Economist who mixes it up with agriculture, climate change, energy, data, and micro/macro fundamentals. Love the ocean. Swimmer, kook surfer, and lucky Dad.
Honolulu, Hawaii.
Joined September 2009
- Tweets7K
- Following560
- Followers1.9K
- Likes5.8K
Pinned Tweet
1/
New working paper: "Optimal transmission expansion minimally reduces decarbonization costs of U.S. Electricity."
#energytwitter #EconTwitter #decarbonization
🧵
Crap. That’s a new line crossed. And a really big one.
The scarier story isn't a president firing a commissioner over bad jobs numbers. It's what happened last week, quietly, with no front-page coverage: our statistical agency actually put out a number shaped to please the president.
That's not a bad data point. That's the loss of a shared source of truth. newsletter.platypuseconomics…
245
“The ironic consequence: the sector that gets automated becomes a smaller share of the economy, not a larger one. Agriculture got massively more productive and its share of employment collapsed. Manufacturing too. The "stagnant" sectors absorb the spending and the jobs.”
New essay on the economics of structural change and the post-commodity future of work.
1. Almost any question about the impact of advanced AI on the economy needs to start at the same place: what is still scarce? Answer that, and the analysis becomes pretty straightforward. This essay explores what becomes scarce if AI really can replicate most of what humans do in production, and what this mean for the future of jobs.
2. My conjecture, working through the economics: labor reallocates across sectors, and the sector it reallocates to has properties that keep labor a meaningful share of the economy. Ultimately this is about the structure of demand itself. For this, we have to go back to Girard, Augustine and Rousseau: once people's base needs are met, their preferences shift to comparative motives (e.g., status, exclusivity, social desirability). This motive is inherently non-satiated.
4. The key paper is Comin, Lashkari, and Mestieri (Econometrica 2021). As people get richer, they don't buy proportionally more of everything. They shift spending toward sectors with higher income elasticity. They estimate income effects account for 75%+ of observed structural change.
5. The ironic consequence: the sector that gets automated becomes a smaller share of the economy, not a larger one. Agriculture got massively more productive and its share of employment collapsed. Manufacturing too. The "stagnant" sectors absorb the spending and the jobs.
6. So the question is: which sectors have high income elasticity in a post-AGI world? I argue it's what I call the relational sector. Categories where the human isn't just an input into production, it is part of the value.
7. Why does the relational sector have high income elasticity? Because human desire has a mimetic, relational dimension. We don't just want things for their intrinsic properties. We want what others want, and we want it more when others can't have it. Girard, Rousseau, Augustine, and Hobbes all saw this.
8. In work with Kristóf Madarász, we showed this experimentally: WTP roughly doubles when a random subset of others is excluded from the good. And in new work with Graelin Mandel, AI involvement kills the premium. Human-made art gains 44% from exclusivity; AI-made art only 21%.
9. This all comes together for the core argument. The sector that absorbs spending as AI makes commodity production cheap is one where human provenance is part of the value, and demand for it grows faster than income. Exactly the profile that keeps labor meaningful.
10. To be clear about the claim: I'm NOT saying aggregate labor share must rise. It may fall. The claim is about sectoral composition, i.e., where expenditure and employment go once commodities get cheap, and the fact that the sector that will absorb reallocated labor maps to a substantial component of human preferences and desire.
11. If you're interested in the formal model, a linked companion technical note works out all the economics.
Read the essay here: aleximas.substack.com/p/what…
2
3
183
Solar and batteries are so cheap and so easy to site at most any scale. Resistance is futile.
But still they resist.
160
I didn’t watch this, but these are obviously true points. Africa will electrify faster now with cheap solar and batteries.
A question I’ve had for a while now: how much better off will the rest of the world be with a richer electrified Africa? Can we extrapolate from Asia?
We still hear this argument: “If you reduce fossil fuel production, Africa will never be electrified.”
In this clip from The Energy Capital Podcast, Nat Bullard and I talked about how those talking points ignore the reality on the ground.
For more than a century, fossil fuels have been produced at massive scale. If they were going to bring affordable power to everyone, they would have done it by now.
What is bringing power to places without electricity?
⚡ Solar panels, batteries, and LEDs delivering light, cooling, and power one home, clinic, or community at a time.
⚡ Modular, local systems that grow piece by piece, without waiting for larger infrastructure which may never come.
⚡ Air conditioning and solar peaking together, delivering health and safety in a warming world.
Nat added that no one buying solar panels in Zambia or Malawi, or selling them from China, is waiting for permission from Washington. People around the world don’t care about our fossil fuel debates. They’re doing what works. It would be better if America were involved and helping, but they're not waiting for us.
Distributed solar isn’t charity.
It’s power – literally and figuratively.
👉 Full conversation in the reply.
120
Ronald Reagan's last speech on what made America great. 🎥 Credit: @nowthis youtube.com/shorts/J5upAEZOc… via @YouTube
102
Hate speech against my tribe will be punished.
Hate speech against your tribe will receive Presidential honors.
Isn't that what America is all about?
This quoted post is unavailable.
1
109
This chart is *probably* misleading. The NYT should do better.
Why? Significant demographic changes sit beneath these lines. It's essential to control for age and population shares in each category.
1
119
So refreshing that MSM is letting Justin Wolfers provide real information instead of the usual he-said, she-said nonsense that fills the airwaves.
Most of this is CA and not Trump related. Still, Trump policies will drive electricity prices higher everywhere. People won’t like it but energy interests of many stripes will like it.
1
226
If they cook the inflation numbers, will there be a class-action suit to try to claw back withheld returns on inflation-indexed bonds?
I don’t think I have ever publicly criticized any Presidential nominee before.
But E.J. Antoni is completely unqualified to be BLS Commissioner. He is an extreme partisan and does not have any relevant expertise.
He would be a break from decades of nonpartisan technocrats.
1
391
It shouldn't be required, but someone should patiently explain why it makes more sense to look at manufacturing jobs as a share of all jobs rather than as the absolute number of jobs, especially in an economy with a rapidly growing population.
According to the principle of comparative advantage, reading economic data is best done by lawyers than by trained economists.
1
1
191
Seems like the way the Trump administration operates.
Told someone that the LLM output they were citing was nonsensical, gave them a source proving it, and they responded that I was wrong because they asked the LLM multiple times and got the same answer.
LLMs are replacing reasoning for some of the dumbest people.
115
I’d guess the problem here, which is even worse in Hawaii, is that prices are not clearly posted, creating a poor environment for competition.
Regulators could fix this by requiring a standardized disclosure of the cost per Watt and monthly posting of average price in each area.
The problem with residential solar in the US is that companies are trying to sell homeowners a $1 MSRP product for $3. Of course customer acquisition is going to be hard & financing is expensive and we need subsidies. All those problems go away if you just sell it for $1.
265
Update to this paper on arXiv here:
arxiv.org/abs/2402.14189v2
We better account for ramping constraints and boost demand on the toughest weeks in each region by 25%. This makes transmission slightly more valuable.
1/
New working paper: "Optimal transmission expansion minimally reduces decarbonization costs of U.S. Electricity."
#energytwitter #EconTwitter #decarbonization
🧵
1
126