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    Overdrawn

    Posted by Sgt. Mom on 6th December 2016 (All posts by )

    I was kind of intrigued by last week’s Buzzfeed article, attempting to whip up the internet mob for the purpose of going after Chip and Joanna Gaines, who have a hugely popular home renovation show on the HGTV channel, and cannily have never said a word on the show regarding their more or less mainstream Christian beliefs, or their attendance at a mega-church where the pastor apparently is on the record as having expressed disapproval of the concept of the institution of formal marriage being anything other than that of a man and a woman. (Note: I’ve never watched the show myself, although my daughter has. Blondie avers that Joanna Gaines is a one-note designer; her thing is shabby chic. All to the good, since that is my own preference, well-mixed with Laura Ashley comfortable country antique seasoned with a splash of William Morris/Craftsman. And … well, most people have items of décor and large furniture of which they are fond … who the heck clears the deck and redecorates every year or so, in response to the fashion of the moment? Only the very wealthy and socially insecure, I surmise.)

    More power to them – the Gainses and their redecorating business; not the internet lynch mob, always ready to be whipped up to a fine frothing frenzy. Really, this early 21st century is increasingly resembling the 16th, in the ruthless search for the ritual burning at stake by officials or by the annoyingly self-appointed for individuals who refuse to give lip-service to the prevailing social/political orthodoxies. Read the rest of this entry »

    Posted in Business, Civil Society, Conservatism, Current Events, Diversions, Human Behavior | 6 Comments »

    A Week of Thanksgiving

    Posted by Sgt. Mom on 24th November 2016 (All posts by )

    Today is Thanksgiving Day; my daughter and I will share a feast of delightfully orange-flavored brined turkey breast (a recipe lifted from the current issue of Cuisine at Home) plus some sides; as a small dish of baked stuffing using some heels of pumpernickel bread from the bounteously-stuffed garage deep-freeze, oven-roasted Brussel sprouts, garlic mashed potatoes, all served with a dash of the lingonberry sauce from the jar I purchased last weekend from the Ikea grocery department – it tastes very much like cranberry sauce anyway — and finished off with a slice of pumpkin pie, baked this week. The enduring trouble that I have with Thanksgiving is that I don’t much like most of the traditional dishes. Of those that I do, I don’t want to eat leftovers of them from now until past mid-December. Seriously, in many years, I was so tired of sorting out the remainders of a whole turkey I would choose anything else vaguely birdlike for the main entrée, and for Christmas, practically anything else. On some years when it would be just me, I threw tradition to the winds and did a tiny half-pound frozen poulet from HEB Central Market, or a rock Cornish game hen, accompanied by the traditional autumnal dishes that I did like. (These solitary dinners were a treat for me; single servings of exotic and/or expensive dishes that I would never have sampled otherwise.)

    Yes, I did some Thanksgiving days with just me, myself, and I, contra every existing holiday tradition. I experienced some uncomfortable Thanksgiving Day dinners at the houses of acquaintances, but the worst of them was an excruciating dinner wherein I with preschool daughter in tow had been invited by my military supervisor to share his familial table … except that he had somehow forgotten to tell his spouse until the very last minute that he had invited us. Her resentment was a palpable thing, hovering over the table like a fog and curdling every bite that I took. That was the year that I resolved to break no bread on Thanksgiving with any but blood family; if it meant only the two of us or myself alone, then so be it. I did manage to get home for that traditional dinner with blood relatives now and again – which varied the solitary meal program to some degree.

    Besides, sometimes the Thanksgiving holiday was an opportunity to do serious work – the year that I replaced the back fence myself, and ate my supper mid-project from a tray (the tiny poulet year) sitting in the living room and regarding the fence in mid-project. This year is no different, with substantial projects in mid-accomplishment: we have the three-day market event in Johnson City to prepare for; the full-on display of the pavilion, with Christmas lights, special displays and three days’ worth of stock; my books, her earrings. This is a huge event – justifying some preparations above and beyond the usual. Christmas dinner will mark the real end and celebration for us – another year, well-done.
    Read the rest of this entry »

    Posted in Americas, Arts & Letters, Book Notes, Business, Culture, Current Events, Diversions | 9 Comments »

    Attack of the Job-Killing Robots, Part 2

    Posted by David Foster on 15th November 2016 (All posts by )

    In my previous post of this series, I remarked that most discussion of the employment effects of robotics/artificial intelligence/etc seems to be lacking in historical perspective…quite a few people seem to believe that the replacement of human labor by machinery is a new thing.

    This post will attempt to provide some historical perspective on today’s automation technologies by sketching out some of the past innovations in the mechanization of work,  focusing on “robots,” broadly-defined…ie, on technologies which to some degree involve the replacement or augmentation of human mind/eye/hand, rather than those that are primarily concerned with the replacement of human and animal muscular energy…and will discuss some of the political debate that took place on mechanization & jobs in the 1920s through 1940s.

