For America’s 250th birthday, my present to all of you is this chart showing our economic history. Average income in the US has increased dramatically since the country was founded. This chart attempts to provide one, continuous series, using the best available income data and inflation adjustments (well, mostly continuous — before 1790 there are just a few estimates). Sources are listed at the bottom of the chart. The y-axis is a log scale.
When visiting a large county park the other day, I noticed a sign for “Amateur Radio Field Day, Public Welcome.” I have always had great respect for amateur radio operators, for their technical prowess and for their service in emergencies when other forms of communication go down. So, I wandered over to see what was happening.
There were maybe half a dozen large screened in gazebo type tents. In each gazebo there were one or two men seated before some radio apparatus on a table, with a couple other guys sitting in more of a spectator role, chatting away. Someone had used a potato cannon to shoot a fishing line over the top of a tall tree, which was then used to pull up a rope, which was then used to pull up a long antenna wire. There was also a tall standalone antenna mast, held erect by three guy wires staked to the ground.
What were these guys doing? There were mainly doing what hams mainly do, which is reaching out across the continent and across the globe, to make contact via radio with other amateur radio operators. Some were doing it by voice communication, using single side band (SSB) technology for more efficient transmissions. Some were using a computer interface to turn their transmissions into a digital format, which could be transmitted and received more effectively. The guy on the other end would have matching software to turn the numbers back into words.
And there was one guy doing it the old-fashioned way, listening to “beep, beep, beedily beep” Morse code coming in, and transcribing that to letters and numbers. The Morse code beeps can cut through radio clutter more strongly than voice signals, allowing more distant contacts with relatively low power. Which is kind of a bragging point.
The special thing about so-called short waves used by hams is that they can reflect or refract from the underside of charged layers high up in the atmosphere. Your signal can bounce off those layers and come back to earth hundreds or thousands of miles away. Before the Internet, this was actually a big deal. The only other ways to communicate back then with distant people were snail mail, telegraph, or long-distance telephone, which was super expensive and grid dependent. I put together a short-wave video kit around 1970, and it was pretty amazing to hear a station broadcasting from Ecuador, not to mention Radio Moscow. Voice of America and BBC short wave broadcasts helped to keep the ideal of freedom alive in Soviet occupied Europe for many decades.
The guys in the park (I didn’t see any women operators, although I know they exist) were enthusiastic and friendly. When I mentioned I have a grandson who seems interested in technology, a man pressed on me an envelope filled with electronic components, and a small circuit board, encouraging me to help my grandson solder the parts into the board to make a short-wave receiver for Morse code. I thanked him sincerely, but said I might wait till my grandson was seven or eight before embarking on this project.
I am something of a techie myself, with a professional career in chemical engineering. But I found myself far out-geeked by these gentlemen. They would be certainly eager to help in the amount of emergency, but that’s actually a very rare event. It seems much of the thrill is simply the technology itself. To truly understand antenna theory, and even to design and build your own radio, are marks of distinguishment in that crowd. What I found most interesting from a psychological point of view was that when they do connect with someone 1000 or 10,000 miles away, they usually do not stop to chitchat about things like, how’s the weather where you are, how long have you been doing this, etc. No, nothing of normal human interest, it’s just: dutifully log the other party’s location and call sign, and move on to make the next contact.
My takeaway: as I’ve done maybe once a decade, I peered into my soul to assess whether I wanted to invest the time and money into pursuing this hobby. I could crank up my aging brain to pass the technical exams required to get an amateur radio operator’s license. But to set up a working short-wave radio and antenna, and get proficient at using it, would take a lot of effort. And in the Internet age, reaching out and touching someone on a different continent in real time just is not the rush that it used to be. As a responsible citizen, the emergency preparedness aspect is of interest to me. However, there is a newer, alternative class of radio called GMRS, which I think may be more realistic for most emergency situations. My encounter the other day with the hams did cause me to reengage with GMRS, and I may write a blog post about that in the future.
This is a near-perfect policy experiment showing us, once again, that immigration is not only a net gain for all, but an absolute gain in the rural communities that have become the most politically resistant to immigration.
Further summary:
The brilliant content creator economist Matt Hill has posted a video “How Piracy Accidentally Created AI” to the @EconNerds channel on YouTube.
The video is so funny (and smart!) that I encourage you to sit back and watch it all the way through. Around minute 2, he gets to the topic of online piracy.
The 4 minute mark is where I am featured to explain my paper with Bart Wilson: You Wouldn’t Steal a Car: Moral Intuition for Intellectual Property (SSRN link)
The @EconNerds channel on YouTube has over 100 engaging videos like this to help you learn economics. You can also find Econ Nerds updates on X/Twitter
I summarized our findings in a previous blog “Summary of You Wouldn’t Steal a Car,” but Matt’s video is more fun and quite technically accurate, so now everyone can just watch it.
