If two New Hampshire men aren't a match for the Devil, we might as well give the country back to the Indians. -Stephen Vincent Benet (1898-1943)
Thanks to Milei, Argentina adds 7.7 million people to the middle class in one year (La Derecha Diario, 06/08/2025)
According to data from the consulting firm LCG based on the Permanent Household Survey (EPH) by INDEC, the middle class went from representing 23% of the population at the beginning of 2024 to reaching 39% in the first quarter of 2025. This is equivalent to 7.7 million people who managed to improve their family income and leave the vulnerability zone.
Melville’s Bartleby: The Great-Great-Grandfather of the Quiet Quitters of Today’s Gen Z: Herman Melville’s “Bartleby the Scrivener” had It right: Why forcing workers back to the office misses the point. (Stephan Richter, 8/02/25, The Globalist)
Corporations across the globe are currently doubling down on “return to office” mandates. They are keen on summoning their employees back into their cubicles and open-plan watercooler chatter.And yet, one wonders: What exactly are they being called back to? The promise of collaboration? The lure of higher productivity? Or is it something more profane — a claim of presence meant to boost executives and assure them that corporate control has not slipped?
Middle managers fade as AI rises (Emily Peck, 7/07/25, Axios)
There are now nearly six individual contributors per manager at the 8,500 small businesses analyzed in a report by Gusto, which handles payroll for small and medium-sized employers. That’s up from a little over three in 2019.
“It’s happening broadly across the economy,” Nich Tremper, a senior economist at Gusto, told Axios.
For small companies, a lot of this happened through attrition, he says. “Rather than replacing a manager, an existing one will just see an expanded scope.”
The massive inefficient expansion of management was how white men integrated women and minorities into the workforce without giving up our own jobs.
The Weird and Lovely Surge of US Productivity Growth (Timothy Taylor, July 3, 2025, Conversable Economist)
Economists have come up with four potential explanations. Three of those suggest this surge in productivity growth probably won’t continue.
The first explanation is that this is mostly just a reflection of the rise of work from home. … [I]f an increase in work from home drove the extra boost to productivity, that would be a one-time boost to the level of productivity, not a change to the overall growth rate going forward.
The second explanation is what economists call “labor reallocation and increased match quality.” Which kind of tells you why you should never ask for messaging advice from people with PhDs in economics. But this is just the idea that before Covid people were stuck in jobs they didn’t love and then the Great Resignation essentially let people rematch to do things that they are more motivated or better suited to do, and productivity went up. Even if you buy that as a driver, quit rates and other measures of job turnover are back to their pre-Covid levels, so the lovefest is probably done. This one, too, would be a one-time increase to the level of productivity, not a longer-lived change to the growth rate.
The third explanation is entrepreneurial dynamism: The number of startups each year was steady or falling for a long time, and it jumped at the start of Covid to a higher level and it hasn’t gone back down. But again, if new firms have higher productivity, this jump will show up as a one-time increase, not a sustained increase in the growth rate.
The fourth and final explanation is that this boom in productivity has been tech and AI driven. I realize that might have been where many of you first started, but note that economists are still skeptical—mainly because there hasn’t been enough adoption yet to explain why the economy-wide productivity growth rate would’ve increased this much.
The AI Efficiency Trap: When Productivity Tools Create Perpetual Pressure (Knowledge Wharton, July 05, 2025, Fair Observer)
Three-quarters of surveyed workers were using AI in the workplace in 2024, but instead of experiencing liberation, many found themselves caught in an efficiency trap — a mechanism that only moves toward ever higher performance standards.
Imagine thinking that creating wealth ever more cheaply is a problem?
Science says plastic bag bans really do work (Joseph Winters, Jun 19, 2025, Grist)
When you outlaw or discourage the sale of plastic bags, fewer of them end up as litter on beaches.
That’s the intuitive finding of a paper published Thursday in the journal Science, which involved an analysis of policies to restrict plastic bag use across the United States. The study authors found that, in places with plastic bag bans or taxes, volunteers at shoreline cleanups collected 25 to 47 percent fewer plastic bags as a total fraction of items collected, compared to places with no plastic bag policies.
US wage patterns during and after the pandemic: Insights from a novel data source [Jeff Nezaj (ADP Research), Nela Richardson (ADP Research) and Liv Wang (ADP Research)
Working Papers 25-5]
This paper adds to a growing body of evidence on the underlying determinants of pandemic and postpandemic wage patterns by leveraging private-sector payroll records from ADP Inc., a dataset that comprises more than 25 million employees, or about 1 in 6 workers in the United States. The paper finds that the pandemic’s disruption of industry sectors and workers drove large swings in pay growth as lower-wage workers left the labor force in the spring of 2020 and were hired back a year later. It also triggered a shift to larger year-over-year pay gains that so far have endured, albeit with some moderation.