    Throughout most of history, the production of yarn for cloth was an extremely labor-intensive process, done with a device called a distaff, almost always employed by women, and requiring many hours per day to generate a little bit of product.  (There even exists a medieval miniature of a woman spinning with the distaff while having sex…whether this is a comment on the burdensomeness of the yarn-making process, or a slam at the love-making skills of medieval men, I’m not sure—-probably both.)  Eventually, probably around 1400-1500 in most places in Europe, the spinning wheel came into use, improving the productivity of yarn-making by a factor estimated from 3:1 to as much as ten or more to one.

    Gutenberg’s printing press was invented somewhere around 1440.  I haven’t seen any estimates of its effect on labor productivity, compared with the then-prevailing method of hand copying of manuscripts, but surely it was at least 1000 to 1 or more.

    The era from 1700-1850 was marked by tremendous increases in the productivity of the textile trades.  The flying shuttle and other advances greatly improved the weaving process; this created a bottleneck in the supply of yarn, which was partly addressed by the invention of the Spinning Jenny–a foot-powered device that could improve the yarn production of one person by 5:1 or better. Power spinning and power looms yielded considerable additional productivity improvements.

    An especially interesting device was the Jacquard Loom (1802), which used punched cards to direct the weaving of patterned fabrics.  In its initial incarnation, the Jacquard was a hand loom: its productivity did not come from the application of mechanical power but rather from the automation of the complex thread-selection operations previously carried out by a “Draw Boy.”

    Turning now to woodworking:  in 1818, Blanchard’s Copying Lathe automated the production of complex shape–a prototype was automatically traced and copied. It was originally intended for making gunstocks, but also served in producing lasts for shoemakers, and I believe also chair and table legs.

    Another major advancement in the clothing field was the sewing machine.  French inventory Barthelemy Thimonnier invented a machine in 1830, but was driven out of the country by enraged tailors and political instability.  The first commercially-successful machines were invented/marketed by Americans Walter Hunt, Elias Howe, and Isaac Singer, and were in common use by the 1850s.

    By the late Victorian period the sewing machine had been hailed as the most useful invention of the century releasing women from the drudgery of endless hours of sewing by hand. Factories sprung up in almost every country in the world to feed the insatiable demand for the sewing machine. Germany had over 300 factories some working 24 hours a day producing countless numbers of sewing machines. 

    The beginnings of data communications could be seen in gold ticker and stock ticker systems created by Edison and others (circa 1870) , which relayed prices almost instantaneously and eliminated the jobs of the messenger boys who had previously been the distribution channel for this information.  Practical calculating machines also appeared in the 1870s.  But the big step forward in mechanized calculation was Hollerith’s punched card system (quite likely inspired in part by the Jacquard), introduced in 1890 and used for the tabulation of that year’s census.  These systems were quickly adopted for accounting and record keeping purposes in a whole range of industries and government functions.

    Professor Amy Sue Bix, in her book Inventing Ourselves out of Jobs?, describes the fear of technological unemployment as silent movies were replaced by the ‘talkies’. “Through the early 1920s…local theaters had employed live musicians to provide accompaniment for silent pictures.  Small houses featured only a pianist or violinist, but glamorous ‘movie places’ engaged full orchestras.”  All these jobs were threatened when Warner Brothers introduced its Vitaphone technology, with prerecorded disks synchronized to projectors.  “Unlike other big studios, Warner did not operate its own theater chains and so had to convince local owners to screen their productions. Theater managers would be eager to show sound movies, Harry Warner hoped, since they could save the expense of hiring musicians.”

    The American Federation of Musicians mounted a major PR campaign in an attempt to convince the public that ‘living music’ was better than ‘canned sound.’  A Music Defense League was established, with membership reaching 3 million…but the ‘talkies’ remained popular, and the AFM had to admit defeat.  A lot of musicians did lose their jobs.

    Read the rest of this entry »

    Posted in Book Notes, Business, Capitalism, Deep Thoughts, Economics & Finance, History, Tech, USA | 44 Comments »

    Attack of the Job-Killing Robots

    Posted by David Foster on 12th November 2016 (All posts by )

    Here’s a new factory for making automobile frames, specifically designed to minimize the need for human labor.  The CEO of the company that built it actually said, “We set out to build automobile frames without people.”

    At the start of the process, rough steel plates are inspected by electronic sensors, automatically pushing aside any that deviate from tolerances.  Conveyors take the plates through punching, pressing, assembling, and nailing machines, as well as a machine that can insert 60 rivets simultaneously in each frame.  A set of finishing machines then rinse, dry, spray-paint, and cool the frames.  Aside from a few men moving frames between conveyor belts, the floor routine of the plant requires almost no hand labor.

    And today’s robotics and artificial-intelligence advances go far beyond automating routine manufacturing labor and take over the kind of cognitive functions once thought to be exclusive to human beings. Here, for example, is a new AI-based system that displaces much of the thought-work which has been required of the people operating railway switch and signal installations:

    The NX control machine is in effect the “brain” of the system. It automatically selects the best optional route if the preferred route is occupied.  It will allow no conflicting routes to be set up. It eliminates individual lever control of each switch and signal.

    Pretty scary from the standpoint of maintaining anything like full employment, don’t you think?

