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  • Archive for the 'Capitalism' Category

    The Rolling Kristallnacht

    Posted by Sgt. Mom on 19th August 2020 (All posts by )

    The rolling Kristallnacht of “mostly peaceful” protests organized and sponsored by the unholy union of Antifa and BLM continues unabated in those mostly progressive Democrat party municipalities such as Chicago, Minneapolis, Portland, and New York. Give the protesters, rioters and looters credit for stamina; they’ve kept it up for nearly two months now, and look to be going strong, still. They haven’t much dared venture out and away from those progressive sanctuaries, although half a dozen did make a trip to Sturgis to provoke the bikers rallying there, which futile bit of resistance theater they did from behind a screen of local police. Which brings to mind Insty the Blogfaddah’s oft-repeated observation that the police – which the Antifaites and BLM protesters wish to abolish – are there to protect accused criminals from the rest of us. Frankly, it would have been laugh-out-loud comic if the bikers in Sturgis had been allowed to pants the Antifaites and run them out of town naked, but there you are. Obviously the Antifaites and BLMmers are hoping to provoke an over-the-top violent reaction and a blooming new crop of martyr Horst Wessels; they must be quite annoyed that so far, the rest of us have kept our temper. Read the rest of this entry »

    Posted in Capitalism, Civil Society, Conservatism, Current Events, Deep Thoughts, Urban Issues | 58 Comments »

    Oh, FFS!

    Posted by Sgt. Mom on 22nd July 2020 (All posts by )

    As if it wasn’t enough for the joyless, bitter scolds among the wokerati to have an absolute tizzy over the head of Goya Foods being civil and respectful of the office of the President of the US, another provider of excellent and relatively inexpensive foodstuffs is in their cross-hairs. Unlike the president of Goya Foods who basically told them to pound sand – and is now enjoying the economic benefits of having defied the wokerati – the management of Trader Joe’s is beating a sniveling and apologetic retreat, and promising to redo their policy of labeling their various ethnic food items with a suitably ethnic variation on ‘Trader Something-or-Other’. This was a bit of light-hearted bit of humor on their part, playing with naming stereotypes, but good lord, the grim and determined wokerati cannot abide any humor at all and so the whole concept must go. The Daughter Unit tells me, and the above link conforms, that the whole thing started as a petition by high school students, which doesn’t surprise me in the least. I suspect the responsible students are the earnest and censorious sorts, desperately trying to out-woke each other.

    Frankly, the whole ‘Trader Joe’s’ South Sea Island – Tropical Paradise motif always struck me as a last gasp of the 1950s ‘Tiki Culture’ and about the only one which didn’t involve a bar decorated with fishing nets and dried starfish, and fru-fru drinks with little umbrellas in them. Trader Joe’s various products are high quality, reasonably priced, and the social-consciousness is laid on with a light hand, in pleasant contrast with the mountain of ostentatious correctitude and high prices offered at Whole Foods. There is a reason the latter is derisively known as “Whole Paycheck.” I can only think it’s only a matter of time before the social justice warriors go after Trader Joe’s for that bit of cultural appropriation as well.

    At least the providers of groceries are not having as rotten a year due to the Chinese Commie Crud as Hollywood is. Theaters shut down, premieres cancelled, top-flight releases like Greyhound, with Tom Hanks and based on C.S. Foresters’ war novel The Good Shepherd diverted to release on streaming video, the fall-out from “Me Too” and Harvey Weinstein’s wholesale-level practice of the casting couch, the apparent urge among our producers of entertainment to whore after foreign audiences, and now looking to curry favor with the hot new trend of ‘anyone but white heterosexuals in front of the camera and behind it as well as behind it in any capacity’ … well, Establishment Hollywood has earned the foul reputation they richly deserve. Those of us in flyover country are watching old movies on DVD (from our own libraries, let it be known) or on streaming video, watching foreign films or series – practically anything other than grim parables and lectures by the wokerati.

    Comment as you wish: what are you going to watch, now? The Daughter Unit and I are watching episodes of Are You Being Served? Which has the side benefit of being gloriously politically incorrect, and not featuring any masks or six-foot apart social distancing. (The Daughter Unit and I temped for a few months at an upscale department store over the holiday season some years ago. We consider ‘Served’ as nearly a documentary on retail sales at a certain level.)

    Posted in Advertising, Capitalism, Civil Society, COVID-19, Current Events, Customer Service, History, Media, Military Affairs | 37 Comments »

    Saying “No”

    Posted by Sgt. Mom on 11th June 2020 (All posts by )

    I lifted a graphic from last weekend’s Powerline Week in Pictures, and posted it on my Facebook feed (where I post only anodyne stuff and things to do with my books, home improvements, and social schedule) which pretty much sums up how I’m feeling this week. Kermit the Frog stares out a rain-drop-misted window, and says, “Sounds Like Thunder Outside – But With the Way 2020 is Going, It Could Be Godzilla.”

    Even before one could draw a breath of relief that the Chinese Commie Crud had not ravaged the US population anything like the 1918 Spanish Flu did, and that life was returning to something like normal, what with businesses slowly reopening – here came the stomping behemoth of violent protests and race-riots, in the wake of the death (possibly caused by drugs rather than the apparent mistreatment) of a long-time violent criminal of color at the hands of a white police officer.

    This entire brutal and grotesque encounter was on video and understandably condemned as unacceptable overreaction on the part of the officer by just about every reasonable person of any color who watched it. Serious concerns regarding the militarization of police have been raised for at least a decade among thoughtful citizens, what with so many instances of police barging into houses in no-knock and full SWAT mode (often the wrong house, and opening fire indiscriminately), of abusing civil forfeiture statutes and traffic fines as a means of making budget. This concern was exacerbated by resentment during the Chinese Commie Crud lockdown enforcing social distancing – like pursuing a solitary paddle-boarder, all alone on the ocean, and going all-out on parents tossing a softball in a park with their kid. Read the rest of this entry »

    Posted in Americas, Capitalism, Civil Society, Conservatism, COVID-19, Crime and Punishment, Current Events, Just Unbelievable, Law Enforcement, Leftism, Media, Personal Narrative, Society, Urban Issues | 63 Comments »

    Deja- Poo

    Posted by Sgt. Mom on 1st June 2020 (All posts by )

    Why, yes, as a matter of fact – I have seen this sh*t before; several times, as a matter of fact. The first go round of racial/political rioting, looting, arson and general mayhem that I took notice of was that long hot summer of ’68, interspersed with political assassinations and anti-Vietnam War protests, although the Watts riot had taken place three years before. I was fourteen in the year of ’68 mayhem, and already well-aware of current events, through reading the Los Angeles Times when it was still a great and meaningful newspaper. Mom also had subscriptions to Harpers’ and Atlantic Monthly, when they also were still solid and more or less centrist publications, and although Mom and Dad didn’t watch TV news regularly, Granny Jessie did. I believe that it was sometime during that late summer, watching coverage of the riot attendant on the Democrat Party national convention, that I remarked to Granny Jessie that it seemed as if the world were all seriously going to Hell. Recall that I was only fourteen, and had led a comfortable, fairly sheltered middle-class life. Violence was something only seen t a distant remove as part of the plot in movies and TV adventure shows (and pretty anodyne, considering what I would have seen in them back then) and the real-life violence played out on the TV news was shocking. Granny Jessie replied, “It always seems that way, I guess.” Her tone was so jaded, and world-weary, I found it actually rather comforting.

    Read the rest of this entry »

    Posted in Americas, Capitalism, Civil Society, Conservatism, Current Events, Society, The Press, USA | 22 Comments »

    Risk Register

    Posted by Jay Manifold on 18th April 2020 (All posts by )

    There are, of course, many items that could be placed in a risk register for our ongoing management of COVID-19. I find myself drawn to those categorizable as, or perhaps triggered by, human perception and behavior. By way of limiting the scope of this post to reasonable attention spans, here are my current top 3: Read the rest of this entry »

    Posted in Big Government, Business, Capitalism, China, Civil Society, COVID-19, Current Events, Health Care, Human Behavior, International Affairs, Law Enforcement, Markets and Trading, Predictions, Religion, Society, Statistics, USA | 21 Comments »

    SARS-CoV2/COVID-19 Update, Easter 2020 edition

    Posted by Trent Telenko on 12th April 2020 (All posts by )

    There are lots of hopeful reports — despite the USA COVID-19 infections being over 1/2 million and the total deaths of over 20,000 people — that the pandemic will soon be “Over.”

    This is fantasy thinking at best.  SARS-CoV2/COVID-19 won’t be over, until it is over, for YEARS.

    “Over” being defined as world wide mass vaccinations to the tune of 70% of humanity or human herd immunity.  Assuming such a thing is possible, which it may not be, given this recent report from the UK Daily Mail on post SARS-CoV2/COVID-19 infection immunity —

    Blow to Britain’s hopes for coronavirus antibody testing as study finds a THIRD of recovered patients have barely-detectable evidence they have had the virus already

    .

    – Nearly third of patients have very low levels of antibodies, Chinese study found
    – Antibodies not detected at all in 10 people, raising fears they could be reinfected
    – Explains why UK Government repeatedly delayed rolling them out to the public

    .

    https://www.dailymail.co.uk/news/article-8203725/Antibodies-prove-difficult-detect-Chinese-coronavirus-survivors.html

    .

