One Economy to Rule Them All

THE RISING TIDE:

The 1950s Mirage (John H. Cochrane, 1/22/26, Coolidge Review)

Look at standards of living. Real gross domestic product per capita sat below $19,000 in 1955. In 2025 it approached $69,500. These figures are expressed in 2017 dollars, thus accounting for inflation. They show that the average American is about 3.7 times better off today than in 1955. It’s not even close.

REMOTE WORK DEMONSTRATES THE SUPERFLUITY OF MANAGEMENT:

Welcome Back to the Office. You Won’t Get Anything Done: Return to office mandates aren’t about output. They’re about asserting control (Kathy Chow, Jan. 5, 2026, The Walrus)

Unsurprisingly, employees are almost universally against RTO mandates. One 2024 study from the University of Pittsburgh found that 99 percent of companies that implemented them saw a drop in employee satisfaction. Part of the problem is that people are back to the commutes they avoided during the pandemic. In some cases, these commutes are longer than they used to be. As housing costs increased over the past few years, many people moved away from cities with the expectation that they could continue to work remotely.

Countless reports have also documented how RTO rules negatively impact women in particular. In places where day care is either unaffordable or unavailable, women typically shoulder the consequences. Many mothers choose lower-paying jobs that allow them to work from home so they can juggle child care at the same time. All this has likely contributed to another depressing fact: over the past two years, the gender pay gap has widened for the first time since the 1960s. […]

Why, then, are employers rounding up their workers so insistently, with both stick and carrot? (There are the mandates, of course, and then there are the flashy constructions. Jamie Dimon, the chief executive officer of JPMorgan Chase & Co., just cut the ribbon on an extravagant skyscraper in Manhattan. It includes a luxury gym, meditation rooms, and indoor spin studios. Allegedly, the architect consulted wellness guru Deepak Chopra.) Management typically cites productivity as a key reason for bringing workers back into the office. But several studies have shown that hybrid work does not impact productivity. To the contrary, it improves job satisfaction and reduces quit rates.

It may be that the problem is precisely that people are too satisfied with their jobs. Some members of the C-suite have admitted that they implemented RTO mandates to encourage people to quit. RTO mandates offer a way for companies to reduce their staff size without having to pay severance—a tantalizing possibility for employers embattled in the Sisyphean quest to maximize shareholder value.

But the price of playing this mind game with employees is not negligible. For one, management can’t control who will quit, so it’s a rather risky way to reduce the size of a company. You could lose the guy who never does anything, but you could also lose your star player.

The other reason that employers often cite for bringing employees back in-person is “company culture.” But Daisley told me that bosses are “not necessarily being honest about what work was and what we want to go back to.” He recalled that, back in 2019, one of the most common complaints among employers was that workers were sitting around the office with their headphones on. Of course, the headphones that the C-suite were grumbling about from their corner offices were necessary if a worker had any desire to get work done while people around them took calls, crunched chips, and clacked on keyboards. Prior to COVID-19, office space leased per worker had been declining steadily since the 1990s, and employees were increasingly piled on top of each other. If good fences make good neighbours, then no fences presumably make very bad neighbours. All this to say, the “company culture” for which employers are so nostalgic has not existed for a few decades.

Isuspect the real motivation behind RTO mandates has nothing to do with productivity or company culture and everything to do with control. That is what the modern office was designed for, after all.

A GENEROUS PEOPLE:

US Has the Most Progressive Tax System in the Developed World (Adam N. Michel, 1/06/26, Cato at Liberty)

An IRS tax refund check and several fifty dollar bills are showing between two account ledgers
The United States places an unusually heavy share of the tax burden on higher earners. You wouldn’t know this from hearing some politicians claim that the rich escape next to tax-free or deserve to be taxed at higher rates. In reality, the data show the opposite. The most recent example is a study by the Fraser Institute, which shows the US ranks first out of 33 developed countries as having the most progressive tax system.

Nevermind our disproportionate level of charitable giving.

