Associate Professor of Finance, @NYUStern. Finance/Real Estate/Urban newsletter: arpitrage.substack.com.
Manhattan, NY
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I'm teaching a new course at Stern on AI in Finance and opening it up!
Syllabus/slides on Github: github.com/arpitrage/ai-in-f…
Weekly summaries on Substack
arpitrage.substack.com/p/1-t…
First post is on Amdahl's Law, Jevons' Paradox, and why finance was slow to learn the bitter lesson
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My sense is economists still view this as a bit of a white elephant project, and haven’t updated on how amazing this is
Wild that throughout 2024 high speed trains in China carried 3.27 billion passengers. That's a daily ridership of almost 10 million people per day, on high speed trains alone.
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France seems to be crushing it:
• Builds housing
• Builds transit (Anglo country difficulty level: impossible)
• Leading Europe esp on defense
• Green: nuclear, bikes etc
• High birth rates in declining world; Paris seems like highest birth rate large metro
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I like it, but as an alternative I’m okay with keeping the old one green - and building a new bronze one every 250 years until the harbor is littered with them
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Senator and representative salaries have been stuck at $174k/yr since 2009, declining something like 40% in real terms.
Very unpopular, but not paying government officials means only rich people do the job. Better to pay well and punish bribing.
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At some point, after they keep succeeding, the rational Bayesian has to concede these are probable missions
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This WSJ story about the crypto crash is a good time to revisit Matt Levine's favored securities regulation regime:
wsj.com/articles/terrausd-cr…
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Good graphic here. Nuclear actually provided almost 30% of total energy needs in the 90s in Germany; has now been reduced to zero.
If that share were maintained, you could basically eliminate coal today.
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Pretty bad how normalized bigotry against Muslims and Indians has gotten on this site
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"Smartphone theory of everything" explains many trends:
• worsening mental health, esp women
• rise of addictive gambling behavior, esp men
• cognitive decline
• lower coupling rates, so lower fertility
• new information bubbles and global rise in populism
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I hope the “abundance” view wins out in the Democratic Party
There’s a reason a lot of deregulation happened in the 70s: it’s the right response to a supply shock.
More of everything: housing, energy, transportation, health can address tangible voter concerns over the economy
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Wonder what the $53 billion dollar endowment is for if not to smooth shocks
Temporary hiring freeze at Harvard bloomberg.com/news/articles/…
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I hope President Trump pursues in his second term the best idea from his first: buying Greenland.
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I would like to apologize to Frank Herbert for finding the later Dune novels a little implausible
Quite a hot mic moment on CCTV in Beijing today as Putin and Xi, both 72 years old, are caught casually talking about living to 150 and maybe forever thanks to organ transplants. (As picked up by Bloomberg.)
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NYC’s success should spur more cities to adopt congestion pricing. Here are a few zones which might work
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Thinking of writing a book *Scarcity* on market-based pricing to manage demand:
•congestion pricing
•land value tax
•carbon tax
•real time electricity pricing
•California almond farmers pay for water
• no free parking
•volume based garbage fees
•fishery quotas
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NIMBYs seem to have an "opposite Georgist" point of view, in that they seem to think the rents accruing from passive landownership are sort of small or justified; whereas the act of new construction represents outrageous and unjustified profits
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On the left we have a beautiful Art Deco pre-setback building, and on the right a new building which is the product of modern zoning rules.
Aside from being uglier; the required setbacks cut maybe $3 million in total value and produce less housing for no really good reason
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Giving China incentives to export tariff-free electronics and computers, while continuing to tariff their low-end apparel, is industrial policy which benefits China in continuing to upgrade export complexity
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These results suggest that getting a PhD causally worsens mental health, or at least receiving psychiatric medicines. The reversal post PhD degree is particularly convincing.
But the up trend among the control group is intriguing. The highly educated are in distress.
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Sort of incredible how American manages the really hard task of staying on the tech frontier; leading the world’s economic growth.
But misses all sorts of basic infrastructure, public goods, health, etc the whole rest of the world has figured out.
