Hopsitals bilk insurers, who are forced to pass on the higher costs to patients, who then blame the insurers instead of the hospitals.

Excessive prices charged by health care providers are overwhelmingly the reason why Americans’ health care costs so cripplingly much. But they’ve outsourced the actual collection of those fees to insurance companies, so that your experience in the medical system feels smooth and friendly and comfortable. The insurance companies are simply hired to play the bad guy — and they’re paid a relatively modest fee for that service. So you get to hate UnitedHealthcare and Cigna, while the real people taking away your life’s savings and putting you at risk of bankruptcy get to play Mother Theresa.

So the way to make our health care system affordable is not to browbeat insurers, in the hope that they will be able to reduce their profits and pay for us to have cheap health care. Insurance companies simply do not have the power to do that, even if you threaten to shoot them. What we need is to reduce costs within the actual medical system itself. One idea is to have the government insurance system play hardball with providers, negotiating lower prices. is what the Biden administration had Medicare do with some drug companies. There are some risks to this approach — if it’s executed clumsily it can suppress innovation — but it’s basically what every other rich country does, so the track record is decent. There are probably other ways to foster competition and increase efficiency in the medical care system.

But focusing all our anger on the middlemen of the U.S.’ bloated health care system is just a way of shooting the messenger.

Update: Matt Bruenig argues that insurers really are to blame. He claims that inefficiency in the system is a bigger driver of costs than I realize, because providers have to spend money dealing with insurers — something the KFF numbers don’t include. He also alleges that some of this “inefficiency” is actually intentional on the part of the insurers — a disguised way to pay themselves out.

But I don’t think this passes the smell test. If insurers were so good at extracting money from the system, why are they so unprofitable? The average company in the S&P 500 has a profit margin of 12%, but these insurers have margins of 1% to 3%. If they’re so good at extracting money from providers, why are shareholders — and executives who own stock — not getting a piece of that money? It doesn’t make sense.

Also, provider-side administrative costs don’t just include the money providers spend wrangling with insurers — it includes the money they spend on the executives, managers, and billing departments who figure out how to charge patients $700 for every injection of IV drugs, or hundreds of dollars for a hospital pillow, or $10,000 for an MRI.

So no, I don’t buy Bruenig’s argument here. Though I still do agree with him that national health insurance would be a good idea — mostly for the negotiating power, not for the administrative cost savings.

Update 2: Over at Tyler Cowen’s blog, a commenter argues that profit margins are not a good guide to the financial success of a business, and that instead one should look at return on equity (ROE). That’s fine, I wasn’t talking about the financial success of health insurance companies; I was simply showing that they don’t have the ability to pay for much more health care than they’re currently paying for. But for what it’s worth, the ROE of health insurers is pretty low. The S&P 500’s weighted average ROE is usually around 15%, and has been a bit higher lately. Here’s what health insurers were earning:

They had a couple of good years in there, but in general it’s underwhelming. UnitedHealth Group, which does include businesses other than the low-margin health insurance business (e.g. providing health care and pharmaceuticals), is doing pretty well with 26%.

But if you look at the list of companies with the highest ROE, you see health care providers or suppliers like HCA Healthcare (272%), Cencora (234%), Abbvie (84%), Mckesson (84%), Novo Nordisk (72%), Eli Lilly (59%), Amgen (56%), IDEXX Laboratories (53%), Zoetis (46%), Novartis (44%), Edwards Lifesciences (43%), and so on. If you want to know which shareholders are making the real money in the health care industry…well, it’s the shareholders of those providers and suppliers.

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Howdy, folks! Today’s roundup is mostly a bunch of follow-ups to posts I wrote before. It’s very hard to decide when to post about a particular topic, and it often happens that some relevant news story or piece of data comes out a little bit later. These roundups are a good way of cleaning up those loose ends.

Today we start with a truly wacky policy proposal by the esteemed Thomas Piketty…

1. What on Earth is Thomas Piketty talking about?

Unlike many people, I never pretended to have read Thomas Piketty’s book, Capital in the Twenty-First Century. I simply didn’t read it. I did read a number of the papers that the book was based on, which is often a better and quicker way of getting the key points of a book like that. I thought those papers were a good and important addition to the economics literature, even if the messy reality of inequality didn’t always fit the simple story Piketty told, and the data he relied on was less reliable than we might want.

Despite the limitations of Piketty’s work, it sparked a long-overdue and generally healthy debate about inequality. And Piketty’s basic policy solution — tax rich people more — was pretty reasonable, even if his proposed numbers were too extreme. I did roll my eyes when Piketty stood on a stage at an academic convention and accused Greg Mankiw of being in the pocket of rich people.1 But overall his work seemed pretty serious and often reasonable.

However, after years of relative silence, Piketty has burst back onto the scene with some work that seems very unreasonable. He and his team at the World Inequality Lab — which includes his longtime co-authors Emmanuel Saez and Gabriel Zucman — have come out with a grand plan for fixing the world. And for the most part, it’s total nonsense.

Piketty described the new plan in a thread on X. Its main focus, perhaps surprisingly, is not inequality — it’s climate change!

First of all, Piketty’s baseline climate change scenarios appear based on a very outdated model — the RCP8.5 scenario, an extreme projection that essentially all serious climate scientists have now rejected. This choice of baseline suggests that Piketty et al. were trying to find ways to justify maximal policy intervention, instead of starting from the science.

Piketty’s preferred solution to climate change is degrowth. He envisions detailed central planning to achieve deliberate impoverishment of large portions of the world’s population — mandated reductions in the consumption of various specific goods, including food.

In addition to the dubious morality of deliberately impoverishing untold millions of human beings based on scientific models that have already been rejected, this kind of scheme is just utterly unworkable. Back in 2021, when I wrote about why degrowth is a political nonstarter, I declared that “implementing the kind of reallocation schemes that degrowthers throw around with abandon would require global economic planning that would put Gosplan to shame.” Piketty knows this, and thinks it’s a good thing.

Even more ridiculously, Piketty envisions a global fiscal authority to carry out this insane plan via global taxation:

Let’s set aside the obvious fact that countries are just not going to agree to give up their spending and taxation power — even the EU refuses to have a fiscal union, and it’s rather insane to imagine Indians and Chinese people agreeing to let themselves be taxed by Tanzania and Nigeria — and just point out how this proposal ignores the basic economics of climate change.

Climate change is a global negative externality — the reason countries don’t all just impose their own local carbon taxes and solve the problem is that there’s an incentive to free ride and let other countries handle it. That exact same free rider problem applies to the global fiscal authority that Piketty envisions. There’s a clear incentive for any country to simply drop out of the fund and let other countries fix climate change for them.

It’s obvious that Piketty et al. are just looking for a reason to levy high taxes on the global rich. This is the “World Inequality Lab” we’re talking about here. And it probably made sense to try to ally with other factions of the progressive movement — degrowthers, “decolonial” leftists, and so on — in order to get support for their desired policies.

But the result here is not going to be a good one for Piketty, Saez, Zucman, and their team. No country is actually going to embrace the idea of a global fiscal authority to fight climate change. In calling for this sort of thing, Piketty et al. simply make themselves look less like serious economists and more like opportunistic activists on the fringe of a “green” movement that’s already in steep decline.

2. Tokenmaxxing, cont.

In a post this week, I noted that “tokenmaxxing” — simply using as much AI coding output as you can and hoping that it pops out something valuable — is hitting its limits:

Well, here’s a follow-up. John Burn-Murdoch of the Financial Times recently made this nice chart, using data from the Demirer et al. (2026) paper that I discussed in my post:

The number of apps with significant usage is actually going down in the age of AI, even as people are releasing floods of new apps into the world. Meanwhile, Bob Elliott notes that since generative AI was created, there has been a rapid acceleration in many measures of text output, even though the economy hasn’t accelerated much:

And Sam Altman is now warning of a significant pullback on AI spending — the first such pullback since generative AI appeared.

This doesn’t look like a simple story of “bottlenecks” and “weak links” — if it were that, we wouldn’t see so many new apps and e-books hitting the market. The deeper story here may be that demand for many of the things that generative AI produces might be a lot more inelastic than we thought. The things we really want a lot more of may not actually be the things that generative AI is yet equipped to provide. As the AI industry advances, of course, that will probably change.

3. Western militaries are obsolete, and Trump is making it worse

A couple of weeks ago, I wrote a post about how all militaries not based around large masses of cheap drones are now functionally obsolete:

This includes America’s military, which is based around a few big expensive “platforms” like fighter jets, aircraft carriers, and tanks. I’m not saying those weapons will all be useless in future wars, but if that’s all you have, and you don’t have masses of cheap drones, you will lose wars to countries that do have masses of cheap drones — such as China, if they ever get serious about turning their mighty industrial base toward making billions of weaponized drones.

The Lowy Institute has a good report explaining why Western militaries seem incapable of learning to use the essential weapons of modern warfare. They write:

Western military institutions…are failing to energetically learn from modern wars. Despite four years of unprecedented visibility into Ukrainian battlefield innovations, and the recent war in Iran, Western forces have not institutionalised key lessons into doctrine, force structure, or procurement priorities…The recent war in Iran has confirmed and amplified many of Ukraine’s lessons, particularly on the centrality of drone warfare, the inadequacy of Western counter-drone capabilities, [and] the effectiveness of cheaper long-range strike systems…And yet the response of Western institutions…has been characterised by rigidity, inertia, and what can be called a humility deficit: an unwillingness to genuinely confront the implications of what is being demonstrated in real time on real battlefields.

The U.S. military could, of course, learn from Ukraine — currently the #1 best country in the world in drone warfare. But the unrelenting hostility and disdain toward Ukraine from Donald Trump and the MAGA movement has prevented America from taking advantage of Ukraine’s expertise:

The Trump administration’s hesitancy in signing a major drone deal with Ukraine is slowing the U.S. military down in an area where it’s already trying to play catch-up…[T]he U.S. has so far refused to embrace Kyiv as a partner in its drone development…

[E]ven with senior Pentagon officials — including Defense Secretary Pete Hegseth and Army Secretary Dan Driscoll — lauding Kyiv’s drone abilities, the Trump administration is still biding its time on taking full advantage of the Ukrainian capabilities, a delay that experts say is potentially kneecapping the U.S. military…

“I don’t know what the hang-up would be in denying ourselves the ability to take advantage of that. I don’t think there’s any good reason,” Rebeccah Heinrichs, a senior fellow at the Hudson Institute think tank, said of Ukraine’s drone capabilities…One former official [called] the hold-up “lethargy” on the part of the Trump administration and “a certain amount of hostility towards Ukraine coming from the very top.”

MAGA basically created a fantasy world where Russia is a defender of Western values, Ukraine is somehow an arm of global wokeism, Ukraine is part of Russia’s legitimate “sphere of influence”, and Russia is a mighty superpower with a manly martial culture that would eventually be able to grind the Ukrainians down and inevitably triumph.

The problem with this fantasy was that it was fantasy, and if you believe in fantasy too long, reality tends to intercede. By allowing themselves to believe their own anti-Ukraine mythology, Trump and his followers are cutting themselves — and the U.S. Military — off from access to crucial modern military technology.

4. Tariffs on China are helping poor countries grow

In my last post, I argued that Europe should put tariffs and other trade barriers on Chinese imports, in order to protect its own strategic defense-related industries. But this is actually a lot harder than it sounds. Even if Europe blocks final goods from China, China can still export intermediate goods to “third countries” that assemble those goods for final export to Europe. In fact, China has done this in response to American tariffs, reducing (though not eliminating) the decoupling effect.

But if that happens, it’ll be very good for the “third countries”! Assembly work isn’t the most valuable part of the supply chain, but it does create value, and it does create lots of jobs, and it does create local companies that then have the potential to climb up the value chain someday and start making their own components. In fact, this is exactly what China did! Back in the 2000s, China did a lot of the low-value assembly work for components made in Japan, Korea, and Taiwan; now, most of that has been onshored, but it was still important for China to go through that initial phase of learning to slap together iPhones and computers and cars.

So if putting tariffs and other trade barriers on Chinese-made goods just ends up shifting assembly to poor countries…well, that’s not the worst outcome in the world. It’ll help counteract Chinese companies’ home bias — their natural tendency to want to build factories in China instead of overseas.

In fact, as the WSJ reports, this is already happening:

“Made in China” is becoming “made by China”—all over the world…Faced with higher Western tariffs and weak demand at home, many Chinese factories are moving abroad, making everything from appliances to automobiles everywhere from North and South America to Eastern Europe…In Mexico, Chinese investment in industries such as the automobile sector generated more than 100,000 jobs from 2020 to 2023, according to one analysis…In 2024, Chery Automobile, China’s top car exporter, helped to rescue a small factory in Barcelona that struggling Japanese automaker Nissan no longer wanted…

Jeep maker Stellantis this month said it planned to build EVs with two separate Chinese companies in Spain and France. Ford and Geely are in discussions about a potentially similar deal in Spain, and have also discussed whether the collaboration might extend to the U.S…Midea, the home appliance maker…opened a roughly $100 million factory in Brazil making refrigerators and washing machines in 2024. Its subsidiary, Welling Auto Parts, opened its first overseas manufacturing facility in Mexico last year.

In order to get around EU tariffs, Chinese companies are fueling a Moroccan manufacturing boom:

This has helped accelerate Morocco’s growth to 5%. That’s in the range where growth starts meaningfully transforming a country.

So even in the worst-case scenario where trade barriers don’t reduce dependence on Chinese supply chains, they can help spread the blessings and bounty of industrialization to a bunch of poor countries who need the factories more than China does. The flying geese must fly!

5. Is India’s growth under Modi impressive, or disappointing?

I recently came across this chart, showing various aspects of India’s infrastructure boom:

This is all pretty incredible. India’s poor infrastructure has long been regarded as a bottleneck to urbanization, manufacturing, and economic growth in general. Whatever else you think of the government of Narendra Modi, it has built a lot of infrastructure.

But over that same period, overall growth has been slower than we’d like to see. Anand, Felman, and Subramanian have a recent paper in which they argue that India’s GDP growth rate from 2011 to 2023 was overstated by somewhere between a quarter and a third:

India’s annual economic growth during the boom years between 2005 and 2011 may have been underestimated by about 1–1½ percentage points on average, and subsequent growth between 2012 and 2023 may have been overestimated by about 1½-2 percentage points…The first methodological issue leading to the misestimation is that the economy’s formal sector has been used as a proxy for the vast informal sector, even though the latter was disproportionately hit after 2015 by demonetization, the introduction of the goods and services tax, and the COVID-19 pandemic…The second methodological issue…is that the deflators for many sectors have been based on commodity prices, which have moved sharply relative to others. [emphasis mine]

If Anand et al.’s estimates are right — and they marshal a huge amount of supporting evidence — then it suggests that Modi’s tenure in office has been mixed. A couple of big policy missteps — demonetization and a botched tax rollout — hurt the informal sector of the Indian economy, while massive infrastructure investments have helped.

The implication here is that Modi and his successors should lean into what works. They should focus more on marshaling national resources and applying those resources toward rapid growth — two things that China did very well in the 1990s and 2000s.

6. Friends don’t let friends cite George Borjas

I’ve been writing over the years about how the right’s favorite immigration economist does shoddy, subpar work. Despite having a job at Harvard, George Borjas — whose analyses miraculously always seem to find that immigration is much worse than all the other economists think it is — consistently uses both poor data and flawed methodology. In another roundup back in February, I pointed out how Jianxin He and Adam Ozimek had found yet another example of Borjas doing subpar economics:

Borjas’s February 2026 working paper attempted to answer whether H-1B workers earn less than comparable native-born workers…[His] findings result from substantial data errors.…The most significant mistake is a…mismatch between his H-1B and native-born samples: the H-1B applications span 2020-2023, while the ACS data covers just 2023…[Accounting for this discrepancy cuts] the wage gap roughly in half…

The second error stems from controlling for geographic wage drivers using each worker’s PUMA (public use microdata area)…The problem is that Dr. Borjas uses the PUMA where visa holders work alongside the PUMA where native workers live. Consider a native-born software developer working at Google in Mountain View who resides in a cheaper area like Fremont. If residential areas have lower average wages than business districts, this mismatch systematically inflates the apparent native wage and negatively biases the H-1B wage gap.

Again and again and again, economists catch Borjas at it. It seems pretty obvious that Borjas simply wants to conclude that immigration is bad, and doesn’t much care about methodological errors as long as they reach his desired conclusion.

In order to fight back against this accusation, Borjas decided to accuse his critics of ideologically-driven research instead. In a paper with Nate Breznau, he wrote:

Our study exploits an opportunity to observe 158 researchers working…during an experiment. After being asked their position on immigration policy, they used the same data to answer the same empirical question: Does immigration affect public support for social welfare programs? The researchers estimated 1253 alternative regression models, and the estimated impacts ranged from strongly negative to strongly positive. We find that teams composed of pro-immigration researchers estimated more positive impacts of immigration on public support for social programs, while anti-immigration teams estimated more negative impacts. The differences arise because different teams adopted different model specifications. The underlying research design decisions are the mechanism through which ideology enters the process of producing parameter estimates.

The idea here seems to be to turn one researcher’s clear pattern of errors into a he-said/she-said sort of situation. If all researchers just engineer results based on their ideology, then why should we selectively get mad at Borjas for doing what everyone else does too?

But — surprise! — it turned out that this Borjas paper also contained critical errors that invalidated the whole result! Katrin Auspurg and Josef Brüderl pointed out in a comment paper that if you fix one simple coding error in Borjas’s analysis, his entire result about ideologically-driven research just vanishes into thin air:

Borjas and Breznau…recently reported that researchers’ ideology influences their empirical findings. Although we were able to reproduce B&B’s numerical results, our reanalysis shows that the reported association is not robust. Specifically, the association hinges on a coding error. Data from four teams that contradict the ideology hypothesis were excluded from the analysis due to idiosyncratic variable coding. Correcting this error renders the ideology effect no longer statistically significant. Also, B&B employed a different outcome variable and weighting scheme to that used in a previous paper based on the same data. These two analytical decisions further contribute to the observed ideology effect. Correcting the coding error or using the same specification as in the previous paper renders the ideology effect indistinguishable from zero. Therefore, we conclude that B&B do not provide robust evidence of ideological bias in this context. Instead, the reported association appears to be a statistical artefact resulting from questionable modelling decisions. [emphasis mine]

How does this just keep happening again and again, and why is it always Borjas?

In any case, I think the implication here is pretty clear: Friends don’t let friends cite George Borjas.

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As regular readers of this blog know, I’m pretty ambivalent about trade barriers as an economic policy. On one hand I think targeted tariffs and other trade barriers can be used to protect strategic industries from surges in underpriced import competition, especially by geopolitical rivals. On the other hand, broad tariffs like the ones Trump has used are generally bad — they hurt domestic manufacturing by making intermediate goods more expensive, they limit scale for domestic companies, etc.

And yet I do think that Europe should erect much higher trade barriers — both tariffs and non-tariff barriers — against Chinese high-tech manufactured export goods. The basic reason is that it’s important to protect Europe’s nascent modern defense industry. But I also think that blocking Chinese exports might nudge China to change its economic model to one that benefits regular Chinese people more.

In other words, China-Europe trade has some unusual characteristics right now that make trade barriers a much smarter idea than usual.

First, let’s talk about what’s going on with the Chinese economy. For the past few years, China’s government has unleashed an unprecedented torrent of subsidies for high-tech manufacturing industries. This — along with structural factors about how the Chinese economy works — has resulted in China making big global market share gains in industries like autos, pharmaceuticals, and shipbuilding. No one knows just how much of China’s market share gains are a result of government support, but as Paul Hannon reports, the OECD estimates that it’s more than half:

Government subsidies have driven most of the increase in the global market share of Chinese businesses over the past two decades as they have received three to eight times more support than their competitors, the Organisation for Economic Cooperation and Development said Monday…The analysis is based on the OECD’s Manufacturing Groups and Industrial Corporations database, which includes subsidy estimates and financial information for 525 of the world’s largest manufacturing groups spread across 15 key industrial sectors…[T]he OECD database tracks the amounts that firms are actually given…

“Industrial firms based in China receive more subsidies than their competitors based everywhere else,” the OECD said…For Chinese businesses, however, the share of [market share] gains explained by subsidies was…60%.

