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Eric Kramer

Articles by Eric Kramer

AI risk, ad taxes, and information curating

June 6, 2023

Does AI pose a meaningful existential threat to humanity?  If an existential threat is one that can lead to mass death or human extinction, and a risk of extinction is meaningful if it is (say) at least 10% as large as the risk of a nuclear holocaust, my answer is that I have no idea.  

But it seems clear that AI does pose a serious threat to democratic stability.  It will give anti-democratic actors a powerful new tool for spreading political misinformation and fostering discontent with elites and resentment of socially disfavored groups.  More generally, AI will speed the process of social and economic change, which unsettles people and makes them more receptive to the promises of authoritarians. 

This is very much worth worrying about, and it

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Did Biden out-negotiate McCarthy?

May 31, 2023

I’m still trying to get my head around what happened with the debt ceiling.

Is the proposed deal a win for Biden and the Democrats?  

The conventional wisdom is that it was.  Catherine Rampell argues that the Republicans achieved little in the way of policy that they could not have gotten through the regular budget process.  They also failed to take away any of Biden’s signature policy victories. 

There are some questions about whether the deal is really such a clear win for the Democrats and how it will interact with budgeting rules this coming fall, but let’s run with this story for a bit.  Assume Biden won the negotiation with McCarthy. 

This just raises more questions.  How did Biden fight off Republican demands for spending cuts,

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The debt limit denouement

May 29, 2023

The deal is much better than I expected for Democrats, and much worse for Republicans (preliminary summaries by Dayen and Stein).  Of course, the whole thing was destructive and pointless and the deal is bad in the way one would expect – it includes work requirements for some food stamp and TANF recipients.  On the plus side, these requirements are crafted to limit the number of people affected while letting the Republicans claim a “win”.

Over the past few weeks many observers and congressional Democrats criticized Biden for his relatively quiet approach to negotiations.  I was sympathetic to this criticism.  I initially thought the administration should keep attention focused on Social Security, Medicare, Medicaid, and after that ship sailed I

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The debt ceiling end-game

May 23, 2023

What should President Biden do if Republicans refuse to raise the debt ceiling?  What should he say he will do, in advance, to avoid a catastrophe and gain leverage in negotiations? 

The answer to these questions is far from clear.

Krugman and Klein on unorthodox legal strategies

Paul Krugman argues that the administration should do something – anything – to avoid a debt default.  He doesn’t care about the details – platinum coin, consul bonds, 14th amendment.  He thinks that there is a real possibility that the Republicans will be unwilling to accept any compromise on the debt ceiling, and that this could have such dire consequences that some plan B is essential.  (Krugman has also opposed any negotiations over the debt ceiling, a position I

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Why are so many long-shot Republicans running against Trump?

May 19, 2023

As of today, Trump seems well-positioned to win the Republican nomination.  The basic dynamic is familiar from 2016 – Trump has a strong base of committed supporters, the opposition will likely be divided, and many Republican primaries are winner-take-all or winner-take-most.  Couple this with the bump in support Trump got after his indictment in NY, the apparent missteps and general unlikeability of his chief rival DeSantis, and the fact that Trump seems to be running a functional campaign so far and it is hard to see much of a path for challengers. 

And yet large numbers of politicians who would be serious contenders in a pre-MAGA year are either running or teasing a run:  Pence, Christy, Haley, Sununu, Scott, Youngkin in addition to DeSantis,

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Trump, the road to serfdom, and the debt ceiling

May 11, 2023

During last night’s CNN “town hall” fiasco Trump had this to say about the debt ceiling:

Former President Donald Trump on Wednesday urged Republican lawmakers to let the United States default on its debt if Democrats don’t agree to spending cuts.

“I say to the Republicans out there — congressmen, senators — if they don’t give you massive cuts, you’re going to have to do a default,” said Trump, who is again running for president. “And I don’t believe they’re going to do a default because I think the Democrats will absolutely cave, will absolutely cave because you don’t want to have that happen. But it’s better than what we’re doing right now because we’re spending money like drunken sailors.”

