His theory was that the body-snatching was happening through their phones

Friday, September 15th, 2023

All the sudden disruptions of long-running economic trends in America led people to wonder,What the heck happened in 1971? Now Erik Hoel looks at all the sudden disruptions of long-running social trends in America and wonders, What the heck happened in 2012?

Of course, we should expect it to be harder to measure cultural tipping-point years rather than economic ones, since what makes for healthy psychologies and cultures is often immeasurable. Still, if you look at charts about people’s psychology, or culture in general, like how people use language, you often consistently see a major shift around 2012 or shortly thereafter.

This isn’t just due to the definition of the word “depression” broadening. Teenagers legitimately try to commit suicide far more now, taking off right around 2012.

These changes haven’t affected just teenagers, although they are the most intense there, as if the youth, those most exposed and dependent on the current culture, those with nothing else to lean back on (no memories of the 90s to bask in) are operating like canaries in a coal mine—it is their little lungs which go first.


And yes, psychological changes are nebulous, but there are obvious downstream real-world ramifications. For 13-year-olds across America, both reading and mathematics peaked in 2012 and then rapidly began to decline.

Around 2012, birth rates fell off. They were low anyways, which should be expected after the Great Recession, but it is precisely around 2012 where they should have started climbing back up and instead they fell off a cliff.


It’s simply impossible to dance around it: what would now be called “wokeness” came onto the main stage of culture in 2012, and this in turn began to trigger anti-wokeness (e.g., while Jordan Peterson wouldn’t become famous until 2016, 2013 was when he created his YouTube channel and began uploading). This action/reaction dynamic explains the timing differences for when each political side felt the psychological effects.


At a personal level, I remember someone in graduate school, which I entered in 2010, confessing to me after a few beers that the rise in politicalization among our peers around 2012-2013 (as my fellow grad students either suddenly bought into wokeness and started using its reasoning and language or staked out controversial or secretively resistant anti-woke positions) reminded him of “the invasion of the body-snatchers.” His theory was that the body-snatching was happening through their phones.


In fact, in terms of market saturation, the transition from 2012 to 2013 is the exact year the majority of the US switched to finally owning a smartphone.

Which would certainly explain the massive spike in pedestrian fatalities from cars following a low in 2010.

Marxism remains dangerous nonsense

Tuesday, September 12th, 2023

Tyler Cowan asks, What is valid in Marxism?

1. Capitalist systems, especially before reaching contemporary times, can produce less autonomy than small scale production. Standards of living do rise from industrialization. But I look at many of my rural Mexican friends. They could earn somewhat higher wages in factories, but they prefer to paint ceramics at home. It is more fun and they control their time to a large degree. At some point industrialization can undercut the cultures and networks of suppliers that makes such a choice possible. Marx directs our attention to a certain indivisibility of systems.

2. Marxism promotes an alternative idea of freedom, namely freedom from the market. Anyone who has chosen life as a tenured university professor should not claim that such an idea is complete nonsense. Smith thought in terms of marginal tradeoffs. Marx, above all, focused on inframarginal and systematic effects.

3. The benefits of industrialization take a long time to kick in. Reforming postcommunist economies took fifteen years or more. Poland did most things right and people there are still unhappy. So how long should it take to reform feudalism or other preindustrial structures? Forty years? I take seriously the idea that the industrial revolution did not make people better off right away, so did Marx.

4. Being happy at work is one of the most important things in life. Marx saw the importance of this more clearly than did many of the classical economists. And he saw the importance of inframarginal systemic factors.

5. A growing division of labor can make some people unhappier at their jobs.

To sum up, we all know that capitalism brings a “creative destruction,” to use the phrase of Schumpeter. This is all for the better, but Marx saw how strong both the positive and negative sides of this process would be. And he knew that the relevant problems went deeper than just looking at whether people make rational tradeoffs at the margin. That being said, he overestimated the negative side of the market and underestimated how well capitalism could solve its problems concerning the distribution of income.

Of course marxism, as a political program, remains dangerous nonsense. Marx’s blind spots were enormous, and I still cannot understand how generations of the intelligentsia were taken in by the whole thing.

