![\"\"\/](\"https:\/\/i0.wp.com\/substackcdn.com\/image\/fetch\/%24s_%21XmUw%21%2Cf_auto%2Cq_auto%3Agood%2Cfl_progressive%3Asteep\/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F8396ea95-d451-422b-b6a2-876e532ebb22_982x627.jpeg?quality=89&ssl=1\")
<\/a>Source:\u00a0Joey Politano<\/a><\/p>\nIf BART\u00a0doesn\u2019t get bailed out<\/a>\u00a0with higher taxes, it will have to close stations, reduce service and lay off workers.<\/p>\n Why did so many people stop riding BART? It\u2019s possible that the pandemic permanently shifted people\u2019s tastes; maybe people just got used to taking Uber or driving instead of using the train. <\/p>\n But it\u2019s also possible that\u00a0the general increase in public disorder\u00a0<\/a>in the Bay Area just made BART unacceptable as a mode of transportation. It seemed like every train had its share of shady characters, drug users, vagrants and the mentally ill.<\/p>\n For a long time, everyone talked about this, but no one had the hard evidence to prove it. Well, now we do. After BART installed fare gates last year at many of its stations, crime on the trains\u00a0plummeted by 54% in a single year<\/a>.[1]<\/a>\u00a0What\u2019s more, the amount of time that BART employees have to spend on \u201cpatron related Corrective Maintenance\u201d \u2014 i.e., fixing or cleaning up things that riders break or defile \u2014 went from huge amounts to almost nothing:<\/p>\n It turns out that just a few riders were causing most of the disorder on the BART \u2014 and those riders were mostly not paying their fares, since the fare gates were effective in stopping them.<\/p>\n This demonstrates a general principle: You only have to restrain a very small number of people in order to maintain public order.<\/p>\n Progressives often\u00a0argue against<\/a>\u00a0measures like fare gates, labeling them \u201ccarceral\u201d and \u201cracist.\u201d This demonstrates a principle that I call\u00a0anarchyfare\u00a0\u2014 the idea that eliminating society\u2019s rules serves as a kind of welfare benefit for marginalized people. <\/p>\n But in fact, most poor and marginalized people are just peace-loving people who need to ride the train to get to work. They are the chief victims of the tiny number of chaotic individuals who destroy the commons and make public spaces and public services unusable.<\/p>\n BART\u2019s lesson should be applied throughout much of our society. Restraining a very few uncontrollable and chaotic individuals makes life much better for the poor and working class.<\/p>\n 2. Is AI taking our jobs yet?<\/p>\n As agentic coding apps wow the world, it\u2019s time for yet another round of \u201cIs AI taking our jobs yet?\u201d. Most of the attention has been focused on young college grads. The story here is that so far, AI primarily automates knowledge work \u2014 software engineering, legal services, and so on \u2014 and so impacts white-collar entry-level hiring more than other types of hiring.<\/p>\n This was the thesis of\u00a0Brynjolfsson et al. (2025)<\/a>. And it\u2019s the subject of\u00a0a new post by Mike Konczal<\/a>:<\/p>\n Konczal writes:<\/p>\n As you can see, people without college degrees who are 22-27 more or less track exactly what we\u2019d expect given the labor market slowdown. But young college is much higher than our trendline we\u2019d expect from the slowdown.<\/p>\n To be clear:\u00a0college-educated unemployment is still\u00a0lower\u00a0than non-college unemployment, and\u00a0everyone\u2019s\u00a0unemployment is up\u2026What\u2019s unusual is the\u00a0gap\u00a0between where college unemployment should be historically and where it actually is today\u2026<\/p>\n [Y]oung people have higher unemployment than we\u2019d expect at 4.4% overall unemployment. It\u2019s especially higher at its peak and throughout their 20s for people with a college degree. Their recent unemployment rate is historically a surprise. The bad kind of surprise.<\/p>\n He doesn\u2019t claim that we know it\u2019s AI causing the change in the historical pattern, but it\u2019s heavily implied.<\/p>\n But Adam Ozimek points out that this story depends on using\u00a0unemployment\u00a0rates. If you look at employment rates instead, the picture looks very different:<\/p>\n You\u2019d think employment rates and unemployment rates would just measure the same thing, right? But they don\u2019t. The way our government calculates things, the employment rate is the percentage of people who have a job. <\/p>\n The unemployment rate is the percentage of people who don\u2019t have a job\u00a0but are looking for a job. In other words, the unemployment rate depends on who says, \u201cI\u2019m looking for a job right now.