September 2026 links

Today’s post is brought to you by my sponsor, Mechanize. They’re hiring junior software engineers at $300K/year base salary. Apply now!

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Before starting on this month’s links, let’s look at the most important influencers of our leading LLMs:

And a few other examples:

Excellent choices!! BTW, Matt Yglesias, Tyler Cowen, Derek Thompson, Ezra Klein—do those names ring a bell? Let’s go back to September 2012:

and

and

And here’s Ezra Klein, from the same period:

Most influential-yet-obscure economic blogger: Scott Sumner. Be honest, how many people had even heard of Nominal GDP level targeting before this year? No one. But as the economy stagnated, and policymakers seemed increasingly incapable of mitigating the pain, many analysts started reading Sumner’s blog with interest. So far, the Federal Reserve has rejected his idea for NGDP target—under which the Fed would essentially target a combination of real output plus inflation rather than focus on curbing inflation alone—but the notion has attracted support from everyone from Paul Krugman to Tyler Cowen to Goldman Sachs. And much of that has to do with Sumner’s near-monomaniacal focus on the topic.

Is it possible that our future ASI overlords will adopt NGDP level targeting? If so, I’d like 0.1% of the gain in total stock market cap during that “Scott Sumner Rally”.

Here’s AI Overview:

On September 13, 2012, the S&P 500 index experienced a significant rally, surging 23.43 points, or 1.63%, to close at 1,459.99. The primary driver behind this sharp upward move was the Federal Reserve’s announcement of QE3 (a third round of quantitative easing), alongside its commitment to keep interest rates ultra-low until at least mid-2015. This policy outcome sparked widespread optimism, helping the index secure what was its highest closing level since 2007.

At the time, US total market cap was about $16 trillion and that day’s gain was more than $250 billion. Tip please . . .

(What did Springsteen say about old men with boring stories of glory days?)

The first half of the links are free:

1. Most people seem to struggle with the concept of moral progress. Matt Yglesias gets it:

1. For some odd reason, I find it funny that when journalists describe the size of a place, they always use New York’s Central Park as a unit of measure:

I have a better idea. Just describe a square mile as Central Park up to 98th Street. Nebraskans still won’t know what you are talking about, but at least Upper East Side readers will finally understand what a square mile is. And rural Midwesterners already know, as the region is laid out using a one-mile grid of town roads.

1. I’ve seen the term “capitalism” defined in many different ways, but even I was surprised to see it extended to state-owned enterprises:

“This is completely unprecedented,” said Alejandro Velasco, an associate professor at New York University. Venezuela “risks becoming a playground of US capitalism,” Velasco said.

1. Ryan Murphy has a new blog, and this observation caught my eye:

We discussed previously that the size of government can be boiled down to two-ish concepts that are negatively correlated with one another. The first is government consumption, transfers and subsidies, and the top marginal tax rate. Call that “the welfare state.” The second is government investment and government ownership over the economy. Call that “socialism.” State capacity is positively correlated with the welfare state and negatively correlated with socialism. Yes, let me repeat: across countries, the welfare state is negatively correlated with socialism.

I’m glad to see this point getting some attention. I made some related observations in a paper I wrote back in 2008. (The basic idea is that capitalism makes countries rich, and rich countries have bigger governments—largely due to entitlements.)

1. A related point was made in an article in The Economist:

Yet it is equally fair to argue that Sweden has a libertarian side. Yes, income taxes are eye-watering and redistribution higher than free-marketeers might advocate. But in many other ways the country cherishes individual freedoms as ferociously as a Montana survivalist. The state may be large, but public services in Sweden are often delivered by the private sector: around a third of Swedish children graduating from high school do so at an institution run by non-state operators, many of them run for profit. Sweden is a rare country with no inheritance tax. During the covid-19 pandemic, it stood out for imposing fewer restrictions than most countries, whether strict lockdowns or mask mandates. . . . Employers are largely free to hire and fire, unlike in most of Europe. All this has resulted in Sweden having around 50% more billionaires per person than America. . . .A large impersonal state is seen as bolstering autonomy: when in need, Swedes feel it is better to be beholden to an impersonal bureaucracy than to a parent or some charity. Seen this way, a bigger state translates into more freedom, not less.The upshot is what Henrik Berggren and Lars Tragardh, two historians, call “statist individualism”. In their book “The Swedish Theory of Love”, newly updated in English, they argue that Swedes have come to prize relationships entered into freely rather than maintained by material necessity. Public child care helps women avoid financial dependence on husbands, state old-age homes liberate children from obligations to ageing parents, and so on. (Even marriage is a bit suspect: in France or Germany households are the basic unit of taxation, but in Sweden all adults file independently.) American parents sending their offspring to college must submit proof of their incomes for the youngsters to qualify for scholarships. In contrast, young Swedes are assumed to be on their own: the income of their parents is irrelevant.

