Economics & Finance

“Evil Amazon”

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Josh Treviño regarding the Mexican cartels:

“It is evil Amazon, really. They’re logistic firms with small armies attached that will profit from whatever they can and increasingly take on the characteristics of insurgency.”

I think the Amazon comparison is apt, but Treviño pulls up a bit short because it’s more than just logistics. Amazon has proven to be a master of leveraging existing capabilities in order to exploit new markets. There is of course its e-commerce transformation from an online bookstore to selling just about everything under the sun. Then there was its leveraging the last-mile delivery and now using its expertise in data centers to develop AWS and enter the AI market.

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2024 Election Plus/Delta

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Pluses: admittedly much the shorter list, but we did resolve a few things.

  1. Thanks mainly to vote shifts in California and New York, the popular vote outcome was not at variance with the Electoral College vote, and it wasn’t particularly close (over 4-1/2 million votes).
  2. Largely as a result, the losing side, and VP Harris herself, have indicated cooperation with formal certification and transition processes.
  3. Harris is gone. She’ll get a chunk of money for a book and retire to the lecture circuit.
  4. Walz, same, and given the likelihood that he would have been a 21st-century version of Henry Wallace, with Chinese instead of Soviet agents in his inner circle, that might be more important than getting rid of Harris.
  5. Taking a somewhat longer view, Trump is gone too (perhaps not a much longer view; see the final Delta item below).
  6. By extension, there is some chance that ’28 will not have the electorate choosing between a crook and an idiot for President.
  7. Whatever one may think of prediction markets, and there are arguments on both sides regarding their functionality, the biggest prediction market of all, the US stock market, was forecasting a Trump victory all year (not coincidentally, the same thing happened in 2016).
  8. By the way, the media will actually report negative economic news now.
  9. I could have put this in either category, but I’ll leave it here: your Cluebat of the Day is a reminder that Trump is as old as Biden was in ’20, and notwithstanding some of my more apprehensive items below, to expect anything much of him is a waste of time.
  10. Likely continuation of relatively good space-industry policy across Administrations, which should be the only thing that matters several decades from now.

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On the Waterfront

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The longshoreman strike is a great example of why you need a functioning president at the top of the executive branch.

There has been a lot of gobbledygook from leftist circles over the past several months that Biden’s inability to carry out the functions of the presidency is not a crisis because for the most part government runs on its own. They say, sure he’s not up to another four years but let’s not go crazy and start thinking about invoking the 25th Amendment forcing him to resign; we’ve got smart people in government and can get by.

Well the two arguments against that are the natural entropy of government and the ability to deal with crises. In both cases, someone needs to have both the legitimacy and incentive to knock heads and take the risks needed in a leader; as the sign on Truman’s desk said, “The Buck Stops Here.”

We’ve been skating on thin ice for a while regarding possible labor unrest across various critical parts of our transportation network and the longshoreman strike couldn’t have come at a worse time for the Biden Administration. The International Longshoremen’s Association (ILA) has maximum leverage given its ability to shut down the ports in the eastern half of the country, at a time when the economy is especially vulnerable and during the final month of an election when the Democrats need union support in a tight election.

The last thing the Democrats need is the economy to go into a tailspin. The second-to-last thing they need is the labor unrest that would stem from invoking Taft-Hartley and breaking the strike.

Outside of the danger to the economy and people’s livelihoods, there is something almost entrancing about the cartoon villainy of ILA President Harold Daggett, who has threatened to cripple the economy if his demands aren’t met regarding pay and automation. You can argue that long-term he is being foolish because he’s converted a viable threat in-being into a dangerous threat in fact — the best threats you can have are the ones you never have to state let alone use.

It also doesn’t help that the productivity of US ports is among the lowest in the world. In the world of tight supply chains and container shipping, inefficiency in port operations has the same effect as a tariff on the cost of goods. To paraphrase William J. LePetomane, Daggett and the ILA need to protect their phony baloney jobs. I’m as nostalgic as the next guy, but not for that ’70s vibe of unions using extortion to protect their cushy way of life.

So basically our cartoon villain Daggett has thrown down the gauntlet and challenged the feds to come get him. The problem in the executive branch is that anyone can make a decision and get it implemented under Biden’s signature, but there has to be somebody willing to take the risks and the heat to see that decision through and that’s where the buck stops. Somebody needs to not just broker across the various interests in any administration but to make the decision stick. There’s only so much our 21st Century version of Edith Wilson, Jill Biden, can do.

Like Zelensky and the mullahs, Daggett knows that a Republican victory will undercut his leverage so he’s in a use-it-or-lose it situation. If Biden does nothing, the economy tanks. If Biden breaks the strike, he weakens a valuable base of support for the Democrats right before the election.

From the Middle East to the Atlantic-Gulf Coast ports, the consequences of the Biden puppetry are coming home to roost.

Side note. It’s a shame Jen Psaki is no longer in government so that when the inevitable shortages from the ILA strike occur she can poo-poo us about “the tragedy of the treadmill that’s delayed.”

Let the Games Begin

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The ancient Greeks gave us “democracy,” a set of rules for candidates to compete for the right to rule. They also gave us the Olympics, a set of rules for individuals, teams and ultimately countries to compete in athletic events. The Olympics outlawed certain drugs, standardized the technology and separated males from females (historically) due to genetic differences, but otherwise there is no favoritism due to race, ethnicity, family history, country of origin, etc. Medals are awarded only to the top performers, gold/silver/bronze (all formerly used for money). Capitalism is a comparable set of rules for competition among individuals, teams and countries. Technology and management differences are allowed, even encouraged, as all contestants share in it over time. Similarly, capitalist competition is the source of virtually all human improvement for winners and losers alike. The US Constitution uniquely established rules for a competitive democracy and competitive market economy, historically the source of US economic growth.

 

The Olympics is a big business, with a history of scandals relating to kickbacks to judges, host country officials or Olympic Committee Members that corrupts the competition. Similarly, politicians who make the rules for a market economy that show favoritism to particular industries, firms or people, i.e., crony capitalism, is the corrupt antithesis of competitive market capitalism.

 

Competing with Olympic coverage in France, ironically under the French banner of “equality,” is the current political competition for the US presidency, which both sides agree is “pivotal” for democracy’s future, but the democracy spectrum runs from a limited government representative republic on the right to a majoritarian “peoples democracy” on the left. Each campaign accuses the other of hate, fear mongering, political pandering and the usual lies and misinformation (political spin). So far it has been an entertaining tag team mud wrestling match (even these have rules and limits).

 

But for over a century the fundamental economic choice has been between competitive market capitalism and egalitarian socialism, growth versus stagnation. The divide has never been more clear, although the Democratic Party eschews the socialist label. In 2020, when openly socialist Democratic candidate Bernie Sanders appeared a certain victor, the Party pulled the candidate, but adopted his “democratic socialism” platform. Current candidate Harris, similarly anointed, has either agreed with or been to the left of that platform on every issue, recent flip/flops notwithstanding. Their radical distributional “democratic socialism” goes beyond “to each according to his needs” to require “to each equally.” Their production ideology, eschewing state ownership, calls for a fair degree of state control.

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