\u201d The employment rate does\u00a0not\u00a0depend on this.<\/p>\n In fact, as Ozimek shows, recent college grads have shown pretty constant labor force participation (i.e. they\u2019re all still trying to find jobs), while a number of non-college people of the same age have stopped looking entirely. This shows up as higher unemployment for the college grads, even though the gap in terms of \u201cwho has a job\u201d has actually widened since the release of ChatGPT.<\/p>\n This simple observation throws a lot of cold water on the idea that AI is taking jobs from young college graduates. As if that isn\u2019t enough, Zanna Iscenko has\u00a0a good post<\/a>\u00a0that casts even more doubt on the thesis. Iscenko points out that the jobs that are typically reckoned to be more \u201cAI exposed\u201d also tend to be more sensitive to macroeconomic swings:<\/p>\n \u201cAI exposure\u201d and \u201cinterest rate sensitivity\u201d are deeply correlated variables\u2026[O]ccupations in the top quintile of AI exposure are overwhelmingly concentrated in\u2026the most AI-exposed quintile\u2026These are precisely the sectors most sensitive to capital costs and broad economic uncertainty. <\/p>\n This finding is supported by existing economic literature, such as research by\u00a0Gregor Zens, Maximilian Bock, and Thomas O. [Zorner] (2020)<\/a>, which found that workers in tasks that are easily automated are also disproportionately affected by conventional monetary policy shocks.<\/p>\n Further supporting the interpretation that AI exposure is correlated with sensitivity to macroeconomic shocks is the fact that we also see more pronounced drops in job postings for \u201cAI-exposed\u201d occupations during the hiring slowdown in early 2020\u2026when Generative AI could not even theoretically be the explanation for the difference.<\/p>\n It still looks to me as if the slowdown in new-grad hiring is not a great example of AI taking jobs. I understand why everyone is worried about this, and I do think it\u2019s plausible that\u00a0many people will have to find new jobs in the age of AI<\/a>. On top of that, it seems easily possible that\u00a0uncertainty\u00a0about the effects of AI could slow hiring, even if people don\u2019t end up being replaced.<\/p>\n But I just don\u2019t think there\u2019s good evidence that it\u2019s happening yet. Perhaps\u00a0this year will be the year<\/a>.<\/p>\n 3. Are tariffs reducing America\u2019s trade imbalances?<\/p>\n Tariffs aren\u2019t creating a wave of manufacturing jobs for Americans; in fact,\u00a0manufacturing jobs are decreasing<\/a>. <\/p>\n But it\u2019s also worth asking whether tariffs are even having an effect on America\u2019s overall trade deficit. Recall that Trump thinks trade deficits are bad in and of themselves \u2014 a sign of American \u201cdefeat\u201d in a global competition, and a way in which America is dependent on foreigners.<\/p>\n The effect of the tariffs on trade deficits doesn\u2019t appear for a little while. At first, everyone tries to front-run the tariffs by importing as much as they can before the tariffs go into effect, leading to a giant temporary spike in the trade deficit. But after that temporary effect abated, it looked like US trade deficits were shrinking:<\/p>\n The November data\u00a0throws a bit of cold water<\/a>\u00a0on that idea. Imports soared and exports fell. November might turn out to be an anomaly, but so far, it doesn\u2019t look like tariffs have done much to trim America\u2019s trade deficit.<\/p>\n But the US\u00a0bilateral\u00a0trade deficit with\u00a0China\u00a0has come down a lot. The percentage of US imports that come from China has been falling since the pandemic, but it absolutely fell off a cliff after Trump\u2019s big tariffs were announced. America used to get more than a fifth of its imports from China; now it gets less than a thirteenth:<\/p>\n Some people claim that China is just shipping more goods to America indirectly, through third countries like Vietnam. But Gerard DiPippo looked at which goods China has started selling more of to third countries, and found that transshipment to America can\u2019t be very high:<\/p>\n By comparing the decline in China\u2019s exports of specific goods to the United States with the increase in its exports of those same goods to