David Foster

Tariffs

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…a few quick notes.

The US reciprocal tariffs announced by Trump yesterday are not based simply on the other’s countries’ tariffs for imports of US goods; rather, they attempt to also factor in the effect of currency and of non-tariff barriers. The way the numbers were actually determined is based on a simple algorithm driven by relative trade flows.  Flexport CEO Ryan Petersen explains how it works.  Here’s some detail from the US Trade Representative.

Also from the USTR, a very long document containing a country-by-country analysis of non-barriers faced by US imports.

Interesting post from a guy whose company builds machine tools in Japan:

I’m on the machine builder side of the equation, out of Japan. Looks like our product is going up 24% in price (we’ll probably absorb some, but machine tool margins are not astronomical).

We do production machines. Our biggest single customer is Apple, so when you need 100,000+ of something, you call us. If this was just a Japan trade war, we would be boned…

But it isn’t. My books were already full of projects coming back from China. Small companies with big, commodity (500k+ unit) volumes, and we were already showing that you *can* do stuff in the US at a competitive cost with good process design, smart machine selection, and existing automation. This market will be able to absorb a 20% equipment price increase, and still come out way ahed compared to building their product oversees (not just China, but bejesus… overseas *anywhere*).

So short term, this is gonna suck… but the future was going in a direction of unlimited downside, and if this is what it takes to swing that into long-term health? So be it – all of the people saying this is insanity seem to be clinging to a status quo that everyone with eyes could see is headed towards disaster – they have no better answers.

 

 

 

Retrotech: Sending Photographs Under the Ocean, in 1925

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In my post Technology in 1925, I mentioned the Bartlane process for transmitting news photographs via undersea cable. The way that this process works is so..so…the words ‘elegant’ and ‘baroque’ both come to mind..that I thought it deserved its own post.

Transatlantic cables had been around since the 1860s, originally handling transmissions in Morse Code or its cable variant. By 1925, teleprinter transmission thru the cables was increasingly common.  Bandwidths had increased but were still quite limited–a maximum of 25 to 40 characters per second, usually multiplexed into multiple slower subchannels. These cables were strictly for telegraphy: voice telephony under the Atlantic was still many years away.  News stories could be transmitted under the ocean almost instantaneously, but the accompanying photos would take a week or more: obviously there would be commercial value if the photos could be transmitted by cable as well.

So how was telegraphy married with photography?

The Bartlane process (Bartlane comes from the names of co-inventors Maynard McFarlane and Harry Bartholomew) starts with analog-to-digital conversion of the filmed image (although neither ‘analog’ nor ‘digital’ were terms in common use at the time)..varying shades of gray at particular points in the negative (‘pixels’, in our terminology) are captured as combinations of holes punched into a paper tape. The completed tape is sent to the cable office where it is transmitted using standard cable transmission equipment..simultaneously punching a duplicate tape at the other end of the cable. The received tape is then run through a device which recreates the original picture…with quality limited by the density of pixels and the number of shades of gray that the equipment can handle.

In its original 1924 released form, the Bartlane system contained no electronic components at all–it was strictly mechanical, electrical, and optical.  How did that work?

Like this…

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Cherry Blossoms

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These are in Maryland, a few miles outside of DC…they generally bloom a few days later than the ones at the Tidal Basin. I’m guessing peak bloom by this weekend.

This is Bad

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As almost everyone knows, the Navajo Code Talkers were a group of WWII Marines who provided secure communications by the simple expedient of transmitting and receiving orders in their own language. This procedure was much faster than conventional encryption / decryption methods, and the Navajo language was apparently so little-known and so complex that the Japanese were never able to read such messages.

Someone at the Department of Defense (or more likely some set of someones) apparently interpreted President Trump’s executive order on DEI as meaning that it would be improper to refer to the Navajo Code Talkers as…Navajos, and at least 10 articles mentioning the Code Talkers have been removed from DoD websites.

There have been many other questionable deletions made on counter-DEI grounds, such as the deletion of items about Ira Hayes of Iwo Jima fame.  The Navajo Code Talkers deletions I find particularly bad because their being Navajo–specifically, being speakers of the Navajo language–was an inherent enabler of the work that they did.  To refer to their accomplishments without reference to their language (and hence, their tribal background) would be as silly as banning a post on codemakers and codebreakers of the more conventional sort from disclosing that many of them had mathematical or linguistic backgrounds.

I don’t know if this is malicious compliance, or arrant stupidity, or just robotic bureaucratic behavior, but I think it is really, really bad.  It reminds me of the Left’s destruction of statues.  It’s harmful to the country and also harmful to the political future of Republicans/MAGA. It’s not at all consistent with an intelligent narrative of American patriotism and identity.

Manufacturing versus ‘High-Tech’….Really?

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In yesterday’s WSJ, Phil Gramm and Don Boudreaux predictably argue for free trade and against tariffs and say:

We are today taking actions to protect manufacturing jobs the same way we did with agriculture a century ago. In the process, we are imperiling our access to the world market in high-tech and AI, which are the economic future.

I have often seen this assertion of a polarity between manufacturing (old, boring, low growth and low margin) and ‘high tech’ (new, cool, high growth and super-profitable) and wonder what the writers think ‘high-tech’ exactly IS.

Would they consider Taiwan Semiconductor Manufacturing (market capitalization $758B) as high-tech? It is certainly a manufacturing company!

How about ASML Holding NV (market cap $274B)?…this is the only company in the world that manufactures the Extreme Ultra Violet machines which are essential for making the highest-performance semiconductors.

Consider GE Aerospace, now trading as a separate company with a market cap of $206B. It may lack the Cool factor of the above two companies, but anyone who thinks that making jet engines doesn’t count as ‘high-tech’ should read this article: Why it’s so hard to build a jet engine at the Construction Physics substack.

The above examples are companies that sell business-to-business rather than to consumers.  For a business that sells to consumers, look at Tesla–there are many articles and videos available about this company’s innovations in manufacturing. (Here, for instance)

What, exactly, do Gramm and Boudreaux, and similar writers,  think ‘high-tech’ actually means?

Personally, I’m not particularly fond of the term, nor even of just ‘technology’ when used in a narrow and restrictive sense–I think it’s pretty odd to consider a company that sells some garden variety consumer product online (with sparkly AI algorithms!) as being ‘technology’ while excluding the making of jet engines (or power turbines) from that category.

One point that is not well enough understood: process innovation is as important as product innovation.  The manufacturing innovations of Matthew Boulton and John Wilkinson were as important for the success of the steam engine as were James Watt’s design innovations. In the case of the Model T Ford, the process innovations which allowed production at low and continuously-declining cost were perhaps even more important than the design of the car itself.

The idea of a polarity between ‘High-Tech’ and Manufacturing is unhelpful to clear thinking about policy.