When pushed by CNN anchor Kaitlan Collins to

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How to end the debt ceiling stand-off democratically:  set fiscal policy through elections, not hostage taking

May 4, 2023

The Biden administration and congressional Democrats have so far refused to negotiate with House Republicans over spending cuts to resolve the looming debt ceiling crisis.  This tactic has successfully pressured Republicans into passing a bill with unpopular spending cuts that Democrats will quite rightly use to their advantage in the upcoming election.  But now that the House Republicans have put a plan on the table it will be difficult for Democrats to sustain their “no negotiation” posture. 

To get the best possible outcome, President Biden and the Democrats need to persuade the public that their rejection of GOP spending cuts is justified, not just a stubborn and possibly dangerous refusal to compromise.

How can they do this?  By pointing

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Martin Wolf has a new book coming out . . .

February 8, 2023

. . . called The Crisis of Democratic Capitalism, and he was interviewed by Rob Johnson on the Economics & Beyond podcast.  Here’s a quote from 50:20 in the pod (my transcription, done before I saw the official transcript at the link):

Now a core thesis of my book . . . is that If you want a capitalist order, and if you want democracy . . . then you must accept that the free market will have to be contained within and tempered by an active state which provides fundamental security to all its citizens because it’s something they’re all going to demand . . . and that where fundamental problems arise of all kinds environmental . . . problems with bringing up children, social problems of severity . . . the state exists as an insurance mechanism, as an

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Democrats, let’s turn the debt ceiling standoff into a referendum on Social Security, Medicare, and Medicaid

February 3, 2023

President Biden has so far insisted he will not negotiate over the debt ceiling.  This makes sense on one level.  The Republicans are threatening to blow up the economy to get the Democrats to agree to – and share the blame for – unpopular budget cuts.  It is easy to see why Democrats want to resist going down this path.

Just saying “no” to negotiations may not work

But in the real world things are not so simple.  The House Republicans may pass a debt ceiling bill that includes spending cuts.  They are trying to find cuts that voters find acceptable if not appealing.  Proposals have been floated to cut spending on IRS enforcement, to implement work requirements for Medicaid, to claw back unspent covid funds, and to end the Covid state of

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Kevin Hassett:  The Road to Serfdom meets the debt ceiling

January 30, 2023

Ordinarily you would not drive a motorcycle without a headlight down a narrow, winding mountain road at high speed on a dark, rainy night.  But you would do this if your child is dying and you need to fetch a doctor immediately.  Even sensible people take great risks to avoid an imminent catastrophe. 

Kevin Hassett, chairman of Trump’s Council of Economic Advisors, applies this logic to the debt ceiling in a post at National Review subtitled “Fiscal-policy brinkmanship might be the only thing that can save us from catastrophe”. 

Let’s look.  Here are some of Hassett’s key points:

Small-government conservatives have been outraged by our profligacy for decades, of course, but the stakes are getting very, very high. The fact is that if we don’t

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ChatGPT goes to Wharton

January 24, 2023

Can ChatGPT run a business?  Color me very skeptical.

ChatGPT has now successfully passed a Wharton MBA exam. Sure, this isn’t the hardest problem, but to execute it in 1 second is the breakthrough. pic.twitter.com/3W8T7UIV4E— Aaron Levie (@levie) January 22, 2023This is a shockingly easy question, but I would not have predicted that ChatGPT would get it right, given its limited ability to do math and think logically.  So, I am updating my assessment of ChatGPT (slightly) in a favorable direction.

Still, before we get too excited, it helps to contextualize this a bit.

Suppose you are a newly hired executive or strategy consultant.  You are trying to figure out how to add value.  Identifying the bottleneck in a production process might be a

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Trump and the debt ceiling

January 20, 2023

According to Politico, Trump is against cutting Social Security and Medicare:

Former President Donald Trump issued a warning to Republican lawmakers on Friday: Don’t lay a finger on entitlement programs as part of the debt ceiling showdown with the White House.

“Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security,” Trump said in a video message.

. . .