Imagine a world where NYC garbage workers don’t have to hang on to the side of trucks & jump off every 20 feet to manually grab leaking bags of trash, through 2 parked SUVs, and throw 15 of them into the back of their truck. (Ibiza, Friday 11:10am)
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The Connecticut towns with pretty easy commuter rail access to New York and no density around the station are a little nuts
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Some personal news: there has been a change in my tax return status. Will be filing jointly with @LTummalapalli
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The world is splitting into countries which don’t make cars, and can so adopt EV at a pretty fast rate, and those that need to protect domestic car companies
“It took Denmark approximately 30 months to go from a 20% share of electric cars to 60%, while this period took longer for Norway.”
⚡️⚡️⚡️
📊 @electric_nick_
#alwaysbecharging
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Huge reductions in congestion today within the congestion pricing zone; while unaffected areas don't see as much of a change.
Huge win for this policy, and I hope this program's success drives new initiatives in other cities
this is INCREDIBLE, congestion pricing is already working wonders
traffic at 1:30PM on the average Sunday vs today
Holland Tunnel: 27 mins ➡️ 9 mins
Lincoln Tunnel: 10 mins ➡️ 3 mins
Williamsburg Bridge: 11 mins ➡️ 6 mins
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Signs NYC is definancializing:
• Share of workers in finance went from 12% in 1990 to 7.7% now
• NYC only got 19k finance jobs out of 233k created in last five years
• JPMorgan employs more in TX than NY
• national share of college educated and millionaires has fallen
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Kind of remarkable Elon Musk bought Twitter, cut 90% of the staff and things worked fine, then annoyed users and advertisers through platform and algorithm shifts so the value tanked; then used it to train an AI company now valued at $40 billion
Elon Musk’s xAI has raised $6 billion in new capital, wrapping up a funding round that has been in the works for months trib.al/1ZDSC3O
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I swear, one of the biggest impediments to environmental progress is professional environments groups
More clean energy is sorely needed in New York City, but critics say pumping in hydropower from Canada isn’t the way to do it. ⚡️
🔗: trib.al/Z3QDe0d
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The “transplant” fearmongering happens in NYC in part because the city actually has surprisingly few domestic migrants.
56% of the city was born in NY State, and 28% is intentional. But just 12.8% of the city was born in a US state outside the tristate area
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My NYC mayoral platform:
- Eliminate all zoning, FAR, height restrictions
- Achieve Nordic costs of subway construction and do Alon's subway plan
- Long Manhattan
- Regional sea wall defense
- Build over Sunnyside Yards
- Retrofit the top of the Empire State Building to accept trans-atlantic zeppelins
- Through-running trains at Penn Station
- Network of rapid regional rail lines to link NYC with neighboring cities
- "superblock" the whole city so traffic only on some lanes
- Protected bike lanes everywhere and new bike bridges across Hudson + East River
- No more onstreet parking; get a parking garage. Expand lots onto the street and do way more outdoor dining and building
- Move the Penn Station bus terminal to New Jersey and run a fast and quick train to it
- Through run freight onto Long Island
- Fix the LIC Hunter's Point food distribution site
- Trash containerization everywhere, including new hydraulic trash tunnels
- Transit expansions to LGA
- Property tax overhaul to reduce burden on multifamily
- expand congestion pricing zone
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Deep South states have adopted science-based reading approaches based on phonics and have seen their reading scores go up a lot.
Seems like very low hanging fruit for the rest of the country.
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Tokyo is humanity's greatest urban achievement, and it's not particularly close.
But what is #2?
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"A 1% increase in new supply (i) lowers average rents by 0.19%, (ii) effectively reduces rents of lower-quality units, and(iii) disproportionately increases the number of second-hand units available for rent. Moreover, the impact on rents is equally strong in high-demand markets”
Does new housing supply lead to a decrease in rents, even in high-demand markets? Read this Just Accepted article from the Journal of Political Economy Macroeconomics to find out: ow.ly/1eN950UqS1B @JPolEcon
ALT Journal of Political Economy Macroeconomics
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I didn’t realize that a basic reason affordable housing costs so much is that the actual cost carries such a low weight in winning the bid
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How to remember your Chinese provinces
- "Bei" is north and "Nan" is south. Hebei = north of "He" (river); Henan = south of river. Hubei = north of lake, hunan = south.
