Economics Links

Johann Kurtz on millennial complaints; Michael Magoon contra Joel Mokyr; Joseph Politano on America's housing stock; Tyler Cowen on AI investment

Johann Kurtz writes,

new parents discover that the activities formerly provided by ‘free-range childhoods’ must now be bought as expensive private services. Supervision that neighbors and older siblings once provided becomes daycare and after-school programs.

…The transition to the economic default of the two-earner household intensifies these pressures. A household with a parent at home produces an enormous stream of untaxed, uncounted output: childcare, cooking and cleaning, budget management, and the daily maintenance of relations with other families (ie. social capital).

Move the at-home spouse into the labor market and every service she provided must be repurchased from the latest private equity roll-up (nursery, takeaway, cleaner, security system…). GDP records each purchase as growth. A family can thus be measured as substantially richer while consuming the same services — only now they spend less time together.

His argument is that the cost of living is higher for young adults today because of what he calls a decline in social capital. I would call it costly cultural change.

A stay-at-home mom provides a positive externality. If there are two stay-at-home moms, or part-time-working moms, living close to one another, then neither one needs to pay for as much day care. Once again, I praise the cul de sac, where children keep one another occupied and parents can share oversight responsibilities.

Michael Magoon writes,

The historical record suggests that useful knowledge has existed for thousands of years. The real question is not whether useful knowledge existed before the modern era. The question is why useful knowledge produced sustained economic growth in a small number of societies and not in countless others.

Although Magoon does an excellent job of articulating Nobel laureate Joel Mokyr’s narrative of the Industrial Revolution, I think his criticism of Mokyr is a bit unfair. “Useful knowledge” for Mokyr is more than just knowledge that is useful. It is knowledge that combines practical value with scientific understanding.

Joseph Politano writes,

In 2025, Americans spent more money on home improvements and renovations than on building new single-family homes — a historical first, excepting a brief period during the Great Recession. Total renovation spending now exceeds $430 billion per year, an increase of 36% in inflation-adjusted dollars over just the past decade.

…Restrictive permitting processes make replacing many old homes a nonstarter, so an entire cottage industry has erupted around renovating and flipping existing homes to meet the needs of new buyers.

Tyler Cowen writes,

In the late 19th century, various railroads went bankrupt—but that didn’t stop rail from knitting together much of the world. In the early part of the 20th century, there were over 100 auto companies in the U.S. By the end of the 1930s, Ford, General Motors (GM), and Chrysler controlled 80 percent of the market. Bankruptcy, it turns out, doesn’t stop progress.

A similar logic holds for all the companies that built the AI infrastructure, whether we are talking about data centers, cloud computing, chips, energy, or other inputs into production. There is plenty of capital to step in and support any part of the AI supply chain that might be experiencing economic trouble.

substacks referenced above:

Tyler Cowen: Nothing Can Stop the AI Revolution

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America's endless home makeover

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Did Useful Knowledge Cause Modern Prosperity?

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Young adults are poor despite every metric which suggests otherwise