Afghanistan and Vietnam as Long-Term Investments

On this day:

79
Mount Vesuvius erupts. The cities of Pompeii, Herculaneum, and Stabiae are buried in volcanic ash (note: this traditional date has been challenged, and many scholars believe that the event occurred on October 24).
410
The Visigoths under King Alaric I begin to pillage Rome.
1349
Six thousand Jews are killed in Mainz after being blamed for the bubonic plague.
1391
Jews are massacred in Palma de Mallorca.
1456
The printing of the Gutenberg Bible is completed.
1662
The Act of Uniformity requires England to accept the Book of Common Prayer.
1682
William Penn receives the area that is now the state of Delaware, and adds it to his colony of Pennsylvania
1814
British troops invade Washington, D.C. and burn down the White House and several other buildings.
1857
The Panic of 1857 begins, setting off one of the most severe economic crises in United States history.
1929
Second day of the two-day Hebron massacre during the 1929 Palestine riots: Arab attacks on the Jewish community in Hebron in the British Mandate of Palestine, result in the death of 65-68 Jews and the remaining Jews being forced to leave the city.
1949
The treaty creating NATO goes into effect.
1991
Mikhail Gorbachev resigns as head of the Communist Party of the Soviet Union.
1991
Ukraine declares itself independent from the Soviet Union.

***

“Every time the US ‘saves’ a country, it converts it into either an insane asylum or a cemetery.”--Latin American author Eduardo Galeano

***

When Vesuvius erupted, 20,000 people lived in Pompeii, including merchants, manufacturers, and farmers who exploited the rich soil of the region with numerous vineyards and orchards. None suspected that the black fertile earth was the legacy of earlier eruptions of Mount Vesuvius. Herculaneum was a city of 5,000 and a favorite summer destination for rich Romans. According to Pliny the Younger’s account, the eruption lasted 18 hours. Pompeii was buried under 14 to 17 feet of ash and pumice, and the nearby seacoast was drastically changed. Herculaneum was buried under more than 60 feet of mud and volcanic material. Today, Mount Vesuvius is the only active volcano on the European mainland. Its last eruption was in 1944, and its last major eruption was in 1631.

***

The trial of the woman who killed her children includes testimony from medical professionals who saw her the day before the murders, and they said she was perfectly sane. Assuming they are competent, these murders imply that a lot of threatening and violent behavior is performed by people who are very different from their fellows but not clinically insane. That should worry everybody.

***

Full decompression kills an astronaut primarily through oxygen reversing direction, leaving the blood and diffusing backward into collapsed, unpressurized lungs, a process that can cause unconsciousness in as little as ten seconds. And his saliva boils.

***

You have to show your identification to board an airplane, cash a check, buy liquor, or check out a library book and rent a video, but not to vote for who runs the government. But you are assuming that your vote helps run the government and is not a placebo.

***

Afghanistan and Vietnam as Long-Term Investments

Trump has invested federal dollars in private companies, thirty so far. This is not new, clever, or innovative. This is contrary to every idea in a free society, and the Americans have fought an endless rearguard action against it. Not only does interference in the economy violate basic American principles, it also doesn't work. It's bad enough when the government is just predatory; it is a disaster when it gets entrepreneurial.
Two observations on recent events.

--Shapiro has done a U-Turn. He now opposes data centers. He did this with school vouchers, as well. He looked like a promising guy, so this is extremely disappointing. Is he just part of the current rage of politicians unrestrained by any real philosophy, like Trump? Does comfort with contradiction just make you agile in politics? Or do multiple U-Turns mean you're just a guy running in circles?

This looks like a significant political opportunity for someone. Data centers are coming, either fast or slow. And this astonishing and dangerous technology is going to be something the world will have to learn to live with. Why not develop a policy that accepts that reality, design and build a template to manage the new technology, and allow it to develop efficiently and safely? You might even create a template that presents risk management ideas for future technologies that are beyond the average politician's myopic ken.

Accept the challenge, create a management plan, then beat those politicians--whose idea of management is suppression--to a pulp with it.


--There is a weird dichotomy with successful people. Everyone is mad at them. The rich and successful are somehow on the outs. We vilify them; we suspect them of harboring aristocratic philosophies and cabalistic plans; we farm them for taxes.


But when they have an idea or want to start a business or a laboratory program, we suddenly think they are needy and desperate for our help. The country will lose its international edge without our tax support of these selfsame successful, rich, and creative people.

Why should the most capable, productive people in the land get money from taxes? Why should their efforts be underwritten by the average guy, struggling along? If a business idea or research is insightful and promising, the free market will be standing in line to support it and benefit. Yet these politicians think these people need their help. Somehow politicians and their bureaucratic assistants think all the smart, successful, hard-working highest quintile guys in society who have already proven their value just can't get along and achieve anything without the approval and help of the lower quintile of the high school class.

Sometimes the fussy State intrudes just because it can. There is a big difference between "I need..." and "I could use..." And sometimes the government just thinks it's crucial to everything

But the day is coming when financial restraint will not be voluntary.

China/US Economies

On this day:
1258
Baghdad falls to the Mongols, and the Abbasid Caliphate is destroyed.
1306
In front of the high altar of Greyfriars Church in Dumfries, Robert the Bruce murders John Comyn, his leading political rival, sparking revolution in the Scottish Wars of Independence
1567
An explosion destroys the Kirk o' Field house in Edinburgh, Scotland. The second husband of Mary, Queen of Scots, Lord Darnley is found strangled, in what many believe to be an assassination.
1933
In round 13 of a boxing match at New York City’s Madison Square Garden, Primo Carnera knocks out Ernie Schaaf, killing him.
1996
The IBM supercomputer Deep Blue defeats Garry Kasparov for the first time.
2009
The communication satellites Iridium 33 and Kosmos-2251 collide in orbit, destroying both.

***

Common sense tells us that restraints on business are generally bad, that red tape strangles enterprise, that taxes on goods in transit will reduce the volume of transactions, that wage earners will suffer if the things they buy are made artificially dear, that legislation to increase the cost of living and production must be especially disastrous to a populous manufacturing and commercial country like ours.--Hirst

***

A newly released federal memo reveals Ohio’s richest man accused sex offender Jeffrey Epstein stole or misappropriated several hundred million dollars from him over their decades-long financial relationship.