Growth has to come from within

Thursday, August 3rd, 2023

One of the interesting lines of evidence about the importance of human capital in wealth disparities, Emil O. W. Kirkegaard notes, comes from examples of how groups can recover from setback:

The most obvious example are the losers of World War 2, that is, Japan, Germany, and Italy. Japan and Germany suffered extreme damage to their infrastructure in the later stages of the war but were quickly able to recover.


Some of this research has been done using slaveholders in the former Confederacy, who lost the US civil war (1861-65). These were wealthy people who owned slaves, but lost this wealth. If they were wealthy because of human capital reasons, we would expect them to regain some fraction of this, and their children to markedly catch-up towards their long-term trend.


For people who had a lot of wealth from slave owning in 1960, their wealth was still reduced in 1870. However, their sons had actually caught back up by 1900. Likewise with the grandsons.


In his book The Son Also Rises economic historian Greg Clark tracked elite surnames to gauge social mobility across many countries. One of these was China, where the situation was dire.


However, when looking up modern data for the elite surnames, these are still over-represented among the current elite, despite the efforts of the communists to eradicate their advantages.


Here some will object that the recovery of the former Axis powers was due to US subsidies (Marshall plan in Europe). The problem with this idea is that wealthy countries have also tried doing the same kind of growth program in other regions of the world, and they have never worked very well.


Growth has to come from within.

Abusers give vice a bad name

Thursday, July 27th, 2023

According to our prevailing civic religion, Bryan Caplan asks, who are we supposed to resent, stigmatize, and punish in response to drug and alcohol addiction?

First and foremost, the producer. Anyone who makes money off of human misery.

Second and secondarily, the typical user. Sure, they rarely experience severe personal blowback. But they normalize deviant behavior. And they put money into the pockets of the vendors of sin, allowing them to flourish.

Last and least, the “abuser” or “addict.” Personally, they may disgust us. Yet the bipartisan position is that archetypal abusers are victims who deserve general sympathy and taxpayer assistance.

I say that these priorities are confused at best.

Visualize a world full of moderate users of every alleged vice. You might not approve, but what’s the big deal? The moderate users do their jobs, live in homes, take care of their families, and keep their friends. They’re not perfect, but who is?

The picture doesn’t change if you add thriving legal businesses supplying all these moderate users with their desired products.


The difference between me and normal observers: I don’t consider extreme abusers or “addicts” to be victims. I consider them victimizers. They aren’t a symptom of a greater social problem. They are the greater social problem. Abusers have and continue to make evil choices. Granted, it logically possible to end up on Fentanyl Row through tremendously bad luck. Empirically, however, everything I’ve read on poverty convinces me that the root cause of such residence is almost invariably extraordinarily irresponsible behavior.


Abusers don’t just mistreat their families, friends, neighbors, and passersby. Even worse, they give vice a bad name. Abusers inspire the indiscriminate, unjust “wars” on innocent users. They inspire prohibition, which takes production out of the hands of ordinary businesspeople and into the hands of criminals.


At minimum, you can impose the standard punishments for theft. Which is easy, because if you examine encampments, ill-gotten wares are in plain sight. Stealing shopping carts is a crime. Stealing bicycles is a crime. It’s crazy for cops to look the other way when shifty characters violate property rights in plain sight. And unless you oppose the very existence of public property, you can also consistently favor enforcement of laws against trespassing on, vandalizing, and defiling public property. Enforcing all of this doesn’t precisely make abuse illegal, but it comes close.


But in a strange sense, both gun control and prohibition grow out of softness. A system with the moral courage to harshly, swiftly, and surely punish violence would have little need of gun control. A system with the moral courage to harshly, swiftly, and surely punish abusers for stealing, trespassing, vandalizing, and defiling would have little need of prohibition. In both cases, we haphazardly punish millions of innocents because we refuse to decisively punish thousands of clear-cut criminals.

