There are three open questions regarding police abuse and corruption:

1) How much is there?

2) What are the mechanisms underlying it?

3) What are the policy options for mitigating it?

This is a subject I have much interest in and have been researching for over a decade. I am still interested in the first two questions, but it’s increasingly difficult to invest in any conversation that doesn’t immediately contribute to how we are going to mitigate the problem.

This story of Hamilton County, Tennessee is a pure, unadulterated nightmare. We don’t want to make policy off a single nightmarish department or event, but there is nothing isolated or unique about this story. Bad officers migrate to other departments or are simply re-hired by their old one. Bad departments are rarely shut down. Bad sheriffs get re-elected. For large departments, “internal affairs” serve as the de facto monitors, but they are both part of larger social network of law enforcement and also shunned by the an insular sub-network of street officers. Both municipal police and sheriffs’ unions work tirelessly to solve the collective action problem for their members, but in doing so also provide the institutional capital that ensures that members are insulated from any form of accountability. Police take care of their own.

None of this is a new problem – “Who will watch the watchmen” has been a political puzzle since the advent of political thought. What is increasingly clear, though, is that the institutions we have in place for monitoring local law enforcement are largely impotent, either because they’ve always have been or because they’ve become obsolete. Internal and mutual monitoring i.e. “the watchmen watch themselves” only works when the individuals in question are unable to solve their collective action problem, in this case collectively preventing the reporting of misconduct by fellow officers. I regret to inform you that the police have solved their collective action problem.

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There is arguably (and I would argue it) no one in our society less likely to be punished for committing an act of violence against another human being than a police officer. I don’t view that as an inflammatory or even particularly normative claim. That’s a reality, and it may in fact even be a welfare enhancing one i.e. maybe someone has be endowed with additional coercive force relative to most citizens. But I think the specific power of police is something well beyond simple “coercion”.

I am hard pressed to think of any occupation with more unwitnessed discretionary power than police officers. Judges may have more power, but they sit on benches in public courtrooms in front of an audience when they exercise their power. All regulatory power occurs via documentation. Political power eventually has to pass through the prism of public governance. Economic power comes via reward and deprivation, but is always constrained by the opportunity of individuals to exit the relationship. You can always move out on a bad landlord or quit a terrible job, but there’s no swapping out for the better officer when one’s got you pinched.

Police officers often exercise their power one-on-one, away from prying eyes, in settings where they themselves serve as the primary witness of record. They have the discretion to not just bear witness to a crime, but to establish its very event, and in doing so start a chain of events that will change how every institution in society treats a person for the rest of their life. They have the power to constrain a person physically, the power to kill, all in a context absent any external monitoring.

You might be imagining a story in an alley or in the back of a squad car, but a holding cell or interrogation room can be a far lonelier place when the only other potential witnesses are other officers. What little doubt a single officer’s testimony may carry is completely washed away by the matching depositions of multiple officers. If the story comes down to you versus them, you’re going to lose.

So I’ll say it again: police officers are endowed with more unobserved discretionary power than any other occupation in our society.

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It’s time for significant resources to be invested in monitoring local law enforcement, and it needs to be made permanent. This can’t a be priority that lives at the whim of the Presidential election cycle. This can’t just be an ad hoc prioritization that manifests case-by-case and is largely driven by news coverage. Monitoring of local law enforcement needs to become a permanent feature of our federal bureaucracy. Whether that means creating an independent agency, a subset of the FBI, or a reappropriation of the labor in capital currently being wasted in the Drug Enforcement Agency, I don’t know.

Trust in local police is so low that “Defund the police”, an idea whose foolishness is only matched by its political naivete, actually got off the ground as an idea. That’s where we are at as a society: we have so little trust in the providers of law and order, a core good so central to the very idea of government it shows up in frontier towns before just about anything else, that people were open to appeals to simply live without law enforcement. That’s…that’s not good.

There is all kinds of really good research into what can be done to restore trust in the police. Training reforms, procedural justice, body-worn cameras, (ahem) public finance reforms, just to name a tiny few. These are all good ideas, but maybe we should also consider recommitting to our core belief that policing works, that monitoring and punishing people who break the law deters others from doing so. If we really believe it works for private citizens, then it might just work for the police.

In fact, I think already nailed it two paragraphs ago. Let’s rename the DEA the Department of External Affairs. We’re legalizing narcotics one drug at a time and these people will need jobs, right (I’m only 41% kidding)? We can have a Watchman “Czar” (they watch the watchmen, get it?). They can have tip lines. There can be informants in bad police departments, court ordered wire taps. They can seize resources from corrupt departments. They can keep doing all the things they’ve been doing, but instead of drug smugglers they can track abusive officers skipping across state lines from job to job, bust corrupt sheriffs, and occasionally seize the odd speed boat. If you’re going to be endowed with a badge and a gun, with the ability to pull a person out of their life and threaten to render moot every plan they ever had, then it seems only fair that you know someone might be watching you.