***

The U.S. attack on Iran was shocking and unprecedented. Why is there so little talk about it?

***

China/US Economies

Analysis of commercial and political patterns suggests China’s broader AI ecosystem operates according to a different logic than the “US-China AI race” framing implies.

First, development and deployment remain private-led, with state participation filling infrastructure and application gaps rather than competing directly for frontier capabilities.

Second, frontier developers are pursuing diverse technical and commercial strategies rather than converging on LLMs as the path to AGI. The data shows specialization in modalities, vertical domains, and applications. This reflects a market where companies are optimizing for deployability and commercial viability, not just pushing frontier capabilities.

Third, China’s AI ecosystem is actively shaped by local policy competition and fiscal incentives, rather than solely by market forces or central planning. This creates geographic inequality but also reveals how innovation actually gets governed in practice through decentralized competition for activity and talent. It also raises concerns of potential resource waste, especially given that many local governments are currently short of money.

This assessment (from somewhere) emphasizes local, private incentives and less central control (although they influence incentives), more free markets and less command economies. The strength of the West has always been its freedom to evolve, so China may be woodenly adapting here, allowing some risk. Compare this to Trump's recent demand that defense contractors freeze dividends and buybacks until their inventories rise.

We are back to the old arguments. A government, in the words of Zohran Mamdani, that can “replace the rigidity of rugged individualism with the warmth of collectivism”; a government, in the words of Adrian Vermeule, that will “enjoy a capacious scope of public discretion to promote the common good.”

But there is no "warmth" in government, no "discretion."

The Constitution creates political structures and then limits them within those structures because self-restraint in politics does not exist.

Intel

On this day:
9
Arminius’ alliance of six Germanic tribes ambushes and annihilates three Roman legions of Publius Quinctilius Varus in the Battle of the Teutoburg Forest.
1543
Mary Stuart, at nine months old, is crowned “Queen of Scots” in the central Scottish town of Stirling
1855
Crimean War: The Siege of Sevastopol comes to an end when Russian forces abandon the city.
1942
World War II: A Japanese floatplane drops incendiary bombs on Oregon.
1945
Second Sino-Japanese War: Japan formally surrenders to China.
1956
Elvis Presley appears on The Ed Sullivan Show for the first time.
1971
The four-day Attica Prison riot begins, which eventually results in 39 dead, most killed by state troopers retaking the prison.
2001
Ahmed Shah Massoud, leader of the Northern Alliance, is assassinated in Afghanistan by two al Qaeda assassins who claimed to be Arab journalists wanting an interview.

***

Politics is the art of making your selfish desires seem like the national interest.--Sowell

***

Vermont’s socialist U.S. Sen. Bernie Sanders only likes markets when they’re broken. Therefore his support for President Donald Trump’s foray into the semiconductor industry is the clearest sign yet that the federal government owning a piece of chip maker Intel is bad news for U.S. technology.

***

US Navy SEALs reportedly tried to sneak into North Korea and plant a listening device amid 2019 high-level nuclear talks with then-president Donald Trump. The mission failed after the US operatives, thinking they’d been discovered, opened fire on a vessel that apparently turned out to be a boat of unarmed fishermen, all two or three of whom died.(nyt)

***


Intel

Steven Rattner, the Wall Street financier who led the 2009 emergency rescue, said the Obama administration had little choice but to save GM and Chrysler from collapse. “It would have been an economic calamity. You would have had a couple million people out of work. We just felt it was an unacceptable risk to take,” said Rattner.

He spoke on March 9 at Stanford GSB about his five-month stint leading the Obama administration’s task force on restructuring the auto industry.

The rescue team put GM and Chrysler into bankruptcy, overhauling operations and finances with money from the Troubled Asset Relief Program, or TARP, which Congress had approved to rescue the financial sector.

TARP. When Lehman Brothers Holdings Inc. collapsed, its U.S. operations had 1.2 million derivatives transactions outstanding with 6,500 trading partners. Many of them were far from Wall Street, including schools such as Beaver Country Day School outside of Boston or companies like Metavante Corp. in Milwaukee, which had relied on Lehman to help reduce their exposure to fluctuating interest rates through derivatives. In all, the contracts, which were tied to interest rates, bonds, currencies, commodities, and stocks, had a "notional," or theoretical, value of $39 trillion. (wsj)

The notional value of the world's derivatives actually was estimated at more than $600 trillion. Yes, $600 trillion. Notional value is the total value of a leveraged position's assets. This distinction is necessary because when you're talking about leveraged assets like options and derivatives, a little bit of money can control a disproportionately large position that may be as much as 5, 10, 30, or, in extreme cases, 100 times greater than investments that could be funded only in cash instruments. This was done by people who thought they knew what they were doing.

The Bank for International Settlements (BIS) estimated the net notional value of uncollateralized derivatives risks was between $2 trillion and $8 trillion, a staggering amount of money.

Freedom and risk. Trillions invested by idiots. The world teetering on insolvency.

GM, Chrysler, TARP. And conservatives are worried about a cashless purchase of a little bit of little Intel?

Who are we kidding?

Trump may be philosophy-free, but so are we.

Labor Day

On this day:
1864
American Civil War: Confederate General John Bell Hood evacuates Atlanta, Georgia after a four-month siege by General Sherman
1923
The Great Kantō earthquake devastates Tokyo and Yokohama, killing about 105,000 people.
1939
Adolf Hitler signs an order to begin the systematic euthanasia of mentally ill and disabled people
1939
World War II: Nazi Germany and Slovakia invade Poland, beginning World War II.
1972
In Reykjavík, Iceland, American Bobby Fischer beats Russian Boris Spassky to become the world chess champion.
1983
Cold War: Korean Air Flight 007 is shot down by a Soviet Union jet fighter when the commercial aircraft enters Soviet airspace. All 269 on board die, including Congressman Lawrence McDonald.
1985
A joint American–French expedition locates the wreckage of the RMS Titanic.
2004
Beslan school hostage crisis commences when armed terrorists take children and adults hostage in Beslan in North Ossetia, Russia.

***

The Trump administration is drawing up plans to rebrand the Department of Defense as the Department of War, according to a White House official, following up on the president’s push to revive a name last used in 1947.

