Mexico (Taiwan) fact of the day
Tyler Cowen

Mexico has quietly become a cornerstone of the AI boom, providing 40 per cent of US imports this year of the computer servers that are widely used in the data centres powering artificial intelligence.Taiwanese manufacturers are rapidly expanding factories in Mexico to assemble servers, which are now the country’s top US export, overtaking autos that dominated its trade for decades.Mexico is the second-largest provider of enterprise servers to the US so far this year, with sales reaching $46.9bn, behind Taiwan, which sold $53.5bn, though Mexico became the largest on a monthly basis in May.The phenomenon is helping prop up Mexico’s limp economy, pushing the country’s exports to record levels. Servers and related hardware made up almost one-fifth of the $317bn of goods Mexico exported between January and May, more than double the same period a year earlier. Taiwan, in turn, is now Mexico’s third-largest trading partner, up from eighth place in 2022. Taiwanese companies have spent more than $1.6bn since 2020 on Mexican factories that offer geographic proximity and tariff-free access to US tech giants spending hundreds of billions on data centres.“Mexico is of tremendous importance to the way this new AI-powered economy is working,” said Jesse Rogers, head of Latin America economics at Moody’s Analytics. “It is really a new frontier of collaboration and even dependency on the Mexican economy when it comes to AI servers.”Here is more from Christine Murray and Alan Smith at the FT.The post Mexico (Taiwan) fact of the day appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesMore math breakthroughs from GPT modelsThe wisdom of Eli DouradoReforms to the PhD? 

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Taiwan fact of the day
Tyler Cowen

[Annualized] 14% GDP growth in the first half of 2026The post Taiwan fact of the day appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesMexico (Taiwan) fact of the dayMore math breakthroughs from GPT modelsImmigration and Macroeconomic Outcomes in OECD Countries 

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On the Acemoglu-Autor et.al. fertility result
Tyler Cowen

Here is criticism from Revana Sharffuddin.  Here is criticism from JFV.The post On the Acemoglu-Autor et.al. fertility result appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesTaiwan fact of the dayImmigration and Macroeconomic Outcomes in OECD Countries*Redefining Global Health in the 21st Century* 

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Sunday assorted links
Tyler Cowen

1. The inverseminar, someone else presents your paper.2. The rise of million-dollar companies with just one employee (WSJ).3. The political party itself is a big driver of polarization.4. Gita Gopinath is making sense.5. GPT Pro (not Astra) on what “Astra” means.6. David Perell art history game.7. New model of “Racing to Ruin.”The post Sunday assorted links appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media Media Comments#3 haven't read the paper, but just the title seems implausible ... by fred#3: The abstract doesn't say that much, but if there's one ... by Action Figure 

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*Rome’s Age of Revolution*
Tyler Cowen

The author is Tim Whitmarsh and the subtitle is Augustus, Empire and the Making of Christianity.  This is the most important book on the history of Christianity I have read in a long time, and it is also an important work in Roman history.  Yet also fun and extremely readable.  Excerpt:The story I have told so far has emphasised the fit between Christianity and the Greek world of the early Roman Empire; I have given relatively little space to conflict.  That has been quite deliberate.  One of the commonest misconceptions about the early Roman Empire is that it was a time of ceaseless and inevitable suppression of virtuous Christians by a brutal governmental machine.  This is a myth that has roots in antiquity itself, and has been pumped systematically into western popular culture since the nineteenth centuury.  It is a remarkably durable myth, because it is both emotionally seductive and ideologically powerful.  The idea that virtuous Christians were engaged in endless conflict with the Roman state makes for great narrative.  But the reality is more banal: most Christians were fully integrated into Roman society, and no more or less harassed than anyone else…My argument has been, rather, that Christianity could not have come into being in anything like the form we know it without the revolutionary impact of Augustus’ political reforms.  It was this seismic change that fundamentally transformed Mediterranean thought…The most dramatic effect of the Augustan swirl was Christianity itself: a breakaway Judaean sect led by brilliant entrepreneurs who understood the opportunities offered by the new political dispensation, and rapidly reshaped their ideas to suit new audiences.Definitely recommended, and not only to Christians and Romans.The post *Rome’s Age of Revolution* appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesWhat should I ask Jared Diamond?*Liberal Worlds: James Bryce and the Democratic Intellect*Odysseus notes 