To add a bit a self-important context to this suggestion, please know that advocating for the establishment of federal agencies is far from my default solution. I know that the US government is littered with departments and agencies that do little but drag down the efficient expenditure of resources, inch by inch eroding the credibility of the public enterprise. Part of the promise of federalism is not just pushing local goods down the government hierarchy, but pushing national goods up. Not since the Civil Rights Movement has it been more clear that local law enforcement is in crisis. The Hamilton County Sheriff’s office, the Ferguson police department, these are no longer local problems. Each story of tragedy and abuse chips away at the broader reputation of law enforcement across the country and we are all less safe for it. Nor are they dependent on tacit local knowledge or relationships– quite the contrary, local relationships are likely to inhibit proper monitoring through either personal loyalty, collective intimidation, or being outright complicit.

The law enforcement crisis has been become a national problem. A federal problem. It’s time to treat it like one.

I don’t take Maslow’s Hiearchy of Needs very seriously. I don’t much worry about hedonic treadmills. I don’t worry about a cursed existence where I am forever advancing half-way closer to whatever goal will bring happiness and emotional fulfillment.

I don’t worry about it, but I understand.

I’m struggling to find much inspiration sketching my little ad hoc economic models of daily life with the backdrop of Ukrainians struggling to survive in the face of an invading army. Perspective is a hell of a drug. This struggle has brought to the front of my mind Maslow’s Hierarchy of needs, which lays a psychological layering onto the economic prioritization of needs (food and shelter first, social needs second, “self-actualization” last). It’s the kind of model that gets used and abused because it adds a veneer of psychological depth to absurd reductionist theorizing. Don’t take my petty academic denigration too seriously, though. Just because I think it’s not particularly useful doesn’t mean it’s wrong.

Similarly, I find consternation over hedonic treadmills unnecessary because whenever your result is that utility is declining as resource constraints are loosening, the likely explanation is that you aren’t observing utility correctly. Specifically, there are dimensions to utility you aren’t observing, be it temporal (i.e. the distribution of future possibe utilities), network (i.e. sympathetic utilities of children, spouses, friends, etc), or most likely that you are in fact not observing utility but rather one of many inputs into total utility i.e. there’s more to utility than just “happiness”.

But maybe you’re not interested in how to optimally model the pursuit of happiness under the dual constraints of finite resources and the human condition. Maybe you’re just worried about managing your life under the limitations of your own flawed humanity. Maybe you’re worried about getting stuck on a hedonic treadmill, the carrot of self-actualization dangling forever just out of reach. Now I’m not a licensed therapist or trained psychologist, but I am an economist who has to constantly struggle against my own technical limitations. What that means is that I have a lot of experience solving problems beyond my own mathematical limitations, not through technical elegance but by simply hacking the problem until the problem solves itself.

You know. Cheating.

If you’re on a hedonic treadmill, all that really means is that you’ve defined your units wrong. It’s only a treadmill measured in feet. If you define happiness not as feet advanced but as having a positive first derivative in microns per microsecond, you can establish the model such that you’ll be long dead before you reach the dipping edge on the horizon. Happiness isn’t a destination or a journey. It’s a positive first derivative or, barring that, a sufficiently positive second deriviative. If that’s out of reach, f*** it, there’s a third one you can push into the positive.

Framed this way, Zeno’s paradox is no longer a curse, it’s a blessing. To always be advancing half-way to your goal for all eternity is to live in eternal bliss. To self-actualize. Whether you get there is outside the model. It’s irrelevant.

Which is a really long way of saying that one way you might hack the puzzle of self-actualization is to help support the physiological and safety needs of Ukrainians be transferring some of your resources to them as means of supporting the first-derivative of sympathetic inputs into your utility function.

A reader (though perhaps not yet a loyal one) wrote me:

“I don’t know if you take reader requests – but on the Nurse/Teacher/Kitchen Staff post from a little while ago – I am curious what the economic data might say about career switchability. I.e. sure, a teacher or nurse may feel trapped, but how free does everyone else actually feel? I’m assuming it’s hard to get data on this (what counts as an actual career change?) – but I (as someone scanning a list of blog titles and clicking on the one titled “It’s a Trap!”) would be interested in your perspective on this from an economics angle.”

I’m not quite sure how to go about answering this question directly, but I’ll venture a couple things. Some lazy searching on google scholar turned up a paper from 1988 that itself rediscovered a survey by the San Diego Teachers Association from 1964(!) that found “A feeling of being trapped in the profession” to be the #1 cause of burnout reported by teachers. A couple thoughts!