***

AI fiction authorship has created a strange, obtuse, intelligent-sounding gibberish. 

If AI learns from us, what does that mean?

***

Populist or far-right parties are leading the polls in the U.K., France, and Germany simultaneously.

***

Under President Trump, the government has become a minority owner of Intel and will take a cut of Nvidia’s and Advanced Micro Devices’ sales of artificial-intelligence chips to China. This might sound like Chinese-style state capitalism, not classic U.S. free enterprise. However, government investment in companies is as American as apple pie and was common in the 19th century, Wall Street Journal columnist Jason Zweig writes. Unfortunately, history suggests the likely results will be massive misallocation of capital and a surge in waste, corruption, and conflicts of interest. --wsj

***

India is meeting with China, China is meeting with Russia. We are meeting with ourselves. 

Now, if Russia would just give China some of that eastern land...

***

Florida State true freshman linebacker Ethan Pritchard was injured and subsequently hospitalized following a shooting incident in Havana, Florida, on Sunday evening.

***

The navigation system of a plane carrying Ursula von der Leyen was disrupted due to suspected Russian interference, the European Commission said.
A spokesperson said the "GPS jamming" happened while the Commission president was about to arrive in southern Bulgaria on Sunday, but she still landed safely.

***

Labor Day


A Labor Day parable I stole off a blog:

A guy looked at my Porsche the other day and said I wonder how many people could have been fed for the money that sports car costs. I replied I am not sure, it fed a lot of families in Bowling Green, Kentucky who built it, it fed the people who make the tires, it fed the people who made the components that went into it, it fed the people in the copper mine who mined the copper for the wires, it fed people in Decatur IL, at Caterpillar who make the trucks that haul the copper ore. It fed the trucking people who hauled it from the plant to the dealer and fed the people working at the dealership and their families. BUT,… I have to admit, I guess I really don’t know how many people it fed.

*

Another thought on labor for Labor Day.

"Growing cotton, further, unlike sugar or rice, never required slavery. By 1870, freedmen and whites produced as much cotton as the South produced in the slave time of 1860. Cotton was not a slave crop in India or in southwest China, where it was grown in bulk anciently. And many whites in the South grew it, too, before the war and after. That slaves produced cotton does not imply that they were essential or causal in the production.

Economists have been thinking about such issues for half a century. You wouldn’t know it from the King Cottoners. They assert, for example, that a slave was “cheap labor.” Mistaken again. After all, slaves ate, and they didn’t produce until they grew up. Stanley Engerman and the late Nobel Prize winner Robert Fogel confirmed in 1974 what economic common sense would suggest: that productivity was incorporated into the market price of a slave. It’s how any capital market works. If you bought a slave, you faced the cost of alternative uses of the capital. No supernormal profits accrued from the purchase. Slave labor was not a free lunch. The wealth was not piled up.
….
We need to stop using the history of slavery to bolster anti-capitalist ideology. Ingenuity, not exploitation by slavery or imperialism or finance, is the story of the modern world."--McCloskey

Managing China's Economy

On this day:
988
Norse King Glun Iarainn recognises Máel Sechnaill II, High King of Ireland, and agrees to pay taxes and accept Brehon Law; the event is considered to be the founding of the city of Dublin. The Horse King!
1212
The most severe of several early fires of London burns most of the city to the ground.
1460
Richard Neville, 16th Earl of Warwick, defeats the king’s Lancastrian forces and takes King Henry VI prisoner in the Battle of Northampton.
1499
Portuguese explorer Nicolau Coelho returns to Lisbon after discovering the sea route to India as a companion of Vasco da Gama.
1553
Lady Jane Grey takes the throne of England.
1778
American Revolution: Louis XVI of France declares war on the Kingdom of Great Britain.
1882
War of the Pacific: Chile suffers its last military defeat in the Battle of La Concepción when a garrison of 77 men is annihilated by a 1,300-strong Peruvian force, many of them armed with spears.
1925
Scopes Trial: In Dayton, Tennessee, the so-called “Monkey Trial” begins with John T. Scopes, a young high school science teacher accused of teaching evolution in violation of the Butler Act.
1946
Hungarian hyperinflation sets a record with inflation of 348.46 percent per day, or prices doubling every eleven hours.
1962
Telstar, the world’s first communications satellite, is launched into orbit

***

President Donald Trump on Wednesday threatened Brazil with a tariff of 50% if Brazil doesn't stop legal action over charges against its right-wing former president, Jair Bolsonaro.
Earlier this year, he threatened 25% tariffs on Colombian exports that would grow to 50% if the country didn’t accept deportees from the US. (Colombia ultimately accepted the deportees and avoided those tariffs.) Trump also imposed tariffs on goods from Mexico, Canada, and China over the role he alleges they play in facilitating illegal migration to the US and enabling fentanyl to reach the country.
Interference with the internal workings of another country should drive Americans nuts.

***

Mamdani's college application is revealing of him, but the reaction to his scores is revealing of the Left. Arrogance is at the Left's marrow; their critics are, by definition, unimaginative, unread, and just dumb. To have their standard bearer in the lower half of the class is mortifying to them.

***

Brennan, accused by Trump of weaponizing the FBI, accused Trump of weaponizing the FBI to go after him.

***

Have polls become de facto substitute voting?

***

Managing China's Economy

The more economic power the [Chinese] Communist Party takes, the more knowledge and outside initiative is lost. The difference between the popular image of China and what research actually shows about it could hardly be greater. Our politicians and media paint horrifying images of China’s brilliant strategic planning, but in the vast literature on China’s economy, there is hardly a single study that even attempts to argue that a specific industrial policy has created real commercial success.