Nevertheless, in issuing his statement now, Trump places his fellow Republicans in a political corner. Several of them have openly discussed using using the looming debt ceiling standoff to extract cuts in non-discretionary spending, though party leadership has not fully embraced such a demand.

This does indeed put Republicans in a

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Democratic politics and the multiple audience problem:  the case of Ukraine

January 15, 2023

One reason politics is so hard is that our words are often heard by different audiences, and a message that is well-calibrated for one type of listener may work poorly for listeners with different roles, values, or interests.

To illustrate:  Phillips O’Brien has a piece in the Atlantic with the headline “Time is on Ukraine’s side, not Russia’s”.  He did not choose the headline, but this morning he defends it.  He argues that it is important to convey a sense of optimism about the prospects for a Ukrainian victory.  Americans and other western publics will support aid to Ukraine if they feel that Ukraine has a reasonable prospect of winning.  On the flip side, O’Brien notes that pro-Russian propagandists like Tucker Carlson emphasize Russian

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Ukraine updates

January 6, 2023

Ukraine is getting much more advanced offensive weapons . . . This seems to mark a major shift, a commitment to helping Ukraine go on offense and win.  Open questions . . . How far will Ukraine’s partners go?  Infantry fighting vehicles today, maybe tanks, ATACMs, planes, etc. tomorrow?  How big a threat is the Republican controlled House of Representatives?  Will Ukraine be able to avoid a drawn out war of attrition?  Can it launch successful offensives against Russian lines that are shorter and in some cases better fortified than the territory they took in the north?  Will this show of Western resolve make Putin reconsider his commitment to the war?  Why did France, Germany, and the United States decide to provide these weapons now?

A reminder of

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Insanity is doing the same thing over and over and hoping for a different result.  Apparently no one has mentioned this to Republican congressional “leadership”.

January 5, 2023

The Republicans have no good options as they cast around for a solution to their speakership problem.  McCarthy can try to make concessions to secure the support of the Freedom Caucus.  These concessions will empower the obstructionists in the FC and will make the House ungovernable.  The result will be interminable gridlock and recriminations at best and a catastrophic debt default at worse.  We’ve been down this road before.  If Boehner couldn’t manage the FC there’s no reason to think McCarthy can.  Another option for Republicans is to look for an alternative to McCarthy from within the party.  It’s not obvious what problem this solves.  The smart move for the non-FC Republicans might be to seize the high ground of compromise and work with

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Is our AI learning?

December 24, 2022

Tyler Cowen points us to YouChat, a new AI chatbot, that as far as I can see after studying this carefully for 15 seconds is supposed to be more up to date than the OpenAI bot and integrated with a search engine which naturally makes it the next new thing and presumably worth billions of dollars to potential investors.

In the interest of being scrupulously fair, I decided to give YouChat a chance to answer the same question that OpenAI fumbled badly, viz.,

If a three dimensional polygon has nine sides and nine vertices, how many edges does it have?  How do you know?

Here is the reply:

A three-dimensional polygon with nine sides and nine vertices is called a nonagon [1]. A nonagon has 12 edges [1]. The number of edges in a polygon can be

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OpenAI Chat GPT3 meets Euler’s polyhedron formula.  It goes poorly.

December 23, 2022

The new OpenAI chatbot is fun to mess around with.  (You can sign up for a free account here.)  But is it smart?

I asked it an easy math question, based on Euler’s polyhedron formula.  Euler discovered that the number of edges of a polyhedron is equal to the number of faces plus the number of vertices minus 2:  E = F + V – 2.  So, for a cube, the number of faces is 6, the number of vertices or corners is 8, and the number of edges is 12, which is 8 + 6 – 2. 

I asked it the following question:

If a three dimensional polygon has nine sides and nine vertices, how many edges does it have?  How do you know?

You can check that the answer is indeed E = 9 + 9 – 2 = 16 by picturing a cube with a pyramid on top and counting the edges, vertices,

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Jay Bhattacharya’s selective libertarianism:  on COVID and insurance rating

December 22, 2022

A recent paper finds that drivers who are not vaccinated against COVID are substantially more likely to be involved in serious auto accidents than vaccinated drivers.