There are still only 24 hours in a day

Friday, June 30th, 2023

Real GDP per capita has doubled since the early 1980s, Alex Tabarrok noted, but there are still only 24 hours in a day:

How do consumers respond to all that increased wealth and no additional time? By focusing consumption on goods that are cheap to consume in time. We consume “fast food,” we choose to watch television or movies “on demand,” rather than read books or go to plays or live music performances. We consume multiple goods at the same time as when we eat and watch, talk and drive, and exercise and listen. And we manage, schedule and control our time more carefully with time planners, “to do” lists and calendaring. A search at Amazon for “time management,” for example, leads to over 10,000 hits.

Time management is a cognitively strenuous task, leaving us feeling harried. As the opportunity cost of time increases, our concern about “wasting” our precious hours grows more acute. On balance, we are better off, but the blessing of high-value time can overwhelm some individuals, just as can the ready availability of high-calorie food.


By the way, the same theory also explains why life often appears to unfold at a slower, more serene pace in developing nations. It’s not just an illusion of being on holiday. In places where time is less economically valuable, meals stretch more leisurely, conversations delve deeper, and time itself seems to trudge rather than race. In contrast, with economic development comes an increased pace of life–characterized by a proliferation of fast food, accelerated conversation, and even brisker walking (Levine & Norenzayan, 1999).

Do ten times as much

Tuesday, June 20th, 2023

Bryan Caplan”s go-to advice is to do ten times as much:

Almost no one learns how to speak a foreign language very well in school. By the numbers, it’s tempting to declare, “Learning a foreign language is impossible.” But that’s plainly false. Going from zero to fluency is ultra-rare, but I’ve seen it happen.

How does fluency happen? First and foremost, people who attain fluency practice a lot more than the typical foreign language student. “A lot” doesn’t mean 10% more, 25% more, or even 100% more. People who attain fluency practice about ten times as much as the typical person who is officially “learning a foreign language.” Sure, the quality of practice matters, too; immersion is the best method of foreign language acquisition. But unless you’re willing to give ten times the normal level of effort, fluency is basically a daydream.

When I see the contrast between people who succeed and fail, I generally witness a similar gap in effort. During my eight years in college, I spent many thousands of hours reading about economics, politics, and philosophy. Since high school, I’ve spent over ten thousand hours writing. When young people ask me, “How can I be like you?“ my first thought is, again, do ten times as much.


But my advice is usually far more practical than it sounds, because most people who “want to succeed” barely lift a finger most of the time. Saying ten times as many kind words to your friends is easy in a world whether most people only say two or three such sentences weekly. Cold emailing ten times as many successful people in your field for advice is easy in a world where most people do so once in a lifetime. Never underestimate your fellow man’s lack of initiative.

Take parenting. Most readers summarize my Selfish Reasons to Have More Kids as “Parenting doesn’t matter.” But that is only one possible interpretation of the twin and adoption data. The data is also consistent, however, with the theory that most parents are barely trying to get results — at least on many relevant margins.


If you want to learn a foreign language, you need to budget about two thousand hours. If you want to master a technical subject, you need to budget about five thousand hours.


Either that, or admit that you’ve got higher priorities. No one succeeds at everything. If you’re not willing to do ten times as much, just level with yourself: “I’ve got better things to do than learn a foreign language.” “I’ve got better things to do than become a great economist.”


Pick your battles, friends. And wherever do you choose to fight, do ten times as much.

The problem is particularly acute in Los Angeles and San Francisco

Monday, June 19th, 2023

A recent Boston Consulting Group survey found that many office buildings are at risk of becoming “zombies,” with low usage, high vacancy and quickly diminishing financial viability:

The problem is particularly acute in Los Angeles and San Francisco, where weekday office building use has fallen to around 40%. As a result, in both cities, public transit revenue has plummeted by 80% or more, and office property values and tax revenues may drop by as much as half, according to our analysis of public data.

Rising interest rates are compounding the financial pressure for building owners, whose rental income stands to drop 35% to 45% as corporate leases expire in both San Francisco and Los Angeles. Higher borrowing costs coupled with lower valuations could leave some owners owing more than their buildings are worth, leading in turn to a wave of defaults that suddenly make lenders the owners and managers of these buildings. In February, a fund managed by Brookfield Properties defaulted on $784 million in loans on two well-known office skyscrapers in downtown L.A., which was seen by some as a turning point for the U.S. office market.