The Westerners who now assume we need an active industrial policy in order to compete with China thus choose not to imitate the Chinese policy that created the country’s successes, but the post-2010 policy that involves enormous risk-taking. To the extent that the new policy has achieved any results, they are negative. Capital has been transferred to less productive state-owned companies. Despite the fact that they only account for around a quarter of the country’s GDP, they get about 80 per cent of the banks’ lending. Growth per capita, which in the 1990s and 2000s was around an incredible 10 per cent annually, declined to 5 per cent before the pandemic (and some observers believe this was an exaggeration). Under the current economic model, China finds it hard to squeeze any growth out of the economy.--Norberg

While the West has a decided philosophical advantage, it suffers, as it did in its competition with Japan, from organizational jealousy, a fear that its messy, unchecked spontaneity will wilt before the fierce, structured, state-directed economies that oppose it. Some of this is simple restlessness, some the by-product of the very experimenting process that has given it such success. But the real impetus is that foolish selfishness that asks simple-minded politicians to achieve their grasping dreams. No sensible, nonpathological explanation is available to clarify the apparent success of Mamdani in a sophisticated, wealthy city like New York.

Rumors of Solutions

This Day:1527
Spanish and German troops sack Rome; some consider this the end of the Renaissance. 147 Swiss Guards, including their commander, die fighting the forces of Charles V in order to allow Pope Clement VII to escape into Castel Sant'Angelo.
1863
American Civil War: The Battle of Chancellorsville ends with the defeat of the Army of the Potomac by Confederate troops.
1937
Hindenburg disaster: The German zeppelin Hindenburg catches fire and is destroyed within a minute while attempting to dock at Lakehurst, New Jersey. Thirty-six people are killed.
1996
The body of former CIA director William Colby is found washed up on a riverbank in southern Maryland, eight days after he disappeared.

***

A study from the University of Washington found that soldiers became emotionally attached to robots used to disarm bombs. Many named their robots (usually after a celebrity or current wife or girlfriend) and some painted the robot’s name on its side. A few soldiers even held funerals for their robots when they “died.”

***

Some of the things that happened in the Pirate game on Sunday included Ke’Bryan Hayes getting picked off second base, Matt Gorski getting thrown out at home plate while attempting to score on a ground ball to the third baseman, starting pitcher Andrew Heaney not paying attention to the runners as the Padres executed a double steal, catcher Henry Davis letting a pitch right over home plate clank off his mitt for a passed ball and shortstop Jared Triolo misplaying a routine groundball.

Major League Baseball.

***



Rumors of Solutions

Kent Smetters is the Boettner Chair Professor at the Wharton School of the University of Pennsylvania. During the 2024 election, he spoke with Srijana Mitra Das about economic measures offered in the election and the issue no one was addressing. This is culled from an Economic Times article and has the usual undertone of wide-eyed terror, but also a surprising assessment of the potential for solution:


At a broad level, I’d say former President Donald Trump is about cutting taxes, and Vice President Kamala Harris is about increasing spending. However, neither recognises that we are already on an unsustainable path — America’s debt relative to the size of our economy is exploding. As I would put it, our fiscal house is burning down — but both candidates are arguing over the furniture.

Historically, debt crises have never been only about economic pain — they’ve brought very serious social disruptions. Entire forms of government and social cohesion have changed. These impacts must be taken into account, but neither candidate is doing so. In fact, both will increase US debt, shortening the timeline of when the associated problems will materialise.

We have about 20 years left — after that, we will have so much debt, with such large interest payments, that the government won’t be able to cut spending enough to even make those. If they try to increase taxes, the distortions on the economy will be so large that it would be impossible to raise money because the base will contract.

The 20-year window also doesn’t mean we can wait till year 18 or 19 — even today, the cuts or increases in revenue required are substantial.  

Our Penn Wharton Budget Model study has shown three options — one is mostly tax increases. The second is spending cuts.

The third is broad-based new tax revenues, including a carbon tax and a value-added tax (VAT), alongside discretionary spending cuts. We could have sizeable debt reduction while growing the economy. It is a myth that to reduce debt, you need austerity measures that contract the economy. Our study shows a wide range of possibilities that could grow the economy.

***

So, according to him, cutting the debt and growing the economy are not incompatible. What is not compatible is a problem and the lying about the solutions. This debt will be resolved, one way or another, and the resolution spectrum is wide. And a small but intense minority in the culture wants a European solution for its ills: conflict, scapegoating, and revenge.

Clear-headed, flint-eyed honesty created this country and raised its head briefly during the Civil War, but has become less and less an element in public life. Everything from politics to religion is presented on a sales platform, with the assumption of insincerity and manipulation. Democracy, to be successful, must deal with the difficult times as well as the good; success only during good times is not reaffirming.

And most of the time spent falling from a great height is pain-free.

 

Parker

On this day:

In 1913, Gideon Sundback of Hoboken patented the all-purpose zipper.
In 1661, the Chinese Ming dynasty occupied Taiwan.
In 1429, Joan of Arc led French forces to victory over English at Orleans.

.

***

Since 1980, the intra-year market has fallen 14.2% on average but recovered to end positively in 33 out of 44 years.

***

US foreign aid totalled $65 billion in 2023. Humanitarian assistance made up a large slice of the total. But significant funding also went to strengthening militaries in allied nations and helping governments phase out fossil fuels or contain the production of opioids that could end up in the U.S.

***

Parker

(The following should be taken with a grain of salt. This discusses litigation and, as such, involves lawyers. And it is culled from Tobias, who is an investor. Moreover, years ago, I bought a bit of Parker myself. Nonetheless, the story is interesting and provocative with enough innuendo to keep you up at night.) That said...

A jury unanimously awarded ParkerVision $173 million in damages against Qualcomm in 2013.

After all, they were shown internal emails from Qualcomm senior executives that said: “The truth is ParkerVision have(sic) stumbled on something revolutionary.” And this one to Qualcomm’s CEO at the time: “This is critical technology we must land.”

Rather than license PRKR’s technology — that ultimately came to reside in literally billions of cell phones — Qualcomm, in the jury’s unanimous view, stole it.

It took a decade to get the case in front of a jury. Giants like Qualcomm can afford legal talent who is really good at delaying.

So $173 million for past use of the intellectual property went to Parker, plus a royalty to be negotiated on all future use. The judge seemed fine with that.

And then six months later, out of the blue, the judge threw out the verdict.

What happened?

Recently, PRKR released what it says is the first of a four-episode “Against the Giants” video series.

According to “Episode 1” of “Against the Giants," Qualcomm visited ParkerVision’s website often. But a couple of days after Qualcomm’s CEO hosted an Obama fundraiser, there was a visit from a computer in the White House. And a few days later, the Obama-appointed judge threw out the verdict.

