Author name: 9u50fv

redbox-easily-reverse-engineered-to-reveal-customers’-names,-zip-codes,-rentals

Redbox easily reverse-engineered to reveal customers’ names, zip codes, rentals

dvd, privacy, redbox, Tech / /

Thousands of Redboxes getting dumped

It’s worth noting that the amount of data expected to be stored on Redboxes is small compared to Redbox’s overall business. Since Redbox once rented out millions of DVDs weekly, the data retrieved only represents a small portion of Redbox’s overall business and, likely, of business conducted on that specific kiosk.  That might not be much comfort to those whose data is left vulnerable, though.

The problem is more alarming when considering how many Redboxes are still out in the wild with uncertain futures. High demand for Redbox removals has resulted in all sorts of people, like Turing, gaining access to kiosk hardware and/or data. For example, The Wall Street Journal reported last week about a “former Redbox employee who convinced a 7-Eleven franchisee” to give him a Redbox, a 19-year-old who persuaded a contractor hauling a kiosk away from a drugstore to give it to him instead, as well as a Redbox landing in an Illinois dumpster.

Consumer privacy concerns

Chicken Soup’s actions may violate consumer privacy regulations, including the Video Privacy Protection Act outlawing “wrongful disclosure of video tape rental or sale records.” However, Chicken Soup’s bankruptcy (most of its assets are in a holding pattern, Lowpass reported) makes customer remediation more complicated and less likely.

Mario Trujillo, staff attorney for the Electronic Frontier Foundation, told Ars that this incident “highlights the importance of security research in uncovering flaws that can leave customers unprotected.”

“While it may be hard to hold a bankrupt company accountable, uncovering the flaw is the first step,” he added.

Turing, which reverses engineers a lot of tech, said that the privacy problems she encountered with Redbox storage “isn’t terribly uncommon.”

Overall, the situation underscores the need for stricter controls around consumer data, whether it comes internally from companies or, as some would argue, through government regulation.

“This security flaw is a reminder that all companies should be obligated to minimize the amount of data they collect and retain in the first place,” Trujillo said. “We need strong data privacy laws to do that.”

Redbox easily reverse-engineered to reveal customers’ names, zip codes, rentals Read More »

it’s-increasingly-unlikely-that-humans-will-fly-around-the-moon-next-year

It’s increasingly unlikely that humans will fly around the Moon next year

artemis II, ground systems, orion, Science, Space / /

Don’t book your tickets for the launch of NASA’s Artemis II mission next year just yet.

We have had reason to doubt the official September 2025 launch date for the mission, the first crewed flight into deep space in more than five decades, for a while now. This is principally because NASA is continuing to mull the implications of damage to the Orion spacecraft’s heat shield from the Artemis I mission nearly two years ago.

However, it turns out that there are now other problems with holding to this date as well.

No schedule margin

A new report from the US Government Accountability Office found that NASA’s Exploration Ground Systems program—this is, essentially, the office at Kennedy Space Center in Florida responsible for building ground infrastructure to support the Space Launch System rocket and Orion—is in danger of missing its schedule for Artemis II.

During this flight a crew of four astronauts, commanded by NASA’s Reid Wiseman, will launch inside Orion on a 10-day mission out to the Moon and back. The spacecraft will follow a free-return trajectory, which is important, because if there is a significant problem with Orion spacecraft’s propulsion system, the trajectory of the vehicle will still carry it back to Earth. At their closest approach, the crew will come within about 6,500 miles (10,400 km) of the surface of the far side of the Moon.

The new report, published Thursday, finds that the Exploration Ground Systems program had several months of schedule margin in its work toward a September 2025 launch date at the beginning of the year. But now, the program has allocated all of that margin to technical issues experienced during work on the rocket’s mobile launcher and pad testing.

“Earlier in 2024, the program was reserving that time for technical issues that may arise during testing of the integrated SLS and Orion vehicle or if weather interferes with planned activities, among other things,” the report states. “Officials said it is likely that issues will arise because this is the first time testing many of these systems. Given the lack of margin, if further issues arise during testing or integration, there will likely be delays to the September 2025 Artemis II launch date.”

It’s increasingly unlikely that humans will fly around the Moon next year Read More »

x’s-depressing-ad-revenue-helps-musk-avoid-eu’s-strictest-antitrust-law

X’s depressing ad revenue helps Musk avoid EU’s strictest antitrust law

Antitrust law, Digital Markets Act, dma, elon musk, European Union, Policy, social media app, Twitter, X, x corp / /

Following an investigation, Elon Musk’s X has won its fight to avoid gatekeeper status under the European Union’s strict competition law, the Digital Markets Act (DMA).

On Wednesday, the European Commission (EC) announced that “X does indeed not qualify as a gatekeeper in relation to its online social networking service, given that the investigation revealed that X is not an important gateway for business users to reach end users.”

Since March, X had strongly opposed the gatekeeper designation by arguing that although X connects advertisers to more than 45 million monthly users, it does not have a “significant impact” on the EU’s internal market, a case filing showed.

A gatekeeper “is presumed to have a significant impact on the internal market where it achieves an annual Union turnover equal to or above EUR 7.5 billion in each of the last three financial years,” the case filing said. But X submitted evidence showing that its Union turnover was less than that in 2022, the same year that Musk took over Twitter and began alienating advertisers by posting their ads next to extremists’ tweets.

Throughout Musk’s reign at Twitter/X, the social networking company told the EC, both advertising revenue and users have steadily declined in the EU. In particular, “X Ads has a too small and decreasing scale in terms of share of advertising spend in the Union to constitute an important gateway in the market for online advertising,” X argued, further noting that X had a “lack of platform power” to change that anytime soon.

“In the last 15 months, X Ads has faced a decline in number of advertising business users, as well as a decline in pricing,” X argued.

X’s depressing ad revenue helps Musk avoid EU’s strictest antitrust law Read More »

ftc-“click-to-cancel”-rule-seeks-to-end-free-trial-traps,-sneaky-auto-enrollments

FTC “click to cancel” rule seeks to end free trial traps, sneaky auto-enrollments

click to cancel rule, deceptive trade, federal trade commission, ftc, junk fees, lina khan, Policy, subscription fees, subscriptions, unfair trade / /

No more jumping through endless hoops to cancel subscriptions, FTC rule says.

It will soon be easy to “click to cancel” subscriptions after the US Federal Trade Commission (FTC) adopted a final rule on Wednesday that makes it challenging for businesses to opt out of easy cancellation methods.

“Too often, businesses make people jump through endless hoops just to cancel a subscription,” FTC chair Lina Khan said in a press release. “The FTC’s rule will end these tricks and traps, saving Americans time and money. Nobody should be stuck paying for a service they no longer want.”

The heart of the new rule requires businesses to provide simple ways to cancel subscriptions. Under the rule, any subscription that can be signed up for online must be able to be canceled online. And cancellation paths for in-person sign-ups must be just as easy, offered either by phone or online.

In guidance released Wednesday, the FTC recommended that businesses keep “three guardrails in mind” to ensure cancellation methods comply with the law. First, customers cannot be required to talk to a live agent or chatbot to cancel if that wasn’t required for sign-up. Next, any phone cancellation methods cannot include charges and must be offered during normal business hours. And finally, canceling services in person must always be optional.

To comply with the rule, businesses offering “negative option marketing” such as subscriptions, automatic renewals, and free trial offers—to both consumers and other businesses—are prohibited from misleading customers. They must clearly disclose all terms of the deal prior to accepting payment, including explaining how much and how often customers will be charged, when free trials or promotions end, any deadlines to avoid charges, and, importantly, how to cancel.

“All this information should be clear, conspicuous, and available to your customers before they enroll. And certain key information related to charges and cancellation must appear right when and where the customer agrees to the negative option, every time,” the FTC said.

Under the “click to cancel” rule, businesses must also get consumers’ informed consent before issuing charges and maintain records of consent for a minimum of three years. Those records could be in the form of a ticked checkbox or a signature, the FTC said, noting the agency offers “some flexibility on what that proof looks like.”

“Don’t try to distract people with other information,” the FTC said. “Get proof of consent and maintain it for at least three years.”

That provision is designed to end unfair and deceptive practices that the FTC found, such as inadequate disclosures about free trials or sneaky auto-enrollments. Those “practices have been a persistent source of consumer harm for decades,” the FTC’s notice on the final rule said, “saddling shoppers with recurring payments for products and services they never intended to purchase nor wanted to continue buying.”