    Related studies:
    Wu F et al. Neutralizing antibody responses to SARS-CoV-2 in a COVID-19 recovered patient cohort and their implications. medRxiv 2020.03.30.20047365; doi: https://doi.org/10.1101/2020.03.30.20047365

    .

    and

    .

    Zhao J et al. Antibody responses to SARS-CoV-2 in patients of novel coronavirus disease 2019, Clinical Infectious Diseases, , ciaa344, https://doi.org/10.1093/cid/ciaa344
    total by July 1st 51,197

    Or this South Korean story on coronavirus “reactivation” —

    South Korea reports recovered coronavirus patients testing positive again
    APRIL 10, 2020
    Josh Smith, Sangmi Cha

    .

    https://www.reuters.com/article/us-health-coronavirus-southkorea-idUSKCN21S15X?utm_campaign=trueAnthem%3A+Trending+Content&utm_medium=trueAnthem&utm_source=facebook

    The issue with most COVID-19 tests, like the ones mentioned in South Korea, is they detect SARS-CoV2 RNA. They do not detect whether the viral particles are active or not. The issue here is whether these people are shedding active viral particles that can re-infect people.  We don’t know if that is the case here from the story text.  Given how infectious it is.  This coronavirus will tell us in due course.

    There are some viral diseases like Herpes that hide inside your body and reactivate to make you infectious. We do not know enough about the SARs-CoV2 virus to say whether that is the case here.

    If the SARS-CoV2 virus is like Herpes in that once contracted, it never goes away and flares infectious several times a year.

    And there is no herd immunity for some people no matter how often they are infected.

    Then we will need multiple, cheap,  out-patient style “cure-treatments” as well as multiple vaccines, based on co-morbidities, and possibly to account for racial differences like sickle cell blood mutations, as SARS-CoV2 may well be more a blood disease than a respiratory infection in terms of it’s killing mechanism.

    See:

    COVID-19: Attacks the 1-Beta Chain of Hemoglobin and Captures the Porphyrin to Inhibit Human Heme Metabolism

    https://chemrxiv.org/articles/COVID-19_Disease_ORF8_and_Surface_Glycoprotein_Inhibit_Heme_Metabolism_by_Binding_to_Porphyrin/11938173

    There is not enough reliable data, d*mn it!

    Until we get to “Over,” our old economic world of Just-In-Time, Sole Source anywhere, but especially in China, is dead without replacement.

    The world is in the same position as Germany was from August 1944 – April 1945 or  Japan from August 1944 until August 1945 versus the Allied strategic bombing campaign.  We have entered the world of  End Run Production as world wide supply chains grind to a halt from various fiddly bits of intermediate parts running out without replacement.  The on-and-off hotspots world wide of COVID-19 at different times and places in the world economy is no different than WW2 strategic bombing in terms of causing random damage to the economic life support.

    See also  “End Run Production” here from this one volume WW2 history book The Great Crusade:

    https://books.google.com/books?id=5L-bwPZK7PQC&pg=PA420&lpg=PA420&dq=%22End+Run+Production%22&source=bl&ots=kc30FQflCj&sig=ACfU3U2kmF-kTPo0Tgr2A9_ESPKpEQAEOg&hl=en&sa=X&ved=2ahUKEwjfpurOnOPoAhUKA6wKHemwBMcQ6AEwAHoECC4QKQ#v=onepage&q=%22End%20Run%20Production%22&f=false

    Be it automobiles, self propelled construction equipment, jets, power plants or the latest electronic gadget, anything that has thousands of parts sourced world wide with lots of Chinese cheap/disposable sub-component content anywhere in the supply chain simply won’t be produced for the next 18 months to three years.

    This “random damage to the economic life support” effect is amplified by the unwillingness of Western private industry to invest in building the capitol equipment to produced those intermediate parts.  Because of the threat of China coming back with predatory pricing — using bought politicians to cover for them — means those parts won’t be built without massive cost plus contract government buy out of the investment risk like happened in the USA in the 1942 WW2 mobilization.

    The story of  one American n95 mask manufacturer’s experience with the Obama Administration in 2009 with the Swine flu is a case in point.  The n95 mask is a 50 cent item where China pays 2 cents a mask for labor versus 10 cents a mask for American labor.  When the American manufacturer geared up to replace Chinese mask production.  China came back on-line and the Obama Administration refused to keep buying the American mask producer’s 8 cents more expensive mask when the Chinese masks were available.

    Unlike almost 80 years ago, current Western and particularly American politicians are too corrupt to go too massive cost plus contract government buy out this private investment risk.  Mainly because these political elites  can’t be bothered to figure out their 10% cut.  Instead we are getting more “fiscal stimulus” AKA boondoggles that the elites will saddle the rest of us with high interest payments on huge public debts.

    It will take local small to mid-sized business to get the American economy going during the COVID-19 pandemic via making products and services that don’t use the intermediate products China threatens with when the pandemic ends.

    My read on what comes next economically is local/distributed production with limited capitol investment that is multi-product capable.  The name for that is additive manufacturing, AKA 3D Printing. Here are a couple of examples:

    1. The idea of 3D Printed Sand Casting Molds For Automobile Production

    voxeljet enters alliance to industrialize core tooling production using 3D printing

    2. And the replacement of physical inventory with 3D printers, print media and electronic drawings:
    Such “Make or buy” decisions have always been the key decision of any business.  The issue here is that middle men wholesalers and in-house warehousing holding cheap Chinese-sourced  intermediate parts are both set to go the way of the Doe-Doe Bird in a 3D/AM manufacturing dominated world.
    .
    Distributed production in multiple localities with 3D/AM vendors for limited runs of existing intermediate products to keep production lines going.  Or the re-engineering intermediate products so one 3D/AM print replaces multiple intermediate products for the same reason, will be the stuff of future Masters of Business Administration (MBA) papers describing this imminent change over.

    .

    But, like developing SARS-CoV2/COVID-19 vaccines, this new locally distributed manufacturing economy will take time.  The possible opening of the American economy in May 2020 will not bring the old economy of December 2019 back.

    .

    That economy is dead.  It cannot, will not, come back.

    .

    We will have to dance with both the sickness from SARS-CoV2/COVID-19 and the widening End Run Production product shortages that the death of the globalist  just-in-time, sole source in China economic model causes for years.

    .

    And this is a hard reality, not a fantasy, we must all face.

    Posted in America 3.0, Business, Capitalism, China, Civil Society, COVID-19, Culture, Current Events, Deep Thoughts, Entrepreneurship, Germany, Health Care, Human Behavior, International Affairs, Medicine, Miscellaneous, Politics, Public Finance, Science, Systems Analysis, Taxes, Tradeoffs, Uncategorized, USA | 64 Comments »

    Madness and Maddow

    Posted by Sgt. Mom on 31st March 2020 (All posts by )

    The Navy hospital ships promised by President Trump to deploy to New York and Los Angeles arrived on-station as ordered a few days ago. MSNBC’s Rachel Maddow, presumed for some obscure-to-me reason to be associated with the provision of news to the public, and most recently famed through peddling Russian conspiracy theories regarding Trump’s election for the past three years, had ridiculed the President’s proposed schedule as “nonsense. ” She, or whatever pronoun she goes by, had loudly and publicly claimed that it would be “weeks” before the hospital ships arrived. Instead, the hospital ships arrived more or less to schedule. A lesser news-person would have the decency to be embarrassed over how transparent a prediction-flop this was. Not this Maddow person, it appears. This is not a good thing, and not for the reason first assumed. PBS’ Yamiche “Rolie-Polie-Olie” Alcindor baldly admitted, and in nicer words, that the name of the game for the national establishment news media is “Get Trump!” and anything goes, fair or foul (mostly foul) will serve that end. Well, really – those of us who have been paying attention, especially for the last decade and a half (or longer) have known very well that the name of the game as far as the establishment national news media is concerned, is to enthusiastically smear Republicans and their conservative supporters (no matter how mild or harmless) the pretext, and to excuse Democrats and their supporters, no matter how vile the offense and actions. Nothing new here, move along. SSDD, as we used to say in my active duty days. (Same sh*t, Different Day.) Read the rest of this entry »

    Posted in Big Government, Business, Capitalism, Conservatism, COVID-19, Customer Service, Media, North America, The Press, Trump, USA | 21 Comments »

    Book Review: Red Plenty, by Francis Spufford

    Posted by David Foster on 27th October 2019 (All posts by )

    Red Plenty by Francis Spufford

    —-

    The idea of centralized economic planning is a very seductive one.  It just seems to make sense that such planning would lead to more efficiency…less waste…and certainly less unnecessary human suffering than an environment in which millions of decision-makers, many of them in competition with one another, are making their own separate and uncoordinated decisions, resulting in pointless product redundancy, economic cycles driving unemployment, and lots of other bad things.

    Red Plenty…part novel, part nonfiction…is about the Soviet Union’s economic planning efforts as seen from the inside.  The characters include factory managers, economic planners, mathematicians, computer scientists, and “fixers.”  Published in 2010, Red Plenty is now quite timely in view of the current vogue for socialism in American political discussion.