Members of the early 20th century English upper class tended to have portfolios weighted towards land and government bonds

Friday, June 16th, 2023

Byrne Hobart looks at emergency portfolios for worst-case scenarios:

Physical gold, for example, retains some of its value even if the financial system collapses. On the other hand, the old coins we have are often recovered from hoards that someone buried and never dug up, often because of war, famine, plague, or revolution.


Members of the early 20th century English upper class tended to have portfolios weighted towards land and government bonds, exactly what you’d buy if you were certain of disaster but uncertain about whether it would be inflationary or deflationary. But after the First and Second World Wars, they got the worst of both worlds: inflation high enough to devalue the purchasing power of their bonds, taxes high enough to render the real return from their land negative.


China’s communist revolution was one of the most thorough economic levelings in human history, one so effective that the children of the elite were actually poorer than average for a while, but then recovered and by the early days of China’s opening-up, and were better-off than ever. Similarly, in the post-Civil War South, the descendants of slave-owning families ended up about as well-off as other rich people, even though their land was seized, their currency depreciated to nothing, and the source of their wealth was banned by the Constitution.

The new platform-based standards set fuel economy targets based on wheelbase and tread width

Tuesday, June 6th, 2023

Obama-era fuel regulations incentivized automakers to build bigger trucks:

One particular goal of the Obama Administration was to increase fuel efficiency through the typical political process: telling someone else to do it. To that end, the DOT and the EPA handed down a series of standards that nearly doubled the miles-per-gallon requirements for cars and light trucks.


The new platform-based standards set fuel economy targets based on wheelbase and tread width, that is, how far apart the wheels are. If your vehicle is longer and wider, the fuel-economy targets shrinks. In the words of Dan Edmunds of Edumnds.com, “There was kind of an incentive to maybe stretch the wheelbase a couple of inches and set the tires maybe an inch [farther] apart, because you get a bigger platform and slightly smaller target.”

Asian success has obscured a bleaker picture in the rest of the world.

Sunday, May 21st, 2023

The prognosis for the poor world is much worse than the standard picture, David Oks and Henry Williams argue:

The crux of the problem is this: despite attempts to find alternative models of economic development, there is no widely replicable strategy to develop a country — simply put, to turn it from poor to rich — that does not involve an economy becoming highly industrialized. But in recent decades, the growth of manufacturing sectors, and thus of economic development more broadly, has been overwhelmingly concen­trated in East Asia, particularly in China. Across the bulk of the poor world— here we have in mind Latin America, South Asia, the Middle East, and sub-Saharan Africa — economies have been experiencing a more disturbing trajectory: simultaneous deagrarianization and deindus­trialization, especially in the years after 1980.

The result is that industrialization, development, and massive income growth in East Asia has statistically “compensated” for stagnation almost everywhere else — with East Asian industrialization partly re­spon­sible for the loss of other countries’ manufacturing bases. This has been the case even as incomes have risen in most of the poor world, mainly on account of the 2000–15 commodity supercycle driven in part by the explosive growth in demand from the Chinese market — which, ironically, helped lock emerging markets into low-tech, undiversified export profiles. Asian success, in short, has obscured a bleaker picture in the rest of the world.

Most emerging markets have not found an engine of durable growth comparable to manufacturing— most have indeed grown over the last few decades, but dependence on services and commodities exports has not made them rich. Thus most “developing” countries — we are skepti­cal of that euphemistic label — are in a worse structural position than they were a few decades ago: less economically complex and more socially unstable, with their developmental coalitions, if they ever exist­ed, badly frayed. For all the intermittent hype around “rising India” or “rising Africa,” systemic dynamics — deindustrialization, ecological dis­ruption, demographic headwinds — will pose severe challenges to eco­nomic development over the coming decades. New waves of industrialization and meaningful development are unlikely in these parts of the world. From the perspective of poverty statistics, Africa will assume particular importance: by far the continent with the worst economic performance over the last several decades, it is there that the most sig­nificant population growth will occur over the next century. The result, pending dramatic change, is a world in which the progress made against poverty over the last forty years will slow, stagnate, or even reverse.