    Read the rest of this entry »

    Posted in Business, Economics & Finance, Tech | 12 Comments »

    Quote of the Day

    Posted by Jonathan on 10th November 2016 (All posts by )

    Nigel Farage, commenting on the election of Donald Trump:

    “This is a big opportunity for all British business because once we’ve left that awful EU thing we can do our first trade deal with the United States of America. Isn’t that great?”

    Posted in America 3.0, Anglosphere, Britain, Business, Current Events, Elections, Europe, Politics, Tradeoffs, Trump, USA | 2 Comments »

    Voter Fraud (not what you think)

    Posted by TM Lutas on 8th November 2016 (All posts by )

    Today is election day for the US. Tomorrow is the annual meeting for my homeowners association. I’m looking at a fraudulent proxy statement issued in my name for that HOA annual meeting.

    We’ve gotten out of the habit of treating fraud seriously, depending on the high reputational penalties associated with getting caught doing such things in the first world.

    My HOA’s budget is tiny, about an eighth of a million. The amount of energy being spent on controlling it is beyond foolish.

    Posted in Business, Economics & Finance, Elections, Miscellaneous | 6 Comments »

    Quote of the Day

    Posted by Jonathan on 3rd November 2016 (All posts by )

    Home Builders Say Federal Loan Limits Shut Out Many Buyers (WSJ):

    One of the hallmarks of the housing recovery has been the historically low level of new-home construction, particularly at lower price points attainable for first-time buyers. Although a wide range of factors are at play, from slow wage growth to higher regulatory costs, builders say the FHA limits in many markets are shutting out potential buyers.
     
    The challenge is particularly acute in California, which has the nation’s highest upfront fees for new construction, according to housing-research firm Zelman & Associates. Fees to pay for roads, sewers, schools and other infrastructure in California markets average between $40,000 and $72,000 per home, according to the firm’s research, compared with an average of $2,600 in Houston. [emphasis added]

    Posted in Big Government, Business, Economics & Finance, Political Philosophy, Real Estate, Urban Issues | No Comments »

    Efficiency and Restaurants

    Posted by Carl from Chicago on 30th October 2016 (All posts by )

    Since I eat out a lot and have frequented restaurants of every stripe over the last few decades I am always interested in restaurant efficiency. The restaurant industry is brutally competitive and it always disturbs me when I eat at a restaurant and enjoy it but then fear that the restaurant won’t survive because it lacks a critical mass to make enough money.

    There is an Italian restaurant called “Grassa” in Portland (you can see their logo, below). They are attached to another restaurant called “Lardo”.

    These restaurants serve high-end food (not luxury cuisine, but far from fast-food) and alcohol but have communal tables and always seem to be packed with a line out the door. They are different because their menu is a large signboard (dishes are frequently updated) when you enter the space and you order your food at a central register and they hand you a “flag” to bring with you to your table. Then when your food is ready, they bring it out to you and take away your flag and you eat your meal. Drinks are brought out first (and appetizers) and you can also flag down one of the servers to order more drinks (although most people tend to have one drink with their meal and then leave, based on a few times that I’ve sat at the restaurant). You can also order your food “to go” at Grassa, as well.

    This model drives peak efficiency at the restaurant. There are many fewer tables than you would need at a “standard” restaurant due to the communal standing tables and the food comes out as soon as it is available (the servers don’t have to take orders, they just serve the food as soon as it is up and return back to the kitchen area, unless they are bussing a table that just left). They don’t have to take reservations or mess with any of that complexity, either.

    Read the rest of this entry »

    Posted in Business, Economics & Finance | 11 Comments »

    The Total Bureaucratization of Hiring and Promotion

    Posted by David Foster on 24th October 2016 (All posts by )

    It seems that one of the next campaigns of the ‘Social Justice Warriors’ will be the elimination of management discretion in hiring:

    The next battlefield after high tech is discretion in hiring–which the activists believe must be limited to force employers to hire any candidate “qualified” for a job as soon as they apply. Only a few radicals are proposing this kind of blind hiring now, but continuing successes in getting firms to bow to their diversity demands will result in a list of new demands. We have already seen Seattle pass an ordinance requiring landlords to rent apartments to the first applicant who qualifies. And similar movements in hiring–supposedly to prevent discrimination by eliminating management choice of who to employ–are coming soon.

    The SJWs will certainly get around to insisting that promotions, as well as initial hiring, be handled in the same way.

    You can be certain that a Hillary Clinton presidency would be far more favorable to this sort of thing than would a Donald Trump presidency.

    If your aspiration is to be a robot, with your every action in life controlled by highly-detailed top-down rules, then you should by all means work fervently for a Clinton presidency.

    Posted in Big Government, Business, Civil Society, Leftism, Management, USA | 16 Comments »

    Worthwhile Watching

    Posted by David Foster on 4th September 2016 (All posts by )

    …especially for Labor Day weekend

    There probably aren’t too many TV series centered around a CNC machine shop…but there’s at least one, and it’s called Titans of CNC.  The producer and central figure, Titan Gilroy–yes, that’s his real name–grew up in rough circumstances, spent some time in prison, and eventually learned machine-tool operation and CNC programming. With these skills in hand, he built a pretty substantial business, Titan America, which is focused on precision machining, mainly producing components of products being made by larger companies.

