Category Archives: Web Article Review

Edmund Phelps vs. Breitbart

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Edmund Phelps, a Nobel prize-winning economist, is not alive to defend himself against this Breitbart article claiming to be based on his ideas:

This is where incoming Fed chairman Kevin Warsh’s argument about artificial intelligence and monetary policy fits naturally. Warsh has argued that AI represents a genuine supply-side productivity shock, not merely demand-pull inflation dressed up as growth. If that’s right, then accommodating those gains with lower interest rates isn’t a concession to inflation. It’s a recognition that the economy’s supply capacity is improving.

Under a Phelpsian framework, the policy goal should be to let productivity gains flow through the economy without forcing an unnecessary contraction. Rate cuts in this setting aren’t simply “loose money.” They can be the mechanism that prevents firms from overreacting to realized productivity gains by pulling back too sharply on hiring and investment.

This also explains why the tight labor market may be protective against recession rather than a precursor to it. In the standard story, a productivity acceleration can be dangerous because it follows a period of overexpansion. Firms hired in anticipation of the boom, and when productivity finally arrives, they discover they no longer need as much labor. Layoffs ensue, consumer confidence cracks, spending falls, and the risk of a recession becomes large.

This sounds kind of smart-ish, but I was skeptical because of the source. Phelps’s main ideas were about expectations of the future, true, but it seemed to me that this was likely to be a twisting of his ideas to meet a desired political end, rather than a serious analysis.

Since Phelps is not around to defend his ideas, I asked Gemini to assume his persona and write a response. Here is what she said:

It is flattering, I suppose, to see my theories invoked, but this argument entirely misapprehends the mechanics of both expectations and capital. If artificial intelligence is truly about to unleash a massive, structural leap in total factor productivity, the natural rate of interest must rise, not fall. When an economy anticipates a surge of genuine, grassroots dynamism—moving beyond the mechanical, exogenous growth of standard Solow models—firms aggressively seek capital today to capture those future gains. If a central bank artificially suppresses interest rates in the face of that surging demand, it does not foster innovation; it merely ignites asset bubbles and distorts the very market signals that tinkerers and entrepreneurs rely upon.

Furthermore, the author has forgotten the most crucial lesson of the expectations-augmented Phillips curve. You cannot placate the labor market with cheap money today by promising them a technological supply miracle tomorrow. If the Federal Reserve cuts rates in an already tight market, businesses and workers will instantly observe the monetary expansion and update their inflation expectations, driving up prices and wages immediately. The inflation takes root long before the first AI efficiency is ever deployed. True mass flourishing requires the discipline of real capital costs, not the illusion of a monetary free lunch.

Let’s imagine a case where we were actually observing increased productivity in real time because the AI technology is progressing and rolling out much faster that previous technologies like the “electrification, automobiles, radio, modern manufacturing” – which Breitbart mentions. In this case, we should also be seeing inflation expectations starting to shift toward deflation, and it would then make sense to lower interest rates and try to get more cash flowing through the system. But this can be done in real time in response to the signal. The argument that it can or should be done in advance would seem to be invalid. I don’t think Breitbart “overlooked” anything here, I just think this is an un-serious twisting of serious ideas, meant to fool people into supporting a preferred political agenda.

things I thought I knew about food poisoning

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We’ve all had a handful of cases of what we are pretty sure was food poisoning, along with a few hundred or thousand cases of more mild…gastrointestinal distress, to use a euphemism. This article from Philadelphia magazine says many people may have some misconceptions.

  • We tend to blame the last meal we had before the symptoms start. But the microorganisms that cause a serious case of food poisoning tend to have at least a 24 hour incubation period, and sometimes up to 72 hours. So it is more likely something you ate the day before or even a couple days before. And it’s hard to be sure for that reason.
  • Microorganisms that cause milder cases of gastrointestinal distress tend to have shorter onset periods. The ones where you do a shot of Pepto-Bismol and get on with your day, rather than the ones requiring medical attention or at best leave you curling up in a fetal position on the bathroom floor.
  • Nasty stomach viruses like Norovirus can spread from person to person, particularly people in close contact in families or environments like cruise ships. These people will often have eaten together, and when they get sick around the same time may misattribute it to something they ate together.
  • The only way to be sure is to go to the doctor and have a stool sample analyzed. And honestly, that is not something most people are going to spend the time and money on most of the time, when we know from experience that most cases of food poisoning in an otherwise healthy adult tend to pass without long term ill effects.

