1. “The very best loans are the ones that cannot be justified at all in terms of hard information, but are made anyway on the basis of very good soft information. Big banks are simply unable to lend on soft information, due to bureaucratic imperatives, and a need to manage legitimate ethical concerns.” And “Big banks do a terrible job, on the asset side. Economic growth has been declining in the United States in lockstep with consolidation of banking. (Correlation is not causation, but when there’s blood on the knife, it’s hard not to draw inferences.) Bank scale and diversification are harmful to the public interest. They blunt banks’ incentives and capability to extend high-quality, soft information loans over the full range of industries, localities, and borrower types upon which economic development depends. By the time regulators are forced to recognize that megabanks are in trouble, the holes in their balance sheets are deep indeed, and the cost to the public of filling them — whether via an overt bailout or a covert tax — will be large.” [Interfluidity drafts]
2. Simon Halsey, long-time chief conductor of the Rundfunkchor Berlin, talking about a 2013 performance of Berliner Philharmoniker / Peter Sellars’ 2013 version of St. Matthew’s Passion. “On the occasion of the revival of the Peter Sellars production of the St Matthew Passion in October 2013, Simon Halsey, long-time chief conductor of the Rundfunkchor Berlin, talks about the never-ending search for the “correct” interpretation of Bach.” (Apparently the 2013 performance is famous and was ungated by Berlin Philharmonic for Easter). [Link to interview]
3. I didn’t know there were big lithium reserves in Mali [Ken Opalo on Substack]
4. Phenomenal World on “new US bullishness on African growth.” Quips about increasing demographic tends not necessarily being positive destiny driver but also potential tinderbox (See link #1 here). Seems to basically argue Africa needs FDI? Feels that simple? ““I spend a lot of time in countries all over Africa, and they’re like, ‘Eh, we wouldn’t mind a little more globalization, actually.’” So said Bono in a recent interview with the New York Times. Perhaps the celebrity singer-philanthropist was channeling the great Keynesian economist Joan Robinson, who quipped that “the only thing worse than being exploited by capitalism is not being exploited by capitalism.”” [Phenomenal World]
5. More demographics: Works in Progress piece explaining how France use to be like 4% of population now less than 1% while Germany and England zoomed by it (“there were 25 million inhabitants in France and 5.5 million in England. Today, there are 68 million inhabitants in France and 56 million in England. Had France’s population increased at the same rate as England’s since 1760, there would be more than 250 million French citizens alive today.) — Why? Normal story would be falling birth rates from Industrial Revolution but blog argues that decline in fertility in France happened earlier (use machine reading of parish records and stuff). Argues “dechristianization” caused it by reading language in wills and stuff. “At the end of the seventeenth century, most testators referred to God, Paradise, or various saints in their wills. On the eve of the French Revolution, they used more secular language and expressions, such as ‘indispensable tribute that we owe to Nature’, to discuss death. Other measures, such as requests for requiem masses (perpetual masses for the dead), bequests, offerings to the church, or even invocations of the Virgin Mary or average weight of funeral candles, all declined significantly.” Conclusion: ‘did France cease to be a great power not, as is usually thought, on 15 June 1815 on the field of Waterloo, but well before that, during the reign of Louis XV when the natural birth-rate was interrupted?’ [Works in Progress]
6. Updated and bleaker version of Andy Weir’s The Egg: https://drafts.interfluidity.com/2023/04/06/alignment-is-the-problem-of-gods-love/index.html
   • Bonus: https://drafts.interfluidity.com/2023/03/24/financial-regulation-is-just-debt-covenants/index.html: Financial regulation is to public lending precisely what loan covenants are in the private sector.