    The program is about the challenges involved in the operation of Titan America and a portrait of some of its employees and customers.  It is also a passionate argument for the importance of manufacturing in America.  Sponsors include Autodesk, IMCO Carbide Tools, Haas Automation and GoEngineer.

    The series was made for a cable channel called MATV, which is owned by Lucas Oil Products and is targeted towards car people.  It’s available on Amazon streaming, which is where I’ve been watching it.

    There’s an interview with Titan in Manufacturing & Technology News.

    Posted in Business, Management, Media, Tech, USA | 11 Comments »

    What Works and What Doesn’t, Again: A Blush-Pink Frock

    Posted by Ginny on 19th August 2016 (All posts by )

    Ivanka Trump, mother of three and stunning in a sheath, introduced her father at the Republican Convention. Many argue his kids seem great – certainly they appear loyal, attractive, alert, and sensible. But be that as it may. Both Adams and Franklin disowned sons. For most of us, raising children will be our most consequential task and Trump seems to be doing reasonably well. But it’s a thin reed.

    Still, that dress! It represents what moved country after country out of poverty. Causes of that respect across class lines and the rise of a large middle class and greater health for all are complicated: some see the Bible in the vernacular, some see the marriage of the Great Awakening with the Enlightenment, Dutch and English traditions, sea routes. Surely living longer and with more health meant more productivity. Others rightly prize a concept motivating these views, that each has within the divine. Such a belief emphasizes human rights – the free market of commerce, of ideas, of innovations, of speech, of religion. Honoring the dignity and virtuous habits of the bourgeoisie led to a respect for everyman and everyman’s talents. It was huge, that change from 1700 to 2100. And a signifier is a presidential hopeful in the most powerful nation introduced by his daughter in that blush pink dress.
    Read the rest of this entry »

    Posted in Business, Capitalism, Elections, Entrepreneurship, Human Behavior, Trump | 9 Comments »

    Supermarket Parable

    Posted by Jonathan on 5th August 2016 (All posts by )

    At the store they offer plain, vanilla and chocolate soy milk. Chocolate is the only flavor that’s any good IMO. Other customers seem to agree as chocolate is always in short supply and sometimes sold out by the time I get to the store. It seems obvious they should stock more chocolate but they never do.

    I complained a couple of times to guys in the dairy department and once to a manager. They didn’t understand what the problem was so I stopped complaining. When they have chocolate on the shelf I load up.

    Today I took two cartons of chocolate and couldn’t reach a third. One of the stock guys climbed up on the shelf and got it for me. He good-naturedly said that it’s great stuff, it flies off the shelves. I thanked him and mildly suggested the store should stock more chocolate because it’s the most popular flavor. He said that, on the contrary, people who like chocolate should be more considerate and leave some for the other customers. He added that there is a God upstairs and He is watching. I believe this man missed his calling. He could have been a successful bioethicist.

    Posted in Bioethics, Business, Customer Service, Deep Thoughts, Economics & Finance, Medicine, Personal Narrative | 31 Comments »

    Who Built That?

    Posted by Michael Hiteshew on 2nd June 2016 (All posts by )

    Who Built That: Awe-Inspiring Stories of American Tinkerpreneurs ~Michelle Malkin

    Note the ad hominem and generally vile nature of the leftists’ comments. It’s a reflection of who they are.

    Posted in Book Notes, Business, Capitalism, Entrepreneurship, Video | 12 Comments »

    When Texas DUCs Go Quack, Quack, Frack

    Posted by Trent Telenko on 26th May 2016 (All posts by )

    The “DUC” in this case being _D_rilled but _U_n_C_ompleted shale oil & gas wells

    I ran into this article by Seeking Alpha energy analyst Gary Bourgeault over on Real Clear Energy which gave a figure for how many drilled but ‘unfracked’ wells are available for the new extended oil flow fracking technique I mentioned in May 15th 2016 post Texas Fracking and the Death of Big Oil.

    The key passage from “U.S. Shale Oil Boom Over Says CSMonitor – Hahahahaha” below —

    DUC wells waiting in the wings
     
    Another major reason the shale boom isn’t over is the large number of drilled but uncompleted wells waiting to be brought into production. There is an estimated 5,000 in the U.S. which can be quickly brought to market when the price of oil is high enough to reward it. Some companies have been completing them for some time, and more are being completed in 2016.

    There are a lot of implications in that number. Starting with the fact that new oil & gas rig counts are going to be minimal for some time. And the hard economic fact that major politically event driven oil price spikes are going to be extremely short and will drop below 50 dollars a barrel within weeks to three months, given how fast these North American “DUC” wells can be fracked to bring product to market.

    This new age of “banked” cheap oil plays, and the resultant oil price stability, will see off both the “Big Oil” economic model and the political/corporate elites that live by it.