The relationship between the decision and the White House may be a coincidence. But the question of suppression and destruction of American quality technology and companies is a problem that threatens the very essence of American culture. Property is basic. Innovation and quality should be rewarded. The legal system should benefit the public, not stymie it. And power should never be allowed to shift the scales of justice.

The larger significance is that Qualcomm is not the only tech giant that squashes small inventors who cannot possibly afford decades of litigation to enforce their patents. Which, apart from being truly un-American and unfair, may affect our global competitiveness.  

Vernon Smith on Tariffs

Lincoln died on this day, and the Titanic sank.

***

The authors of this book also run a trade deficit with supermarkets. In fact, we have been running a trade deficit with Whole Foods for many years. Is our Whole Foods deficit a problem?--Tabarrok

***

"Atmospheric dynamics of first steps toward terraforming Mars"--A Paper!!!

***

This is so funny.

Vernon Smith on Tariffs:  

From Nobel economist Vernon Smith:

I find the public discussion of tariffs very convoluted and complex with the core considerations not understood.

1. All but minimum subsistence levels of wealth are created through individual choice in markets disciplined by opportunity costs.

2. As Adam Smith understood, wealth is created by input specialization (he called it the division of labor).

3. Specialization is limited by the extent of markets. Thus, the important consequence of globalization which has expanded markets and wealth creation.

4. Tariffs reduce market exchange and total wealth creation making people generally worse off.

Musk's Principles

BlackRock analysts found that Americans now estimate they will need over $2 million saved for retirement. However, the average American only has $87,000 saved in their retirement accounts.
69% have less than $150,000 saved and an astonishing 33% have no retirement savings at all.

***

U.S. authorities recovered $31 million in cryptocurrency stolen in 2021 cyberattacks on Uranium Finance, a Binance Smart Chain-based DeFi protocol. The platform launched in April 2021, but hackers quickly exploited vulnerabilities in its smart contracts to drain its assets and push it to premature death, causing millions in investor losses.

***


Musk's Principles

Murray has a column in the WSJ about Musk. Here's a segment.

"What do we know about Musk as a leader? Fortunately, ...Dennis Kneale has provided a guide. His new book is called “The Leadership Genius of Elon Musk” and boils it down to 11 key principles. If “The Art of the Deal” tells us what we need to know about Trump’s leadership style, Kneale’s book does the same for Musk.

Here are Kneale’s 11 principles, ranked by me from the least to the most idiosyncratic: 

-It’s better to launch and burn than never to launch at all.
-Always bet on yourself, and double down.
-Dream huge, and be willing to spend decades in pursuit.
-Reduce, reduce, reduce. The key to business success, and life, is simplification.
-Most people are loafers; work harder than you ever have before.
-On the media: to hell with them, they are shameless shills.
-Free speech is everything; stand up and be heard.
-Tease your critics and torture your enemies.
-The most likely outcome is often the most ironic (and unexpected) one.
-The highest nail gets pounded down first. Strap on a helmet.
-This all may be fake, so just go for it."

That last one is a reference to Musk’s often restated belief that, as Kneale puts it: 'We are living inside a superreal virtual simulation, mere characters in someone else’s videogame.'"

Musk is a lot. This disappointing article is considerably less so because people are hard to summarize. Thankfully. We are subtle and nuanced; distilling us is a task braved only by the arrogant or the foolish...like sociologists, Marxists, and racists. Summarizing us is mental shorthand, binary, not analog. Not accurate but convenient for those with a limited purpose. Think commissars or CRT. We are a race of tendencies, like dog breeds, but unlike dog breeds, those tendencies are only the starting points. it is that promise that makes us so inspiring, and our failures so disheartening, to everyone except the collectivist. The Americans created a political culture where the limits on an individual are individual and innate. There are no breeds here and no laws declaring a courser a pointer. And most importantly, he is of equal value before the law.

Every child is born a Musk, or a DiVinci or a Shakespeare until he proves otherwise. But he will always have the dignity and integrity of a free individual regardless of his accomplishments.

War and Trade

Hims & Hers Health:  the online pharmacy's value has plummeted as the window closed on the legal loophole it used to sell patent-protected weight loss drugs. 

The company had been worth as much as $15 billion a few weeks ago or around 140 times trailing 12-month earnings.

***

White men are, for the first time, no longer a majority of C-suite executives.

***

$358 million was generated by crypto trading for Robinhood Markets during the fourth quarter. Companies such as Robinhood have already benefited from the rally in Bitcoin and other digital assets that followed President Trump’s election

***

Banana Republic will leave Walnut Street on March 31.

***

War and Trade

In The Spirit of the Laws, Montesquieu famously argued that:

"…Peace is the natural effect of trade. Two nations who traffic with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling; and thus their union is founded on their mutual necessities."

Similar arguments were made by Kant, Cobden, Angell, and others. The effect of free trade on war was perhaps most pithily summarized by the aphorism “When goods don’t cross borders, soldiers will.” 

In Territory flows and trade flows between 1870 and 2008 Hu, Li and Zhang offer supporting evidence:

"Countries gain and lose territories over time, generating territory flows that represent the transfer of territorial sovereignty. Countries also export and import goods, creating trade flows that represent the transfer of merchandise ownership. We find a substitution between these two international flows during the years 1870 and 2008; that is, country pairs with greater trade flows have smaller territory flows. This indicates how international trade enhances international security: reciprocal goods transactions discourage irreciprocal territorial exchanges."

Not all territorial exchange involves war but most do.

See also Polachek and Seigle in the Handbook of Defense Economics who find that “A doubling of trade leads to a 20% diminution of belligerence.”--Tabarrok

Oh, Canada

The guy who has vanished from elected public office while other, unknown people--a small, anonymous cabal---stepped in to run this country in his stead and hid their power assumption and his debilities has just given a national farewell address warning of rising, dark, power-hungry oligarchies opposed to democratic principles.

The bad news is that, while mendacity and hypocrisy are disfiguring, they are not fatal.

***

A SpaceX Falcon 9 launched carrying two Japanese moon landers.
Blue Origin's massive New Glenn orbiter launched early today and achieved orbit. Apparently, its boosters were not immediately recovered.
It is designed to conduct regular flights using reusable boosters, lifting commercial and national-security satellites into orbit. The rocket is eventually meant to launch astronaut crews.

