Thank you for the heritage of philosophical and scientific ideas, preserved through an international effort over thousands of years. Thank you for coming to study at American universities in this century, and for staying to teach.
Thank you all for buying into our heroes. What is Star Wars without a global audience? Your enthusiasm transforms our characters into shared legends. Thank you for cheering on Harrison Ford and Will Smith. Thank you for feeling the joys and heartbreaks of Taylor Swift, Luke Combs and Beyoncé. Thank you for sending us Lord of the Rings, Howl’s Moving Castle, and Squid Game.
Video games unite us all. Thanks for Elden Ring from Japan, and Minecraft, which started in Sweden before it was acquired by Microsoft. It helps us be more creative when the world buys U.S.-made games like Call of Duty and Fortnite.
Merci France, for helping us in our war of independence and giving us the Statue of Liberty. (And for printing my cartoon.)
Thank you to England, for the inheritance of a system of limited government, whose principles of common law, parliamentary tradition, and constitutional rights became the foundation upon which we built our republic.
Thank you, world, for listening to our national anthem at the Olympics. For training with us and competing against us in feats of endurance and collectively celebrating as humans have recently broken so many records of performance. Congrats to Eliud Kipchoge and Katie Ledecky.
Thank you for believing in the American Dream. The wealth enjoyed by average Americans today would not be possible without globalization.
Thank you for seeing good in us and trusting our soldiers and businesses.
Thank you for trading with us. Thanks for keeping the modern F-150 truck affordable. Quality is better today, because it’s more powerful with stronger engines and still gets better gas mileage while being safer. Part of what keeps the price down is getting so many component parts through imports from places like Mexico and Asia.
Thank you for sharing your genuine thoughts on our social media platforms. Thank you for making the World Wide Web worldwide, starting with http://info.cern.ch.
Thailand, thank you for welcoming my college friends who do not speak your language. You gave them a break from the monotony of their local landscapes. What would our Instagram be without you, and Iceland and Ecuador? The generosity with which you welcome travelers enriches not just our photo albums, but our perspectives.
It’s hard to keep up with all of the Trump administration’s activities. There is such a flurry of activity related to funding, regulations, and executive actions that no one can keep up with everything. Individuals and news outlets have scarce resources and attention. There’s the added typical challenge of filtering out fact from analysis. If only there was way to summarize the administration’s activities in an objective and meaningful sense.
Luckily, numbers don’t lie – and the federal government publishes a lot of numbers. Specifically, they publish the Daily Treasury Statement which identifies each day’s various categories of outlays. We can look at the raw number of spending to get a sense for where and whether Trump is changing spending within the federal government.
Lauren Bauer at The Hamilton Project noticed that the US Treasury has an API for those daily statements. She created a nice online tool at Brookings that is relatively user friendly. Individuals can visit and see each day’s spending or the cumulative spending throughout the year. Below is the cumulative federal spending for 2024 and 2025. As of March 5th, the US has spent a total of 5.2% more in 2025 than in the year prior (that’s on track with the growth rate of GDP). Importantly, she makes all of the data available for download so that individuals can conduct their own analysis. I lean on her data here.
Where have the cuts been happening? The below graph includes the 5 spending areas that have been most deeply cut relative to the same day in 2024.* The red line denotes inauguration day. The USAID cuts made big news, and it seems like they knew something was happening around the time of inauguration. It looks like they were trying to get spending out the door before the taps were shut off. The FCC and the Library of Congress were also affected by the funding freeze that was announced in late January.
President Trump claims to have made cutting waste a priority. With Elon Musk in tow, the administration has made waves by disrupting USAID, the NSF, and federal payroll. We’re 45 days into the administration. We can use the data provided by the Treasury and made accessible by Bauer to evaluate how the Trump administrations has been spending and cutting according to the numbers.
One way to evaluate spending is to compare the cumulative spending over the course of 2024 and 2025. That is, spending on the 45th day of the year should be more or less comparable in 2024 vs 2025. It’s still early in the year and since various payments can be quite irregular, there’s a lot of noise in the data so far. But we should be able to see big changes. Smaller changes will be easier to see as the year goes on.