    Update May 27 2016:

    It looks like Zerohedge has come to the same set of conclusions about the “Big Oil” economic model with his post “Peak Petro-State – The Oil World In Chaos”

    Posted in America 3.0, Business, Economics & Finance, Energy & Power Generation, USA | 14 Comments »

    TV Series Review: “American Genius”

    Posted by David Foster on 16th May 2016 (All posts by )

    Over at The Lexicans, Bill Brandt posted an item about an 8-part TV series titled ‘American Genius’…it is about a selection of inventors and entrepreneurs who have had a major impact on technology, society, and history.  It sounded worthwhile and I’ve watched about half of the episodes–thanks, Bill!…definitely worth watching, but OTOH I think there are a few things in the series that should have been covered a little differently.

    Edison vs Tesla is about the AC-vs-DC power wars, and correctly reports on the sleazy fearmongering tactics that Edison used in his unavailing attempt to maintain DC’s dominance.  The show referred to George Westinghouse, who was Tesla’s sponsor in this battle, as “sort of a railroad baron,” completely ignoring the fact that Westinghouse was himself a major American inventor.  Most people would think of a ‘railroad baron’ as someone who owns or manages railroads, not someone who invented the air brake.

    Farnsworth vs Sarnoff  is about the battle to dominate the emerging television industry.  It was presented as a David-versus-Goliath story–though Goliath was in this case named David (Sarnoff)–individual inventor versus ruthless tycoon.  Sarnoff was indeed ruthless, indeed could be fairly referred to as a prototypical crony capitalist…but it would have been interesting to point out that he wasn’t always a Goliath, wasn’t born to that position, but had in fact come to this country as an impoverished Russian Jewish immigrant and had encountered severe and career-threatening anti-Semitism on his path to Goliath-dom.

    Space Race is focused on two individuals, the German/American Wernher von Braun and the Soviet rocket designer Sergei Korolev.  Korolev was played by an actor who looked a little too young for the role at the subject time period:  more importantly, it should have been mentioned that Korolev had been arrested and sent to the Gulag, where he lost most of his teeth due to the brutal labor-camp conditions.  There were psychological scars as well–Boris Chertok , who worked closely with Korolev for years, said that there was only one single time that he saw the man really happy.  In a series focused primarily on the leading characters and their conflicts rather than on technical details, these things deserved to be covered.

    The program refers to a successful Soviet test in 1957 of a missile with intercontinental range, shortly before the launch of Sputnik.  Actually, the test was a failure because the warhead disintegrated on reentry…and reentry, while a critical factor for ICBMs, is not important at all for one-way satellite launches.  The American belief that Sputnik meant all of our cities were vulnerable to Soviet missiles was a little premature–not much.

    I thought Wernher von Braun got off too easily in this program.  The show did mention that the V-2 missile was assembled by slave labor in an underground factory adjacent to a concentration camp: the truly horrific nature of V-2 manufacturing (this was possibly the only weapons system ever made that killed more people in its making than in its employment) could have gotten more emphasis, and the evidence is that von Braun was fully aware of what was going on in this place.

    I’m also not convinced that von Braun was as absolutely critical to US missile and space programs as the show implies.  The program to build the Atlas missile, which was developed in roughly the same time period as Korolev’s R-7, was directed by USAF General Bernard Schriever, with technology expertise provided largely by the newly-formed Ramo-Wooldgridge Corporation and by Convair.  I see no reason why this team could not also have conducted a Moon program, had they been so chartered.

    The show does point out that von Braun, in addition to his technical and management contributions, played an important role in popularizing the ideas of rocketry and space travel…I had been unaware of his work with Disney to this end.  So, in addition to being a genuine rocket scientist (and, arguably, a war criminal in at least a moral sense), von Braun was also one of the great PR men of the century.

    Again, with the omissions and missed opportunities, the series is still very much worth watching.

    Posted in Business, History, Media, Space, Tech, Transportation | 13 Comments »

    Texas Fracking and the Death of Big Oil

    Posted by Trent Telenko on 15th May 2016 (All posts by )

    It isn’t often you see the death of a major worldwide industry. Last week I saw the death of the “Big Oil” economic model. It just died at the hands of Texas oil frackers who have developed a new “disruptive technology” that has made obsolete all the pillars of technology underpinning large, vertically integrated oil companies. More importantly, the same is true of all the petro-states that nationalized Big Oil’s assets in the 1960s to make all the state oil companies around the world today.

    I found this out doing my day job last week as a Defense Department quality auditor visiting a mid-sized oil service company diversifying into federal contracts. The meeting was about issues with the contract they won and touched on others they have bid on. As a side bar at lunch the following points about their main business came up:

    1. Oil field spending has died. Rig count in the USA is the lowest it has been since 1940.
     
    2. One oil rig controller company these folks worked with saw a year over year drop of 72% in its business.
     
    3. Another company they supplied had their “Cap-X” budget drop from ~$400 million for 2015-2016 to little over $30 million for 2016-2017.
     
    4. One drilling company they supplied went from 120(+) new wells last year to _12_ this year.
     
    5. This supplier sold a lot of copper tubing for “frack-log” drilling. That is the drilling of holes in good oil-bearing rock without fracking rock for oil immediately — and here is the new part — to take advantage of a new long-flow fracking technique.