other markets, we can approximate how much of China\u2019s exports are being diverted. By this method, about 82% of China\u2019s lost exports to the United States found alternative markets in the second quarter\u2026<\/p>\n The top destinations for those diverted exports are Southeast Asia and Europe. Comparing those trade diversion estimates with the increased US imports of those same goods from those regions, we can estimate a maximum for potential transshipment into the US market. <\/p>\n By that metric, Southeast Asia is the top potential source of transshipped goods. Overall, potentially transshipped goods during the second quarter equal 23% of China\u2019s diverted trade, suggesting that Chinese exporters have, at least so far, mostly found alternative markets.<\/p>\n True transshipment is likely lower than the 23% number that DiPippo cites as an upper bound.<\/p>\n What\u2019s more plausible is that China is shipping intermediate goods \u2014 parts, materials, etc. \u2014 to countries like Vietnam, who assemble the inputs into consumer goods and sell them to the US. <\/p>\n But while this means that the US is still dependent on China for some types of technology, the actual manufacturing base is migrating out of China \u2014 which is good for the rest of the world, since it\u2019ll help other countries industrialize. Also, having assembly outside China reduces America\u2019s geopolitical vulnerability somewhat.<\/p>\n So while tariffs haven\u2019t clobbered the trade deficit or led to a manufacturing renaissance, they do appear to be working to decouple the world\u2019s two largest economies. Recall that the tariff rate on China is still much higher than the rate on other countries:<\/p>\n If you view import dependence on China as a geopolitical risk, then this is a positive result for tariffs.<\/p>\n 4. Why is Jon Stewart attacking economics?<\/p>\n Jon Stewart was my favorite political comedian when I was younger. He didn\u2019t always get everything right, but he could almost always make you laugh, and it was clear that his heart was in the right place. He just wanted to see America succeed and Americans be happy.<\/p>\n But in recent years, this admirable desire has slowly morphed into a kind of lazy centrist populism. One of Stewart\u2019s occasional targets is the economics profession \u2014 a favorite punching bag of left-populists everywhere. <\/p>\n But because Stewart doesn\u2019t know much about the field of economics, or what economists do, or what economics is about, or what economics research actually says, his critiques often feel uninformed and fall flat.<\/p>\n Jerusalem Demsas saw a recent Stewart interview with behavioral economist Richard Thaler, and\u00a0decided she had finally had it<\/a>\u00a0with the former Daily Show host:<\/p>\n Stewart interjected\u2026\u201cBut that\u2019s not economics, economics doesn\u2019t take into account what\u2019s best for society!\u201d\u2026\u201cThe goal of economics in a capitalist system is to make the most amount of money for your shareholders. So my point is, since when is economics about improving the human condition and not just making money for the companies that are extracting the fossil fuels from the earth?\u201d<\/p>\n At this point it became clear that Stewart has conflated the entire field of economics with a half-remembered, left-wing caricature of capitalism\u2026Throughout the interview, Stewart seemed to believe that economics is just a sophisticated justification for letting rich people and corporations do whatever they want. And this total lack of basic understanding renders him an inept translator of politics and an ineffective force for the very policies he says he supports.<\/p>\n Demsas noted a hilarious moment in the interview in which Stewart rejects the notion that economists have anything useful to say about climate change, and then immediately endorses a cap-and-trade scheme \u2014 something economists invented. It\u2019s as if a talk show host rejected the science of physics by saying we didn\u2019t need physics equations to land on the moon.<\/p>\n Jason Furman, an incredibly mild-mannered and affable guy, was nevertheless willing to vent about his own interview with Stewart:<\/p>\n \u201cThe single worst interview I\u2019ve ever done was with Jon Stewart. I normally try to be calm and level-headed but I basically lost it with him. And worry that I lost viewers\/listeners too, doing more to convince them that economists were obnoxious than that we had useful insights.