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On infinite ethics
Tyler Cowen

Infinite numbers have long troubled utilitarian ethicists: if the universe is boundless, then there is infinite positive utility and infinite negative utility, and we can’t even define our current state, let alone affect it. Oxford philosopher Toby Ord proposes a solution: use hyperreal numbers, a mathematical construct in which infinite sums behave more like finite ones (for example, the sum of infinitely many twos is twice as big as the sum of infinitely many ones). As with so many philosophical ideas, this solves some existing problems while creating some new ones (pinpointing some hyperreals requires choosing something called an “ultrafilter”, but this choice is underdetermined). Still, Elias Schmied calls this a real philosophical advance, of the sort which comes along only rarely and makes genuine headway into a previously-hopeless-seeming problem. I’m just surprised there’s a way of thinking about infinities under which they behave logically. Why didn’t we start with this one, instead of being told that infinity + infinity = infinity and we should just accept it? Claude tries to answer my questions.That is from Scott Alexander (many more links at the link, many on AI safety).The post On infinite ethics appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesCould our preoccupation with mental health be part of the problem?Odysseus notesThe Decision, the sequel 

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What should I ask Nick Bostrom?
Tyler Cowen

Yes I will be doing a Conversation with him.  So what should I ask?If you need them, here are various Bostrom links.The post What should I ask Nick Bostrom? appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesOn infinite ethicsCould our preoccupation with mental health be part of the problem?Odysseus notes 

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Monday assorted links
Tyler Cowen

1. A new simulation argument?2. PC on aesthetics.3. An interview with Yiyang Zhuge.4. The truth and aesthetics of going to church?5. Some forms of math cope? And a different view.6. At the demolition derby.The post Monday assorted links appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media Media Comments#4 I recommend reading Graham Greene's short story “A Visit ... by ROBERTO 

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How does the market regard stablecoins?
Tyler Cowen

We study the demand for safety and liquidity in the crypto ecosystem. We do so under a framework in which a representative investor allocates liquidity across stablecoin deposits in lending pools and traditional safe assets (e.g., MMF shares). Our model delivers three main predictions: (i) the stablecoin deposit premium co-moves with the Treasury premium when investors value the safety and liquidity services of stablecoins; (ii) increases in Treasury supply reduce the stablecoin deposit premium; and (iii) drops in the perceived safety and liquidity of stablecoin deposits (e.g., due to de-pegs or hacker attacks) reduce their premium. Using granular data from hundreds of DeFi pools spanning multiple protocols, tokens, and blockchains, we find evidence supporting these predictions. Investors treat stablecoin deposits as money-like instruments that are borderless and permissionless, yet as fragile as other forms of privately produced safe assets.That is from a new NBER working paper by Murillo Campello, Angela Gallo, Lira Mota & Tammaro Terracciano.The post How does the market regard stablecoins? appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media Media 

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Emergent Ventures winners, 57th cohort
Tyler Cowen

Oisin O’Gorman, 15, Dublin, misinformation and fakes.Karsen Lee Wahal, Stanford, is AI killing the web?, and measuring media slant.Davy Deng, with Claire Wang (previous winner), whole brain emulation, MIT.Enej Grmek, 16, Ljubljana, privacy.Vladimir Shmelev, Ukraine, Ukrainian children for relief trips to Montenegro.Nik Verma, Chicago, a legal framework for AI agents.Emirhan Demir and Çınar Yıldırım, Istanbul area, 19, protection against AI agents.Midhat Doruk, 14, Ankara, longevity, biology, and skin cosmetics.Burak Yilmaz, 17, Diyarbarkir, Turkey, browser-native authentication.Lloyd Strickland, London, to publish the remaining Leibniz papers, including on computation.Abdul Quyum, 15, Perth, organizing information and data.Catharine Young, podcast on women in science, science communication tranche, Cambridge/DC.The post Emergent Ventures winners, 57th cohort appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesEmergent Ventures India, 18th cohortAn experiment for our schoolsReforms to the PhD? 