First, 1964! Second, while the reasons for feeling trapped in the teaching profession in 1964 were no doubt different than they are today (*cough* extreme institutionalized sexism *cough*), but we need to consider that the profession of teaching at the primary and secondary levels isn’t one that creates a lot of opportunities for adding to your human capital, which can lead to feeling, correctly and incorrectly, of the job market passing you buy.

A more recent paper from 2002 notes that “The lack of anything resembling a genuine career ladder contributes to the feeling of many teachers that they are trapped in a career that has become not only joyless but futureless.” As someone who’s been there myself, I can tell you there grows quickly in the mind a specific anxiety that that to stay a teacher too long is to risk being left on a career ladder with no rungs. If there was ever a reason to have the now clichéd “quarter-life crisis”, that’s it.

While teachers may leave the profession early for fear of being trapped by atrophied human capital, nurses appear to be more a story of over-specialized human capital. A relatively simple analysis found that nurses with more education and experience were more likely to stay within the professions. Nothing terribly shocking (or causally identified) there, but other work has found within-profession concerns of overspecialization as well: one paper found that emergency department nurses were especially concerned about becoming trapped ED-only nurses, particularly those in more rural hospitals, losing access to more lucrative urban jobs that require more advanced care-giving and physician support related skills.

Sure, it’s a little methodologically kludg-y, but I also enjoyed this endeaver to create a career typology separating ladders from dead-ends.

This is a great time to remember that causal identification is important, but it isn’t everything. Sometimes its really useful to create a super-charged summary statistic and look for patterns, like the above.

To get back to the readers question about extending beyond teachers and nurses, I think the key to understanding the transition costs of a career is to appreciate the two channels for becoming trapped:

1. Human capital atrophy
2. Human capital overspecialization

Atrophy speaks to a lack of options because of an absolute disadvantage, while overspecialization is because of an intense comparative advantage. The first is, in most ways, far scarier because you have limited options save to stay in a career where years tenure is your only real advantage. The second, on the other hand, is really only problematic if you have a strong preference against the field of your specialization or you fear the risk of obsolescence. That doesn’t mean you shouldn’t take overspecialization fears seriously. We’ve all seen a againg musician who can still fill an audience but looks like they’d rather get a root canal than spend another evening on stage. They’re not there because they want to, they’re because they’re second best option can’t cover their mortgage.

Do I have an career advice for maximizing career advancement and adaptability ?

Do I ever! Get an advanced degree in economics from a respectable school. Or, barring that, a school entirely absent in respect or prestige. More specifically (and more seriously), my advice is this: major in tools, minor in substance.

Substance can be acquired piecemeal, in a disjointed sequence with random and sometimes large intermittent breaks. Acquiring tools, on the other hand, is far more dependent on uninterrupted periods of intense learning and application. You can read about the Ottoman empire over coffee breaks and bus rides. Learning Python, R, real analysis, econometrics, virology, chemical spectroscopy, or evolutionary game theory are all far more easily learned if you can dedicate months or years to them in large uninterrupted bursts of focus.

Further, tools tend to exist in their own phylogenetic hierarchy. Once you’ve acquired a tool, it is often an order of magnitude easier to acquire a new, closely related tool. It might have taken 2 years to get really good at C++ or Java, but because of that you can learn Python in a couple weeks of fooling around on a side project. Those first tools are the most important ones you will ever acquire, but they are also the hardest.

A secondary bit of advice: major in something that people know is always at least a little hard. I try not to overrate the “signalling theory of education” but there remains the hard to deny reality that education does have some signaling value. One of the signals is “I’m smart”, but as a signal I think it’s highly overrated. A more important signal is “I’m willing to learn things that are hard”. Most careers within persistance advancement and robust demand require the continuing acquisition of new skills and adaptation to new circumstances. You want very badly to signal, early and often, that you are someone who is willing to put in the effort to adapt and remain productive.

Despite that some members within my vocation may suggests, however, the answer to every problem is not in fact more school. Which leads me to my final, most important, but probably most trite piece of advice:

Quit.

No, seriously, quit. If you can pay your bills and you want out, get out. If you can’t, start laying the groundwork for your exit. Yesterday would have been better, but today is a close second. There’s no room for sunk cost thinking in careers. You only booked two commercials in 7 years in LA? Move to Kansas City and learn to code. You want out of the service industry? Jump start your BS in chemistry two classes a semester. You hate nursing? Start applying for admin positions in your hospital, apply for reimbursement for a 2 year executive MS in IT management through your hospital. You hate your PhD program and realize there’s no market for your degree outside of academia? Start writing ad and social media copy for local restaurants trying to get off the ground.