- "Xi" is west and "dong" is east. So Shandong = east of mountain; Shanxi is west. Or Guangdong and Guanxi.
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What would a serious pro-natal policy program look like?
•Faster degree completion (3 vs 4 years, start your JD or MD right away) to speed careers
•Zoning/housing reform to make more starter homes
•Enforce early retirement again to speed early people's careers
•Eliminate payroll tax for <30
•Very large ($100ks) baby bonuses/dependent bonuses
•Daycare reform to lower costs (ie higher ratios)
•Ban social media <16, aggressively discourage screen time among <25
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Italians are exceptionally snobbish about a cuisine they just came up with yesterday with a lot of American input
Most Italians had never heard of pizza before the 1950s. Carbonara was invented in the United States. Much of what we call classic Italian food — cacio e pepe, tiramisu — was probably invented in the 1960s. And other sacrileges! ft.com/content/6ac009d5-dbfd…
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Call every Chinese billionaire and offer a US Passport at a hefty one-time wealth tax rate
China’s highest-profile entrepreneur Jack Ma has not appeared in a public setting since a late October forum in Shanghai where he blasted China’s regulatory system in a speech that put him on a collision course with officials reut.rs/3pTkye5
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Phonics — teaching kids to sound words out — is a better method for earning to read, but offers less autonomy to teachers who often don't like it
MS first passed a law mandating phonics, and saw reading scores go up a lot. Many, but not all states, followed
Mississippi has the best demographic-adjusted NAEP (4th & 8th grade) scores now
The "Mississippi Miracle" started in 2012 when the Republican governor/legislature introduced phonics-based instruction and began to hold back ~10% of 3rd graders per year who fail a reading test
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One of India's most fundamental growth challenges: generating a Ganges corridor.
Why? Because population density drives economic clusters, which boosts specialization and trade and innovation. And this is where India's population is. ~400m people in this box.
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Cancelling congestion pricing at the last minute emboldens anti-change groups to exercise the veto power — none of the formal lawmaking process “matters” if you can push a backtrack at the end
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Europe brought a billion dollars to a trillion dollar fight
The EU just launched a €1.1B “Apply AI” plan to boost artificial intelligence in key industries like health, manufacturing, pharma, and energy.
The goal is simple but ambitious: build European AI independence and reduce reliance on U.S. and Chinese tech.
Europe finally wants to stop buying the future and start building it.
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The Coke served in McDonalds is different! Pre-chilled, different syrup to water ratio (anticipating ice), syrup in steel tanks, wider straws.
"When you'd ask Coca-Cola in what countries it had the biggest sales, it would say something like the United States, Japan, Germany and McDonald's — and in that order"
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My views on AI:
• water issue is fake
• energy issue is real, but scaling solar/batteries should address
• a valuable, transformative technology
• will rot our brains through slop if we let it
• data center built out seems a wee bit excessive but who knows
• ?? on doomer
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"Economists think the main lines are fine and the peripheral ones are the problem"
-> the issue here is you have to view it as a network. Peripheral lines funnel people into main corridors, so you can't value as a pure sum of parts.
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Lots of econ critics, but somehow political science gets a free pass despite failing to predict January 6
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The basic political economy problem many aging societies are facing is that to get to replacement level, you need either very large cash transfers to parents, or large immigration.
But the power is in the hands of the elderly, who want neither of these things.
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Love these pre-zoning beauties; before FAR caps and setbacks thwarted NYC architecture
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If only the University of Chicago could talk to someone who knew about index funds. Oh well
“Had UChicago simply matched the market, its endowment would be $6.45 billion larger today—more than enough to repay its entire debt.”
"Possibly the most notorious example [of University of Chicago's poor investment decisions] is the university’s foray into cryptocurrency. Four sources…allege that the university lost tens of millions investing in crypto around 2021." stanfordreview.org/uchicago-…
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Glad Tamil Nadu never got the memo that the world doesn’t have room for another China, so it’s not worth trying
🚨TAMIL NADU : The New Footwear Hub In Making!!!