Abundance and Its Discontents (James Livingston, 3/07/25, Project Syndicate)
[T]he vision Klein and Thompson offer makes the idea of abundance sound like what awaits the Tribulation Force of the Left Behind film franchise, whose members prove they are worthy of joining the Raptured in heaven by working hard against the anti-Christ on Earth. The abundance we need and deserve cannot be incentivized by monetizing it and attracting private investors and contractors emboldened by relaxed regulations and officials who are willing and able to bend the rules. Nor does it have to wait on the arrival of another “political order” that will deliver the goods because it tells a “better story,” as per the historian Gary Gerstle’s periodization of the US political party system (eagerly cited by Klein and Thompson). Abundance is here and now, abiding in the simple fact that economic growth doesn’t require more savings, more work, and more fossil fuels (and thus the incineration of the planet), because growth – at any pace – no longer demands larger inputs of either capital and labor.
It’s impossible tyo overstate deflationary pressures.
What, Exactly, Are Negative Externalities? (Donald J. Boudreaux, 2/5/25, AIER)
By far, the market imperfection believed, at least by economists, to be most common is that of externalities. An externality, as defined by the Nobel-laureate economist George Stigler, “is an effect, whether beneficial or harmful, upon a person who was not a party to the decision.” Consult almost any economics textbook and you discover a similar definition of externality. Because harmful effects of this sort (“negative externalities”) generally get more attention than do beneficial effects (“positive externalities”), the discussion in this Explainer will be confined to negative externalities, although most of the points I make apply also to positive externalities.
A classic example of a negative externality is a railroad that builds a line next to farmland and, when it runs its trains, throws sparks onto the farmland, occasionally burning the farmer’s crops. The farmer suffers damage that he did not bargain for. If the railroad doesn’t pay for this damage, it does not cover all of its operating costs, which include doing damage to crops. Because incurring costs restrains the actions that generate the costs, not having to pay all of its costs leads the railroad to run too many trains. And when the railroad runs too many trains, the farmer winds up supplying too few crops.
To induce the railroad to produce the optimal amount of railroad services, it must somehow be obliged to pay not just for some of its costs of doing business—to pay not just wages to compensate its workers, and prices to compensate its suppliers of fuel—but to pay for all of its costs, including whatever damage it causes to farmers and other parties who suffer incidental losses as a result of the railroad’s operation.
A.C. Pigou and Ronald Coase
The government can “correct” this market imperfection by imposing on the railroad a tax equal to the value of the crops damaged by its trains. This tax—called by economists a “Pigouvian tax” (after the British economist A.C. Pigou)—“internalizes” on the railroad the cost that it once imposed on the farmer. A cost that was previously external to the railroad’s decision-making processes is now internal to it given that the railroad must pay the tax. With this cost “internalized” on the railroad, it will now produce the economically optimal amount of railroad services, and allow the farmer to supply the optimal amount of crops.
The Post-Neoliberal Delusion: And the Tragedy of Bidenomics (Jason Furman, March/April 2025, Foreign Affairs)
[T]he Biden administration’s post-neoliberal turn, the predicted economic transformations of which prompted comparisons to Franklin Roosevelt’s presidency, fell considerably short of its lofty goals. In some respects, the macroeconomic outcomes have been impressive. The U.S. economy has bounced back much faster than it did after previous recessions, and its post-pandemic performance has also outpaced that of many peer countries in terms of economic growth. But the recovery has been uneven, frustrated by inflation at least partly induced by the administration’s own policies. Inflation, unemployment, interest rates, and government debt were all higher in 2024 than they were in 2019. From 2019 to 2023, inflation-adjusted household income fell, and the poverty rate rose.
Even before inflation doomed Biden’s chances for reelection, it undermined the administration’s goals. Despite efforts to raise the child tax credit and the minimum wage, both were considerably lower in inflation-adjusted terms when Biden left office than when he entered. For all the emphasis he placed on American workers, Biden was the first Democratic president in a century who did not permanently expand the social safety net. And despite signing into law an infrastructure bill that committed over $500 billion to rebuilding everything from bridges to broadband, skyrocketing costs of construction have left the United States building less than it was before the law’s passage.
There have been important successes, especially considering the slim congressional majority with which Biden was forced to operate. Massive legislation that he pushed to address climate change is already reducing emissions and likely will continue to do so even in the face of hostility from the Trump administration. Domestic semiconductor production is being revived. But a hoped-for manufacturing renaissance has not materialized, at least not yet. The proportion of people working in manufacturing has been declining for decades and has not ticked back up, and overall domestic industrial production remains stagnant—in part because the fiscal expansion Biden oversaw led to higher costs, a stronger dollar, and higher interest rates, all of which have created headwinds for the manufacturing sectors that received no special subsidies from the legislation he championed.
The Biden administration failed to seriously reckon with budget constraints and to contend with the effects of “crowding out,” when a surge in public-sector spending causes the private sector to invest less. Both missteps reflected a broader unwillingness to contend with tradeoffs in economic policy and allowed Trump to ride a wave of discontent back into the White House. For Democrats, it would be a mistake to think their loss was due solely to a global backlash against incumbents—or worse, to conclude that American voters had simply been insufficiently appreciative of everything Biden did for them.
Truly building back better will require harnessing the Biden administration’s ambitions for economic transformation without discarding conventional economic considerations of budget constraints, tradeoffs, and cost-benefit analysis—in other words, not giving in to the post-neoliberal delusion.