LIKE THEY LEARNED NOTHING FROM THE ’60s-’70s:

The UK Becomes a Case Study in How Not to Fix a Floundering Economy (John Phelan, December 18, 2025, Daily Economy)

Public sector workers were rewarded for supporting Labour with a £9.4 billion pay hike — 42.9 percent of the alleged “black hole” — while the perpetually cash-hungry National Health Service received £1.5 billion. To fund this, Reeves raised taxes by £40 billion — the largest increase since 1993 — including a two-percentage-point hike in employer NI contributions. She denied breaking her pre-election promise, noting that the employee share was unchanged, but this convinced no one. Overall, taxes were forecast to reach “a historic high” as a share of GDP.

Incredibly, the Office for Budget Responsibility (OBR, Britain’s version of the Congressional Budget Office) projected that Reeves’ budget would push government spending, taxes, borrowing, inflation, and interest rates up, while driving employment, disposable income, and GDP growth down.

AFTER ALL, THEY REFLATE:

Are bubbles good, actually? (Tim Harford, 11th December, 2025)

There is a solid theory behind the idea that investment manias are good for society as a whole: it is that without a mania, nothing gets done for fear that the best ideas will be copied.

Entrepreneurs and inventors who do take a risk will soon find other entrepreneurs and inventors competing with them, and most of the benefits will go not to any of these entrepreneurs, but to their customers.

(The dynamic has the delightful name of the “alchemist’s fallacy”. If someone figures out how to turn lead into gold, pretty soon everyone will know how to turn lead into gold, and how much will gold be worth then?)

The economist and Nobel laureate William Nordhaus once tried to estimate what slice of the value of new ideas went to the corporations who owned them, and how much went to everyone else (mostly consumers). He concluded that the answer — in the US, between 1948 and 2001 — was 3.7 per cent to the innovating companies, and 96.3 per cent to everyone else. Put another way, the spillover benefits were 26 times larger than the private profits.

BAN GAMBLING:

Lost Vegas: Everyone inside America’s most flailing destination city has a theory for what’s wrong. Now I have my own. (Luke Winkie, Nov 18, 2025, Slate)

The Mehaffeys escorted me past the blinking slot machines and into the pit, where we sidled up alongside a gaggle of players peering over the wheel—watching the silver ball zip along the rim. John explained the math: A standard roulette table has 36 numbers—half red, half black. Hit your number, and you’re paid 35 to 1; bet on a color, and you double your money. Quantitatively speaking, a roulette wheel fashioned this way would be totally fair. “Theoretically, over a million spins, you’d get 100 percent of your money back,” said John.

Where the house maintains its edge is in the two additional numbers foisted upon the roulette wheel, a single zero and a double zero, both painted green. With those digits in place, betting on red or black is no longer a 50/50 proposition, and if a player is lucky enough to score a win on a 7, or a 12, or a 28, they’re still making what they bet back by a multiplication of just 35—despite the fact that those green spaces allow for 38 potential outcomes. All this is to say that each zero added to a roulette table increases the revenue it scrapes from players by 2.7 percentage points. So, in a moment of incredible audacity, the power brokers of Las Vegas decided to sharpen their advantage, festooning a gauche and unsightly triple zero to their wheels, plundering our wallets more efficiently than ever before.

Why would anyone put up with those bad odds? That’s not quite the right question to ask. Later on in the day, I watched a bachelor party descend upon a triple-zero wheel, despite that, right next to them, bathed in fluorescent light, a double-zero table—encircled by empty seats—waited for customers. The serene, vodka-buzzed tourists either didn’t know or didn’t care that they were inches away from a much better deal. Vegas happily feasted upon that ambivalence all night long.

Vegas seems to have exported its triple-zero philosophy across the Strip. Another casualty is blackjack, which remains the most popular casino attraction in the city. Historically, the game has followed a golden rule. If you are dealt 21—an ace and a 10—you’ve hit blackjack, and your wager is paid out on a 3-to-2 ratio. (A $100 bet nets $150, and so on.) But Vegas has since altered the rules. Now, on most tables, blackjack is rewarded with a 6-to-5 equation; that same $100 kicks back only $120, significantly curtailing just how lucky someone is allowed to get. Again, it’s not hard to see why Vegas casinos made the change. “They’re tripling the house edge,” John told me. “It went up from about 0.66 percent to 2 percent.”