Major Investments in pipeline : 👞👟
🔹🇮🇳🇹🇼JR One - 5,500 Crs (50,000 Jobs)
🔹🇹🇼Pou Chen - 2,302 Crs (20,000 Jobs)
🔹🇰🇷Hwaseung Enterprises - 1,720 Crs (20,00 Jobs)
🔹🇹🇼Hong Fu -1,000 Crs (20,000 Jobs)
🔹🇻🇳Freetrend - 1,000 Crs (15,000 Jobs)
🔹🇹🇼Feng Tay - 1,000 Crs (10,000 Jobs)
🔹🇮🇳Aspire Footwear - ~ 500 Crs (20 Acre Plot)
➡️ All these firms are leading suppliers to the likes of Nike, Adidas, Puma, Crocs, Reebok etc and setting their base in TN along with their ancillary units. Not one MoU signed here is with a dummy/shell firm
➡️ TN was the first state to launch a dedicated footwear policy as early as 2022 with aim to attract investments of 20,000+ Crs
➡️ The govt setup dedeicated footwear parks (Sipcots) predominately in backward places like Ariyalur, Villupuram, Tindivanam Perambalur etc
➡️ Has setup exclusive desks in Taiwan, Vietnam to tap investments
➡️ The govt is working closely with TN Shoe Federation of India to lure investments.
‼️ We will have to wait & see how the USA Tariffs play out. But so far things are fine...🤞🤞
Detailed Thread below! Plz read ...⏬⏬🧵(1/7)
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It seems true that, for whatever reason, unions in Europe are more aligned with constructing at low cost.
But in America labor unions are more often a source of cost bloat or poor governance. @jbarro provides four simple but illustrative cases
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Utterly nuts and morally bankrupt for Universities to take money from gambling companies to turn their students into addicts
nytimes.com/2022/11/20/busin…
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Bumper to bumper gridlock and incessant honking in Manhattan; thanks to Gov Hochul
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Amazing how much more pleasant Manhattan is on a warm summer day now that the problem of trash bags sitting on the sidewalk has been largely solved
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Think of Mastercard/Visa like a 2% VAT on every transaction in the economy, with proceeds going to them.
Payments was a very hard and creative problem once, but now it’s a monopoly. Other countries are now figuring out basically free payment options.
The US regime wants Indonesia to stop using QRIS and GPN (Indonesia local payment system) and switch to Mastercard/Visa because the former gives local businesses an "unfair" advantage.
This is insane, QRIS is a standarized cashless payment system. Think of it like our's Alipay
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With equities down this much, and overnight funding rates spiking, the risk of financial contagion and random stuff breaking is getting much higher
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It's really quite surprising the extent to which reverse-bankshot "actually good things are bad" logic has become entrenched at the CDC
So, CDC is worried updating vaccines might "create an impression that we don’t have a very effective vaccination program".
Having vaccines available only for a long-extinct strain when we could easily update them would surely not be the answer here to fixing that "impression".
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Excited to be taking the third fastest train in the Western Hemisphere, after Morocco and Spain
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Hope these kids learn a valuable lesson on the importance of permitting reform
My two oldest kids have been asking to sell lemonade.
After an hour, the neighborhood security guard came up and said, “I hate to have to do this, but several neighbors have called asking me to shut down the lemonade stand.”
There are some grumpy, miserable people out there.
Don’t be one of them.
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I can't recall a single public official apologizing for an error this entire year on Covid before this.
This is healthy to do, and our public discourse would be better if admitting error was more common.
GUS PERNA, the general running logistics for Operation Warp Speed, takes sole responsibility for a big problem with Pfizer vaccine rollout: states report they’re getting less than they were promised.
“It was my fault,” Perna says. “It was a planning error, and I am responsible.”
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One of the biggest puzzles with housing affordability is why construction productivity growth is so low.
This paper by an all-star team suggests an answer: housing regulation lowers scale of builders, limiting incentives to invest in innovative technologies.
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The proliferation of spam phone calls has destroyed our call-based social capital necessary to do contact tracing
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So we’re back to Liberation Day tariffs but the stock market is fine with it this time? How does that work?