\u201d<\/p>\n Meanwhile, in order to get some backup for his newfound crusade against the economics profession,\u00a0Stewart has recruited Oren Cass<\/a>, a Trump supporter and big fan of tariffs who spends much of his time yelling about how economists don\u2019t know anything. <\/p>\n I have written in the past about\u00a0the utter vapidity of Cass\u2019 critiques<\/a>\u00a0of economics. Every time I see a story about how US manufacturing employment keeps falling and falling, I tweet to him and ask him whether he has revised his belief that tariffs help manufacturing. He never answers.<\/p>\n Anyway, the point here is that although Jon Stewart\u2019s style of comedy is great for making fun of American politics, it\u2019s not an effective or interesting way to address economic policy challenges. Unfortunately, the \u201cecon is fake\u201d meme has given a lot of people permission to treat those challenges as if they\u2019re a simple matter of common sense. They are not.<\/p>\n 5. Hire them here or hire them there<\/p>\n Trump and the MAGA movement aren\u2019t just going after illegal immigrants; they\u2019re also opposed to high-skilled legal immigration. The administration\u2019s main target on that front has been the H-1B visa, which brings smart people to work in US tech companies. <\/p>\n Most H-1B recipients are from nonwhite countries, with India taking\u00a0by far the biggest share<\/a>. Trump has\u00a0implemented a huge fee<\/a>\u00a0for hiring H-1Bs, and other GOP politicians are also trying to curb use of the visas.<\/p>\n Proponents of skilled immigration, such as Yours Truly, have\u00a0long warned<\/a>\u00a0that if companies can\u2019t get talent to come to America, they\u2019ll simply set up overseas offices and take advantage of talent there. In fact,\u00a0Glennon (2023)<\/a>\u00a0has evidence that this is exactly what happens:<\/p>\n How do multinational firms respond when artificial constraints, namely policies restricting skilled immigration, are placed on their ability to hire scarce human capital?\u2026[F]irms respond to restrictions on H-1B immigration by increasing foreign affiliate employment\u2026particularly in China, India, and Canada. The most impacted jobs were R&D-intensive ones\u2026[F]or every visa rejection, [multinational companies] hire 0.4 employees abroad.<\/p>\n Well,\u00a0it\u2019s happening again<\/a>:<\/p>\n Alphabet Inc is plotting to dramatically expand its presence in India, with the possibility of taking millions of square feet in new office space in Bangalore, India\u2019s tech hub\u2026<\/p>\n US President Donald Trump\u2019s visa restrictions have made it\u00a0harder<\/a>\u00a0to bring foreign talent to America, prompting some companies to recruit more staff overseas. India has become an increasingly important place for US companies to hire, particularly in the race to dominate artificial intelligence\u2026<\/p>\n Google rivals including\u00a0OpenAI\u00a0<\/a>and\u00a0Anthropic PBC<\/a>\u00a0have recently set up shop in the country\u2026<\/p>\n For US tech giants, India offers a strategic workaround to Washington\u2019s tightening immigration regime. The Trump administration has moved to sharply hike the fees for H-1B work visas \u2014 potentially to $100,000 per application \u2014 making it harder for companies to bring Indian engineers to the US.<\/p>\n This shift is fueling the growth of so-called global capability centers, or technology hubs operated by multinational corporations across sectors from software and retail to finance. Many of these centers are now focused on building AI products and infrastructure.\u00a0Nasscom<\/a>, India\u2019s IT industry trade group, estimates such centers will employ 2.5 million people by 2030, up from 1.9 million today.<\/p>\n If those jobs were in America, the Indians who are working at those jobs would be spending their money on American doctors and dentists, American tax preparers and financial advisers, American restaurants and shops. Now, instead, thanks to Trump, that money is being spent in India.