This isn’t me trying to admonish you with “by-your-bootstraps” ra-ra BS. This is me saying that the time you’ve put in shouldn’t matter if you want something else. But maybe you don’t want something else. That’s fine too! Just don’t tell me you’re trapped then, just say that you’re bored and you need a new hobby. And then sell your hobby on Etsy. And then market your hobby through google. And then write a book and tell Martha Stewart about it. That’d be pretty cool.

But then again, it’s easy to give advice. Do your best. Feed your kids. Keep trying. It’ll be fine.

I had the title of this post sitting in “Drafts” for a couple months now, but Kris and Paul have given me good reason to actually write about it. These thoughts are largely off the cuff, but they do come from experience.

What is Agent-Based Modeling?

This is not actually as straight-forward question as one might think. If you define it broadly enough as, say, any model within which agents make decisions in accordance with pre-defined rules and assigned attributes, then the answer to the overarching question posed by this post becomes: well, actually, economics has been producing agent-based models for decades, but that answer is as annoying as it is useless.

Instead, let’s start with a minimal definition of an agent-based model:

1. They are composed of n >3 agents making independent decisions
2. Agents are individually realized within the model.
3. Decisions are made in accordance with pre-defined rules. These rules may or may not evolve over time, but the manner in which they evolve are themselves governed by pre-defined rules (e.g. learning, mutation, reproduction under selective pressures, etc).

If we stop at this minimalist definition, then the answer becomes only marginally less trivial, as essentially any dynamic programming/optimal control model within macroeconomics would meet the definition. This leads to what I consider the minimal definiton of an agent-based model as a distinct subclass of computational model:

1. Agents within the model are characterized by deep heterogeneity.
2. Agents exist within a finite environment which serves as a constraint in at least one dimension (lattice, sphere, network, etc).
3. Decisions are made sequentially and repeatedly over time

Now we’re getting farther into the weeds and beginning to differentiate from whole swaths of modern macroeconomics that either employ a “representative agent” or collapse agent attributes to the 1st and 2nd moments of distributions. But that doesn’t eliminate all of modern macro. If embracing heterogeneous agents in your models of macroeconomics, banking, etc, are of interest to you, there are scholars waiting to embrace you with open arms.

Which brings me to the final attribute that I believe fully distinguishes the bulk of the agent-based models and their advocates from modern economics:

1. Agent-based models exist as permanently dynamic creations, absent any reliance on equilibria as a final outcome, characterization, or prediction.

The departure from general or partial equilibria as outcomes or predictions is where the schism actually occurs and, I suspect, is where many purveyors found themselves with a research product they had a hard time selling to economists. Economics, perhaps more than any other social science, demands that theoretic predictions be testable and falsifiable. Agent-based models (ABMs) don’t always produce particularly tidy predictions that lend themselves to immediate validation. Which doesn’t preclude them from making a scientific contribution, but it puts them on unsteady footing for economists who are used to having a clear path from the model to the data.

OK, but really, why didn’t agent-based modeling happen?

As much as big, irreconcilable differences in scientific philosophy would make for a satisfying explanation, I suspect the most salient reasons are less sexy and, in turn, less flattering of the day-to-day realities of grinding out research in the social sciences. Here are a few.

Economics was already a “model” social science

One of the reasons mobile phones caught on faster in Africa than North America was an absence of infrastructure. The value add of going from “no phones” to “mobile phones” is far larger than going from “reliable land lines in every edifice” to “mobile phones”, making it easier to justify both investments in relevant infrastructure and bearing of personal costs. Such a thing occurred across the social sciences with regards to ABMs.

Rational choice and mathematical sociology always had a limited following. Evolutionary biologists were often alone in their mathematical modeling, computational biology barely existed, and cultural anthropologists were more excited about Marx’s “exchange spheres” than they were about formal models of any kind. For a PhD student in these fields, the first time they saw a Netlogo demonstration of an agent based model, they were seeing something never previously available to their field: the ability to formalize their own theories in a way fully exogenous to themselves. There would be no fighting about what their words actually meant, whose ideas they were mischaracterizing, what they were actually predicting. Their critics, be it journal referees or thesis committee members, would have no choice but to confront their theory as an independent entity in the world.

This advantage of formality, of independent objectivity, in agent-based modeling was not something new to economics. While critics have many (often correct) complaints about modern economics, it’s rare to air concerns that economics is insufficiently formal or mathematized.

Too many “thought leaders”, not enough science

Axtell and Epstein wrote their landmark book “Growing Artificial Societies” in 1996. In it they produced a series of toy simulation models within which simple two-good economies emerged. This wasn’t revolutionary in it’s predictions by any means (whole swaths of macro models were able to make comparable predictions for two decades prior), but the elegance through which minimalist computer code could produce recognizable markets emergent from individual agent decisions was just incredible. The potential to readers was immediately obvious: if we can produce such things from 100 lines of code, what could we simulate the fully realized power of modern programming?