I’ve recently gone back and started listening to the archived episodes of the ‘Macro Musings’ podcast hosted by David Beckworth. The show started in 2016. At that time, there was still a sense of malaise after the 2007-2008 Great Financial Crisis (GFC) and the slow recovery that followed it. We were also in a prolonged low-interest rate environment.
A recurring theme is whether the Fed should have engaged in expansionary policy earlier than they did in response to the GFC. There are multiple ways to answer. It’s not helpful to say ‘knowing what we know now’. The Fed didn’t have that opportunity. It’s a little bit more helpful to say ‘if the Fed had a different target or different tools’. The target and tools are higher-order policy decisions and changing them can be helpful in the future. But they typically can’t be changed with the flip of a switch. After all, the 2% inflation target itself rolled out over the course of decades.
The most awkward/damning question is “Given the target, tools, and data that the fed actually had, did they make the right decision?”. If the answer is ‘no’, then that warrants a serious investigation of individuals, groups, processes, etc. I don’t mean a legal investigation. I mean the decentralized kind in which public and expert trust can be affected.
A concept that Beckworth often mentions concerning Fed culpability/performance during the GFC is the problem of data revisions. Currently, we know what the revised data says about NGDP, inflation, employment, etc. But the Fed only had the contemporary numbers and immediate revisions. In a world where economic growth is lousy or stellar in a range of 1-3%, small revisions can matter a lot. For example, below are the 2001q1 NGDP revision values over time.
Revisions occurred twice by 2002q2, revising NGDP down by more than 2%. Subsequent revisions raised the value on record to nearly +3% of the initial estimate, before settling at a less elevated value. Sheesh! In a world where a 1% swing is a big deal, how can we possibly expect the Fed to succeed at managing aggregate demand?
Things are not so scary as they might seem. The Fed doesn’t much care about revisions to an individual quarter. Rather, they care about the direction of change over time. Whether future revisions increase GDP by 2% is unimportant. What’s important is whether one period’s value is lower relative to the earlier value. That’s the relevant difference that tells us how the economy is changing.
Now, in 2026, our current understanding of NGDP during the GFC follows the below pattern starting in 2005q1 (lest I omit important pre-trends). NGDP growth had weakened in 2007q4, turning negative in 2008q1. Weak growth resumed in 2008q2. Then we had near-zero or negative growth for the next five quarters. Of course, we’re now approaching twenty years later, so we have the huge benefit of hindsight and revisions. Keep in mind that the contemporary numbers aren’t available until the subsequent quarter. By the yard stick of NGPD, the Fed should have been loosening by Q3 or certainly Q4 of 2008 if they cared about supporting total spending. Maybe as early as Q2 is they were especially sensitive.
Continue readingAlan Greenspan died this week at age 100. He was the Federal Reserve chair during my entire childhood.
But since I wasn’t really following markets and macro at the time, I don’t think of him in terms of monthly announcements about interest rates. What I find most interesting now is the winding personal and intellectual path he took to become a long-serving Fed chair.
He studied clarinet at Julliard before later getting economics degrees at NYU. He supposedly attended the famous 1944 Bretton Woods conference that organized the post-war international monetary system- but as part of an orchestra, not as a monetary economist. In 1966 he coauthored “Capitalism: The Unknown Ideal” with Ayn Rand, where he argued against antitrust and consumer protection laws and for the gold standard. This may be why my intro macro professor Bobbie Horn always referred to Greenspan as “Ayn Rand’s boy toy”.
His advocacy for the gold standard is striking given that just two years later he would join the campaign of Richard Nixon, who took the US off the gold standard in 1971. Then Greenspan would go on to chair the Fed in the now-standard discretionary manner while making, as far as I can tell, no attempts to move it back in the direction of a gold standard.
While it’s unclear whether Greenspan’s unusual path improved his ability as a Chair, it was at least possible then to reach the office by his somewhat unusual path. Since his 1987 appointment the path to the highest appointed offices narrowed to include only more conventional candidates. Randy Barnett and Josh Blackman noted this in a 2015 article on the Supreme Court:
earnest, platinum-résumé’d law geeks have their eyes set on “the Big Bench,” so they keep tidy lives because they think they might someday face a confirmation hearing. It is an unfortunate reality today that to be a judge, you cannot hold vehement opinions prior to the nomination and confirmation process.
I see similar forces at work in economics, where the 50 economists who have a shot at being Fed Chair and the 500 who think they do all hold their tongues. But what does that mean for the kind of Fed Chairs we get?
the truth about SCOTUS-wannabes who “trim their sails” and limit their potential based on a fear of a future confirmation hearing: Such persons lack the character a justice needs…. “Courage is a muscle. You develop courage by exercising it. Sitting on the fence is not practice for standing up.” Imagine what it takes to live your whole professional and personal life as a “justice-in waiting.” These SCOTUS-wannabes spend their careers seeking the approval of others, in the hopes that one day they will be nominated because of their friendships across the political spectrum.
