China's Economy

If ever the time should come, when vain and aspiring men shall possess the highest seats in government, our country will stand in need of its experienced patriots to prevent its ruin. -Samuel Adams, revolutionary

Montreal looks a lot better, young and vibrant, but still under construction. And still with miserable weather.
McGill will have 180 medical students this year but, as a state school, will allow only 12 from out of the Provence of Quebec, including two from out of Canada.
Ferocious rain this morning.
I am overwhelmed with unread emails.

After just seven years of service in the Brazilian Navy where it was wracked with maintenance and structural problems, given that by the time it was purchased from the French it was already four decades old, Brazil's only aircraft carrier is now up for sale. Officially decommissioned in 2017, the São Paulo never actually saw more than three months of successful continuous operation without the need for repairs and maintenance. According to The Drive, it's now up for auction with bids starting at $1.275 million, or "roughly a tenth of what the country paid to buy the ship from France". 

Doughtery, writing of the "impeachment #3" in NR says, "Is the request for information itself interference? Prove it to me."

On this day in 1938, Adolf Hitler, Benito Mussolini, French Premier Edouard Daladier, and British Prime Minister Neville Chamberlain sign the Munich Pact, which seals the fate of Czechoslovakia, virtually handing it over to Germany in the name of peace. Although the agreement was to give into Hitler’s hands only the Sudentenland, that part of Czechoslovakia where 3 million ethnic Germans lived, it also handed over to the Nazi war machine 66 percent of Czechoslovakia’s coal, 70 percent of its iron and steel, and 70 percent of its electrical power. It also left the Czech nation open to complete domination by Germany. In short, the Munich Pact sacrificed the autonomy of Czechoslovakia on the altar of short-term peace-very short term. The terrorized Czech government was eventually forced to surrender the western provinces of Bohemia and Moravia (which became a protectorate of Germany) and finally Slovakia and the Carpathian Ukraine. In each of these partitioned regions, Germany set up puppet, pro-Nazi regimes that served the military and political ends of Adolf Hitler. By the time of the invasion of Poland in September 1939, the nation called “Czechoslovakia” no longer existed.

                                  China's Economy

The Wall Street Journal’s Greg Ip, in a column, observed that “the country’s state-led growth model is running out of gas. … Absent a change in direction, China may never become rich.” Not only has growth slowed, but alternative data such as nighttime light and tax collections suggest even that reduced rate might be significantly overstated.

 A slowdown would mean China is falling short of previous Asian economies that enjoyed long periods of rapid growth after opening their economies to global trade and investment. Sustained growth of even 4% might be tough going forward, Ip writes, but after “reaching levels comparable to China today, Taiwan’s per-capita income grew 7.5% for another decade, South Korea 6.3%, and Japan 4.7%.”

And while China faces some different challenges, including demographic and the limitations of its export model given its massive size and saturated global markets, there’s also this: China may be suffering from a fatally flawed growth model. Ip: “For 30 years the Communist Party opened ever more of the economy to private enterprise, trade, foreign investment, and market forces. Yet it never relinquished its commitment to socialism … The trade clash has also hurt the private firms, many foreign owned, that dominate exports while rallying nationalists to defend China’s state-centric model.” 

The Soviet Union also had an economic model that for a time seemed like a threat to capitalism. Maybe the same will happen for socialism with Chinese characteristics. As Reuters recently reported, “Chinese productivity growth has gone into reverse for the first time since the Cultural Revolution tore the country apart in the 1970s, according to a new study, highlighting the failure of recent reforms to set China on a sustainable development path.” And it that really surprising? And as my AEI colleague Derek Scissors has noted, “Beijing has long abandoned the pro-market path and shows no true interest in returning to it.”

Even as some China hawks urge active US effort to undermine Chinese economic progress, particularly as it relates to technology, the communists running the country are proving to be their own worst enemy.

Cartoon

Stop smoking for three years and save enough money to buy an ox.--The slogan of China's 1995 anti-smoking campaign

Montreal.



There has been a 4.5X (and 350%) increase in New Mexico’s crude oil production over the last 8 years, from 200,000 barrels per day (bpd) in 2011 (and about the same level as for the previous 30 years) to nearly 900,000 bpd in recent months this year. This is all the result of the revolutionary technologies of hydraulic fracturing and horizontal drilling, and the state’s proximity to the Permian Basin in West Texas, one of the most prolific oil fields in the world. Current production in the Permian Basin is more than 4 million bpd and about 25% of that production is across the Texas border in New Mexico.

 
For the highest SAT math test score range (700-800) there were 157 male high school students (127,392) for every 100 female students (80,974) that follows a 50+ year history of males significantly out-performing females on the Math SAT both for average scores (537 vs. 519 this year) but especially for scores on the high-end.
But, “There just aren’t gender differences anymore in math performance,” says UW–Madison psychology professor Janet Hyde.