1. “it wasn’t until the mid-1990s that the entire region’s population surpassed Europe’s (see below). Now the region is in the middle of a demographic boom that will see its population double over the next 50 years to more than 3 billion. By 2100 half all humans being born will be African… Very broadly, it helps to have competitor states that focus ruling elites’ minds on the intensive margin of good governance — i.e., making the best use of their people. It follows that states and markets need people to get going. Someone has to work the fields and pay taxes or staff armies and bureaucracies. Finally, state-induced economic and political stability can be a catalyst for population growth, thereby reinforcing the dynamics described above.This development will undoubtedly change African countries’ economics and politics. Agricultural land will become scarce. Urbanization will reduce the labor share in agriculture. Higher education attainment will raise citizen expectations while also lowering the costs of mobilization. In the face of macroeconomic and political failures, “exit” (as happened during the 1970s and 1980s) will no longer be a viable option. Increasingly “proletarianized” people who must work to live will demand macroeconomic stability, mass job creation, and social protection from their governments. The rural subsistence safety net for households (and which also doubled up as a political safety valve for ineffective ruling elites) will fade into history…. Given the menu of options available, urbanization and intra-Africa trade present the best possible ingredients for economic takeoff. Ongoing urbanization will create a market for agricultural products. The same urban populations will be a ready market for fast-moving consumer goods.” [An Africanist Perspective substack]
2. Tanner Greer on the Diminished Democracy, from membership to management argument. “American life did become dominated by centralized and professionally managed bureaucracies. The population, in response, became increasingly conditioned to lobbying for centralized decisions instead of self-organizing. Those who introduced managerial bureaucracy to American life understood the “great strength” bureaucratic tools would grant them. But these tools destroyed the conditions that made them so adept at institution building in the first place. The first instinct of the nineteenth-century American was to ask, “How can we make this happen?” Those raised inside the bureaucratic maze have been trained to ask a different question: “how do I get management to take my side?” The old “school of strength and character” is gone…. The nineteenth-century pattern of life that created it no longer exists. But the features of its social fabric demonstrate what an agentic society with a recognizably modern set of technologies and institutions looks like. This culture was upstream of organizations like the Sanitary Commission, making possible the agentic behaviors of those who founded them. Three features are especially prominent: the aspirational ideal of public brotherhood, a commitment to formality and discipline in self-government, and organizational structures that combined decentralization with hierarchy. These are the same patterns any future culture of high agency self-government will also have to cultivate in themselves and their neighbors. [Palladium]
3. Argument the the dollar system was never setup to serve just domestic interests and that it has always been built to play a security function [Phenomenal World]
4. Money and empire or money as empire? [Also Phenomenal World]
5. Mauboussin is a rationalist? On probability vs confidence and reference classes & bases cases and first order vs second order uncertainties [Michael Mauboussin]

1. Tifa: From economic growth to national security in China. “To grasp the significance of what is happening here, we have to rewind to the 1980s. This is when the phrase “take economic construction as the central task” [以经济建设为中心] was first introduced to the Communist lexicon. Phrases like these are extremely important to Communist Party politics and policy. Governing a party with more than 90 million members presents a dizzying coordination program. One way in which the Center manages this challenge is through the promulgation of slogans—also known by their Chinese term, tifa [提法]. The goal of a slogan is to package leadership priorities, strategic assessments, historical judgments, and policy programs in a phrase small enough to circulate throughout propaganda system. The ideal tifa is vague enough for cadres to easily adapt to their own sphere of responsibility but specific enough unify the work priorities of millions of party cadres and state bureaucrats.” [Scholar’s Stage] And struggle and the lights wink out on globalization.
2. Tankus on Pozsar on money. Can’t help but read. [Notes on the Crisis]
3. “So, there you have it. The interiors of our homes, coffee shops and restaurants all look the same. The buildings where we live and work all look the same. The cars we drive, their colours and their logos all look the same. The way we look and the way we dress all looks the same. Our movies, books and video games all look the same. And the brands we buy, their adverts, identities and taglines all look the same.” When the world zig, zig. [The Age of Average]

I found the relative size of these bubbles surprising (https://public.flourish.studio/visualisation/12405521/). I hear so much about the large Nordic (*googles nordic vs scandinavian*; realizes it is 2023 and *ChatGPTs nordic vs scandinavian*) and Middle Eastern SWFs and hear lots of “bad news” about US pensions that I would have guessed these bubbles would be different relatives sizes. But looking at the bubbles makes sense after reminding myself just how big the US economy is compared to the rest of the world (around a quarter of global production).

