mdmakowsky

Rules aren’t real until they are

October 5, 2026October 4, 2026mdmakowskyLeave a comment

This is essentially me revisiting the core concept from last week’s observation that social norms are necessary but not sufficient. Simply read this Michael Lewis essay on the attempted takeover and dissolution of the Institute of Peace by a cadre of DOGE employees who seem little more than a gang of giddy vandals.

You can read it as the narrative is designed. There are good guys resisting a group of marauding (in some cases literal) children. But I think it implies a vastly more important question that we’ve been learning the answer to every day for the last two years: are there rules? If someone does not care to follow the rules, what are the consequences? If someone is creating bespoke rules on the fly with the implied promise that you are taking on great personal risk if you do not follow their rules, are they actually rules or are they something else?

Funny thing about high level governance, it takes on a far greater “fog of war” than a more optimistic observer of institutions might expect. The shape of the current US federal government and the actions it takes appears to be determined far more by the actions of individuals willing and capable of making decisions in a fog of war. That favors people who know that rules aren’t real if they are unenforced. But it also implies the potential for far greater consequences if an authority ever decides to impose consquences for prior transgressions within the fog of war in the interest of resetting precedent for the future.

Social norms are necessary but not sufficient

September 28, 2026September 27, 2026mdmakowsky1 Comment

This, to me, is the principal lesson of the last 10 years from US governance. The story and data in this paper are based in Singapore, but the lessons are universal. Social norms are critical, but if you grow reliant on them absent any formal enforcement, corruption will eventually take root. There are just too many people who figure out that the concept of “being in trouble” isn’t real. If transgressions do not receive instrumental punishments beyond social shaming and reputational damage, then individuals will simply find institutional and social pockets to inhabit where that shame doesn’t reach and a negative reputation might even be viewed as an asset by other would-be corrupt agents.

Read this paper (I mean, at least skim it) and internalize its core observations. This is important.

Political discontinuities

September 21, 2026September 21, 2026mdmakowskyLeave a comment

Here’s the Polymarket…market… for bets on the outcome of the US midterms in November over the last 7 days. You’ll notice a 7 percentage point (13% relative to a 54pp baseline) increase in the expected probability of the leading outcome. That’s a very big change, most of which happened over 3 days. In a $12.8 million market where the largest shareholder has $73k on the line, that is a very, very big move.

I don’t have any insight into what is happening here, I would simply note that there was to my knowledge no singular news item or event that appears to have sparked this. It’s just a great example of what makes betting markets so interesting. There is some tacit knowledge held by a relatively small number of inviduals, but within and through this market this information has now become at least partially observable in the form of a price. Now, to be extra, super, you just won’t believe how clear about this, I don’t have any insight to lay on top of this, no personal model to share, and I would strongly advise very nearly everyone against trying to participate in this market for personal profit. But, nonetheless, this is useful information. If you made me choose between a world with sports gambling or everything else gambling, I might very well choose “everything else.” At least the world captures some value from the revealed information that is, at least in part, subsidized by enabling a very real and serious addiction. I don’t know that we can say anything similarly positive about sports gambling.

Update: longer timeline as of 10am this morning (7/11 to 9/21)

US economic advantages, last 100 years

September 14, 2026September 17, 2026mdmakowskyLeave a comment

Inspired by Canada’s attempt to integrate into the European Union, here is a non-exhaustive (and highly correlated) list of advantages that Americans have benefited from, been subsidized by, or captured rents from over the last 100 years:

Immigration
The world’s largest free trade zone (50 states, 3.8 million square miles, 116m-350m people)
Friendly neighbors
Two coasts to transport goods from
Serving as the world’s reserve currency
The lowest perceived probability of defaulting on its national debt
The absence of historic or prospective hyperinflation
Possessing nuclear weapons that can both credibly be used and, more importantly, not used (NB: I’m not excited about this one, but I at least can’t rule out that it has deterred antagonistic military action)
The world’s most prestigious higher education institutions
Relatively high levels of interpersonal trust

I have no doubt that there is many, many more. I just wonder which of these we will still be intact in 10 years. Are they all still intact now?

Addendum: This is not meant to be a list of simply good policy choices. Those are, in actuality, far easier to achieve. Rather, this is a list of physical and societal attributes that either simply have to exist or take a significant amount of coordination across time and, more difficult still, generations, to achieve.

