Bluntly it's hard to get any side to not worry the average member of the other side supports political violence when the democrats haven't disavowed summer 2020 and the republicans havent disavowed January 6th. Both sides did use violence to try to impose political change undemocratically and aren't especially repentant about it. This creates a pretty understandable mutual trust problem on these issues. Regained trust is going to require *credible* reciprocal commitments that those kinds of things are off the table going forward and neither side is there yet. Both sides fear the other side would support political violence because, while they dont usually, in recent circumstances yes they actually do

Precision missile targeting at distance is hard even with accurate targeting specs because you're steering something heavy and fast with minimal controls with which to course correct. Mobile target obviously makes it worse, last minute evasion is a challenge. It's just hard rocket physics and the speed is really punishing on even minor errors, that .1% drift in 20 seconds over miles is a wide miss @liron @avidseries There's a reason that for uber precision drops like Iran's nuclear facilities we're still doing old fashioned up close air drops, its just a ton less demanding re accuracy challenges

One of the most heartening things in the Discourse is a growing recognition that the US is rich relative to Europe. The existence of the Europoor is one of those critical table stakes facts to making sense of policy impacts and i am hopeful that as the gap continues to widen it will convince some smart people who have long pitched Europe-like economics to reconsider. However, while i have seen this fact used to argue for free market policies in general, there is an implication that i have seen few grapple with.

One of the key economic differences between the US and Europe is the gdp share of the financial sector. Depending on your preferred statistic (industry gdp share, industry share of corporate income, share of the SP500) you can get different baseline numbers to describe financial services prevalence but however you slice it, the US has a large financial sector in a way near peer economies do not. In the aftermath of the great financial crisis, a number of papers argued this was a growth retardant in the US. Those arguments look weaker in 2024 than 2013 to put it lightly.

But the old anti financialization argument still exists, in its old growth form and in newer variants. More frequently today we see a grumble about laptop jobs. Isn't it bad that such a large share of elite college graduates go into finance, consulting, law as opposed to, you know, doing things that actually make things?

In this series of posts i will make three arguments.

First, i will argue that finance, consulting, and a large part (though not all) of legal services are best thought of as Allocation Jobs, allocating capital in its immediate form (money) or its indirect and delayed form (risk).

Second, i will argue that from a first principles perspective it is a reasonable expectation that Allocation Jobs would be extremely valuable in a large complex economy and get more so as complexity grows and that this likely does not represent a misallocation of labor.

Third, i will argue the specific case of the US demonstrably bears this out.

Running through these arguments is a deeper argument - that people recoil from valuing Allocation Jobs because they are a manifestation of the complexity of the modern economy that makes people angry and uncomfortable. The desire is to have the trappings of modernity but clear village values. But you can't have that. And too many people who in general embrace the free market recoil in this specific instance from conceding that many of its most profitable jobs and industries are good. If you fall in that specific category, this is for you. Part 1: A General Theory of Allocation Jobs

The basic idea of Allocation Jobs can be most easily seen with stock picking. When you pick stocks you allocate capital to the equity of some businesses and not others. Even if you are buying from a third party and not in a venture round or at IPO, these investments set the stock price which impacts the ability of companies to raise money in equity markets. On a basic level stock investing sets the capital cost for businesses.

Bond investing and investing in other debt instruments (direct lending, syndicated loan trading) functions similarly. Debt is ultimately also just a cost of capital determination and the pricing of debt impacts the ability and rate at which companies can access new debt capital.

These are direct and obvious cases but the principle generalizes out. When a private fund buys a company and takes a dividend from it this too is an allocation decision. It is a determination that the enterprise value sans the dividend is more profitable in the business than out but the dividend cash has a higher return out of the business than in. It is essentially a determination of where the marginal return on dollars flips. Layoffs and cost cutting are the same, a determination that while some dollars are more profitable in than out, other dollars are more profitable not spent and those expenses (perhaps valuable but insufficiently so) should be removed. This is no different in kind than stock picking but operating on a higher zoom level, within a company not just between (though the expected yield of outside investments always informs).