    Marx drew a nightmare picture of capitalism, when everything was produced only to be exchanged; when true qualities and uses dropped away, and the human power of making and doing itself became only an object to be traded.  The alternative? A dance to the music of use, where every step fulfilled some real need, did some tangible good, and no matter how fast the dancers spun, they moved easily, because they moved to a human measure, intelligible to all, chosen by all.

    How might this actually be accomplished? Stalin mocked the idea that planning an economy required much in the way of intellectual depth or effort.  Get the chain of command right, Stalin seemed to be saying, build it on the right ideological principles, and all that was left was a few technical details, a little bit of drudgery to be carried out by the comrades at Gosplan with the adding machines.  But it turned out to be a little more complicated than that.

    Maksim Maksimovich Mokhov is one of the lords of the Gosplan file room, in which there are hundreds of folders, each tracking the balances and plans for a particular commodity. A good man, who takes his job seriously, Maksim has risen as high as you could go at Gosplan before the posts become purely political appointments..his was the level at which competence was known to reach its ceiling…Not just a mechanical planner, he realizes that the file folders  cast only the loosest and most imperfect net over the prodigious output of the economy as the whole, and has worked to understand the stress points, the secret path dependencies of the plan.  His specific responsibility is the chemical and rubber sector, and he is particularly concerned, at the time when he enters the story, about problems in the viscose subsector.

    Arkhipov, Kosoy, and Mitrenko run one of the most important plants in the viscose supply chain, and they are three worried men.  The plan goals aren’t being met, and they know that the path to career death is separated by only a few percentage points of plan fulfillment from the other one, the upward path, the road to glory and local fame. (A couple of decades earlier, it wouldn’t have been just career death on the table.) This plant makes two viscose-derived products, yarn and tire cord.  The yarn line works fine, the tire cord line, not so much…but no problems with the machine can be found.  There is no prospect of getting a replacement machine in any relevant timeframe.

    Arkhipov and his associates come up with a plan to solve their problem…read the book to see what it is and how it turns out.

    Nikita Khrushchev, in September 1959, told a crowd that “the dreams cherished for ages, dreams expressed in fairytales which seemed sheer fantasy, are being translated into reality by man’s own hands.”  Modern technology, combined with the benefits of a planned economy would make it possible.

    Because the whole system of production and distribution in the USSR was owned by the state, because all Russia was (in Lenin’s words) ‘one office, one factory’, it could be directed, as capitalism could not, to the fastest, most lavish fulfillment, of human needs.  

    The American exhibition in Moscow in mid-1959 (site of the “kitchen debate” between Khrushchev and Nixon) was attended by 3 million Soviets (including some of the characters in this book), and although many of them thought that the American claims of broad-based prosperity were exaggerated or worse, the experience surely helped feed the longing for a better life for the Soviet Union’s ordinary people.

    Leonid Vitalevich Kantorovich pioneered the application of mathematics to the optimization of economic activities…these methods surfaced as a possible toolkit for the planning organizations circa 1960. Could these methods help achieve Khrushchev’s stated goal of broad-based prosperity?

    For example, consider several factories, producing a common set of products but with different efficiency characteristics.  Which products should be made by which factories in order to optimize overall efficiency? A set of equations can be constructed representing the constraints that must be observed–labor, machine utlization, etc–and the relative weighting of the variables to be optimized.  Although these techniques have been used to a considerable degree in capitalist countries, they would seem tailor-made for a starring role in a planned economy.  Selling the new methods in the Soviet Union, though, could be tricky:  the linear-programming term “shadow prices”, for example, sounded like something that might have politically-dangerous overtones of capitalism!

    One of the first applications involved potatoes, the distribution of same. The BESM (computer) is using Leonid Vitalevich’s shadow prices to do what a market in potatoes would do in a capitalist country–only better. When a market is matching supply with demand, it is the actual movement of the potatoes themselves from place to place, the actual sale of the potatoes at ever-shifting prices, which negotiates a solution, by trial and error.  In the computer, the effect of a possible solution can be assessed without the wasteful real-world to-ing and fro-ing, and because the computer works at the speed of flying electrons rather than the speed of a trundling vegetable truck, it can explore the whole of the mathematical space of possible solutions, and be sure to find the very best solution there is, instead of settling for the good-enough sollution that would be all there was time for, in a working day with potatoes to deliver.

    And even in the planned Soviet economy, there is still a market in potatoes, right here in Moscow, the leftover scrap of capitalism represented by the capital’s collective-farm bazaars, where individual kolkhozniks sell the product from their private plots…The market’s clock speed is laughable.  It computes a the rate of a babushka in a headscare, laboriously breaking a two-rouble note for change and muttering the numbers under her breath…No wonder that Oscar Lange over in Warsaw gleefully calls the marketplace “a primitive pre-electronic calculator.”

    So put the BESM to work minimizing distance that the potatoes have to travel..a proxy for efficiency and freshness:  price is not a consideration, since the state selling price of potatoes has been fixed for many years.  But BESM can only work with abstract potatoes: Not, of course, potatoes as they are in themselves, the actual tubers, so often frost-damaged or green with age or warty with sprouting tublices–but potatoes abstracted, potatoes considered as information, travelling into Moscow from 348 delivering units to 215 consuming organizations…The economists recognize the difficulty of getting a computer model to mirror the world truly.  They distinguish between working at zadachi, ‘from the problem’, and of fotografii, ‘from the photograph’…This calculation, alas, is from the photograph.  It deals with potato delivery as it has been reported to Leonid Vitalevich and his colleagues.  There has been no time to visit the cold-stores, interview the managers, ride on the delivery trucks. But the program should still work.

    The author notes that “the idea that the computer had conclusively resolved the socialist calculation debate in socialism’s favour was very much a commonplace of the early sixties.”

    But despite all the planning paperwork, despite the attempts at computerization, people like Chekuskin remain essential to keep the Soviet economy functioning at all.  He is a fixer, he works the system to ensure that his customers–factories, for the most part–can get the parts and materials they need in order to keep operating.  Before the revolution, he was a salesman: now, the economic problem is not selling, but buying.  Chekuskin explains what a real salesman was, back in the day:

    You’re thinking of some fellow who works in a sales administration, sits by his phone all day long like a little king, licks his finger when he feels like it, and says, “You can have a litttle bit”…That’s not a salesman.  You see, the world used to be the other way up, and it used to be the buyers who sat around examining their fingernails, hard enough as that is to imagine.  A salesman was a poor hungry bastard with a suitcase, trying to shift something that people probably didn’t want, ’cause back in those days, people didn’t just get out the money and buy anything they could get their hands on.  They had to be talked into it.”

    But with Communism, the things changed.  Back then, people didn’t want to buy.  Now, they don’t want to sell.  There’s always that resistance to get past.  But the trick of it stays the same:  make a connection, build a relationship.

    Volodya, is a young propagandist recently assigned to the huge locomotive plant in Novocherkassk, a dismal town that also features a university.  Unfortunately, it was classified by the planners as a “college town”, in need of the calorific intake required to lift pencils and wipe blackboards, but there were forty thousand people living and working in the industrial zone out by the tracks now, and between the students and the loco workers, a locust would have been hard put to it to find a spare crumb. White bread was a distant memory, milk was dispensed only at the head of enormous queues.  Sausages were as rare a comets.  Pea soup and porridge powered the place, usually served on half-washed plates.

    Eventually, people can’t stand it anymore–and decisions by two separate planning organizations have the result that on the very same day, food prices are increased and so are the production quotas at the locomotive factory.   There is a raucous mass protest, featuring signs like MEAT, BUTTER, AND PAY and CUT UP KHRUSHCHEV FOR SAUSAGES.  The loco plant manager, Korochkin, does not handle the situation well, and the rage grows.

    The ensuing catastrophe is vividly described as it is observed by the horrified Volodya.  Troops open fire on the protestors:  26 people are killed an 87 wounded.  Death sentences and long prison terms are handed down.

    This was a real event:  it happened in 1962.  News about the events did not appear in the state-controlled press for thirty years.

    Read the rest of this entry »

    Posted in Book Notes, Capitalism, Deep Thoughts, Economics & Finance, Leftism, Management, Markets and Trading, Russia, Systems Analysis, Tech | 37 Comments »

    Labor Day Rerun: Technology, Work, and Society

    Posted by David Foster on 1st September 2019 (All posts by )

    Here is an intriguing book concerned with the exponential advances in technology and the impact thereof on human society.  The author believes that the displacement of human labor by technology is in its very early stages, and sees little limit to the process.  He is concerned with how this will affect–indeed, has already affected–the relationship between the sexes and of parents and children, as well as the ability of ordinary people to earn a decent living.  It’s a thoughtful analysis by someone who clearly cares a great deal about the well-being of his fellow citizens.

    Read the rest of this entry »

    Posted in Book Notes, Britain, Capitalism, Civil Society, Deep Thoughts, Economics & Finance, History, Society, Tech | 9 Comments »

    The First Trip to the Moon, as Envisaged by Robert Heinlein

    Posted by David Foster on 19th July 2019 (All posts by )

    … in his 1950 story, The Man Who Sold the Moon.  Given the upcoming anniversary of the actual first moon landing, I thought it would be fun to go back and take a look at this fictional version of the first trip.

    In Heinlein’s story, the first manned lunar landing is not government-driven. Rather, it is the achievement of entrepreneur/industrialist Delos D Harriman, known to his friends and associates as ‘D.D.”  Having long dreamed of going to the moon, he finally decides that the time is right.