There’s no non-partisan way to say this

September 7, 2026September 6, 2026mdmakowskyLeave a comment

I try to avoid nakedly partisan output, especially in this forum. I give my self a little more leeway on social media, but still try to remain within reason. And over my entire liftetime, the intellectual capability of the president has always been a target for insult (sometimes horrifically so) by the opposition party. But we have arrived, at some point in the preceding months or years depending on your vantage, at the arrival of a sitting President who genuinely appears to be limited in his ability to self-regulate.

If you let the post play, it shows 7 posts over 10 minutes. The rapidity of posts is, I believe, relevant because it signals that it is unlikely to be the product of a staffer in charge of his social media. PR staff would, regardless of content, prefer that posts each have their own time at the top of the feed to generate attention. By firing off so many posts in rapid sequence, each post is buried by the subsequent. This is not professional PR.

As for the posts, it is precisely the kind of content that would generate a lot of interest from juveniles and those in cognitive decline. It’s the kind of slop, AI or otherwise, that gets a lot of attention from individuals with zero opportunity cost of time on Facebook. Read in conjunction with the all-caps posts of threats to ban trade with whole swaths of the globe and other similarly illegal executive actions, it’s just part of the evermounting evidence that the President is not in full control of his impulses. Putting aside what Thomas Schelling would say about fragility and faillings of madman theories of conflict, it’s brings up one of the most important reforms we can and should be pushing for in the next administration.

Age limits on representation.

Reliable, unbiased cognitive tests would be first-best, of course, but the problem there is a) failure is endogenous to the control of the branch administrering them, and b) extrication in the wake of a failure is the kind of stress test that our system does not seem up to at the moment. For all of it’s coarseness, counting days since the record of your birth is straightforward and relatively easy to enforce before being allowed on the ballot in the first place.

One of the realities of modern medicine is that our ability to preserve the body is likely to outpace our ability to preserve the mind at a level adequeate to the task of high representative office. At the same time, our abilitty to extricate and replace someone unfit to their duties in the public sector will likely always be limited relative to similar processes in the private market, where executive services will always be at will in any context where the executive is not themselves the owner.

From a public choice/political economy perspective, age limits will not be an easy legislative or constitutional feat. Representatives will always favor the status quo rules that helped them get their job and subsequently keep it. This is only made more complicated by the basic human optimism regarding our own current and future capacities. And perhaps the simplest obstruction is also the biggest: the reward for winning an election is the expected incumbent advantage in the next election. To limit the prospective future terms for any sitting official, in their current position or the one they aspire to, is to reduce the value of what they already earned, and nobody likes that.

In the face of all that, however, remains a simple truth. The citizens of the United States and the broader world are all made less safe by a sitting President whose self-control and capacity to understand complex contexts has waned well-beyond the threshold of reliable decision-making. That’s a cost big enough and bad enough, wrapped in all the risk aversion and loss-aversion who can possibly imagine, that it should at least have a chance to motivate real legislative action. At least a chance.

Anyway, happy Labor Day.

Academic administration

August 31, 2026August 30, 2026mdmakowsky3 Comments

Raghu Parthasarathy has put together a few graphs looking at labor salaries at the University of Oregon. This isn’t the first potential observation of what others have termed “administrative bloat” at research universities, but the flatness of professors at budget category makes for a useful comparison of slopes.

Vice Presidents Flourish at the University of Oregon

I don’t know whether this is good or bad, but it does leave me with a couple questions

What do Directors do?
What is getting bundled into “Other”?

For directors, this could be a lot of things. They could be directing centers launched with private money, which means they are perfectly likely to be research professionals without teaching obligations and at-will contracts outside the tenure track ecosystem. They could, however, also be service professions working on the sports, entertainment, and student services side of things. The pool, the gym, the student outreach center – perhaps the scale of each now requires their own bespoke middle management position.

“Other” is, of course, far harder to parse without doing some actual digging, which of course I am in no way willing to do.