Barnett and Blackman argued that this should change, and I think this is now in the process of changing again:
Such willfully “stealth candidates” should be disqualified from consideration for the Supreme Court…. We need jurists who are fearlessly committed to the rule of law, reputation be damned…. Paper trails are an asset, not a disqualification.
The Atlantic has a great article about the history of the Boeing 747 aircraft, which is slowly being retired by airlines. Lots of fun details in the article about the plane itself and about that era. The author is also conscious of the fact that flying was expensive back then, and that a lot more people fly today (though in part, the 747 was a cause of mass flying). Still, the tone of the article is nostalgic for the era, in addition to just being a nice obituary for a marvel of engineering and luxury.
But just how much more expensive was flying when the 747 was introduced? The article doesn’t exactly tell us, though they do give some inflation-adjusted figures on the cost of building the planes. They do give us some hint of how luxurious flying was, even in coach: “on a 1970 Pan Am flight from JFK to Heathrow, a coach-class passenger would have enjoyed filet mignon.”
Sounds nice! But expensive. In 1970, a roundtrip flight on Pan Am from New York to London was $420. First class was $750. To put those numbers in context, the average wage in 1970 was $3.40, meaning it would have taken 124 hours of work to buy the coach ticket, and 221 hours to buy the first class ticket. The average wage today is $32.31, meaning that the coach ticket is the equivalent of almost $4,000 today, and the first class ticket is over $7,000. Filet mignon is nice, but not $4,000 nice.
Today, you can buy a coach ticket from New York to London for around $800. Of course, there is no one single price today, as there was in 1970 (something that frustrates buyers, to be sure), but I’ve searched multiple websites in different months, and you can generally get a direct flight for around $800 in economy class (often cheaper if you don’t have a direct flight). Today most airlines have multiple upper classes for international flights, not a single first class, but on American Airlines you can generally get a business class ticket to London for around $4,000 and a first class ticket for a bit over $5,000 (both direct flights from NYC).
In other words, for the same amount of work as buying one coach ticket in 1970, you could buy five tickets in 2026. Or, if you desire that luxury, you could also buy one business class ticket today, for roughly the same amount of hours worked as the coach ticket in 1970. Business class seats today take about half the hours of work as a first class seat in 1970, and an international first-class ticket today takes about 75% of the hours worked in 1970 as a first class ticket (American Airlines Flagship First class is a truly luxury experience, probably better than 1970, even though there is no piano bar on the plane).
The decline is much smaller than the decline for coach seats, but it is still a decline. But that is an important point: the biggest gains from deregulation and competition in air travel and the non-rich, who mostly weren’t flying anyway. Is the experience as good as 1970? Of course not, and The Atlantic article stresses this point repeatedly. You won’t get filet mignon, you’ll probably be in a cramped seat, with a frustrated flight attendant. But you can afford it, which for most middle-class families is probably the most important fact.
Imagine my surprise the other day when I noticed that $1000 had been transferred from my bank account to some nonprofit, without any knowledge or approval on my part. It turned out that an acquaintance, with no access to my banking credentials, had done this. They wanted to make a charitable donation, using a direct bank transfer rather than a credit card, to save the charity the 3% fee charged by Visa/Mastercard. I had written them a check some months back, and they accidently entered the routing number and account number from that check of mine, instead of their own account information.
Was this some unique, gross security lapse by the bank? Or can anyone drain money from your bank account from anywhere, simply knowing your routing and account numbers? After all, these numbers appear on every check you write.
In the old days, someone armed with those two numbers could print fake checks for your account and forge your signature. Sadly, the same principle holds true now in the age of electronic transfers.
The ACH network, which powers most bank-to-bank transfers, bill payments, and direct debits, was historically designed on the assumption that initiating a pull was authorization enough. Someone with your numbers can:
Ouch. It seems there is really nothing you can do to prevent this, other than closing your existing account if you are worried, and opening a new account with different numbers.
The main mitigation method is to set your account to notify you every time there is an electronic transfer, and notify the bank immediately (call, and follow up in writing or bank’s message system). Start documenting all aspects of this dispute process, in case of litigation. Or at a minimum, look through every month’s statement soon after it appears, to check for shady transfers. Close or restrict the account if appropriate.
As I understand it, if you notify the bank within 60 days of when they sent the monthly statement, your max liability is $500. Beyond 60 days, you are toast – the money is just gone.