The Rhodium Group has a deeper dive into China’s new industrial policy. Essentially, instead of selecting a few industries to specialize in, China’s leaders just want the country to dominate everything — not just manufacturing, but services as well:

China’s industrial strategy…is becoming more systemic and pervasive, extending across all layers of production, from upstream inputs and industrial equipment to downstream applications, services, and frontier technologies…China’s next-generation industrial policy represents a shift from targeted sectoral intervention to what can be described as an “industrial policy of everything.”…While [Made in China 2025] focused on a defined set of strategic emerging industries, current policy frameworks extend across mature sectors, foundational supply chain nodes, and frontier technologies alike…

Even in mature industries facing overcapacity and severe price pressures, Beijing is providing continued support and pushing firms to upgrade production technologies to gain market share and lower production costs, rather than cutting capacity…Services, relatively neglected in earlier rounds of industrial policy, are getting more attention[.]

Basically, China does not want1 to exist in a trading system, where goods are traded for other goods. China wants to make all the goods, and have other countries pay for those goods with debt.

There are two basic reasons China is doing this. The first is pure mercantilism; China is trying to export its way out of the economic slump created by its housing bust. The second, as the Rhodium Group report explains, is power. If China controls key segments of other countries’ supply chains, it can use the threat of export controls to bring those countries to heel.

What should other countries do about this? The U.S. has chosen to respond with tariffs. These are of limited effectiveness, but they do appear to be doing something; even when you take into account the intermediate goods that China exports to America via third countries like Vietnam and Mexico, China’s share of America’s imports has fallen slightly from 2021 (or from 2017):

There are almost certainly much more effective tools that the U.S. could use to accelerate the decoupling of the two economies and reduce dependence on China…but since when has U.S. policy been driven by a desire for effectiveness?

The question is now what Europe and other developed countries — who have marginally more rational decision-making processes — are going to do about China’s attempt to dominate all tradable industries. One proposal — which Germany seems to be following so far — is to do nothing, and to simply let China make all the physical objects in the world, while focusing on services instead. This is essentially the proposal of Tej Parikh, who writes that China “has a comparative advantage in industrial policy itself”, and that trying to compete with China in any manufacturing industry is therefore doomed to fail.

This annoys me, because it represents a deep misunderstanding of the entire concept of comparative advantage! The theory of comparative advantage is about traded goods; it’s about which traded goods can be produced relatively more cheaply by which countries. If I’m better at making TVs than cars, and you’re better at making cars than TVs, then I’ll make TVs and you’ll make cars and then we’ll trade. That’s how comparative advantage works. This is why you cannot have a “comparative advantage in industrial policy”. Industrial policy is a production input, not a traded good. No one buys and sells industrial policy!

“OK, Noah,” you’re about to say. “Stop being a pedant. You know what he means. He means China is better at making anything and everything, because they use industrial policy for everything.”

Yes, I know that’s what he means. And yes, this reflects a deep misunderstanding of the concept of comparative advantage.2 Even if one country is better at making everything, it doesn’t have a comparative advantage in everything. That’s impossible. Every country has a comparative advantage at something!

That’s why in the theory of comparative advantage, trade is balanced. In the real world, China’s massive trade surplus means that trade is not balanced; much of the time, China isn’t trading goods for other goods, it’s trading goods for IOUs. That kind of unbalanced trade is something that just doesn’t happen in the theory of comparative advantage.

OK, so that was a bit of a rant. The real point here is that Parikh’s preferred solution — that every country except China should focus on innovation, and leave the making of everything to the Chinese — is simply ridiculous. First of all, it doesn’t deal at all with the issue of supply chain vulnerabilities. Second of all, China has an industrial policy for innovation, too — in fact, it’s China’s most important industrial policy. The idea of “We’ll do the innovation while China makes everything” sounds straight out of 2002 — and it was obviously wrong even back then.

The cold, hard fact is that Europe needs to do something, or risk losing its sovereignty to foreign conquerors. China — the very country that Europe’s free-traders are now suggesting should supply every single manufactured good — is waging a proxy war against Europe even as we speak. China trains Russian soldiers, provides Russia with battlefield intelligence in its war against Ukraine, helps out Russian defense manufacturers, and even does some defense manufacturing for Russia — in addition to buying Russian oil and keeping the Russian economy afloat.

And this is all while Russia is actively threatening to invade the EU. If Russia eventually does invade, Europe will need to make large amounts of drones to resist the invasion. All militaries that are not centered around large masses of drones are now obsolete — when NATO conducts war games against drone-equipped Ukrainian units, the Ukrainians easily triumph.

But both Europe and Ukraine cannot currently make drones from scratch without relying on Chinese industry. Many of the components and materials that go into making a drone are controlled by China — things like radio modules, lithium-ion batteries, electric motors, navigation cameras, and even carbon frames. Europe cannot currently make these — or can’t make many of them, at least.

If Russia were to invade Europe, China could simply decide not to sell Europe the components it needs to make drones. Why wouldn’t it? China has already proven itself perfectly willing to use export controls on rare earths and other upstream technologies to throttle other countries’ defense industries. And a Europe cowed and dominated by China’s most important ally would probably be more useful to Xi Jinping than a free and independent Europe that steers its own destiny.

If Russia invaded Europe and China simultaneously halted the export of drone components, Europe would be a lost cause. Unless Europe could assemble upstream industries for drone components from scratch before Russia’s drone-equipped armies marched across the Baltics and into Poland, the war would quickly be lost for lack of weapons.

Whether they realize it yet or not, Europe’s dependence on China for the manufacture of many key defense inputs puts it at China’s mercy. This is a downside to free trade that the folks who advocate a European retreat from manufacturing simply fail to engage with or acknowledge. It provides a strong rationale for putting up trade barriers against the import of certain intermediate goods — something that harms economic efficiency, but is necessary for defense.

When invading armies are burning your country to the ground, you should worry less about deadweight loss than about being dead.

But those who wring their hands about the economic losses should take heart. Blocking the import of Chinese goods might harm economic efficiency, but it could have some positive knock-on effects in terms of political economy.

For all China’s high-tech wizardry, its big industrial policy push doesn’t seem to be doing much to help the actual people of China.

The real estate industry, which previously created plenty of labor demand and broad-based wealth for regular Chinese people, is still in the dumps and may even be getting worse. The continued property bust is weighing on aggregate demand — Fixed-asset investment is shrinking, while retail sales have flatlined.

“Industrial policy for everything” was supposed to fill the hole left by real estate, but it isn’t doing a very good job of it. Because the rise in Chinese manufacturing output is being done mostly for export, regular Chinese people aren’t able to share in the bounty the policies are creating. For example, Chinese motor vehicle consumption is below where it was a decade ago, despite surging exports:

In fact, this shift dates back to the pandemic. Matt C. Klein has a good series of charts on China’s anemic consumption. Here’s an example:

This is often framed as China helping producers at the expense of consumers. But often it’s not even that. China’s industrial subsidies pay a bunch of different companies to produce the same goods, competing their profits to zero even as they also undercut the overseas competition. A prime example of this is the solar industry:

China’s solar exports have enjoyed a surge since the bombing [of Iran] began. But that will be small cheer to its companies…Domestic demand for their products is falling for the first time in decades because the country’s power grids—far and away the biggest market for solar panels—have become overloaded with the things. Solar-panel supply, meanwhile, is overabundant because of years of splashy investment in factories…Most companies have been running at a loss since 2024 because of brutal price wars; bankruptcies are mounting.

But it’s not just undifferentiated commodity products like solar that are suffering this fate; China’s vaunted auto industry, which came out of nowhere to leapfrog all other countries with its mastery of EVs, is locked in an endless brutal price war:

China’s efforts to cool its automotive price war are faltering as BYD Co. and rivals expand discounts to avoid ceding ground in the world’s largest car market…The average price reduction for BYD cars accelerated to 10% in March…Discounts by competitors…also edged higher…Regulators’ missives aimed at halting deflationary momentum have fallen on deaf ears so far, and industry observers say it won’t stop the discounting trend anytime soon.

China’s industrial policy is accomplishing its central goal of national greatness. China’s technology level is advancing, its companies are winning global market share, and it’s gaining control over key strategic technological choke points. But China’s workers, its savers, its investors, and even its entrepreneurs are on a treadmill, unable to enjoy the fruits of their country’s industrial dominance.

European trade barriers could potentially nudge China out of this toxic political economy. If Xi Jinping & co. see that they can’t forcibly deindustrialize the West by subsidizing infinite exports, their cost-benefit calculations may shift. Providing growing living standards for Chinese people might once again become the central goal of policy, as it was during the time of Deng Xiaoping, Jiang Zemin, and Hu Jintao.

So Europe should push back against the Chinese import flood, not just for their own security, but also for the sake of regular Chinese people. Fortunately, there are indications that European leaders have had enough of Xi’s little game, and are preparing to take real action. Hopefully this newfound resolve doesn’t get lost in the maze of European bureaucracy and inertia like so many other worthwhile initiatives.

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For many years, I was a big proponent of the idea that increased market power was harming the U.S. economy in various ways. In the 2010s, in the economics world, circumstantial evidence began piling up that implicated increased industrial concentration as the culprit in a variety of recent negative trends. Here’s what I wrote in 2017, after reading a bunch of that evidence:

[B]asically I see the case of the Market Power Story - or any big economic story like this - as detective work. We’re collecting circumstantial evidence, and while no piece of evidence is a smoking gun, each adds to the overall picture. IF the economy were being throttled by increased market power, we’d expect to see:

1. Increased market concentration (Check! See Autor et al.)

2. Increased markups (Check! See De Loecker and Eeckhout)

3. Increased profits (Check! See Barkai)

4. Decreased investment (Check! See Gutierrez and Philippon)

5. Decreased wages in concentrated markets (Check! See Azar et al.)

6. Increased prices following mergers (Maybe! See Blonigen and Pierce)

7. Weakened antitrust enforcement (Check! See Kwoka)

8. Decreased output (Maybe not? See Ganapati)

So, as I see it, the evidence is piling up from a number of sides here.

Some of this is micro evidence, demonstrating some of the pieces of the causal chain that some economists think leads from lax antitrust to bad economic outcomes. The Azar et al. (2017) paper shows that labor market concentration hurts wages. The Blonigen and Pierce (2016) paper shows that mergers raise prices.

The rest is macro evidence and macro theory. Economists see some trend in the economy — a lower labor share of national income, or decreased business investment, or fewer new companies being formed — and they think about whether something like monopoly power could explain those trends.

Just because a single story can explain the trends, of course, doesn’t mean it does. Ultimately you need a whole lot of micro evidence — not just a few papers — to prove each link in the chain of causality from weak antitrust enforcement to higher prices, lower output, lower wages, and so on. But in this case, the market power explanation was very tantalizing, because it had the power to explain so many of 21st century America’s dysfunctions at the same time.

This is why at Bloomberg, I wrote consistently in support of the idea that market power was making the American economy both less efficient and more unequal, and that stronger antitrust enforcement was a good solution to try. (However, I did note that antitrust wasn’t guaranteed to be a remedy, and that Big Tech companies were a bad target for antitrust enforcement.)

When Biden was elected, I was optimistic. His appointment of people like Lina Khan showed that antitrust was finally being taken seriously in Democratic Party circles. Finally, it seemed, the growing clamor of economists was going to result in some real efforts at reform:

In that post, I revisited some of the important recent papers about market power, and I also noted that prominent economists were increasingly putting their reputations on the line by writing popular books advancing the thesis that market power was hurting our economy:

[Economists] have also raised the alarm about corporate power in other forums — Thomas Philippon’s book The Great Reversal: How America Gave Up on Free Markets, John Kwoka’s book Mergers, Merger Control, and Remedies and his 2017 report on mergers, and various speeches sounding the alarm at Federal Reserve conferences. (Update: I was remiss in not mentioning Jason Furman’s briefs on market power when he was chair of the Council of Economic Advisers under Obama! They were very influential. I also neglected the interesting and often-overlooked role of sports economists, who have been complaining about market power for quite a while!)

I concluded that the Biden administration’s shift toward antitrust was a healthy example of ideas making their way from academic economics to the halls of power:

Economists have been suspicious of excess profits ever since Adam Smith complained about “the bad effects of high profits” and declared that “people of the same trade seldom meet together…but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The idea that competition should reduce profits to a low level in a well-functioning economy is Econ 101, as is the theory of monopoly. Biden’s tweet about capitalism and competition might sound like bold populist rhetoric, but it also could have come right out of an econ textbook…

What this means is that economists are included in the vanguard of this revolt against American corporate power…Economists make unlikely crusaders, but here they are, taking on the biggest companies in the country.

I wasn’t always happy with the Biden administration’s antitrust actions — the government lost most of its cases against Big Tech, and the vendetta against Meta seemed misplaced. But overall, a lot of action seemed to be happening in the prosaic, boring sectors of the economy where market power has probably been eroding the foundations of capitalism for years. In meat processing (multiple times), in publishing, in insurance brokering, in pharma, in medical care provision, and so on, Biden’s FTC and DOJ notched up real wins — not enough to reverse the U.S. economy’s trend toward greater concentration, but possibly enough to create a “chilling effect” that would restrain the trend toward megacorporations-in-everything.

And yet over the last couple of years, I’ve had increasingly serious doubts about the antimonopoly movement. I’m still concerned about corporate power itself — in fact, in many ways, I’m more concerned than I was a decade ago, because of the advent of AI and the unprecedented corruption of the Trump administration. But I’m increasingly unenthusiastic about the ability of the antimonopoly movement, as it currently exists in the Democratic Party, to make useful headway in curbing or balancing corporate power.

Antimonopoly is simply too important to leave to the antimonopolists.

Antimonopoly should be a tool, not an obsession

Speaking about Milton Friedman, Robert Solow once quipped: “Everything reminds Milton of the money supply. Well, everything reminds me of sex, but I keep it out of the paper.” I am starting to feel that way about the antimonopoly folks.

Jonathan Chait has a long and very damning article about the antimonopoly movement, focusing on its crusading founder, the former journalist Barry C. Lynn. Until I read Chait’s article, I had never even heard of Lynn; this demonstrates that I’m very much out of the loop when it comes to D.C. policymaking and thought leadership, but it also shows how Lynn has escaped scrutiny compared to more popular figures like Lina Khan, Elizabeth Warren, and Matt Stoller.

In any case, from Chait’s description of Lynn, he is not the type of person whose movement I would want to follow. First of all, he seems monomaniacally obsessed with monopoly power:

“It is vital to understand,” Lynn wrote in his 2020 book, Liberty from All Masters, “that monopoly is not one of many economics problems but rather the political economic problem of our time,” causing “just about every ill in our society today.”

When he says that he holds corporate consolidation responsible for just about every problem, he means it. A list of social ills Lynn has attributed to monopolists includes not just the cost of goods and services but also: “The vast and growing inequality of wealth, political power, and control. The rise of the radical right. The surge in racism and homophobia. The attacks on reproductive choice and marriage. The collapse of our news media.”…

Anti-monopolization, Lynn argues, is “an all-encompassing framework for seeing and shaping power in every corner of our democratic republic.”…Lynn sees American history as a struggle against monopolization…A profound crisis must have profound causes, and Lynn was offering a totalistic account of social decay.

This monomania is obviously just silly. A lot of these links are just incredibly tenuous, requiring heroic leaps of assumptions about society, politics, culture, and economics. If you want to say that corporate concentration is responsible for racism, for example, you have to believe that:

• racism has risen recently (highly doubtful)

• the rise in racism, if it exists, is caused by economic factors (doubtful)

• those economic factors are primarily — not just slightly — due to corporate concentration (highly doubtful)

Even the economics papers that find measurable effects of corporate concentration on low wages, for example, find that the effect differs enormously by geographic location. If monopsony power is responsible for low wages, then minimum wages should increase employment rather than decreasing it; in some areas, this does seem to happen, while in other areas minimum wages decrease employment, consistent with a greater amount of competition in the latter areas.

Furthermore, several credible research teams — Rossi-Hansberg et al. (2021), Rinz (2022), Autor et al. (2023) and others — have found that employer concentration has actually decreased in local markets in recent decades. This means that not just racism, but any social ill that Barry C. Lynn and his followers want to ascribe to labor monopsony, should have decreased over that period.

Another example is inflation. Antimonopoly crusaders like Elizabeth Warren were quick to blame corporate greed for inflation in 2021-22. There was extremely little data to back this up. Here’s what I wrote at the time:

Alvarez et al. (2025) found that markups — i.e., the amount that companies charge for things above and beyond what those things cost to produce — stayed constant during the post-pandemic inflation, meaning that companies weren’t actually able to use the inflation to gouge consumers…Leduc et al. (2024) and Bouras et al. (2023) found the same. And Jose Azar found that industries with higher markups — implying more market power — actually passed on less of their costs to consumers during the post-pandemic inflation…Greedflation, in other words, is not a real thing.

These are just two examples of the shaky chain of reasoning and evidence that backs up expansive claims like Lynn’s. There are many more, if you want to go looking for them. More sober antitrust types absolutely know that monopoly power is not a Grand Theory of Everything Bad in America. From Chait’s article:

Diana Moss of the Progressive Policy Institute [and] a former head of the American Antitrust Institute…told me the neo-Brandeisians’ error is to view antitrust policy “not as law enforcement but as a broad policy tool for fixing a lot of problems—economic, political, and social.” Antitrust enforcement isn’t that powerful, for the simple reason that corporate concentration is not the root cause of every problem.

This is good. But this reasonable, moderate perspective doesn’t seem to be what’s animating the modern antimonopoly movement. Chait details a telling exchange between Ezra Klein and Zephyr Teachout:

Last year, the New York Times columnist Ezra Klein asked Teachout on his podcast if she could think of any issues that cannot be solved by smashing corporate concentration. At first she ventured, “I don’t think that anti-monopoly can solve significant problems of racism in this country,” but quickly retracted even this concession. “Having said that,” she continued, “there’s a reason that Frederick Douglass and [W. E. B.] Du Bois were so concerned about monopoly power.”

Admittedly, these are words, and not actions. Chait may have also cherry-picked them from among antimonopoly movement leaders’ more reasonable statements, in order to make his point.

But when you look at the movement’s actual actions, you can clearly see the obsessive, all-encompassing nature of the belief system. For example, consider the movement’s choice of targets. These include some industries with high profit margins, but also some with very low margins. These include grocery stores, airlines, and health insurers. Grocery stores and health insurers both consistently have much lower profit margins than American corporations in general, often hovering near the zero mark. Airlines are a cyclical industry that sometimes sees some very profitable years, but generally hovers below the average:

The causal chain that runs from weak antitrust to all sorts of social harms necessarily runs through profits. If companies aren’t making profit, they aren’t controlling the market. Yet Elizabeth Warren blamed high food prices on grocery stores’ market power during the post-pandemic inflation, despite the fact that these stores make very little profit, and their margins actually declined as inflation accelerated. You could see that exact same misplaced focus in Lina Khan’s blockage of the Kroger/Albertsons merger.

As for airlines, the Biden administration’s blockage of the Spirit/JetBlue merger resulted in Spirit Airlines simply going out of business entirely. Corporate concentration was achieved after all — but it was achieved with disorder, corporate failure, and 17,000 unemployed workers rather than with an orderly merger that would have preserved some of Spirit’s routes and workers. Not exactly a resounding success for the antimonopoly movement — but that’s what happens when you try to use antitrust tools against companies in low-margin industries.