<\/p>\n 6. Japan, the giant hedge fund<\/p>\n As\u00a0I noted in my last post<\/a>, Japan has a huge national debt. Even once you net out the portions of the debt that are held by other branches of the government, debt is only\u00a0around 119% of GDP<\/a>\u00a0\u2014 about the same as in the US, which is highly indebted. <\/p>\n But\u00a0a recent post by Toby Nangle<\/a>\u00a0shows how Japan\u2019s government has managed to reduce the impact of that debt by basically acting as a giant hedge fund, making huge profits on various macroeconomic \u201ctrades\u201d:<\/p>\n [I]f the Japanese government had raised a bazillion yen on the bond market and funnelled it all into, say, a successful forex trading operation and a long-only stock portfolio which has gone to the moon, maybe we should consider these assets too when trying to work out what sort of parlous state Japan is actually in?\u2026<\/p>\n [Japan] has enjoyed spectacular returns on its\u00a0monster macro punts<\/a>\u00a0over the past few years\u2026They\u2019ve scored\u00a0healthy profits on its FX interventions<\/a>\u00a0since 1991, which we reckon could be worth around 8% of GDP\u2026The Bank of Japan\u2019s most outlandish version of QQE has involved building a huge position in stocks, and we estimate the unrealised P&L could be worth 11% of GDP\u2026And that\u2019s before we chalk up jumps in the value of GPIF, Japan\u2019s $1.8tn public pension reserve fund that is maintained to help the government pay pensions. This has benefited greatly from a combination of a slide in the yen and booming stocks\u2026<\/p>\n Beyond these three, there are a host of other such trades. But pretty much all of them come down to one core basket of positions: short yen vs US dollars, and long stocks. And this trade has been wildly successful.<\/p>\n Nangle plays with some numbers from Fed economist YiLi Chien for Japan\u2019s various government trading positions, and finds that they shrink Japan\u2019s debt by around half:<\/p>\n The US has not done anything of the sort. If George Bush had implemented his Social Security scheme in 2005, we\u2019d be reaping many of the same benefits Japan is now enjoying\u2026but we did not. Japan is acting like a giant \u2014 and very successful \u2014 macro hedge fund, while the US keeps its money in cash under the mattress.<\/p>\n Notes<\/p>\n 1<\/a> The fare gates are also\u00a0raising millions of dollars<\/a>\u00a0for the BART system.<\/p>\n This article<\/a>\u00a0was first published on Noah Smith\u2019s Noahpinion\u00a0Substack and is republished with kind permission. Become a Noahopinion\u00a0subscriber<\/a>\u00a0here.<\/p>\n","protected":false},"excerpt":{"rendered":"Welcome to another roundup of interesting news and events from around the econosphere, from my traditional, 100% handcrafted…\n","protected":false},"author":2,"featured_media":358727,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[42107,1537,216924,181,35495,57589,28,3195,178321,101,3471,216925,9609,216926,216927,216928,5736,216929,195971],"class_list":{"0":"post-466148","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-ai-job-losses","9":"tag-alphabet-inc","10":"tag-anarchyfare","11":"tag-artificial-intelligence","12":"tag-bank-of-japan","13":"tag-block-2","14":"tag-business","15":"tag-chatgpt","16":"tag-china-exports","17":"tag-economy","18":"tag-japan","19":"tag-japan-debt","20":"tag-jon-stewart","21":"tag-noahpinion","22":"tag-san-francisco-bart","23":"tag-southeast-asia-transshipment","24":"tag-trump-tariffs","25":"tag-us-h-1b-visas","26":"tag-us-trade-deficit"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/466148","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=466148"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/466148\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/358727"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=466148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=466148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=466148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/4b5bf9ab-ec4c-4043-8916-9463c97f1fb4_1124.jpeg\")
<\/a>Source:\u00a0BART<\/a><\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/d2971292-8d76-40d4-b556-06981fe49cc4_1164.jpeg\")
<\/a>Source:\u00a0Mike Konczal<\/a><\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/753ce6d5-1ca6-47d0-9a93-3f9f3e8f64c0_720x.jpeg\")
<\/a>Source:\u00a0Adam Ozimek<\/a><\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/f7117c40-a523-4372-b601-3ee3a25d2dfd_1320.jpeg\")
<\/a><\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/7224e317-3848-41d3-8dad-9574c223fcda_904x.jpeg\")
<\/a>Source:\u00a0Gelonghui<\/a><\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/06b662ab-a43f-4c08-95ec-d7902421253c_937x.jpeg\")
<\/a>Source:\u00a0Wharton<\/a><\/p>\n![\"\"\/](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/6ed04c08-281c-4e32-ab68-15f37fa3d64b_917x.jpeg\")
<\/a>Source:\u00a0Toby Nangle<\/a><\/p>\n