What came next was…still more people evangelizing and extolling the power of ABMs to revolutionize economics. What didn’t come were new models. Forget revolutionary, its hard to even find models that were useful or at least interesting. The ratio of “ABMs are gonna be great” books and articles to actual economic models is disappointing at best, catastrophic to the field at worst.

There were a couple early models that got attention (the artificial Anastazi comes to mind), but after a few years everyone noticed that same 2-3 models were still be brought up as examples by evangelists, and none of them had meaningful economic content. As for the new models that did end up floating out there, there was also an oversupply of “big models”, with millions (billions) of agents and gargantuan amounts of code that intended to make predictions about enormous chaotic systems. Models, such as the Santa Fe Artificial Stock Market, tried to broadly replicate the dynamics of actually stock markets across a large number of dimensions. Such ambitions were greeted with skepticism by economics for a variety of reasons, not least of which the “curse of dimensionality”, which limits what you can learn about underlying mechanisms when the number of modeler choices exceeds your ability to test them or, for that matter, verify their internal coherence. For better or worse, these models felt akin to amateurs trying to predict a town’s weather 30 days out.

Bad models drove out good

The problem of too few good models was closely followed by the over-supply of bad models. Agent-based modeling, for good and for ill, is not a technique with high entry costs. A successful macroeconomic theorist is effectively a Masters-level mathematician, bachelors level computer programmer, and PhD economist. Netlogo programming can be learned in a week. You can get really good at programming agent-based models in a dedicated summer.

This isn’t unto itself a problem, but I can tell you this: in my first 5 years as an assistant professor, I was asked to review at least 100 papers built around agent-based models. I’m not sure if any of them were any good. I am sure that many of them were extremely bad. Most concerning is that I don’t think I learned anything from any of them. The costs of producing bad ABM papers is much lower than the costs of producing bad theory papers based on pure math. Bad science is often evolutionarlily selected for in modern science, a dynamic that in the case of ABMs was only amplified by a lower cost supply curve.

Now, here’s the thing: there was probably huge selection effects into what I interacted with. I doubt I was getting the best papers sent to me for review given my status in the field. But the quantity of bad papers was astonishing. They were just too easy too churn out. I suspect that some decent papers were lost in haystack of ad hoc pseudoscience and, in turn, some decent scientific careers probably got lost in the shuffle. More than once I had the thought “Editors are going to start rolling their eyes every time they see the term agent-based modeling if this what keeps coming across their desks.” Combined with the fact that ABMs are tricky to evaluate because you really need to go through the code to know what is driving the results, I think a lot good modelers got lumped in with the dreck.

[Not for nothing, it wasn’t uncommon for ABM papers to spend the bulk of the paper describing model outputs, while having nearly nothing about model inputs (i.e. rules, code, math, etc). These models were essentially black boxes that expected you to take their coherence on faith. I should note here that I haven’t really kept up with the field in the past few years. Hopefully transparency norms have improved, particularly in biological, ecological, and anthropological modeling, where ABMs have thrived to a far greater extent.]

The empirical revolution took hold of economics

I’ve save the biggest reason for last, but honestly I think it dwarfs the others.

The same rise in cheap computational power that gave rise to other forms of computational modeling, including ABMs, came along with the plummeting cost of data creation, storage, analysis, and access. By 2010 it was already increasingly clear that theory was taking a backseat in economics. Not because we were becoming an a-theoretic discipline (far from it), but because the marginal contribution of theory against the body of broadly accepted economic framings was small compared to those made by empirically testing the predictions of the existing body of theories against real data. The questions were no longer “How do we mentally organize and make sense of the world”, but instead “What is the actual measured effect of X on Y?” Theory gave way to statistical identification. Modeling technique gave way to causal inference.

Agent-based models are hard to empirically evaluate and test

Which gives way to a sort of subsidiary problem. It is more difficult for agent-based models to take advantage of the new data-rich world we live in. They don’t produce neatly direct predictions the way that microeconomic theories do, nor do they lend themselves to measured empirical validation in the same way as general equilibrium predictions of macroeconomic models. Empirical validation is by no means impossible, but it requires the matching of observed dynamics or patterns, which is generally a taller order. In this way, agent-based computational models are a bit of a throwback to the days of “high theory”, making for interesting discussion but of secondary importance when it comes to the assigning of journal real estate that makes and breaks careers.

Bonus story

I once presented my ABM paper on emergent religious divides, only to have an audience member become extremely upset, closing with the denouncement that “This isn’t agent-based modeling, this is economics!” That was my first exposure to the theme of ABMs as “antidote” to the hegemony of economics and all of its false prophecies. The idea that the destiny of ABMs was to unseat economics as the queen of the social sciences was probably an effective marketing strategy in many hallways, but not so much in economics departments (well, maybe at The New School).