This is all fairly direct but i would argue that other fields and jobs still function as Allocation Jobs in a more indirect fashion. Take classic scapegoat legal services. If lawyers negotiate a merger agreement much of what they are doing is risk allocation. The difference between a representation qualified by materiality and one which is not is which party bears the cumulative risk of relatively immaterial breaches. Covenants restricting operations during the executory period between sign and close allocate the risk of management decisions during that period. And so on. You can make similar arguments in most fields. This is less direct than allocating money but in almost every case is allocating the impact of a potential future event, or setting who gets to make the decision. That is allocation of capital too.

One can nitpick some examples, the plaintiffs bar or certain high frequency trading perhaps, though i do not endorse such exceptions and view there as worthy debate there. But as a general matter our understanding of what so many elite school graduates do after graduation should look to this category, Allocation Jobs.

So ok, how should we feel about that?

People understand that taxing unrealized individual income is bad but still think taxing corporations is good and my friends, that is the same thing.

"We shouldn't tax people still holding investments we should just tax the investments" basically In this house we believe in taxing income on a non distorted gross basis without deduction at the time it is realized by a natural human.

Weird how a ton of the first SAT optional NYU class failed orgo.

https://twitter.com/chsommers/status/1577016088054857728

It's impolite to say this bluntly but students with good grades and bad standardized test scores are, with rare exceptions, not very smart, not bad at testing.

The critical thing about House of the Dragon is that the greens are less sympathetic characters but... are obviously right? The instrumentalisation of reproductive lineage inherent in monarchical rule sits poorly with modern sensibilities but Rhaenyra's children are illegitimate. And it is not just that there are rumors, they are visibly obviously illegitimate while a trueborn line exists in parallel that most would view as senior to start with. There is just absolutely no way to place Jacaerys on the throne in time while Viserys' trueborn lineage lives.

I've been categorically certain Russia would not use nuclear weapons to win a war in Ukraine - it defies all their historic doctrine and self interest. I am only very skeptical they would use a tactical nuke to avoid losing one (ie routing back to borders). Categorically certain v very skeptical is not a huge difference in probabilistic terms - perhaps between 0.1% and 5% - but that's a material albeit low probability worth flagging as such.

One thing I think will be very clear in hindsight that eludes people now is that humans just aren't evolved to deal with the amount of cognitive inputs (ideas, feeds, sounds, lights) coming at them in modernity. Different people have different tolerances. As people get closer to theirs, I would suggest, they get more prone to varying presentations of anxiety, choice paralysis, conspiracy thinking, etc in both clinical and subclinical ways. It's less the algos or the content than the simple volume.

Executive order counting is a weird measure of presidential overreach. The president is the boss of the executive branch, every instruction they give is an "executive order." Which ones get written and published is a political / ambiguity reduction function that doesn't strictly track importance or overreach. A verbal instruction to make a policy to address something is more at risk of encroaching on congress's turf than a published order on a core executive function (for example on executive branch employment policies).

A stock trading way above fundamentals will likely (not investment advice!) lead to losses for almost all of the people trading above, even if some time it just right. In fact, the primary economic dynamic is a few who time it right profiting at the direct expense of other enthusiastic buyers. So I suspect enthusiasm bubbles and short squeezing are not going to be major systematic factors of the market on a go forward basis.

I think this poll is phrased in a way that maxes prioritization responses (sounds like the no waste option is junk risk entirely if not previously aware of the debates) but it's right that broadly many people are OK with waste and excess death as a cost of following the rules.

https://twitter.com/mattyglesias/status/1354025158604951554

Perhaps the more charitable read is that many people think they are at risk of losing their spot in line if the system opens up (though they can excuse this with the at risk) and so favor rule following out of a sort of self interest, fearing battling through a scrum themselves.