The FTC confirmed that some provisions of the final rule will go into effect within 60 days, but most will take effect after 180 days. Violators risk civil penalties and other forms of consumer redress that weren’t previously available under the FTC act, the notice in the federal register said.

Some frustrated individual commenters asked for stiff penalties, the FTC’s notice said.

“There needs to be a substantial penalty when a service is requested to be cancelled, but the charges continue,” one commenter urged the FTC. “I dropped my TV service from Comcast three months ago and they continue to charge me. Every time I need to re-contact them, I waste an hour.”

FTC made few concessions to critics

More than 16,000 comments were submitted during proposed rulemaking, including concerns raised by cable firms who worried that the FTC’s rule might make it so easy to cancel a subscription that customers miss out on benefits, including deals often offered to retain their business.

At that time, Michael Powell, CEO of The Internet & Television Association (NCTA), defended using live agents to process cancellation requests. He warned that “a consumer may easily misunderstand the consequences of canceling,” incurring unexpected costs in situations like “canceling part of a discounted bundle” that “may increase the price for remaining services.”

Powell further argued that the rule could raise costs for customers, alleging that the FTC had significantly underestimated compliance costs that “could easily exceed $100 million for initial implementation by” the cable industry alone.

But the FTC strongly disagreed with some estimates of compliance costs. For example, in the notice in the federal register, the FTC noted that “because NCTA members who enroll consumers online already, clearly, have websites, the Commission rejects the notion that adding ‘click to cancel’ functionality to websites that already include an order path for enrolling, and likely also include functionality for registering a payment mechanism for automated billing, would cost $12–$25 million.”

Ultimately, the FTC disputed the NCTA’s data and rejected the notion that the rule would “require building online cancellation systems virtually from the ground up and expensive ongoing recordkeeping requirements across all services,” pointing any concerned commenters to “the detailed cost-benefit analysis” of the rule provided in the federal register notice.

There were only a few major changes to the final rule following the public commenting period. Notably, the FTC dropped a provision that would have required businesses to send annual reminders about recurring charges, as well as another prohibiting promotions or deals offered during the cancellation process in efforts to retain customers without customers opting in to seeing those offers.

The FTC said that it’s only dropped these provisions for now, noting that the Commission plans to keep the record “open on these issues” and may seek additional comments.

Exemptions available but seem unlikely

Perhaps of greatest interest to businesses, the FTC also added “a provision allowing requests for exemptions.” But those will likely be reserved for businesses already complying with the rule, the FTC said, while explaining that each request for exemptions will be weighed individually.

“Because such decisions are highly fact dependent, the Commission must consider exemptions, even of larger groups, on an individualized basis pursuant to the FTC’s Rules of Practice,” the FTC’s notice said.

Some businesses may qualify for recordkeeping exemptions, the FTC said, but only if “it is technologically feasible to make it impossible for customers to enroll without providing unambiguously affirmative consent.”

“Sellers must either maintain records of each consumer’s unambiguously affirmative consent or demonstrate they satisfy the technological exemption provision,” the FTC’s notice said.

The Commission specifically confirmed that it will not be granting “blanket exemptions to sellers who contract with third parties while offering subscription services.” While some businesses claimed this leaves them on the hook for cancellations they cannot process, the FTC found that “an exemption for all sellers who contract with third parties to manage aspects of their negative option programs would effectively nullify the Rule by incentivizing less than legitimate sellers to contract with actors engaged in deceptive practices to maximize negative option enrollments and frustrate cancellation with impunity.”

“A seller cannot evade its responsibility to deal honestly with consumers by contracting with a third party who does not,” the FTC’s notice said.

Official: FTC rule “may not survive legal challenge”

The final rule narrowly passed by a vote of 3–2, with commissioner Melissa Holyoak providing a dissenting statement accusing the agency of rushing the rule to score political points for the Biden administration ahead of the presidential election.

Vice President Kamala Harris will likely continue Biden’s war on “junk fees” if elected, Reuters reported, and Holyoak claimed that Khan pushed for the rule’s adoption to help follow “through on a campaign pledge made by the Chair’s favored presidential candidate.”

According to Holyoak, the final rule is deeply flawed, “improperly generalizing” unfair and deceptive practices “from narrow industry-specific complaints and evidence to the entire American economy.” She argued that the FTC only based the rule on 35 cases, which is allegedly not enough to establish that harmful practices are “prevalent.”

“Whatever the merits of the past cases, the Majority does not remotely come close to explaining how the evidence in those limited cases are similar to the myriad contexts an economy-wide rule would inevitably apply to,” Holyoak suggested.

She also claimed that “if similarity among complaints and cases only at the highest level of generality constitutes the ‘prevalence’ sufficient to ground an economy-wide rulemaking, then a ‘prevalence’ determination is in fact no meaningful guardrail on the Commission’s conduct at all.”

In the press release, the FTC discussed the wide reach of harms, noting that it “receives thousands of complaints about negative option and recurring subscription practices each year,” with the number “steadily increasing over the past five years.”

But Holyoak insisted that the final rule is such an overreach that it “may not survive legal challenge.”

“The Chair has put political expediency over getting things right,” Holyoak said, raising “the possibility that foreordained outcomes and political goals curtailed considering the rulemaking record with an open mind and without prejudgment, as law requires.”

A key legal flaw, Holyoak claimed, is that the rule prohibits any misrepresentations of a negative option, not just those relating to “deceptive terms.” That means businesses risk civil penalties for any material fact deemed misleading, which she alleged “fails to meet” the level of “specificity” required for FTC rulemaking. That seeming textual oversight “will no doubt invite serious legal challenge on this basis,” Holyoak predicted.

Should any portion of the rule be struck down through a legal challenge, the FTC included a provision on severability, allowing the remainder of the rule to remain in force.

Too soon to guess impact on subscription prices

According to Holyoak, the broad final rule “tilts the playing field in ways that are likely to pervert business incentives,” perhaps leading businesses to stop offering negative option billing models, “even when businesses and consumers could derive significant value from them.”

“Even honest businesses will have reason to reconsider the use of negative option billing now that it means subjecting themselves to potential civil penalties for misreading Commission tea leaves,” Holyoak said.

Further, she alleged that consumers could be harmed if the rule preempts state laws or potentially increases transaction costs for businesses that potentially stop offering cheaper negative option billing. Businesses could also pass on to customers the costs of legal fees incurred in efforts to obtain an exemption, Holyoak suggested.

“Raising the transaction costs will reduce a business’ sales and the utility consumers derive from these services. In other words, in our good intentions, we may harm the consumers and competition we are supposed to protect,” Holyoak warned.

But while Holyoak seems sure that consumers could be harmed by the rule potentially limiting negative option billing and spiking subscription costs, the FTC argued that “consumers cannot realize these benefits when sellers make material misrepresentations to induce consumers to enroll in such programs, fail to provide important information, bill consumers without their consent, or make cancellation difficult or impossible.”

At least one individual customer the FTC notice cited insisted that the rule was necessary to end a wide range of abusive charges draining the wallets of many Americans.

“Implementing this consumer-protection rule has the potential to save American consumers millions of dollars and prevent unscrupulous companies from using byzantine cancellation procedures to squeeze unwarranted funds out of their customers,” the commenter said.

Photo of Ashley Belanger

Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.

FTC “click to cancel” rule seeks to end free trial traps, sneaky auto-enrollments Read More »

deepfake-lovers-swindle-victims-out-of-$46m-in-hong-kong-ai-scam

Deepfake lovers swindle victims out of $46M in Hong Kong AI scam

AI, AI crimes, AI fraud, AI scams, Biz & IT, deepfake, Deepfakes, Faceswap, faceswapping, Hong Kong, image synthesis, machine learning, police, romance scam / /

The police operation resulted in the seizure of computers, mobile phones, and about $25,756 in suspected proceeds and luxury watches from the syndicate’s headquarters. Police said that victims originated from multiple countries, including Hong Kong, mainland China, Taiwan, India, and Singapore.

A widening real-time deepfake problem

Realtime deepfakes have become a growing problem over the past year. In August, we covered a free app called Deep-Live-Cam that can do real-time face-swaps for video chat use, and in February, the Hong Kong office of British engineering firm Arup lost $25 million in an AI-powered scam in which the perpetrators used deepfakes of senior management during a video conference call to trick an employee into transferring money.

News of the scam also comes amid recent warnings from the United Nations Office on Drugs and Crime, notes The Record in a report about the recent scam ring. The agency released a report last week highlighting tech advancements among organized crime syndicates in Asia, specifically mentioning the increasing use of deepfake technology in fraud.