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The economics of H-1B immigration
Tyler Cowen

We study the effects of H-1B immigration on U.S. industries that employ H-1B workers and their trading partners. Using a novel cross-industry design and the 1999–2003 expansion of the H-1B visa cap for identification, we find that H-1B exposure raised incomes for natives and pre-existing immigrants, with gains concentrated in non-STEM occupations. Income gains propagate forward through supply chains to downstream industries but not backward to upstream industries, consistent with a productivity shock rather than a labor supply shock. We find no direct effect on patenting, suggesting that productivity gains arise from better task execution rather than patentable invention.That is from a new NBER working paper by Ran Abramitzky, Leah Platt Boustan, Ahmet Gulek & Jens Hainmueller.The post The economics of H-1B immigration appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesImmigration and Macroeconomic Outcomes in OECD CountriesThe Apples and Oranges TribunalOn the Acemoglu-Autor et.al. fertility result 

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Tuesday assorted links
Tyler Cowen

1. Selecting innovation funding mechanisms.2. Helen Andrews on race.3. Famous radio station goes all-automated.4. On Stefanie Stantcheva.5. ChinaTalk submission hiring contest.6. New Hamilton faculty at University of Florida, 21 of them.7. Battery in your backyard? (WSJ)8. How Americans are talking to Claude about politics.The post Tuesday assorted links appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media Media Comments2??? Am I missing something? by DP 

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Estimating the Economic Value of Zoning Reform
Tyler Cowen

We estimate the economic value of zoning reform in São Paulo, which altered maximum permitted construction along transportation corridors. Developers increased filings for multifamily construction in blocks affected by the reform, leading to more housing supply and lower housing prices in neighborhoods that allow more densification. Our equilibrium model of housing markets estimates an aggregate 1.6 percent increase in housing stock and a 0.4 percent reduction in prices, resulting in large housing wealth transfers from current to future homeowners. The reform produced welfare gains of 0.65 percent of city GDP, mostly due to developer profits and consumer gains from the newly built environment.That is from the AEA policy journal, by Santosh Anagol, Fernando Ferreira, and Jonah Rexer.The post Estimating the Economic Value of Zoning Reform appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesThe economics of H-1B immigrationImmigration and Macroeconomic Outcomes in OECD CountriesThe Apples and Oranges Tribunal 

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The Value of Behavioral Policies
Tyler Cowen

Behavioral interventions have become central to modern public policy, but their empirical promise remains contested because estimated treatment effects often appear small. We argue that a policy response is economically meaningful only relative to the response generated by alternative policies. We assemble more than 1,200 estimates from over 600 studies comparing “nudges” and traditional price interventions in the markets for cigarettes, alcohol, influenza vaccination, electricity, and residential water. Translating nudge effects into equivalent price changes, we find that behavioral interventions often correspond to enormous fiscal interventions, from an 11% tax on electricity to a 100% subsidy on influenza vaccinations. Nudges are also more cost-effective than price instruments in all markets, but cost-effectiveness does not predict the welfare ranking of policies. Using a behavioral extension of the Marginal Value of Public Funds, we show that nudges have high welfare returns at the margin, while price instruments often generate larger total surplus at scale.That is from a new NBER working paper by John A. List, Matthias Rodemeier, Sutanuka Roy & Gregory K. Sun.The post The Value of Behavioral Policies appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesEstimating the Economic Value of Zoning ReformThe economics of H-1B immigrationImmigration and Macroeconomic Outcomes in OECD Countries 

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Victor Niederhoffer, RIP
Tyler Cowen

In addition to his well-known public roles, he worked very hard to help and befriend me when I was younger.  Here are the Google searches for Victor.  Less well known about Victor is that he had one of the world’s best collections of private letters.  He also once gave me a very nice small painting by Jack Savitzky.The post Victor Niederhoffer, RIP appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media Media 

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Is this why China finds it so hard to inflate producer prices?
Tyler Cowen

