Links, 10/21/22

In case you missed it, I talked to Chris Nicholson this week about whether and how China could conquer Taiwan. It’s paywalled for a week, at which point I’ll release to everyone. See here for the audio, and here for the video and transcript. The video includes us looking at maps and other cool things, so check it out if you’re interested. Here’s a Twitter thread with some of the highlights.

1. There was a baby bump after Covid, concentrated among college educated women.

That’s quite a massive rise! Indicates that more work-life balance would increase birth rates, particularly among the wealthier and better educated.

2. If you find yourself mad at American elites, please listen to this on how the economy has been managed in Argentina. Based on this article.

These illegal exchanges are called "cuevas" (the word for "cave" in Spanish), and they are a crucial part of Argentina's financial infrastructure. Argentinians are constantly exchanging their pesos (ARS) for other currencies, usually US dollars (USD), and back again because they simply cannot rely on their country's fiat currency.

• The value of ARS is infamously unstable. The country's money supply has persistently high inflation, punctuated by bouts of hyperinflation. Argentina has seen an average of 100% annual inflation for the last century. In 1989, inflation reached 3,000%!

• The government has also imposed strict capital controls that make moving money in and out of the country challenging. It is impossible to take USD out of Argentinian ATMs, even as an American with a US bank account.

• Argentinians who vacation in Costa Rica or pay their child's college tuition in Miami have to pay exorbitant taxes to move money out of the country, or sometimes cannot move the money at all. As a result, these sorts of transactions require an illegal workaround.

• ARS has a pegged exchange rate, meaning its value is not set by market demand like USD but rather is set by government mandate — and the pegged exchange rate almost always overstates the value of the peso. As a result, there is a thriving black market that sets a floating, informal exchange rate called Dólar Blue. These two rates are often dramatically different: as of early 2022, the official ARS to USD exchange rate is 110 to 1, while the informal is 215 to 1. If you bring $1 USD to a legal exchange, you get just 110 ARS pesos, whereas you’ll get 215 ARS pesos in return for that same dollar at a cueva.

As a result of these challenges, there is a lot of demand to move money around without the government’s visibility. Illegal money movement is so common that it's discussed as openly and casually as people in the US might discuss what bank they use.

I’m just glad I live in a country that has had responsible leaders, like Donald Trump, Nancy Pelosi, and Joe Biden.

3. Last week, I discussed Kirill Stemousov, an official appointed by the Russians to to be a leader in Kherson. Here he is reciting some nationalist poetry, which he apparently stole from a kid.

4. Republicans have a shot at winning the governor’s race in Oregon. Nate Silver thinks the state might be the next Wisconsin/Michigan in the coming years, given that it is relatively white and less educated. People being able to observe Portland up close probably also helps.

5. Xi Jinping’s ideological goals are hurting Chinese economic growth. And it’s not just Zero Covid.

A longer-term economic concern is that Mr. Xi has prioritized state-owned businesses, squeezing private companies—a major reversal from China’s trajectory since former leader Deng Xiaoping ushered in a period of “reform and opening” in 1978….

Some signs point to trouble for the country’s growth potential. An IMF analysis estimates that growth in productivity averaged just 0.6% in most of the past decade under Mr. Xi’s watch. That was a sharp decline from an average of 3.5% in the previous five years.

The IMF estimates the productivity of state firms is only about 80% of private ones, and they’re typically less profitable. State-owned PetroChina Co., which helps with China’s efforts to reduce foreign energy dependence, has more than 400,000 employees, six times more than Exxon Mobil Corp.

Based on return on assets, the Texas-based company is about three times more profitable than PetroChina, with more than twice the revenue for each full-time worker.

6. The NIH is now restricting access to a large genetic database so people don’t look for genes associated with educational outcomes and intelligence. There appears to be no legal basis for this, and it would be good to engage in some lawfare over this.

NIH’s responsibility is to protect the safety and privacy of research participants, not to enforce a party line. Indeed, no apparent legal basis exists for these restrictions. NIH enforces hundreds of regulations, but you will search in vain for any grounds on which to ban “stigmatizing” research—whatever that even means.

The restrictions appear to be invented to impede research on certain topics that anonymous bureaucrats with ideological motivations have decided are out of bounds. It’s impossible to know whether senior NIH officials have instigated the restrictions or merely accepted them tacitly. Perhaps they are unaware of the problem; officials far down the bureaucratic ladder are responsible for approving specific applications.