There is a slightly murky provision for limiting liability to $50 if you notify the bank within two days of you learning of the fraud (as long as that is within the 60-day window noted above). The application of this 2-day rule is clear if you are getting real-time notifications of transfers. But, say, if you slit open a printed statement the day after receiving it in the snail mail, perhaps three days after it was sent, notice a fraud and call the bank immediately, it is less clear whether you get dinged $50 or $500. If you are a good customer, I’m guessing the bank would make it $50.
All this is powerful motivation for using credit cards or Venmo/Zelle instead of paper checks. Bad guys can’t withdraw from your Venmo or Zelle unless they have your login information. With a credit card, you generally don’t get charged anything for a fraudulent transaction on your credit card (assuming you report it in reasonable time) – – plus you can usually get 2% or more cash back.
Economics is everywhere, but I find endless enjoyment in watching others learn about economics in unexpected places. In this case, it’s in the largest Dungeons and Dragons subreddit, where a particularly long-playing and supremely powerful group of adventurers get the bright idea to institute a tax…on magic. What could possibly go wrong?
Well, that is precisely the discussion that emerges. All the things that will and should go wrong if you decide to place a tax on what is essentially the wellspring of all technology and welfare in their world. All healthcare, production, sanitation, agriculture, public safety, etc etc. It all comes back to magic. And these hearty and hale adventurers think it would nice to rake in a few extra million gold pieces by placing, and presumably enforcing, a tax on it.
What’s fascinating is to walk through the comments and watch the crowd collectively puzzle out all the ways this is going to backfire, only to then march through ways the world is going to collectively respond and eventually rebel. There’s a reason why most tax discussions eventually become, at the very least, targeted and, at their very best, highly nuanced. Because it is no small decision how a society should best leverage taxation as a means to solve a problem. Do we want to tax the rich? Ok, what’s the line at rich? Do we want to eliminate regressive taxes targeting the poor? Ok, but is this only a tax or is it doing something else as well?
In this world of magic and mayhem, we see our heroic players stumble into literally the worst possible thing you could ever tax: the entire body of technology. Not labor, not capital, not income, not capital gains…no, they target the single most important input into all of economic growth and human welfare. From a pedagogical point of view, this is <chef kisses fingers> perfection. Absolutely no notes. I’m not kidding when I say that, if I was still teaching Principles of Economics, I would build a class discussion around this exact thread.
And special shout out the commenter to worked through the economic, political, and ecumenical consequences in real time:
It’s economics all the way down, apparently even into the depths of The Nine Hells.
Lately I’ve been experiencing personal advertising barrages. Sometimes, I actually buy a product online before realizing that I had been living in a fake information environment complete with fake AI-generated product reviews. What I want for myself right now is to hear more product reviews from real people. I’m not against earning money from affiliate links, but I will earn nothing from this post. Here’s what I’m using right now.
Sourdough Bread Baking gear kit – I got a kit with “bannetons” (if you’re not interested, don’t ask) back when I decided to get into sourdough baking. The appeal was the savings from buying it all in a bundle (i.e. “dough whisk,” etc.). The investment is worthwhile if you are going to make your own sourdough bread. As I wrote earlier, this is a big investment of time. I do not recommend starting the process at all if you will make homemade bread less than 5 times a year.
Homemade Driveway Pickleball Court – if you have a paved level driveway or large patio, you might be able to create a non-regulation-sized Pickleball court. It used to be that billionaires could have their own tennis court and the rest of us could have ping pong tables. Now there is a Third Thing. You will likely need to rig up nets as a backstop by piecing together sports gear meant for baseball backstops. The actual mid-court net can come cheap from Amazon (I went with 14 feet wide). A small Pickleball court is fun for children/teens, but adults will prefer going to a real court where you can hit the ball much harder. Pickleball facilities are appearing all over the country and many cities now provide free courts in parks and gyms.
Canvas LMS and New Quizzes – Samford University uses Canvas, and I have always liked the interface. Finally, in the year 2026, I have decided to build a new course using “New Quizzes” instead of Classic Quizzes. The rollout of this product has been so awkward, but if you are starting from scratch, Item Banks and “New Quizzes” works well now.
The book Misbehaving by Richard Thaler is about his career and the field of Behavioral Economics. I think anyone could learn from how the field evolves in the face of new evidence. It’s been helpful for me with my project on LLMs and financial decision making.
Codex – Thanks to Codex, I can finally do something teaching-related that ChatGPT had failed to do for me in summer of 2025. Codex can write straight to a subfolder on my computer, with coaching. For technical details, follow Aniket. What I used to say to people who wanted to “learn computer programming” is that it’s impossible to learn from reading books. Build something that you care about, even if it is just a tiny website. I would say the same for Codex. Use it to build something, even if that’s something for your personal life like a sourdough bread baking scheduling assistant.
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