Even if a gambler is willing to tolerate these perversions of tradition, the price of admission in Vegas has skyrocketed. According to John’s research, in 2020, 38 casinos in the greater Las Vegas gambling market featured tables dealing 3-to-2 blackjack capped at a $5 minimum bet. (As in, to play, you need to risk at least $5 per hand.) These days, that group has dropped to six casinos. Prowl through the Strip after dark, sift through the pits, and you’ll feel the difference. Most table games in 2025 force patrons to sacrifice painful amounts of cash to its maw—$25 minimums are basically standard. Fifty-dollar minimums aren’t uncommon either. Even more deviously, some Vegas properties force customers to pay a premium to access friendlier rules. I came across exactly one ultra-rare single-zero roulette wheel on the Strip, which felt a little bit like uncovering the hutch of the last surviving dodo. Naturally, it was stowed away in a high-limit room.

John told me that Vegas initially ratcheted up its minimums during the pandemic in reaction to the crunch of COVID-era gambling. Social-distancing mandates limited the number of players that could gather at casino tables, so operators made up the difference in scale—squeezing more money out of the few gamblers risking infection to play. It is less clear why those juiced wagers stuck around once the coronavirus receded, outside of the obvious: Gamblers are willing to pay them.

Oliver Lovat, a real-estate consultant at the Denstone Group who serves as an adviser to several Vegas casino properties, said I needed to understand that cheaper games are no longer economically prudent in the city. Between inflation, upkeep, and labor costs—including a Nevada minimum wage that jumped to $12 last year—Lovat argued, the salad days of low-minimum blackjack have been legislated out of the fray. After all, it is telling that no matter how much Vegas tourism declines, the city’s gambling revenue continues to tick upward. In August, gaming revenue on the Strip increased by 5.5 percent. Downtown, it was by over 8 percent, and the Boulder Strip was up almost 10.

“It’s not viable to run a $5 blackjack table anymore. You will lose money running $5 blackjack,” Lovat said. “Now, some places still have it. But they’re running it at a loss.”

LIBERALISM WORKS:

Why Americans are feeling poorer even though they’re not (John Burn-Murdoch, 12/07/25, Financial Times)

Green’s figure raised more than a few eyebrows among economists who study these sorts of questions for a living — $140,000 is almost 70 per cent higher than the median US household income. A series of careful analyses of the data he invoked to make his case revealed mis-steps in his calculations that led him to a figure far higher than any reasonable method could produce. But his article nonetheless struck a chord with some, who felt that even if the precise numbers were off they pointed to a larger societal truth: the increasing sense of financial precarity among the middle class.

As someone who crunches numbers for a living, the temptation would be to ally myself with the former camp and dismiss the appeal to vibes, but I happen to think both responses are legitimate. Having dug into the data, I can provide some evidence-based squaring of the circle.

Where Green and his supporters are on to something, is the share of income the middle class spends on essential categories, which has risen significantly over both the long and shorter term. Add together the increased portion of incomes accounted for by healthcare (up by 3 percentage points over recent decades), childcare (up 2 points), housing (up 4 points) and food (up 1 point in recent years), and total spending on these unavoidable costs has climbed from just over a third of middle class disposable income to half of the total.

But this squeeze from essentials has not led to an increase in the share of income American households spend in total across all categories, which is broadly in line with the historical average — even slightly down on where it was when all of these things were cheaper in real terms. This has been made possible primarily by dramatic falls in the price of clothes, electronics, household appliances and other mass-produced tradeable goods, which have more than offset the rise in essential services.

Notably, this pattern is not isolated to the US; it’s common across high-income countries. And there’s a good reason. Rather than the increasing burden of essential costs suggesting living standards are being eroded, if we take a step back, it’s an indication that people across society are becoming more prosperous.