The UN agency identified more than 10 deepfake software providers selling their services on Telegram to criminal groups in Southeast Asia, showing the growing accessibility of this technology for illegal purposes.

Some companies are attempting to find automated solutions to the issues presented by AI-powered crime, including Reality Defender, which creates software that attempts to detect deepfakes in real time. Some deepfake detection techniques may work at the moment, but as the fakes improve in realism and sophistication, we may be looking at an escalating arms race between those who seek to fool others and those who want to prevent deception.

Deepfake lovers swindle victims out of $46M in Hong Kong AI scam Read More »

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North Korean hackers use newly discovered Linux malware to raid ATMs

banks, Biz & IT, hiddencobra, Linux, malware, North Korea, Security / /

Credit: haxrob

Credit: haxrob

The malware resides in the userspace portion of the interbank switch connecting the issuing domain and the acquiring domain. When a compromised card is used to make a fraudulent translation, FASTCash tampers with the messages the switch receives from issuers before relaying it back to the merchant bank. As a result, issuer messages denying the transaction are changed to approvals.

The following diagram illustrates how FASTCash works:

Credit: haxrob

Credit: haxrob

The switches chosen for targeting run misconfigured implementations of ISO 8583, a messaging standard for financial transactions. The misconfigurations prevent message authentication mechanisms, such as those used by field 64 as defined in the specification, from working. As a result, the tampered messages created by FASTCash aren’t detected as fraudulent.

“FASTCash malware targets systems that ISO8583 messages at a specific intermediate host where security mechanisms that ensure the integrity of the messages are missing, and hence can be tampered,” haxrob wrote. “If the messages were integrity protected, a field such as DE64 would likely include a MAC (message authentication code). As the standard does not define the algorithm, the MAC algorithm is implementation specific.”

The researcher went on to explain:

FASTCash malware modifies transaction messages in a point in the network where tampering will not cause upstream or downstream systems to reject the message. A feasible position of interception would be where the ATM/PoS messages are converted from one format to another (For example, the interface between a proprietary protocol and some other form of an ISO8583 message) or when some other modification to the message is done by a process running in the switch.

CISA said that BeagleBoyz—one of the names the North Korean hackers are tracked under—is a subset of HiddenCobra, an umbrella group backed by the government of that country. Since 2015, BeagleBoyz has attempted to steal nearly $2 billion. The malicious group, CISA said, has also “manipulated and, at times, rendered inoperable, critical computer systems at banks and other financial institutions.”

The haxrob report provides cryptographic hashes for tracking the two samples of the newly discovered Linux version and hashes for several newly discovered samples of FASTCash for Windows.

North Korean hackers use newly discovered Linux malware to raid ATMs Read More »

economics-roundup-#4

Economics Roundup #4

Economics / /

Previous Economics Roundups: #1, #2, #3

Since this section discusses various campaign proposals, I’ll reiterate:

I could not be happier with my decision not to cover the election outside of the particular areas that I already cover. I have zero intention of telling anyone who to vote for. That’s for you to decide.

All right, that’s out of the way. On with the fun. And it actually is fun, if you keep your head on straight. Or at least it’s fun for me. If you feel differently, no blame for skipping the section.

Last time the headliner was Kamala Harris and her no good, very bad tax proposals, especially her plan to tax unrealized capital gains.

This time we get to start with the no good, very bad proposals of Donald Trump.

This is the stupidest proposal so far, but also the most fun?

(Aside from when he half-endorsed a lightweight version of The Purge?!)

Trump: We will end all taxes on overtime.

The details of the announcement speech at the link are pure gold. Love it.

The economists, he said, told him he would get ‘a whole new workforce.’

Yes, that would happen, and now it’s time for Solve For the Equilibrium. What would you do, if you learned that ‘overtime pay’ meaning anything for hours above forty in a week was now tax free? How would you restructure your working hours? Your reported working hours? How many vacations you took versus how often you worked more than forty hours? The ratio of regular to overtime pay? Whether you were on salary versus hourly? What it would mean to be paid to be ‘on call,’ shall we say?

I used this question as a test of GPT-4o1. Its answer was disappointing, missing many of the more obvious exploitations, like alternating 80 hour work weeks with a full week off combined with double or more pay for overtime. Or shifting people out of salary entirely onto hourly pay.

I often work more than 40 hours a week for real, so I’d definitely be restructuring my compensation scheme. And let’s face it, the ‘for real’ part is optional.

This of course is never going to happen. If it did, it would presumably include various rules and caps to prevent the worst abuses. But even the good version would be highly distortionary, and highly anti-life. You are telling people to intentionally shift into a regime where they work more than 40 hours a week as often as possible, the opposite of what we as a society think is good. This is not what peak performance looks like, even working fully as intended.

Less fun Trump proposals are things like bringing back the SALT deduction (what, why, I am so confused on this one?) and a 10% cap on interest on credit cards. Which would effectively be a ban on giving unsecured credit cards with substantial limits to anyone at substantial risk of not paying it back or require other draconian fees and changes to compensate, and lord help us if actual interest rates ever approached 10%. Larry Summers notes that this is a dramatic price cut on the order of 70% for many customers, as opposed to other proposed price controls that are far less dramatic and thus less destructive, so it would have far more dramatic effects faster. If payday loans are included they’re de facto banned, if not then people will substitute those far worse loans for their no longer available credit cards.

(Fun fact: We do have price controls on debit cards, which turns out mostly fine because there’s no credit risk and it’s a natural monopoly, except now of course the Biden DoJ is bringing an antitrust suit against Visa.)

Then there’s ‘I’m going to bring down auto insurance costs by 50%’ where I could try to imagine how he plans to do that but what would even be the point.

Also there is his plan to ‘make auto loan interest tax deductible’ which is another fun one. Already car companies often make most of their money on financing. The catch is the standard deduction, which you have to give up in order to claim this. If the car loan is the only big item you’ve got, it won’t help you. What you need is some other large deduction, which will usually be a home loan. So this is essentially a gift to homeowners – once you’re deducting your mortgage interest, now you can also deduct your car loan interest. It makes no economic sense, but Elon Musk will love it, and it’s not that much stupider than the mortgage deduction. Of course, what we should actually do is end or phase out the mortgage deduction (as a compromise you could keep existing loans eligible but exclude new ones, since people planned on this), but I’m a realist.

Also there’s Trump’s other proposed huge giveaway and trainwreck, which is a quiet intention to ‘privatize’ Fannie Mae and Freddie Mac. I put privatize in air quotes because if you think for one second we would ever allow these two to fail then I have some MBS to sell you. Or buy from you. I’m not sure which. Quite obviously we are backing these two full on ride or die, so this would mean socialized losses with privatized gains and another great financial crisis waiting to happen.

As Arnold Kling suggests, we could and likely should instead greatly narrow the range of mortgages the government backs, and let the private sector handle the rest at market prices. When we back these mortgages, the subsidy is captured by existing homeowners and raises prices, so what are we even doing? Alas, I doubt we will seriously consider that change.

Another note on the unrealized capital gains issue is what happens to IP that pays out over time. For example, Taylor Swift suddenly owns a catalog worth billions, that could gain hundreds of millions in value when interest rates shift. Are you going to force her to pay tax on all that? How is she going to do that without selling the catalog? You want to force her to do that? Or do you want her to find a way to intentionally sabotage the value of the catalog?

We have some good news on the grocery price control front, as Harris has made clear that her plan would not involve global price controls on groceries and widespread food shortages. Instead, it will be modeled on state-level price gouging laws, so that in an emergency we can be sure that food joins the list of things that quickly becomes unavailable at any price, and no one has the incentive to stock up on or help supply badly needed goods during a crisis.

Tariffs are terrible, but not as bad as I previously thought, if there is no retaliation?

Justin Wolfers: Here’s a rule of thumb that Goldman draws from the literature:

  1. Roughly 15% of a tariff is borne by exporters from the other country.

  2. Another 15% results in compressed margins for American importers.

  3. 70% of the burden is borne by consumers paying higher prices.

The first 15% is indeed then ‘free money’ and the second 15% is basically fine. So if you were to use the tariff to reduce other taxes, and the other country didn’t retaliate, you’d come out ahead. You get deadweight loss from reduced volume due to the 70%, but you face similar issues at least as much with almost every other tax.

A full-on trade war by the USA alone, however, would be extremely bad (HT MR).