In response, Jay Bhattacharya, an author of the Great Barrington Declaration and a prominent opponent of lockdowns and vaccine mandates, tweeted that the study “should not be used by automobile insurers as a basis to discriminate against the unvaxxed.”

Well, why not?  One argument Bhattacharya makes is that the “result can’t be interpreted as a causal link between vax status and accident probability” and “Good or bad health could alter monthly premiums, whether any known mechanism links health status to bad driving.”  But many variables used to rate auto insurance are predictive of

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Give Ukraine the weapons it needs to defeat Russia quickly

December 20, 2022

The moral and strategic importance of a Ukrainian victory seems hard to overstate.  A protracted, frozen conflict would be a humanitarian disaster for Ukrainian civilians in Russian occupied areas and war zones, it would lead to continued slaughter of troops on both sides, it would strip Ukraine of critical ports, it would embolden further adventurism by Russia and by China against Taiwan.  An extended war might cause or contribute to a worldwide recession.  Domestically, stalemate and economic stress would damage Biden’s re-election prospects.  Finally, a victory by Russia would damage the confidence of democratic countries and the reputation of liberal democracy around the world, at a time when democracy is very much at risk.  A victory by Ukraine

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Twitter really might implode

December 19, 2022

I have no idea what is going on in Musk’s head, but hoo-boy.  Overpaying, firing essential employees, scaring off advertisers, implementing half-baked policies then quickly reversing himself, provoking regulators.  Now there are indications/rumors he is getting ready to bail. 

And the problem for Musk goes way beyond Twitter.  Tesla’s valuation is insane.  It’s been based on nothing more than Musk’s showmanship for some time.  Despite declining by 50% in the past three months Tesla still has a market cap 5x that of Ford and GM together.  Immolating his reputation by mishandling Twitter will only hasten the inevitable fall to earth.

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What exactly is the libertarian position on access to health care, anyway?  And can we please knock off the Road to Serfdom crap? It’s dangerous.

December 19, 2022

Nature recently published a paper on “degrowth”.  Libertarian economist Donald Boudreaux immediately attacked the paper with his usual collection of pro-market, anti-government arguments.  Fine.  But then Boudreaux published a letter he got from Daniele Struppa, president of Chapman University.  Here is a brief excerpt:

It is just a manifesto for a deindustrialization of the west, filled with naïve and simplistic comments. For example “it is necessary to ensure universal access to high-quality health care”. Nobody disagrees, but do they realize that such health care requires expensive doctors, expensive medications, expensive machinery (MRI, CAT, etc.)?

Nobody disagrees?  I’m pretty sure Boudreaux disagrees.  I haven’t read everything he’s

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Consumption taxes and inflation

December 15, 2022

In a recent post, Matt Yglesias argues for using fiscal policy – tax increases or benefits cuts – to control inflation, rather than relying on interest rate hikes.  There is certainly an argument to be made here, but his suggestions for reducing consumption seem less than ideal.

Yglesias floats the idea of limiting Social Security inflation adjustments for retirees with higher incomes.  He also mentions capping deductions, and cutting Medicare reimbursement rates to drain dollars out of the pockets of medical providers. 

A similar but perhaps more promising idea is to implement a temporary, progressive consumption tax.  To fix ideas, we might put a temporary 5% tax on all consumption expenditures over $5,000 per month.  In practice, that would

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Trump is far more dangerous than many believe

December 9, 2022

Some people believe that a DeSantis presidency would be a bigger threat to democracy than a second Trump presidency.  The thought is that DeSantis is just as authoritarian as Trump, but more competent. 

I agree that DeSantis appears to be a dangerous authoritarian and he might well be more effective than Trump at undermining democratic control.  However, there are reasons to think that a second Trump presidency would be more dangerous than a DeSantis presidency, for reasons having to do with character traits other than authoritarianism.

