Economics & Finance

Worthwhile Reading

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A teacher’s experiences in an American high school…a highly-rated American high school…with thoughts on the power of incentives.

Related: the effects of easing up on school troublemakers.

Research suggests that CEOs born in “frontier counties with a higher level of individualistic culture” are more effective at promoting innovation.

The market value of Tesla…$1.2 trillion…now exceeds the market value of the entire S&P 500 energy sector.  (The components of that sector can be found here.)

“Believe the science”, bureaucracy, speed, and creativity:  America needs a new scientific revolution.

Planning is a bigger job than planners can do.

Offshoring is not just for manufacturing jobs: Teleshock.  See also my 2019 post Telemigration.

Interesting memoir by a woman who started as a clerk for Burlington Northern Railroad, worked her way up to Yardmaster, and then worked closely for many years with the legendary RR executive Hunter Harrison, focusing mostly on improved data and methods for performance measurement and operational support.  (The author has since made a major industry & career change and is now focused on bioinformatics research related to cellular development!)

 

Recent Reading

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Four mini-reviews in this batch:

—Splendid Solution, by Jeffrey Kluger
—Red Plenty, Francis Spufford
—Instruments of Darkness, Alfred Price
—The Scarlet Thread, Mandy Rice-Davies

Splendid Solution is about the development of the Salk polio vaccine. The book gives a vivid picture of the devastation wrought by epidemics with no vaccines and without meaningful treatments, both the 1918 Spanish Flu epidemic and the successive polio epidemics, and the public health measures used in attempts to control such epidemics.  It describes how the Salk vaccine was developed, some of the conflicts among scientists, and the vaccine rollout, including media reactions and early manufacturing problems.  Very interesting reading, especially in the light of our present vaccine situation and controversies.

Red Plenty is about Soviet economic planning, as seen from the inside.  (I’ve reviewed it previously here, but recently re-read it in conjunction with an online book discussion group.)  It’s part fiction and part factual history: the characters include factory managers, economic planners, mathematicians, computer scientists, and “fixers.” Very well-written and also well-researched and footnoted.

Instruments of Darkness is about electronic warfare during WWII, primarily on the European front but also touching on the Pacific war.  Covers ‘the battle of the beams,’ in which Britain attempted to interfere with the radio guidance system used by the Germans to support night bombing, and the jamming and spoofing which was directed at communications between night fighters and their ground controllers.

The author was himself an electronics warfare officer with the RAF during the war, so speaks from a position of knowledge.

A Scarlet Thread is a historical novel about Israeli settlements in what was then called Palestine, at the time of the First World War.  Faced with increasing exactions and depredations by the Turkish rulers, a group of Jews resolve to support the British war effort by providing intelligence information–if they can find anyone in the British government who is willing to accept such information and take it seriously, that is.

The author became famous (or infamous) as one of the two women involved in the Profumo sex scandal of 1963-64, which brought down Prime Minister Macmillan and the Conservative government.  She married an Israeli, moved to Israel, and converted to Judaism–this book (published in 1989) is a pretty decent historical novel, not just an attempt at capitalizing on her celebrity.

 

 

 

The “Green Agenda” is already killing the energy industry.

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Recently, we have read of energy shortfalls in Germany, the UK and even China. The Chinese energy problems may be contributing to the supply chain issues. What all these stories have in common, with the possible exception of China, is the “Green Agenda.”

Germany’s problems were predicted. The country decided to shut down nuclear power and rely on wind and solar. Relying on solar in Germany’s climate was ludicrous.

Germany’s Energiewende, or energy transition to renewables, is leading to an insecure supply of energy and is affecting the nation’s economy. Germany plans on phasing out all its nuclear plants by 2022 and its coal plants by 2038 in favor of renewable energy, primarily intermittent wind and solar power, which is causing electricity prices to spike and its electric grid to falter. If Germany continues to phase out both coal and nuclear, it will lose the equivalent of 43 percent of 2018 secured output. German electricity prices are already 45 percent above the European average (and 3 times U.S. average residential prices) with green taxes now accounting for 54 percent of household electricity prices.

The Greens are taking down the German economy.Russia and the new pipeline for natural gas cannot supply enough power.

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The Johnstown Flood

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Pennsylvania borrowed more money to build infrastructure supporting canals than any other state to take advantage of the trade opportunities of the Erie Canal. Construction started on the South Fork Dam in 1838 with scheduled completion within a year, but by the time it was finished in 1852 the railroads had made it obsolete. The state wrote it off and it eventually provided a fishing lake for Pittsburgh’s elite. When it burst in 1889, causing the Johnstown flood, the total loss in life and property was probably 100 times the initial construction cost. Pennsylvania, having long since declared bankruptcy in 1841, blamed the rich.

Most every year the Congress metaphorically dances on top of the earthen South Fork Dam looming over Johnstown with the water lapping at their feet. Their solution is always the same: Let’s throw some more dirt on top this year. We’ll drain it when we drain the swamp, after we eliminate the air pollution in Johnstown, the price paid for the industrial revolution raising American living standards in the late 1800s.

The primary issue facing America during the post WW II era was whether its consumerist economy could continue to produce rising living standards for all, the cornerstone of political legitimacy. The leader of America’s competitor Nikita Khrushchev in the Soviet Union put the issue crudely six decades ago: “we will bury you” with a savings and investment rate several multiples of yours. America’s intelligence community and economic elite were shocked by the sudden collapse of the Soviet economy – like a dam bursting – less than three decades later.

Khrushchev, like most of America’s development economists, understood the role of saving and investment but not how important the private capital markets were to the allocation of capital to its highest and best use, politically directed credit being the main cause of their collapse. In Johnstown everyone knew that the valves to lower the water level in the lake had been removed during the last amateurish reconstruction, but fixing or removing it was opposed by rich land owners. The debt ceiling has similarly proven an ineffective mechanism to control America’s flood of debt, with the central bank standing ready to buy it all to the benefit of the wealthy. American politicians, feeling unbound by constitutional constraints, are addicted to issuing debt, the birthing person’s milk of politics. The Biden Build Back Better Plan promises to strengthen the dam, but like the amateurish repairs to the South Fork will weaken the dam’s foundation while causing water levels to rise, possibly to a critical level.

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