One in three Europeans who traveled to the Congo died

Friday, May 12th, 2023

In The Predictioneer’s Game — and in his EconTalk podcast on The Political Economy of Power — Bruce Bueno de Mesquita makes the point that Leopold II of Belgium was, if anything, quite progressive back in Belgium, where he had to answer to his people, in contrast to how he ruled the Congo, where he did not.

Any discussion of the Congo, or of European colonialism more generally, Bruce Gilley remarks, invariably begins with the question: “Have you read King Leopold’s Ghost?” — but he calls the book King Hochschild’s Hoax:

The first and biggest deceit at the heart of King Leopold’s Ghost is the attempt to equate Léopold’s “État indépendant du Congo” or EIC (long mistranslated as the Congo Free State) with Western colonialism. Yet the EIC was a short-term solution to the absence of colonial government in the Congo river basin. The deal was simple: Léopold was to open the area to trade and eliminate endemic Arab slave empires and African tribal wars. In return, he hoped to bring glory to the Belgian people for having done what no other European ruler dared (one in three Europeans who traveled to the Congo died, usually of illness). The EIC had nothing to do with the Belgian government. To the extent that limited abuses and misrule occurred in some parts of his domain (discussed below), this was a direct result of its not being controlled by a European state. As no less than Morel insisted (not quoted by Hochschild), “Let us refrain from referring to the Congo as a Belgian colony, let us avoid writing of ‘Belgian misrule.’”


The freelance EIC had at its peak just 1,500 administrative officers and about 19,000 police and soldiers for an area one third the size of the continental United States. As such, it exerted virtually no control over most areas, which were in the hands either of Arab slave-traders and African warlords, or of native soldiers nominally in the employ of Belgian concession companies without a white man for a hundred miles.


By 1891, six years into the attempt to build the EIC, the whole project was on the verge of bankruptcy. It would have been easy for Léopold to raise revenues by sanctioning imports of liquor that could be taxed or by levying fees on the number of huts in each village, both of which would have caused harm to the native population.


Instead, he did what most other colonial governments and many post-colonial ones in Africa did: He imposed a labor requirement in lieu of taxes. In a small part of the upper Congo river area, he declared an EIC monopoly over “natural products,” including rubber and ivory, that could be harvested as part of the labor requirement to pay for the territory’s government. From 1896 to 1904, an EIC company and two private companies operated in this area, which covered about 15 percent of the territory and held about a fifth of the population. The resulting rubber revenues temporarily saved the EIC, but only until rubber prices collapsed.


The rubber quotas imposed on natives in this 15 percent of the territory were enforced by native soldiers working for the companies or for the EIC itself. In many areas, the rubber came with ease and the natives prospered. The rubber station at Irengi, for instance, was known for its bulging stores and hospitable locals, whose women spent a lot of time making bracelets and where “no one ever misses a meal,” noted the EIC soldier George Bricusse in his memoirs. Elsewhere, however, absent direct supervision, and with the difficulties of meeting quotas greater, some native soldiers engaged in abusive behavior to force the collection. Bricusse noted these areas as well, especially where locals had sabotaged rubber stations and then fled to the French Congo to the north. In rare cases, native soldiers kidnapped women or killed men to exact revenge. When they fell into skirmishes, they sometimes followed long-standing Arab and African traditions by cutting off the hands or feet of the fallen as trophies, or to show that the bullets they fired had been used in battle. How many locals died in these frays is unclear, but the confirmed cases might put the figure at about 10,000, a terrible number.

The abuses were first reported by an American missionary in The Times of London in 1895 and quickly brought Léopold’s censure: “If there are these abuses in the Congo, we must stop them,” he warned EIC officials in 1896. “If they continue, it will be the end of the state.” For the next ten years, reforming the Congo’s rubber industry absorbed an inordinate amount of attention in the British and American press and legislatures, not to mention within Belgium and the EIC itself, leading to formal Belgian colonization in 1908.