    While most of the points above are due to the Saudis’ oil price war on Texas frackers. An ex-Big Oil geologist I know put it this way —

    The entire reason for the price drop was because the Saudis wanted to destroy fracking in the United States in order to keep us dependent upon them in order to keep them getting a free defense. The Saudis will have to diversify and start spending money on defense before the price goes back up, or they will be in serious trouble.

    The technique in Point #5 above marks another “fracking revolution” that is of growing importance to the USA. This new fracking energy revolution will upend the world order as we know it. Political winds willing, America may well be a net hydrocarbon exporter in five to eight years.

    Explaining why that is requires some background in Texas oil fracking.

    Read the rest of this entry »

    Posted in America 3.0, Big Government, Business, Capitalism, Economics & Finance, Energy & Power Generation, Miscellaneous, National Security | 42 Comments »

    Book Review: The Myth of the Robber Barons

    Posted by Michael Hiteshew on 15th May 2016 (All posts by )

    The Myth of the Robber Barons, by Burton Folsom

    —-

    MythOfRobberBaronsCover‘Who controls the past,’ ran the Party slogan, ‘controls the future: who controls the present controls the past.’ ~George Orwell, 1984

    Controlling our view of the past – even our view of the present – is an obsession with the Progressive Left. Our understanding of history deeply influences our thinking and philosophy. Among other things, it shapes our view of both the morality and social-economic effects of free market capitalism versus socialism.

    To that end, a group of enormously successful people from the 19th century were demonized by turn of the century Progressives and have continued to be demonized as The Robber Barons by Leftist historians in primary school and college texts ever since. More subtly, through dark Orwellian references in Leftist entertainment programs and media, they have been thoroughly maligned in the popular imagination as well. Yet few people know who these people actually were and what, for better or worse, they actually did in their lives and how their works affected our lives even today. In his book, Robert Folsom sets out to take fresh look at people we would today call entrepreneurs.

     

    Read the rest of this entry »

    Posted in Academia, Big Government, Book Notes, Business, Capitalism, Education, Entrepreneurship, History, Video | 1 Comment »

    Broken-Windows Software

    Posted by Jonathan on 11th May 2016 (All posts by )

    In broken-windows policing the cops go after guys who jump subway turnstiles and commit other minor crimes. This is because the policing of low-level crimes tends to lead to reductions in serious crimes. Not only are minor criminals disproportionately responsible for felonies as compared to the general population, the fact that the police are seen not to ignore the small stuff creates a virtuous cycle by deterring other crimes and increasing the public’s confidence in civic authority.

    I thought of this issue when I noticed that a sophisticated Java program that I use on my PC has serious bugs that are never corrected. For example, opening an Excel tie-in in the Java program kills all of the open Excel processes on my PC. I’ve complained several times but nothing gets fixed. Meanwhile there are simple apps on my phone that get updated frequently so that annoying little problems disappear over time. The fancy Java software has many more features but which software would I rather use?

    Another Chicagoboy adds: The problem is that many companies view software updates as a cost rather than a feature. Software upgrades in response to customer complaints should be a trumpeted feature, because they are a way of convincingly communicating that the company shares its customers’ values about what matters, and therefore that it’s safe for the customers to invest their time in the company’s products as opposed to competing products.

    Posted in Business, Customer Service, Deep Thoughts, Tech | 6 Comments »

    April Showers

    Posted by Grurray on 29th April 2016 (All posts by )

    Yesterday, the GDP figures were released for the first quarter of the year, and they showed that the economy is flatlining. We grew at only a pitiful 0.5%. Much of it was caused by a huge decline in business investment, which saw the biggest monthly drop since the recession.

    This is mostly blamed on the troubles in the oil and gas industry, but output in other areas of the economy also showed weakness. Factory orders dropped and have remained flat the past several months. Car sales plummeted 2.1% last month, their biggest drop in a year. With gas prices low this is the one thing we should see rising. The car industry stumbling means there may be some other underlying problems.

    The conventional wisdom, on the other hand, views this as just a blip. The winter season in the post-recession era has usually been the weakest time of year only to be followed by a rebound into the rest of the year. The exception was 2012 where the high hopes at the start gave way to the rising probability of an Obama reelection. The economic shock spread during the year, and the traditional holiday hangover came a little early in the wake of the electoral wreckage. This year, with the jobs market expected to stay strong and the Fed signaling it will put the brakes on further interest rate increases, the economy is seen bouncing back as the rough waters give way to the calm port.

    It may very well turn out that way for all I know. My crystal ball has been a little foggy lately, so I wouldn’t venture a guess either way. However, there may be some other causes for concern further down the road. This week the McKinsey Institute just issued a research report on the stock market, ominously titled, Diminishing returns: Why investors may need to lower their expectations. In it they provide a detailed analysis of why the next 30 years will see lower stock market returns than the previous few decades.

    Now admittedly, most analysts’ forecast for the next 30 days can usually be attributed to luck. A forecast for the next 30 years probably isn’t something you want to bet the whole farm on. A small corner of the barn maybe, but I would save the rest of the homestead to see how things actually unfold.