We use an advanced model of the global economy to consider a set of scenarios consistent with the proposal to impose a minimum 60% tariff against Chinese imports and blanket minimum 10% tariff against all other US imports. The model’s structure, which includes imperfect competition in increasing-returns industries, is documented in Balistreri, Böhringer, and Rutherford (2024). The basis for the tariff rates is a proposal from former President Donald Trump (see Wolff 2024). We consider these scenarios with and without symmetric retaliation by our trade partners.

Our central finding is that a global trade war between the United States and the rest of the world at these tariff rates would cost the US economy over $910 billion at a global efficiency loss of $360 billion. Thus, on net, US trade partners gain $550 billion. Canada is the only other country that loses from a US go-it-alone trade war because of its exceptionally close trade relationship with the United States.

…

When everyone retaliates against the United States, the closest scenario here to a US-led go-it-alone global trade war, China actually gains $38.2 billion.

Noah Smith does remind us that no, imports do not reduce GDP. Accounting identities are not real life, and people (including Trump and his top economic advisor) are confusing the accounting identity for a real effect. Yes, some imports can reduce GDP, in particular imports of consumer goods that would have otherwise been bought and produced internally. But it is complicated, and many imports, especially of intermediate goods, are net positive for GDP.

In other campaign rhetoric news, I offer props to JD Vance for pointing out that car seat requirements act as a form of contraception.

The context of his comment was a hearing where people quite insanely proposed to ban lap infants on flights, which the FAA has to fight back against every few years by pointing out that flying is far safer than other transportation.

So such a ban would actively make us less safe by forcing people to drive.

If you want the right job, or a great job, that’s hard. If you want a job at all? That’s relatively easy, if you’re in reasonable health.

Jeremy: Only 4% of working age males “not in the labor force” say they have difficulty finding work. By far the largest reason for dropping out is physical disability and health problems.

A comment points out Jeremy is playing loose here: 4% is who listed this as the primary reason for being out of the labor force. A lot more did have difficulty.

Jeremy: Also, the prime-age employment rate is near all-time highs — some men aren’t in the LF, this is true, but women are employed at by far the highest rate ever. This suggests that the number of jobs isn’t the problem, but something (or things) are making men drop out (see above).

And the prime age employment rate is highest for native-born workers

Yes, a lot of those jobs are terrible. But that has always been true.

Kalshi will pay 4.05% on both cash and open positions, which will adjust with Fed rates. That’s a huge deal. The biggest barrier to long term prediction markets is the cost of capital, which is now dramatically lower.

Election prediction market update: As I write this, Polymarket continues to be the place to go for the deep markets, and they have Trump at 55% to win despite very little news. So we’ve finally broken out of the period where the market odds were strangely 50/50 for a long time, likely for psychological reasons driving traders. The change is also reflected in the popular vote market, with Trump up to 31% there, about 8% above his lows. Nate Silver’s predictions have narrowed, he has Harris at 51% to win, down from a high of 58%.

The move seems rather large given the polls and lack of other events. My interpretation is that the market is both modestly biased in favor of Trump for structural reasons (including that it’s a crypto market and Trump loves crypto) and that the market is taking a no-news-is-good-for-Trump approach.

I haven’t heard anyone think of it that way, but it makes sense to me. Consider the debate. Clearly the debate was good for Harris, including versus expectations. But also the debate was expected to be good for Harris, so before the debate the polls were underestimating Harris in that way. One could similarly say that Harris generally has more opportunity to improve and less chance of imploding or having health issues over the last two months, so her chances go down a little if Nothing Ever Happens.

As many have pointed out, there is little difference between 44% Harris at Polymarket, and 51% Harris at Silver Bulletin. Even if one of them wins decisively, it won’t mean that one of them is right and the other wrong. To conclude that you have to look at the details more carefully.

We’ve gone over this before but it bears repeating, and I like the way this got presented this time around. How bad are our marginal tax rates for those seeking to climb into the middle class, once you net out all forms of public assistance, taxes and expenses?

As bad as it gets.

Josh Job: Holy shit.

Brad Wilcox: Truly astonishing indictment of our welfare policies fr @AtlantaFed. A single mother in DC can make no gains, financially, as her earnings rise from $11,000 to $65,000 because benefits like food stamps & Medicaid phase in/out as her income rises. Terrible for work/marriage.

Andrew Jobst: Talked to someone who lost their job in the GFC (highly educated, driven, professional credentials). Wanted to start her own business. Commented about how demoralizing it was to hustle all day to earn another dollar, only for her unemployment benefit to drop by a dollar.

Benefits are not ‘as good as cash’ so the problem probably is not quite as bad as ‘100% effective marginal tax rates from $10,000 in income up to $65,000’ but it could be remarkably close, especially in places with high additional state taxes.

Can you imagine what would happen if you took a world like this, and you stopped counting tips as taxable income, as proposed by both candidates?

Effectively, you’d have a ~100% tax rate on non-tip income, but 0% on tips (and Trump would add overtime). Until you could ‘escape’ well above the $65k threshold, basically everyone would be all but obligated to fight for only jobs where they could get paid in these tax-free ways, with other jobs being essentially unpaid except to get you to the $10k threshold.

Given these facts, what is remarkable is how little distortion we see. Why isn’t there vastly more underground economic activity? Why don’t more people stop trying to earn money, or shift between trying to earn the minimum and then waiting to try until they’re ready to earn the maximum, or structuring over time?

My presumption is that this is because the in-kind benefits and conditional benefits are worth a lot less than these charts value them at. Cash is still king. So while the effective rate is still quite high, we don’t actually see 100% marginal tax rates.

If you want more income, Tyler Cowen suggests perhaps you could work more hours? A new estimate says 20% of variance in lifetime earnings is in hours worked, although that seems if anything low, especially given as Tyler points out that working more improves your productivity and human capital.

Tyler Cowen: In the researchers’ model, 90% of the variation in earnings due to hard work comes from a simple desire to work harder. Note again this is an average, so it does not necessarily describe the conditions faced by, say, Elon Musk or Mark Zuckerberg.

In my experience, vastly more than 20% of my variance in income comes from the number of hours worked and how hard I was working generally. One could draw a distinction between hours worked versus working hard during those hours. I’d guess the bigger factor is how hard I work when I’m working, but the times I’ve succeeded and gotten big payoffs, it wouldn’t have happened at all if I hadn’t consistently worked hard for a lot of hours. The time I wasn’t able to deliver that effort, at Jane Street, it was exactly that failure (and what caused that failure) that largely led to things not working out.

Working hard also applies to influencers. In this job market paper from Kazimier Smith, he finds that the primary driver of success is lots of posting. Sponsored posts grow reach the same as regular posts, which is nice work if you can get it, although this results likely depends on influencers selecting good fits and not overdoing it, and on correlation, where if you are getting sponsorships it is a sign you would otherwise be growing.

The abstract also introduced the question of focus and audience capture. Influencers and other content creators have to worry that if they don’t give the people what they want, they’ll lose out, and I’ve found that writing on certain topics, especially gaming, creates permanent loss of readers. I’d love to see the proper version of that paper too.

Since we’ve now had some major storms, it’s time for another round of reminding everyone that laws against ‘price gouging’ are a lot of why it we so quickly run out of gas and other supplies in emergency situations. Why would you stock extra in case of emergency, if you only can sell for normal prices? Why would you bring in extra during an emergency, if you can only sell for normal prices?

Because presumably, what you value most lies elsewhere.

Dr. Insensitive Jerk: Our relatives in the Florida evacuation zone just told us I-75 is a parking lot, and no gasoline is available.

Do you know why no gasoline is available? Because of price-gouging laws.

Pointing this out provokes a predictable emotional response from adult children. “He should give me gas cheaply! He should store an infinite amount of gasoline so he can fill up all the hoarders, and still have gas left for me, and he should do it for the same price as last week!”

Now when Floridians need gasoline desperately, they can’t buy it at any price, because other Floridians said, “It’s cheap, so I might as well fill the tank.”

People outside Florida with tanker trucks full of gasoline might have considered helping, but instead they said, “I won’t risk it. If I charge enough to make it worth my while, I will be arrested and vilified in the press.”

But at least the Floridians won’t have to lie awake in their flooded houses worrying that somebody made a profit from rescuing them.

Alas, the Bloomberg editorial board will keep on writing correct takes like ‘Price Controls Are a Bipartisan Delusion’ (the post actually downplays the consequences in a few cases, if anything) and we will go on doing it.

I appreciate this attempted reframing, though I doubt it will get through to many:

Maxwell Tabarrok: High prices during emergencies aren’t gouging – they’re bounties for desperately needed goods. Like a sheriff offering a big reward to catch a dangerous criminal, these prices incentivize the entire economy to rush supplies where they’re most needed.