The colonization-development story gets the direction of causality backwards

Thursday, May 4th, 2023

A major gulf has already appeared between Western Europe and the rest of the world prior to 1500 AD:

West Europe experienced a major transformation between 1000 and 1500. Their incomes increased, they established institutions of higher learning across the continent, they became more urbanized, more technologically developed, produced vastly more books, literacy and numeracy increased, violence greatly decreased, and they produced many more notable scientists, mathematicians, philosophers, inventors, and engineers. In terms of overall development, West Europe had surpassed that of other big civilizations (China, India, and the Middle East) by 1500. Not only that, the rate of advancement was accelerating. The other major civilizations instead went into cultural stagnation.

The divergence I observe in the data of notable people of science, starting from approximately 1300 A.D., seems tightly connected with the so-called “Little divergence” (Pleijt & van Zanden, 2016), i.e., the “process [between 1300 and 1800] whereby the North Sea Area (the UK and the Low Countries) developed into the most prosperous and dynamic part of the Continent.” Starting in a similar period and in similar places (e.g., the Netherlands and the UK), I observe an especially great increase in per-capita rates of notable people of science.

As the rise of the West was already operating at great speeds prior to European colonialism, the often-suggested idea that the West’s ascent can be attributed to Europe’s colonialist history is untenable. Rather than colonialism or slavery being the cause of the rise of the West, the timeline is consistent with a commonsensical alternative idea: The colonization-development story gets the direction of causality backwards. It was the West’s relative developmental advantage that gave them the ability to colonize so successfully in the first place. Only wealthy societies could afford global exploration and subsidize colonies on a large scale. Oceangoing technology, improvements in vessels, shipbuilding, navigation tools, and in cartography, all together facilitated exploration and direct travel across the Atlantic. Advantages in military technology made conquest and colonization far easier, exemplified by “when Pizarro’s tiny army of Spaniards captured the Inca emperor Atahuallpa, absolute ruler of the largest, richest, most populous, and administratively and technologically most advanced Native American state” (Diamond, 1997).

Individualism, impersonal sociality, and a pacified environment allowed the market economy to grow beyond its former limits

Wednesday, April 19th, 2023

Europe, particularly northwest Europe, was pushed forward by an expanding market economy, Peter Frost explains, in the fourteenth century, when England and Holland embarked on sustained economic growth:

That expansion was driven, in turn, by a population that tended toward individualism and “impersonal sociality.” For at least the past millennium, Europeans were behaviorally distinct north and west of a line running approximately from Trieste to St. Petersburg:

Almost everyone was single for at least part of adulthood, and many stayed single their entire lives.

Children usually left the nuclear family to form new households, and many individuals circulated among unrelated households, typically young people sent out as servants.

People were more individualistic, less loyal to kin, and more willing to trust strangers (Frost 2017; Frost 2020; Hajnal, 1965; Hartman, 2004; Hbd*chick 2014; ICA, 2020; MacDonald 2019; Seccombe, 1992, p. 94-95, 150-153, 184-190).

According to Schulz et al. (2019), the above behavioral pattern was created by the Western branch of Christianity, particularly through its decision in the ninth century to broaden the ban on cousin marriages to any couple who shared a common ancestor seven generations previously. That ban, they argued, had the effect of creating the Western European pattern of late marriage, frequent celibacy, and nuclear households. That pattern, in turn, encouraged individualism and impersonal sociality.

Schulz et al., however, ignore two points. First, the broadening of the cousin marriage ban resulted from a decision to abandon the Roman method of calculating degrees of kinship, whereby first cousins were considered to be fourth degree. The new method, of Germanic origin, made them second degree, thereby doubling the number of forbidden marriage partners (McCann, 2010, pp. 57-58). In sum, the ban was Church-enforced but of pagan origin.

Second, when the cousin marriage ban was broadened in the ninth century, Western Europe already had high rates of late marriage, celibacy, and nuclear households. This has been shown at two locations in ninth-century France: the estates of the Abbey of St Germain-des-Prés near Paris, where about 16.3% of all adults were unmarried, and Villeneuve-Saint-Georges, where the figure was 11.5%. At both locations, households were small and nuclear (Hallam 1985, p. 56). A ninth-century survey of the Church of St Victor of Marseille shows both men and women marrying in their mid to late twenties (Seccombe 1992, p. 94). Further back, in the first century, the Roman historian Tacitus wrote about the Germanic tribes, “Late comes love to the young men, and their first manhood is not enfeebled; nor for the girls is there any hot-house forcing; they pass their youth in the same way as the boys” (Tacitus, Germania 20, 1970).