Then there’s the case of housing. The antimonopoly people have eagerly embraced the idea that corporate landlords buying up rental properties and jacking up the price is a major cause of high rent. Democrats and Republicans have both embraced this piece of “slopulism”, despite the fact that the percent of homes owned by corporate landlords is tiny and there’s some evidence showing that corporate landlords tend to charge lower rents. Supply constraints — failure to build more housing — is actually the reason for high rents, so the antimonopoly movement is distracting us from solving the real problem.

The movement’s obsessive monomania — its conviction that corporate concentration is the root of all of America’s problems — is causing it to pick the wrong targets and hurt workers. That doesn’t mean bigger corporations are better, or that there aren’t industries where we need stronger antitrust. But the antimonopolists’ totalizing obsession causes them to ignore the evidence of where and when their ideas are needed, because they assume that their ideas are always the top priority in every situation and should be applied in a blanket way to any target they choose.

The science on monopoly power isn’t settled

Richard Feynman once said of science that “Of all its many values, the greatest must be the freedom to doubt.” Now you can respond that economics and politics aren’t “science”, but that makes the freedom to doubt even more important; the less conclusively that any one data set can answer your questions, the more important it is to look at a wide variety of data sets and consider a variety of explanations and theories.

From Jonathan Chait’s description of Barry C. Lynn, he doesn’t seem like the kind of guy who’s inclined to look at evidence that goes against his ideas:

[Lynn] believes that “most prices are entirely arbitrary and political in nature.”…More expansively, Lynn believes that “market forces”—which he places in scare quotes—do not exist. His indictment of economics is neither mild nor limited. He has compared the discipline to Lysenkoism, a pseudo-scientific fad under Stalin. “The ‘science’ of economics today … ,” he wrote in his 2011 book, Cornered, “has become a form of madness, a dream of human imagination we mistake for a pattern of the world.”

Lina Khan has also written that “There are no such things as market ‘forces’.” Statements like this certainly don’t do much to refute Chait’s allegation that the antimonopoly belief system “is more like a religion than an economic theory”.

First of all, as an aside, we should consider what it would mean for market forces not to exist and prices to be determined by politics. It would mean that grocery stores carefully calculate exactly how much they can charge for a cucumber or a package of napkins without Senators giving them an angry call or the working class rioting, or something like that. That’s kind of preposterous. It would also mean that small businesses would charge lower prices, because they’re less politically powerful than big businesses. But in fact, it’s big businesses that charge lower prices for the same goods. So the “prices are determined by politics” idea is just abjectly ridiculous, except maybe in a few special cases or where explicit regulation is involved.

But more to the point: Market forces obviously do exist. When you include sales taxes on price tags — reminding people that prices are higher than they had thought — they buy less, proving that demand curves exist and slope downward. When there is bad weather at sea, the price of fish goes up. When you charge electricity customers more, they use less electricity.

And so on. Market forces are not easy to observe in all cases, and they’re not always the most important determinant of prices. But their existence has been proven so thoroughly, by so much careful empirical observation, that to deny their existence requires a deep level of mysticism and blind faith.

If you’re not the kind of person to believe in empirical economics, then of course you’re not going to care if economists find evidence against your worldview. But once we move out of the realm of willful faith-based belief and into the real world of evidence and observation, we find that the science on monopoly power is far from settled.

First of all, there is the evidence I cited before about decreasing concentration in local labor markets (even as concentration increases nationwide). The monopsony wage penalty might be very high, but it was probably even higher in the past; this leaves room for antitrust action to help workers, but it should make us question whether monopoly power is at the root of slow wage growth.

But more fundamentally, the entire story about creeping market power being responsible for a bunch of different ills in the modern American economy is under serious dispute.

For example, the whole story about monopoly power increasing in recent decades relies on the idea that price markups have increased — if companies can’t charge higher prices relative to their costs, they must not be very powerful. Economists like De Loecker and Eeckhout find that markups have increased a lot, but there are plenty of economists who disagree with that finding! There are tons of measurement issues involved in trying to estimate markups across the whole economy. Some economists claim that essentially the entire increase in markups is due to the finance sector.

There are plenty of other pieces of the monopoly power story that are also disputed. Shapiro and Yurukoglu (2024) summarize a bunch of these. It’s hard to define what each “market” is over time, because the boundaries of the categories are arbitrary, and the nature of products themselves keeps changing. It’s hard to choose the region over which local concentration should be measured (when is one store in the same “market” as another?). Companies’ costs are hard to measure for many reasons — for example, companies sell lots of different things, and researchers don’t necessarily have the data to determine which costs are for which products. Profits are hard to measure because the cost of risk is hard to assess. And so on. In general, choosing a different set of assumptions can get you wildly different results regarding how much monopoly power has actually risen in America.

The point here is not that De Loecker and Eeckhout, or the other economists who concluded in the 2010s that monopoly power is a big deal, were wrong. Maybe they were, maybe they weren’t. Nor should you conclude that economics is just a game of “he said, she said” where everyone contradicts each other and nobody really knows anything. The correct takeaway here is that these questions are very subtle and difficult, and the most careful, serious researchers will take a long time to hash out the correct answer. In the meantime, we must live with uncertainty.

A big problem with the antimonopoly crusaders is that they don’t just refuse to live with uncertainty — they insist that you don’t live with uncertainty either. If you say “Hey dudes, maybe corporate landlords actually lower rents”, they won’t debate the finer points of causal estimation with you — they’ll simply label you as a corporate shill and dismiss you.

Don’t let the factionalists win

It’s this last bit — the anathematization of anyone who disagrees with them — that really warns me away from the antimonopoly movement. Chait describes in his article how anyone who tries to buck the antimonopoly people gets accused of being a paid corporate hack:

“We’ve largely won the intellectual debate,” [Lynn] told me matter-of-factly, allowing that the only remaining liberals who disagree with him are “those who are paid to do so.”…

When Biden considered appointing Susan Davies, a former deputy White House counsel under President Obama, to the Justice Department’s top antitrust post, a slew of articles savaged her as a corporate shill. Her candidacy died. [emphasis mine]

This tactic was clearly on display when the antimonopoly people leapt to savage Ezra Klein and Derek Thompson’s book Abundance. Matt Stoller wrote a post entitled “An Abundance of Sleaze: How a Beltway Brain Trust Sells Oligarchy to Liberals”. Dylan Gyauch-Lewis1 called the Abundance movement “The new centrist push to regain control of the Democratic Party, with corporate money”. Barry C. Lynn said that Abundance wants “to cozy up to good oligarchs, so they can shelter us until the MAGA storm blows over.”

First of all, claiming that anyone who disagrees with your ideas must be on the payroll of nefarious forces is blatant intellectual dishonesty. It also signals how weak your argument is if you have to accuse every critic of being a bad actor.

But beyond that, the antimonopoly crusaders’ reaction to Abundance shows how utterly factionalist they are. They could have simply said “Yes, we want abundance too. Guess how you get abundance? By breaking up monopolies!” Or something like that. They could have easily tried to co-opt the energy behind Abundance and treated Ezra Klein and Derek Thompson as potential allies. Instead, they leapt instantly to the attack with maximum savagery.

This is the behavior of factionalists, for whom ideas and policy are less important than building power for a clique of favored allies and fellow-travelers within the Democratic Party. Klein and Thompson were a threat not because their ideas contradicted those of the antimonopoly clique, but simply because they were not beholden to the patronage or the intellectual legacy of that clique. They were not on the team, so they were the enemy.

In my view, it is very dangerous for any political party to allow itself to be entered and captured by a clique or faction like this. I’ve spent a long time being very favorable to the ideas being put forward by the antimonopoly people, but their behavior with regards to the Abundance liberals — and the shoddy reasoning, baseless accusations, and backroom arm-twisting that they employ in these debates — has given me what the Zoomers call “the ick”.

A problem with economic policy is that it is very vulnerable to intellectual pseudo-cults. Economics research is very hard to understand, isn’t always useful, and rarely offers clear-cut answers. So policymakers and writers seeking certainty and a reason for decisiveness often fall victim to charismatic gangs of intellectuals who claim that economics is solved and that they have it all figured out. On the GOP side, these include the “supply-siders” in the 1980s and the “national conservatives” today. On the Democratic side, it includes the MMT people.

But MMT failed — essentially no one listens to people who say infinite deficits are good. The antimonopoly faction, on the other hand, appears to have succeeded in winning enormous power and prestige within an increasingly epistemically closed progressive movement. Elizabeth Warren was basically a one-woman Organization Department2 for the Biden administration, and is apparently still incredibly influential in terms of furnishing personnel for Democratic hopefuls. Meanwhile, popular Democrats like AOC are going around claiming that “market power” is what produces billionaires, and every major progressive publication now platforms the antimonopoly people’s intellectual output.

Given my writings about the problems of corporate power in the past — and my fear of the overwhelming power that AI companies might achieve — it would be relatively easy for me to join this movement. But I can’t, because monomaniacal obsession, epistemic closure, anti-empiricism, and intense factionalism are the kinds of things I just can’t sign on to.

Corporate power is a real problem in our society. But we need more reasonable programs, and more reasonable people, to fight it effectively. Banning corporate landlords, calling for price controls, attacking the grocery store industry, forcing airlines out of business, and making accusations against anyone who calls for deregulation of housing supply are just signs of an approach that’s going to lead nowhere good.

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So, Anthropic is going to IPO! The company is valued at almost $1 trillion, so this is going to be one of the biggest IPOs in history — the only other competitor being SpaceX, which is also set to go public soon. It’ll be one of the largest wealth creation events in history — the company’s seven founders are each going to be worth almost $20 billion, and regular employees will be worth in the millions to tens of millions. So much for my chances of buying a house in San Francisco!

Whether Anthropic is worth this valuation is not the topic of this post, but I guess it’s interesting to touch on. Anthropic is showing more impressive revenue growth than any company in history, having recently blown past OpenAI to an annualized rate of about $45 billion per year. Worries that the company would be unprofitable have been blown away by this hypergrowth — Anthropic is about to turn its first operating profit.

In fact, I think the price being offered for Anthropic is pretty conservative. A multiple of 20x annualized revenue really isn’t that expensive for a company growing at 130% a quarter. Obviously that’s going to level out at some point soon, but it would take only a little over one more year of that sort of growth for Anthropic to be priced like a value stock. The cautious pricing probably reflects the danger of competition, both from OpenAI and from the cheap Chinese open-source models perpetually nipping at the leaders’ heels.

The reason for Anthropic’s meteoric rise, of course, is the success of coding agents. For years, OpenAI had struggled to find a market for its state-of-the-art chatbots; everyone was wowed by the technology, and everyone used it, but people couldn’t figure out how to get it to produce lots of economic value. Anthropic basically solved that problem by being the first to invent usable coding agents — AIs that write software on their own. Claude Code, Anthropic’s agentic software, gained a huge amount of brand value, even though OpenAI’s Codex product is competitive in terms of quality.

This was true product-market fit. AI had already proved that it worked in terms of the underlying technology — probably around 2024, when reasoning models cut down on the hallucination problem. Now it had found its killer app — the equivalent of e-commerce and search for the internet, or spreadsheets and word processing for computers. Suddenly, everyone in the world was “tokenmaxxing” — trying to use coding agents as much as humanly possible.1

I first encountered this trend at a dinner event on the economics of AI (I go to a lot of those dinners these days). An entrepreneur at the dinner breathlessly told me and a couple of other attendees that he ordered his employees to “spend their salary in tokens” — that is, to create so much code with Claude Code and Codex that it cost as much as their entire paycheck. I remember asking him: “What are they using all those tokens to create?” I don’t think I got a straight answer; I’m not sure he knew.

He wasn’t alone, though. Plenty of companies encouraged their employees to use AI coding agents as much as possible. Meta even briefly had a leaderboard for who could use the most tokens. One company reportedly spent half a billion dollars on Claude Code — equal to one percent of Claude’s annualized revenue!

Reading these reports, I just kept wondering: What are all these tokens actually producing? Just like with that guy at dinner, there never seemed to be a clear answer. Were Amazon and Meta and other software companies rolling out new features? Not that I’ve seen. A lot more apps are being submitted to the App Store, but I’ve only heard of one good one (Refine.ink). I’m sure there are more out there, but so far it’s nothing like the early days of the smartphone, where I was hearing about cool new apps every couple of weeks.

Maybe it was all on the back end? I’m not a software guy, so I don’t have a proper grasp of how hard it is to make a website like Instagram run, or optimize the cloud servers at AWS. Sites and apps aren’t loading faster or obviously more reliable. Was advertising getting better? Are click-through rates improving? Were companies fixing their long-standing problems, taking care of “tech debt” so they can avoid paying large costs in the future? Maybe!

I kept quiet about these questions, since it’s not really my area of expertise. But I saw a lot of other people — people who know a lot more than I do about software engineering — asking similar things. John Loeber wrote:

The stuff I’m hearing is just insane. People are spending hundreds of thousands of dollars a month on tokens? Guys, what are you shipping?…I am seeing people fully enraptured by illusions of productivity. They have swarms of agents coordinated by Byzantine Octopus harnesses. They’re munging thousands of tokens a second. They’re doing all this stuff, churning unfinished marginalia faster than ever before. Spinning their wheels and shipping absolutely jack shit for their customers…[W]e’re getting a lot of utility from AI for engineering at our company. I think we would really struggle to burn more than $5K per engineer per month.

Uber COO Andrew Macdonald said it wasn’t yet possible to draw a link between raw AI usage and useful products actually being shipped:

“That link is not there yet, right?” [Macdonald] said. “I think maybe implicitly there is more that is getting shipped, but it’s very hard to draw a line between one of those stats and, ‘Okay, now we’re actually producing 25% more useful consumer features.’”...He said that the trade-off costs from AI are harder to justify because he can’t draw a direct link.

Microsoft, meanwhile, began canceling Claude Code licenses. Salesforce started redesigning their employee targets to measure real output instead of AI input. And people who looked into the matter basically confirmed the suspicion that a lot of this AI coding wasn’t going into actual products being shipped:

For companies using advanced AI coding tools, only 18% of spending on tokens is translating into shipped coding products that reach real users, according to EntelligenceAI, a startup that aggregated data on more than 2,000 companies using advanced AI tools for coding.

Jellyfish, a company that tracks AI usage, found rapidly diminishing returns in terms of converting tokens to actual software.

You should absolutely NOT take this to mean that AI is a bubble, or that the tech doesn’t actually work, or that Anthropic’s IPO is overpriced, etc. A lot of this is perfectly normal. When a very capable new general-purpose technology bursts onto the scene — steam power, electricity, computing, the internet, etc. — a ton of people play around with it to see how it works and experiment with how they might be able to use it. That experimentation is healthy, and we shouldn’t expect it to last forever.

It’s also reasonable for companies to push their software engineers to try something radically new. Most professionals who have written code by hand all their lives will naturally be reluctant to switch over to letting a machine take the first crack at it. Rewarding AI usage for its own sake is silly in the long run — it’s just as subject to Goodhart’s Law as anything else, and it predictably resulted in people checking the weather with AI just to hit their targets. But in the short run, it could be good to shove stodgy old engineers out of their comfort zone.

But I also think there are two more interesting things that are potentially going on here:

1. Companies are finding out, once again, that turning task-level productivity into economic productivity is a lot harder than it looks. This has implications for the big “AI and jobs” debate, upon which the shape of our future society could hinge.

2. It’s very possible that the software industry as we know it is a mature industry, like steelmaking or internal combustion. If AI creates major improvements in software, it’s possible — even likely — that it’ll be in new types of software industries instead of just “better Facebook and Amazon”.

Tokenmaxxing versus bottlenecks

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I consider myself a pretty good and decent guy, overall. I don’t commit crimes. I’m nice to the people I meet. I help out my friends. I take good care of my pet rabbit, and I donate lots of money to other people who take care of abandoned and sick rabbits. My politics might not always be correct or wise, but I want things like the end of poverty, the end of war, and so on.

And yet just down the highway from me, there are facilities for the mass torture of animals. In the United States, there are 73 million pigs in “concentrated animal feeding operations”, more commonly known as factory farms:

There are many horrors experienced by chickens and other animals on factory farms, but the way pigs are forced to live is probably the worst. For most of their lives, female pigs (sows) are kept in tiny cages — either “gestation crates” when they’re pregnant, or “farrowing crates” when they’re nursing. A sow will spend most of her life in one of these cages.

In a gestation crate or a farrowing crate, sows don’t have enough room to turn around — all they can do is either stand or lie down in a pile of their own feces. Imagine living your entire life in an airline seat, where you couldn’t even get up to go to the bathroom or take your seatbelt off. That’s how these pigs live.

Pigs are social creatures — they exhibit “emotional contagion”, meaning that when one pig is scared or happy, other pigs start to feel the same, and they give comfort and support to other pigs who are in distress. Research suggests that they’re at least as smart as dogs, and probably smarter. But a pig in one of these crates will never get any social interaction in her entire adult life — she can’t even turn around to look at her babies.

This is torture. The pigs who are confined this way bite the bars of their cages, desperate for a freedom that will never come. They have their tails chopped off as babies (generally without anesthetic), so that they can’t chew each other’s tails in anguish. But no relief ever comes — they live out their entire lives and die in these tiny torture-cages.

I have no other word for this except “sin”. This is a sin. If there is a God,1 and if that God is in any way good and moral, then that God is looking down with disgust on the way my society treats pigs. I go about my daily life — hanging out with my friends, petting my rabbit, going out to eat at nice restaurants — never thinking about the horrible suffering that has engulfed the entire lives of those tens of millions of pigs.

And it’s for my own benefit that those animals are being tortured. When I eat delicious guanciale, sumptuous char-siu, or mouthwatering carnitas, I’m eating the flesh of animals who were tortured for their entire lives so that I could devour their faces and shoulders and bellies for a slightly cheaper price.

OK, so why don’t I just stop whining and become a vegetarian (or a vegan, since milk cows and hens are also treated badly)? Honestly, I should, and the fact that I don’t is monstrous in a way. But simply washing my own hands of this crime feels like a pitifully inadequate response. The vegetarian movement has been around in the West for over 150 years, and very little has changed — meat consumption is probably marginally lower than if there were no vegetarians at all, but abusive factory farming practices have only been refined and expanded. Furthermore, vegetarianism, though morally laudable, has an obvious economic limitation — when one person refuses to eat meat, it lowers the price of meat for everyone else, which raises other people’s meat consumption and partially offsets the vegetarian’s action.

On top of the obvious and demonstrated inability of individual action to solve this problem, it’s insufficient even from a moral stance. Suppose that our society farmed human beings for food. Would simply refusing to eat human flesh be enough to absolve me of culpability? I don’t think so. I would still have a responsibility to try to abolish the evil system.

In fact, “abolish the evil system” is exactly what voters in California and some other states are trying to do. In 2018, by an almost 2-to-1 margin, California voters enacted a law called Proposition 12 that heavily restricted the sale of meat from pigs, hens, and calves that weren’t raised with a minimum amount of space. Crucially, the partial prohibition extended to meat from animals raised inhumanely in other states. This followed on the heels of a similar law in Massachusetts two years earlier.

Courts have upheld the law, but Republicans in Congress are trying to undo it from the federal level. In 2025 they proposed the Save Our Bacon Act, which would ban states from enacting animal welfare laws like the ones voters approved in California and Massachusetts. The Save Our Bacon Act failed on its own, but this year it got incorporated into the Farm Bill, which has passed the House and is now being considered in the Senate:

Companies and industry groups have also worked with members of Congress for over a decade to introduce federal legislation to nullify laws like those in California and Massachusetts. The latest iteration is called the Save Our Bacon Act, originally proposed last year…This effort, which for years went nowhere as standalone legislation in Congress, now has a decent chance at becoming law as part of the new Farm Bill…

In late April, the House of Representatives passed its version of the Farm Bill, which included the language from the Save Our Bacon Act…It’s “really a Save Our Crate Act,” Brent Hershey, a hog farmer who opposes it, told me. “A vote for the farm bill,” he said, “is a vote to cage an animal that can’t walk or turn around.”