With two major hurricanes in the last couple of weeks, “price gouging” is in the news. In addition to it’s violent name, there are good intuitive reasons to dislike price gouging.

But imagine if you were the sheriff of Ashville, NC, and it was your job to get more gasoline and bring it into town.

You might offer a bounty of $10 a gallon, dead or alive.

That’s a lot more than the usual everyday bounty, but this is an emergency.

Prices aren’t just a transfer between buyer and seller.

They’re also also a signal and incentive to the whole world economy to get more high-priced goods to the high-paying area; they’re a bounty.

The last thing you’d want if you were the sheriff is a cap on the bounty price you’re allowed to set.

High prices on essential goods during an emergency are WANTED posters, sent out across the entire world economy imploring everyone to pitch in and catch the culprit.

The difficulty that many people may have in paying these higher prices is a serious tragedy, and one that can be alleviated through prompt government response e.g by sending relief funds and shipping in supplies. But setting prices lower doesn’t mean everyone can access scarce and expensive essential goods. In an emergency, there simply aren’t enough of them to go around.

Setting low prices might mean the few gallons of gas, bottles of water, or flights that are available are allocated to people who get to them first, or who can wait in line the longest, but it’s not clear that these allocations are more egalitarian.

These allocations leave the central problem unsolved: A criminal is on the loose and a hurricane has made it difficult to get these goods to where they’re needed.

When there’s an emergency and a criminal is on the loose, we want the sheriff to set the bounty high, and catch ‘em quick. High prices during other emergencies work the same way. Let the price-system sheriff do his work!

Scott Sumner points out that customers very much prefer ridesharing services that price gouge and have flexible pricing to taxis that have fixed prices, and very much appreciate being able to get a car on demand at all times. He makes the case that liking price gouging and liking the availability of rides during high demand are two sides of the same coin. The problem is (in addition to ‘there are lots of other differences so we have only weak evidence this is the preference’), people reliably treat those two sides very differently, and this is a common pattern – they’ll love the results, but not the method that gets those results, and pointing out the contradiction often won’t help you.

Chinese VC fundraising and VC-backed company formation has fallen off a cliff, after China decided they were going to do everything they could to make that happen.

Financial Times: Venture capital executives in China painted a bleak picture of the sector to the FT, with one saying: ‘The whole industry has just died before our eyes.’

Bill Gurley: Many in Washington are preoccupied with China. If this article is accurate, the #1 thing we could do to improve US competitiveness, would be to open the door much more broadly & quickly to skilled immigration. Give these amazing entrepreneurs a home on US soil.

It’s important to note these are private VC funds and VC-backed companies only. This is not the picture of all new enterprise in China. There are plenty of new companies.

According to FT, venture capital has died because the Chinese government intentionally killed it. They made clear that you will be closely monitored, your money is not your own and cannot be transferred offshore, your company is not your own, the authorities could actively go after the most successful founders like Jack Ma, that you are to reflect ‘Chinese values’ or else. Venture capital salaries are capped.

What is left of venture is often suing companies to get their money back, so the government doesn’t accuse them of not trying to get the money back on behalf of the government. New founders are required to put their house and car on the line.

The advocates of Venture Capital and the related startup ecosystem present it as the lifeblood of economic dynamism, innovation and technological progress. If they are correct about that, then this is a fatal blow.

Often we hear talk about ‘beating China,’ along with warnings of how we will ‘lose to China’ if we do some particular thing that might interfere with venture capital or the tech sector. Yet here we have China doing something ten or a hundred or a thousand times worse than any such proposals. Yet I don’t expect less worrying about China?

One perspective listing what 2% compounding annual economic growth feels like once you get to your 40s. It is remarkably similar to my experience – I look around and realize that the stuff I use and value most is vastly better and cheaper, life in many ways vastly better, things I used to spend lots of time on now at one’s fingertips for free or almost free.

A new paper asks why inflation is costly to workers.

We argue that workers must take costly actions (“conflict”) to have nominal wages catch up with inflation, meaning there are welfare costs even if real wages do not fall as inflation rises.

We study a menu-cost style model, where workers choose whether to engage in conflict with employers to secure a wage increase.

…

We conduct a survey showing that workers are willing to sacrifice 1.75% of their wages to avoid conflict. Calibrating the model to the survey data, the aggregate costs of inflation incorporating conflict more than double the costs of inflation via falling real wages alone.

Matt Bruenig rolls his eyes and suggests that a union could take care of that conflict for the workers.

Matt Bruenig: Also worth considering the degree to which “conflict costs” constitute another of the frictions that prevent job-switching (people don’t like upsetting their boss/colleagues), which again points towards collective bargaining as important and a limitation of anti-monopsony.

I got a job once that I left after 6 weeks because I got an unexpected offer that paid about $20k more per year and boy did I have to hear what a piece of shit I was from the person who hired me in the first job. It’s as if they had never even read the textbook.

Matt Yglesias: This resonates with me as I ask myself why I re-upped my Bloomberg column contract at the same nominal salary without even attempting to negotiate for a higher fee.

Except I have seen unions, and whatever else you think of unions they do not exactly minimize such conflicts, instead frequently leading to deadweight losses including strikes. And I have no doubt that inflation substantially increases the average costs of such conflicts.

The reason a worker would pay to avoid conflict with the boss is partly it is unpleasant, partly The Fear, and partly because it can result in anything from turning the work situation miserable up through a full ‘you’re fired,’ or in the union case a strike. At minimum, it risks burning a bunch of goodwill.

Also Matt should realize that when you take a new job after six weeks and quit, you have imposed rather substantial costs on your old employer. During those six weeks, you were probably a highly unproductive employee. They spent a lot of time hiring you, training you, getting you up to speed, and then you burned all that effort and left them in another lurch.

Of course they are going to be mad, although the bigger the gap in offers the less mad they should be. We’ve decided that the employee doesn’t strictly owe the employer anything here, it’s a risk the employer has to take, but at minimum they owe them the right to be pissed off – you screwed them, whether or not it was right to do that.

Another way to look at this is that the decline in real wages is a cost, which then often means other costs get imposed, including deadweight losses like switching jobs or threatening to do so, in order to fix it, but that as is often the case those new costs are a substantial portion of the original loss.

There are also the actual real losses. This is especially acute in situations that involve wages being sticky downwards, or someone is otherwise ‘above market’ or above their negotiating leverage. For example, when I joined [company], I was given a generous monthly salary. I stayed for years, but that number was never adjusted for inflation, because it was high and I needed my negotiating points for other things – I didn’t want to burn them on a COLA or anything.

Often salary negotiations happen at times of high worker leverage, when they have another offer or are being hired or had just proven their value or what not. Having to then renegotiate that periodically is at minimum a lot of stress.

As one commenter noted, sufficiently high inflation can actually be better here. If there’s 2% inflation a year, then you’re tempted to sit back and accept it. If it’s 7%, then you have a fairly straightforward argument you need an adjustment.

Vincent Geloso points out that federal any income tax data before 1943 is essentially worthless if you are looking at distributional effects. The IRS was known not to bother auditing, inspecting or challenging tax returns of less than $5k, which was 91% of them in 1921. It is a reasonable policy to focus auditing and checking on wealthier taxpayers.

But this policy was sufficiently known and reliable that it resulted in absolutely massive tax evasion, as in 95% of people earning under $2,000 a year flat out not bothering to file. Needless to say, at that point you might as well set the tax for such people to $0 and tell them they don’t need to file.

When considering insurance costs as a signal, how does one differentiate what is risky versus what are things only people who are bad risks would choose to do?

John Horton: If you listen, insurance companies are giving you solid, data-driven advice about stuff not to do or buy—don’t own a pit bull, don’t have a trampoline, don’t under-water cave dive, don’t own a “cyber” truck…

what’s kind of nuts is that when instead of just quoting you a higher price, they explicitly just will not cover it. To me, that suggests they think adverse selection is a problem. It’s not *justthat pit-bulls are natural toddler-eaters, they think you’re a reckless idiot and a higher price just increases the average idiocy of the customers, with predictable results

Gwern: Or they don’t have enough data.

The problem is, insurance companies only need correlates. So none of that is good advice about stuff you should do – unless you are planning to starting to transition to a woman because of lower insurance rates for women on many things…?

Robert Parham: Upon inspection, it seems like a externality issue. The cybertruck is so tough that any accident with it leaves the truck unscathed while totalling the other car. The Insurance company is liable for the totalled car, hence the decision.