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In an ideal world we could ramp this way up and get rid of all the fire department driven building codes, street widths, setbacks, etc
Shenzhen’s fire brigade has been testing drones to tackle high-rise fires. The service has run a number of controlled drills on this tower in the city over the past few weeks.
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Also multiple islands in Hawaii; but there Oahu suffices to cover most of the population
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🚨 New publicly available dataset on housing regulations across US municipalities
With @AlexBartik and @DMilo75, we highlight a novel AI-based method for accurate categorization of regulations in unstructured text, which we use to establish 5 facts about housing regulation:
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India now substantially below replacement, with a TFR of 1.9 in 2023
Delhi is 1.2! Tamil Nadu 1.3. India is set for substantial population drop in these areas absent internal migration
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It will not shock you to learn the ban on Airbnb was led by political contributions by the hotel industry, and led to increased hotel rates
Somehow the neo-Brandeisian antitrust types are silent here
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A proposal to build on the success of congestion pricing by adding zones and raising fees
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“Abundance politics” has been making headway on the West Coast; but there remains distressingly little abundance/YIMBY politics on the East Coast
Who is our Scott Weiner, Ro Khanna, etc
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In India; the youngest and highest educated cohorts vote for the right (BJP) rather than left (Congress), bucking international trends.
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Neat idea I hadn't heard of before! Mitigate 6% of the sea level rise from global warming by flooding the Qattara Sea in Egypt, other bonus wildlife benefits to follow.
The Egyptian gov had the idea of seaflooding it
This would have the additional benefits of:
No international discussions
A much bigger surface
In a much more desertic & desolate region
It would reduce ocean levels by 3mm
And 6% of global warming-induced sea level increases
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Proposed Zoom feature:
As you are logging on for a meeting, you can click a "I don't think this meeting is necessary" button.
If a quorum is reached — meeting just cancels itself.
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I’m shocked to learn the scarcity solution of banning Airbnb has not improved the housing situation in New York City
wsj.com/real-estate/new-york…
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Vietnam's successful education model: get good teachers, fund the school system, in general care about education
Why are Vietnam's schools so good?
@TheEconomist highlights research by @singhabhi & @Alenestour @lhmosco @JustinSandefur in answering
economist.com/asia/2023/06/2…
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Interesting thread, but another response would be to aggressively lower ages of professional advancement
• early graduation from HS
• 3 rather than 4 year BA degrees
• major in law or medicine up front; rather than in professional school
• social shift to promote the young
One's 30s are a crucial period for professional advancement. Especially in so-called "greedy careers": those where returns to longer hours are non-linear.
But one's mid 30s is also when most women's fertility starts to drop 🧵
worksinprogress.co/issue/fer…
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Bearish for the AI bubble:
- Chinese tech firms can train frontier models pretty cheaply
- They shoot straight to the top of the leaderboards, hugging face downloads, are open source
- Get incorporated in wrappers like Perplexity
Shows US foundational models have no moat
🚀 Hello, Kimi K2 Thinking!
The Open-Source Thinking Agent Model is here.
🔹 SOTA on HLE (44.9%) and BrowseComp (60.2%)
🔹 Executes up to 200 – 300 sequential tool calls without human interference
🔹 Excels in reasoning, agentic search, and coding
🔹 256K context window
Built as a thinking agent, K2 Thinking marks our latest efforts in test-time scaling — scaling both thinking tokens and tool-calling turns.
K2 Thinking is now live on kimi.com in chat mode, with full agentic mode coming soon. It is also accessible via API.
🔌 API is live: platform.moonshot.ai
🔗 Tech blog: moonshotai.github.io/Kimi-K2…
🔗 Weights & code: huggingface.co/moonshotai
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“union members appear negatively selected by teacher value added… teachers’ productivity improved in decertified districts. Together, the results imply that union efforts to insulate workers may adversely affect the quality of public services.”
morganfoy.github.io/papers/F…
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It’s really weird how we just let voice calling be overrun by scams, which among other things makes it more unlikely people will answer polls or contact tracing, and just decided not to collectively address that
Another day, another call on the "phone" platform.
It was from a robot voice, impersonating financial officers, with the ultimate intent to rob me.
It is the only call I have received so far today.
These are just some of the many experiences this platform has to offer.
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