In the past decade, nearly $1.36 trillion in net flows were added to U.S. equity mutual funds and exchange-traded funds that mimic market indexes while some $1.32 trillion fled higher-costing actively managed counterparts.

On a day of travel. a cartoon:

Patrick Cross

It is precisely those who (plausibly) preach prudence in manipulating the natural world who are most cavalier about smashing and rebuilding social institutions. --Munger


Mom and I had dinner at The Vandal last night. First time we've sat down in a week. The place was earnest and the food was mostly good.
We go to Montreal today. We'll meet Liz, Ned and Caroline. I did not manage the online checkin well.

The Government and the Press have finally completely befuddled me. This new impeachment effort; is this what is meant by "jumping the shark?" Do you just keep the process going, rolling from one innuendo to another, hoping one gets traction? Does a partisan whistleblower carry more weight than a partisan retired British spy? And at what point do your partisan failures lose you the moral high ground?

Carden writes, "Price gouging laws are effectively knowledge embargoes." Price increases aren't arbitrary impositions on the part of the callous and the mean. As Tyler Cowen and Alex Tabarrok explain, "a price is a signal wrapped up in an incentive." Price is how markets communicate.

In the 1980s, the national debt amounted to 30 percent of US GDP; by the mid-1990s, it was up to 65 percent. Today we're at more than 100 percent, and rising. Merely paying the interest on the debt will cost Americans almost $400 billion this year. And that's at today's super-low interest rates. If those rates go up — when those rates go up — the government's interest obligations will skyrocket. By 2025, former Pennsylvania Governor Ed Rendell and Maya MacGuineas of the Committee for a Responsible Federal Budget have projected, interest on the national debt will surpass the defense budget.
    

The last twenty years have disrupted investing generalities. This is an interesting article from M.W.. Edward McQuarrie, a professor emeritus at the Leavey School of Business at Santa Clara University in California, has painstakingly reconstructed U.S. stock- and bond market returns back to the late 1700s. Except for 40 of the past 220 years — 1942 through 1982 — stocks and bonds have produced essentially equal returns.

The net effect of his findings is to reduce estimates of what researchers refer to as the “equity premium” — the margin by which stocks outperform bonds. Previous research had found this premium to be much larger — as much as six or more annualized performance points, according to some studies. McQuarrie’s best guess, based on the entire period since 1793, is that the premium is just 1.7 annualized percentage points. The more shocking implication of McQuarrie’s data is not that the equity premium is far smaller than previously thought. It’s that, for some periIf our investment horizons are like the average experience between 1793 and 1942, or since 1982, then there may be no equity premium. If we do decide to make a big bet that stocks will outperform bonds, then we in effect are betting that the future will be more like the 1942-1982 experience than the decades before or since.ods over a lifetime and longer (think about your heirs), there is no equity premium at all. 

                                     The Children

Life is the abstract meeting policy. Kipling wrote this poem on the death of his only child. On September 27, 1915, Second Lieutenant John Kipling of the British army, the son of Nobel Prize-winning author Rudyard Kipling, was killed at the Battle of Loos, in the Artois region of France.

The Children

By Rudyard Kipling

1914-18("The Honours of War"—A Diversity of Creatures)

These were our children who died for our lands: they were dear in our sight.

    We have only the memory left of their home-treasured sayings and laughter.

    The price of our loss shall be paid to our hands, not another’s hereafter.

Neither the Alien nor Priest shall decide on it.    That is our right.

        But who shall return us the children?

At the hour the Barbarian chose to disclose his pretences,

    And raged against Man, they engaged, on the breasts that they bared for us,

    The first felon-stroke of the sword he had long-time prepared for us—

Their bodies were all our defence while we wrought our defences.

They bought us anew with their blood, forbearing to blame us,

Those hours which we had not made good when the Judgment o’ercame us.

They believed us and perished for it.    Our statecraft, our learning

Delivered them bound to the Pit and alive to the burning

Whither they mirthfully hastened as jostling for honour—

Nor since her birth has our Earth seen such worth loosed upon her.

Nor was their agony brief, or once only imposed on them.

    The wounded, the war-spent, the sick received no exemption:

    Being cured they returned and endured and achieved our redemption,

Hopeless themselves of relief, till Death, marveling, closed on them.

That flesh we had nursed from the first in all cleanness was given

To corruption unveiled and assailed by the malice of Heaven—

By the heart-shaking jests of Decay where it lolled in the wires—

To be blanched or gay-painted by fumes— to be cindered by fires—

To be senselessly tossed and retossed in stale mutilation

From crater to crater.    For that we shall take expiation.

        But who shall return us our children?

