Jim Miraflor @futilityfunc

The motivation for using industrial policy is more complex than simply fixing market failures. Industrial policy is a tool for long-term planning and even for *shaping* markets. In my newsletter this week, I discuss why countries use industrial policy. Link in reply.

Thanks @joshgans . I just downloaded his 2025 MIT Press book. The JEL's email told me about this new book and I skimmed Max K's review. direct.mit.edu/books/oa-monog…

I just want to say this very good tweet is exactly what Piketty argued in Capital in the 21st Century.

Renzo™ @fwrenzo1

3 days ago

The "Middle Class" was a 50-year fluke designed to prevent a communist revolution during the Cold War. Now that the threat is gone, the elites are systematically dismantling it. You aren't "falling behind"; you’re being pushed back into the peasantry.

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If China's development strategy in the 1990s followed the theory of comparative advantage, they wouldn't be making batteries, EVs, drones, AI chips, or robots today.

NASA's "Introduction to Tensors": grc.nasa.gov/www/k-12/Numbe…

Macro is quietly reorganizing around a few sufficient statistics: iMPCs, impulse responses, covariances, in place of a full structural model. New essay on Sufficient Statistic: carloschavezp29.substack.com/p/sufficient-f…

True, you can only read econometrics. So start here and work your way up.

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Deirdre Nansen McCloskey @DeirdreMcClosk

7 days ago

An economist is often asked at a cocktail party what to read to learn some economics. It’s easy to answer the question about chemistry or ancient Greek or any settled science. If you ask an astronomer what to read to learn some astronomy, she’ll have no problem. But there’s a

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A valuable part of an economics education is being introduced to major debates in the discipline early on. I will often recommend comparative political economy and international development books that I acknowledge are very much flawed, but still serve as practical introductions:

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Deirdre Nansen McCloskey @DeirdreMcClosk

7 days ago

An economist is often asked at a cocktail party what to read to learn some economics. It’s easy to answer the question about chemistry or ancient Greek or any settled science. If you ask an astronomer what to read to learn some astronomy, she’ll have no problem. But there’s a

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Seven years ago a representative from Google reached out to me in an official capacity to discuss the company's energy use. I told them it would become necessary for major firms in core economies to reduce energy use in order to enable Paris-compliant decarbonisation. They assured me that their new AI tools were already helping them identify ways to improve the company's energy efficiency, so they weren't worried. They insisted this would soon yield radical efficiency improvements, and lead to energy use reduction without any change to their production activities. "Just wait, you'll see!" they told me, full of confidence. I told them that's not how it works. In growth-oriented capitalist firms, savings from efficiency improvements are generally leveraged to expand production. I predicted that even if their AI found ways to improve efficiency, Google's energy use would go up, not down. Seven years later and this is where we're at:

The biggest myth of economic history is that rich countries developed by embracing free trade. The truth is that rich countries relied heavily on state intervention. Then, they told the rest of the world to embrace free trade, kicking away the ladder they had climbed up. We are now witnessing, once again, rich countries turning to state intervention and protectionism. In fact, they are actively dismantling the ideology of free trade they pushed onto the rest of the world. Why? The answer is simple: they now need protectionism again to compete with countries that “accidentally” caught up.

@collision Everything requires maintenance to avoid decay, and this ongoing cost is commonly underestimated and unappreciated by the inexperienced, ambitious, or distracted. Hence the virtue of focus and humility.

As you become an adult, you realize that things around you weren't just always there; people made them happen. But only recently have I started to internalize how much tenacity *everything* requires. That hotel, that park, that railway. The world is a museum of passion projects.

Keir Starmer could have ended child poverty, homelessness and the grotesque levels of inequality in this country. Instead, he abandoned those in need, destroyed our civil liberties and facilitated genocide in Gaza. That is how this Prime Minister will be remembered - and that is the legacy of moral and political bankruptcy he leaves behind. The crises in our society are not going away. Neither are we - and we will keep fighting for a more equal, peaceful and dignified society for all.

Happy Father’s Day to Karl Marx, the father of modern economic growth theory and macroeconomics as we understand it

"Transformers" by Daniel Jurafsky and James H. Martin is one of the clearest and most mathematically grounded introductions to the Transformer architecture I have ever read. Chapter 8 introduces the Transformer as the standard architecture behind modern large language models. What makes this chapter particularly interesting is its step-by-step presentation of the underlying mechanisms: contextual embeddings, self-attention, query, key and value vectors, scaled dot-product attention, multi-head attention, residual streams, feedforward layers, layer normalization, masking, and the parallel matrix formulation of attention. In particular, the treatment of attention as a weighted sum of contextual representations is especially valuable. The chapter first develops an intuitive, simplified view of attention and then gradually derives the full formulation using the Q, K, and V matrices. This approach makes it easier to understand what is actually happening inside the architecture from an algebraic and matrix-based perspective, rather than simply viewing the usual block diagrams. I think it is an excellent resource for anyone interested in understanding how Transformers work from linguistic, mathematical, and computational perspectives. web.stanford.edu/~jurafsky/slp3…

