I can think of some conditions that might be problematic for these things to deal with.
Tech
Freezing in the Dark
There has been much concern about possible hacking of the power grid by Russia, China, and others. Here we have a segment from Rachel Maddow, inspired by a threat analysis from the US Intelligence Community. From the analysis:
China has the ability to launch cyber attacks that cause localized, temporary disruptive effects on critical infrastructure–such as disruption of a natural gas pipeline for days to weeks–in the United States. Russia has the ability to execute cyber attacks in the United States that generate localized, temporary disruptive effects on critical infrastructure.
Maddow: It’s like negative 50 degrees in the Dakotas right now. What would happen if Russia killed the power today? What would happen if all the natural gas lines that service Sioux Falls just poof on the coldest day in recent memories?
What would happen? Nothing good. These are serious threats, and I doubt that Russia and China are or will continue to be the only entities able to conduct such cyberattacks. And there is also plenty of risk for non-cyber attacks…physical-world sabotage…which could have similarly malign impact on energy infrastructure.
But we don’t need to wait for a foreign adversary or domestic terrorist organization to cripple our energy infrastructure. We can quite effectively do it to ourselves.
In late January, it was very cold in Minnesota. And there wasn’t a lot of wind. Natural gas, also, was in short supply, as a result of pipeline capacity constraints. Xcel Energy urged its gas customers to turn down thermostats and water heaters, and to use electric heaters as necessary. The electricity was coming from primarily coal plants (40 GW) and natural gas plants (about 23 GW)–the gas plants, of course, are also dependent on pipeline capacity.
Also in Minnesota, here’s a large solar farm covered with snow. Wonder if it’s melted or been swept off yet? And here’s a cautionary story from Germany, where long, still, and dim winters do not mix well with wind and solar power generation.
Solar and wind in most parts of the US are now small enough in proportion to overall grid capacity that shortfalls can be made up by the other sources. What happens if they come to represent the majority of the grid’s power capacity–not to mention the exclusive source of capacity, as demanded by some?
It may be feasible to store a few hours of electricity without driving costs out of sight…but what about the situation in which wind and solar are underperforming for several days in a row? Interconnection of sources and demands over a wide area (geographical diversity) can help, but is by no means a comprehensive solution. So far, the gas, coal, and hydro plants have been there to kick in where necessary.
Almost every day, there are assertions that new solar is cheaper than its fossil-fuel equivalents. This may be true in some areas if you ignore the need to match supply and demand on an instantaneous basis. But if the fossil-fuel plants are there to handle only those periods when wind, solar, and limited battery storage aren’t sufficient to meet demand, then the total energy production against which their capital cost is charged will be much lower, and hence, the cost per unit will go up. (See the California Duck Must Die for a nice visual portrayal of how widespread solar adoption has changed the load curve for the other sources.) In some states with net metering, a home or business owner can sell excess power to the grid when loads are low and buy it back at the same unit price when loads are at their maximum. This becomes especially problematic when “renewables” become a major part of the mix. Unless incentives are intelligently crafted–unlikely, given politics–“renewable” sources will effectively be subsidized by conventional sources and potentially make the construction and maintenance of those conventional sources impossible. See If Solar and Wind Are So Cheap, Why Do They Make Electricity So Expensive?
A Robot of the Week, Revisited
In a robots of the week post a while back, I mentioned two companies that are attempting to automate the apparel-production process. Recently, one of these companies, Softwear Automation, announced that its Sewbot product is now also available on a rental basis under the banner Sewbot as a Service. (SaaS, playing off the acronym for the currently-hot field of Software as a Service.) From the SaaS announcement:
From 1994 to 2005, the United States lost more than 900,000 textile and apparel jobs to offshoring.
Fast-forward to 2018. The pendulum is swinging back and textiles are returning as lean, highly automated, environmentally conscious production facilities. Within the last six years, there have been significant announcements by foreign-owned textile companies investing in the United States, with site selection choices clustered in the Southeast including the first Chinese owned Cut Make Trim factory in Arkansas.
Despite this industry reversal, the seamstresses are not returning. While the knowledge can be shared to upskill workers, people don’t have the desire to work in a traditional textile factory.
To solve this and accelerate the growth of US based textile manufacturing, Softwear Automation is announcing SEWBOTS-as-a-Service, a rental lease service to allow manufacturers, brands, and retailers to source and manufacture here in the US at a lower cost than outsourcing and with greater predictability and quality. While we understand the benefits of “Made in America”, the focus of this program is to offer US textile manufacturing more control, greater margin, faster turn times and less inventory.