So why should economists give agent-based modeling another shot?

That’s another post for another day. If you’re curious though, I did write about how and why ABMs are useful for economists interested in the study of religious groups and movements. The logic of that piece applies to anyone interested in studying the macroscopic dynamics characterizing social norms, group formation and decay cycles, and how social outliers can pull entire populations in interesting directions.

UPDATED 1/2/2026

I finally got around to writing the promised sequel post. If you got this far, decent chance you’ll find it interesting.

The Kyiv department of economics has created what appears to be a vetted and relatively efficient channel for donating to the care of the Ukraine people during this crisis. You can donate via credit card or crypto. This is very much one of those cases where I believe every little bit helps. Consider:

1. Russia planning and logistical failures mean a continuing heavy invasion may not be sustainable, leading instead to a long runing siege. If this is the case, then it becomes all the more important to get basic humanitarian resources in now in order to minimize the suffering caused by the siege and minimize the odds of Russian success.
2. Ukrainian resistance depends as much on morale as it does lethal resources. Knowing their families are fed and receiving basic healthcare is critical.
3. If the micro-returns protecting a Ukrainian soldier or feeding a Ukrainian family aren’t enough for you, here’s a macro one: if the autocratic leader of an increasingly fascist regime with the strategic advantage of a nuclear arsenal is rebuffed in the Ukraine by a heroic local resistance partnered by global economic sanctions, it will serve as a signal to every leader with similar aspirations that success is less likely than they previously estimated. If your donation can help force a Bayesian update on dangerous autocrats and strongmen everywhere, that seems like nothing less than a perfectly rational act of utility maximization to me.

The Ukraine is as of this writing holding its ground and cities against the invading Russian army. There are a host of reasons, from incredible Ukrainian bravery, unmatched global sanctions clamping down on the Russian economy, to tactical and military failure on the part of Russia. There is nothing I can contribute beyond the linked sources or the constant flow of information coming out in real time. What I would like to add is one bit of broad economic context.

Baumol’s famous “cost disease” idea works like this: as a society gets richer the opportunity cost of everyone’s time increases. This makes certain services, like getting a haircut, more expensive because there is no substitute for a person’s time, no technology to increase labor efficiency, when it comes to cutting hair. Economists never stop speaking of the opportunity cost of time, but I sometimes think we undersell the importance of the concept. Lives are finite, time is the only thing that matters. To say that the opportunity cost of time has increased is to say that lives have been made better. Baumol’s cost disease restated: Anything that improves a person’s life makes claims on their time more dear.

The same logic applies to risk and to armies. Military technology continues to advance, but there as yet remains no substitute for soldiers, particularly if you want to occupy territory (there are plenty of superior substitutes if you just want to take lives and scorch the earth, but thats a different story). While the “labor productivity” of soldiers as occupying forces has remained relatively stagnant, the lives of the soldiers themselves has improved with everyone else’s. As their lives improve, the bar for what they are willing to risk their lives (and their conscience) for gets higher. For Ukrainians defending their homes and families from invaders, the risk is more than worth it and they are awing the world with their bravery everyday. Russian soldiers, on the other hand, are surrendering, scrolling Tinder, and abandoning tanks.

When historians point to generals making the mistake of fighting the “previous war”, they are usually referring to the obsolescence of tactics by new military technology. What I would like to consider is the possibility of Putin trying to fight a war with the previous soldiers. The last time the Russian army marched into a country prepared to offer significant resistance was the Soviet invasion of Afghanistan (Crimea, to my understanding, was never in a position to offer significant miltary resistance). Russian soldiers and their families today have very different lives. Only a quarter are conscripts, and none are facing a life without options outside of the army. The state is not the sole means of earning a living. The Russian market may be fractured and corrupted by a kleptocratic regime, but it’s still a market, one which has led to tremendous improvements in the quality of life enjoyed by citizens. These aren’t men and women enlisted into a religious or philosophical crusade, let alone ordinary men and women fighting to keep their homeland. Soldiers have lives they don’t just hold dear for the sake of survival – they have lives in the modern world they actively enjoy.

There have been no shortage of pundits who, in the form of cliched memes and cosplay masculinity, have speculated that nations of the developed world would not sufficiently come to the aid the Ukraine, or any country invaded by a foreign power, for the simple reason that we have, in our modern decadence, grown soft. What they consistently fail to appreciate is that this is a great outcome. People holding their lives with greater value is the very definition of progress. What is most perplexing, however, is why this idea of softness born of wealth is not applicable to Russians. (As for the theory that the Ukraine would fold overnight because it doesn’t make enough babies, that theory looks less viable, even if Russia achieves any of their goals.)