The 5 areas of greatest cumulative spending growth relative to 2024 are graphed below.* It does look like some funding was trying to get out of the door prior to Trump taking office, but that’s just speculation on my part. FEMA spending was up, likely due to the fires in California. Much more US Treasury spending is happening, specifically for Claims, Judgments, & Relief. We might see that remain elevated as the new administration keeps ‘trying’ things and then being stopped by injunctions, being the subject of lawsuits, and owing compensation.
While big percent changes in outlays can have massive implications for individual programs, Musk and Trump will need to cut huge amounts in order to claim any kind of victory over profligate spending. (Just so we’re all on the same page, they will fail if they refuse to touch old-age entitlements.) Where have the biggest spending cuts happened as measured by actually dollars? See below.*** The deepest and most consistent cuts are coming from the reductions in federal employee insurance payments. Similarly, the USAID and FCC cuts amount to a $2 billion cut from this time last year. Department of Education spending and the hospital insurance trust fund are down, but are also more volatile in their expenditures. Those one-time spikes in the data are due to pay dates between 2024 and 2025 being offset by a day or two.
America has withdrawn aid from Ukraine. Contra the Vice-President, we could easily afford to reverse this, and I hope we will. I know we could afford it because even the much poorer Europeans can, and I think they might finally be ready to try.
Until now, Europe has been fighting with both hands tied behind their back- letting their economic growth fall far behind America’s due to poor policy, and committing only a tiny share of that economy to defense. Here’s how Polish Prime Minister Donald Tusk put it:
Europe may be significantly poorer than the US on a per-capita basis, but it has significantly more people, so the total size of their economy is almost as large as the US and over 4 times larger than Russia:
But Europe has put only a small fraction of their economy toward defense for a long time. Russia alone spends more on their military than the rest of Europe combined despite their much smaller economy, by putting a much larger fraction of their GDP toward the military:
When European countries spend so little on their own defense, they have little to share with Ukraine. Many leaders complaining about the end of US support have contributed much less themselves, even as a share of their smaller economies:
Europe can be much stronger than Russia, but only if they start trying at least half as hard as Russia. Yes, Europe has poor demographics, but Russia’s are worse; Europe has many more military-age men:
Yes, Russia has nukes, but so do Britain and France, and France might actually take advantage of this.
Economically speaking, is this a good time for Europe to rearm? To me it looks fine. The best time would have been the late 2000s to early 2010s, both because it could have been in time to dissuade Russia from starting this war, and because their economic problems then were much more about a lack of aggregate demand. But right now inflation is fine at 2.4%, NGDP growth is fine at 4.3%, and 10-year bond yields the major countries are around 3-4%. Overall this looks like AD is currently about right, but markets expected that economic growth could turn negative this year, and a burst of defense spending could head that off:
This would be especially valuable if it can be paired with the supply-side reforms that European leaders know they should to do anyway, and that would allow for more growth without pushing up inflation. Europe has fallen far behind the US in productivity, to the point that it is now a bigger issue than their higher unemployment and lower hours worked in explaining why the US is much richer:
The silver lining here is that the further behind the US they fall, the faster they could potentially grow- catchup growth is easier than frontier growth, you just need to copy the technologies and implement the strategies already figured out by the frontier economies. Europe easily has the human capital to do this, they just haven’t had the will- have preferred to regulate new technologies like fracking and AI into oblivion, along with older technologies like nuclear power. They won’t drill for oil and gas themselves in the name of decarbonization but have spent hundreds of billions on Russian oil and gas just since the war began. But if they ever decided to change their policy, their economy could rapidly improve- like letting go of the rubber band you’ve been pulling back.
European leaders appear to finally be realizing this. The European Commission just proposed a 150 billion Euro joint defense fund. This week Germany proposed spending half a trillion on infrastructure and defense, sending European stocks above their previous all-time high set in the year 2000 (!).