Trump is impulsive, self-involved, corrupt and dishonest, undisciplined, and intellectually lazy.  He surrounds himself with people who tell him what he wants to hear.  These traits will make it more difficult

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Voters to Fed Chair:  back off, bro

November 17, 2022

How hard should the Fed hit the brakes to bring inflation down?  The answer to this question depends, in part, on just how damaging you think inflation is.  And one reason to think that inflation is harmful is simply that most people – normal people, not CEOs or financiers – seem to really dislike it.  If most people think steady inflation of 8% is worse than steady inflation of 2%, that is, in fact, a (non-dispositive) reason to think that 2% inflation is better than 8% inflation. 

The United States has been, in general, a hard money country.  This is generally speaking a good thing.  Sure, it can go too far – inflation phobia can hurt employment and wages, and there are smart people who think the Fed’s 2% inflation target is too low – but having

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Trump, the MAGA base, and election denialism

November 15, 2022

It has been widely noted that Trumpy Republicans have largely accepted vote tallies and conceded defeat.  There have been few strong claims of fraud or election theft by major candidates (the main exception so far appears to be Kari Lake), and no efforts that I am aware of to mobilize protests against the election results, much less violent protest.

So that raises the question we have been grappling with for 6 years now:  to what extent is Trump sui generis?  Does his charisma (yes, he has charisma) and connection to the MAGA base give him the power to mobilize anti-democratic violence and election denialism, a power that most of his potential MAGA replacements lack? 

Can you see MAGAs storming the Capitol for DeSantis or Cruz or Haley or

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Trump, Musk, Putin, and the power of spite

November 14, 2022

Three different people, same crappy emotion?

Trump has been an electoral liability for the Republican party for at least the last 3 elections, and possibly 4 (depending on what you think would have happened in 2016 without Trump).  So far, his power over MAGA voters and his spitefulness – his evident willingness to tear down Republicans who show disloyalty – has kept Republican elites largely in line. 

But some Republicans are beginning to argue that he is bad for the party and should not be the 2024 nominee.  The challenge for the party – and for DeSantis – is that Trump may well decide to take the party down with him if he does not win the 2024 nomination.  This could involve badmouthing the Republican nominee, or even mounting a third-party

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Why did the Democrats overperform relative to the fundamentals?

November 9, 2022

As I write this it is still possible the Democrats will lose control of Congress, with all that entails, but the Democrats did outperform the fundamentals, and it is useful to think about why.  Here is my quick list of possible explanations:

Increased partisanship and decreased cross-over voting (see here).

Inflation may not be as much of an economic negative as a lot of commentary suggests; maybe unemployment matters more.

Voters may be better at separating disappointment with Biden from support for Republicans than retrospective voting models assume.  It’s not just “throw the bums out” if the other party doesn’t look so hot.

Voters may be better at understanding what politicians are responsible for than retrospective voting theory

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An election pre-mortem

November 8, 2022

According to political scientist John Sides, the fundamentals suggest that Democrats should expect to lose 1 to 3 Senate seats and 40 to 45 House seats.  Going into the election today, polls suggest that the Democrats are likely to lose the House and possibly the Senate, but not by as much as one might expect given economic conditions. 

Suppose that Democrats substantially beat the fundamentals even if they lose control of Congress.  What lessons should they draw from this?

Recriminations would no doubt be the order of the day, but some optimistic souls might be tempted to conclude that the party is basically on the right track because it outperformed relative to economic conditions.  Voters may be disappointed with the state of the country, but

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Canvassing in MI and NC

November 7, 2022

This year I canvassed in MI before the primary and in NC last week.  I don’t like canvassing, it’s boring and tiring, but you do meet some interesting people and see things you would not otherwise see.  A few observations.

Many people seem to be *deeply* isolated.  One woman said she could not open the door.  I wasn’t sure if she was disabled or scared.  A lot of people do not have doorbells, or their doorbells are broken.  That shocked and saddened me.  It sure didn’t seem like they have lots of friends coming over and people just bang on the door to get in.

In many places you could see McMansions and some pretty grim houses and apartments a few blocks apart. 

I met a fair number of black voters who were either Trump curious or so angry at

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