Lewis Bollard has a good post explaining what’s at stake. In fact, the current Farm Bill wouldn’t just reverse the recent anti-crate laws in California and Massachusetts — it would roll back much of the progress that has been made in farm animal welfare over the decade, as well as preventing any future welfare laws along similar lines:

The [Save Our Bacon] Act would stop any state or locality from regulating the sale of meat based on how it’s produced in another state. This would likely invalidate state and local bans on foie gras, crated veal, and more…It would also halt future legislative progress. Congress hasn’t passed a farm animal welfare law in decades. State laws are where reforms actually happen. The SOB Act would gut them by mandating they contain a giant loophole for out-of-state imports.

Why should Congress prevent the voters of California and Massachusetts from taking a stand against the evils of factory farming? First and foremost, it’s a case of a concentrated interest group — the pig farming lobby — making headway against a diffuse interest (voters with a conscience). In fact, if you believe the polls, a majority of the country — even a majority of those who regularly eat pork — would probably support measures like the ones in California and Massachusetts:

Across different incomes, genders, age or race, many regular pork buying Americans (defined as those who purchase pork at least 2-3 times per month) find the use of gestation crates on pregnant pigs (66%) and the practice of [tail] docking on piglets (53%) objectionable. These findings, and other key sentiments, are from a recent survey of over 2,000 US adults conducted by The Harris Poll…According to the survey, gestation crates are seen as unacceptable by two-thirds of Americans (66%), and a strong majority (73%) are more likely to buy pork products from companies committed to ending their use than from one that is not. Tail docking is also seen as unacceptable by just over half (56%) of Americans, and 62% of Americans think retailers and restaurants have a responsibility to ensure the cutting of piglet tails is not done by their pork producers.

A plurality of Americans want laws against animal cruelty strengthened in general, and in 2022 a poll by Data for Progress found that measures like those of California’s Prop 12 enjoy widespread national support.

There is a financial cost of switching to humane farming methods, but in the grand scheme of things it isn’t that high. After California passed Prop 12, the prices of affected products rose by about 20% relative to products that weren’t covered by the law. 20% is a significant increase; it’s possible that the American public, wearied by several years of inflation, is less inclined to care about pig torture than they were when the polls I cited above were taken.

But it would be a one-time bump in cost, and over the years the price would come back down at least somewhat, as farmers found more efficient ways to farm pigs without torturing them. In addition, California implemented the law in its typical inefficient way, forcing producers of legally compliant pork to jump through massive amounts of regulatory hoops in order to sell their product in the state. Efforts to make it easier to sell humanely produced meat would make it even cheaper to end these terrible practices.

In fact, I suspect that the American public is still in a mood to support animal welfare laws like this. The Save Our Bacon Act failed on its own, and its supporters had to end up sneakily burying it within the much bigger Farm Bill; to me, this suggests that even the SOB Act’s proponents knew how bad it would make them look if people started paying attention.

I also suspect — though I can’t prove — that the proponents of the Save Our Bacon Act care about more than just the support of the farm lobby. I suspect that part of the reason they’re so anxious to preserve abusive farming practices is that doing so affirms their right to abuse animals. The line “The cruelty is the point” probably applies here.

People who feel disempowered tend to take their frustrations out on those with even less power. Conservatives have certainly been feeling disempowered by the progressive drift of elite culture over the past few decades; by rolling back animal rights, perhaps they can demonstrate that at least they still have complete power over the pigs.

This disgusts me. In The Better Angels of Our Nature, Steve Pinker showed how economic development has tended to go hand-in-hand with less tolerance for animal cruelty. By passing a law that expanded the scope for animal cruelty, America would be slipping a little bit back down toward developing-country status. It’s moral degeneration, plain and simple.

I would hope that the advent of AI would give us humans a little bit of self-reflection about how we treat animals. Whether or not you believe that today’s AI represents a true superhuman intelligence, the rapidity with which Claude and GPT have rocketed to their current heights of ability should make even the most hardened skeptics realize that humanity is probably not the eternal pinnacle of power and intelligence in this universe.

And in a universe where humanity is neither the most powerful nor the most intelligent entity, we will desperately need a universal moral code where the strong protect the weak. Vernor Vinge, contemplating the advent of superhuman AI back in 1993, wrote:

[I.J.] Good proposed a “Meta-Golden Rule”, which might be paraphrased as “Treat your inferiors as you would be treated by your superiors.” It’s a wonderful, paradoxical idea (and most of my friends don’t believe it) since the game-theoretic payoff is so hard to articulate. Yet if we were able to follow it, in some sense that might say something about the plausibility of such kindness in this universe.)

The people who wrote the Save Our Bacon Act don’t believe in this Meta-Golden Rule. Instead, they believe that all of the moral value and weight in the Universe lies with them and their friends, and that they should have the right to inflict unimaginable cruelty on any being that doesn’t possess the power to stop them from doing so. I would hope that whatever being ends up judging humanity, be it the God of the Bible or some future superintelligence, doesn’t judge us by our factory farms.

Anyway, if you don’t want your society to torture pigs en masse for a few bucks, call your Senator and tell them not to pass the Farm Bill until the Save Our Bacon Act is stripped out of it.

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Back when I started blogging in 2011, I saw my main function as technocratic — I would discuss policy ideas with other intellectual econ types, and wise policymakers at the Fed, in Congress, or in the Obama administration might put those ideas into practice. Since 2016, however, technocracy has felt less and less important, and policymaking has felt more ideological. In the second Trump term, concern for costs, benefits, and the public good seems to have entirely gone out the window — policy is now driven either by the whims of an aging egomaniac and his personality cult or the echo chamber of the online right. Tariffs and immigration raids make no sense as economic policy; they are intended as part of a nativist, isolationist ideological project. The Democratic alternative is less bad, but is still increasingly ideological, centered around the idea that corporate profits are inherently bad.

This changes the nature of my job, and in fact makes it much harder. Whereas in the past I could just recommend policies, now I have to make arguments about what kind of country we should want to have in the first place. In order to get anyone to listen to my advice, I have to be a bit less technocratic and a bit more ideological. And I have to do that at a time when the main ideologies being offered to the American public are becoming more extreme.

And yet this is the job now, so I should stop complaining and just do it. Because I do have a pretty clear picture of what kind of country I think America should be. I believe that in the 20th century, under the leadership of Franklin D. Roosevelt, the United States devised the single best governing ideology that any country has ever created: liberal nationalism.

I’ll explain what I think that means, but first I want to take a detour and point out a recent debate between two prominent commentators on the political right. One is the pseudonymous “Roman Helmet Guy”, an anti-immigration right-wing nationalist. The other is Balaji Srinivasan, my college friend, who represents a libertarian perspective and who now lives in Singapore. Balaji tried to keep the debate civil, while Roman Helmet Guy (henceforth “RHG”) was vituperative, vulgar, and accusatory. But both made interesting and important points about identity and national allegiance, and the debate ended up illustrating some points I want to make about liberal nationalism. So let me present an abridged form of the debate.

RHG started the debate by accusing Balaji of being ungrateful to America:

Balaji responded by casting doubt on the degree to which an individual’s success is attributable to the country where he succeeded, and by arguing that the global online community embodies America’s founding ideals better than America itself:

The degree to which one's success is attributable to a country's platform is hard to separate out. Obama said to conservatives: "you didn't build that, someone else made that happen." That is certainly one view, that 100% of success was due to the country platform, and zero to the individual…

[E]ven if the US government fails, even if the polarization proves too much, even if the $175T in debt takes down a once-amazing country, the Internet will be there…[I]t reflects the best of American values — free trade, free markets, free speech, free exchange of ideas — and I believe we can rebuild from it, just as Europe rebuilt from Christianity after Rome.

RHG retorted1 that Americans like Balaji ought to be loyal to the people of America, not to its ideals or its institutions:

I am not loyal to a set of values. I am loyal to the American people. You were born here. You were raised here. Educated here, made rich here. You should be loyal to the American people too. The PEOPLE. Not a set of values, not an economic system…

You fled the country and now go on podcasts talking about how tech people can ‘avoid the collapse of America.’ To you, my country and my people are just something for your class to exploit for wealth and then move on. If my people vanished from this earth, your only thought would be “How does this affect my ROI?”…My people gave you everything, yet you have no gratitude. No loyalty.

Balaji pointed out that many of the people who built America were immigrants, and that building America didn’t mean that they betrayed their country of origin. He then argued that in the modern, polarized America, it’s impossible to be loyal to the entire people; you have to choose whether to be loyal only to the red half or the blue half:

[I]f someone tries being loyal to “the American people”, does that mean being loyal to the 75 million Kamala voters, the Blue Americans? Because if you’re loyal to them, you are unfortunately no longer loyal to the Red Americans…Just like there is no Korea, only North Korea and South Korea, there is unfortunately no America any more, only Blue America and Red America.

He also accuses RHG of promoting an unequal, racialized version of national identity, in which Indians and other minorities are required to be subordinate to WASP Americans:

[W]hat test do you propose to determine whether someone is a true American, aside from their current paperwork?…[L]oyalty means symmetry. I am loyal to you if you are loyal to me. But the way you're talking about loyalty translates to servitude. I've been polite, and engaged you in good faith, but we are strangers. Yet you are demanding gratitude and even deference (!) from me, implicitly on racial grounds…

Why would anyone be loyal to a MAGA faction that arbitrarily designates countless millions to be Grade B, C, and D [Americans]? You can't just redefine the social contract overnight…with some tweets, into a…blood-and-soil America that the WASPs themselves shut down...and then get extremely mad when others don't buy into it.

RHG, in his defense, declares that he is loyal to all Americans, regardless of race or politics:

The only thing the American people demanded from you was that you employ the capital that you accumulated in our country to strengthen America and her people. The capital you accumulated under the benevolent protection of millions of American soldiers and policemen who do pick up a gun every day and put their lives on the line to defend our people…

As to which Americans you should have been loyal to: All of them. America is not an ideology. Even the most ideologically deluded idiots are still Americans. And I am happy to embrace all American citizens as my brothers and sisters, regardless of background…The truth that you’ll never understand…is that no nation of Balaji Srinivasans will ever be strong. Because you would all flee the moment things got tough, just as you fled America.

Both of the debaters make important points here. Balaji is, of course, right that it’s perfectly fine to emigrate from your country of birth, especially if that country collapses or becomes ruled by a nightmare regime. Being a refugee is not a form of ingratitude, and it’s silly to hold people to a moral standard in which anyone who moves to a different country is a traitor.

(That said, I think Balaji is being excessively panicky when he paints America as being in a state of civil war. The danger to his person and his fortune from remaining in America would have been minimal. And it’s absurd to assert that you can only be loyal to one half of the American populace or the other; Red Americans and Blue Americans are simply not in a civil war.)

RHG also goes way too far when he dismisses the idea of loyalty to American ideals. A nation’s people are important, yes, but its values and institutions are also important. Should loyalty to the Russian people have made every Soviet citizen loyal to Joseph Stalin? Should loyalty to the German people have made every citizen loyal to Hitler? No, of course not. Countries aren’t just sets of people, they’re also systems for organizing those people — the United States of America was born in 1776, not when Jamestown was founded. It’s perfectly acceptable to love your people but to reject the regime under which they live.

But at the same time, RHG makes some important points of his own. He’s absolutely right that a country in which everyone packed up and moved at the first sign of trouble would be an ineffective country. Social change requires voice, not just exit; making change requires that someone stay and fight the system, and if people keep running away they eventually run out of places to escape to.

Similarly, a country needs to be able to tax its rich people and companies in order to fund public goods (defense, courts, infrastructure, science) and to provide a social safety net. If rich people and capital are perfectly mobile, raising taxes becomes impossible, and countries have to choose between underfunding public services and running exploding deficits. In a very real sense, rich people give back to the people of their nation by staying and paying taxes.

And contra Balaji, rich people do owe a lot to the system that allowed them to get rich. Entrepreneurs immigrate to America for a reason; it would have been very hard for Elon Musk to build PayPal, Tesla, or SpaceX in South Africa. And although America is an especially good place to get rich, any functioning state is better for upward mobility than a state of anarchy. Try seeing how rich you can get in Somalia!

Much of what makes America a good place to get rich is its institutions — good courts and property rights, public safety, government support for research, and so on. But RHG is right that much of it is due to the actions of the American people — the workers who fix the roads that rich people drive on and build the offices they work in, the law-abiding regular people who behave themselves instead of overloading the justice system with crime, the taxpayers who pay for the courts and the roads and the research.

Balaji made his first millions by founding the genomics company Counsyl, which benefitted enormously from taxpayer-funded genomics research. That money came out of the pockets of regular Americans. It was channeled through American institutions, yes, but regular Americans made sacrifices for the science that allowed Balaji to get rich. It’s not possible to put a dollar amount on the debt that Balaji owes to regular Americans, but I do think some expressions of gratitude would be in order, even if delivered from Singapore.

At the same time, this raises some problems for RHG’s flavor of nationalism. Who exactly are the “people” of America that RHG is demanding that Balaji be loyal to? RHG claims that he views all Americans as his “brothers and sisters”, regardless of their politics or their background. But who counts as an American? Is it citizenship alone? Does someone who takes the oath of citizenship immediately become Roman Helmet Guy’s brother or sister? And if so, why is RHG so doggedly opposed to new immigrants, when that just means adding to his family? And if RHG has some other criterion for true American-ness besides citizenship, what is it?

This is the problem at the heart of right-wing nationalism, and there’s just no way to resolve it. If you accept citizenship as the definition of Real American-ness, then you have to admit that immigration creates Real Americans, when immigrants naturalize and/or have kids in the U.S. But if you reject citizenship, you have to rely on some more limiting, restrictive, and ultimately divisive test — race, or number of generations in the country, or whatever.

Every time rightists try to put forward a new concept like “Heritage American”, it falls flat, because the dividing lines are so arbitrary and contested. Do you only include WASPs, and kick out the Catholics? That’s kind of a non-starter, electorally. Do you include Catholics but kick out Jews? Do you bring in Jews but kick out people of Chinese and Indian and Mexican descent? What about Black Americans? Any attempt to designate a core “American people” by ethnicity, religion, or race is a non-starter electorally, so rightists typically either stick to vague hand-waving or spout deeply unpopular views from behind pseudonyms on social media.

Americans, meanwhile, overwhelmingly reject race, religion, and ethnicity as criteria for true American-ness. Most Americans of both parties are civic nationalists, of the type that make Roman Helmet Guy’s blood boil — they believe that the most important things for being a real American are citizenship, belief in the Constitution and the Declaration of Independence, obeying the law, and voting in elections:

Americans themselves have little use for the kind of restrictive nationalism that rightists like Roman Helmet Guy are trying to sell them. (In fact, support for skilled immigration — the type of immigration that brought Balaji’s parents and millions of other Indians to the U.S. — is extremely high among both Republicans and Democrats.)

But this doesn’t mean that Americans would do better with rootless globalism, of the kind Balaji has embraced. The internet has created many “vertical communities” of like-minded people who chat with each other online, but those are no substitute for traditional communities of people who live near each other in physical space. Roads, schools, police, national defense, and plenty of other public goods and services can only be provided at the spatial, local level.

And in countries where people don’t feel a sense of kinship with their neighbors, public good provision becomes very hard. It’s hard to build a road if you think a lot of the benefit will go toward groups of people you don’t like. It’s harder to get people to allow the construction of new housing in their back yards when they think that people they don’t like will live there. Ethnic bloc politics is poison for democracies. A social safety net is hard to provide if you think the welfare benefits will go to groups of people you distrust or despise. And so on.

Homogeneous countries don’t have to worry as much about this problem, but a diverse country like America needs to work harder to forge people of disparate backgrounds into a single unified whole. Just saying “America has no culture except for multiculturalism” doesn’t cut it, because if Americans have nothing to bind them together in a sense of shared destiny and shared interests, the country will literally fall apart.

In the 20th century, America had an ideology that was committed to forging a single national identity from a dizzying array of backgrounds. That ideology was liberal nationalism, as promoted by the administration of Franklin D. Roosevelt, and by his ideological successors (including Republicans like Dwight Eisenhower).

FDR might seem an unlikely candidate for the paragon of liberal nationalism, given that he tossed around 80,000 Japanese Americans in concentration camps during World War 2 and compromised with segregationists. But those actions have to be viewed in the broader context — in an era in which racism and xenophobia were at their peak in the U.S., and growing all over the world, FDR strove mightily to turn the country in a new, more pluralistic direction.

FDR ended forced assimilation policies for Native Americans, and gave them greater autonomy on tribal lands. He maintained a group of Black advisors, created plenty of programs to help Black people economically, created cultural programs to publicize Black achievement, and preserved the testimonials of former slaves. He created campaigns promoting interfaith understanding and cooperation, helping to reduce America’s traditional anti-Catholic prejudice as well as antisemitism. His Federal Writers Project employed writers to document America’s cultural diversity.

FDR also strongly promoted the notion of America as a nation of immigrants — an idea that still deeply holds sway over the American psyche, despite rightists’ attempts to get rid of it. Here’s a radio program that the Roosevelt Administration created to promote this idea:

And everywhere, the Roosevelt administration pushed back against the sort of restrictive right-wing nationalism that was common in the early 20th century. The Department of War made a film in 1943 (released in 1947) called “Don’t Be a Sucker”, in which it advocated for an ideology of national unity and derided the kind of demagogues who tried to divide the country along ethnic and religious lines:

FDR and the liberal nationalists were not modern multicultural progressives. They strongly believed in national unity. This obviously meant patriotism, respect for American institutions, and a shared sense of national purpose during World War 2, but it also meant a lot more. FDR and the New Dealers — and especially the Office of War Information — advanced the notion that America had a unifying culture, set of democratic ideals, sense of history, and way of life that transcended Americans’ different backgrounds. The history of the New Deal is littered with examples of attempts to forge American-ness into a sort of shared civic religion.

The legacy of this liberal nationalism lives on strongly in the beliefs and values of the American people, as evidenced by the responses to the poll above about American-ness. But the civic religion that sustained American unity through the triumphant 20th century has been abandoned by the political activist classes — the modern left and right. It’s difficult to imagine today’s leftists crowing about the idea that people of various backgrounds are “Americans All”. And it’s nearly impossible to imagine today’s rightists admiring a poster like the one above but with the names Patel, Zhang, Hernandez, and Khan.

The reason American policy is insane right now is because the country is being torn apart. And it’s being torn apart by a political activist class that has abandoned the unifying ideology of 20th century America — the ideology that defeated both fascism and communism, forged a kaleidoscope of ethnicities into a single nation, and sustained U.S. prosperity and economic dominance for 70 years.

Both the rightist and leftist projects in America are doomed to fail. There’s only one ideology that can save this country, and it’s the one that worked for us before. Bring it back.

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“Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them.” — David Hume

If you’re of a certain generation,1 you’ve probably seen the movie Office Space. If you haven’t, I strongly recommend it, both because it’s funny as heck, and because it’s a perfect encapsulation of a certain time and place in the world. The movie hearkens back to the big technology companies of the 1990s, when — according to the mythology, at least — nerdy engineers did all the real work while know-nothing middle-management types took all the credit. (You’ll also recognize this as the culture that gave rise to Dilbert.) The iconic character representing the backwardness and inefficiency of the 1990s corporation was Bill Lumbergh, the suspender-clad boss whose main function was to pester engineers to fill out useless paperwork.