1. Back at TheMoneyIllusion, I would often contrast the experience of Iceland and Ireland during the Global Financial Crisis. Iceland’s banks were hit very hard, but the Icelanders wisely stabilized NGDP growth. In contrast, Ireland was anchored to the euro:

(No, America’s fall in NGDP during 2008-09 was not caused by our banking crisis, which was milder than the one in Iceland.)

Now we see the political consequences of this natural experiment.

Icelanders’ confidence that they can prosper outside the EU was reinforced by the country’s rapid recovery from the 2008 financial crisis. The crisis prompted its previous bid to join the bloc, but Iceland rebounded with the help of a weaker krona and a tourism boom.

1. Given my pathetic understanding of information technology, I’m maintaining an agnostic position on most of the recent AI debates. Both sides seem to make good points. Here’s Andrew Ho:

I think people are very quick to anthropomorphize LLM intelligence because humans communicate through words and we infer the intelligence of human counterparties through comprehension of their language, but this leads them to wrong conclusions; for example if we observe that a new model proved some incredible mathematical theorem, some will say, “well, don’t we have AGI now, huh?” But to me, it’s actually more like, “well, given how hard it would have been for a human to do these mathematics, and given the limited economic effect of LLMs upon the world so far, isn’t it actually a negative datapoint vis-a-vis the generality of LLM intelligence?”

And Matt Yglesias (who is an underrated philosopher.)

Stop anthropomorphizing this human you're talking to, it's just a bunch of cells and electric current, it doesn't genuinely "want" things or have "beliefs."

Perhaps the sweet spot is anthropomorphize AI for some purposes, but not others?

1. Banana republic watch, from the FT:

The Dutch central bank has shifted more than 78 tonnes of gold from New York to London in a politically sensitive move, citing “increasing geopolitical unrest”. The transfer follows calls from European politicians and taxpayer lobbyists to repatriate gold reserves from the US, warning that an unreliable American government under President Donald Trump may otherwise seize them amid growing transatlantic tensions.

1. I don’t keep up with pop culture, but I recently learned that there’s a superhero with a similar name. Alas, our lifestyles are quite dissimilar.
2. Imagine living in a country where the leader didn’t tell private companies how to run their business. Here’s Bloomberg:

The Singapore government said it will not interfere in any decision that Singapore Airlines Ltd. makes in Air India Ltd., which is said to be seeking financial aid from its shareholders.Singapore Air has the responsibility to “assess its investments in Air India in relation to the resources it has for the long-term growth and profitability of the company,” Senior Minister K Shanmugam told reporters on Saturday. It’s the Singapore government’s principle to not intervene in individual investment decisions, or put political pressure, he said.“Once governments or politicians start directing individual investment decisions, commercial discipline will be compromised,” according to a transcript of his comments. “Decisions will become politicized — shaped by political considerations, rather than commercial judgment. In the end, Singaporeans will bear the cost.”

1. The Financial Times finds the following pairing to be “unlikely”:

A hard-left, pro-Russian party set up just three years ago has emerged as the unlikely kingmaker that could usher in Germany’s first postwar far-right state premier. The Bündnis Sahra Wagenknecht (BSW) bears the name of its steely founder whose dominance over the party and strict control of its members has led prominent critics to refer to the party as “Ich AG” — “Me Inc”. BSW squeaked into Saxony-Anhalt’s state parliament in Sunday’s election with 5.3 per cent of the vote. It now holds unusual leverage as the only party willing to entertain working with the far-right Alternative for Germany (AfD) — potentially allowing the AfD’s lead candidate, Ulrich Siegmund, to form a government.