A "New History of Capitalism"

Wealth consists not in having great possessions, but in having few wants.--Epicurus




Mrs. McGraw will need several months of resting her injured knee. Then they will consider maybe replacing it.
I had my very first chicken thighs last night with a very good pasta.

Over the last 37 years, women have earned 13.7 million more college degrees in the US than men, and 6.1 million more bachelor’s degrees. It’s perhaps the most remarkable academic success story in US history. And yet colleges and universities continue to pretend that women are so inferior to men academically that they need a disproportionate share of campus resources including women’s centers and women’s commissions, and female-only scholarships, fellowships, initiatives, awards, clubs, and camps.

"...popular mythology insists that matters are exactly the reverse of what they are in reality. We are told that we have meaningful voice when we don’t, and that we don’t when we do.
The market gives to the plumber, the pipefitter, and the political-science professor each a real and meaningful say in how his or her life proceeds. The young man who chooses to pursue a career as a physician need not persuade 51 percent of his fellow citizens to endorse his choice; that choice is his and his alone. Likewise for the woman who chooses to delay having children in order to work full-time as an attorney: the decision is hers, and it’s a decisive one.
Unlike in politics, each person’s individual decisions outside of politics are typically decisive." --Bordeaux (changed a bit)

Great book title:  Termites of the State: Why Complexity Leads to Inequality

 In 2018, the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court forged ahead with such a reform by unanimously holding that drivers who worked for a firm that supplied nationwide courier and delivery services should be classified by law as employees and not as independent contractors. It has been estimated that reclassification of Uber and Lyft drivers as employees in California alone will cost the two companies an average of $3,625 per driver per year for a combined annual bill of nearly $800 million per year.

Jack Letts, dubbed "Jihadi Jack", the British convert to Islam who travelled to Syria in 2014 to join ISIS, has been stripped of his British citizenship. The former dual-national, whose British mother and Canadian father stand by their son, exchanged his picturesque hometown of Oxford for Raqqa, to join the ranks of ISIS. He is currently awaiting his fate in the custody of Kurdish forces.

On this day in 1580, the English seaman Francis Drake returned to Plymouth, England, in the Golden Hind, becoming the first British navigator to circumnavigate the earth.
On December 13, 1577, Drake set out from England with five ships on a mission to raid Spanish holdings on the Pacific coast of the New World. Only the Golden Hind survived the trip.
Queen Elizabeth I knighted Drake during a visit to his ship. The most renowned of the Elizabethan seamen, he later played a crucial role in the defeat of the Spanish Armada. The explorer died off the coast of Panama in 1596 at the age of 56.

                         A "New History of Capitalism"

Studies on the "New History of Capitalism" [NHC] are appearing that attempt to connect slavery with capitalism. This seems to be a mixture of shoddy thinking and simply ideologically driven pamphleteering. The NYT is devoting an entire campaign to the concept. They do not declare their alternative suggestions but we can guess. I'm sure this time they promise to be gentile.

This is from the conclusion of the paper "Cotton, Slavery, and the New History of Capitalism" by Alan L. Olmstead and Paul W. Rhode.

"There are good reasons why slavery remains a topic of keen interest. Slavery’s pervasive impact on American society, the misery it caused, and its toxic effects on American’s troubled history of race relations are all legacies of the nation’s original sin.  Slavery and the war that ended it led to an impoverished South.  It was in this backward, largely rural and agricultural setting, that freedmen and women, lacking education and capital, and often surrounded by hostile whites, had to start new lives.  For too long there was a general acquiescence to a southern revisionist version of slavery, the causes of the Civil War, and the subsequent southern white supremacy governments and policies. The NHC has rightly highlighted past injustices and their ramifications.   However, to recognize the pure evils of the slave system, does not mean that slavery was “absolutely essential” for U.S. economic growth, for the Industrial Revolution, or for world development.  Neither the NHC’s evidence nor its methodology supports such deterministic conclusions.  If slavery had been abolished nationally in 1790, we still would have had the Cotton South, and we still would have had an American Industrial Revolution.  The British Industrial Revolution was already underway, and it would have continued.  The slave system did increase the scale of farm size in the South, made many slave owners rich, and oppressed blacks.  It also impoverished many whites who existed on the margins of the more stratified, less urbanized, and less educated society that slave system created.  The riches of slave owners were not essential for national development, and the policies that this elite imposed on local, state, and national governments were on balance detrimental to development.  The slave system was an effective way to produce cotton, but hardly the only way.  Slavery was a national tragedy that inhibited economic growth over the long run.  The three foundational books in the NHC literature examined here all make serious errors of scholarship.  Perhaps most significantly, all mistakenly assert an essential role for cotton and slavery in the emergence of modern economic growth.  There is little understanding of the fundamental technological and production realities of the plantation cotton economy.  On this latter issue, all three books fail to recognize and come to grips with the significance of biological innovations in reshaping the American cotton slave economy and the worldwide implications of these innovations.  As the NHC matures, it might embrace the enduring strengths of traditional historical scholarship, including citing sources correctly, conducting close (and accurate) readings, drawing inferences that are actually supported by the evidence, and integrating its findings into the broader historiography.  It should also stop making stuff up."    