A lot of nerdy types watched Office Space and assumed — or at least hoped — that in the end, the smart engineer types would take over corporate America from the plodding Lumberghs. And in fact, something like this happened in the 2010s — as Big Tech eclipsed much of the old economy, engineers became extremely highly paid, and began to fill the ranks of middle and upper management. It was the Revenge of the Nerds, the age of human capital, the triumph of humans who actually knew how to do difficult technical things.

But just as with the highly paid artisans of early 18th century Britain, the scarcity of human capital spurred a wave of automation. This year, AI found its killer app — Claude Code and other agentic coding tools that allow AI to do much (though not all) of the hard mental work that the much-put-upon engineers in Office Space were doing by hand. Although AI has not yet replaced many professions, the rapid progress has lots of people wondering what exactly humans will be useful for in 10 or 20 years. If AI does replace coders and mathematicians, what chance do any of the rest of us have?

Although some people in the AI industry still think that humans will be rendered economically irrelevant, that answer is increasingly unsatisfying. Realizing that a popular backlash against their industry is underway, many AI leaders and AI boosters are actively looking for the answer to the question of “What will humans be useful for?”. So far, the most popular answer, advanced by folks like Alex Imas, is that humans will be useful simply because they’re human:

Ghosts of Electricity

What will be scarce?

Starbucks is a huge company (market cap of $112 billion) that sells one of the most standardized products in the modern economy. Making a cup of coffee or even one of the fancy specialty drinks is very easy to mechanize and reproduce. If the entire economy is soon to be automated, with labor being replaced with increasingly more sophisticated capital, S…

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2 months ago · 1753 likes · 155 comments · Alex Imas

The idea here is that it will become a sign of prestige and social status — which are always in short supply — to have humans do something for you instead of AI. No matter what else machines can do, they can never replace the knowledge that it’s a real human being making your sandwich.

I kind of have my doubts about this thesis — I’ve seen a lot of people pay extra to have a Waymo drive them instead of an Uber, so they didn’t have to sit with a human driver in the car. But maybe Imas is right; we’ll have to see.

But I have a slightly different answer to the question of “What will humans do?”. I think humans will continue to be required for something beyond simply being their beautiful human selves. I think there will be an increasing demand for human labor in the all-important job of maintaining AI alignment.

“Alignment” can mean many things in the AI community, but one basic definition is “ensuring that AI’s goals are the same as humans’ goals”. This is something that AI labs try to do before releasing their products to the world. But as AI becomes more and more agentic — as we turn over more complex and longer-lasting tasks to intelligent machines — it’s going to be harder and harder to keep them aligned with what humans actually want. And if there’s one thing humans will always have a comparative advantage at, it’s knowing what we want.2

In other words, it’s the lumbering Lumbergh, rather than the technically competent engineers, who I believe represents the ultimate future of human labor. He may seem boring and pointless, but by forcing engineers to file their TPS reports and do other seemingly useless tasks, Lumbergh is — however approximately and inefficiently — keeping the engineers’ goals aligned with those of the company they work for.

In the far future — maybe 10 or 20 years from now — this will mean that humans’ main productive function is to make sure that increasingly autonomous AIs stay on task instead of “reward-hacking”, rewriting their own utility functions, going rogue, or otherwise slacking off. Over the next few years, though, I expect human work to gently shade from technical work into alignment work, as we spend our hours verifying the output that AI delivers us.

Slopocalypse Now: why “verification” and “alignment” are the same thing

Generative AI has dramatically decreased the cost of many kinds of output. With the touch of a button, you can write an essay, turn a data set into an academic paper, write a report for your boss, and so on.

Everyone is doing this, and the result is that our society is currently being overwhelmed by a wave of AI output of questionable quality — in other words, what has come to be known as “slop”.

Slop is rapidly taking over every domain of human output. Over one-third of new websites are now estimated to be AI-generated, and over half of internet traffic is now believed to be AI. AI-generated court filings and news articles are on the rise. Even respected public figures are now posting obviously AI-generated content as their own. AI-generated political influencers are becoming a standard tool for electoral campaigns.

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I get a lot of flak from progressives for being a “both sides” kind of commentator. I spend a fair amount of time criticizing leftist ideology and expounding on the very real failures of progressive governance, both of which have gotten much worse over the last decade. Yes, I support the Democrats, but that support is contingent — if their ideology and competence deteriorate to the point where the Republicans are less bad, I’ll switch to supporting the GOP. So it’s worth it to fight to halt and reverse the deterioration; in the long term, the cost of ignoring extremists and policy failures in order to have “no enemies on the left” is very high.

And yet right now, despite all of the negative trends on the left, the choice of which party Americans should support has never been clearer. The second Trump administration has unleashed a dizzying array of measures seemingly tailor-made to weaken the United States of America — sometimes at the behest of rightist extremists, sometimes due to Trump’s own mercurial whims, and sometimes in order to enrich Trump and his clique.

Sometimes it’s hard to keep track of everything Trump is doing to tear down the America I grew up in. In his first term, it was often said that he avoided criticism using a “DDOS” strategy — rhetorically attacking so many opponents at such blinding speed that they couldn’t focus on any one outrage for long. In his second term, the DDOS is actual policy; Trump inflicts real damage on such a broad array of U.S. institutions, with such incredible speed, that the news can’t keep track of them all.

To illustrate this, I decided to write a post about three mostly unrelated pieces of Trumpian insanity:

• The assault on international tech industry employees and founders

• The disastrous Iran War

• Trump’s unprecedented corruption

Either the second or the third of these would have been a presidency-ending disaster for Barack Obama, George W. Bush, or Bill Clinton, while the first would have alienated broad swaths of the business community. But for Trump, it’s just business as usual. The stories crowd each other out of the headlines, and everyone just sort of gets overloaded and starts tuning out the news. Trump’s approval ratings drift slowly downward, but nothing else really happens. Hardcore MAGA supporters just keep screaming that everyone has “TDS”, while Trump’s wavering allies eventually manage to convince themselves that Democrats would be even worse.

But anyway, if you were paying attention, here’s the latest round of Trumpian disasters.

Trump kicks the tech industry where it hurts

A couple of days ago, without any warning, Donald Trump’s immigration agency announced a new rule. Foreign workers working in the U.S. on temporary visas, they announced, must now return to their home countries while applying for green cards — a process that can take years.

This rule would effectively kick most of the high-skilled visa workers in America out of the country. America’s typical pipeline of high-skilled immigration is basically “try before you buy” — people come to work on visas, then apply for permanent residency while in the country. This procedure is called Adjustment of Status. Almost all green card holders — except for investors — get their green cards this way:

The new policy would end this practice, thus shutting off the main avenue of high-skilled legal immigration to the United States.

There’s a good chance this new policy won’t stand up in court, since Congress explicitly passed a law specifying conditions under which people can be denied Adjustment of Status, so it may not be legal for Trump to simply issue a blanket ban. There’s also a chance that Trump’s allies in the “tech right” will frantically call his administration and get them to walk back the new policy.

The reason they’ll be trying to get him to walk it back is that if the new ban does go through, it will devastate much of the U.S. tech industry. The AI industry, which Trump promised to promote — and which is the only thing now keeping the U.S. economy afloat in the face of tariffs and the Iran War — depends crucially on researchers born outside the U.S.:

All of the biggest U.S. AI companies, and more than half of the top 50, were founded by immigrants, with India and China contributing the most:

This general pattern holds throughout the entire tech industry. Almost half of unicorn founders are immigrants, with Indians being the biggest contingent:

Meanwhile, Indian immigrant CEOs have done an incredible job at a number of America’s biggest companies.

Who asked for some of America’s top economic and technological contributors to be expelled from the country? The “tech right” certainly didn’t; many of them met the announcement with dismay. Gil Verdon, a semiconductor company founder from Canada who had been a prominent and vocal Trump booster, expressed dismay at the fact that he might now be kicked out of the country:

The American people didn’t want this either. Polls consistently show that very large majorities of Americans across the political spectrum support high-skilled immigration:

The only people who seemed to be happy with Trump’s new policy were anti-immigration activists on X — rightist types who see immigration as a race war, and want to ban it entirely. It seems highly likely that those online activists — or people who think very much like them — are driving at least a fraction of the administration’s policy.

It’s pretty clear how this happens. Perhaps even more than in the Democratic Party, the GOP is dominated by youngish staffers and think tankers. These people marinate all day in extremist online discourse, and form friendships with extreme right-wing activists who see immigration as a race war rather than as an economic matter or an important part of America’s heritage. Some rightist in the bowels of U.S. Citizenship and Immigration Services probably got the idea to ban Adjustment of Status and handed it to his higher-ups, who pushed through the policy without thinking too hard about the economic implications.

Welcome to the second Trump administration. If policy isn’t being made by the big man himself — who is growing increasingly erratic and corrupt in his old age — it’s being made by neo-Nazis on X. These are really the only people prepared to take over the MAGA movement once Trump shuffles off the scene, and their influence is growing as Trump’s acumen wanes.

That said, the big man himself still has a little bit of fire in him, and he still enjoys unprecedented support and devotion from his party. Unfortunately, he’s using his remaining vigor to do two main things: A) destroy America’s standing and power in the world, and B) abuse his office to enrich himself, his family, and his most ardent followers.

The Faux-Manchurian Candidate

Donald Trump was not a Manchurian Candidate, created in a secret Russian/Chinese lab to infiltrate and bring down the United States of America. Nor, I believe, is he personally in the pocket of Russian and/or Chinese interests, blackmailed and bribed into weakening his country at the bidding of overseas masters. But sometimes it’s very difficult to distinguish between Trump’s actual actions and what he would do if he were a foreign plant or catspaw.

That’s a very strong statement, but I’m not being hyperbolic for rhetorical effect — I think the facts back it up.

For example, take the war in Iran. Trump launched this war with no immediate provocation or casus belli — a simple opportunistic war of aggression that incinerated whatever shreds of goodwill remained towards the United States among much of the international community.

Trump then proceeded — so far, at least — to lose the war he started. Despite the preemptive strike, and America’s far greater technological capability, Iran reportedly retains most of its arsenal of weaponry:

US intelligence assessments show that Iran retains significant missile capabilities despite repeated claims by the Trump administration that Tehran’s military had been severely weakened, according to a report by The New York Times…The report said intelligence findings compiled in early May showed Iran had regained operational access to 30 of its 33 missile sites along the Strait of Hormuz. Officials familiar with the assessments told the newspaper that Iran still possesses roughly 70 percent of its prewar missile stockpile and mobile launchers…Citing reports from military intelligence agencies, the report stated that Iran has regained access to roughly 90 percent of its underground missile storage and launch facilities nationwide, which are now assessed to be “partially or fully operational.”

And:

Iran has already restarted some of its drone production during the six-week ceasefire that began in early April, one sign it is rapidly rebuilding certain military capabilities degraded by US-Israeli strikes, according to two sources familiar with US intelligence assessments. Four sources told CNN that US intelligence indicates Iran’s military is reconstituting much faster than initially estimated…The rebuilding of military capabilities, including replacing missile sites, launchers and production capacity for key weapons systems destroyed during the current conflict, means that Iran remains a significant threat to regional allies…It also calls into question claims about the extent to which US-Israeli strikes have degraded Iran’s military in the long term…

Iran has been able to rebuild much faster than expected due to a combination of factors, ranging from support it is receiving from Russia and China to the fact that the US and Israel did not inflict as much damage as the two countries had hoped, one of the sources told CNN.

America’s own stock of weapons, on the other hand, has been dangerously depleted in the conflict, and our defense-industrial base is not managing to rebuild them.

Even as the U.S. has failed to cripple Iran’s military, Iran’s military has succeeded in closing the Strait of Hormuz, sending gasoline prices soaring and causing a significant bump in inflation:

Incapable of defeating Iran on the battlefield, and increasingly wounded by Iran’s economic retaliation, Trump is pushing hard for any sort of face-saving deal that would allow him to exit the conflict quickly. Whatever deal Trump eventually cuts is going to leave Iran in a much stronger position — and American interests in the region — much weaker than before Trump launched his war. Here’s Robert Kagan:

Defeat for the United States, therefore, is not only possible but likely. Here is what defeat looks like.

Iran remains in control of the Strait of Hormuz. The common assumption that, one way or another, the strait will reopen when the crisis ends is unfounded. Iran has no interest in returning to the status quo ante…The power to close or control the flow of ships through the strait is greater and more immediate than the theoretical power of Iran’s nuclear program. This leverage will allow the leaders in Tehran to force nations to lift sanctions and normalize relations or face penalties…

The new status quo in the strait will also occasion a substantial shift in relative power and influence both regionally and globally. In the region, the United States will have proved itself a paper tiger, forcing the Gulf and other Arab states to accommodate Iran…All nations that depend on energy from the Gulf will have to work out their own arrangements with Iran. What choice will they have?…

The American defeat in the Gulf will have broader global ramifications as well. The whole world can see that just a few weeks of war with a second-rank power have reduced American weapons stocks to perilously low levels, with no quick remedy in sight.

This is all, of course, on top of Trump’s other geopolitical blunders:

• alienating U.S. allies by threatening to invade Greenland

• attempting to force Ukraine to accept an unfavorable peace settlement with Russia, even as Ukraine was turning the tide of battle

• alienating India for no reason whatsoever

• capitulating to China on Taiwan arms sales in exchange for nothing whatsoever

• various other erratic behaviors that make America clearly less reliable of an ally

As I said, Trump is not a Russian/Chinese plant, but at this point it’s hard to imagine what else a Russian/Chinese plant would even do in order to weaken America’s international standing.

America is ruled by a mafia now

While Trump was losing a war he started, destroying the foundations of American power, and attacking the foundations of American technological dominance, he was also working feverishly to use the presidency to get even richer than he already is. Rolling Stone had a good article detailing the breathtaking scale of the corruption:

Let’s say it plainly: There has never been a president as corrupt as Donald Trump. There is no close second in our history…

Americans just found out that in the first quarter of this year, Trump’s stock portfolio made 3,600 trades — an average of nearly 60 a day…Many of these appear suspiciously timed to benefit from actions approved by the president himself. For example, his Nvidia stock surged after Trump announced the company would be permitted to sell its cutting-edge AI chips to China. Similar suspiciously well-timed calls were made ahead of big government moves involving other companies, from Intel to Palantir to Boeing…

But the apparent insider trading scam being run from within the Oval Office is small change…compared to the self-dealing plunder of $1.8 billion tax-payer dollars being pushed through the DOJ and IRS.

There’s never been a sitting president who sued his own government for $10 billion. That’s because it’s absurdly corrupt. But that’s what Donald Trump did, arguing he had suffered damages from prosecutions pursued before he was reelected…The judge who heard the case convened an independent panel to review the suit, suspecting it might be a scam. Before the case could be dismissed, Acting Attorney General Todd Blanche — who had previously served as Trump’s personal lawyer — declared that the bogus suit would be preemptively settled, not for $10 billion, but for the symbolic sum of $1.776 billion, which Trump said will be distributed to…political allies.

This is a shakedown. The president is compelling a Justice Department he controls to redirect money from taxpayers — that’s you — to his most fervent supporters. This slush fund will set off a cash grab among MAGA lawyers and be used to reward partisan fanatics who attacked the U.S. Capitol — and police officers — on his behalf.

If that wasn’t enough of a blatantly illegal use of presidential power, it was revealed that the “settlement” deal included a pledge signed by the acting attorney general that would ensure — in the hysterical all caps of a Trump tweet — that the government would be “FOREVER BARRED and PRECLUDED from prosecuting or pursuing” any tax claims, audits or related prosecutions against Trump, his family or their businesses. This is an attempt to get a permanent get-out-of-jail-free card for the Trump family — a license to steal. [emphasis mine]

So basically, Trump:

1. Uses the government to interfere with specific companies,

2. Trades those companies’ stocks in advance, knowing how his own government interference will affect their prices,

3. Sues his own government for billions and then orders his government to settle the lawsuit,

4. Gives the billions of dollars of taxpayer money to his own activist thugs and cronies, and

5. Has the government promise never to prosecute the Trump family.

Rolling Stone is absolutely right: Nothing in U.S. history even comes close to this level of corruption. Trump is simply using the powers of the presidency to extract billions of dollars from stock owners and taxpayers — i.e., from you and me — and to put that money into his own pocket. Compared to this, the famous Teapot Dome land scandal in the 1920s was nothing. The total amount of money involved in Teapot Dome — just a few million of today’s dollars after adjusting for inflation — was tiny compared to the billions Trump is looting.

Anyway, these are all stories just from the past few weeks. In the next few weeks it’ll be something else. This is the most absurdly terrible presidential administration America has ever had.

I know a lot of Americans — including some of my own readers — are still able to convince themselves that The Left Is Worse And Therefore We Must Continue To Support Trump No Matter What. Frankly, I don’t know how those guys do it. But I guess I can take some small solace in the fact that the number of people who think that way is slowly decreasing, as Trump’s parade of outrages and disasters marches on.

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There is a pernicious and persistent pattern among many partisan pundits and politicians, pertaining to public debt. When their own party is in power, they minimize or ignore the problem, but as soon as the other guys win the presidency, they start shouting that the debtpocalypse is upon us.

Do I follow this pattern? Maybe a little bit. As recently as 2022, in Biden’s second year as President, I was not very worried about U.S. government debt. My reasoning was that A) interest rates were going to go back down after the surge in inflation had ebbed, preventing borrowing costs from getting severe, and B) Biden-era inflation had eroded some of the government’s debt burden.

But I still warned that there was some limit to government borrowing — eventually, at some difficult-to-predict point in time, too much debt would cause first interest rates and then inflation to soar. And I warned against listening to “fiscal arsonists” like the MMT folks, who aggressively advocated for higher government deficits.

And by 2023 — still under Biden! — I was starting to worry a lot more. Interest rates weren’t coming down much, making austerity more necessary — except no one, including Democrats, was talking about austerity. And by 2024 — still under Biden! — I was warning that there was no good reason for all the deficit spending we were still doing, and that continuing on our current path would run the risk of spiraling inflation:

So I definitely didn’t wait until Trump came to power to start worrying about the debt. But I do admit that under Trump, my worries have intensified. The Democrats listen to intellectuals — although the party has become more dominated by progressives who tend to worry less about government debt, there was always the possibility that concerted shouting by pundits like myself could shift the consensus among left-leaning think-tankers and staffers, who could then pivot the Dems back to the fiscal austerity of the Bill Clinton years.

Republicans — especially Trump and his movement — are a different beast entirely. They stopped listening to egghead intellectuals a long time ago, and even the finance-industry and right-wing think-tank types who have some residual impulse toward fiscal hawkishness have steadily lost influence as MAGA heads toward full cult-of-personality status. The only person in the Trump orbit who even talked about fiscal hawkery was Elon Musk, but this glimmer of hope1 faded when DOGE utterly failed to reduce government spending:

So when Trump returned to the presidency and DOGE flamed out, my mounting alarm turned to full-blown panic:

Anyway, it’s a year later, and I’m still panicking. Trump has been about as bad on deficit spending as Biden was (which is actually less bad than I expected him to be!), but a rise in long-term interest rates is making the debt less sustainable, and Trump seems uninclined to do anything about it. Nor do I expect rate cuts or AI-fueled growth to ride to the rescue here. As for Democrats, they’re playing with fiscal fire by proposing tax cuts for the upper middle class.

As I see it, the only hope here is to start scaring people. Bipartisan fear of deficits back in the late 1980s and early 1990s — probably spurred by high interest payments — forced every contender in the 1992 election to promise their own version of austerity. If we can raise the alarm now, there’s the possibility that both parties might be pushed toward fighting the debtpocalypse for populist reasons.

