Chairman Powell’s Statement
Whether an independent Fed is desirable is beside the point. The core issue is lawfare: the strategic use of legal processes to intimidate, constrain, and punish institutional actors for political ends. Lawfare is the hallmark of a failing state because it erodes not just political independence, but the capacity for independent judgment.
What sort of people will work at the whim of another? The inevitable result is toadies and ideological loyalists heading complex institutions, rather than people chosen for their knowledge and experience.
What should I ask Joe Studwell?
He has a new and excellent book coming out, namely How Africa Works: Success and Failure on the World’s Last Developmental Frontier, which I consumed eagerly. You probably know his earlier book How Asia Works. So what should I ask him?
For additional context, here is the opening of his home page (no Wikipedia page?):
Hello. I am an author, journalist, public speaker and occasional university teacher. I am based much of the time in Cambridge. In the 2000s I restored and lived in a home in a still unspoiled area of central Italy (the photo at the top of the page is a view from the house).
So what should I ask him?
MRU college fellowship
The MRU College Fellowship, for US undergrad and grad students, helps Fellows produce their own videos, podcasts, or other online content to bring economic insights to a wide audience. Fellows are paired with MRU mentors for a seven-week remote program, starting with an expenses-paid weekend kickoff event in DC. Fellows also earn a $2,000 stipend.
Applications are due January 23.
The price of gold went vertical
Low-skilled immigration into the UK
I asked GPT 5.2 Pro what it thought of the welfare consequences of UK immigration, and here are its summary remarks:
The literature does not support the claim that low-skilled immigration has imposed large net welfare losses on the UK as a whole. Instead, it supports something like:
-
Net welfare for existing residents is likely modestly positive (or near zero but not strongly negative) on average,
-
but the distributional impacts can be meaningfully negative for some low-skilled native workers and for some localities,
-
and the sign/magnitude hinge heavily on productivity spillovers and on dynamic trajectories (skill acquisition, occupational mobility, family formation).
The entire response is useful and well thought out.
Sunday assorted links
1. Request for research proposals on psychology of progress.
2. Interview on NIH grants and how to improve them.
3. Burry, Jack Clark, and D. Patel.
4. a16z. A good and impressive piece.
5. That California tax would hit some people pretty hard.
6. NYT on the history of picture books.
My Austin visit
First, I gave a talk at University of Austin and also had some meetings there, including with students. My talk was a practical guide on how to use AI to offer courses that a college or university otherwise cannot afford (especially important for smaller institutions). I believe they will be putting it online.
My general sense was that U. Austin undergraduates are on a par with undergraduates at top five schools. I do not think on the technical side they would compete with Stanford or MIT, but more generally…they were very impressive and asked excellent questions with real curiosity. And seemed politically saner than typical Ivy League cohorts, though without being “mono” in any particular direction. Here is Arnold Kling on UATX and its students.
The school does admissions by SAT scores only.
Austin is also one of my favorite places to eat in the United States. It is especially strong in areas of import to me, including barbecue, cheeseburgers, and Tex-Mex. Just ask your local friendly LLM…
Those new service sector jobs
Basketball Expert (Fans, Journalist, Commentator, etc.)
Role Overview
We’re looking for Basketball experts — avid fans, sports journalists, commentators, and former or semi-professional players — to evaluate basketball games. You’ll watch basketball games and answer questions in real time assessing the quality, depth, and accuracy of AI insights, helping us refine our AI’s basketball reasoning, storytelling, and strategic understanding.
Key Responsibilities
Game Evaluation: Watch basketball games and review AI-generated play-by-play commentary and post-game analysis.
Performance Scoring: Rate the accuracy, insight, and entertainment value of AI sports coverage.
Context & Understanding: Assess the AI’s grasp of player performance, game flow, and strategic decisions.
Error Detection: Identify factual mistakes, poor interpretations, or stylistic inconsistencies.
Feedback Reporting: Provide clear written feedback highlighting strengths, weaknesses, and improvement opportunities.
Collaboration: Work with analysts and developers to enhance the AI’s basketball-specific reasoning and realism.
From Mercor, pays $45 to $70 an hour. For background on Mercor, see my very recent CWT with Brendan Foody. Via Mike Rosenwald, wonderful NYT obituary from him here.
Military operations in Iran?