Is this bloat? Is it an academic institution drifting away from research and other forms of traditional public service? Not sure. What I am confident in is this is further evidence of the attractiveness of employee slots unattached to tenure. I’ve written before on what tenure is and how it is intended to be leveraged as a mechanism within the production of scholarship. Maybe the University of Oregon is simply trying to deleverage from tenure. Or maybe the bundle of goods being offered is more complex than previously, requiring a new layer of middle management. I’m curious if any of our readers have additional insight for the comments. Because, at the very least, this is more evidence that what is being produced at major universities is changing.

Intellectual Squatting

August 22, 2026August 24, 2026mdmakowsky2 Comments

So a professor at a major institution wrote 200 papers last year. Unlike other commenters I’ve observed so far, I think this is neither true research nor pure AI fraud. It is likely AI “slop” to varying degrees, but unlike a lot of slop there is probably real value within it. What I have not yet seen ascertained is whether any of it has been vetted, investigated, or curated by the author in a meaningful way. The real question is: what is the actual ambition here? I think the tell is the lack of submission to peer review.

I think this is a form of intellectual squatting. The nice version is it’s putting out a series of half-baked papers in the hopes of establishing a property right to the underlying ideas at an earlier stage of the research process than previously possible. The less generous interpretation is it’s dumping a series of haystacks on the plains and laying claim to the needles probabilistically within each. Imagine you are a person who has highly esoteric, potentially important ideas every day. Many of those ideas you suspect, based on some combination of experience and ego, are new in at least one dimension. You would like to get credit for that newness. For being first. What’s the problem?

The problem is that scholarship remains more perspiration than inspiration. Having a new idea is great, but it takes years to work through the nuance in sufficient detail that you can convince your peers of the coherence and originality of the contribution. During the minutes each day you are not working on this singular project you have the inspiration for other ideas, sometimes multiple within a single day. How frustrating is the proposition that someone else gets credit for the originality of contribution just because they had time to reveal it to the world while you were embroiled in your investigation of what is only one of your many score ideas!?

Ah, but meta-level inspiration has struck you! What if you took each one of those ideas, spent an hour curating a series of prompts around it, and then let Chat GPT (or another LLM) fabricate an entire research paper around it? It might not be good, correct, or even coherent, but it does somethine far more important. It establishes an intellectual property right to the claim of being first. Now, to be clear, you are fully aware of the deficiciency of your paper as an actual scholarly contribution, but if somone else writes a full paper you at least have something to point to and say “I was here first. Cite me. Hell, if I’m close enough you might even have to name it after me. Well, sure, us. But definitely include me. Glory shared via hypenhnation is better than no glory at all.”

Is it a contribution? That’s something that will vary on a case-by-case basis, but I expect far more misses than hits. The work isn’t there. It’s like plopping down a block of marble with a dramatic-ish sketch of a man on an adhered post-it note and claiming that Michaelangelo needs to share credit with you on any subsequent sculptures. It’s like asking people to cite that one cool tweet you did about how DNA is cool but maybe RNA could be useful in vaccines one day. Intellectual property rights trolling via AI blunderbuss.

BTW, I’m not 100% sure this isn’t an AI take on a modern Sokal hoax. An attempt to show how much AI slop is introducing a whole new version of Gresham’s Law to scholarship. But if we treat it as earnest, it’s proof that a very smart person can potentially disrupt the market for scholarship, patents, or any other intellectual property by laying claim to ideas in much the same way that the printing press undermined the market for plenary indulges. Flood the market, leave it to someone else to sort through the ecumenical consequences.

First Derivatives

August 17, 2026August 17, 2026mdmakowskyLeave a comment

Lebron James is obsessed with golf. His new YouTube channel is what is getting the most attention, but this has been a publicly known fact for a while. There’s even a (largely unevidenced) theory that he chose to play his potentially final season in Philadelphia for it’s proximity to elite golf courses.

I just want to take this time to deconstruct why Lebron’s golf obsession is interesting. It’s a reminder that first derivatives often matter more than both absolute values and higher order derivatives. Let me explain.

Lebron at 41 years of age, in the face of history, experience, and logic, is still one of the 20 very best human beings at basketball in the world. So, in terms of absolutes, playing basketball should still give him immense satistfaction. The problem, of course, is his personal reference point (how good he used to be) and the rate of decay he is experiencing from that reference point. This is a person who spent more than two decades getting better and better at something, who arrived at a point where they were literally the very best in the world at it, only to then at some point in time arrive at the awareness that they were in fact getting worse at it. To be clear, that rate of decay is far slower than anyone could have predicted, but it remains decay nonetheless. And it’s not just “getting worse”. It’s getting worse at something that you are orienting your every day around. Your meals, your sleep, your family life, everything, all in dedication to something you are getting worse at.