The EU always used to be able to excuse their economic failings by saying “at least we brought peace to a continent formerly full of war.” But this is no longer the case. If they cannot settle the war on good terms, they have no excuse. The good news is that European decline has been a choice, and it is a choice they could decide to change at any moment. Victory awaits those who will it.
The chart comes from the Atlanta Fed’s GDPNow model, which tries to estimate GDP growth each quarter as data becomes available. The sharp drops in their Q1 forecast for 2025, based on the last two data updates, look pretty shocking. Should we be worried?
First, it’s useful to ask: has this model been accurate recently? Yes, it has. For Q4 of 2025, the model forecast 2.27% growth — it was 2.25%. For Q3 of 2024, the model forecast 2.79% growth — it was 2.82%. Those are very accurate estimates. Of course, it’s not always right. It overestimated growth by 1 percentage point in Q1 of 2024, and it underestimated growth by 1 percentage point the quarter before that. So pretty good, but not perfect. Notable: during the massive decline in Q2 2020 at the start of the pandemic, it got pretty close even given the strange, uncertain data and times, predicting -32.08% when it was -32.90% (that’s off by almost 1 percentage point again, but given the highly unusual times, I would say “pretty good”).
OK, so what can we say about the current forecast of -2.8% for Q1 of 2025? First, almost all of the data in the model right now are for January 2025 only. We still have 2 full months in the quarter to go (in terms of data collection). Second, the biggest contributor to the negative reading is a massive increase in imports in January 2025.
To understand that part of the equation, you have to think about what GDP is measuring. It is trying to measure the total amount of production (or income) in the United States. One method of calculation is to add up total consumption in the US, including by final consumers, business investments, and government purchases and investments. But this method of calculation undercounts some US production (because exports don’t show up — they are consumed elsewhere) and overcounts some US production (because imports are consumed here, but not produced here). So to make GDP an accurate measure of domestic production, you need to add in exports, and subtract imports.
Keep in mind what we’re doing in this calculation: we aren’t saying “exports good, imports bad.” We are trying to accurately measure production, but in a roundabout way: by adding up consumption. So we need to take out the goods imported — not because they are bad, but because they aren’t produced in the US.
The Atlanta Fed GDPNow model is doing exactly that, subtracting imports. However, it’s likely they are doing it incorrectly. Those imports have to show up elsewhere in the GDP equation. They will either be current consumption, or added to business inventories (to be consumed in the future). My guess, without knowing the details of their model, is that it’s not picking up the change in either inventories or consumption that must result from the increased imports. It’s also just one month of data on imports.
As always, we’ll have to wait for more data and then, of course, the actual data from BEA (which won’t come until April 30th). More worrying in the current data, to me, is not the massive surge in imports — instead, it’s that real personal consumption expenditures and real private fixed investment are currently projected to be flat in Q1. If consumption growth is 0% in Q1, it will be a bad GDP report, regardless of everything else in the data.
Since I have posted on the recreational drugs/painkillers kava and kratom for the past two weeks (here and here), I figured I would round it out with a look at the various active compounds that can be derived from the cannabis plant. I knew of THC (the main psychoactive ingredient in weed) and CBD (very tame), but there are many others. When I visited that head shop/kava bar in Florida last month, I noted that they sold a lot of products containing THC-A, THC-P, and HHC, since THC sale is illegal there:
“Super Looper” Vapes, Containing Cannabinoids
The stork clerk showed me the following road-map (with its color-coded “Measure Your Mellow” legend) of various cannabinoids, taking you from innocuous CBD (“Non-psychoactive, soothes anxiety, anti-inflammatory; calming, relaxing”) to THC-P (“Very psychoactive, best entourage effect; energizing, euphoric, total head and body high”) and HHC-P (“Strongest and longest-lasting psychoactive effect; energizing, sativa-like effect”):
Road-Map of Cannabinoids, with putative effects.
On this roadmap, the main “THC” ingredient in weed is shown as Delta-9 or trans-delta-9-Tetrahydrocannabinol (rated as “Very Psychoactive”).