    The report lays out in detail why the oversized returns between 1985 and 2015 were possible, and the reasons they say are because of four factors: low interest rates, low inflation, high productivity from technological advances, and favorable demographics from emerging markets entering the global economy. Nothing controversial there. The first three elements increased profit margins, and the last one provided cash influxes, which kept interest rates low, which in turn increased the others. Virtuous cycle – wash, rinse, repeat. They also include some calculations, but the self-evidence is apparent enough.

    The wrench in the works is going to be the fact that those elements won’t have the effect that they once had. Interest rates are already rock bottom, and in some cases even below that. Squeezing more out of low yields is going to be tougher and tougher. In 1980 inflation was 13% and interest rates were 20%. Now they’re currently at 1.6% and 0.5% respectively. There’s nowhere to go but up. Sideways is always a possibility, but we’re still in the same boat. That won’t drive future growth either like it once did.

    Demographic growth may still hold up. There’s still a whole lot of world out there with the potential to drive a modern global economy. The question is will they be capable of replicating what we saw in the recent past with hundreds of millions of Chinese rising out of the Maoist ashes and into the middle class? Any new emerging markets will have a lot more work to do. The report points out that the countries with the largest economies have seen slowing population growth, and that will continue to decelerate

    In Western Europe, aging is more striking than in the United States. In France, for example, the share of the working-age population is expected to decline from 63 percent to 58 percent over the next 20 years. In Germany, the fertility rate has exceeded replacement rate in only seven of the past 50 years. Employment has already peaked in Germany, and its labor pool could shrink by up to one-third by 2064. Until the 2015 influx of refugees from Syria, Iraq, and elsewhere, the German population was expected to shrink by as much as 0.3 percent per year over the next 20 years.

    Germany has decided to address their demographic collapse by welcoming in an unproductive culture. Either way they haven’t much left to contribute in preventing the forecasted shortfall.

    McKinsey does hold out hope for some technological breakthroughs which could pick up the slack in productivity. Whatever it may be, they say it will need to have a bigger impact than the previous computer and internet revolutions because of the other headwinds. The best scenario would be in some combination with fast growing emerging market or industry. The problem with that happening is now that taxes and regulation are increasing, companies involved in fast growing sectors will tend to want to stay private, so equity returns will be elusive for only a select few.

    Interestingly, one sector highlighted that will benefit from higher interest rates is insurance companies. The era of low to zero interest rates has made it difficult for them to make any money on annuities. Their annuities pay out guaranteed yields to customers, but ZIRP and NIRP keep profits low. Fixed income annuities in which insurers bear most of the risk will benefit from higher yields.

    However, variable annuities where the customers share the risk have more exposure to equities, so they would be vulnerable to the lower growth/lower returns environment. Providers of variable annuities along with other asset managers will need to adjust their investment strategies:

    To confront this, asset managers may have to rethink their investment offerings. One option would be for them to include more alternative assets such as infrastructure and hedge funds in the portfolios they manage. Such alternative assets already account for about 15 percent of assets under management globally today.

    To chase returns, investors will be forced into riskier assets, possibly with dubious intentions, i.e. government boondoggles otherwise known as shovel ready infrastructure projects. We may already be seeing something like this with the imminent government takeover of financial advisors

    The Department of Labor dealt a bit of a surprise blow to fixed indexed annuities in the final iteration of its rule, issued Wednesday, by lumping the annuities into a more complex and costly regulatory regime than they have presently, representing an about-face from the department’s original proposal.

    Just like Obamacare pushes out the small to medium firms that can provide much needed innovation in order to capture the market, the new DOL fiduciary rules will push out small to medium sized advisors to replace them with automated puppets that will be programed to herd investors into investing in government programs.

    There’s a good reason the Obama Administration is currently fighting so hard to keep these rules. It’s a template for taking over other industries. And with that it’s another impediment to productivity growth and innovation which reinforces the grim forecast of diminishing returns by McKinsey.

    Posted in Business, Economics & Finance, Miscellaneous, Politics | 7 Comments »

    The Stupidest Man on the Face of the Earth…

    Posted by Sgt. Mom on 20th April 2016 (All posts by )

    … Must be the LGTBYTUVXYZ activist and alleged Christian minister who bought a specially-decorated cake from the Whole Foods store in Austin, and tried to claim that a disparaging message had been iced upon it. The shock, the horror and all of this devastating experience (Devastating, I tell you!) led him to post at length on YouTube, hire a mouthpiece and alert The Media! Very shortly afterwards. So shortly, I reckon it was done at something close to light-speed as the social media cycle goes these days.

    Sigh. This in Austin, and at Whole Foods. I can only guess that an HEB bakery counter was just too infra dig, and any Christian-owned bakeries were just too damn far out in the suburbs, and like ick! Straight and white people cooties! Like – he would have to have driven simply miles to have found a commercial bakery outlet which would have delivered a product absolutely guaranteed to live up to all those sweaty social justice warrior fantasies. So pick on Whole Foods … where a video rundown of the staff likely would have looked like the sequence of Roger de Bris’ stage crew in the remake of The Producers.