Insurance is indeed pretty great for things like internalizing that your cybertruck would be very bad for any other car that got into an accident with it. The problem is that when you price out trampoline insurance, a lot of this is that people who tend to buy trampolines are reckless, so you don’t know how much you should avoid owning one.

I even wonder if ‘arbitrary’ price differentials would be good. If you charge less for insurance on houses that are painted orange than those painted green, and someone still wants to insure their green house, well, do they sound like responsible people?

As the tech job market continues to struggle, I’m seeing more threads like this asking if it’s time to reevaluate career and college plans based around being a software engineer. My answer continues to be no. Learning how to code and build things is still a high expectancy path.

Work from home allows workers to be paid for the 10 hours they actually work, without having to semi-waste the other 30. What is often valuable is the ability to suddenly work 60-80 hours a week when it matters, or that one meeting or day when you’re badly needed, and it’s fine to work 10 hours (or essentially 0 hours) most other weeks, and the payment is so you’re on standby.

Detty: The most surreal aspect of the WFH vs. in-office debate is how it’s widely acknowledged that hundreds of millions of people do very little all day every day and yet the economy continues to just churn & those who don’t have the magic piece of paper work very hard for very little.

Seth Largo: Lots of corporations and institutions are so wealthy that it makes sense to pay someone a full time salary for 10 hours of work per week, because those 10 hours really do help keep the machine running, and no one’s gonna do it for 10 hours of pay.

Lindy Manager: Also managers need people available who can activate for bursts when needed who have all the context and information to create or present something of sufficient quality on short notice for a client or executive.

Seth Largo: Don Draper knew this.

ib: Yep. A lot of corporate salaries are effectively retainers.

Always Adblock: Yes. And to keep their institutional knowledge. And to keep them away from competitors.

Had this section in reserve for a post that likely will never come together on its own, so figured this was a good time for it.

Paper concludes minimum wage increases drive increased homelessness due to disemployment effects and rental price increases, and dismisses migration as a potential cause. I mean, yes, obviously, on the main result.

A better question is, what does the minimum wage do to rental costs? The minimum wage does successfully cause some work to become higher paid. Most such workers will not be homeowners. It is entirely plausible that landlords could capture a large portion of these gains via higher rents for low-quality housing, perhaps all of it. In which case, what was the point?

Restaurants in Milan used to be forced to be distant from each other, then they stopped requiring that, resulting in agglomeration that caused diverging amenities in different neighborhoods, and increased product differentiation. Tyler Cowen notes ‘I am myself repeatedly surprised how much the mere location of a restaurant can predict its quality.’

I would think of this less as returns to agglomeration and more as it being costly to force restaurants to locate in uneconomical locations, and to effectively undersupply some areas, leading to lack of competition and variety there, while oversupplying others. By creating product differentiation in location, this reduces their incentive to otherwise differentiate or seek higher quality.

More educated workers experience faster wage growth over time, and an expanding wage premium with age.

The U.S. college wage premium doubles over the life cycle, from 27 percent at age 25 to 60 percent at age 55. Using a panel survey of workers followed through age 60, I show that growth in the college wage premium is primarily explained by occupational sorting. Shortly after graduating, workers with college degrees shift into professional, nonroutine occupations with much greater returns to tenure.

Nearly 90 percent of life cycle wage growth occurs within rather than between jobs. To understand these patterns, I develop a model of human capital investment where workers differ in learning ability and jobs vary in complexity. Faster learners complete more education and sort into complex jobs with greater returns to investment. College acts as a gateway to professional occupations, which offer more opportunity for wage growth through on-the-job learning.

Tyler Cowen suggests this causes problems for the signaling model of education. I disagree, and see this result as overdetermined.

  1. Path dependence. Those who go to college then enter professions and careers that allow for such wage growth, from a combination of skills development and social and reputational accumulation. Thus, whatever mix of signaling, correlation and education is causing these other paths, the paths are opened by college, and this has a predictable effect over time.

  2. In particular: Gatekeeping. I don’t buy that future employers will no longer care if you went to college. Many high paying jobs will be difficult or impossible to get without a degree, and the degree helps justify paying someone more, since pay is largely about affirming social status. Gatekeeping thus keeps such people increasingly down over time as results compound, and also discourages investment. Why develop human capital that no one will pay for?

  3. Correlational. If you go to college, this is a revealed preference for longer time horizons and longer term investment, including the capacity and capability to do it. It makes sense that such folks would continue to invest in human capital growth over time relative to others.

  4. In particular: Signaling. Alas, those more willing to invest more time and resources in signaling likely get better compensated over time. Also college plausibly teaches you how to signal.

  5. Catching up. If you take a job rather than go to college, you are going to start out with several years of practical experience, which gives you a temporary advantage that fades over time. College students first entering the workforce are famously out of touch and useless, lacking practical skills, and are coming from a sheltered academic world with unproductive norms. Over time, you get over it.

Tyler Cowen put the rooftops tag on this study from Andreas Ek (gated):

This paper estimates differences in human capital as country-of-origin specific labor productivity terms, in firm production functions, making it immune to wage discrimination concerns.  After accounting for wage and experience, estimated human capital varies by a factor of around 3 between the 90th and 10th percentile.  When I investigate which country-of-origin characteristics correlate most closely with human capital, cultural values are the only robust predictor.  This relationship persists among children of migrants.  Consistent with a plausible cultural mechanism, individuals whose origin place a high value on autonomy hold a comparative advantage in positions characterized by a low degree of routinization.

I don’t understand why we want to be shouting this from the rooftops. These types of correlations are the kind that very much do not imply causation, the whole thing is doubtless confounded to hell and back and depends on a bunch of free variables. Autonomy is one of those values that maps reasonably closely with ‘The West’ and so does the level of human capital.

The core claim is that if your culture values autonomy, then you are better suited to a less routine production activity and hold comparative advantage there. Which is a case where I am confused why we needed a study or mathematical model. How could that have been false? Less routine is not the same as more autonomous but the correlation is going to be very high. People with cultural value X hold comparative advantage in activities that embody X, paper at conference?

War Discourse and the Cross Section of Expected Stock Returns finds that the paper’s model of what war tail risks should be worth does not match the market’s past evaluation of what war tail risks should be worth, and decides it is the market that is wrong. I am highly open the market mispricing things like this, especially in response to media salience, but I’m even more open to the academics being wrong.

Paper claims that we are gaining 0.5% per year in terms of how much welfare we get from across a variety of categories from increased product specialization and variety. Households increasingly spend funds on specialized products that exactly fit their preferences, with the increased variety driving the divergence in consumption.

This is also evidence we are richer. Increased product variety requires people able to consume enough, and pay enough extra for quirky preferences, to justify greater product variety. This represents a real welfare gain. However, instead of making people feel less constrained and wealthier, it puts strain on budgets and competes with and potentially puts additional strain on raising families rather than making it cheaper to raise one.

I very much appreciate the product variety, but increasingly I think we need to consider three different measures of wealth:

  1. The welfare value of the experience of the items in a typical consumption basket.

  2. The combined welfare value including goods that remain unpriced.

  3. The difficulty in purchasing the typical consumption basket, and what affordances that leaves for life goals especially retirement, marriage and children.

Or: The Iron Law of Wages proposes that real wages tend toward the minimum to sustain the life of the worker. So we can measure four things.

  1. The minimum real wages required to sustain the life of the worker.

  2. The welfare value of that minimum consumption basket.

  3. The surplus available after that to the typical worker and what that buys them.

  4. What else is available that is not priced.

When we either effectively mandate additional consumption, such as purchasing additional safety, health care, residence size, education or other product features, or our culture effectively demands such purchases, or the cheaper alternatives stop being available, what happens?

We do increase the welfare value of the minimum basket. We also raise the cost of that basket, which reduces everyone’s surplus.

What happens when things that people value, like community and friendship and the ability to raise children without being terrified of outside intervention, and opportunities to find a good life partner, are degraded?

Life gets worse without it showing up in the productivity statistics or in real wages.

The current crisis and confusion could be thought of as:

  1. The value of the minimum consumption basket is going up a lot.

  2. The cost of the minimum consumption basket is going up less than that.

  3. Real wages are going up, but less than the cost of the basket, so the surplus available after purchasing the basket is also declining.

  4. Key other goods and options are taken away, like those mentioned above.

  5. Economists say ‘workers are better off,’ and in many ways they are.

  6. People say ‘but I have little surplus and do not see how to meet my life goals and I have no hope and my life experience is getting worse.’

