Nathan Lane

.@ben_moll (LSE) presented “Structural Reinforcement Learning for Heterogeneous Agent Macroeconomics” w/ @YuchengYang1993 Wang & Schaab. SRL replaces agent distribution with low-dim prices as state variable & learns price dynamics from simulated paths w/o perceived law of motion

A million people have rightly dunked on this guy, & I don’t care, I’m going to do it too, bc these people should have their catastrophic and massively consequential failures in judgement shoved in their faces forever. Sometimes a dog doesn’t learn unless you rub it’s face in it.

I’ve been getting a lot of good content for the Other Nathan Lane lately

My hypothesis: US university education was a massively successful export industry (foreign students paying tuition + housing + living expenses is literally classified as exports) and Trump admin collapsed this demand.

@andresintheory Their paper is contested and conclusion Although an equilibrium analysis isn’t illegitimate per se

@straightedge Which part? I don’t think evaluating macroeconomic policy during a depression with an equilibrium model is a legitimate practice

The New Deal prolonged the Great Depression because my made up fantasy analysis of the world said so

@brew56200 @RishiJoeSanu Yup—and this isn’t paper isn’t great empirical evidence

@RishiJoeSanu If that held any shred of truth FDR wouldn’t have even won 2 terms, let alone 4

Your threadly reminder that New Deal prolonged the Great Depression, not end it.

Great @WSJ from @greg_ip: "Xi Jinping has elevated Chinese industrial policy into something the world has never seen. It targets almost every industry and region, demand as well as supply, services as well as goods, the sophisticated and the mundane. Its goals are economic, technological and strategic. Its tools are microeconomic and macroeconomic.

As a Spinoza *and* typography fan, this is very satisfying

This is fascinating

@jdlondon1 @lugaricano not sure I understand the ?

@lugaricano @straightedge Where is the quality of life better?