    Harriman-known as “our bad boy” to his fellow Directors of the power cartel–finds his colleagues reluctant to invest in a venture whose costs are so high and whose returns are uncertain.  Even his long-time partner, George Strong, fails to see either financial return or emotional appeal in the effort:

    George, isn’t there anything in your soul but discounts and dividends? Didn’t you ever sit with a girl on a soft summer night and stare up at the Moon and wonder what was there?

    Yeah, I did once.  I caught a cold.

    Nevertheless, Strong supports the project out of loyalty, and some tycoons support it because supersalesman Harriman is able to convince them that there is money for them in the project–or loss, if they decline to participate.  Much of the story is devoted to Harriman’s strategies for fund-raising, some of which skirt–or go over–the lines of legality and ethics. He implies to the Moka-Coka company, for example, that another soft drink maker plans to turn the Moon into a massive billboard (using a rocket to scatter black dust on the surface in patterns), and suggests that the public-spirited Moka company might like to invest in the project to preclude such use of the moon by their rival.

    As an old real-estate operator, Harriman is very focused on the question:  who owns the moon?…he argues that the question is indeed meaningful, based on real-estate doctrine that a property owner owns a wedge going down to the center of the earth and extending up to infinity. He doesn’t want lunar ownership vested in any country, even the US, because he thinks it would result in world war (given the moon’s value as a rocket-bomb base), and he does want it vested in his operation, for reasons of profitability as well as protection from bad uses.  His legal maneuvering, involving the UN as well as all countries over which the path of the moon passes–and a mix of non-profit, for-profit, and anonymous corporations–is intricately described.

    For the technology of the moon trip, Harriman had hoped to use a nuclear fuel which has been applied to power generation, but it proves too unstable for use in a rocket–so well-known chemical rocket technology must be employed instead (rockets are commonly used for long-distance transportation in the era where this story is set).  On the advice of Harriman’s chief engineer, Andrew Ferguson, the most technically-qualified man in rocketry, Bob Coster, is hired to run the project…but he evidently lacks sufficient management experience and is soon overwhelmed.  Harriman tries to help him out:

    “Top administration ain’t engineering, and maybe I can show you a few tricks there, if you’ll let me….Top bossing is like sex; until you’ve had it, you don’t know about it.”  Harriman had the mental reservation that if the boy would not take advice, he would suddenly be out of a job, whether Ferguson liked it or not.

    Although the story does deal with the technical aspects of the moon trip, that is not its primary focus…it is really a “business romance”, as Colby Cosh called it. “The Man Who Sold The Moon” emphasizes the financial difficulties, deals, the marketing, and the interpersonal stresses involved in the project–even Harriman’s wife is strongly opposed to his pursuit of his dream.   There are endless angles for the raising of money developed by Harriman and his friends, even soliciting contributions from children.

    The “man who sold the moon” tag becomes literal when, inspired by stories of the Florida land boom–“sometimes a parcel would change hands a dozen time before anyone got around to finding out that the stuff was ten-foot deep in water”–Harriman suggests selling lots on the moon itself:

    “We can offer bargains better than that–an acre, a guaranteed dry acre, for maybe ten dollars–or a thousand acres at a dollar an acre.  Who’s going to turn down a bargain like that?  Particularly after the rumor gets around that the Moon is believed to be loaded with uranium?”

    “Is it?”

    “How should I know?  When the boom sags a little we will announce the selected location of Luna City–and it will just happen to work out that the land around the site is still available for sale.  Don’t worry, Saul, if it’s real estate, George and I can sell it.  Why, down in the Ozarks, wheter the land stands on edge, we used to sell both sides of the same acre.”

    Comparisons between Harriman and Elon Musk come readily to mind–see the Colby Cosh article–though I don’t think Musk has been credibly accused of anything as far over the line as several of Harriman’s maneuvers.  It has also been suggested that Harriman’s name, and some aspects of his character, are owed to the railroad builder Edward Henry Harriman.

    I don’t think the date of the first lunar landing is mentioned in the story itself, but it has been placed–based on Heinlein’s future history timeline and on other stories–in 1978.  So real life beat out science fiction, at least from a date standpoint, by nine years.

    Could it have really happened that way–the first moon trip not via a gigantic government/corporate program piggybacking off of military missile technology, but rather by a private/corporate venture?  Given the vast amounts of money spent on the Apollo program and its predecessors–certainly much more than the fictional Harriman and his tycoon friends could have raised–it may seem impossible.  But would it really have been?

    Posted in Book Notes, Business, Capitalism, Civil Society, Space, Tech, USA | 30 Comments »

    Our ‘Xanatos Gambit’ President’s Energy Export Strategy Tree

    Posted by Trent Telenko on 5th May 2019 (All posts by )

    In my last post — President Trump’s ‘Xanatos Gambit’ Trade Policy — I spoke to how President Trump has set up his political strategy on trade policy to make any outcome on the USMCA Trade agreement that he negotiated to replace the NAFTA agreement would be to his advantage over House Democrats and the “purchased by the multi-national corporation China Lobby” GOP Senators.  In this post I am going to lay out President Trump’s “Global  Energy Dominance” export policy’s “Xanatos Gambit” strategy tree vis-à-vis the 2020 presidential elections.

    To start with, I’m going to refer you back to this passage from my last post on how the Trump Administration is “gaming” economic growth measurements:

    This is where Pres. Trump’s ‘Xanatos Gambit’ strategy tree kicks in via a macroeconomic and trade policy manipulation of the very simple economic equation of gross domestic product:

    GDP = US ECONOMIC ACTIVITY + EXPORTS + FOREIGN INVESTMENT – IMPORTS – EXTERNAL INVESTMENT

    The American economy just grew 3.2% in the 1st quarter of 2019.  It would have grown another 0.3% but for the 30-odd day federal government shut down.  The “markets” were expecting 2.5% GDP growth.  The huge half-percent GDP “miss” boiled down to:

    1. The USA exported more.

    2. The USA imported less and

    3. There was more external foreign investment than expected.

    All three were the result of a combination of Trump administration policies on oil/LNG fracking, tax & regulatory cuts and trade/tariffs.

    The Trump Administration upon coming into office in January 2017 had a huge windfall of energy projects that the Obama Administration had held up approval of in the Federal Energy Regulatory Commission.   This windfall neither began nor ended with the  Keystone XL oil pipeline There was a whole cornucopia of oil and natural gas energy infrastructure projects that Democratic Party interests, only some of them environmental, that the Obama Administration was using the FERC to sit on for a whole lot of reasons that I refer to as “The Economic Cold Civil War.

    While the media was spending a great deal of time talking about things like the Congressional votes to open the Arctic Wildlife Refuge in the early days of the Trump Administration’s energy policy implementation.  President Trump spent a great deal of his early political capital on getting his earliest political appointments through the Senate to the FERC to get those projects turned loose as a part of President Trump’s “Global  Energy Dominance” export policy.  The first fruit of this export infrastructure energy policy focus started paying off with the  Louisiana Offshore Oil Port (LOOP) coming on-line in 2018.  See this Apr 16, 2019 article by Julianne Geiger at Oilprice.com:

    U.S. Doubles Oil Exports In 2018

    The United States nearly doubled its oil exports in 2018, the Energy Information Administration reporting on Monday, from 1.2 million barrels per day in 2017.

    The 2.0 million barrels of oil per day exported in 2018 was in line with increased oil production, which averaged 10.9 million barrels per day last year, and was made possible by changes to the Louisiana Offshore Oil Port (LOOP) which allowed it to load VLCCs (Trent Note: Very Large Crude Carriers) .

    The changes to LOOP and to the sheer volume of exports were not the only changes for the US crude oil industry. The destination of this oil shifted in 2018 as well, and even shifted within the year as the trade row between China and the United States took hold.

    Overall, Canada remained the largest buyer of US oil in 2018, at 19% of all oil exports, according to EIA data. During the first half of 2018, the largest buyer of US crude oil was China, averaging 376,000 barrels per day. Due to the trade row, however, US oil exports to China fell to an average of just 83,000 barrels per day in the second half, after seeing zero exports to China in the months of August, September, and October.**

    [**Please note above the nice thing about energy exports is how futile a energy user embargo is against it.  China’s economic embargo of US crude products only hurt itself.]

    The impact of the Trump Administration’s energy export policies from those early days of his administration in terms of liquefied natural gas (LNG) export facilities are now impacting the American economy. A large part of the extra 0.7% GDP growth achieved over the 2.5% Wall Street forecasts in the first quarter of 2019 came from the Corpus Christ 1 and Sabine 5 LNG export facilities coming on-line in late 2018 and making their first full export capacity quarter in Jan – Mar 2019.  The Cameroon 1 and Elba Island 1-6 LNG export facilities were also scheduled to come on-line in Late Feb-Early March 2019, and were very likely large contributors to LNG export surge.

    This is how CNBC described 2019’s 1st quarter:

    Robust demand for Texas oil and gas in the first two months of 2019 pushed the state’s export activity into high gear, strongly outpacing the national rate and contrasting with a slight decline by California.

    Texas represented nearly 20% of all U.S. exports in the January-February period while California accounted for roughly an 11% share.

    California has seen its share of total U.S. exports fall in recent years while Texas has been growing its share due mainly to the new oil boom.