Jakarta

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Let’s check in on Jakarta, Indonesia. I have never been there, although I have set foot in Indonesia a couple times – Bali and a couple of the outlying islands around Singapore. I always maintain that Indonesia is the largest and most important country that gets little to no press coverage in the U.S.

  • First, Jakarta is massive. It’s not just massive, it is the largest city on Earth according to the United Nations. It recently surged past Tokyo due to some methodological changes in how to decide what the actual boundaries of an urban area are. There are always arguments about that, but Jakarta is massive no matter how you slice it.
  • It is at severe risk from sea level rise. It is located in a low-lying river delta, and while the ocean is rising the land is subsiding at an alarming rate. As of a few years ago, there were plans for massive public works to keep the ocean out, although some argue not enough is being done about groundwater extraction driving some of the subsidence. I haven’t checked in on these plans lately – maybe a topic for another post. These sorts of mega-projects tend to move slowly, although that may be my American perspective – when relatively functional developing and middle income countries want to get something done, they have a way of bringing in competent foreign contractors, low cost labor whether local or from nearby low-income countries, and taking a more lax attitude toward environmental and safety concerns, and whoever might need to be moved out of the way. There are some good and bad aspects to what I just said, of course, but the bottom line is middle income countries in Asia have been known to get things done.
  • A decade or so ago, there was a consensus that Jakarta was not at all a nice place to live, especially when it came to getting around in gridlocked traffic and choking smog. I may have some sense of what this is like from time in Bangkok, but by all accounts Jakarta was much worse. Since I have been going to Bangkok over the last 20 years or so, they have made noticeable progress in public transportation and air pollution. Now it sounds like Jakarta has made significant improvements of its own in just the last few years. (Bangkok is also in a river delta and severely threatened by sea level rise, and while there is lots of discussion and planning it doesn’t seem like there is much happening on the ground. Another thing I will point out about both these cities is that the bulk of the population and economic activity of the country is highly concentrated in one mega-city, so a disaster in that city would be not just a disaster for the locals but for the entire country.)

In 2014, Jakarta was crowned the world’s most congested city by the Stop-Start Index and a year later was ranked far below other Asian cities on livability by the Economist Intelligence Unit.

Ten years later, Jakarta has the world’s largest and one of the most used bus rapid transit (BRT) systems. The old, crowded diesel commuter trains, famous for allowing passengers to ride on the roofs, are now electrified, air conditioned, and run on regular schedules linking the suburbs to the city center. There are multiple subway and light rail lines crisscrossing the city. The transformation has been remarkable: in 2015, less than 20% of residents were within walking distance of transit. Now, nearly 90% of the city has access to BRT or trains.

You have to read down a ways to learn that they still have a long way to go on both access to transportation and air pollution. Because while they have been making these improvements, the population has continued to grow quickly, with increases in cars and sprawling land use to go along with it. If Jakarta is just Bangkok minus a decade or two, there is a particularly Asian brand of sprawl I have seen with my own eyes that will tend to outpace efforts to improve infrastructure in the city center.

AI as pro-social media

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This is an idea I hadn’t thought of – because AIs are inherently rational and objective (more or less, most of the time?), they tend to nudge people towards rational evidence-based views (which tend to be centrist politically). Whereas social media tends to herd people toward extreme views, wild conspiracy theories, and political fringe-ism.

My provisional theory is that LLMs, as a consumer product, will push people’s senses of reality closer together in a sort of mirror image of the way social media has fractured them. They are not algorithms meant to custom-tailor content (including facts) to you, and what you will find infuriating or motivating. They are centralized systems that, until you prompt them or give them context, behave basically the same way for everyone. As the philosopher Dan Williams put it, “Whereas social media democratised information, LLMs technocratise it.”

A couple points he makes is that even though AIs can demonstrably be trained to favor one part of the political spectrum (see the analysis of Grok below posted by the blog Urbanomics), even then they are much more centrist than social media. So is it possible AI could nudge our entire society in a more rational, evidence-backed direction?