This paper investigates why China’s recurrent credit expansions have coincided with persistently weak inflation. We argue that this pattern reflects the country’s production-oriented monetary regime. At the aggregate level, faster monetary-financial expansion temporarily raises PPI inflation but depresses it over longer horizons. At the sectoral level, liability growth among listed industrial firms is followed by weaker producer prices, lower profitability, higher leverage, rising inventories, and reduced capacity utilization. We also find asymmetric supply-chain transmission: downstream liability growth raises upstream PPI inflation, while upstream liability growth does not generate a corresponding downstream price response. These findings indicate that credit expansion in China tends to sustain production and balance sheets rather than stimulate final demand. As a result, monetary policy operates less as a conventional tool for demand management and durable reflation, and more as a mechanism for preserving production capacity and supporting growth.That is from a new paper by Jeffery (Jinfan) Chang & Wei Xiong.  I have to say I understand the result but not exactly the mechanism.  I am reminded of Milton Friedman’s dictum not to focus too much on the first-order effects of an increase in money supply.The post Is this why China finds it so hard to inflate producer prices? appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesThe Value of Behavioral PoliciesEstimating the Economic Value of Zoning ReformThe economics of H-1B immigration 

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Dominant Assurance Contract aka Refund Bonus Explainer
Alex Tabarrok

I created the dominant assurance contract aka the refund bonus mechanism in 1998–it’s a mechanism capable of producing some types of public goods privately–in recent years working with Tim Cason and Robertas Zubrickas I’ve put refund bonuses to the test in lab experiments and they work! I’ve written an accessible Refund Bonus Explainer that covers this body of work. Here’s one bit:The dike is a public good. Once it stands, it protects everyone nearby, and a neighbor who contributed nothing cannot easily be excluded. That property is what makes it hard to finance.Paul Samuelson gave this category its modern formulation in 1954, and he drew a pessimistic conclusion from it. Each person does better by understating what the good is worth to him, so it is, in Samuelson’s words, “in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has.” From this he concluded that “no decentralized pricing system can serve to determine optimally these levels of collective consumption.” Public goods, on this view, are what governments are for. Refund bonuses are a challenge to that conclusion.Read the whole thing and here is my Rent Control Explainer.The post Dominant Assurance Contract aka Refund Bonus Explainer appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media Media 

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Wednesday assorted links
Tyler Cowen

1. A catalog of past AI predictions.2. Jasmine Sun on why people do not want data centers.  And Jasmine Sun on Ezra Klein, on data centers (NYT).3. A bot running an SF retail boutique? (NYT)4. Elise Cawley, RIP.5. On the NYC grocery store plan.6. New credit card gives you tokens instead of miles.7. Does AI mean the end of math heroes?  Some other heroes too?The post Wednesday assorted links appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media Media Comments““It is quite likely that in the next presidential election ... by JSKLast week Aisha Khan asserted that her fellow Muslims were ... by Action Figure 

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Who Pays for Unions?
Tyler Cowen

If unions raise worker wages, who pays? We provide a comprehensive assessment of firm responses to increased unionization, using changes in the tax deductibility of union dues in Norway as a quasi-exogenous source of variation in firm-level union density. In the average private sector firm, higher union density raises labor costs and leads firms to contract employment and production, lowering profits without increasing the labor share. The incidence is shared: consumers bear part of the cost through higher prices, shareholders through lower profits, and the remainder is offset by productivity improvements. The total wage bill falls, with losses concentrated among less-attached “outsider” workers. Firm responses vary systematically by the degree of market competition. In manufacturing, where firms operate in less competitive product and labor markets, the response is reversed: the average firm expands employment and production, reduces labor markdowns, and does not experience profit declines. Instead, higher labor costs are largely passed on to consumers through higher prices, with the remainder offset by productivity gains. Workers benefit as both wages and employment rise. These patterns suggest that unions can offset employer monopsony power and that firm responses–and therefore who ultimately bears the cost-depend importantly on market structure. Overall, unionization in this setting primarily redistributes from consumers rather than shareholders and has effects that differ sharply across firms, including a reallocation toward larger and more productive firms. We rationalize these patterns using a partial-equilibrium model of union bargaining with product- and labor-market power.That is forthcoming in the QJE by Samuel Dodini, Anna Stansbury, and Alexander Willén.The post Who Pays for Unions? appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesThe Value of Behavioral PoliciesEstimating the Economic Value of Zoning ReformThe economics of H-1B immigration 

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Will U.S. cities face a knock-on fiscal crisis from the feds?
Tyler Cowen