    And this is only the beginning for the US economy in 2019. See the following text and LNG export facility graphic from a Dec 10, 2018 report by the US Federal government’s Energy Information Administration:

    U.S. liquefied natural gas export capacity to more than double by the end of 2019

    U.S. LNG exports continue to increase with the growing export capacity. EIA’s latest Short-Term Energy Outlook forecasts U.S. LNG exports to average 2.9 Bcf/d in 2018 and 5.2 Bcf/d in 2019 as the new liquefaction trains are gradually commissioned and ramp up LNG production to operate at full capacity. The latest information on the status of U.S. liquefaction facilities, including expected online dates and capacities, is available in EIA’s database of U.S. LNG export facilities.

    EIA projection of Liquefied Natural Gas Export Capacity from 2016 - 2021. Date of projection Dec 2018

    EIA projection of U.S. Liquefied Natural Gas Export Capacity from 2016 – 2021. Date of projection, Dec 2018.

    Given the above information, barring a war or serious election year intervention to kill the economy by the Federal Reserve, the cascade of LNG export infrastructure coming on-line in the 2nd and 4th quarters of 2019  will mean something on the order of a full percentage increase in GDP growth (in a range of 4.0% to 4.5%) in Jan – Mar 2020 over Jan – Mar 2019.  That is what going from 3.6 billion cubic feet per day (Bcf/d) of natural gas export capacity to to 8.9  Bcf/d in Dec 2019 does for you.

    This extra 1% GDP will be happening just in time for the Iowa caucuses and New Hampshire primary.

    Read the rest of this entry »

    Posted in America 3.0, Big Government, Business, Capitalism, Culture, Current Events, Economics & Finance, Energy & Power Generation, Immigration, Markets and Trading, Miscellaneous, Politics, Predictions, Taxes | 34 Comments »

    President Trump’s ‘Xanatos Gambit’ Trade Policy

    Posted by Trent Telenko on 27th April 2019 (All posts by )

    I’ve written previously in my column “President Trump’s ‘Xanatos Gambit’ Government Shutdown” of President Trump’s tendency for building political strategy trees were every possible outcome is to his advantage. (See the “Xanatos Gambit” strategy tree example in the figure below)

     

    https://static.tvtropes.org/pmwiki/pub/images/XanatosGambitDiagram_7509.jpg

    This is a decision diagram example of a “Xanatos Gambit. Source: https://tvtropes.org/pmwiki/pmwiki.php/Main/XanatosGambit

    It very much looks like President Trump has done the same thing with the Democrats and “China lobby” GOP Senators with the post-NAFTA US-Canada-Mexico (USMCA AKA “You Smack-A”) trade agreement and the US economy.

    THE US ECONOMY, NAFTA & USMACA

    The key thing you need to understand regards NAFTA and American manufacturing is that NAFTA was geared to allow the “China lobby” of multinational corporations to use Canada and Mexico as an “international arbitrage opportunity” for Chinese slave labor wage manufactured goods to be assembled at Canadian and Mexican production facilities and avoid American tariffs.

    Multinational corporations exploiting this “international arbitrage opportunity” was “The Great Sucking Sound” that Ross Perot talked about which killed the US domestic refined metals industry and hollowed out middle class manufacturing jobs in the American economy.

    President Trump’s USMCA removes that “international arbitrage opportunity” via original 75% North American manufacturing content requirements for metals and intermediate manufacturing goods as well as a Mexican minimum wage rules on the order of $15 an hour for automotive parts assembly.

    In response the “China lobby” has been paying large campaign contributions to both House Democrats and “free trade” GOP Senators to try and keep NAFTA, as well running info-war spots everywhere in the corporate media and “movement conservative” publications/media outlets about the benefits of “free trade.”  This has resulted in public statements by Speaker Pelosi that the House does not intend to vote for USMCA.

    This is where Pres. Trump’s ‘Xanatos Gambit’ strategy tree kicks in via a macroeconomic and trade policy manipulation of the very simple economic equation of gross domestic product:

    GDP = US ECONOMIC ACTIVITY + EXPORTS + FOREIGN INVESTMENT – IMPORTS – EXTERNAL INVESTMENT

    The American economy just grew 3.2% in the 1st quarter of 2019.  It would have grown another 0.3% but for the 30-odd day federal government shut down.  The “markets” were expecting 2.5% GDP growth.  The huge half-percent GDP “miss” boiled down to:

    1. The USA exported more.

    2. The USA imported less and

    3. There was more external foreign investment than expected.

    All three were the result of a combination of Trump administration policies on oil/LNG fracking, tax & regulatory cuts and trade/tariffs.

    First point, the USA will be a net energy exporter — of oil, natural gas & coal combined — in 2020 if it isn’t one already.

    Some rough numbers:  In 2012 US oil production was ~8 million barrels a day, all for domestic consumption, and in 2019 it is 12.6 million with some exports.  Today’s US oil consumption is 20 million barrels a day.  That increase in oil production that has reduced imports of oil by a net of 4.6 million barrels a day has also been accompanied by the displacement of coal and oil in both electrical production and manufacturing by cheaper natural gas, thus freeing both the coal and oil not used to be exported. This combined economic change since 2012 alone is worth a 1% increase in GDP growth a year compared to 2012.

    Second, the Trump administration’s systematic and sustained attack on Obama era federal regulatory growth is reducing business compliance costs particularly in the energy sector for new infrastructure projects.  These are the “anti-green” actions the Democrats accuse the Trump administration of.

    Third, the Trump administration/GOP tax bill, in addition to increasing spending power for the middle class, has had a huge -YUGE- reduction in capital gains taxes and a one-time break in repatriating overseas capital holdings. This has made America a much more attractive place to hold and invest money.  Particularly for energy companies like Exxon, which are dropping this foreign capital inflow into the Permian basin for oil and natural gas fracking and energy export infrastructure from the Permian to the Gulf Coast.

    Finally, in terms of trade and tariffs, President Trump’s tariffs on Chinese steel and aluminum combined with the business implications of USMCA rules have made further investment in Canadian automotive plants a net loss position.  American metal content is now economically competitive for energy sector infrastructure and automobile parts such that US Steel among others are reopening US metal plants.

    Taken together every part of the GDP equation has been directly affected by the Trump administration macroeconomic policies to get that 3.2% GDP number.

    This is where the Xanatos Gambit for USMCA arrives.

    Things will be worse for the China lobby without a vote on USMCA than with one.

    Short form:

    NAFTA is dead regardless of any action or inaction by the House.  All the House and Senate can do is not vote on USMCA.  The legislative branch cannot revive a NAFTA trade agreement the federal executive has withdrawn from.

    This means without a signed USMCA trade deal Pres.Trump can — and will — lay on even more tariffs on the multinational corporations playing price arbitrage in Mexico and Canada between Chinese and American manufacturing.

    While such trade sanctions can reduce the American economy like a tax increase, when we are likely at close to 4% economic growth in late 2019 to early 2020 from the accumulated investment in energy projects bringing defacto energy independence, a 3.5% economic growth rate with tariffs is still pretty good.

    And when the House refuses to vote in USMCA, NAFTA still dies.

    Pres. Trump can and will lay on new massive new anti-Chinese tariffs on Canadian and Mexican front companies for China without USMCA rules.  This will be massively popular in the Midwest in an election year and will hurt the income streams of the multi-nationals supporting the Pelosi Dems and McConnell RINOs.

    From Trump’s point of view, What’s not to like about America’s manufacturing base employing the Midwestern white working class growing while the “international arbitrage opportunity” of China’s slave labor economy contracts?

     

    Posted in America 3.0, Big Government, Business, Capitalism, Civil Society, Economics & Finance, Elections, Energy & Power Generation, Entrepreneurship, Environment | 28 Comments »

    Worthwhile Reading

    Posted by David Foster on 27th January 2019 (All posts by )

    Why do journalists love twitter and hate blogging?

    The legacy of China’s Confucian bureaucracy.  Related:  my previous post on the costs of formalism and credentialism.

    Stroking egos does nothing for students — raising expectation does.

    Magic and Politics.

    Related to the above:  Witches: the new woke heroines.

    Legos, marketing, and gender.  “In 1981,” says a woman who as a child was pictured in a Legos ad back then, “LEGOs were ‘Universal Building Sets’ and that’s exactly what they were…for boys and girls. Toys are supposed to foster creativity. But nowadays, it seems that a lot more toys already have messages built into them before a child even opens the pink or blue package.”

    What will be the economic impact of China’s increasing emphasis on economic control and preferential treatment for state-run enterprises?

    What is the fastest the US economy can grow?

    Midnight at the Gemba. Kevin Meyer visits the night shift at the medical-device molding plant he was running.

    Posted in Blogging, Business, Capitalism, China, Culture, Economics & Finance, Management, Media, Religion | 12 Comments »

    Coupling

    Posted by David Foster on 15th November 2018 (All posts by )

    (No, this post is not about sex…sorry. Nor is it about electrical engineering, though it might at first give that impression.)

    The often-interesting General Electric blog has an article about drones, linked to a cloud-based AI platform, which are used to inspect power lines and detect incipient problems–for example, vegetation which is threatening to encroach on the lines and short them out, or a transformer with a tendency to overheat.  The article mentions a 2003 event in which an encounter between an overgrown tree branch and a sagging power line resulted in a wide-area blackout that affected 50 million people.