Paper explores the impact of the 2010 dissolution of personal income tax reciprocity between Minnesota and Wisconsin. This looks like it on average raised effective taxes on work across state lines by about 8% of remaining net income. This resulted in a decline in quantity of cross-border commuters between 3% and 5%, with the largest impact on low and young earners. My hunch is that the impact size is so low primarily because of inertia, switching costs and lack of understanding of the costs. Whereas jobs that don’t pay as well, and those of the young, are less sticky. It would be shocking if an 8% tax had this small an effect at equilibrium.

Paper estimates that the CARD Act, which limits credit card interest charges and fees, saved consumers $11.9 billion per year, lowering borrowing costs by 1.6% overall and by 5.3% for those with FICO below 660. What is odd is they also find no corresponding decrease in available credit, despite this making offering credit less profitable. There is no free lunch. A potential story is that credit cards adjusted their other costs and benefits, or the counterfactual here is not well established and there would have been growth in credit otherwise, or the good version is that the whole enterprise is so profitable and useful that the banks ate the reduced profits.

There’s also the strange graph below, which requires explaining. Patrick McKenzie points out that the part of the FICO curve where offering credit cards is unprofitable is still a good place to do business, because those in the unprofitable range are unlikely to stay there so long and their business will remain somewhat sticky as they move.

Has real median income gone up under Biden? This clart implies that it perhaps hasn’t, even if weird timing is involved, and that this explains a lot. Yes, pay has increased since 2019, and increased since 2022, but the question people often effectively ask is since the end of 2020.

‘Total compensation’ is cool but what people look at is the actual money.

Economics Roundup #4 Read More »

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Rebellion brews underground in Silo S2 trailer

Apple TV Plus, culture, Entertainment, Rebecca Ferguson, Silo, streaming television / /

Where we left off

The first season opened with the murder of Juliette’s lover, George (Ferdinand Kingsley), who collected forbidden historical artifacts, which silo sheriff Holston Becker (David Oyelowo) investigated at Juliette’s request. When he chose to go outside, he named Juliette as his successor, and she took on George’s case as well as the murder of silo mayor Ruth Jahns (Geraldine James). Many twists ensued, including the existence of a secret group dedicated to remembering the past whose members were being systemically killed. Juliette also began to suspect that the desolate landscape seen through the silo’s camera system was a lie and there was actually a lush green landscape outside.

In the season finale, Juliette made a deal with Holland: She would choose to go outside in exchange for the truth about what happened to George and the continued safety of her friends in Mechanical. The final twist: Juliette survived her outside excursion and realized that the dystopian hellscape was the reality, and the lush green Eden was the lie. And she learned that their silo was one of many, with a ruined city visible in the background.

The official S2 trailer picks up there but doesn’t provide many additional details. We see Juliette in her protective suit walking across the desolate terrain toward the other silos, human skulls and bones crunching under her feet. When Juliette’s oxygen runs out, she finds shelter and survives, and we later see her trying to enter a silo—whether it’s her original home or another one is unclear. Meanwhile, Holland gives an impassioned speech to his silo residents, declaring her a hero for sacrificing herself.  But rumors swirl that she is alive, and rebellion is clearly brewing, with Juliette becoming a symbol for the movement.

The second season of Silo debuts on Apple TV+ on November 15, 2024. Ferguson has said that there are plans for third and fourth seasons to wrap up the story, which will hopefully be filmed at the same time.

Rebellion brews underground in Silo S2 trailer Read More »

why-a-diabetes-drug-fell-short-of-anticancer-hopes

Why a diabetes drug fell short of anticancer hopes

cancer treatment, experimental drugs, health, metformin, pharmaceutical research, Science, syndication / /

Studies suggested it could treat cancer, but the clinical trials were a bust.

Multi-pipettes

Pamela Goodwin has received hundreds of emails from patients asking if they should take a cheap, readily available drug, metformin, to treat their cancer.

It’s a fair question: Metformin, commonly used to treat diabetes, has been investigated for treating a range of cancer types in thousands of studies on laboratory cells, animals, and people. But Goodwin, an epidemiologist and medical oncologist treating breast cancer at the University of Toronto’s Mount Sinai Hospital, advises against it. No gold-standard trials have proved that metformin helps treat breast cancer—and her recent research suggests it doesn’t.

Metformin’s development was inspired by centuries of use of French lilac, or goat’s rue (Galega officinalis), for diabetes-like symptoms. In 1918, researchers discovered that a compound from the herb lowers blood sugar. Metformin, a chemical relative of that compound, has been a top type 2 diabetes treatment in the United States since it was approved in 1994. It’s cheap—less than a dollar per dose—and readily available, with few side effects. Today, more than 150 million people worldwide take the stuff.

Illustration of French lilac plant.

The French lilac, Galega officinalis, has been used medicinally since medieval times, including for symptoms associated with diabetes. Investigations of the plant’s chemical galegine led to the development of metformin, a related molecule synthesized in the lab. Credit: Wikimedia Commons

Metformin has a variety of effects, such as improving immune function and the body’s responses to insulin, which in turn regulates blood sugar. It can also slow growth of cancer cells in the lab. Many of these benefits seem to stem from metformin’s action in the cell’s powerhouses, the mitochondria, where it slows the production of energy and limits the generation of damaging chemicals called free radicals.

Researchers have considered metformin for treating a plethora of conditions, from glaucoma to polycystic ovary syndrome to pimples. “It really has a reputation of being a potential wonder drug,” says Michael Pollak, an oncologist and researcher at McGill University in Montreal. “There’s still a lot of work to be done on metformin.” (Pollak consults for biotechnology companies interested in metformin analogs as medicines.)

But the latest research has convinced Pollak and some others that treatment of cancers should be taken off the list.

More studies, but no proof

One of the first hints linking metformin to anticancer effects came in a short note in the British Medical Journal in 2005. Researchers analyzed medical records of almost 12,000 people from the Tayside region of Scotland who were newly diagnosed with diabetes between 1993 and 2001. Of those, more than 900 went on to develop cancer. Interestingly, those who’d taken metformin at some point during the study period were 23 percent less likely to have received a later cancer diagnosis.

This finding fueled further research on people with diabetes taking metformin and the risk for breast cancer, liver cancer, ovarian and endometrial cancer, and other types. The authors of a 2013 analysis, covering more than 1 million patients in 41 observational studies like the original one, concluded that metformin “might be associated with a significant reduction in the risk of cancer.” But such associations are not proof.

Researchers went on to explore the link in studies with cells in dishes and in lab animals, finding that metformin slowed growth of blood, breast, endometrial, lung, liver, stomach, and thyroid cancer cells. It also seemed to make cancer cells extra sensitive to chemotherapy drugs. In one mouse study, scientists grafted human breast, prostate, or lung cancer cells into the animals and treated them with either standard chemotherapy drugs, metformin, or a combination of both. The combination worked best, preventing tumor growth and prolonging relapse.

These findings made sense to researchers. Metformin treats metabolic problems in diabetes, and cancer has also been linked to metabolic issues such as obesity. Even before the 2005 British Medical Journal study, Goodwin had noticed that breast cancer patients with high insulin did worse than those with normal insulin levels.

That logic, plus the promising data, led scientists to conduct a number of randomized controlled trials—the gold-standard experiment in medicine. Researchers would enroll people with cancer and split them into two groups. One group would get standard cancer therapy plus metformin; the other group would get standard therapy plus a placebo, a pill containing no medication.

And metformin flopped, big time. While a number of studies are ongoing, trials for two types of cancer recently reported no benefit overall from metformin. In June 2024, at the American Society of Clinical Oncology meeting in Chicago, researchers reported a Canadian trial with 407 men with low-risk prostate cancer. The enrollees had been diagnosed within six months before starting the trial and had decided to monitor their cancer without starting immediate treatment. Half took metformin and half took a placebo. After biopsies at 18 and 36 months to test whether their disease had progressed, there was no difference between the two groups.

A larger British and Swiss trial including nearly 1,900 patients with newly diagnosed or relapsed prostate cancer that had spread to other body parts was reported at the European Society for Medical Oncology Congress in Barcelona, Spain, in September. This trial also found that metformin plus standard treatment, compared to standard treatment alone, did not improve overall prostate cancer survival in the study population.

A multinational study of breast cancer helmed by Goodwin also led to disappointment. The researchers enrolled more than 3,600 patients between 2010 and 2013; these patients had been diagnosed about a year before enrollment and had already undergone chemotherapy and surgery. In addition to standard cancer treatment, half received metformin and half received a placebo.