I don’t want to go too far down this rabbit-hole, but out of curiosity I looked up a few articles to try to understand this zoo of mind-altering compounds. Out of sheer laziness, I’ll start with Wikipedia’s take on the pharmacology, focusing on THC itself:
When THC enters the blood stream and reaches the brain, it binds to cannabinoid receptors. The endogenous ligand of these receptors is anandamide, the effects of which THC emulates. This agonism of the cannabinoid receptors results in changes in the levels of various neurotransmitters, especially dopamine and norepinephrine, which are closely associated with the acute effects of cannabis ingestion, such as euphoria and anxiety. Some effects may include a general altered state of consciousness, euphoria, relaxation or stress reduction, increased appreciation of the arts, including humor and music, joviality, metacognition and introspection, enhanced recollection (episodic memory), and increased sensuality, sensory awareness, libido, and creativity. Abstract or philosophical thinking, disruption of linear memory and paranoia or anxiety are also typical. Anxiety is cannabis’s most commonly reported adverse side effect. Up to 30 percent of recreational users experience intense anxiety and/or panic attacks after smoking cannabis….Cannabidiol (CBD), another cannabinoid found in cannabis, has been shown to mitigate THC’s adverse effects, including anxiety.
Cannabis produces many other subjective effects, including increased enjoyment of food taste and aroma, and marked distortions in the perception of time. At higher doses, effects can include altered body image, auditory or visual illusions, pseudohallucinations, and ataxia from selective impairment of polysynaptic reflexes. In some cases, cannabis can lead to acute psychosis and dissociative states such as depersonalization and derealization.
Regarding some other cannabinoids:
There are similar compounds in cannabis that do not exhibit psychoactive response but are obligatory for functionality: cannabidiol (CBD), an isomer of THC; cannabivarin (CBV), an analog of cannabinol (CBN) with a different side chain, cannabidivarin (CBDV), an analog of CBD with a different side chain, and cannabinolic acid. CBD is believed to regulate the metabolism of THC by inactivating cytochrome P450 enzymes that metabolize drugs; one such mechanism is via generation of carbon monoxide (a pharmacologically active neurotransmitter) by upon metabolism of CBD.[14] THC is converted rapidly to 11-hydroxy-THC, which is also pharmacologically active, so the euphoria outlasts measurable THC levels in blood.
Almost none of these psychoactive compounds are present in the raw cannabis plant. The raw plant contains THC-A, which is then converted to THC and CBD, etc., by heating (e.g. by the heat of burning the dried leaves in a joint, or by baking in brownies). THC-A itself seems to have some attractive anti-inflammatory properties. This NIH article has a listing of the major classes of cannabinoids along with a description of their chemistries. Various synthetic cannabinoids have also been created, with some them now included in pharmaceutical preparations. I have not dug into all the research, but it seems likely to me that some combination of these other cannabinoids might have more favorable effects than plain old THC.
Although CBD is not itself psychoactive, it appears to helpfully modulate the effects of THC, and to have its own useful properties. It is used to treat seizures, and possibly anxiety and chronic pain. It can be eaten (think: gummy bears) or applied in skin patches (for longest-lasting, controlled exposure) or oils or lotions. Some varieties (e.g. “Full-Spectrum”) of CBD contain traces of THC, and so act more strongly.
Taking cannabinoids via a tincture under the tongue (where it can cross a mucous membrane, into the bloodstream) takes longer than smoking to show effects, but they last longer. It also gives a more precise dosage, and avoids smoke inhalation, so this seems like a preferable route if it is available. I recall reading some months back that a mixture of THC and CBD taken sublingually was effective in controlling pain. Eating cannabis, as in “Colorado” brownies, can be problematic: it often takes several hours to take effect (via liver metabolism), so users get impatient and start eating more brownies, and then end up way higher than intended.