    Brilliant, guy – simply brilliant. And Whole Foods is going to sue; all props to them for not caving.

    There may be real hate crimes being perpetuated in these somewhat United States, but anyone paying attention to news reports of them usually must conclude that if they have not been faked outright by the so-called victim, it’s some curious circumstance that has been wildly misinterpreted by hysterics. Discuss.

    Posted in Business, Culture, Current Events | 24 Comments »

    TechnoProletarians?

    Posted by David Foster on 18th April 2016 (All posts by )

    Here’s a story about some Silicon Valley tech workers protesting outside a Hillary Clinton event co-hosted by a venture capitalist and George Clooney.  One might expect that these people are protesting Clinton because their political preferences lean toward the Libertarian or Conservative side.  But then, one would be wrong.

    They are mostly Sanders supporters.  And they feel oppressed by the industry that they are in, and especially by the VCs who fund the companies where they work. Here’s the complaint of a 26-year-old software engineer:

    “They sell you a dream at startups – the ping-pong, the perks – so they can pull 80 hours out of you. But in reality the venture capitalists control all the capital, all the labor, and all the decisions, so yeah, it feels great protesting one.”

    “Tech workers are workers, no matter how much money they make,” said another guy, this one a PhD student at Berkeley.

    Now, one’s first instinct when reading this story–at least my first instinct–is to feel contempt for these whiners.  Most of them are far better off financially than the average American, even after adjusting for the extremely high costs of living in the Bay area.  And no one forced any of them to work at startups, where the pressures are well-known to be extreme.  They could have chosen IT jobs at banks or retailers or manufacturing companies or government agencies in any of a considerable number of cities.

    Looked at from a broader perspective, though, the story reminded me of something Peter Drucker wrote almost 50 years ago:

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    Posted in Business, Current Events, Deep Thoughts, Elections, Entrepreneurship, Management, Society, Tech, USA | 48 Comments »

    Culture, Cooperation, and Entrepreneurship

    Posted by David Foster on 6th April 2016 (All posts by )

    Claire Berlinski is very pleased with the response to the GoFundMe page in support of her new book ($9700 as of this writing) as well as the strong interest in the crowdfunding investment possibility.

    A conversation between Claire and her brother Mischa suggests some grounds for cautious optimism about the future of this country:

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    Posted in Business, Capitalism, Civil Society, Tech, USA | 25 Comments »

    Europe, Crowdfunding, and a New Publishing Model

    Posted by David Foster on 3rd April 2016 (All posts by )

    Claire Berlinski wants to write a sequel to her important book Menace in Europe, which I reviewed here.  She hopes to do this via a  self-publishing and investment model, under which people will make contributions toward the estimated $60,000 cost of the project and receive in return a percentage of the profits.

    Obviously, it will take some work to structure a deal like this properly and in compliance with all relevant regulations.  In the meantime, Claire is doing some initial fundraising via GoFundMe–see the link at Brave Old World.  Contributions here, which will go especially toward development of the project website, are straight donations without expectation of any financial return.  However, you do get the benefit, as Claire notes, of helping to replace the New York Times and similar publications as gatekeepers of the news.

    Posted in Business, Europe, Media | 6 Comments »

    Unions and Robots.

    Posted by Michael Kennedy on 30th March 2016 (All posts by )

    port

    California has now decided to impose a a $15 per hour minimum wage on its remaining business economy.

    Denial of consequences is an important part of left wing philosophy.

    “California’s proposal would be the highest minimum wage we have seen in the United States, and because of California’s sheer size, it would cover the largest number of workers,” said Ken Jacobs, chairman of the UC Berkeley center. “This is a very big deal for low-wage workers in California, for their families and for their children.”

    Implicit in all the assumptions is the belief that employers will not adjust by reducing the number of minimum wage employees they have.

    The UC Berkeley estimate also includes some who earn slightly more than the lowest wage and stand to benefit from a ripple effect as businesses dole out raises to try to maintain a pay scale based on experience, Jacobs said.

    If Brown’s plan passes, 5.6 million low-wage workers would earn $20 billion more in wages by 2023, according to the UC Berkeley analysis. It assumed no net jobs would be lost as businesses look to trim costs.

    The experience in other places has not been positive.

    Even a former chairman of President Obama’s Council of Economic Advisers, Alan Krueger, has cautioned recently that “a $15-an-hour national minimum wage would put us in uncharted waters, and risk undesirable and unintended consequences.”

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    Posted in Big Government, Business, Economics & Finance, Politics | 27 Comments »

    Another Software & Systems Debacle

    Posted by David Foster on 10th March 2016 (All posts by )

    I’ve previously written about the failure of the “Advanced Automation System,” an FAA/IBM effort to create a new-generation system for air traffic control: the story of a software failure.  (The post excerpts the thoughts of Robert Britcher, who was deeply involved in the effort and is an excellent writer–very much worth reading.) The AAS project has been called “the greatest debacle in the history of organized work”–there are a lot of contenders for that honor, though, and here’s another one…

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    Posted in Business, Management, Tech | 25 Comments »