    The inspection drone sounds like a very useful and productivity-improving tool: obviously, inspecting thousands of miles of power lines is nontrivial job. But the deeper issue, IMO, is the fact that one problem in one place can propagate over such a wide area and affect such a vast number of people.  Power system designers and the people who operate these systems are certainly aware of the need to minimize fault propagation:  circuit breakers and fuses, network analysis tools,  and the technologies of protective relaying were developed, by GE among others, precisely for reasons of fault localization.  But experience shows that large-scale fault propagation still sometimes does take place.

    This problem is not limited to electrical systems.  The mention of the tree-branch-caused 2003 blackout reminded me of a passage from the historian Hendrik Willem Van Loon:

    Unfortunately in the year 1914 the whole world was one large international workshop. A strike in the Argentine was apt to cause suffering in Berlin. A raise in the price of certain raw materials in London might spell disaster to tens of thousands of long-suffering Chinese coolies who had never even heard of the existence of the big city on the Thames. The invention of some obscure Privat-Dozent in a third-rate German university would often force dozens of Chilean banks to close their doors, while bad management on the part of an old commercial house in Gothenburg might deprive hundreds of little boys and girls in Australia of a chance to go to college.

    This probably overstates the interconnectedness of the global economy as it existed in 1914, but would fit our present-day global economy very well.  (The author was talking about the origins of WWI, which he blamed largely on economic interconnectedness…not correct, IMO, but the war was largely caused, or at least reached the scale that it did, because of another type of interconnectedness…in the shape of alliances.)

    Read the rest of this entry »

    Posted in Big Government, Business, Capitalism, Deep Thoughts, Economics & Finance, Energy & Power Generation, Human Behavior, International Affairs, Trump, War and Peace | 18 Comments »

    Tariffs, Trade, and the British Corn Laws

    Posted by David Foster on 8th October 2018 (All posts by )

    Stuart Schneiderman linked an article by Robert Samuelson on the 1846 British repeal of the tariffs on food imports, which further linked an Economist article arguing that:

    With the repeal of the tariffs, instituted to protect British corn farmers, liberal economic policies ascended. Free trade, free enterprise, free markets and limited government became the rule. And the world has not been the same since.  (Schneiderman’s summary)

    To me, it is highly questionable how much the elimination of tariffs had to do with limited government and internal free enterprise. The view that the British 1846 action was economically a very good thing for almost everybody is, however, generally accepted.  From the Economist article:

    The case for getting rid of British tariffs on imported grain was not a dry argument about economic efficiency. It was a mass movement, one in which well-to-do liberal thinkers and progressive businessmen fought alongside the poor against the landowners who, by supporting tariffs on imports, kept up the price of grain…When liberals set up the Anti-Corn Law League to organise protests, petitions and public lectures they did so in the spirit of the Anti-Slavery League, and in the same noble name: freedom. The barriers the league sought to remove did not merely keep people from their cake—bad though such barriers were, and strongly though they were resented. They were barriers that held them back, and which set people against each other. Tearing them down would not just increase the wealth of all. It would bring to an end, James Wilson believed, the “jealousies, animosities and heartburnings between individuals and classes…and…between this country and all others.”

    Again, this is all mostly generally-accepted thinking.  But Stuart’s post and the links reminded me of something I read–oddly enough, in a 1910 book on railroad history.  The author (Angus Sinclair) describes the transition to steel rails (from cast iron) and the heavier trains they enabled, and then discusses the political-economic impact of this transition:

    The invention of cheap methods of making steel rails has exerted a tremendous effect upon railroad transportation, and has created social revolutions in certain part of the world…It threw many farms in New England and along the Atlantic seaboard out of cultivation; it caused a semi-revolution in farming business in the British Isles, and strongly affected the condition and fortunes of millions of people in other countries.  Irish peasants used to go in thousands to England and Scotland to work in the harvesting of grain crops and thereby earned enough money to pay the rent of their small holdings.  Steel rails and Consolidation locomotives stopped the cultivation of so many wheat fields in the British Isles that the help of the Irish worker was no longer needed…

    The woes of Ireland were merely the preliminary manifestations of hardships inflicted through the grim ordeal of competition worked out by our cheapened  methods of land transportation.  (The heavier locomotive enabled by steel rails) is steadily forcing more grain raising farms of Europe out of cultivation and is raising a demand for protection against cheap land, just as our politicians have so long urged the necessity for protection against the cheap labor of Europe.

    About 60 years ago Great Britain abolished all duties on grain…By curious reasoning the statesmen believed that this policy would not only make the British Isles the manufacturers of the world, but that it would increase the prosperity of the agricultural communities as well.  The first thirty years’ experience of free corn did not seriously  challenge the correctness of the free trade theory, for more of the American wheat lands were yet unbroken prairie or virgin forests, and our steel rail makers and locomotive builders were merely getting ready…In 1858 the rate per bushel of wheat from Chicago to New York was 38.61 cents.  The rate today is 11.4 cents…

    The effect of that cheapening of transportation in the United States has been very disastrous to Great Britain, for during the last thirty years there had been a shrinkage of 3,000,000 acres in wheat and another of 750,000 acres in green crops; an enormous amount of land had reverted to pasturage…and the number of cultivators of the soil  had declined 600,000 in thirty years–1,000,000 in fifty years.

    That is a high price to pay for the devotion to a theory which fails to work out as expected.

    Read the rest of this entry »

    Posted in Britain, Business, Capitalism, Economics & Finance, History, Ireland, Libertarianism, Taxes, Transportation, USA | 36 Comments »

    Draining the Swamp: Progressive Politics – the Road to Crony Capitalist Perdition

    Posted by Kevin Villani on 17th June 2018 (All posts by )

    From A Libertarian Republic to Majoritarian-Totalitarian Democracy: a Summary

    The 2016 American Presidential Election

    Trust in government fell by almost 80% from the end of the Eisenhower Administration to the end of the Obama Administration. Then Americans endured one of the most divisive and longest two year election campaigns leading up to the 2016 election. Former Democrat turned Republican Donald Trump defeated a field of 17 traditional center-right Republicans to run against traditionally center–left Democratic candidate Hillary Clinton who turned left to defeat her socialist competitor Bernie Sanders in the primary. Sanders correctly argued that the U.S. political system is rigged – more than he knew at the time – but responded by promising his generally young supporters socialism without totalitarianism. The public has endured another two years of divisiveness as the losing party tries to undermine and some would impeach the winner.

    Republican nominee and arguably crony capitalist businessman Donald Trump, the son of a crony capitalist housing developer, ran on the paradoxical promise to “drain the swamp.” The faux democratic election of crony capitalist supremo Vladimir Putin in 2011 drew the public reprobation of then U.S. Secretary of State Hillary Clinton, the subsequent Democratic Party nominee. Putin responded with a campaign of not so fake news not to elect Trump – they had the same polls as everybody else – but to expose Clinton as a crony capitalist who also engaged in election-rigging. He hit pay dirt. The faux Russian collusion scandal has since been used to undermine the legitimacy of the Trump Administration.

    On the issue of trade there was no difference between the three main candidates – all opposed the new TTP trade agreement. The U.S. trade deficit has been about $500 billion a year during this century, consumption financed mostly with additional debt. Candidate Clinton, who supported China’s entry into the WTO during the Clinton Administration agreed she would if elected renegotiate NAFTA, the trade bill passed at her husband’s initiative. On the related issue of immigration, candidate Clinton voted for the bipartisan Secure Fence Act of 2006, as did then Senators Obama and Schumer.

    The Obama Administration had doubled the federal debt outstanding to over $20 trillion – and the unfunded liability is approximately ten times that. President Obama’s Chairman of the Joint Chiefs of Staff publically warned as early as 2010 that the debt was a threat to national security. Candidate Clinton promised she wouldn’t add a penny to the national debt, but her platform had an imbedded $10 trillion increase, less than Sanders to be sure. Candidate Trump promised to eliminate the debt in eight years by increasing economic growth. Clinton’s was a political lie, Trump’s an outlandish campaign promise since going unfulfilled: his appropriations bill contained a $200 billion increase in spending, a Democratic victory for domestic spending in return for Republican defense spending.

    Candidate Trump ran against the “deep state” wars and military interventions that candidate Clinton had voted for. But as President, Trump embraced it with overwhelming Democratic support to punish Russia.

    Progressivism’s Administrative State

    The Democrats’ agenda has arguably fared much better under Trump than Republicans did under Obama. Given these similarities in proposed and actual policies, the subsequent animosity might appear puzzling. But the biggest difference among the candidates relates to the relative roles of the public and private sectors. The U.S. is now governed by an unaccountable patria administrative state: judicial and legislative subsumed in the executive branch and sometimes independent even of that – judge, jury and executioner. The new religion is “science” requiring a faux consensus and leadership by the “experts” as proposed by John Kenneth Galbraith in the New Industrial State (1967) over a half century ago.

    Washington, D.C. is a place where self interested deals are made in hotel lobbies and K street offices, but the entire federal bureaucracy sits on a former swamp. Most federal politicians are political swamp people having worked their way up in local and state politics by making political deals for budget and/or tax subsidies and/or regulatory discretion – legal extortion. Candidate Clinton is a self described progressive and candidate Sanders a socialist, the former supports state control of business, the later favors more direct state ownership.