I’m now going to generalize from my own lived experience, but I think the emotional returns to dedication are always stronger when the first derivative is positive, but no amount of work can guarantee it. You can work harder and increase the positive gains or, failing that, slow down the decay, but at some point the decay is inevitable (i.e. the work shows up in the second derivative). And no matter how much you slow it down, decay just isn’t as satisfying as the day-to-day lived experience as improvement or even plateauing.

And this is where golf comes in. Golf is a sport that has much lower athletic barriers to entry and, for Lebron or anyone who is starting out, a vastly lower reference point for quality. It is entirely likely that every time Lebron has ever picked up a golf club he is better at golf than he was the previous month. It is the 100% inverse to what Lebron has experienced playing basketball for at least 7 or 8 years now, likely longer. The relief he must feel, directly experiencing and observing the returns to his efforts.

Coming to terms with being past your prime is a standard trope in narrative fiction of all formats, but from an actual mental health point of view, I don’t think it is given enough attention, particularly for those at the tops of their field. There are vanishingly few purely natural elites in any profession, vocation, or craft. Most have had to sacrfice whole avenues of life experiences to achieve such levels, and when they do begin to decay they either have to endure public scrutiny bordering on censure, or the quiet tragedy of being alone in their ability to discern just how much they have lost. The latter is almost worse. Almost.

As a final tidbit, let me make a loose connection to technological innovation and AI specifically. Obsolescence hurts. A negative first derivative hurts. But what hurts even more is an unexpected shock that accelerates that decay. Injuries are mentally hard for athletes, in part, because of their often discontinuous nature. They were still improving, the rate at which they were improving was accelerating, until they weren’t. There are professions that are wrestling with this right now. There are professionals who reasonably expected to have another half decade before the decay began. That timeline is now in question. And most of us don’t have the luxury of being a generationally great athlete who can immediately become great at something completely new.

Bubbly

August 10, 2026August 9, 2026mdmakowsky3 Comments

At what point does the advice to “invest in an index fund and forget about it until you retire” become insufficient advice?

Because I’m not a financial planner. I’m not even an active investor. I’m an economist who follows the standard economist dictum regarding passive investing and low-fee index funds. But at some point the, if we take parallels to the past seriously, there arises the question of whether a 40 year old with a 100% index fund portfolio should consider hedging/reallocating their porfolio a decade sooner than they planned on becase, well, just look at that chart.

Maybe AI is great. The internet certainly was an is pretty great. But that doesn’t mean there won’t be a massive dotcom bubble-esque correction, and a 20% hedge can be the difference between 4 years getting back to even versus 7 years getting back to even. Even at the risk of misisng out on some growth in the longer term, the calculus with basic risk aversion checks out.

So, seriously. Are we hedging? And what are we hedging into? Asking for a friend. Who is an economist. And also me.

Service Industry Exodus and the ACA: Anecdata

August 3, 2026August 2, 2026mdmakowsky1 Comment

Within my social network the exodus from the service industry is now almost complete. Ten years ago I had no fewer than 7 good friends in the restaurant busines, now only one remains (and he is, by his own classification, 40% retired). The reasons were both myriad and similar. The physiscal toll is substantial, the hours long, and lack of weekends, the separation from non-industry people working diametrically opposed schedules. What really keeps pushing people out, however, that seems to tip the scales over and over, is the lack of health insurance consistent across most restaurants. With the expiration of the ACA subsidies driving up premiums for those without an employer pool to participate in, the calculus has shifted. Who’s leaving? Is it just the friends of economists?

No, it’s everyone over 35. It’s not really more complicated than that. They are entering the age where health insurance has a lot more marginal value, so they are leaving. Sometimes for substantial paycuts.

Between the ACA subsidies expiring and ICE enforcement targeting the keep service industry labor pools, the business that make our meals are going to look very, very different. Will they be worse? I guess I can’t say for sure…no, scratch that, I absolutely can. It’s worse. Everything is going to be worse. Younger, less experience, fewer immigrants? Yeah, that’s the formula to make everything worse.