1. Stigma, trust, and good outcomes when thinking about Team Pause vs Team The Only Way Out Is Through: “Stunting growth now in the development of artificial intelligence just makes the probability of a bad future outcome more likely, as the people who are prosocial and thoughtful are more likely to be discouraged from the field if we attach a stigma to it. My view is that most people are good and care about others and our collective future. We need to maintain this ratio of “good people” in AI research. We can’t have this become the domain of malevolent actors. It’s too important for humanity.” [Marginal Revolution]
2. “I can say that if there was a plane where I had radical uncertainty, or 90% confidence, on its ability to land safely, I would not get on that plane. If you said ‘but you will eventually get on a plane at some point’ I would say all right, let’s work on our air travel technology and build a different plane. If you told me ‘yes we might not have to put everyone on Earth into this radically uncertain plane now but we definitely are going to do it with some plane, eventually, might as well do it now, I’d probably get to work on airplane safety.” [Zvi substack on second link in #1]
3. Reminder that some regulations right, wrong, or indifferent socialize cost through private firms passing along costs to consumers: “One way or another, the public, or some part of it, will have to bear the cost of unlimited deposit insurance. The clearer it is that you and I and all of us are on the hook whenever any bank’s hunger for yield leaves any deposit unbacked, the more likely we are to adopt actually sensible policy, like disentangling the deposits and payments system entirely from private risk investment.” [Interfluidity drafts]
4. Liberalism’s slowness as feature-not-bug in comparison to fascism [Interfluidity drafts]
5. And Tanner Greer on “If we look at the Iraq War as the young rightists do, as a project conceived in secret by a cabal of neoconservative officials hell-bent on promoting democracy abroad whatever the costs, then the conflict’s historical lessons are obvious and have largely been realized. But if we see the invasion of Iraq through a different lens, the lens of civilizational stakes, vitalist drives, and a class of enervated urbanites who yearn to restore meaning and manhood through heroic state action — well, then it is not clear to me we have learned any lessons from our experience in Iraq after all.” [National Review]

1. My animus towards Section 230 is about its central tendency, which has been to eliminate from the profit-and-loss statement very real diseconomies of scale associated with interpreting and curating speech well. Given the reality of network effects, eliminating these countervailing diseconomies has bequeathed to us a consolidated information sphere, dominated by massive platforms whose incentives are to promote engagement rather than high quality deliberation. [Interfluidity]
2. Today there are more city dwellers in Kenya than there were in all of Africa in 1950 [Twitter]
3. “And that’s fine–we always laughed at them as slightly clueless toffs, not realizing (or wanting to admit) that their field is largely a battle of normative opinions, without any quasi-objective touchstone or clearly right or wrong answers. In contrast, we can point to things like express deadlines and numerical ratios that must be maintained and efficiency principles like “least cost avoider”. That’s what’s made the Supreme Court’s recent jurisprudence so delicious–it shows what every non-con law scholar has long known–that con law is as much politics as it is law. There was a certain joy in watching the con law field realize that the emperor had no clothes. But there’s karma in the universe, and Silicon Valley Bank is sticking it right back the banking law scholars. I don’t usually teach the core prudential regulation banking law class, but I really feel for colleagues who do. The response to Silicon Valley Bank is banking law’s Dobbs moment. In 2010, in the wake of the 2008 crisis, Congress erected an enormous legal edifice to govern financial institutions–the Dodd-Frank Act. And we saw in the course of a weekend that it was all an expensive and wasteful Potemkin village.” [Credit Slips]
4. With footloose petrodollars, every story is an oil story. [Twitter]
5. Chinese media and Africa [Foreign Policy]
6. Inflation take 1: “Given the nature of the economy as a network of input-output relations, once an environment of price-raising has been established throughout firms along the value chain, all firms have continual justification for further price hikes to offset costs. If firms with sufficient market power in systemically significant sectors continue not only to propagate but to amplify cost increases, one can imagine a self-sustaining ‘price-price’ spiral persisting. Furthermore, if labor manages to overcompensate for its losses and increase its share in national income in response to price hikes during the conflict stage, this can create another impulse in the form of a new cost shock that restarts the propagation process, as firms react again by protecting profit margins through price increases. [FT Alphaville]
7. Inflation take 2: Raise taxes, not rates [Slow Boring]
8. “It’s a war for the dollar—and the big banks. The rest of us better hold on tight.” [James K. Galbraith]