    The Berlin Wall fell in 1989, followed by the Soviet Union two years later. In 1995 U.S. President Bill Clinton declared “The era of big government is over.” Britain’s Prime Minister Tony Blair, publishing in a Fabian pamphlet in 1998 argued: “Liberals (classical, i.e., American conservatives) asserted the primacy of individual liberty in the market economy; social democrats promoted social justice with the state as its main agent. There is no necessary conflict between the two, accepting as we now do that state power is one means to achieve our goals, but not the only one and emphatically not an end in itself.” But “the values which have guided progressive politics for more than a century – democracy, liberty, justice, mutual obligation and internationalism” have lead in practice to “state control, high taxation and producer interests (crony capitalism).” By the end of the century a few years after Blair spoke, the market had reached The Commanding Heights of the economy. But a decade later the Obama Administration had put the state back on top, seeking to control not just health care but finance and energy.

    Progressivism – like fascism and communism – started with the best of intentions, in opposition to crony capitalism. Social welfare programs were implemented to spread the wealth and provide a safety net, but during the progressive Obama Administration economic growth per capita stagnated. Candidate Trump believed that rolling back the administrative state regulations and the tax on savings and investment as suggested by Blair would restore real private economic growth, the key to managing the public deficit. His Democratic opponents both favored a vast expansion of the administrative state and increases in the tax on capital.

    Progressive Internationalism and the New World Order

    Progressives supported freer trade even if not reciprocal in the post WW II era because America could still enjoy a balance of trade surplus that could be used to fund investments abroad and a “new world order” of American dominance in a bi-polar world with the Soviet Union and its satellites. The European Union evolved as a mechanism to end European – especially German – “nationalism” in favor of this plan. Two events undercut this agenda of international control through capital flows: the 1960s wars on poverty and Vietnam turned American surpluses into deficits, and the common European currency created a German economic hegemony over Europe. The U.S. today is to China what Greece, Italy, Spain, Portugal and Ireland are to Germany, and that’s not a compliment. Both China and Germany – whose exports equal China’s with only 6% of the population – are mercantilist countries pursuing low wages and consumption domestically so that future generations can live off the debt that finances their over-consuming customers.

    Germany understands perhaps better than any country the problem of using foreign debt to finance current consumption as it did to feed a starving population during the interwar years. The excessive debt undermined the fledgling Weimar Republic, giving rise to Hitler. Trumps trade policy appears incoherent, as is much of the criticism. Progressives still argue for globalism and internationalism while conservatives and libertarians are hung up on Ricardian theory of comparative advantage in international trade and the accounting identity of the trade and capital balance.

    The problem isn’t global trade per se, but progressive policies that repress national saving and domestic labor and capital productivity while growing the administrative state. National boundaries still matter. In the EU the single currency zone has destabilized previously relatively stable prosperous countries, threatening political and economic collapse. The relationship between the U.S. and China reflects a similar dynamic: the willingness to accept American debt has kept the dollar from falling and trade adjusting. China holds over trillion dollars of debt backed by taxpayers, and was the biggest foreign funder of Fannie Mae and Freddie Mac during the sub-prime lending bubble. Progressives argued that we would grow out of this debt, but simultaneously and inconsistently deny that the failure to grow during the Obama Administration reflected economic repression but “secular stagnation” – that capitalist innovation has run its course. If so, we are doomed when countries attempt to collect.

    Thus far the main part of the Trump agenda, the tax reform and regulatory roll back – against universal Democratic opposition and condemnation – appears to be working. Economic growth per capita has picked up, unemployment is the lowest since the turn of the century, and business investment net of depreciation is rising from historic lows. But it is way too early to declare success. China entered the WTO without meeting the minimum requirements for intellectual property protection or reciprocity, a Clinton Administration oversight. Fixing the former should be uncontroversial. Reciprocity insures that the most competitive – not the most subsidized – win. Subsidies may benefit American consumers temporarily, but the dislocations are costly and overconsumption dangerous, the debt leading to contemporary “gunboat diplomacy” to settle debts. A reciprocal tariff is a consumption tax, not irrational to consider under those circumstances.

    Progressive efforts to Impeach President Trump: the Totalitarian Administrative State Strikes Back

    Yet since the election, some progressive Democrats have been pushing for impeachment on grounds of Russian collusion and obstruction of justice, although no evidence has yet been produced of that after two years of investigation.

    One thoughtful progressive commentator dismisses these grounds, arguing that the real grounds for impeachment are the “threats Trumpism poses to democracy and rule of law.” If true, those would indeed be grounds for impeachment but he doesn’t define Trumpism or provide evidence. The many articles in the progressive media can be summarized thus: Trump is tweeting against the administrative state agents that are out to get him.

    Libertarians and Republican conservatives have argued that progressives have been undermining liberty and the rule of law for over a century to create the administrative state, obfuscating their agenda by manipulating words to mean the opposite of their historical meaning. Trump’s Court appointments are intended to reverse that trend. Statism is usually associated with one-party faux democracy to prevent state power from turning against the entrenched interests with a change of government. Trump ran against the progressive new world order, arguing to “put America first.” The Democrats didn’t think Trump had any chance to win. This seems the more compelling reason for their impeachment efforts. The anti-Trump organized hysteria bears a marked resemblance to the largely Soros funded Republican and Democratic efforts to ignite the democratic color revolutions in the former Soviet states described by F.William Engdahl in Full Spectrum Dominance: Totalitarian Democracy in the New World Order (2009).

    This isn’t about Trump tweets. It’s a battle for the commanding heights.
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    Posted in Big Government, Capitalism, Civil Liberties, Civil Society, Conservatism, Crony Capitalism, Economics & Finance, History, Leftism, Libertarianism, Political Philosophy, Politics, Public Finance, Taxes, Tradeoffs, USA | 11 Comments »

    More and Better Disclosures!

    Posted by David Foster on 29th March 2018 (All posts by )

    It’s now required for publicly-traded companies to publish the ratio between the CEO’s annual compensation and that of the median employee.  That ratio is, for example,  367:1 at Disney (Robert Iger), 124:1 at Deere & Co (Samuel Allen), and 50:1 for Whirlpool (Jeff Fettig). Link

    These numbers (which, it should be clarified, include seasonal and part-time employees) have caused much alarm in many quarters, and even referred to as heralding a “crisis of capitalism.”

    But why stop at CEOs and other business executives when requiring this kind of analysis?  My idea is that there are many other fields in which high-visibility disclosures could be interestingly required…

    In movies, for example, it should be required that the opening credits include the ratio of the pay of each of the top 5 stars to the median pay of the entire crew that worked on the film–including accounting clerks, boom operators, sweepers, and various ‘assistants to’.

    In professional sports, team uniforms should display prominently the total value of the player’s current contract.  This feature would greatly add to the pleasure of fans, who could instantly and continuously compare the player’s financial value to his demonstrated, moment-by-moment playing-field value.

    At colleges and universities, a sign out front of the president’s mansion should display the ratio of his compensation to that of the median faculty member, which category of course must include the starvation-paid adjunct professors.  (The compensation number for the president should certainly include the imputed value of his university-provided mansion and any other similar benefits, such as cars and drivers.)

    For politicians, the disclosure problem is a little more complicated, since in many cases the main financial payoff for these jobs is in the form of “deferred compensation”, i.e., lobbying positions and consulting contracts offered after the term of office ends, in recognition of services rendered while in office.  About all I can think of for the politician class is that, for all public appearances, they must wear jackets, with the names of their top sponsoring/contributing organizations prominently emblazoned, in a manner similar to the way racecar drivers display the names of their sponsors.

    There are probably a lot of additional possibilities for disclosure and transparency, which the ChicagoBoyz and Chicago Grrrlz and Readerz can surely suggest.

    Concerning those who support the CEO pay-ratio requirement but would object to these further suggestions…I have to wonder if their primary agenda really concerns ‘inequality’ or is really about something else.

    Posted in Academia, Business, Capitalism, Economics & Finance, Leftism, Sports, USA | 10 Comments »

    Po nan Jwèt la: Asymétri Kache nan Lavi Chak Jou

    Posted by Jay Manifold on 16th March 2018 (All posts by )

    Taleb, Nassim N., Skin in the Game: Hidden Asymmetries in Daily Life. New York City: Random House, 2018.

    NB: precisely because I regard Taleb as a national treasure and have considerable respect for his work, I am not going to pull punches here. I get to do this because I have … skin in the game, and not only in Haiti[1] (where I wrote this post over the past ten days, thus the Kreyòl Ayisyen title), but in a couple-three moderately hair-raising situations back in KC, which I will relate when appropriate. Which might be never; see Matthew 6:1-4 (cited by Taleb on page 186).

    Getting this out of the way—buy this book, read it, and recommend it to others. I say this very much irrespective of what might be called the Manifold-Taleb delta, which is not altogether trivial, as I will explain in some detail—again, as a sign of respect—below. Immediately below, in fact.