***

Oh, Canada

A lot of fuss about Canada.

If Canada were to become a state, it would be the third poorest in the country, right behind Alabama.

Everybody talks about the American debt issue, but Canadian households bear more debt relative to their income than any other G7 country. The average Canadian now spends 15% of their income on debt servicing.

This is a stark shift from 2008 when Canada emerged from the global financial crisis with a healthier balance sheet than any other G7 nation.

Every year, businesses invest in growth – new technology, new projects, new employees or products. If you take the total number that businesses invest during a calendar year, and divide that by the number of active workers in the country, you get the corporate investment per worker.
In the U.S., businesses invest about $28,000 per worker. In Canada, that number is only $15,000—nearly half.
Corporate investment is what drives future productivity, economic growth, and opportunity. The higher the number, the brighter the future.

What is Canada’s comparative advantage?

They have vast natural resources, with easy-to-navigate geography, the world’s longest coastline that spans three oceans – allowing direct access to every global market, and the largest shared international land border, on the other side of which is the worlds wealthiest, hungriest customer.

They have product. And a direct line to the consumer.

Canada is not capitalizing on these advantages because they have been sold a narrative discouraging investment in the industries where they could outperform the world.

The narrative that Canada should abandon its resource sector to pursue conceptual industries like hydrogen power or electric vehicle production is both misguided and damaging. These are fields where Canada has little experience or infrastructure, where they are not competitive, and the evidence is in their economic data.

GP-1 and Economies

Since 1969, major U.S. projects receiving federal funds must submit an Environmental Impact Statement  (ETS) under the National Environmental Policy Act. In 1985, the Chicago Transit Association’s Final EIS for the Orange Line ran 378 pages. The 2022 Final EIS for the Red Line Extension is 50 times longer, at 17,899 pages. That’s for a project that’s half as long.

The planned Red Line Extension is projected to cost seven times more per mile than the Orange Line, which we completed in 1993.

***

In 1900, US income (GDP) was $4,096 per capita in 2023 dollars, while in 2023 it was $81,695. The US poverty rate fell from 56% to 11.1% over the same period. How was such a dramatic increase in our widely shared standard of living possible? The answer (without explaining how it came about) is increased labor productivity. Each worker has been able to produce more and more and hence earned a higher income.

***

GP-1 and Economies

Ozympic and Wegovy, both GLP-1 agonists that contribute to weight loss, are made by Novo Nordisk from Denmark.

The GLP-1 boom has been such good news for Novo Nordisk that rising drug exports are currently driving the majority of Denmark’s GDP growth—since late 2021, Danish GDP has increased by 3.6%, but economic growth would have been 0% without the contribution of rapid increases in pharmaceutical manufacturing output. In fact, the pharmaceutical boom has been so strong that it has almost singlehandedly made Denmark one of the fastest-growing economies in the European Union.

Most of that pharmaceutical production boom has gone towards meeting foreign demand for GLP-1 drugs, especially in the United States. Real Danish goods exports have increased by roughly 37% over the last four years.

Interestingly, despite the country’s increase in economic output over the last two years, Denmark has struggled to fully translate the GLP-1 boom into rising personal spending or domestic investment. Real Danish household consumption and capital formation have both been stagnant for more than three years, mirroring many of the economic struggles seen in Germany and many other parts of the EU.

To some extent, that should not be particularly surprising—pharmaceutical manufacturing is not a labor-intensive industry and the returns to successful drug discovery usually come in the form of increased corporate profits. Yet Denmark is economically synonymous with the Nordic model that has long successfully converted innovative growth into broad-based welfare, and Novo Nordisk itself is unique for being majority-controlled by a charitable fund that is now the world’s largest. 

The task ahead for them is clear—to continue the current GLP-1 boom while more durably translating it into general economic prosperity.--Apricitas

Remittance

Hegseth may be withdrawn, possibly in favor of DeSantis.

***

"He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance."
One of the grievances in the Declaration of Independence, forseeing the modern state.

***

Joseph E Stiglitz is a Nobel laureate in economics, a university professor at Columbia University, and a former chief economist of the World Bank believes the Left must mobilize to deal with unprecedented inequality, stagnation in the middle of the income spectrum (and worse for those below), and declining average life expectancy (highlighted by mounting “deaths of despair”)

Big aims. One wonders how such notions would fit in with the American Constitution. 

They simply don't take constitutional restraints seriously.

***

Remittance

A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries. Workers' remittances are a significant part of international capital flow.(Wiki)

The money that Mexican migrants send home to their relatives grew by 7.6% in 2023, to reach a record $63.3 billion for the year, Mexico’s central bank said.

In 2022, remittances grew by 13.4%, totaling about $58.9 billion for the year as a whole. In 2021, remittances grew by an astounding 27.1%, totaling about $51.6 billion for that year.

Remittances now surpass almost all other sources of the country’s foreign income, including tourism, oil exports, and most manufacturing exports.

Mexico receives more money from remittances than any other country except India. Indian migrants send home about $125 billion each year. China’s share of remittances was affected by the coronavirus pandemic.

Remittances as a percentage of Mexico’s GDP almost doubled over the past decade, growing from 2% of GDP in 2010 to 3.8% in 2020; since then that may have grown to around 4.5%! Between 2010 and 2020, the percentage of households in Mexico receiving remittances rose from 3.6% to 5.1%.

Inequality

For democracy to work as a long-term component of government, its role must strictly be limited, as the Founders intended. There is a tendency to view criticism of democracy as anti-American, but an analysis of American political history shows that its Founders tried to prevent the creation of the type of democracy that characterizes twenty-first-century American government.--Holcombe

***

Advocates of reducing the U.S. trade deficit should realize that doing so would also reduce the inflow of capital from abroad. Do we really want to do that? If so, why? U.S. governors and mayors who now go to Europe and Japan with delegations of boosters to attract investors may not have heard that they might be boosting the trade deficit by encouraging capital inflows.--miegs

***

From obscure academic topic to major campaign issues, ESG (Environmental, Social, and Governance) investing has erupted onto the political scene. Projections indicate ESG fund assets will balloon from around $20 trillion in 2022 to a staggering $40 trillion by 2030.