By 2016, it was clear that metformin wasn’t doing anything to enhance survival for about 1,100 participants with a particular cancer subtype. When the study wrapped in 2020, the researchers analyzed the rest of the patients, counting how many were alive and free of breast or any other form of cancer. Metformin made no difference in those results, or to survival overall, the team reported in 2022.

Fatal flaws in the research

In retrospect, researchers think they know why earlier studies oversold metformin’s potential. Many of the studies that examined medical records had a crucial flaw, says Samy Suissa, a pharmacoepidemiologist at McGill.

Here’s what happens: Researchers sift through old medical records to see if someone ever took metformin. Then they compare cancer rates among people who took the drug at any point to those who never took it. But you have to be alive to take metformin. Anyone who died, of cancer or other causes, before having a chance at a metformin prescription is left out of the calculations. This skews the results; it’s called the “immortal time bias.” It makes any drug, metformin or otherwise, look like it helps patients to survive because it can only be taken by people who are alive, says Suissa.

Plus, scientists are more likely to publish studies that show metformin is promising than ones where it makes no difference, skewing the scientific literature.

As for those studies of cells in dishes and of lab animals, many experiments used much higher doses of metformin than are used in people. Too much metformin risks a buildup of lactate, a byproduct of low oxygen metabolism that acidifies the blood and can be fatal.

Researchers still suspect metformin might treat specific subgroups of cancer. For example, the authors of the prostate cancer trial presented in Barcelona suggested that metformin might help patients whose cancer has spread to other tissues or multiple sites in their bones. And Goodwin saw a hint in her trial that it might help women whose cancers contain a certain version of a cell-growth gene called ERBB2. But it would require another trial, focused on women with that particular cancer, to prove it.

And there are now better treatments for those patients than there were more than a decade ago when Goodwin started her study, reducing the opportunity to test metformin. Goodwin doesn’t currently have the funding to follow up on this theory.

It may also be that the clinical trials recruited patients with cancers that were too far along. “I always thought we were asking too much of metformin,” says Victoria Bae-Jump, a gynecological oncologist at the University of North Carolina Lineberger Comprehensive Cancer Center in Chapel Hill. “Maybe it just needs to be earlier in the pathway of growth.” Bae-Jump is now testing metformin in women who have early-stage endometrial cancer or a precursor to it.

Others are investigating metformin for people who have precancerous lesions in their mouths. “The idea would be to keep them from progressing, or reverse the tissues to be more normal,” says Frank Ondrey, a head and neck cancer surgeon at the Masonic Cancer Center of the University of Minnesota in Minneapolis. In a small, uncontrolled study of 23 people, metformin halved lesion size in four of them. Ondrey is involved in two ongoing studies, one a randomized, controlled trial, to further test metformin in people with precancerous lesions; these should yield results within a few years.

Subdued expectations

Metformin is also being tested for other conditions such as dementia and a genetic disorder called fragile X syndrome. And perhaps the ultimate potential use for metformin is to slow aging itself. “I think it’s much easier to treat aging and prevent cancer than to treat cancer,” says Nir Barzilai, a geroscientist at Albert Einstein College of Medicine in New York and president of the nonprofit Academy for Health & Lifespan Research. Through its enhancement of insulin action and metabolism plus its minimization of free radical production, metformin influences all the key hallmarks of aging, such as problems with DNA, mitochondria and stem cells, says Barzilai.

He and colleagues are gathering funds for a randomized, controlled trial of metformin in 3,000 people age 65 through 79 who are showing signs of age-related disease already. The trial will test whether fewer people taking metformin die over six years. Barzilai, who is 68, says he is confident in metformin’s anti-aging ability and already takes the drug himself.

Others, mindful of what happened with cancer, are more circumspect. Pollak says that many of the studies in other areas of medicine are too small to prove metformin works, and Suissa notes that some of the studies finding benefits in populations taking metformin, including for longevity, have the same problems the oh-so-promising early cancer research did.

In short, Suissa says, “Don’t believe everything you hear.”

This story originally appeared in Knowable Magazine.

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AMD unveils powerful new AI chip to challenge Nvidia

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On Thursday, AMD announced its new MI325X AI accelerator chip, which is set to roll out to data center customers in the fourth quarter of this year. At an event hosted in San Francisco, the company claimed the new chip offers “industry-leading” performance compared to Nvidia’s current H200 GPUs, which are widely used in data centers to power AI applications such as ChatGPT.

With its new chip, AMD hopes to narrow the performance gap with Nvidia in the AI processor market. The Santa Clara-based company also revealed plans for its next-generation MI350 chip, which is positioned as a head-to-head competitor of Nvidia’s new Blackwell system, with an expected shipping date in the second half of 2025.

In an interview with the Financial Times, AMD CEO Lisa Su expressed her ambition for AMD to become the “end-to-end” AI leader over the next decade. “This is the beginning, not the end of the AI race,” she told the publication.

The AMD Instinct MI325X Accelerator.

The AMD Instinct MI325X Accelerator.

The AMD Instinct MI325X Accelerator. Credit: AMD

According to AMD’s website, the announced MI325X accelerator contains 153 billion transistors and is built on the CDNA3 GPU architecture using TSMC’s 5 nm and 6 nm FinFET lithography processes. The chip includes 19,456 stream processors and 1,216 matrix cores spread across 304 compute units. With a peak engine clock of 2100 MHz, the MI325X delivers up to 2.61 PFLOPs of peak eight-bit precision (FP8) performance. For half-precision (FP16) operations, it reaches 1.3 PFLOPs.

AMD unveils powerful new AI chip to challenge Nvidia Read More »

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Are Tesla’s robot prototypes AI marvels or remote-controlled toys?

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Two years ago, Tesla’s Optimus prototype was an underwhelming mess of exposed wires that could only operate in a carefully controlled stage presentation. Last night, Tesla’s “We, Robot” event featured much more advanced Optimus prototypes that could walk around without tethers and interact directly with partygoers.

It was an impressive demonstration of the advancement of a technology Tesla’s Elon Musk said he thinks “will be the biggest product ever of any kind” (way to set reasonable expectations, there). But the live demos have also set off a firestorm of discussion over just how autonomous these Optimus robots currently are.

A robot in every garage

Before the human/robot party could get started, Musk introduced the humanoid Optimus robots as a logical extension of some of the technology that Tesla uses in its cars, from batteries and motors to software. “It’s just a robot with arms and legs instead of a robot with wheels,” Musk said breezily, easily underselling the huge differences between human-like movements and a car’s much more limited input options.

After confirming that the company “started off with someone in a robot suit”—a reference to a somewhat laughable 2021 Tesla presentation—Musk said that “rapid progress” has been made in the Optimus program in recent years. Extrapolating that progress to the “long term” future, Musk said, would lead to a point where you could purchase “your own personal R2-D2, C-3PO” for $20,000 to $30,000 (though he did allow that it could “take us a minute to get to the long term”).

And what will you get for that $30,000 when the “long term” finally comes to pass? Musk grandiosely promised that Optimus will be able to do “anything you want,” including babysitting kids, walking dogs, getting groceries, serving drinks, or “just be[ing] your friend.” Given those promised capabilities, it’s perhaps no wonder that Musk confidently predicted that “every one of the 8 billion people of Earth” will want at least one Optimus, leading to an “age of abundance” where the labor costs for most services “declines dramatically.”

Are Tesla’s robot prototypes AI marvels or remote-controlled toys? Read More »

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Former Apple hardware chief Dan Riccio is retiring

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Dan Riccio, one of Apple’s most prominent executives for more than two decades, will retire from the company this month, according to a report in Bloomberg that cites people with knowledge of the move.

Reportedly, Riccio has said he has been planning his retirement for the past five years, and his last day will be Friday, October 11.

Riccio began working at Apple in 1998, and by 2012, he had become the chief of hardware engineering. In that role, he oversaw several major hardware developments for Apple, including AirPods, the evolution of the modern iPhone, the iPad Pro, and more.

He held the title of senior vice president of hardware engineering during that time, then moved into a new role within the company in January of 2021. The public at first only knew that he was working on a “new project” at that time, but before long it became clear the project in question was what became the Vision Pro, Apple’s augmented-reality headset that launched this February.

The group that produced the Vision Pro is called the Vision Products Group within the company; that’s the 2,000-engineer-strong group Riccio has overseen since 2021. He was also involved in developing Project Titan, Apple’s smart car initiative that was eventually abandoned.

Former Apple hardware chief Dan Riccio is retiring Read More »