Jason Furman on AI contestability

From Marginal Revolution.

"This ease of switching has forced companies to pass the gains from innovation on to users. Free tiers now offer capabilities that recently would have seemed almost unimaginable. OpenAI pioneered a $20-per-month subscription three years ago, a price point many competitors matched. That price has not changed, even as features and performance have improved substantially.

One recent analysis found that “GPT-4-equivalent performance now costs $0.40/million tokens versus $20 in late 2022.” That is the equivalent of a 70 percent annual deflation rate — remarkable by any standard, especially in a time when affordability has become a dominant public concern.

And this is only the foundational model layer. On top of it sits a sprawling ecosystem of consumer applications, enterprise tools, device integrations and start-ups aiming to serve niches as specific as gyms and hair salons.

Users aren’t the only ones switching. The people who work at these companies move from one to another, a sharp contrast to work in Silicon Valley during the era of do-not-poach agreements."

The Atlantic’s Critique of Homeschooling Ignores the Real Education Crisis

By Corey A. DeAngelis. Excerpt:

"The Atlantic recently ran a story headlined “He Was Homeschooled for Years, and Fell So Far Behind.” It profiles Stefan Merrill Block, who was homeschooled in his early years and later struggled to catch up once he entered traditional schooling. But one rough experience doesn’t invalidate an entire movement that is delivering superior results for millions of families across the country.

Homeschool students are outperforming kids in government schools by a wide margin. Brian Ray’s peer-reviewed systematic review in the Journal of School Choice examined dozens of studies on the topic. Seventy-eight percent of those studies found homeschoolers scoring significantly higher academically than their public school peers. They beat traditional school kids by 15 to 25 percentile points on standardized tests. These solid results hold up regardless of family background, income level, and whether the parents ever held a teaching certificate.

Government schools deliver exactly the opposite outcome. In Chicago alone, there are 55 public schools where not a single kid tests proficient in math. They spend about $30,000 per student each year and still fail to produce basic proficiency. The Nation’s Report Card shows nearly 80 percent of US kids aren’t proficient in math. That’s the real crisis staring us in the face, and it demands accountability from the system that claims to serve our children."

Better defined property rights improve economic growth

Tweet from Vincent Geloso.

 

Hold Harmless for Whom? The Impact of COVID Era Policies on School Funding, Teachers, and Students

Michah W. Rothbart, Samantha Cervantes, and Amy Ellen Schwartz of Syracuse University.

"Abstract 

This study evaluates the fiscal and academic consequences of New York City’s hold harmless policy during COVID-19, which aimed to stabilize school expenditures amid unexpected enrollment declines by restoring schools’ funding up to initial levels. We examine how school racial composition predicts whether or when schools receive hold harmless “treatment” and assess the impact of hold harmless on financial resources, staffing, and student outcomes, exploring heterogeneity by timing of policy announcement. Although schools with higher White student shares were no more likely than those with higher Hispanic or Black shares to receive hold harmless funds, schools with higher Black shares that did receive them saw larger per-pupil allocations due to deeper enrollment losses. Overall, hold harmless schools experienced significant increases in per-pupil spending, and reduced pupil-teacher ratio and class size, while maintaining the size of the teaching workforce. We find hold harmless had no effect on attendance or chronic absenteeism in 2021 or 2022, but improved both in 2023, when it was announced earlier. Although funds often rolled over to later years, we find no corresponding gains in student outcomes. Overall, the policy effectively preserved school-level spending and staffing – as intended – with some improvements in student outcomes when announced early."

End the SEC’s Access Rule, Don’t Mend It

Activists love it, but it is counterproductive, has no basis in statute, and could be unconstitutional

By Joseph A. Grundfest. He is a professor emeritus at Stanford Law School. He served as an SEC commissioner, 1985-90. Excerpts:

"Investors owning as little as $2,000 of a company’s stock—about 16 billionths of the average market capitalization of an S&P 500 company—can force a vote. Average monthly rent for a New York City apartment is roughly $3,500, 75% more than the rule’s minimum. This holding requirement might be the only thing in America not suffering an affordability crisis.

Only 11% of the proposals that proceeded to a vote in the 2025 proxy season gained majority support from voting stockholders. If a proposal is approved, the corporation’s board typically declines to implement it anyway. The Access Rule thus generates toothless, performative votes.

The rule is wildly popular with governance gurus and policy advocates. It’s a free soapbox that forces management to address issues they’d rather not discuss. To buy peace, executives will often make concessions in exchange for the activists’ withdrawing their proposals. If a proposal fails, activists still demonstrate to supporters a willingness to confront the corporation. Just because a proposal is performative doesn’t mean it’s ineffective."

"The Access Rule . . . commandeers the corporate proxy to compel votes on shareholder proposals, an encroachment not authorized by federal securities law." 

Governors Who Refuse Education Dollars

Not surprisingly, they’re pandering to teachers unions

By Daniel Lipinski. Mr. Lipinski, a Democrat, represented Illinois’s Third Congressional District 2005-21. He is a fellow at the Hoover Institution and the University of Dallas. Excerpt:

"Scholarships can be granted to cover a variety of education expenses. While many will fund tuition aid, scholarship nonprofits can choose to help families pay for tutoring, education technology, special-education services and other expenses. Eligibility will be limited to households earning less than 300% of the area’s median income, but many programs will likely focus on those most in need.

Teachers unions are pressuring Democratic governors to reject this golden goose. Their virulent opposition is revealing. Extra resources are what educators say they want. So why do their unions oppose receiving them? It seems they so abhor the idea that a scholarship might help parents choose which school their child goes to that they are willing to reject support for students in their own members’ classrooms."

The Embarrassing Truth About Tariffs

Why is Trump so upset about Federal Reserve economic research into his trade policies?

WSJ editorial. Excerpts:

"American households and businesses are bearing nearly 90% of the cost of the Trump tariffs"

"Kevin Hassett, director of the National Economic Council, took to CNBC Wednesday to pan the New York Fed research as “the worst paper I’ve ever seen in the history of the Federal Reserve System” and suggested the people who wrote and published it should be “disciplined.”"

"The Fed analysis aligns with other research into the distribution of tariff costs from Harvard economists and Germany’s Kiel Institute—and with common sense. There isn’t widespread evidence that foreign producers are cutting their prices to offset the tariffs"

"Nor is the dollar strengthening, which is the other possible mechanism for making foreigners pay"

"tariffs are causing an increase in post-tariff prices of those goods that are still imported"

"Americans pay higher prices, or “pay” in the form of less choice."

"he said last year that Americans may have to buy fewer dolls for their children as a result of his trade policies"

"So far the manufacturing boom Mr. Trump promised hasn’t appeared, as manufacturing jobs are down over the last year."

"To the extent American companies eat some of the costs of tariffs, that’s less cash available for investment and hiring." 

"The market response to his April 2025 “liberation” tariffs was so negative that the President quickly withdrew them and negotiated lower tariffs"

"He has also laced the tariffs with multiple exemptions."