Federal money flows to cities in three flavors: direct transfers, indirect transfers, and what we call fiscal dark matter. Direct transfers are exactly what they sound like — money sent directly from the federal government to various localities. These include funds disbursed through programs like the Community Development Block Grant (CDBG), which supports things like public infrastructure and neighborhood services.3 In 2022, direct transfers like the CDBG totaled $146.3 billion.4 That’s significant, but actually the smallest of the three categories.Less visible are the indirect transfers. These monies are initially awarded to state governments, which then allocate funds to municipal-level programs and services in accordance with state prerogatives. The cleanest example is probably K-12 education, which receives federal Title I dollars to pay for teachers and programs, but federal highway dollars work essentially the same way. All told, in 2022, the federal government handed down $1.1 trillion to state governments. That amounted to 36% of overall state revenue for that year and, depending on the individual state, ranged from roughly 22% to 50% of state revenue. How much of that ultimately flowed down to cities is hard to say, which is itself a problem: it’s difficult to even establish how exposed local governments are to a pullback in federal support of state budgets.The third category – our fiscal dark matter – is all the federal money spent into local communities that never shows up in a local budget. This includes housing subsidies like the Low-Income Housing Tax Credit (LIHTC) and Section 8. It also includes food support programs like SNAP and even some direct funding for local food banks.Rightfully or not, when the flow of federal money in this category starts to dry up, the resulting problems will fall squarely on the mayor’s desk. After all, the median voter is never going to see increasing numbers of homeless encampments and think to blame the head of HUD.Here is the full piece by Jeff Fong.The post Will U.S. cities face a knock-on fiscal crisis from the feds? appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesWho Pays for Unions?Is this why China finds it so hard to inflate producer prices?The Value of Behavioral Policies 

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The Binmen of Birmingham
Alex Tabarrok

I was on the British CapX Podcast talking about the Equality Act, riffing off my two posts Equality Act 2010 and The Apples and Oranges Tribunal. One thing I discussed in the podcast which I haven’t blogged on is the amazing Birmingham dustbin dispute.In 2010 an employment tribunal ruled that Birmingham City Council had discriminated against thousands of female workers — cooks, cleaners, care assistants, caretakers — who were denied bonuses paid to the mostly male binmen, gardeners, and gravediggers. Why were the binmen given bonuses? Well, refuse collection is filthy, heavy, outdoor work and not many people want to be gravediggers. Thus, these jobs command a premium for exactly the reason Adam Smith gave in 1776 — compensating differentials. Or was it sexism? Well, note first that there is nothing stopping women from becoming “binpersons” and indeed there are female binpersons and they earn the same bonuses as their male counterparts (just as with the Next case). Moreover, we can test the sexism versus compensating differentials theory. Let’s see what happened.Here’s the problem, which contributed to Birmingham going bankrupt in 2023. The council employs roughly 400 binmen and something like 6,000 women in comparable graded roles. Every extra pound paid to a binman therefore implied about fifteen pounds owed to the cooks and cleaners. The council simply didn’t have the money to pay everyone binman wages so they cut the binmen’s wages. But the market wage for collecting rubbish is what it is, so when Birmingham finally deleted the premium in January 2025, the binmen went on strike — and they are still on strike, nearly eighteen months later. The rubbish piled up, 17,000 tonnes of it, and the city declared a major incident.Here’s the most amazing part. The council hired an outside contractor to take over its rubbish collection and it now pays roughly triple its pre-strike outsourcing bill–more than it was paying its own employees. So much for sexism. Apparently the premium wasn’t a favor to men; it was the price of the job. If you want your rubbish picked up and your graves dug, you must pay the market wage. This was pure regulatory arbitrage, of course. Because the new binmen were contractors they legally had a different employer than the Council’s female caregivers and the Act’s comparator rules stop at the employer’s nexus.The government mandarins, of course, want to close the “loophole” adding yet another bureaucratic requirement to push the equal pay madness up the supply chain. The rubbish piles up.The post The Binmen of Birmingham appeared first on Marginal REVOLUTION.MediaMedia Media Media Media Media Media MediaRelated StoriesWill U.S. cities face a knock-on fiscal crisis from the feds?Estimating the Economic Value of Zoning ReformThe economics of H-1B immigration 

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