Modeling the US-Europe Paradox (Very Wonkish)
A new technical note formalizes the “US‑Europe paradox,” where U.S. real GDP measured in constant prices outpaces Europe despite identical current‑price GDP per capita. The model attributes the gap to rapid productivity growth in the tech sector, which the United States dominates, while non‑tech output remains static in both regions. Because tech accounts for a fixed share of global spending, U.S. measured growth rises at twice that share of the tech productivity rate, leaving relative living‑standard measures unchanged. The analysis shows the divergence is a statistical artifact, not evidence of declining European prosperity.
Is Europe in Economic Decline?
The blog challenges the prevailing narrative that Europe is in economic decline, arguing that the perception is driven more by U.S. political rhetoric and media than by hard data. It cites recent incidents—such as a dismissive speech at Davos and...
Curing U.S. Health Care, Part II
President Obama signed the Affordable Care Act (ACA) into law in 2010, slashing the uninsured rate from 47 million to 27 million by 2016. The Trump administration’s 2017 repeal effort failed, but subsequent policies are projected to add 16 million uninsured by 2034....
The Oil Squeeze Tightens
The Strait of Hormuz remains shut, curbing Persian Gulf crude exports and tightening global oil markets. Goldman Sachs reports record inventory draws of 11‑12 million barrels per day in April as the world scrapes existing stockpiles to offset supply losses. Brent...
Curing U.S. Health Care, Part I
The Affordable Care Act, enacted in 2010 and fully implemented by 2014, expanded coverage to millions of Americans and slowed the growth of national health‑spending. Yet by 2024, roughly 8% of the population remains uninsured, and a larger share is...
Trump Wants Regime Change at the Fed
In this episode, Paul Krugman warns that former President Donald Trump is attempting to undermine the Federal Reserve’s independence by pressuring for lower interest rates and targeting Fed officials. Krugman explains why monetary policy is a technical, credibility‑driven tool that...
The Dollar’s Special Status: Sources and Threats
A recent Al‑Jazeera analysis highlights Iran and China’s move to collect Strait of Hormuz tolls in yuan or cryptocurrency, signaling a push against US dollar dominance. The piece revisits long‑standing "dollar doomerism" narratives that predict the currency’s imminent decline, noting...
Ignorance and Ignominy
The post imagines a war in which Iran, a medievalist theocracy, defeats the United States, a global military superpower, despite vast economic disparities. It argues that the U.S. displayed strategic ineptitude, technological limits, and moral failure, especially under Trump and...
The Oil Crisis Is About to Get Physical
The Strait of Hormuz, which normally carries about 20% of global oil, is now closed except for limited Iranian shipments, turning speculative price gains into an imminent physical shortage. J.P. Morgan predicts Gulf tankers will stop reaching Asian markets this...
Is America Suffering From the “Resource Curse”?
The blog revisits the classic "resource curse" theory, which argues that nations abundant in natural resources often experience slower long‑term growth and weaker institutions. It highlights how traditional petrostates like Saudi Arabia and Russia exemplify this pattern, and then asks...
How to Burn Less Oil
The blog argues that cutting oil use hinges on time horizon: short‑run reductions require steep price hikes or drastic behavior shifts, while the long‑run offers ample room for vehicle replacement with fuel‑efficient or electric models. Recent geopolitical tension, exemplified by...
Is It Time to Drive 55 Again?
The episode examines whether reinstating a 55 mph speed limit could help curb soaring oil prices amid the ongoing Strait of Hormuz crisis. Host Paul Krugman outlines the current supply shock—about a 10% cut in global oil flow—and argues that short‑term...