1. On the strength of the the Afghan afghan and the pre-2016 Yemeni rial [JP Koning, Moneyness]
2. Love Lawrence Wright and love Austin and thought this was a great profile of Austin, Texas, and what happens to a place when it changes fast. But I still Richard Linklater’s Slacker [trailer] is the key to understanding what Keep Austin Weird means/meant (and not my year there is in 2018/19) [New Yorker]
3. Weirdly interesting overview of Duolingo growth model [Substack]
4. I dig Agnes Callard so will share this unusual profile for what it does and does not about aspiration [New Yorker]
5. Exercise for the reader. Is $1T a lot or a little for a payments company [Bloomberg; ACX]

1. “You can play “wisdom of crowds” in single-player mode. Say you want to know the weight of a cow. Then take a guess. Now throw your guess out of the window, and take another guess. Finally, compute the average of your two guesses. The claim is that this average is better than your individual guesses.” [ACX]
2. “The key purpose of corporate finance is to provide methods to compute the value of projects.” Claim that required me to take a few steps back to consider… and in comments: “The idea that the cost of capital for a project should be related to the amount of risk involved in the project isn’t going to go away. There are various ways to measure risk, the CAPM beta being only one, but the basic risk-required return relationship is robust.” [Marginal Revolution]
3. The relentless accumulation (and management) of snow. [brr]
4. In Bamako: “I was also told that French flags have been unstitched and resewn as Russian ones, with the red, white and blue rearranged.” And “an urban statistics website, lists Bamako as Africa’s fastest-growing city and the sixth fastest-growing conurbation in the world. The population – more than three million – has tripled in the last two decades.” [LRB]
5. The anxiety of Stanley Fisher’s economic influence [FTAlphaville]

1. “but it is the early events that are important for understanding what I have been trying to do.” – [A Short Intellectual Autobiography, pdf page 92]
2. Did Julius Krein write the definitive framing of ESG? It doesn’t quite say it but implies that something like industrial policy can and maybe should be an alternative corporate finance option to ESG? Or… a new localism?! [Compact: Why the Right Can’t Beat ESG]
   Some quotes:
   • ESG acted to “improve transparency and disclosure” in a way totally in line with shareholder supremacy frameworks “an emphasis on shareholder value implies and inevitably leads to the development of frameworks like ESG”
   • They claim to offer specialized products that meet the particular needs and profiles of various investors. ESG offers almost infinite possibilities for such “bespoke” investment products, and even if it didn’t exist for other reasons, fund marketers almost certainly would have invented it
   • The fact that [Ackman] doesn’t, and that there is no wave of activist investors successfully opposing ESG, though there are several cases of shareholder activism in support of ESG issues, is perhaps the strongest indication that shareholder primacy offers little basis for opposition to the ESG framework
   • It would be better to develop investment criteria that take into account these material political risks (energy security, national security, supply-chain resiliency, productivity and innovation, family-friendliness, geographic diversity, enhancing a non-college workforce, and so on) and promote capital allocation to secure supply chains.
   • A final possibility to consider is the gradual unraveling of shareholder primacy. Insofar as ESG is a product of shareholder primacy, a shift away from that corporate-governance paradigm would also entail a decline in the importance of ESG investing (though it wouldn’t eliminate political issues from the calculus of business and finance, just as the move toward shareholder primacy only altered how these issues were articulated). In response to recent controversies, BlackRock and other major asset managers have begun devolving voting power back to the investors in their funds. Should this change become widespread, it would mean that public-company shareholders would become more dispersed and harder to organize, as they were in the pre-Reagan era. It is hard to predict the ramifications of such a shift today, but it would likely strengthen the power and independence of corporate management. Ironically, a move to counter ESG by reasserting shareholder primacy may end up making management teams less accountable to shareholders.

1. Otis the 3rd – Time [youtube]
2. Fortune coverage of OpenAI’s history. Interesting tidbits on payout structure of investments and did not realize that Anthropic split out of OpenAI [Fortune]
3. “network of networks” – Visa corporate history. Tom Noyes’ seven core functions that pretenders would have to replicate if they want to compete: 1) An economic model that encourages shared investment; 2) Strong standardised contracts; 3) Certification with active enforcement; 4) Trust – Bank (issuer) role in managing transaction risk; 5) Active customer and merchant support (enabled by economic model); 6) Ubiquity – it works everywhere all the time; 7) Innovation – Shared investment, standards and integration. One way of thinking about Visa’s edge is that you could never get so many parties to agree. [Net Interest substack]