Long-term adverse effects of cannabis are controversial. Some researchers claim there are none, but:
There is evidence that long-term use of cannabis increases the risk of psychosis, regardless of confounding factors, and particularly for people who have genetic risk factors. A 2019 meta-analysis found that 34% of people with cannabis-induced psychosis transitioned to schizophrenia. This was found to be comparatively higher than hallucinogens (26%) and amphetamines (22%).
Long-term cannabis users are at risk for developing cannabinoid hyperemesis syndrome (CHS), characterized by recurrent bouts of intense vomiting and abdominal cramping during or within 48 hours of heavy cannabis use.
Also, a very recent large study found that 63% of long-term heavy cannabis users had significantly reduced brain function for working memory tasks. (I’ll add that I know someone whose trajectory very strongly suggests that exposure to weed in early teens put a permanent crimp in her mental and emotional functioning).
It seems that habitual use of cannabis can result in general “chill” lassitude, which lowers productivity. As one counselor told a friend of mine, “It is true that with weed ‘nothing happens.’ That is just the problem.”
Weed has long been touted as an alternative pain-killer. I know of people who claim benefits here. Most states allow “medical marijuana” for conditions such as chronic pain or nausea. However, its use is still unlawful at the federal level, so weed must be grown in-state and not transported across state lines.
This NIH site summarizes many studies on cannabis for pain. The evidence is very mixed. Often a significant fraction of subjects report improvements, but so do those on placebos.
My totally amateur takeaway from this flyover: THC and related cannabinoids have a variety of effects on the mind, mostly pleasant but sometimes bad or very bad. There seems little evidence for adverse effects of weed on the body (outside of the brain), but real dangers of messing up your brain with heavy or extended use. As usual with these recreational drugs, harmful interactions are very likely if other substances are used at the same time.
As for pain treatment, it’s effectiveness seems to vary a lot among individuals. Weed may be worth a try as an alternative to opioids, but it still carries significant dangers
If I had to pick a poison for myself as alternative painkiller, at this point it would be a tie between weed (which messes with your brain, not so much your body), and kava (whose side effects mainly show in body parts like the liver and the skin, plus brief nausea). I would experiment to see what worked for me. But first I would make every effort to treat pain through some other means. There are many possible treatments for pain which may be safer than cannabis, and new treatments keep coming. For instance, a friend with neuropathy told me that he experienced relief with a new medicine called Neuropaway.
Huge Disclaimer: I have no expert knowledge here. Don’t act on anything here. All I have done is summarize a few articles. Consult your doctor before doing anything.
P.S.
I could not resist taking a look at the side-effects of drinking alcohol. After all, we all do it, and we have all seen headlines claiming health benefits of drinking a glass of red wine a day. Well, the medical community is pretty down on drinking, saying the proven harms far outweigh the few, slight proven benefits. Even “moderate” consumption can overtax the liver, which really damages it, per this.
The future is always uncertain, but the short term returns on Luka Doncic to the Los Angeles Lakers already look better than some would have forecast. While he isn’t up to his highest previous standard of play yet, the reduced burden and additional space being enjoyed by Lebron James is already evident in his play. You’ll find no predictions regarding the rest of the season here, but it is a healthy reminder that complementarities are harder to anticipate than substitutes. The possibility of substitution between inputs is more than anything else revealed by their sameness, an attribute that alllows revelation by comparions. Complementarity, on the other hand, is far more complex and often obfuscated by the near infinite ways two or more inputs can be different. Substitutes can be predicted with information and attention to detail, and is therefore more easily reduced to a repeatably applied formula. Predicting complementarities demands more bespoke creativity, an art that is far harder to differentiate from luck.
Hoel’s main argument is that if AI becomes more intelligent than humans, it could pose a serious threat. What if the AI agents start to treat humans the way we currently treat wild deer, not necessarily with malice but without much regard for the welfare of every human individual?
Things that are vastly more intelligent than you are really hard to understand and predict; and the wildlife next door, as much as we might like it, we will also build a parking lot over it at a heartbeat and they’ll never know why.
Economist Writing Every Day 