Gender Dysphoria

"Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket, regardless of what I say about whether coal is good or bad, because I'm capping greenhouse gases.  Coal power plants, natural gas, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money onto consumers."--Obama

Mom has really had a remarkable summer.

Mrs. McGraw has not seen ortho yet.

Brian had a big presentation that went well.

China, far and away the world’s biggest auto market with some 28 million vehicles sold annually, is aiming for more than 1 million Hydrogen Fuel Cell Vehicles in service by 2030. That compares with just 1,500 or so now, most of which are buses.

40% of reffugees to the U.S. claiming persecution never fill out the paperwork and vanish. Another 40% fill out the paperwork but do not show up for the hearing and vanish.

Chinese electric vehicle maker NIO is losing money on every car it sells and will soon need to raise more cash. (wsj)

On this day in 1789, The first Congress of the United States approved 12 amendments to the U.S. Constitution and sent them to the states for ratification. The amendments, known as the Bill of Rights, were designed to protect the basic rights of U.S. citizens, guaranteeing the freedom of speech, press, assembly, and exercise of religion; the right to fair legal procedure and to bear arms; and that powers not delegated to the federal government were reserved for the states and the people.

Influenced by the English Bill of Rights of 1689, the Bill of Rights was also drawn from Virginia’s Declaration of Rights, drafted by George Mason in 1776.

                                                    Gender Dysphoria

There are approximately 40-million children in the United States between the ages of four and fourteen. The distribution curve above would suggest that roughly four-million of them have personality profiles that are “sex atypical,” but which are still part of the natural distribution of personalities within each sex.

The broad, but normal distribution of personality traits also explains studies showing a 28% concordance of transgender identity in twins. Twins have identical chromosomes, and so likely will have similar sex-related behaviors, as well as experience similar environmental influences in regard to those behaviors. Using twin adolescent males as an example: If their behaviors are at the “feminine” end of the male-typical distribution, they could both become confused as to what their behaviors and preferences mean about their sex.

In most cases, the thing that is now called “gender identity” likely is simply an individual’s perception of how their own sex-related and environmentally influenced personality compares to same and opposite sexed people. Put another way, it’s a self-assessment of one’s stereotypical degree of “masculinity” or “femininity,” and it’s wrongly being conflated with biological sex. This conflation stems from a cultural failure to understand the broad distribution of personalities and preferences within sexes and the overlap between sexes.

When a girl reports that she “feels like a boy” or “is a boy,” that sentiment may reflect her perception of how her personality and preferences compare to the rest of her peers. If the girl has an autism spectrum condition, she may even perceive “sex-atypical” behavior that does not actually exist, and thereby falsely self-diagnose as male even without experiencing any actual male personality traits.

Historical data suggests that about 0.5% of children develop gender dysphoria—distress caused by a perceived incongruence between one’s biological sex and gender presentation. Reinforcing studies in the medical literature show that, as children get older, childhood-onset gender dysphoria resolves (i.e. ends) in most cases. As two authors put it in a 2016 International Review of Psychiatry article, “the conclusion from these studies is that childhood GD [gender dysphoria] is strongly associated with a lesbian, gay or bisexual outcome and that for the majority of the children (85.2%; 270 out of 317 [studied individuals]) the gender dysphoric feelings remitted around or after puberty.”

The growing population of transgender-identifying high school students now is estimated to comprise about 2% of all students—a three-fold increase over the baseline 0.5% figure cited above. Many adolescents now are presenting to gender clinics, with some clinics seeing a 10-fold increase in new cases. Many of these adolescents have no history of childhood gender dysphoria. Higher rates of autism-spectrum conditions have been described in many of these adolescents, and the controversial “affirmation model” is being applied to this unstudied cohort as well. Not surprisingly, reports of transition regret, and de-transition, are growing in number.

To summarize, a lack of understanding regarding the distribution of sex-related personality and behavioral differences has led to confusion that impacts children who fall at the extreme tail-ends of the distribution, and who would be statistically more likely to grow up to be gay, lesbian or bisexual adults if allowed to experience uninterrupted puberty. Additionally, telling a child that he or she was born in the wrong body pathologizes “gender non-conforming” behavior and makes gender dysphoria less likely to resolve.

The fact is, no child is actually born in the wrong body. Adults should expand their understanding of what normal male and female behavior and preferences look like—which would lead them to appreciate that being male or female comes with a wider range of personalities preferences, and possibilities than old stereotypes would have us believe.

(from an article by William J. Malone, Colin M. Wright, and Julia D. Robertson)