It seems more correct to say that Western Christianity promoted individualism and impersonal sociality because it had assimilated a pre-existing pattern of weak kinship, late marriage, and openness to non-kin. A fusion took place between the Christian faith and the pre-Christian values of northwest Europe (Russell 1994). With the loss of North Africa and Spain to the Muslims, and the rise of the Frankish-dominated Carolingian Empire, Western Christianity saw its ideological center of gravity move northward and westward.

From the eleventh century onward, the Western Church also strove to pacify social relations. Both Church and State came around to the view that the wicked should be punished so that the good may live in peace. Courts imposed the death penalty more and more often and, by the late Middle Ages, were condemning to death between 0.5 and 1.0% of all men of each generation, with perhaps just as many offenders dying at the scene of the crime or in prison while awaiting trial. The homicide rate plummeted from the fourteenth century to the twentieth, with the result that the pool of violent men dried up. Most murders would now occur under conditions of jealousy, intoxication, or extreme stress. (Frost and Harpending 2015).

Those three causes — individualism, impersonal sociality, and a pacified environment — allowed the market economy to grow beyond its former limits (Frost 2020; Macfarlane 1978; Weber 1930). The first two causes had long been around in northwest Europe, being what we may call “pre-adaptations” to the market economy. It was the third one, the pacification of social relations, that sparked the economic takeoff of the fourteenth century. The “market” was no longer a marketplace—an isolated point in space and time. It was now a means to carry out transactions wherever and whenever. It could thus spread farther and farther beyond the marketplace, replacing older forms of exchange and ultimately replacing kinship as the main organizing principle of society.

The Permanent Settlement, introduced in 1793, gave absolute rights to land to zamindar landowners

Tuesday, April 18th, 2023

In India, Cornwallis set about making a series of land and taxation reforms guaranteeing a steady flow of revenue, particularly in time of war, William Dalrymple explains (in The Anarchy), as well as reinforcing the Company’s control of the land it had conquered:

The Permanent Settlement, introduced in 1793, gave absolute rights to land to zamindar landowners, on the condition that they paid a sum of land tax which Company officials now fixed in perpetuity. So long as zamindars paid their revenues punctually, they had security over the land from which the revenue came. If they failed to pay up, the land would be sold to someone else.

These reforms quickly produced a revolution in landholding in Company Bengal: many large old estates were split up, with former servants flocking to sale rooms to buy up their ex-masters’ holdings. In the ensuing decades, draconian tax assessments led to nearly 50 per cent of estates changing hands. Many old Mughal landowning families were ruined and forced to sell, a highly unequal agrarian society was produced and the peasant farmers found their lives harder than ever. But from the point of view of the Company, Cornwallis’s reforms were a huge success. Income from land revenues was both and enormously increased; taxes now arrived punctually and in full. Moreover, those who had bought land from the old zamindars were in many ways throwing in their lot with the new Company order. In this way, a new class of largely Hindu pro-British Bengali bankers and traders began to emerge as moneyed landowners to whom the Company could devolve local responsibility.

So even as the old Mughal aristocracy was losing high office, a new Hindu service gentry came to replace them at the top of the social ladder in Company-ruled Bengal. This group of emergent Bengali bhadralok (upper-middle classes) represented by families such as the Tagores, the Debs and the Mullicks, tightened their grip on mid-level public office in Calcutta, as well as their control of agrarian peasant production and the trade of the bazaars. They participated in the new cash crop trades to Calcutta–Dwarkanath Tagore, for example, making a fortune at this time in indigo–while continuing to lend the Company money, often for as much as 10–12 per cent interest. It was loans from this class which helped finance colonial armies and bought the muskets, cannon, horses, elephants, bullocks and paid the military salaries which allowed Company armies to wage and win their wars against other Indian states. The Company’s ever-growing Indian empire could not have been achieved without the political and economic support of regional power groups and local communities. The edifice of the East India Company was sustained by the delicate balance that the Company was able to maintain with merchants and mercenaries, its allied nawabs and rajas, and above all, its tame bankers.