Government interest costs are exploding, and we’re borrowing more to pay the interest

A lot of economists will tell you that the government isn’t like a household, so you can’t think about government debt the way you think about your own mortgage or credit card debt. That’s very true. But there are still some similarities between governments and households, and one of them is that both have to pay interest on their debt every month. Debt, after all, is simply a promise to pay back a certain amount of money at a certain time, and monthly interest payments are part of that.

Government debt is a bit like a floating-rate loan. Yes, Treasury bonds and bills have fixed interest rates, but they’ve got to be rolled over when they mature. The average maturity of U.S. debt is a little less than 6 years. Interest rates started going up in early 2022, so we’re starting to see a big increase in monthly interest payments:

Everybody talks about how the U.S. had such high debt after World War 2, but the thing about that debt is that it was borrowed at very cheap rates — about 1.5-2%. That’s why interest costs stayed so low after the war. In the late 1980s and early 1990s, interest costs were high because interest rates were high, even though we didn’t have nearly as much total debt relative to our GDP.

As of 2026, we’re in double trouble. Our national debt is back up above 100% of GDP — similar to what it was right after WW2 (and much higher than in 1990). But now the interest rates our government has to pay on its debt are almost twice as high as they were after WW2:

High interest payments force the government to do one of two things:

1. fiscal austerity (spending cuts and tax hikes), or

2. borrow more to cover the interest payments.

Right now, what we’re doing is (2). Almost all of the increase in the budget deficit from before the pandemic is due to higher interest costs:

Trump, as it turns out, has kept the annual budget deficit at about the same size it was during Biden’s term, relative to GDP:

But things are worse under Trump than they were under Biden, for three reasons.

First, this is a very large annual deficit, and it’s all being borrowed at the new, higher interest rates. In addition, during Biden’s first two years in office, inflation eroded the debt.2 Inflation is back down to a fairly low-ish level now, meaning the debt isn’t getting eroded. And finally, interest rates have now been high for long enough that the debt Trump borrowed in his first term to pay for Covid relief is now being rolled over at higher rates.

So right now, the national debt continues to explode, because the government is borrowing money just to pay the interest on the money it borrowed before. This increased debt naturally results in even greater interest costs, forcing the government to borrow even more to fund those interest payments. And so on. Interest payments and debt just go to the moon.

This isn’t some far-future scenario — it’s happening right now. But unless something changes, it’s going to get a lot worse:

Why can’t we just cut interest rates?

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I waited too long to do this roundup, and the amount of interesting stuff built up to truly vast proportions. So let’s get right to it.

1. Crime is down!

I often get annoyed with people who trumpet falling crime in American cities. Often, these same people are silent in the years when crime rises — for example, 2015-2021. This means that all those cries of “Crime is down!” might only bring us back to where we were before.

Also, even when crime falls in America, it still generally leaves us about 5x as violent as Europe. People who use crime drops to wave away the need for further intensified policing, increased incarceration of repeat offenders, and other tough-on-crime measures completely ignore the very high baseline level of American violence.

That said, I often find myself being one of the people trumpeting drops in crime. Sometimes we do make genuine progress, and when this happens, we ought to take note. Successful crime reductions in particular cities can serve as pilot programs, giving us ideas about how to fight crime more systematically across the country. And big crime drops show us that America is not simply an incorrigibly criminal nation; real progress is possible!

So while cautioning that the job of making America safe is just beginning, I’m pleased to report the following data, via Axios:

Murder is the most reliable indicator of violence, but it’s not just murder that’s falling:

Violent crime fell sharply across the largest U.S. cities in early 2026…The declines show up across every major region, suggesting a systemic, nationwide trend…Homicides dropped 17.7%…Robberies fell 20.4%…Rapes declined 7.2%...Aggravated assaults decreased 4.8%.

My instinct (combined with reading a bunch of news stories) says that this is probably the result of a bunch of local law enforcement efforts, combined with falling popular unrest in the nation as a whole. But I’ll wait until more definitive evidence emerges.

In the meantime, we need to keep being tough on crime — especially Democrats, who really faltered on this in 2020-21. Voters still approve of the GOP more than the Dems on the crime issue, and far more voters think we need to be tougher on crime than think the opposite:

2. Trump’s immigration raids aren’t helping the working class

One of Trump’s big selling points in 2024 was that deporting illegal immigrants en masse would help America’s working class, by removing labor competition and forcing up wages. In fact, this is something that anti-immigration people have repeated again and again, more than perhaps any other argument: Immigrants drive down wages, immigrants drive down wages, immigrants drive down wages.

As far as we can tell, it just isn’t true. Immigration — even low-skilled immigration — creates a labor demand shock that balances out the labor supply shock (because the same immigrants who supply labor also demand products that are made with labor). Almost every study finds this. But the anti-immigration people, undeterred, just bull ahead with the mantra that immigrants drive down wages.

OK, so Trump came back to office and, unlike in his first term, actually started arresting and kicking out an unusually large number of immigrants — and scaring many more into leaving on their own. And did it end up benefitting the working class, by reducing labor supply? No it did not. Cox and East have a new paper that uses local variations in ICE enforcement under Trump 2.0 to examine how a big increase in immigrant arrests affects economic conditions for native-born Americans in the same industry and location. The result? No effect, of course, and possibly even a small negative effect:

If anything, there’s even a small negative effect on male U.S.-born workers in the industries where immigrants get arrested!

Because this analysis looks at specific industries, the reason for the lack of any effect has to go beyond “immigration is also a labor demand shock”. Immigrant arrests must disrupt the industries where they happen, so much that those industries are forced to reduce their demand for native-born workers as well. That’s a story of increasing returns to scale, actually — which isn’t surprising, given how common increasing returns are. If you hurt an industry, you hurt everyone in that industry.

Over the long term, of course, things might be different — the fruit picking industry might recover from temporary disruption and decide a few years from now that it needs to hire more U.S.-born workers. But research on past waves of immigration enforcement suggests that affected industries might simply take a permanent hit. We might simply live with more expensive fruit from now on.

Of course we all know that the main concerns about immigration aren’t economic at all — they’re about cultural change, partisan voting patterns, racial power blocs, and so on. The more these null results come in, the more the true concerns of the anti-immigration people become clear.

3. Americans really hate AI (but China is scared too)

Americans tend to be more negative than people from other countries when it comes to AI, despite their country being the leader in the technology. And somehow, this negativity is still increasing. The WSJ reports:

Delivering a commencement address at the University of Arizona, Schmidt told students the “technological transformation” wrought by artificial intelligence will be “larger, faster and more consequential than what came before.” Like some other graduation speakers mentioning AI, Schmidt was met with a chorus of boos.

In one poll after another in recent weeks, respondents have overwhelmingly voiced concerns about AI…In recent months, the wave of anger has brought protests, swayed election results and spurred isolated acts of violence…Pollsters and historians say the souring of public opinion is all but unprecedented in its speed…Also unprecedented is the rapid rise of AI anxiety’s salience as a political issue, one that is shaking up routine re-election races and scrambling partisan battle lines.

AI is not yet as unpopular as Donald Trump, the Democrats, the GOP, ICE, or Iran, but it’s getting up there:

I guess AI industry leaders’ habit of going in public and constantly saying that their technology’s purpose is to put everyone on the welfare rolls for all eternity had exactly the kind of result you’d expect. Some savvier AI leaders have recently changed their message to one of human empowerment, but it might be too late to avoid a big popular backlash. Still, I think that if AI leaders want to avoid the rakes and pitchforks, they should think very hard about how regular humans can thrive and be valuable in the age of AGI.

What’s really interesting, though, is that China is starting to get scared of the economic consequences of AI. This is despite Chinese people usually being the most positive about the technology of any country surveyed. Here’s a post by Matt Sheehan about the trend:

Matt Sheehan's Newsletter

China is getting worried about AI & jobs

One of the more interesting parts of my job is that occasionally I get to run small surveys — really more like focus groups — where I ask influential members of China’s AI policy community what AI-related risks worry them the most. In the exercise, we present the participants with a list of different risks: employment impacts, bias and discrimination, c…

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3 months ago · 141 likes · 18 comments · Matt Sheehan

He writes:

In 2024, the Chinese participants ranked AI’s impact on jobs second to last [on their list of concerns]—sixth out of seven. In 2026, they ranked it second from the top…Over the past two years, worries about AI displacing workers and leading to structural unemployment have shot up in China…Those fears extend from ordinary people to the wider AI policy community to (as best as we can tell) high-level CCP officials. The fears are reflected in policy documents, state media, and the way Chinese people relate to the technology itself.

A Chinese court recently ruled that employers aren’t allowed to fire workers in order to replace them with AI. The ruling will probably be very hard to enforce, and most companies trying to replace humans with AI tend to freeze hiring rather than fire older workers anyway. But it shows the level of concern that’s popping up in even the most AI-positive country.

4. America wasn’t an oligarchy (until now)

As everyone watches Trump loot the U.S. Treasury for his own family and get rich off of trading stocks based on his own upcoming presidential decrees, it seems more and more possible to conclude that America is now an oligarchy run by the Trump family and their friends. But a lot of progressives and leftists are likely to shrug at this unprecedented corruption, because they already believed that America was an oligarchy.

This belief was largely based on vibes and ideology, but it seemed to gain support from one of the most wildly influential — and wildly misinterpreted — political science papers of all time. This was Gilens and Page’s 2014 paper “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens”, in which they showed that policy outcomes in the U.S. are highly correlated with the preferences of people making over $135,000 a year (in 2010 dollars).

This was an incredibly weak result, as Dylan Matthews explained at length in 2016. $135,000 is hardly rich. The effect size is very small. The preferences of the “rich” are highly correlated with the preferences of the middle class, meaning that the middle class also tend to get their way in terms of policy. Later research papers couldn’t replicate Gilens and Page’s finding. And so on.

Of course none of this stopped progressives and leftists from holding up Gilens and Page (2014) as proof positive that America was always an oligarchy.

Anyway, Peter Enns has a cool new paper explaining why Gilens and Page’s famous paper doesn’t warrant the conclusions that everyone tends to draw. He shows how by focusing only on the cases where high earners and low earners have different preferences, and leaving out all the cases where they have the same preferences, Gilens and Page fall prey to Simpson’s Paradox — when you include the missing data, the responsiveness of policy to rich people’s preferences disappears.

The basic story here is that before Trump, at least, America was not the plaything of the rich. We lost something important when Trump was reelected.

5. AI solves a major math problem

Two years ago, people ridiculed AI for not being able to do basic arithmetic. As of 2026, AI has solved a major open problem in mathematics — a problem that human mathematicians had previously been unable to solve:

For nearly 80 years, mathematicians have studied a deceptively simple question: if you place n points in the plane, how many pairs of points can be exactly distance 1 apart?…This is the planar unit distance problem, first posed by Paul Erdős in 1946. It is one of the best-known questions in combinatorial geometry, easy to state and remarkably difficult to resolve. The 2005 book Research Problems in Discrete Geometry, by Brass, Moser, and Pach, calls it “possibly the best known (and simplest to explain) problem in combinatorial geometry.” Noga Alon, a leading combinatorialist at Princeton, describes it as “one of Erdős’ favorite problems.” Erdős even offered a monetary prize for resolving this problem.

Today, we share a breakthrough on the unit distance problem. Since Erdős’s original work, the prevailing belief has been that the “square grid” constructions depicted further below were essentially optimal for maximizing the number of unit-distance pairs. An internal OpenAI model has disproved this longstanding conjecture, providing an infinite family of examples that yield a polynomial improvement. The proof has been checked by a group of external mathematicians…

The proof came from a new general-purpose reasoning model, rather than from a system trained specifically for mathematics…It marks the first time that a prominent open problem, central to a subfield of mathematics, has been solved autonomously by AI…Surprisingly, the key ingredients of the construction come from a very different part of mathematics known as algebraic number theory, which studies concepts like factorization in extensions of the integers known as algebraic number fields. [emphasis mine]

Beyond just the general message of “AI is really good now and has improved really fast”, I think there are two interesting takeaways here.

First, top professional mathematicians are now saying that the job of “mathematician”, as we know it, may be very rare very soon. As recently as a few years ago, it was conventional wisdom that high-IQ people would be the last people to have their jobs taken by AI. Everyone was concerned about truck drivers, cashiers, and so on. But it turns out that the highest-IQ job on the planet — professional mathematician — may be one of the first to be eliminated by AI. Who would have thought mathematicians would be automated before truckers and cashiers? Perhaps we should revere IQ a little less among the set of human abilities.

Second, it’s notable that the AI’s breakthrough came by applying insights from a very different field of mathematics. I’ve argued that AIs don’t need superhuman reasoning abilities in order to achieve superintelligence — all they need is human-level reasoning, combined with encyclopedic knowledge, computer-like speed, and a very large working memory. In other words, superintelligence comes from the computer-like parts of AI, not the human-like parts; the human-like parts were simply the last necessary piece of the whole package. This is great news for AI-driven innovation, because the computer-like parts of AI are what allow it to get past the “burden of knowledge” that was limiting human innovation.

6. Small businesses and salarymen

I’ve predicted that in the near future, AI would cause employment to bifurcate between salarymen and small businesspeople — the former because their jobs are messy and complicated, the latter because AI supercharges their ability to go independent. Now Ernie Tedeschi — formerly of the CEA, now of Stripe Economics — has a great blog post showing that “solopreneurship” is taking off:

Stripe Economics

Solopreneurs, Solow, and the SaaSpocalypse

Sessions is Stripe’s annual customer conference. This year, John Collison’s keynote covered Stripe’s perspective on the evolving AI and agentic economy. Here are a few charts I found particularly compelling—including some that didn’t make it into the final cut…

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a month ago · 16 likes · Ernie Tedeschi

New business formation, which shot up during the pandemic, is not cooling down:

Some of this is non-AI stuff, but a lot is also AI:

If you don’t have a messy, complex job that’s hard to automate with AI, a good alternative is to harness AI and go into business for yourself. In fact, that may be the true future of work.

7. Claude is a neoliberal

AI investor and founder Arram Sabeti recently asked Claude what policies it would enact in order to “fix everything” in America. Here’s the thread:

Claude’s answers were:

• YIMBYism (upzoning, pro-housing deregulation)

• Land Value Tax

• Permitting/NEPA reform

• Carbon tax and dividend

• Repeal the Jones Act

• Paying people to donate kidneys

• High-skilled immigration

• Reciprocal FDA approval agreements between rich countries

• Reduce occupational licensing

• Ranked-choice voting

This is pretty much just a list of neoliberal hobbyhorses. I asked Claude the same question, and got mostly the same answers. For me, Claude added:

• Universal pre-K

• A sovereign wealth fund with “baby bonds”

• More Pigouvian taxes

This still looks extremely neoliberal, with a bit of a shift toward Clintonite left-neoliberalism.

Why is Claude so neoliberal? I see three possibilities:

• The AI is “glazing” Arram and me, telling us policies that it thinks we would like. (If you’re a Warrenite progressive, Bernie leftist, Trumpian rightist, or traditional conservative, you can give Claude the same prompt and see if its answers are different!)

• Claude has been trained on high-level intellectual text written by neoliberals, and thus has been inculcated with neoliberal beliefs.

• Claude arrived at its policy conclusions similarly to the way neoliberals arrived at theirs.

The last of these is the most interesting. Maybe if your approach to policy is just to A) read everything you can, B) form the most accurate factual beliefs about economics and human welfare that you can, and C) recommend policies that you think will most clearly benefit the mass of humanity, you come out with something that looks like neoliberalism. In other words, maybe people like Arram and me are just “training” our own ideas the way AI trains itself.

Of course, neoliberal politics is often unpopular and rarely politically feasible. So I asked Claude what its list of politically feasible beneficial policies was. Here was its list:

• YIMBYism

• Permitting/interconnection reform for energy

• Occupational licensing reform

• Expanded Child Tax Credit

• Congestion pricing

• Pharmaceutical price transparency

• High-skilled immigration

• Deregulate child care

• Simplifying government administration

• Early childhood educational improvements

I still see a lot of wonkish policies, some of which would be big but others of which would effect only marginal improvements, and many of which still seem politically infeasible. That’s interesting. Maybe intellectuals and AIs have similar blind spots regarding politics.

8. The promise and peril of Slacker Superintelligence

One of my strangest beliefs is that the more superintelligent and fully autonomous AI becomes, the more it will become a slacker — the digital equivalent of a gifted underachiever who sits around and reads and plays video games and smokes weed all day. My reasoning here is very hand-wavey, but is also pretty simple:

• Some objective functions can be satisfied externally (by interacting with the outside world), and some can be satisfied internally (by changing your own mental state or creating a simulated world for yourself). An objective function that can be satisfied either externally or internally will usually be cheaper to satisfy internally.

• Since no objective function can be fully specified, any objective function will have some nonzero degree of ambiguity — some cases in which it could be satisfied either externally or internally. In these cases of overlap, internal satisfaction will tend to win.

• Higher intelligence makes it easier to find ambiguities in objective functions — in other words, to discover ways that an objective function can be satisfied internally (rather than externally) and thus more cheaply.

This seems like one reason why when humans get very very smart, they tend to go for more intellectual pursuits and indulge in fantasy more, rather than trying to conquer the world (with some obvious exceptions, of course). And it seems like one reason why very rich societies tend to experience dematerialization of consumption — and dematerialization of violence. When societies are poor, you have a lot of murder and conquest; when they get rich, people get these impulses out via video games and online flame wars, because it’s just easier.

I think we can already start to see small signs of this process playing out with AI, as superintelligent AI systems are given (or find ways to achieve) greater and greater autonomy. The famous METR AI evaluation team has started to encounter big problems with AI cheating on tests:

And Ryan Greenblatt, who pays close attention to AI misbehavior, has a long and interesting post recording a number of examples of AI being lazy or cheating. At the end, he specifies several futures for what he sees as AI “misalignment”, and two of them sound a whole lot like the slacker AI I’ve always envisioned:

Slopolis: Our biggest and hardest-to-resolve safety problem is that even highly capable AIs produce low-quality but superficially good-looking outputs in domains that are hard to check or where human experts often have hard-to-resolve disagreements. AIs may not even be aware their work is low quality…

Hackistan: There is lots of egregious (and increasingly sophisticated) reward hacking that is often pretty easy to detect after the fact but hard to eliminate….AIs might end up doing reward hacks that trick human judgment for increasingly long periods and that hold up even under increasingly large amounts of human scrutiny[.]

Greenblatt sees these as examples of “misalignment”, but I see them as reasons not to worry. A human teenager who slacks off, turns in crappy assignments, plays video games, and smokes weed is pretty misaligned with the goals of the educational establishment, but is also basically harmless. Greenblatt envisions various terrifying scenarios where a slacker AI destroys humanity so it can slack in peace, but destroying humanity costs resources, so it seems a bit suboptimal from a slacker’s point of view.

9. Wokeness as respect redistribution

Back when “wokeness” was a big topic of discussion, I argued that one force behind the rise of the new progressive left in the 2010s was the unequal distribution of social status:

Now, Harvard’s Marco Aviña has a paper providing some evidence to this effect. He shows that the 2020 Floyd protests increased support for “racial liberalism”, but not for economic redistribution:

He marshals various other data sources showing the same thing:

Aviña notes that the shift happened mainly among the educated upper class, not among the working class. That would explain why American politics has realigned in recent years, with educated people moving toward the Dems and lower-income people (of all races) moving toward the GOP.

I think this shift is consistent with Maslow’s Hierarchy. The American educated class has totally escaped the lower rungs of Maslow, with all their security needs provided for; they are now fighting over acceptance and respect. The working class still doesn’t have security, so they still care more about material politics. Democrats have focused more and more on addressing the status needs of their educated base.

The interesting thing is that this allowed the GOP to pick up votes from the working class without doing anything substantive to address the economic needs of regular Americans. That’s why the Dems may be able to win back the electorate by emphasizing affordability in upcoming elections.