Our new paper in the Santa Clara Journal of International Law examines whether market forces or government interventions drive ESG’s rise. We conclude that government policies, rather than investor preferences, primarily fuel ESG.--Mendenhall and Sutton

***

Inequality

"Average is Over," written by Tyler Cowen explores a theme quite commonly heard nowadays, income inequality and potential social instability. (The social instability is always hinted at, written in a whisper, as if the tipping point is so close the mere mention of it will precipitate chaos.) Cowen generally agrees that there is a division of income in the U.S. that he believes will continue but he is much more confident in its outcome. His thesis is that the computer, Internet, and increasing freedoms will make education and advancement much more democratic with a rise in quality and production. A “hyper-meritocracy” is developing. With computer advances, chess has become a common analogy now, and he uses it too. Before online chess, an Armenian player would have to move to Moscow to compete at the highest levels. Now, Armenia is a “perennial competitor” for international chess honors. The advance of machine intelligence will cause a surge in income inequality, but will also level the playing field for opportunity. In a recent interview with NPR Cowen predicted that “for a lot of people upward mobility will be a lot easier.” Competence, not social status, will decide.

As to the instability that doomsayers predict will result, Cowen calls these theories of the revolutionary consequences of income inequality “some of the least thought-out and least well-supported arguments with wide currency.” His argument is that there are stronger bonds in society than economic similarities. In a 2011 article for The American Interest, Cowen wrote, “By broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.” (This is reminiscent of de Tocqueville who always thought there was an esprit in the nation based on liberty.)

More, wealth has risen dramatically. The Dallas Federal Reserve Bank published a report showing that the increase in income disparity is overwhelmed by the rise in the standard of living. In 1919 it took the average American eighty minutes of work in order to buy a dozen eggs. Today it takes him five minutes. That diffuse wealth is a very soothing--and perhaps sedating--element in society.

So income inequality might rise but so will opportunity. The real question is this: How does a society like ours judge social equality? Is income equality the best way? Or does the equality of opportunity and the collateral increase in wealth offer so much more?

Another question: If there is a complacency that develops in the "have-nots," what about the risk it will develop in the "haves," in the producers the "have-nots" need?

Wind and Hot Air

Power is the natural monopoly of politics.

***

Sub-Saharan Africa's GDP per capita peaked in 2014, and since has fallen ~10%. On current trends, it would not retain the 2014 level until 2033, implying a second lost decade.--Blas

***

India, the second-largest sender of students to the United States, is fast catching up to China.

***

24% of consumers are still paying off their Christmas debt from 2022

***

Wind and Hot Air

Today’s installment in the endless epic about the exciting surprises involved in industrial policy concerns wind. Not the vagaries of its occurrences, but the predictable problems that are startling governments and their corporate accomplices as they attempt to harness wind to wean humanity away from less pristine means of generating electricity.

Your federal government is using taxpayers’ money to bribe, with various subsidies, automakers to make more electric vehicles than taxpayers want. So, the government is bribing taxpayers with their own money to buy EVs; the bribes are substantial because EVs typically cost more than other vehicles. Simultaneously, the government is using taxpayers’ money to drive a conversion to, among other renewable energy sources, wind-generated electricity, which potentially will increase taxpayers’ electricity bills.

What (else) could go wrong? New Jersey, which is controlled by Democrats and hence is enthusiastic about wind, is disappointed. The Danish company Orsted, the world’s biggest developer of offshore “wind farms,” was planning to build two of them off portions of the state’s 130 miles of Atlantic coastline. Orsted has changed its mind. It prefers a write-off of as much as $5.6 billion rather than proceed with the projects, which have become too expensive.

…..

Russia, Iran and Venezuela — among other unsavory actors — might reap a windfall from green energy policies. Benjamin Zycher of the American Enterprise Institute notes that the Biden administration has proposed for the five years after 2024 just three sales in its offshore oil and gas leasing program, the smallest number in the program’s history. The plan would block additional leasing off Alaska and in the Atlantic and Pacific oceans.--will

Mobility and Success

The average Ukrainian soldier is 43 years old, according to Time Magazine.
When the war began in February 2022, the average Ukrainian soldier was between 30 and 35 years old.

***

This week, the director of the U.S. government’s UFO analysis office stated that there is “evidence” of concerning unidentified flying object activity “in our backyard.” According to physicist Seán Kirkpatrick, who heads the congressionally-mandated All-domain Anomaly Resolution Office, this alarming UFO activity can be attributed to one of two extraordinary sources: either a foreign power or “aliens.”

***

The fearsome Ann Coulter titled her recent think piece 'Pro-life is the 'Defund the Police' of the GOP ' and made the point that refusing to acknowledge election results is 'not a good way to go through life.'

***

The Pirate team is still weighing its options as to how to approach Oviedo's injury. Tommy John surgery is potentially on the table for the 25-year-old right-hander, which would keep him off the mound for a full season.

***

Mobility and Success

To say, as [John] Rawls does, that unjust rewards may be tolerated only to the extent necessary to benefit people in “the poorer sectors of society,” raises both factual and moral issues. As we have seen, the poorer sectors of American society, as defined by income, are a transient group, disproportionately of the younger and less experienced workers, and no one remains younger for life. Among the small proportion – 5 percent – of those in the bottom income quintile who remain there over the years, while the other 95 percent of those initially in that quintile move on up, it cannot arbitrarily be assumed that this unusual fate can have nothing to do with the way they have chosen to live their lives.--Sowell

The notion that the citizen is mobile in a free economic system is upsetting to those with determinist views. It muddles easy generalizations and diminishes their proponents. And, of course, it undermines the very glue the Left relies upon: despair.

When freedom has promise, it is the Left that is hopeless.

The Country Fails the Swimming Test

A sizable portion of BookTok, a book lovers’ community on TikTok, is devoted to romance. Creators share spicy reading recommendations throughout the genre, including hockey romances. When it comes to posts about this particular category of romance novel, quotes from books will appear on top of video edits of real NHL players, sometimes doing suggestive groin exercises on the ice.
Posters gravitate to players who remind them of their favorite book boyfriends, and one popular choice is Seattle Kraken center Alex Wennberg. His team initially courted BookTok with posts and hashtags in the same style, and flew out a popular creator for a playoff game…
Within the subcategory of sports romance, hockey dominates. Right now, all 10 of the top sports romances on Amazon involve hockey.