In the end it was this access to unlimited reserves of credit, partly through stable flows of land revenues, and partly through the collaboration of Indian moneylenders and financiers, that in this period finally gave the Company its edge over their Indian rivals. It was no longer superior European military technology, nor powers of administration that made the difference. It was the ability to mobilise and transfer massive financial resources that enabled the Company to put the largest and best-trained army in the eastern world into the field.

Bubbles set a Schelling point for talent and capital

Friday, March 17th, 2023

Just as credit produces bubbles in financial markets, Dwarkesh Patel says, talent accelerates bubbles in technology:

During a bust, a highly leveraged hedge fund can experience a death spiral, where people react to bad financial news by calling in their loans, which forces the fund to sell its positions in a weak market, causing lenders to pull back further, and so on. Something very similar happens when you hire superstar employees. By virtue of their talent, these people have lots of options. As soon as you run into trouble and stop being the best place in the world for them to work, some of these 10x’ers will leave (remember, one of the things that makes them 10x is their ambition). And once their peers leave, the remaining A players will scatter too. The leverage you get from hiring really talented people is a huge risk during rough times, because these people have lots of other options and the ambition to pursue them.

Leverage is also a serious risk during a boom. Hedge funds like Tiger Management saw the late 90s Dot-com crash coming. But when they tried to short the tech market, some of their investors asked for their money back, which forced the fund to liquidate its short in a bullish market, which caused even more lenders and investors to pull out, causing further losses.


In The Alchemy of Finance, George Soros explains market bubbles with his theory of reflexivity. Bubbles shouldn’t exist in an efficient market, because speculators will bet against any asset whose price rises above its fundamental value. But bubbles are a common and recurring phenomenon in financial history.

Soros explains that the efficient markets hypothesis does not map onto actual markets, because it treats price simply as the output of market forces despite the fact that price also acts as an input. If a company’s stock quote increases, it will be able to raise more capital from investors, and on the basis of the money it just raised, its value will rise even further. Through this feedback loop, the prevailing bias is reinforced.

Reflexivity is at work in talent markets as well. Say that you manage to convince a few A players that your startup is extremely promising. Now, you can go to investors and say, “I’ve got the beginnings of an amazing startup — look at this awesome team I’m putting together.” And now you can hire even more 10x engineers by telling them, “Hey, we just raised our seed round on a 50 million dollar valuation. How can you not join this rocketship?”

But if this self-reinforcing cycle is not backed up by a legitimate and scalable vision which can make use of the influx of talent, then you have a bubble. Theranos founder Elizabeth Holmes recruited highly credentialed biotech talent, and then advertised this team to raise billions in capital, which helped her get more clout and attention, which she used to recruit even more superstars, and so on.

Leverage tends to accelerate bubbles, because it allows people to throw more money into an already inflated asset. Similarly, extremely talented people accelerate tech bubbles. No prospect is more attractive to a 10x engineer than working with other 10x engineers, and no opportunity is more irresistible to an investor than funding a team of 10x engineers. The positive spin on this is the Byrne Hobart view, that bubbles set a Schelling point for talent and capital. A founder quality person can quit his job and start a new company in Web3 or biotech because he think he’ll get funded, and investors are willing to fund him since they expect that he will be able to recruit 10x engineers, who are comfortable making a career pivot because they find the founder’s vision exciting.

If any of of the people in this chain stop believing the hype around which their project is organized, then the hype becomes unjustified. So the con view of tech bubbles is that the entire party crashes if one person leaves early. And once the bubble starts to wobble, 10x employees will move on to the next compelling tech vision, causing the leveraged death spiral mentioned in the last section. Leveraging your company with talent increases your volatility — either you orchestrate a revolution, or you implode.

Technology, more than any other sector, seems to have this strong pattern of producing bubbles, where one hype train follows another. Perhaps this is because the smartest, most talented people go to work in tech, and just as credit produces bubbles in financial markets, talent accelerates bubbles in technology.