There is no absolute guarantee they are going to stay this way, of course. If I wanted to train an agent right now to go out and look at the day’s news headlines, and filter them for me in the style of Breitbart (which generally provides factually accurate information, but cherry-picked and presented with biased language), I could do that.

https://gulzar05.blogspot.com/2026/04/weekend-reading-links_12.html

exponential decay and park visits

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Exponential decay applies to a lot of physical phenomena, such as dissipation of sound for example, and interestingly the evidence suggests it is also a good model of human behavior in the aggregate. For example, people are more likely to visit a park near home, which makes sense, and they become less likely with increasing distance. And that likelihood doesn’t decline in a straight line but exponentially, which suggests to me it is better for urban quality of life to have many small decent parks rather than a few large great ones.

Exponential distance decay in urban park visitation: A comparative analysis of recreational mobility across 20 U.S. metropolitan areas

Urban parks are essential infrastructure for public health and environmental resilience, yet systematic comparative evidence on how distance constrains recreational access across metropolitan areas remains scarce. This study analyzes 60 million park visits across 20 U.S. metropolitan areas to establish mathematical relationships governing park visitation and their determinants. Park visitation universally follows exponential decay (V = αe-βd) rather than power law scaling, with exceptional model fits (R2 > 0.95) across diverse urban contexts. However, decay parameters vary substantially, from β = 0.090 (Minneapolis) to β = 0.211 (Detroit), creating a 2.34-fold difference in distance sensitivity. This variation produces markedly different accessibility patterns: residents in high-constraint cities experience 50% visitation decay within 3.3 km, while those in low-constraint cities maintain equivalent access to 7.7 km. Regression analysis reveals that transportation infrastructure, built environment characteristics, and sociodemographic factors collectively explain 56.3% of variation in median travel distance to parks. Transit proximity, street network design, and regional employment accessibility emerge as primary associations, while minority-predominant and car-free neighborhoods face compound disadvantages through both restricted mobility ranges and heightened distance sensitivity. These findings establish exponential decay as a consistent mathematical relationship for recreational mobility while demonstrating how local context shapes its parameters. For planning practice, uniform park service area standards may inadequately reflect actual visitation patterns, as the empirically measured half-distance at which visitation drops by 50% varies more than twofold across metropolitan areas. Calibrating park spacing to locally measured decay rates and coordinating green space provision with transportation investment could improve both the efficiency and equity of urban park systems.

I have one quibble, and I would be surprised if the authors didn’t think of it and control for it somehow. And that is the idea that car-free neighborhoods would be at a disadvantage in terms of park access. Now maybe this is true, but it seems to me the decay should be measured in travel time or cost (in the difficulty sense) rather than absolute distance. People who get around a neighborhood mostly by walking aren’t going to travel to a park three miles away, which is no big deal by car (if there is ample free parking on both ends, which is one reason the park has to be so far away!). But the people walking to a smaller nearby park might have an equally pleasant subjective experience than the ones driving. Or they might not. But my point is I can’t tell, at least just from this abstract.

Random Creative Commons licensed image that is loosely related to my post

William Murphy: Who Rules America?

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This is a really interesting description of how our global “neoliberal” or “market capitalist” economic and financial system functions. I’ll try to summarize with a sprinkling of quotes for my own understanding, but the article really is quite eloquent and I recommend reading it.

  • The finance industry sits on top of everything and essentially sets to operating rules that everybody and everything else in the system must follow. When I think “finance” I picture banks and insurance companies, but he refers to “large institutional investors and asset managers”. These are the actual owners of capital, or the nervous system that sort of organizes networks of owners, which includes most of us I suppose through pension funds, etc.
  • Corporate management does the bidding of the finance industry, such as “decisions about automation, outsourcing, wage suppression, or expansion”. These determine how “value is captured”. It includes “[m]ajor corporations in technology, energy, pharmaceuticals, logistics, and defense”.
  • Governments provide essentially a predictable, enforced legal structure for this system. This includes “monetary policy, fiscal intervention, legal frameworks for property rights, and, crucially, the capacity for coercion through military and policing institutions”. The government also serves as a shock absorber in times of crisis, making the whole system more resilient.
  • Political leadership functions to essentially sell this system to the public, through acceptable forms of messaging and through a certain amount of misdirection so it is just not talked about too much, and so the public dialog does not range outside certain bounds that are acceptable to the system. No matter where the political winds seem to be blowing on the surface, this deeper, implicitly accepted ideology tends not to shift much over time.