***

The legacy of the New Deal was, more than anything else, a matter of ideological change. Henceforth, nearly everyone would look to the federal government for solutions to problems great and small, real and imagined, personal as well as social. After the 1930s, the opponents of a proposed federal program might object to its structure, its personnel, or its cost, but hardly anyone objected on the grounds that the program was by its very nature improper to undertake at the federal level of government.--Higgs

***

WOD

heart-whole

MEANING:
adjective:
1. Unattached: not in love.
2. Sincere; wholehearted.

ETYMOLOGY:
From heart, from Old English heorte + whole, from Old English hal (whole). Earliest documented use: 1470.

***

The Country Fails the Swimming Test

Fareed Zakaria had a strange editorial. He started with the 'China Shock,' where the low prices of labor displaced American manufacturing. Then he turned to the Fitch downgrade which he attributed to the second 'shock,' the 'Trump Shock,' the result of an attack on the institutions of the country.

Can this be explained in any terms other than gibberish? There are plenty of problems we face, many self-imposed. We have stopped our energy industry. We have shut the economy off for 18 months. The damage to our institutions has been a function of trust. That was earned. And is anything more certain than the Left's erosion of Western institutions?

Trump is philosophy-free--except for some old-time protectionism (and he has been out of office for almost three years) and, if anything, the government's hostility to him is more damaging than he could be.

As long as there is Trump, there will be witches. And these perceived leaders and thinkers will always see our problems as metaphysical, as they search for witches' marks.

The First and Second Singer

Agenda. Are the democrat economic policies 'agendas as patching a hole in the roof is an 'agenda.?

***

These new indictments are strange, and possibly scary. The charge seems to be that Trump lied in his claims that the 2020 election was tampered with. His opinion is being criminalized and the charges seem to hinge on what he was thinking. 

These politicians have no interest in the integrity of the country.

***

Volunteers and Kiski Township officials are continuing their efforts to safely locate, trap and relocate an alligator spotted multiple times over the weekend along the Kiski River.

***

The First and Second Singer

The SCOTUS ruling against the student loan forgiveness executive act quoted Nancy Pelosi's objection to it as a usurpation of legislative responsibility.

"People think that the President of the United States has the power for debt forgiveness. He does not. He can postpone. He can delay. But he does not have that power. That has to be an act of Congress.”--Pelosi

According to ancient legend, a Roman emperor was asked to judge a singing contest between two participants. After hearing the first contestant, the emperor gave the prize to the second on the assumption that the second could be no worse than the first. Of course, this assumption could have been wrong; the second singer might have been worse. The theory of market failure committed the same mistake as the emperor. Demonstrating that the market economy failed to live up to the ideals of general competitive equilibrium was one thing, but to gleefully assert that public action could costlessly correct the failure was quite another matter. Unfortunately, much analytical work proceeded in such a manner. Many scholars burst the bubble of this romantic vision of the political sector during the 1960s. But it was [James] Buchanan and Gordon Tullock who deserve the credit for shifting scholarly focus.--Peter Boettke

I don't quite get the Buchanan public-choice distinction, but this is a good paragraph.

Tariffs and Trade

The Trump PAC has spent $40 million on legal costs this year.

***

...a President Burgum would not regard fighting it as part of his job description. He would be a presidential rarity, acknowledging the 10th Amendment. (“The powers not delegated to the United States by the Constitution … are reserved to the states respectively, or to the people.”) Cultural issues are, he says, irrelevant to presidential duties.--Will on wokeness

***

WOD

messiah: noun: A savior, liberator, or leader of a group or a cause

ETYMOLOGY: 

From Latin messias, from Greek messias, from Hebrew mashia (anointed), from Aramaic masiah (the anointed one). Ultimately from the Semitic root msh (to anoint), which also gave us massage and masseur. Earliest documented use: 450.

NOTES:
Someone anointed is one on whom a liquid is smeared, literally. The word anoint is from unguere (to smear), which also gave us ointment, unguent, and unctuous. In a religious context, the liquid is typically some plant-based oil applied to a person to consecrate them or make them sacred. In Christianity, the Messiah or the anointed one is Jesus Christ (from Greek christos: anointed).  

***

The death rate from COVID for those aged 0-19 years is 0.0003%.

A 1-in-333,333 chance of dying.

Tariffs and Trade

"There are two ways we can produce automobiles. We can build them in Detroit or we can grow them in Iowa. Everyone knows how we build automobiles. To grow automobiles, we first grow the raw material from which they are made—wheat. We put the wheat on ships and send the ships out into the Pacific. They come back with Hondas on them.

From our standpoint, growing Hondas is just as much a form of production—using American farm workers instead of American auto workers—as building them. What happens on the other side of the Pacific is irrelevant; the effect would be just the same for us if there really were a gigantic machine sitting somewhere between Hawaii and Japan turning wheat into automobiles.
 
Tariffs are indeed a way of protecting American workers—from other American workers."--David Friedman

So, if we make our own Hondas, will our grain exports decline?

American Poverty

American Poverty

Matthew Desmond’s argument, that the last 50 years have seen no progress in America against poverty, is based on the official government measure of poverty. It is true that the official poverty rate has fluctuated between 10 and 15 percent for the past 50 years.

But there’s a problem with that interpretation of the data. “It’s for a very simple reason that serious researchers have known for a very long time: The official poverty measure does not include much of the government assistance,” Corinth said. “If you were to include all the benefits we provide, you get a much different picture of poverty.”

Corinth and other researchers have calculated the “full-income poverty rate,” which includes all the government assistance poor people receive. Where the official poverty rate was 10.5 percent in 2019, the full-income poverty rate was 1.6 percent. The full-income poverty rate was around 19 percent in 1963, around 7 percent 20 years later, and gradually declining to 1.6 percent since then — a long-running decline, contrary to Desmond’s portrayal.

Scott Winship, director of AEI’s Center of Opportunity and Social Mobility, illustrated the absurdity of Desmond’s use of the official poverty number by running it in reverse. He said, “If you use today’s official poverty line, the poverty rate in 1963 would have been 70 percent.”