Working down the supply chain

Now, let’s be clear: soldiers are soldiers, and they are still more likely than not to obey orders and carry out their duties, if nothing else then out of a sense of obligation to one another. The opportunity cost effects of improved private lives are no doubt dampened. But armies depend on a lot more than just soldiers.

Russia remains, relative to the West, a poorer country in terms of GDP per capita, but nonetheless a modern economy where individuals enjoy the luxuries of a developed economy: mobile phones, heat in the winter, food security, transportation, etc. History is filled with stories of wars won and lost because of lack for boots, gasoline, and coats. In the Soviet Union, the army may have been underprovisioned relative to their counterparts from wealthier market economies, but they weren’t beholden to the rules of a market economy. Exclusion from a global system of payments wouldn’t be able to immediately choke off resources. Even if the soldiers marching are entirely severed from their lives in the private market, the supply chains they depend on are not, and the civilians in that supply chain expect to get paid.

Did Putin expect that supplies would arrive while the Ruble plummeted? Did he expect middlemen to incur losses as the entire economy was frozen by global sanctions? Did he expect reliable logistical support from soldiers and civilians while their spouses lined up at ATMs during bank runs? You know what? Maybe he did. Or at least, maybe he thought that the Ukraine would capitulate before sanctions could become salient to the supplying of his army. I have no idea. What I want us to consider is that modern armies depend on more than soldiers to function. Without a monopoly on means for supporting a family or an omnipresent threat of the Gulag, armies depend on citizens who can look at the physical and economic risk they are taking on, and coming to the conclusion that “this is worth it.” I have a hard time believing any Russian citizen, wage earner or oligarch, is looking at what is already an economy-enveloping sinkhole borne of greed for historical infamy, and thinking this is worth it for anyone but Putin himself.

This context of war in a time of better lives places economic sanctions as a geopolitical tool in a new light. Most countries cannot hope to put together an irresistible military force without the resources of a modern developed economy. A modern developed economy will invariably lead to wealthier citizens with a greater opportunity cost of time and risking their lives. The military will, in turn, become more dependent on private citizens to provision their armies. Sanctions in this new world don’t just punish citizens and encourage some form of open revolt, they actually choke off the military from the economies they remain entirely coupled to and dependent on.

If Putin is repelled, it will more than anything be because of the bravery of 44 million Ukrainians who stood their ground and protected their homes. But the military lesson, the historical lesson, may very well be that men and women with good lives make for poor invaders. The best, most peaceful future might just be one where we all have too much too lose.

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Brief Addenum: How this “cost disease” effect would impact the probability of a nuclear strike is complex and in no way clear to me. On the one hand, if Putin believes that he has no possibility of victory without a credible threat of a strike, then it raises the possibility of war, if only through greater chance of error admidst readiness. On the other hand, it’s not like there are no middlemen between Putin and “the button.” Each link in that chain may be more likely to be insubordinate if they view their modern life as too great a sacrifice. I just don’t know.

There’s a concept sometimes floated in academia of being “overqualified”. The story usually starts with a PhD in something either extremely narrow in focus or difficult to imagine having an application in the private sector, and ends with the subject either excluding the PhD from their resume or driving a taxi. The idea is simple – this advanced degree that took years of intense study and effort to acquire has negative signal value in the broader marketplace. It’s the most brutal anecdote highlighting the failure of the Labor Theory of Value I know of.

I think something similar happens with reality television stars. They acquire a level of public awareness and notariety a rung below classic celebrities, but still multiple orders of magnitude more than the average citizen. If they become sufficiently famous they can earn rents off this notariety, at least in the short run. In the long run, however, the source of their fame is external to them (i.e. the show they were featured in), but have no immediate means to keep generating the exposure and public interest. The real problem, however, arrives if they try to re-enter the traditional labor force. They have a huge gap in their resume that requires explanation and haven’t been building human capital in any classic trade (and I very much include acting as a classic trade). Fame makes for fleeting human capital. Fame as capital decays rapidly, while the associated notariety serves as a tax that persists long after that fame has dissipated. This tax most often takes the form of casual harassment, but also includes threats to their privacy and safety. They may find themselves presented with opportunities to appear at bars, concerts, or county fairs for small fees, but these financial stop gap solutions only serve to further maintain what is now costly notariety while still failing to invest in any human capital with long run value.