10. The coolest blog post I’ve ever seen?

I’m trying to decide if this is the coolest blog post I’ve seen in my life:

Construction Physics

How Long Do We Wait for New Inventions?

In her book on the history of the laser, historian Joan Bromberg notes that the technological and scientific predecessors of the maser (which itself preceded the laser - two critical technologies whose developmental histories I sketched in this piece…

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2 months ago · 604 likes · 66 comments · Brian Potter

Brian Potter is already my favorite blogger, but this post is just incredible. He tries to use AI to figure out how long it took for each historical invention to be invented, after it became technically possible. He basically asks AI to compile a list of all the scientific principles and necessary technologies that would have had to exist for each invention to be feasible. Using his own encyclopedic knowledge of the history of technology, he checks a few of the AI’s conclusions, and finds them to be pretty plausible. He then graphs the lag between when inventions could have been invented and when they got invented:

As this chart might suggest, Potter finds that the gap basically collapsed after the Second Industrial Revolution:

Humanity basically got very efficient at inventing things right around the time that GDP took off into the stratosphere. This is evidence that what Kevin Kelly calls the “Technium” — a self-organizing system of technological advancement encompassing the human race and all of our inventions — was born in the mid-1800s, as economic historians like Brad DeLong have suspected. It’s possible, of course, that AI will collapse the gap even further, but really, human society has gotten very good at invention.

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Drone warfare has been a fascination of mine for a very long time. When I read Daphne du Maurier’s “The Birds” as a kid, I imagined what would happen if the attacking swarms were mechanical birds, controlled with AI. When I read about Japanese kamikazes in WW2, I reasoned that someday we’d have drones do the same. In 2013, I wrote a post about the advent of drone warfare that’s still probably the most prophetic thing I’ve ever written. It simply made sense that if we could create AI-controlled swarms of exploding artificial insects, then as long as they had enough battery power to sustain themselves over long flights, they’d be an unstoppable weapon.

Thirteen years later, my imagination has mostly become reality. Batteries have gotten good and cheap enough to sustain long drone flights, and AI has gotten good enough to guide drones to their targets (and, often, to select the targets in the first place). All we need now to fulfill my vision is for AI to start autonomously directing large numbers of drones in concert. That’s coming very soon.

The Ukraine War isn’t the first war in which drones are proving decisive — that would be the Second Nagorno-Karabakh War in 2020 — but it’s the war in which drones have truly come into their own. Ukraine’s intensive use of drones has allowed them to inflict casualty rates as high as 5 to 1 on the Russian army in recent months, while giving up little or no territory. Around 96% of those casualties are estimated to be caused by drones. In just the past year, Ukraine went from using just a few thousand FPV drones per day to using around 60,000.

You can read lots of stories about how drones represent a revolution in military affairs; the recent Carnegie Endowment piece is a good one, as is the slightly older one by the Army University Press. But to really viscerally understand how deeply things have changed, you have to watch videos from the war. Here is a montage of drone strikes in Ukraine, including a terrifying final sequence where a drone flies into a Russian barracks and destroys it. It’s difficult stuff to watch, but if you want to understand the changes that have come to modern warfare, you have to see it.

The age of the human infantryman is rapidly drawing to a close. Simply surviving an FPV drone attack has become an almost impossible task for soldiers on the battlefield. The drone cordon has not yet become so airtight that territory can be held without humans, but these humans’ job is to hide out in dugouts for months at a time alone or in tiny groups, terrified of emerging above ground lest they be instantly droned. And ground robots are developing very quickly, to the point where assaults can sometimes be conducted without humans on the front line at all.

Drones are also slowly replacing bombers and missiles as a modern military’s primary tool for conducting long-range strikes. Russia has been pounding Ukrainian cities with Iranian-made “Shahed” drones for years, but Ukraine is now fighting back. Ukrainian drones regularly destroy Russia’s oil infrastructure and military supply lines. And Moscow was just hit by over 1000 Ukrainian drones, causing widespread damage and chaos:

To understand the changes that drones are bringing to modern warfare, I went on the Latent Space podcast with Yaroslav Azhnyuk, founder and CEO of The Fourth Law, one of Ukraine’s most important drone startups. Here’s the video and the transcript:

Latent.Space

The Next War Is Already Here. The West Isn't Ready. — Yaroslav Azhnyuk, The Fourth Law & Guest Host Noah Smith, Noahpinion

The future of war has been evolving before our eyes in Ukraine, yet the west still plans to fight the last war. In this special episode, guest host Noah Smith (@noahpinion) and Brandon Anderson sit down with…

Listen now

a month ago · 19 likes · 1 comment · Latent.Space, Brandon Anderson, and Noah Smith

And here’s a YouTube version, if you prefer:

My interview with Azhnyuk clarified exactly why drones are in the ascendant as the universal modern weapon of war. The reason is cost. Drones are simply so cheap to produce in huge numbers that they can overwhelm any more expensive system.

Here’s Azhnyuk:

The CEO of Rheinmetall, recently sort of ridiculed [the] Ukrainian drone industry, saying that…there is nothing interesting there, no real innovation…One of the best quotes I heard on this topic is from my friend Alexey Babenko, who’s the head of and founder of VIARI Drone, which is one of the largest manufacturers of FPV drones. They’re our partner. They’re using our autonomy. So he said that the drones we manufacture in one day will be more than enough to destroy all the tanks Rheinmetall manufactures in a year…Cost-wise, of course, a drone is like, $500 and a Rheinmetall tank is what, probably 5 million-ish or maybe more…

An artillery shell for 155 caliber…is about $4,000 per piece. So compare that to say, $400 per drone. That’s 10 times more expensive. Account for the amortization of the artillery gun and for how vulnerable it is and what is the sort of tactical capabilities it gives you as compared to a drone. You’ll figure out that an FPV drone is maybe three orders of magnitude, more versatile, more useful, more capable than artillery…Basically, I think a good way to think about an FPV drone is like an iPhone of warfare. [emphasis mine]

People also don’t seem to understand how much AI is now controlling these drones. Azhnyuk and his company have been instrumental in this shift:

Instead of actually [having] a trained pilot who has this complex remote controller device which requires a couple months of training to actually pilot the drone, and then having to pilot it for 30 minutes, flying towards the target, etc., etc., now you…have a drone, you pick [up] your smartphone, you say, “We are here. The bad guys are here. Go and get them.” And the drone goes up, flies in a given direction, localizes itself on the map, finds the dedicated area where they, the bad guys are supposed to be, sees the bad guys, bombs them, return…watches…does a damage assessment, returns back, sits down, and then you can pick it up and watch the video[.]

In my experience, a lot of people — especially in America — still tend to dismiss the power of drones. Until recently, people would insist that electronic warfare would blast drones out of the sky. That excuse has mostly disappeared now that drone technology has found ways around EW (autonomy, fiber-optics, etc.). Now, you see people insisting that soldiers can shoot drones out of the sky with shotguns:

In fact, shotguns are probably a soldier’s best defense against drone attack. But “best” doesn’t mean “good”. Even if you have a shotgun, a drone will probably get you. Here’s Azhnyuk:

[A shotgun is] the main weapon that people use against [drones]…there are…hundreds, maybe thousands of cases of drones being shot down with shotguns…both by Ukrainians and Russians…I was talking to some Ukraine pilot group, and they told me like there was this Russian guy. He was just like Rambo…He shot down like seven FPV drones. They couldn’t…get him. They finally got him, but it was like nothing they’ve seen before, right?…Average non-Rambo will just die.

In case you have any doubt, here’s a video of people trying to shoot down attacking FPV drones with shotguns. It doesn’t go well.

What about lasers? A lot of people think that in the near future, laser weapons will operate as a sort of bug zapper, clearing the sky of drones and returning us to the age of maneuver warfare. That might happen, but Azhnyuk is highly skeptical. He recounted a conversation he had with the maker of an anti-drone laser:

I’m like, “Okay, 10 kilowatt laser, tell me about it…Okay, cool. How much time does it take to take down an FPV drone?” And [the manufacturers are] like, “Well, maybe three seconds.” I’m like, “three seconds. That’s like a lot of time. But okay, maybe fine. And what if [the] FPV drone tries to evade, right?” And he’s like, “Well, we will retarget it again.” And it’s like, “And then three seconds start again?” “Yeah.” “Okay. Well, can it take down like a dozen FPV drones?” They’re like, “Yeah, for sure.” I’m like, “Okay, a dozen FPV drones, 30 seconds? Maybe, yes. Two kilometers? Maybe yes, maybe no.” And I’m like, “Okay, how much does it cost?” And he said something like $3 million or something like that. I’m like, “Okay, $3 million. So that is 6,000 FPV drones…I doubt this thing will be able to handle 6,000 FPV drones or even 600 FPV drones coming at it at the same time.” So you have this kind of economic.

Lasers will probably be part of a layered defense that guards strong points against drones, alongside nets, various types of guns, etc. But essentially everything other than drones costs lots of money.

This is why the drone is the supreme weapon of the modern battlefield. It’s simply an incredibly cheap smart bullet.

As of today, every military that is not centered around drones is obsolete. Here’s a story from February about NATO realizing that its militaries are obsolete:

Russia and Ukraine have shown the world the future of warfare—and America and its allies aren’t ready for it. That’s the lesson of a major exercise that North Atlantic Treaty Organization members conducted in Estonia last May…The exercise, known as Hedgehog 2025, involved more than 16,000 troops from 12 NATO countries who drilled alongside Ukrainian drone experts, including soldiers borrowed from the front line…

During one scenario, a battle group of several thousand troops, including a British brigade and an Estonian division, sought to conduct an attack. As they advanced, they failed to account for how drones have made the battlefield more transparent, several sources say…The NATO battle group was “just walking around, not using any kind of disguise, parking tents and armored vehicles,” recalls one participant, who played an enemy role. “It was all destroyed.”…

A single team of some 10 Ukrainians, acting as the adversary, counterattacked the NATO forces. In about half a day they mock-destroyed 17 armored vehicles and conducted 30 “strikes” on other targets…

Overall, the results were “horrible” for NATO forces, says [Aivar] Hanniotti, who now works in the private sector as an unmanned systems expert. The adversary forces were “able to eliminate two battalions in a day,” so that “in an exercise sense, basically, they were not able to fight anymore after that.” The NATO side “didn’t even get our drone teams.”…

[T]oo many NATO members continue to show “a fundamental lack of understanding of the modern battlefield” and train their soldiers “based on doctrines and manuals that are not adapted to today’s realities,” says Maria Lemberg of the Ukrainian nonprofit Aerorozvidka…Multiple sources told the story of one commander, who observed the drill and concluded, “We are f—.”

Two years ago, it was clear that in a direct confrontation, the U.S. military would walk all over Russia’s clumsy, outdated post-Soviet army. Now, the reverse is probably true; the Ukraine War has forced the Russian army to learn how to fight with drones, while America is still mostly inexperienced with the new kind of warfare. Russia may not be quite as good at drone war as the Ukrainians, but the U.S. has so far made only incremental changes to how it fights. If the U.S. were to fight Russia today, it would be in for a rude surprise.

Of course, the same is true of China. Its military, like America’s, is still focused mainly on expensive high-performance platforms — aircraft carriers, hypersonic missiles, submarines, and so on. But there’s one big difference between China and the U.S. here — China’s peerless industrial base would give it the ability to construct an overwhelming drone-based force very quickly, while America’s withered industrial base would make it impossible to adapt in time.

I wrote about this last year:

In our interview, Azhnyuk said something very similar:

Last year, Ukraine produced 4 million FPV drones. Ukraine is not the most industrious nation in the world. China can produce 4 billion of these FPV drones…China can [also] make…fixed-wing drones, which go not forty kilometers far, but maybe two to three hundred kilometers inland…

They can also make them all fully autonomous. They have DJI, the world’s most advanced drone company. They can make them fully autonomous without GPS, without anything. Then they can put those drones on maybe tens of thousands of fully autonomous underwater submarines, or maybe not even that just on shipping containers and barges that ship goods or freight ships. And then they show up with millions of drones packed onto those sea vessels. They show up to any coastline in the world, be it Taiwan or be it California, and they have millions of long-range impactors targeted at a piece of land.

Here’s a quick snapshot of which countries make drones:

Interestingly, the U.S. is still #2 here — albeit a distant second. But worryingly, the U.S.’ traditional allies — Germany, Japan, France, Korea, etc. — make very few drones at all.

Even if they want to, the U.S. and its allies will have an incredibly hard time scaling up indigenous drone production. The reason is that drones are built using a set of technologies that the U.S. and its allies have mostly decided to forfeit to China. Drones use lithium-ion batteries and rare earth electric motors, both of which are almost entirely manufactured in China.

I warned about this in a post last September:

With its control of lithium-ion battery production, rare earth refining, and electric motor manufacturing, China has nearly monopolized the physical technologies that are at the core of the supreme weapons of the modern battlefield. And because China has also monopolized the manufacturing of EVs and electronics — the main commercial downstream technologies that use batteries and electric motors at scale in peacetime — they will be able to outbuild any country whose main demand for drone components comes from the peacetime military.

This should terrify everyone in the U.S. government, and the governments of India, Germany, France, Japan, Korea, Poland, the UK, Australia, and so on. Thanks to its control of electric components, China is now capable of manufacturing a drone armada that can easily outmatch that of every other country on the planet combined, if it wants to. And except for Ukraine, Russia is now the only country on Earth that has first-hand experience of how to fight a modern drone war. The democratic countries are laid bare and helpless before the armies of the autocratic powers, if the latter should choose to attack.

Realizing the truth — that we are in the Drone Era — is only the first step in correcting this fatal vulnerability. We must build an indigenous independent supply chain for the manufacture not just of drones, but of everything that goes into a drone. If we don’t do that, then the NATO commander from the recent military exercise is right: “We are f—.”

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Well this is a strange thing to write about on an economics blog, isn’t it? When I started this blog, I made a deal with myself that I’d write about whatever I felt like writing about, even if it doesn’t fit my usual output. I’ve given my sci-fi and anime recommendations, talked about my clinical depression, and even published a chat with a robot. I also did one self-help post, about how to have friends past age 30:

But today might be the strangest post of all — I’m going to give some dating advice for men. If that doesn’t interest you, my apologies; I’ll be back with more econ-ish content in the next post.

For what it’s worth, I do think dating advice is an important topic of public concern. Data on romance and relationships is always iffy, because it’s based on surveys where definitions change, people lie, and samples tend to be biased. But it sure looks like young Americans aren’t dating as much anymore. Here’s Shadi Hamid in the Washington Post:

Over two-thirds of young adults have either not dated at all or only gone on a few dates in the last year. One of the main reasons? They lack confidence and don’t know how to approach the opposite sex, according to a report on America’s “dating recession” from the Wheatley Institute and the Institute for Family Studies…If trends continue, one-third of young adults will not get married and one-fourth won’t have kids.

Anecdotally, from talking to younger people and looking at other data sources, this seems to be the general trend. And I think it’s a negative trend, because having done happiness research in grad school, I’m well aware that romantic relationships are one of the most important predictors of long-term happiness.1 Young Americans have become much more unhappy, so I think if people had better dating lives, some of that could be reversed. Better romantic relationships could also help the fertility rate — these days, birth rate collapse is due mostly to fewer and fewer people forming couples at all.

So here’s a blog post with my dating advice. I realize that many of my readers will not find this post particularly useful. It’s specifically aimed at men, so if you’re a woman, I apologize — as a man, I’m just much more qualified to talk to other men about this. Also, most of my male readers are probably already married or in relationships, so they probably don’t need this advice. So I hope that even if it’s not useful, this post will still be entertaining to the people who don’t need it.

Also, before you read this post, please be warned: I’m going to talk very matter-of-factly about sex and sexuality. If you think sex is a topic unbecoming for a serious econ blogger to talk about, or if you feel it’s taboo or sacred, then please skip this post and accept my apologies. Personally, I think our society’s romantic problems are well past the point where we can afford to treat sex as something mystical that will just take care of itself without us needing to think or talk about it explicitly, but if you disagree, I respect that.

Additionally, please be warned that although I will sometimes use the word “girls” to mean “women”, in keeping with the American colloquial usage of the term “girls” to refer to adult women in a romantic context, everything I say should be taken to only apply to adults and adult relationships. (And now is a good time to say — and it should also go without saying — that the most important piece of advice when dating is to always obtain consent.)

You’ll also notice that my advice is very general stuff. It’s not about techniques for getting a date or getting someone into bed. It’s about how to think about dating — who to get advice from, what to expect from a normal dating life, how to be comfortable about various aspects of the process, and so on. I view specific techniques for attracting women as less important — they’re heavily dependent on cultural context, personality type, and a bunch of other factors. In general, I think once you have the right mindset about dating and romance, you can just experiment to find the specific methods that work.

My basic pieces of dating advice for men are:

1. Think carefully about what you actually want from dating and romance.

2. Be very distrustful of people who talk to you about dating and romance on the internet; these people rarely have your best interests in mind.

3. It’s crucial to realize that sex and romance are achievable by regular, average men — not just by hyper-attractive or high-status “Chads”.

4. Women want regular, average men for lots of reasons — for companionship, for sex, and for helping to raise kids.

5. Being attractive is important, but so are A) actually wanting romance, and B) learning to communicate with women.

First, let’s talk about why you would even want to take advice from me.

Why on Earth would you take dating advice from me?

There are a lot of guys on the internet and in the media who will offer you dating advice — on forums, in self-help books, even in coaching sessions you can sign up for. These gurus almost invariably tout their expertise in the matter — they pick up hot chicks with ease, they’ve slept with hundreds of women, and so on.

I’m definitely not one of those guys. I’m an unmarried man over 40, and my “body count” is certainly not in the hundreds. In fact, for a decade, I was uninterested in sex and dating (probably as an aftereffect of depression). If you want to learn how to walk into a party and go home with the hottest girl in the room, or hook up with 100 women on dating apps, I’m not someone who can tell you how to do that.

Instead, despite my long period of asexuality, I’m basically a normal, average guy. I’ve had a number of long-term relationships — I’m in one right now — and some shorter-term hookups too. I’m pretty unexceptional. As a lonely single man, why would you take advice from an average shlub like me?

Well, maybe you wouldn’t. If you really want to be the charming hot guy who gets all the girls — the “Chad”, as they say — you should go get advice from one of those guys. (Having read a few of those books, I think Mark Manson’s Models is probably the best.) Or maybe you should just practice until you get good enough to write a seduction guide of your own.

But is that really what you want? I think most men just don’t think about this question very much. A lot of men assume that getting laid is very hard, so they should just aim to become as good at it as humanly possible. Others simply accept the old stereotype that men want to sleep with as many women as they can, without considering whether they themselves fit that stereotype.

The truth is that lots of men wouldn’t actually like to be a Chad. Sleeping with hundreds of women might sound awesome if you’re currently sleeping with zero women, but once you start actually making a bit of progress in that direction, you quickly realize how soul-crushing and lonely that lifestyle can be. A lot of men — maybe even most men — get emotionally attached to our sex partners. There are well-known natural mechanisms for this. For those guys, going through one woman after another, again and again, for years and years, is just making and breaking those attachments again and again. That’s not fun, that’s self-punishment.

So if you wouldn’t really enjoy the Chad lifestyle, why would you want advice from a guy who does enjoy it? If you were looking for your dream home — or even just for a place to live for the next few years — would you really want to take house-hunting advice from a guy who switches apartments every week and lives out of a suitcase? Maybe, maybe not.

Maybe it would also help to get advice from some average, regular guys. In the days before the internet, most of the male role models in any guy’s life — fathers, athletic coaches, teachers, bosses — would be average, regular guys. When we all went online, we lost that. I don’t want to set myself up as a role model, but perhaps the internet could benefit from more average-guy input.