In 1937, a 21-year-old MIT student sat in a quiet library, mapping abstract philosophical logic onto electrical circuits to pass the time. By the time he finished his thesis, the young man had mathematically proven that mechanical telephone switches could perform complex calculations. Instead of just routing phone calls, they were destined to become thinking machines. He had just discovered the mathematical trigger for digital computing. But when he published his work, the leading engineers of the industrial world paid little attention, viewing his mathematics as a mere academic parlor trick. His name was Claude Shannon. It would take years for the industrial establishment to fully realize he was right and adopt the binary logic that now powers every computer, smartphone, and network on Earth. His breakthrough against traditional engineering is the ultimate lesson in what happens when rigid practices clash with unexpected philosophical reality. In the early 20th century, engineers believed they understood circuit design. They knew that as telephone networks grew, they needed more physical wires and relays. But traditional engineering offered no universal science; it was a manual process of brute-force trial and error. The systems would grow into a chaotic, tangled mess of blueprints and copper lines. The entire industrial establishment agreed: every circuit, no matter how complex, had to be wired by manual experimentation. It was a tedious, costly formula. But in that library, Shannon realized the establishment had left a massive variable out of their equations: 19th-century symbolic philosophy. Shannon recalculated the engineering, factoring in what happens when you treat an electrical switch using the laws of Boolean algebra. What he found shattered the industrial consensus. He proved that an electrical switch has only two possible states: it is either closed and letting power through, or open and blocking the current. This was mathematically identical to True (1) and False (0). The circuit could evaluate logical statements. There was no limit to what it could compute. It could automate human thought, transforming physical electricity into digital logic. When Shannon presented this concept, mainstream electrical engineers were skeptical. They couldn't accept that an abstract philosophical concept could solve real-world hardware bottlenecks. Shannon was initially ignored. The establishment stuck to their traditional wiring methods. Instead of fighting a rigid, closed system, Shannon quietly expanded his work into Information Theory, proving that all data could be compressed into a universal currency called the "bit." Decades later, when the global tech revolution exploded, the world realized the 21-year-old student had been right all along. The philosophical blueprint Shannon left behind is a vital truth for navigating complex problems and institutional pushback: Comforting traditions will always be more popular than disruptive innovations. Trust the system's underlying logic anyway. Most of us approach our careers and projects seeking the validation of current experts or established guidelines. When we propose a radical new idea or try to change a broken system, and the authorities tell us we are wrong, our instinct is to assume our logic is flawed. We abandon our data to fit the consensus. But Shannon’s legacy proves that traditional industry consensus is not the same thing as truth. Gatekeepers are human; they protect their own methods, their own training, and their own comfort. What is a bottleneck, a project, or a direction you’ve abandoned just because an expert or a boss told you it wouldn't work? What happens if you stop looking for their permission and trust the structural logic of your own work?

Some reading for today

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This looks like a must-read! "Macro: The Economic Models That Shape Our World" by Greg Kaplan (available in November). "In clear and engaging prose, Chicago economist Greg Kaplan demystifies how our everyday behavior, including how we spend and save, connects to the biggest questions in fiscal and monetary policy. Tracing the evolution of modern macroeconomics from Keynes to today, he guides readers through the models that are often used to explain our economy, uncovers their flaws, and reveals what cutting-edge research tells us about managing the economy in good times and bad. The journey culminates in HANK, a macroeconomic model co-created by Kaplan that is more consistent with reality. Macro offers a timely, new framework for understanding and shaping economics in the real world." amzn.to/4xt6MSR

I often think of this passage from Lenin’s text on Tolstoy and the labor movement: "Despair is typical of those who do not understand the causes of evil, see no way out, and are incapable of struggle." We rarely see the other parts of that paragraph. "Despair is typical of the classes which are perishing,” Lenin writes. "The modern industrial proletariat does not belong to the category of such classes." Lenin was writing about the labor movement, and the objective historical process that saw it rise and replace the peasantry as the dominant force in Russia. The peasantry was gripped by despair because its class no longer had a future. The proletariat, by contrast, was growing in strength and number. Today, Lenin’s insight also holds true of the streets of Iran, where people mobilize by the millions under bombardment. It is true of the communes in Venezuela, whose militants continue the task of building socialism and are prepared to take up arms to defend it. It is true of the people of Cuba, who remain defiant under a crushing blockade that has turned their cities dark. Those who despair now — as a new world is being born — are really just mourning the death of liberalism. They are mourning the death of a world that never existed: a world of supposed lawfulness and “rules-based” governance. Anyone who has ever earnestly tried to bring a new world into being quickly learned that these were fictions created to secure impunity for the colonizer and oppressor. That is why we find that people on the vanguard of the systemic transition underway — as with the labor movement in Lenin’s time — “have plenty to protest against but nothing to despair about.”

inhumans of capitalism (Ojibwa ) @Inhumansoflate1

4 weeks ago

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