2025-08-15 21:49:15
Yes, I will be doing a Conversation with him. David recently published Saudi Arabia: A Modern History, a very good and useful book. He has numerous other books on Wahhabism, the history of the Gulf region, and also Syria. Currently he teaches at Dickinson College.
So what should I ask him?
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2025-08-15 19:17:47
Tyler already linked to Max’s excellent post on flight delays but Fortune gives you the backstory:
On one sweltering summer afternoon in June, thunderstorms rolled over Boston Logan International Airport. It was the kind of brief, predictable summer squall that East Coasters have learned to ignore, but within hours, the airport completely shut down. Every departure was grounded, and flyers waited hours before they could get on their scheduled flights.
Among those stranded were Maxwell Tabarrok’s parents, in town to help move him into Harvard Business School, where he is completing an economics PhD. Tabarrok told Fortune he was fascinated by how an entire airport could grind to a halt, not because of some catastrophic event, but due to a predictable hiccup rippling through an overstretched system.
So, he did what any good statistician would: dive into the data. After analyzing over 30 years—and 100 gigabytes—of Bureau of Transportation Statistics data, he found out his parents’ situation wasn’t bad luck: Long delays of three hours or more are now four times more common than they were 30 years ago.
Not only that, but Tabarrok found airlines are trying to hide the delays by “padding” the flight times—adding, on average, 20 extra minutes to schedules so a flight that hasn’t gotten any faster still counts as “on time.” Thus, on paper, the on-time performance metrics have improved since 1987, even as actual travel times have gotten longer.
We had a can’t miss appointment the next morning and ended up renting a car and driving through the night from Boston to the Washington. Glad Max got a great post out of it!
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2025-08-15 15:10:58
MATTHEWS: What was the debate about import substitution like at this point, in the late 1950s/early 1960s?
KRUEGER: The whole profession believed in import substitution. Almost without question. Even Gottfried Haberler, in his lectures in 1959, said that, of course, infant industry substitution by the developing countries was acceptable. Go back and look at the Cairo lectures. It’s in there.
MATTHEWS: Would you say that was how you were thinking about import substitution at the time?
KRUEGER: It didn’t quite ring true. More than that, just seeing how import substitution was working made me skeptical. Lawyers who do trade law are more pro free trade than economists, because they know how badly protection works. A distorted economy is terrible. Not just a little bad—import substitution probably cut growth rates in half of what they could have been.
Here is the entire dialogue.
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2025-08-15 13:00:04
Here is a new NBER working paper:
As geopolitical tensions intensify, great powers often turn to trade policy to influence international alignment. We examine the optimal design of tariffs in a world where large countries care not only about economic welfare but also about the political allegiance of smaller states. We consider both a unipolar setting, where a single hegemon uses preferential trade agreements to attract partners, and a bipolar world, where two great powers compete for influence. In both scenarios, we derive optimal tariffs that balance terms-of-trade considerations with strategic incentives to encourage political alignment. We find that when geopolitical concerns are active, the optimal tariff exceeds the classic Mill-Bickerdike level. In a bipolar world, optimal tariffs reflect both economic and political rivalry, and may be strategic complements or substitutes. A calibration exercise using U.N. voting patterns, an estimate of the cost of buying votes in the U.N., and military spending suggests that geopolitical motives can significantly amplify protectionist pressures and that the emergence of a second great power can contribute to a retreat from globalization.
The authors are
“In the interests of realism, we also consider models where the government a) seeks to maximize returns from corrupt side-bargains, b) seeks to maximize public treasury revenue beyond an optimal level, for Leviathan-like reasons, and c) considers behavioral postulates for policymakers who have an ungrounded attachment to protectionist ideas. The results then change as follows…”
This is after all 2025, and economics is supposed to have a descriptive component. I will make two other points:
1. The paper’s insight about how and why the rise of China may have contributed to the shinking of the pace of globalization is quite valuable, and as far as I know original.
2. This shows once again how the economics profession produces research at least supposedly defending a degree of protectionism, and how its top (non-libertarian) contributors refuse to acknowledge that. At the same time, those people do not wish to consider public choice arguments of the sort that would overturn those conclusions, because such a public choice perspective would have unwelcome implications across a broader range of issues.
Let’s go the corruption and Leviathan and ideology postulate routes with the analysis, you’ll still end up with a good case against Trump. It’s just that it will force you to reexamine some of your other priors.
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2025-08-15 02:39:28
JLL estimates $170bn of assets will require construction lending or permanent financing this year. Between now and 2029, however, global spending on data centres will hit almost $3tn, according to Morgan Stanley analysts. Of that, just $1.4tn is forecast to come from capital expenditure by Big Tech groups, leaving a mammoth $1.5tn of financing required from investors and developers.
About $60bn of loans are going into roughly $440bn of data centre development projects this year, twice as much debt as in 2024, according to a recent presentation by law firm Norton Rose Fulbright. More than $25bn of loans were underwritten in the first quarter of this year alone, according to a report by Newmark.
Here is more from a very good FT article.
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2025-08-15 02:28:28
The University of Chicago has now borrowed $6.3 billion, more than 70 percent of the value of its endowment. The cost of servicing its debt is now 85 percent of the value of all undergraduate tuition. (This is not normal. No peer institution has a debt-to-asset ratio greater than 26 percent. Perhaps that is one reason why Chicago’s tuition is so high and yet it wants to spend so little on education?)
Here is the full story. Via Anecdotal.
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