We stopped everything to write an answer (link below) to Paul Krugman's two posts of today (one informal, one with a simple model) arguing that Europe is broadly not falling behind the United States. The change measured by the Draghi report, he argues, is mostly due to growth in the technology industry, which has distorted GDP numbers without actually leading to higher standards of living. We should believe our eyes when we walk around France and walk around Mississippi. Krugman is wrong. The measures he uses understate European stagnation. This matters enormously. Divergence with the United States is the strongest evidence for reform in Europe. 1. The growth numbers Krugman compares the United States, France, and Germany at purchasing power parity in current prices. On that measure, France's and Germany's position relative to America has been roughly constant since 2000. But current price comparisons miss productivity gains in sectors where prices fall. If America produces twice as much software while the price of each unit halves, the value of American software output looks unchanged even though the volume has doubled. Most economists therefore use constant prices, which fix the base-year PPP level and apply each country's real output growth on top of it. American output growth has concentrated in tech, where prices have fallen tremendously as productivity rises. In terms of the volume of things produced, America has pulled away from Europe. 2. Is it all the tech industry? Krugman concedes this tech divergence but says it is not welfare-relevant. The American growth lead is an accounting artefact of measuring more iPhones at base-year prices, not a sign that Americans are actually richer, because Europeans buy the same iPhones at the same world prices. This is not the right way to think about the world today, as an earlier Paul Krugman would have argued. His model assumes tradable goods, interchangeable workers, marginal-cost pricing, and no profits. Each assumption fails. Most of what households buy is non-tradable: housing, healthcare, childcare, education. When American tech firms bid workers from haircutting to coding, American haircut wages rise. Germany has no growing tech sector to do the bidding, so German wages stay flat. Technology is not priced at marginal cost. Apple's margins are around 40 percent. Anthropic's inference margins are at 70 percent. The major platforms enjoy network effects, switching costs, and lock-in that hold prices well above what a competitive market would deliver. A large share of the productivity gains in technology stays as profit. A lot of the value of American technology dominance shows up in equity, not in wages. Apple, Microsoft, Nvidia, Alphabet, Meta, and Amazon together are worth $21 trillion, more than the entire combined stock market value of all European stock markets. Around 60 percent of US equity is held by American households. The median French or Spanish household holds almost no equity. The median employee at Meta, a company with almost 80,000 employees, earned $388,000 in 2025. This advantage is not going to go away. Krugman's own 1991 paper, cited in his Nobel prize, showed that comparative advantage in modern industries is produced by increasing returns to scale, specialized labor markets, supplier networks and the agglomeration of suppliers, workers, and ideas in particular places. Once an industry concentrates somewhere, the concentration is self-reinforcing. Europe is being pushed away from the next round of technology industries (AI!). 3. What about inequality? Another retort is that GDP per capita hides substantial inequality, and so even if America is rich on average, this is mostly due to the super wealthy. But despite the US's high pre-tax income inequality, it also achieves higher median incomes than Europe, in part because of such a high base, and in part because it actually redistributes more than many European countries. The cleanest comparison is median equivalised disposable household income: income after cash taxes and transfers, adjusted for household size and purchasing power. According to the OECD's 2021 numbers, the median American earns 30 percent more than the median Dutchman, about 31 percent more than the median German, and about 52 percent more than the median Frenchman. 4. What about hours worked? Krugman points out that while American GDP per person is higher, most of this is because Americans work more. For this divergence to be an hours worked story, Americans must work more relative to Europeans now than they did in 2000. The opposite has happened. Birinci, Karabarbounis, and See in a 2026 NBER paper show that about half of the American-European hours gap that existed in the 1990s has reversed by the end of the 2010s. Americans work fewer hours per person than they did in 2000, while most Europeans work more. 5. Is America not a bad place to live? Walk around Alabama and France: surely the former cannot be substantially richer than the latter? American cities often have poorer centres and richer suburbs or exurbs. European cities preserve richer and more attractive historic cores. A visit to a city as a tourist in America compared with a city in France will leave one having seen different spots on the income distribution. Americans in Europe go to the nicest and richest European cities. Rather than a walking around test, do a driving around test. Go to the periphery of any modern American city and see a level of new-built material wealth that is extremely uncommon in Europe, with thousands of enormous four- or five-bedroom homes. In the South, in places like Nashville and Austin, drive around the downtowns to see hundreds of luxury apartment buildings springing from the ground. This construction boom is replicated virtually nowhere in Europe today. The other question is generational. Housing often costs more in Europe than in the United States, despite the quality of the housing stock generally being much better. Europe has nice city cores but these are inaccessible to young Europeans. Consider the salaries available to entry-level workers. The starting pay for a London police officer is $57,000. In Washington, DC, $75,000. The entry-level Deloitte consultant job in Madrid pays around €28,000, roughly $33,000 per year. In Charlotte, the entry-level Deloitte job pays $63,000. There are many things to dislike about life in America. But relative to 25 years ago, the gap in material wealth has shifted dramatically in America's favor. siliconcontinent.com/p/european-sta…

You sell cameos mate

This is important to me

. @JosephEStiglitz and I published a letter in response to @TheEconomist’s article about the U-turn on industrial policy at the World Bank economist.com/letters/2026/0…

How to destroy real wage growth by engineering a cost-push inflation.

@ntsbfh @davidsirota This is false

@davidsirota No one was embracing Dick Cheney.

The Resistance Dems/Never Trump corporate faction of the Dem Party that remains hostile to Graham Platner is also the party faction that cheered Dems proudly embracing Dick & Liz Cheney, the duo who lied America into war & created authoritarian powers Trump is now wielding 🤔

📢 Call for papers! SITE 2026 Session 15: "Causes & Consequences of Misallocation" at Stanford GSB, Aug 31–Sep 1. Theory + empirics welcome. Deadline: June 15 Submit: economics.stanford.edu/site/paper-sub… w/ @TheMichaelBlank @PeteKlenow @sarapfmoreira

can’t believe this is Real Life

[guy who can’t fully remember that Gramsci quote] it’s Monster Time