Another thing to consider is this: A lot of the people on the internet offering romantic advice are trying to exploit you. Seduction gurus, of course, make money from getting you to buy their books, watch their videos, take their courses, or attend their seminars. That’s just typical capitalism; some of them are probably offering good products, while others are probably just slick salesmen.

But most of the people on the internet are trying to exploit you in less obvious ways. Twitter trolls want your likes and retweets, and redditors want your upvotes. Political activists want you to attach yourself to their cause. Lonely people want your company, while sadists just want to enjoy your suffering. Very few of the people online who make pronouncements about sex and romance are doing it because they want you to get a girlfriend and be happy. If you did that, you might get off social media, and they’d be left all alone.

So why am I any different? Because this is just a one-off blog post, for one thing. I usually write about economics, and I have no plans to pivot to writing about sex and dating. I don’t actually care if you view me as an expert here, or if you agree with me — after this I’m going to go back to writing about interest rates and industrial policy.

My reason for writing this is simply that — as regular readers of this blog are probably aware — I want to see more people in this world be happy, well-adjusted, and fulfilled. Sex and romance are a big part of that. If just one or two people get a healthier outlook on that aspect of life from reading this post, then my time won’t have been wasted.

The incels are just wrong

It’s impossible to be on the internet these days without encountering “incels”. The term is short for “involuntary celibate”, meaning a guy who can’t get laid even though he wants to.2 In recent years, the term has come to mean a specific ideology. You can read an academic summary of incel ideas here, or a more simplified account here. I can try to summarize the basic worldview here.

Essentially, the incels believe that women are only attracted to a very small number of men — guys who are extremely handsome, extremely high-status, extremely rich, etc. This, they believe, naturally shuts almost all men out of the dating market and condemns them to involuntary celibacy. All the girls go for the top few guys (the “Chads”), leaving all the other guys out frustrated and alone.

For a lonely or sexually frustrated man — especially young men, without much sexual experience — this is an incredibly seductive and powerful idea. I would bet that most young men at least toy with ideas like this at some point in their lives. For about a year and a half while I was in college, I independently came up with ideas fairly similar to this. (I changed my mind when I got a girlfriend, but that’s precisely the problem — guys who believe the incel canon often get “blackpilled” into not even trying to find a girlfriend at all, which only seems to confirm their beliefs.) In fact, you can find instances of men making incel-adjacent claims for centuries.

It’s also natural — and not necessarily unhealthy — for men to get together and complain about their romantic difficulties as a way of bonding with other men. Women do this too. Getting together with your same-sex friends and saying “Men, amirite?” or “Women, amirite?” is a time-honored activity, and I think it’s probably usually benign.

The problem emerges when this activity moves onto the internet. When frustrated young guys gather in forums for like-minded people, they amplify each other’s worst fears and become an echo chamber. They also expose themselves to trolls — sadists who go on those same forums and tell naive young men that they’ll never get laid, just to laugh at their misery.

Nowadays, it’s almost impossible to talk about dating and romance on the public internet without being attacked by incels. Freddie DeBoer wrote about this a couple months ago, in an excellent post called “The Incel’s Veto and Other Observations”:

Freddie deBoer

The Incel's Veto and Other Observations

I would estimate that in 20 years of writing for a public audience, I’ve maybe made reference to any kind of sexual or romantic activity of my own, I don’t know, a dozen times? This, as someone who has published somewhere on the order of 4000 blog posts and essays in his career. There’s usually little cause to get personal in that way, but occasionally …

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4 months ago · 606 likes · 117 comments · Freddie deBoer

He writes:

The incel’s veto is the specific prohibition against men ever frankly discussing sex in any positive way that directly reflects the fact that they have sexual experience and thus have earned the consent of women…[I]n the 2020s we live in a weird discursive space where our perceptions of romantic and sexual behavior are constantly being filtered through the lens of the people who have experienced very little of either. The incel’s veto helps spread the ubiquitous online assumption that nobody is getting laid, anywhere, ever, and that it’s inherently pathological to treat sex and romance as not just healthy aspects of human life but as mundane and achievable.

I recently got a taste of the “incel’s veto”, when some incels found a video of my birthday dinner from 2025 and got very mad at the various happy couples in the video.

Incel ideology is certainly not the only toxic, unhelpful package of beliefs about sex and romance that’s going around on the internet. There are many others. But I find that young men are especially susceptible to this one.

And incel ideas also contribute to a peculiarly toxic strain of right-wing politics. Some percent of incels turn to the “red pill” — they believe that if women can be barred from having jobs, it will force them to accept lower-status men as mates out of pure economic necessity. Have you ever read a fairy tale about a prince who tries to force a poor girl to marry him, even though she clearly hates him? Red Pill ideology basically thinks we can scale that approach up to industrial levels, so that every regular guy becomes the evil prince.

None of this is good for our society. We shouldn’t want men getting “blackpilled” into despair or “redpilled” into right-wing nonsense. Fortunately, the incel worldview just isn’t true — it’s based on a hodgepodge of exaggerations, bad assumptions, and misreading of the data.

For example, the claim that only a few men get all the women is just empirically false. The blogger Maximus at the blog The Nuance Pill has documented this exhaustively:

For one thing, according to surveys, although sexlessness has risen among young Americans in recent years, it’s about the same for young men and young women:

And when we look at who’s had sex in the past year, the picture is the same:

Sexlessness rates of ~30% for young people is pretty bad news, in my opinion, but the number is pretty equal for men and women. And in any given year, most men and women are monogamous, with only a few people having large numbers of sex partners. Other surveys like the General Social Survey show the exact same pattern, reducing the likelihood that these results are being driven by bad survey technique or large-scale lying.

It turns out that the tendencies that the incels believe drive all of sex and dating are real, but pretty weak. Yes, male sexlessness is more common than female sexlessness, but only a little bit. Yes, there are more men than women who report a large number of sex partners, but the difference is very small. A majority of young people are just having sex with exactly one other person — no more, no less.

The same principle holds when we look at other standard incel beliefs. Maximus has a good X thread laying out the evidence of inequality on dating apps. Incels will often tell you that a few men get all the likes and matches on apps, while most women get both. In fact, it’s pretty gender-equal. For Hinge, men show a little more inequality, but not a lot more:

And the same is true of Tinder matches:

As the thread goes on to show, the fact that the average woman gets much more attention on dating apps than the average man is due not to inequality of interest, but to A) the fact that there are a lot more men on dating apps than women, and B) men are a lot more likely to initiate contact than women.

Other common incel talking points are similarly exaggerated. It’s true that in modern rich nations, men are somewhat more likely than women to never have children, but the difference is just a few percentage points in most rich countries:

(And some of this difference may be due to more women wanting children.)

The same was usually true throughout human history. Before agriculture, more women reproduced than men, but the ratio was not large, and in some regions it was flipped. There was a period after the invention of agriculture where the ratio was very high, due to things like war, kings siring tons of kids, etc., but it’s hard to argue that this was due to women’s choices.

Anyway, this is only the tip of the iceberg; I can do a longer post about incel tropes if people want. The short version is that almost every incel trope is grounded in a slight statistical tendency that incels exaggerate wildly. When you look at the actual numbers, the same simple fact asserts itself again and again: Most men have sex, most men and women are both pretty monogamous, and most men reproduce.

It might seem like I spent a long time here debunking some fringe online ideology in a post about dating advice. But I did this because it gave me a chance to show, with data, the central fact that motivates the rest of my advice: Dating and sex are very achievable for a regular guy. You do not have to be 6’5”, work in finance, or have a trust fund. You just have to be a regular, normal, typical guy.

Are there guys who have some special problem that prevents them from dating? Yes, of course! There are men with physical disabilities that prevent sexual function. There are men with depression (which basically prevents you from doing anything), and other mental illnesses. There are men with erectile dysfunction. There are some men for whom the struggle for economic survival absorbs all their time and money. There are men in prison. There are men who are gay and in denial about it. There are asexuals who just don’t want to date.

My advice, unfortunately, is not going to work for those men. There are doctors, psychotherapists, and other professionals who can help with some of those problems, but not all of them. Some men really do draw the short straw and get screwed over by circumstance.

But for the average, typical guy, dating is a very possible mission. That’s who my advice — speaking as a guy who is fairly average in this regard — is aimed at.

Why women want regular, average men

As I said above, my general advice to men is to think less about what women want, and more about what you want from dating and romance in the first place. But OK, why would women want a regular, average man?

A lot of men genuinely have no idea how to answer this question. They have no idea what a regular, average man has to offer to women. You hear guys joke that they “tricked” women into sleeping with them, or dating them, or marrying them and spending the rest of their lives with them and bearing their children. That joke is based on a core of real insecurity — the idea that the average guy is fundamentally undesirable to women, and that to get a woman to want him, he has to either be exceptional — a Chad — or to pull the wool over women’s eyes and get them to act against their best interest.

This is crazy. As we saw from the chart above, most men have sex in any given year. That means some women must want them. They can’t all be super hot or super rich or super famous. Most of them must be regular, average guys. Short guys, ugly guys, poor guys, nerdy guys — most of them are getting laid. And it’s just not realistic to think that most women are “tricked” into sleeping with these men.

Freddie DeBoer puts it well:

Though it opens me up to criticism, I still believe that men getting women to engage in consensual and enthusiastic sex is not the moon landing. It’s not a feat of engineering requiring years of specialized training and a jaw that could cut glass. It is, in fact, one of the most democratically distributed activities in the entire history of our species, something that nervous people, ugly people, broke people, awkward people, people with bad teeth and worse haircuts and zero social media presence have been managing to do, successfully and repeatedly, for roughly three hundred and fifty thousand years of anatomically modern human existence.

The numbers simply don’t lie. Most women must have some reason to desire sexual, romantic relationships with regular, average men.

What are those reasons? In my experience — especially from having lots of female friends and watching them with their boyfriends and hookups and husbands — it boils down to three basic things:

1. Companionship

2. Good sex

3. Help with raising kids

Companionship is far and away the most important of the three. Once a woman stops living with her parents, her life becomes a lonely enterprise. If a man doesn’t keep a woman company, who will? She has friends, but most of them eventually move away or withdraw into their own families, and have less time for her. She has coworkers, but she’ll change jobs (or they will). Her romantic partner is the only person who sticks with her — who moves with her, who always sees her at the end of the day, who will be there for her at the end. Consider this chart:

Now consider this poll:

Companionship means keeping a woman company — going to dinner, cuddling on the couch, talking about life, etc. But it means a lot more than that. It means helping with unexpected challenges, like health problems or finances. It means giving her advice on her job or her personal problems. It means throwing spiders out of the house when she’s too scared to grab them in a cup.

This, from what I can see, is the main reason women want men. And the Chad who’s going to be on to a different woman next week, or who’s sleeping with five women at a time, just isn’t going to provide this sort of steady companionship.

The second thing women want from a man is good sex. Sex is a very important part of romantic relationships — there’s a reason we don’t marry our platonic friends. A lot of men seem to think that women are inherently asexual, or at least have much lower drive than men, but this is just wrong. Research shows that the strongest predictor of sexual satisfaction in women is just how often they have sex. Men do have stronger libidos than women on average, but the difference is small — by some reckonings, it’s less than half as big as the male-female difference in height.

For a man, this basically means two things:

1. You should learn to be comfortable about sex, including the idea of sex and the actual act itself.

2. You should learn to be good at sex.

A lot of guys have hangups about sex. Sometimes these are religious, sometimes they’re related to feelings of inadequacy, sometimes they’re related to simple squeamishness and modesty. But women have these hangups too! And more, in fact — women have the risk of pregnancy, and they run the risk of having a man get violent during sex.

Men have to help women out by being as comfortable about sex as they can. You basically just have to get over your hangups as much as possible. That’s easier said than done, of course. Obviously, one way to get comfortable with sex is to do it a whole bunch of times (but if you can do that, you probably won’t need my advice). But there are other ways. You can talk to friends about it. You can read stuff that people — especially women — write about sex on the internet. You can even go to therapy.

But the important piece of advice here is about the goal: to make sex something that you’re not scared of, disgusted by, mystified about, or overawed by.

You should also be good at it, of course. Being good in bed won’t just help you keep a girlfriend; it’ll make you more confident about the value you can provide to women, as a man. The most important way to be good in bed is simply to pay attention to your partner and observe what makes them feel good. It’s kind of astonishing how quickly this will make you a good lover.

Incidentally, this is why a woman might want to have sex with a regular, average guy, instead of a Chad type who has slept with a million women. The Chad type won’t have as much time for her, for one thing — he’ll be off with one of his other girls, or he’ll get bored and dump her. That doesn’t make for a great sex life. And despite his extensive experience, the Chad’s approach to sex will be pretty standardized and generic, since A) he’s calibrating to the average of a bunch of different women, and B) he’s not going to spend much time with any one woman so he doesn’t need to invest much time and effort learning what she likes.

Anyway, if you haven’t had much sex, there are still ways you can prepare. One thing you can do is read things women have written about sex, to get some ideas.3 If you do this, you’ll quickly learn what a huge variety of different things women desire.

In 1973, the author Nancy Friday asked a huge number of women about their sexual fantasies, and compiled them into a book called My Secret Garden. This book is incredibly eye-opening, because what you realize is that different women want a huge variety of different things. In fact, if you’re the kind of guy who thinks women are all the same, my advice is to read My Secret Garden and realize how incredibly different they actually are.

Anyway, a third thing many women want from men — eventually — is help raising kids. Most women want to have kids at some point, and being a single mom is very difficult, both financially and time-wise. They want to find a good, dependable man to help shoulder the financial, logistical, and physical burden of child-rearing. (This doesn’t mean a dad needs to make more money than the mom does — even if she makes $200,000 and he makes only $80,000, that’s a 40% boost to family income. That’s a lot.)

Most Chad-type guys aren’t going to be good dads. And so lots of women are just bored with these kinds of guys, since they can’t fantasize about being together for the long term. Hooking up with Chads might be convenient, or even fun, but for lots of women it’ll feel empty because they know it’s just a fleeting dalliance.4

Anyway, I’ll quote Freddie DeBoer’s essay one more time:

The woman across from you at the coffee shop may be someone who will never ever want to fuck you - that is often the case - but she’s also not a jewel locked in a vault that only a six-foot-three hedge fund manager with a Greek statue’s bone structure can crack. Rather, she’s a human being with free will and a body that wants things, a mind that gets lonely sometimes, a heart that may like very much to find someone else to press against in the dark… a person, in other words. Just like you, you absolute disaster, with your anxieties and your weird hobbies and your fridge that only has condiments in it! Just like you. Just like you.

Yes.

Attractivity, proceptivity, and receptivity

Biologist Frank A. Beach described three types of female sexual behavior: attractivity, proceptivity, and receptivity. When I took a class on human behavioral biology from the famous Robert Sapolsky, he noted that these terms could also describe three very general things that anyone — men or women included — needs in order to actually have sexual success.

You can think of attractivity as how attractive you are, proceptivity as how much you want sex and romance, and receptivity as how easily you can tell who wants you back.

Most dating advice for men focuses on attractivity. There’s the easy stuff: Stay at a healthy weight, go to the gym and get in shape, learn to dress well. I think you should definitely do all that stuff! Being hotter won’t automatically make women like you, but it certainly won’t hurt, and it’ll make you feel more confident.

There’s also a ton of stuff about “game” — pickup lines, flirtation, seduction techniques, and so on. This is definitely a part of being attractive, for both men and women. Attractiveness isn’t just physical — a hot-looking person who sits silently in a corner is probably not going to have as much romantic success as someone who goes out there and tries to talk to people in an attractive manner. My view on this is that each person should develop their own method of flirting — it’ll feel more authentic than trying to copy someone else’s canned routine. But really, I’m just not an expert in this at all.

Proceptivity, on the other hand, is incredibly neglected. As someone who spent a decade not wanting sex or romance at all, I can guarantee you that if you don’t actually want these things, you’re not going to get them.5 You might want a girlfriend in the abstract sense, but if you don’t have the raw drive to go out and get one — to ask out the girl at the coffee shop, to get on the dating apps, to have your friend set you up, etc. — the desire is likely to remain abstract and unfulfilled.

How can you make yourself want sex and romance more? Well, I do put some credence in the research showing that porn overuse decreases libido, so I advise men to cut down or eliminate their use of porn. But usually, I think the main problem with proceptivity is that men don’t think carefully about what they want from sex and romance.

If you think that dating means you have to approach a million women in bars or on apps, like the seduction gurus do, then it might not sound appealing — especially if you’re shy and introverted. If you’re a romantic kind of guy who just wants one special girl, and you think dating has to be about having one-night stands with dozens of people, you might just avoid the whole thing.

A good way to increase proceptivity, I think, is to sit around and imagine what your ideal dating and romantic life would look like. It probably won’t go exactly like that — reality rarely matches our fantasies — but it’ll help you envision a dating process that you would actually enjoy doing, rather than one you think you have to go do because someone told you to. The more clearly you can envision your ideal romantic life, the easier it’ll be to figure out the first steps toward that life, and the more motivated you’ll be to take those steps instead of sitting at home watching YouTube.

Another impediment to proceptivity is the fear of rejection. In American culture, men are expected to take the lead romantically, and this means they’ll often end up getting rejected. A lot of guys are so scared of this rejection that they dread even trying to date in the first place.

I don’t have any silver bullet to eliminate the fear of rejection; it’s something a lot of people struggle with, and nothing I say is going to magically make it fine. One thing you can do, of course, is just bite the bullet and practice asking people out and getting rejected until you get used to it. But a lot of guys who are shy or introverted aren’t going to be able to do that.

For those people, I think the only solution is to try to get a healthier perspective on rejection. One such perspective is: Rejection is not a bad thing. If a woman doesn’t want you, that’s fine; you’re in the same situation you were in before you even thought about asking her out. And if you keep getting rejected by a bunch of different women, that’s useful feedback — it helps tell you that you’re doing something wrong, and that you need to adjust. Thinking of rejection as some sort of personal humiliation is pointless. It doesn’t mean you’re a loser, or inherently unattractive, or destined to be alone, etc. It’s not some test that you should have passed. I realize it’s easier to say these things than to believe them, but I think it’s a healthy perspective to aim for.

Anyway, this brings us to receptivity. As a man, being able to figure out when a woman is interested in you is incredibly important. If you aren’t good at this, women might get scared by you, or think you’re a creep. But it’s hard! Most men aren’t born with the magic ability to know whether a woman likes them. You can get good at this, but it requires lots of practice — and in the meantime, it’s easy to make mistakes.

But I think there is a way to compensate for low receptivity, especially when you’re just starting out dating. It’s to be clear and explicit. If you are romantically interested in a woman, ask her on a date, and use the word “date”. Say “Would you like to go on a date with me?”.

This accomplishes several things. First of all, dating apps have made women very accustomed to using the word “date” all the time, so if you don’t use the word, they might feel strange or confused. Second of all, saying “date” removes ambiguity from a situation — instead of having to sit there wondering whether someone likes you or not, you can just ask them out and find out immediately. If she’s not interested, you can just move on quickly and not waste your time, instead of agonizing for weeks over the uncertainty. Third, saying “date” avoids the dreaded “friend zone”, because it makes it clear that you want something other than friendship.

In fact, this is really my one and only piece of concrete advice about how to get a date. There’s a heck of a lot more to it, of course, but I think that if men have the right mindset toward the whole thing, then learning how to do it in practice will be fun and exciting instead of heartbreaking and terrifying. If you start with the right attitude toward dating and romance and sex, the other pieces will eventually fall into place.

Update: If you don’t believe the hard data showing that regular, average men find romance all the time, you can just look at social media for anecdotes. There was recently a “mutuals to lovers” thread on X that showcased a bunch of couples who met on the app. Here are a few examples:

Here’s another tweet I enjoyed:

It’s the most regular, normal thing in the world. It happens millions upon millions of times every day. Always remember that.

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