Which brings me, of course, to JD Vance.

https://twitter.com/EggerDC/status/1495391630668578819?s=20&t=MG7JgWlcefO-kxOBr4-gHw

Cards on the table, I suspect Mr. Vance is not particularly brilliant, but I also doubt he is a complete fool. What I do think is that he has trapped himself in a career path not dissimilar to a reality TV star. Much in a way that a lot of bachelors and bachelorettes think they can build a Kardashian-esque career, Vance thought he could be another Trump. He wrote a successful book and that was made into a film. He dabbled in venture capital and, much like Trump, probably failed (though I can’t really say). What he saw, like Trump, was a path from fame to a career being compensated for that fame. There’s a real chance that it’s not going to work, and forwards inducting from a failed political bid that has included consistently foolish proclamations in an effort to pantomime populist-Trumpism, he doesn’t like what he forsees. Being fame-trapped into a red state fairground fear-mongering stooge might be a way to make a living, but it’s not a living he is particularly excited about.

Fame is a zero-sum tournament, and like a lot of such tournaments the top prize is extremely lucrative. Unlike the basketball or golf, however, the losing here isn’t just costly, its potentially scarring. In this way, it’s a bit more like selling cocaine. You can live a very good life for a while, but if you lose you’re going to have a tough time succeeding at anything else down the line. JD is a shooting his shot, but I don’t think he’s making these sort of aggressive attacks on public figures because he’s excited about being a Senator so much as he’s scared of trying set up a quiet law practice in Ohio and spending the rest of his life explaining to folks he knew in high school what went wrong.

Headlines have moved on from the The Great Resignation to the The Return of Inflation, which is completely normal as far as news trends go. But I think it’s worth reflecting on how the two can be related.

I was privy to a conversation with a local food+retail business owner yesterday where she revealed she was no longer comfortable hiring teenagers for summer and after-school jobs. Not because they were inadequate to the task, but because they had to endure too much abuse from customers eager to take advantage of young people in a service position. She was confronted with a decision: either operate understaffed, increase prices to cover the cost of older employees, or completely reorganize her business model.

Behind the wave of Great Resignation articles and opinion pieces, there has been a subcurrent of related articles about increasing customer predilection for abusing employees. Whether the rate has increased or simply its observation is hard to say, but the phenomenon itself appears to be real and non-trivial. Working in retail and food service jobs has in many ways deteriorated in job quality. The first line of investigaton and blame is always management, but it looks like customers are on the hook this time as well. Karen-wants-to-speak-to-the-manager memes didn’t emerge from nothing, folks.

No shortage of ink has been spilled about stagnating wages, particularly for workers without college degrees. Such discussions, however, always exist within a framework that holds the work, and what it entails, constant. If the quality of life on the job declines without an increase in compensating wage differentials, then the true (net) wage compensation has actually decreased even when nominal or real wages remain ostensibly constant. Combined with a pandemic that made service industry work more dangerous, the precipitous increase in wages necessary to maintain a labor supply sufficient to production demands makes all the more sense. Did we really think we could live in a world where McDonald’s is offering $20/hr to start but prices would stay the same?

Now, let’s be clear, I’m not suggesting that current inflation is being driven by crappy customers eager to abuse anyone they can in a fit of narcisstic rage. But I am suggesting that it, and factors similar to it, is a non-trivial part of the recipe. The market is very good about pricing-in everything associated with the supply of a good, but that doesn’t mean there aren’t frictions and associated lags along the way. Employees and their lives are sticky, and sometimes it takes an exogenous shock to dislodge them from one equilibrium to the next. If we were so eager to accept the hypothesis that the stimulus checks and health concerns were sufficient to get people to quit, we should be no more surprised that they are returning with higher reservation wages than previously, and that these new reservation wages are getting priced into the market. Combined with an utterly flummoxed set of global supply chains and growing geo-political uncertainty, all on top of nearly $2 trillion in stimulus spending, growing prices seem a fairly natural outcome.

Returning to the original thesis: compensating wage differentials are as unavoidable as every other economic phenomenon borne of people making rational decisions given the information at hand. A generation of employees have discovered that bosses may be dour, insensitive, and obsessed with bottom lines at the expense of their employees well-being, but at least they need you. They have to see you at work tomorrow and reap the relationship they’ve sowed. There is an equilibrium of mutual respect and shared objectives to be reached there that is best for everyone, even if a lot of bosses can’t seem to get out of their way when building it.

Customer are a different beast altogether. It’s hard for us coordinate and there’s little we can individually do to punish those who opt to abuse the people serving us. We’ve got a common pool resource problem – a subset get all their gross benefit of being jerks while the cost is spread across everyone. Whether it’s refusing to wear masks, threatening violence, or verbally abusing young people, each and every one of those incidents gets steadily priced in, until one day we’re all just staring in shock at $6 hamburgers and asking what happened. I tell you what happened: the Karen Tax, and we’re all paying it.

I’m not delusional. I know we can’t boycott our family, co-workers, and acquaintences who abuse service workers. But maybe we can all agree to give them just a little more sideeye. Invite them to fewer lunches. Leave them out of the will. Because that’s the price that really needs to increase.

It’s time they paid the Karen Tax.