From a light skim of the article, a reader might get the sense that Mr. Murphy admires this system. But he frames it in terms of a ruling class controlling the rest of society. I can admire this system to a certain extent – it certainly is good at “capturing value” that is potentially out there and probably would not be captured as thoroughly by another system. It also leads to “capture” of that value by a small minority, leaving a significant portion of society in relative squalor when there is actually plenty of value to go around. And some of the “value” it extracts is actually undermining the biophysical system that it sits inside, so that it will eventually kill the host it is feeding on. So the question in my mind is whether these two major flaws (distribution of wealth/value and environmental destruction) can be solved by tweaks to this system. If not, its apparent stability and efficiency on the surface is an illusion in terms of supporting the long-term well-being of the majority of humans on this planet.

This is where the singularity bros will tell us the “end of scarcity” will solve both of these problems in an almost magical way. I want to believe this, and I think we can hope for this but we better also have a plan for the case where it doesn’t happen.

David Chalmers, the “hard” and “soft” problems of consciousness, and could I be a zombie and not know it?

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This article is by a person who disagrees with David Chalmers, but it happens to have a good summary of what David Chalmers had to say.

The consciousness debate is often formulated in terms used in an influential talk given by a young David Chalmers in Tucson in 1994. Chalmers, a philosopher, distinguished two separate “problems of consciousness.” The first is the very hard problem described above: understanding the processes in the brain that give rise to the many aspects of our visible behavior and our inner behavior that we can report about. Chalmers christened this hard problem as the “easy” problem of consciousness. 

Then he declared that there is another distinct problem — why the brain’s behavior is accompanied by experience at all — which he christened the “hard” problem of consciousness. Today, this so-called “hard problem” is mentioned in all debates on consciousness. According to many, it unveils the very limits of current scientific understanding. Chalmers claimed that even after hypothetically accounting for our entire behavior, and for all our reports about our inner life, there would still be an “explanatory gap” between brain processes and experience…

Chalmers asks us to contemplate what he calls a “philosophical zombie.” This is a hypothetical entity that looks and behaves like a human in all respects, including reporting emotions, feelings, dreams and experience, yet it has no consciousness. As Chalmers puts it, “There is nobody home.” This is a rhetorical trick that induces us to distinguish between behavior and a hypothetical reality accessible only by introspection. The very fact that a philosophical zombie could be conceived, Chalmers argues, shows that inner experience is intrinsically distinct from observable natural phenomena. 

The article has a link to a video of Chalmers’s original lecture, for people who have time to watch videos. Such people must either not have jobs, houses or children, or else their jobs, houses and children must be less demanding of time and attention than mine, or maybe they are wealthy enough to pay other people to deal with their houses and children while they do their jobs (but this raises some questions of priorities, in my view.

McKinsey on high-growth industries

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McKinsey has a post with a data visualization on industries it predicted in 2022 would be growing quickly by now (May 2026 as I write), versus how they actually turned out. I find it interesting both for the industries/technologies themselves and for which are overperforming and underperforming. Overperforming ones include, of course, “AI software and services” and semiconductors. Robotics, however, has not kept up with expectations at least in terms of widespread commercialization (I think it is still coming, just behind schedule). Electric vehicles are also both high-growth and overperforming, while “shared autonomous vehicles” are high growth and were not considered in the original study due to “negligible baseline revenue” – more evidence that in the U.S. we are being duped as this combination of technologies explodes globally. Interestingly, batteries have not kept up with expectations as a high-growth, profitable industry/investment even though we know the technology itself has seen massive improvements in cost-efficiency. Biotechnology is a mixed bag – “obesity drugs” have exploded while “non-medical biotechnology” has seen no growth in the profitable investment sense. The holy grail of turbocharging construction productivity by making it more like manufacturing (“modular construction”) is about 50 years behind schedule. Maybe the robots can help with this eventually. And finally, even with all our fossil fuel woes the nuclear energy industry never seems able to capitalize, probably because of its long lead times and public risk-aversion on this particular technology.