In contrast, this seems perfectly natural to me. Why wouldn’t two extremely illiberal parties wish to get together? Birds of a feather:

Since the self-described democratic socialist’s election, several conservatives have suggested that middle class and wealthy New Yorkers may want to leave the city. But Trump isn’t one of them.Asked if he’d be comfortable living in the city under the incoming mayor, the president said: “I really would, especially after the meeting,” Trump said.He added that he picked up a lot of votes from Sen. Bernie Sanders, another self-described democratic socialist who unsuccessfully competed for the Democratic presidential nominations in 2016 and 2020.“Bernie Sanders and I agreed on much more than people thought,” Trump said.

1. The reports on a shameful decision in the UK:

U.K. lawmakers on Friday voted down a bill to legalize assisted suicide for terminally ill adults in England and Wales. . . .The bill, if passed, would have allowed for patients with less than six months to live to apply for assisted suicide. Then, two doctors and a panel of experts would determine if the patient qualified, Only adults would have been able to apply for assisted suicide.

The decision seems to have been motivated by complete ignorance about the reality of dying in the modern world:

Ashley Dalton, also a member of the Labour Party, said there is no reason to expect that without access to assisted suicide, dying will be a horrible experience.

Sad.

1. In an article entitled Who Says Reading is Dead?, John McWhorter discusses the fact that more and more people use subtitles for films in their own language:

I think it’s a sign of what happens to our sense of language when literacy becomes widespread, as the professor of literature Walter Ong wrote of in his magnificent “Orality and Literacy.”Literacy, Ong wrote, fashions a sense that written language is “real” language while spoken language is an inexact approximation of it.In that vein, captions naturally seem like a completion of spoken dialogue, laying out in full what just talking only approximates — “Bam, the words!”

1. From Reason magazine:

A few feet away, I met Teresa Altemus, the first woman to serve on the Gloucester County Board of Supervisors in Virginia. "I know some people that could probably use [$5,000]," she says. "But then, on the other hand, you've got some Republicans that feel that it needs to go toward the national debt." Where does she fall on that? "I think it should go to the national debt," she responds.

LOL. “it”?!? What is “it”? Who’s going to tell her?

Imagine this story:

Fred: Uncle Joe is acting strange. He insists there are six fairies living in his garage, and he plans to use them to build a cabin on the lake.

Mary: That’s sad. I worry that soon we’ll have to think about institutionalizing Uncle Joe.

Fred: Yes, I suppose you’re right. But what should we do with the fairies?

Mary: Perhaps they could tend the flower garden. Everyone knows that fairies are not suited for construction.

As an aside, Aaron Ruper recently tweeted this:

Q: Do you expect Congress would need to approve the $5,000--

TRUMP: I don't know, but it's easy enough. It's $5,000 to all adults in the country, and we can easily handle that because we're taking in so much money

Meanwhile the reports that Bessent claims the plan won’t necessarily require Congressional approval and won’t boost the deficit. When asked where the money will come from he wouldn’t say. Like children playing with fairies, it’s a secret.

1. Is the long Texas boom finally over? Here’s Bloomberg:

The biggest change in US immigration policy in 60 years is etched into the latest US Census Bureau data. While the population of Harris County, the biggest county in the Houston metropolitan area, increased by just under 1% in the year ended July 1, 2025, the number of immigrants arriving from outside the US fell by more than 40%. That’s the slowest growth since the pandemic. Net migration into Harris County, which includes the city of Houston, fell by almost 80%.

The July 2026 figures will probably show a much more dramatic slowdown. Oddly, this will help California in a relative sense, as its recent declining share of the US population may level off. Unlike other states, housing is the only constraint on California’s population. We can take market share anytime we wish to, despite our horrible government. If we build it, they will come. But will we?

1. There are days where I feel like excessive litigation is the root cause of most of America’s problems. Here is :

Condo construction has collapsed across the country as liability issues and costs have mounted, causing developers to move away from a form of housing that once offered many buyers an entry point into homeownership.

1. I enjoyed this Matt Yglesias tweet:

Not quite sure which part of effective altruism is supposed to be evil. Is it the effectiveness? Or the altruism?