    Read the rest of this entry »

    Posted in Bioethics, Book Notes, Capitalism, Ebola, Education, Entrepreneurship, Environment, History, Human Behavior, Islam, Japan, Libertarianism, Miscellaneous, National Security, Political Philosophy, Russia, Space, Systems Analysis, Terrorism | 17 Comments »

    Technology, Work, and Society – The Age of Transition

    Posted by David Foster on 15th December 2017 (All posts by )

    I recently read an intriguing book concerned with the exponential advances in technology and the impact thereof on human society.  The author believes that the displacement of human labor by technology is in its very early stages, and sees little limit to the process.  He is concerned with how this will affect–indeed, has already affected–the relationship between the sexes and of parents and children, as well as the ability of ordinary people to earn a decent living.  It’s a thoughtful analysis by someone who clearly cares a great deal about the well-being of his fellow citizens.

    Read the rest of this entry »

    Posted in Book Notes, Britain, Business, Capitalism, Civil Society, Deep Thoughts, Economics & Finance, History, Society, Tech | 14 Comments »

    Micro-transactions

    Posted by TM Lutas on 6th October 2017 (All posts by )

    It is now possible to convert electricity to money using an Internet browser (like the one you’re likely using to read this post) in amounts lower than $0.001, which is the smallest unit of account for the US Dollar. Jobs earning that amount are constantly available by doing math on your computer that works on supporting open ledger systems called blockchains.

    The product of the math work turns into cryptocurrency fractional coins which, when accumulated in large enough amounts can be sold for dollars, euros, yen, or any other conventional currency around.

    The transaction costs are orders of magnitude lower than in the conventional banking system, enough that large classes of transactions that were impractical are now merely somewhat expensive. There’s a lot of room for efficiency improvements at present.

    You can see an experiment running the first iteration I’m working with this concept at the project blog for Charleston Dry Feet. It’s currently generating litoshi from anyone who visits. Proceeds go to the worthy project of fixing Charleston, SC’s deficient storm water drainage system. You can turn the widget on or off with a button click.

    Posted in Capitalism, Miscellaneous, Tech | 20 Comments »

    Worthwhile Visiting

    Posted by David Foster on 15th April 2017 (All posts by )

    The National Museum of Industrial History is located on the site of the former Bethlehem Steel complex.  Most of the original buildings are derelict or partly torn-down, but the above array of blast furnaces and supporting equipment has been preserved.

    Suggested musical accompaniment for a visit to the place that was Bethlehem Steel…features a different company and a slightly different geography, but basically the same sad story.

    Posted in Business, Capitalism, History, Management, Tech, Unions, USA | 16 Comments »

    Worthwhile Reading

    Posted by David Foster on 7th April 2017 (All posts by )

    Jamie Dimon of JP Morgan is, IMO, one of the more thoughtful of the financial industry CEO’s.  In his annual letter to shareholders, he devotes considerable space to the current situation of the United States–our assets, our problems, and potential paths for improvement.  The public policy section of the letter starts on page 32.

    My view of several issues is different from Mr Dimon’s, but I think the letter is well worth reading and thinking about.

    (Disclosure:  I’m a JPM investor)

    Posted in Business, Capitalism, Economics & Finance, Education, Entrepreneurship, Immigration, USA | 13 Comments »

    Dodd-Frank, Obamacare grew out of same faulty reasoning

    Posted by Kevin Villani on 6th March 2017 (All posts by )

    The current partisan war over the Dodd-Frank Act is just one dispute in a broader ideological divide about the government’s role in industry. This dispute, which has deep historical roots, includes a similar battle over Obamacare. The common disagreement at issue with both laws — now in the cross hairs of a GOP-controlled Washington — is the extent to which politicians should subsidize their constituents indirectly through regulation of private companies.

    The Affordable Care Act governing health insurers was about 1,000 pages, and Dodd-Frank governing most other financial institutions was more than twice that. Both stopped short of nationalizing their respective industry, instead generating more than 10 pages of regulation for every one page of legislation, although many view nationalization as an eventual but inevitable consequence, particularly for health care.

    The distinction between public control and public ownership is the primary distinction between the competing mid-20th-century ideologies of fascism and communism. In contemporary terminology, this distinction is between crony capitalism and nationalization, neither of which can be reconciled with competition and freedom of choice.
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    Posted in Big Government, Business, Capitalism, Crony Capitalism, Economics & Finance, Health Care, Obama, Political Philosophy, Public Finance, Systems Analysis | 10 Comments »

    The Boom/Bust Cycle Isn’t about Emotion

    Posted by Kevin Villani on 27th February 2017 (All posts by )

    My first experience with manias was in the 1950’s. As a pre-schooler, I was dragged along to the Filene’s Basement annual designer dress sale. Thousands of women of all types and sizes pressed against the glass doors opening into the subway station. Within minutes of the doors opening, these “maniacs” cleared all the racks and, holding armfuls of dresses, began stripping to their slips. That’s when I panicked.

    Looking back, those women acted rationally. There was a limited supply of deeply discounted dresses available on a first come basis. They traded among themselves to get the right size and their most desired dress. Buyer’s remorse was cushioned by Filene’s liberal return policy.

    The premise of U.S. financial regulation is that actors within private markets are irrational, but the evidence shows that it’s not maniacal, illogical behavior that sends markets into freefall.

    Great Depression and Recession

    Now in its seventh edition, Manias, Panics and Crashes: A History of Financial Crises, Charles Kindleberger’s seminal work provides the narrative that underlies virtually all public financial protection and regulation: First, the irrational exuberance of individuals transforms into “mob psychology” and fuels an asset bubble. Then, when the exuberance of a few turns to fear, the mob panics and overreacts, causing a crash that brings down both solvent and insolvent financial institutions.

    In his memoir, the former Federal Reserve Bank President and Treasury Secretary Timothy Geithner, who was at the epicenter of the last crisis, concluded, “It began with a mania — the widespread belief that devastating financial crises were a thing of the past, that future recessions would be mild, that gravity-defying home prices would never crash to earth.”  

    Most U.S. federal financial regulation originates from the Great Depression and the subsequent introduction of federal deposit insurance provided by the Federal Deposit Insurance Corporation (FDIC), which was established in 1933 to protect “small” savers. All prior state attempts to provide insurance failed. Because there were no effective, non-politicized regulations that could prevent the moral hazard of insured banks and savings institutions taking on excessive risks, an extensive regulatory infrastructure was put in place.

    Rational Actors

    Now, the U.S. has about 100 financial regulators, including those in the U.S. Treasury and the Securities and Exchange Commission (SEC), the FDIC, and the Fed. With near-universal deposit insurance, bank runs have become a rarity, but systemic crises have occurred more frequently. It is incontestable that big bubbles eventually burst, asset prices crash, and financial crises ensue. What causes the bubbles to inflate to systemic proportions, and to ultimately burst, is more contentious.

    At the time of Kindleberger’s analysis, individuals were assumed to be rational. The latest edition of his book, written after the 2008 financial crisis, postulates numerous theories about mob psychology (mania) that could lead rational individuals to produce irrational markets, but these ideas are all rather lame.

    Read the rest of this entry »

    Posted in Big Government, Business, Capitalism, Economics & Finance, Human Behavior, Markets and Trading, Public Finance, Real Estate, Systems Analysis, Tradeoffs | 9 Comments »

    The End of Accounting Book Review – Part One

    Posted by Carl from Chicago on 8th January 2017 (All posts by )

    Recently I read an excellent book called “The End of Accounting and the Path Forward for Investors and Managers” by Baruch Lev and Feng Gu. I highly recommend this book for investors, analysts, accountants, and those with a general interest in business. The book is very well written and researched in that it:

    1. Describes the current situation in depth
    2. Aligns the situation across an historical context and with relevant research
    3. Makes specific recommendations about how to improve the situation

    If you’d like to read more about this topic on your own (will help to frame out these posts), here is an excellent Wall Street Journal article titled “The End of Accounting” (if the link doesn’t work because you don’t have a subscription you can probably find it elsewhere on the internet). Here is a link from Accounting Today and an interview with the author from CFO magazine.

    The first post in this series is going to be my personal insights and journey in the area of accounting information, financial and investor relations analysts. This context is relevant because I, too, have seen the problems that the authors outline in the series and come up with my own “hacks” to attempt to gain better information and insights.

    I started out my career as an accountant, and I used to help create the footnotes that you see at the end of the financial reports. This wasn’t creative work per se – you would start with last year’s footnote as a template and insert new numbers, unless it was a new requirement, in which case it was a lot of work and we would turn to specialists. At that time (20+ years ago) there were only a few footnotes and the financial statements themselves weren’t that long; you would be able to read from the Chairman and CEO’s letter all the way through to the last footnote in a couple of hours.

    This was also before the internet; we would go into the company library and look at microfiche sometimes to do research or you’d pull up the hard (printed) copy from the files. At that point an annual report was also somewhat of a marketing document; companies put a lot of thought into the cover, for instance.

    At various points in the history of accounting there has been a focus on the balance sheet (assets and liabilities), the income statement (earnings per share and price / earnings ratio) and on cash flows (cash generated from the business). Each of these views are important and have their merits and their drawbacks. The statements were generally the “GAAP” view which focused on financial statement presentation and used taxes at official rates (many companies pay almost nothing in taxes in actuality by deferring them indefinitely) and held assets at historical costs. Both of these assumptions made the financial statements less useful for certain types of companies and industries.

    Read the rest of this entry »

    Posted in Book Notes, Business, Capitalism, Economics & Finance | 3 Comments »