My big picture analysis – technological progress is slow and steady, but when it comes to which will “hit” in a widespread profitable commercialization/investment sense, it is hard to identify the needles in the haystack at least in any sense of precise timing. In a personal investing sense, you can either gamble and go for broke, or you can diversify and be patient. In a broader economic sense, governments can use policy to try to give a particular industry a nudge, but there is a gambling aspect to this too, and my view is they would be better off focusing on reducing economic friction (great infrastructure, ease of starting a business, predictability, level playing field in terms of taxes and regulation) while protecting the environment and workers. Maybe provide childcare, health care, and education so people can start a business without worrying about those things, and have healthy skilled workers available when they do.

https://www.mckinsey.com/mgi/our-research/The-race-takes-off-in-the-next-big-arenas-of-competition

Global Environmental Outlook 7

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The UN has a new UN-speak report on what we need to do to fix the global environment. The simplest take-home message is an economic one – the benefits greatly exceed the costs, but it requires up-front investment blah blah blah. UN-speak is off-putting to many, so talented politicians and other leaders need to translate it to platforms and policies that speak to us, and then do it. There’s a full report, an executive summary, and key messages from the executive summary. I’ll highlight just a few actions here in my own words:

  • Eliminate environmentally harmful subsidies in the energy, food, and mining industries.
  • Internalize external costs – the good old “Pigouvian taxes” that raise revenue and/or encourage behavior, and we win either way.
  • Alternative/supplemental measures of progress besides GDP
  • Circular economy – recycling and reducing waste
  • Renewable energy phase-in and fossil fuel phase-out
  • Electrify everything – transportation, manufacturing, housing/buildings, and agriculture

Nature-based solutions and conservation of natural ecosystems seem to be important things missing from from this list, but those are in other reports of course. Still, I find it strange to make a distinction between “ecosystems” and the “environment”.

Has Trump pulled off the equivalent of a politically impossible global carbon tax?

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Well, certainly not on purpose! He almost certainly thinks he is advancing the agenda of nominally US-based multinational oil companies. But by limiting the supply of oil and gas world wide, he has at least temporarily brought about the peak oil scenario that seemed to be fashionable a decade or two ago, and then mostly forgotten as it looked like new fossil fuel discoveries and exploitation technologies, along with non-fossil-fuel technologies, might outstrip any hard limit in the (economically viable) geologic supply.

But now we get to find out what an actual hard limit on supply looks like. It won’t be permanent – we can speculate months to years. But electrification technology was already a snowball rolling downhill in Asia, and this will just accelerate the takeover of electric vehicles, even if effective propaganda is hiding this from the U.S. public. Governments like Thailand’s are making rational policy choices such as incentivizing trade-in of internal combustion engines for electric. The economic incentive to do this is there, and has been slowed down until now only by infrastructure lock-in and path dependence. Even if this disruption is measured in months or years, the technology will continue to progress even in that time, and rational governments will realize this shut-down situation can happen again in the future and that they can mitigate the risk. So thank you to the one-man wrecking ball who has made all this short-term pain (i.e., horrible suffering and death for many, many human beings which I don’t mean to make light of) and long-term gain possible! (Now, you could say, and I admit, that with electrification coal will be substituted for oil and gas in the near to medium term, and this is not a win for the environment. I actually don’t know if it is a net win or loss, when you consider the greater efficiency of electrification over mobile internal combustion engines. But the incentives still favor renewables longer-term, and the incentives get stronger and stronger as renewables continue to get cheaper while coal as far as I know does not.)

A coalition of the willing implementing an international carbon tax is still a theoretical possibility. Here is one article on what that could look like. It is hard for me to imagine politically, but let’s say a group of large non-oil-producing economies, led for example by China, India, and the Asian Development Bank, decided they were going to do this and impose equivalent border-adjustment taxes (legal under the WTO I think not that this seems to matter any more) on all trading partners not doing it.

An international plan for sustainable development

International cooperation on climate and taxation remains inadequate to deliver decarbonisation, reduce poverty, and finance sustainable development at the required scale. We propose a Sustainable Union among willing countries, combining carbon pricing, new taxes on wealth, polluting fuels, financial transactions, and corporate income, with international revenue-sharing and conditional cooperation mechanisms. Most revenues would remain with participating governments for domestic spending, while a defined share would be pooled internationally. Specifically, participating countries would contribute 1% of gross national income (GNI) to a common pool redistributed in proportion to population, generating net transfers from richer to poorer countries. Meanwhile, the remainder of the revenue would increase domestic fiscal space by on average 2.2% of GNI. Although politically ambitious, such a framework might be credible, as governments are already advancing related forms of voluntary cooperation, and survey evidence indicates that it would be supported by majorities worldwide.