I do not know much about what is going on, or not going on, but comments are open if you have something to add…
Congress is reversing Trump’s budget cuts to science
Surprisingly, analysts foresee a possible rise of more than 2 percent in the budget category known as basic research — the blue-sky variety that produces fundamental strides and spinoffs in fields such as health care and artificial intelligence. Last year, the Trump administration called for a cut in federal basic research of more than one-third.
Mr. Trump sought even larger cuts for the National Science Foundation, which sponsors much of the nation’s basic research. He proposed that its budget be slashed to $3.9 billion from $8.8 billion, a drop of 56 percent. The Senate package countered with a reduction to $8.75 billion, or less than 1 percent.
The bipartisan accord on funding science, Ms. Zimmermann said, stands in sharp contrast with the congressional impasse that shut down the government last fall as Democrats and Republicans clashed over the renewal of subsidies for the Affordable Care Act.
“They’re working together now,” she said. “It’s a return to normalcy.” The new cooperation, Ms. Zimmermann added, is “promising for the eventual passage of the bills.”
Here is the full NYT article.
Soumaya Keynes on the bleak labor market for economists
Third was the bleak labour market for newly minted PhD economists, which Wendy Stock of Montana State University told me could be one of the toughest ever. Hiring freezes helped to halve the number of US full-time academic postings between 2019 and 2025. In the most recent year alone, listings fell by more than during the Great Recession. And according to the most recent comparable data, since 2019 recruitment has shrivelled faster for economists than philosophers or linguists. Oof.
Here is the full FT piece, oof throughout.
Saturday assorted links
1. A new approach to pain management?
2. Geoengineering the ocean? (NYT)
3. Some dogs learn words by eavesdropping on the conversations of humans (NYT). I know one such dog.
4. John Ford’s American justice.
6. A practical guide to a PhD in economics.
7. GronlandsBANKEN.
AI, labor markets, and wages
There is a new and optimistic paper by Lukas Althoff and Hugo Reichardt:
Artificial intelligence is changing which tasks workers do and how they do them. Predicting its labor market consequences requires understanding how technical change affects workers’ productivity across tasks, how workers adapt by changing occupations and acquiring new skills, and how wages adjust in general equilibrium. We introduce a dynamic task-based model in which workers accumulate multidimensional skills that shape their comparative advantage and, in turn, their occupational choices. We then develop an estimation strategy that recovers (i) the mapping from skills to task-specific productivity, (ii) the law of motion for skill accumulation, and (iii) the determinants of occupational choice. We use the quantified model to study generative AI’s impact via augmentation, automation, and a third and new channel—simplification—which captures how technologies change the skills needed to perform tasks. Our key finding is that AI substantially reduces wage inequality while raising average wages by 21 percent. AI’s equalizing effect is fully driven by simplification, enabling workers across skill levels to compete for the same jobs. We show that the model’s predictions line up with recent labor market data.
Via Kris Gulati.
Profile of George Borjas and his influence
More recently, his research has found new attention and urgency in President Donald Trump’s second term: Borjas, 75, worked as a top economist on the Council of Economic Advisers, a post he stepped down from last week.
Borjas is an immigrant and refugee who escaped Cuba for the United States in 1962 and later obtained citizenship — a point of tension he has referenced in his writing.
“Not only do I have great sympathy for the immigrant’s desire to build a better life, I am also living proof that immigration policy can benefit some people enormously,” he wrote in a 2017 opinion piece for the New York Times. “But I am also an economist, and am very much aware of the many trade-offs involved. Inevitably, immigration does not improve everyone’s well-being.”
One of Borjas’s direct contributions to the Trump administration this past year was his extensive behind-the-scenes work on Trump’s overhaul of the H-1B visa system for highly skilled workers that added a $100,000 fee, according to three people familiar with his work and a White House official, who all spoke on the condition of anonymity because they weren’t authorized to share internal deliberations. Borjas had previously written about the “well-documented abuses” of that program over the years.
The White House official said Borjas was among many Trump administration members involved in redesigning the H-1B visa program and confirmed that Borjas provided intellectual support for other Trump immigration initiatives last year.
Here is more from The Washington Post.
Sentences to ponder
France will delay this year’s Group of 7 summit to avoid a conflict with the mixed martial arts event planned at the White House on Donald Trump’s birthday.
Here is the article.