The rental rate for Sewbot is quoted as starting at $5000/month, which comes to $55/shift for a three-shift operation.Softwear is also now offering production-rate estimates for various kinds of textile products. For microfiber towels, a single operator supervising 6 robots can make 2880 towels in an 8-hour shift, compared with 223 towels for a single operator performing traditional manual activities. Other product types which the company sees as suitable for Sewbot automation include mattress covers, pillows, automotive floormats, t-shirts, and shoes (uppers).
Most aspects of the apparel supply chain have long been highly automated: indeed, the mechanization of spinning and weaving was the hallmark of the Industrial Revolution. The sewing process, however, has remained stubbornly labor-intensive, largely because the flexible nature of fabric makes it hard to handle mechanically. Softwear Automation’s solution involves the use of machine vision for precise fabric positioning. This article at IEEE Spectrum explains a little bit about how it works.
Depending on how well these systems turn out to work in practice, and how the technology evolves, they may turn out to be not only the robots of the week, but the robots of the year or even the decade. Apparel-making is a vast industry, concentrated in nations which are not-so-well-off economically, and employs a large number of people. A high level of automation would likely result in much of this production being relocated closer to the markets, thus saving transportation costs and shortening supply cycles. The consequences for countries like China, Bangladesh, and Sri Lanka could be pretty unpleasant. For the US, the onshoring of the work would seem clearly to be beneficial.
I don’t know enough about the industry to analyze the economics of Sewbot vs low-wage-country production in any depth, but back-of-the envelope for one product type (the towels) suggests that on a pure direct labor cost per unit basis, a US-based Sewbot can still be undercut by human labor rates below about $4/hour. (Calculated using the rental rate: for many companies, purchase may offer better economics.) But production isn’t the only factor in the product cost equation, of course, and in many situations proximity to end markets will be of considerable value: especially simpler inventory control and faster response to style changes. And a Made in the USA label is surely worth at least something. Also, the economics may be different for some of the other product types…for the t-shirts, the company is citing a unit cost of $.33 for US-based production using Sewbot…this compares with something around $.22 for a country such as Bangladesh, and is probably cheaper than China at the current wage rates.
Well, This is a Cheerful Thought
…not.
Twitter’s Takeover of Politics is Just Getting Started.
Summary at Tyler Cowen’s blog:
But what does this new, more intense celebrity culture mean for actual outcomes? The more power and influence that individual communicators wield over public opinion, the harder it will be for a sitting president to get things done. (The best option, see above, will be to make your case and engage your adversaries on social media.) The harder it will be for an aspirant party to put forward a coherent, predictable and actionable political program.
Finally, the issues that are easier to express on social media will become the more important ones. Technocratic dreams will fade, and fiery rhetoric and identity politics will rule the day. And if you think this is the political world we’re already living in, rest assured: It’s just barely gotten started.
See also my post freedom, the village, and social media.
Even Smart People Get It Wrong Sometimes
Economist Art Laffer:
“China is a huge plus to the U.S. because without China there is no Walmart, and without Walmart there is no middle class or lower class prosperity in America.”
Actually, the US was known for broad-based prosperity long before either Walmart or China was a significant factor. It was really only in the 1980s that Walmart’s expansion really took off…and it was then by no means as China-dependent as it has more recently become. Indeed, starting in 1984 and extending at least through the early 1990s, Walmart was a strong supporter of the Crafted with Pride in the USA campaign, which was launched by textile entrepreneur Roger Milliken, among others.
China’s presence in the global marketplace was greatly expanded by the Permanent Normal Trade Relations bill, which was signed by President Clinton in October 2000, as well as by China’s own economic-liberalization policies. (Some data on the growth of Chinese exports over time, here)
Real mean US household income, which is effectively a measure of price levels as well as wages/salaries, grew from $71773 in 1985 to $93887 in 2000. Fifteen years later, in 2015, it had risen to only $95887. (2017 dollars)
Real median household income grew from $51455 in 1985 to $59938 in fifteen years later, in 2000. In 2015, this indicator had actually declined to $58476. (It grew to $61372 by 2017)
There are a lot of factors that affect an economy, of course, and it would be unfair to conclude that the slowdown in American household income growth was caused by the vast expansion of trade with China. Maybe it would have been even worse without Chinese imports and exports?
National Review writer Robet VerBruggen cites “research” suggesting that “consumers save hundreds of billions of dollars per year thanks to expanded trade with China, and six-figure sums for every manufacturing job lost. (Tucker) Carlson may be right that cheap junk from China doesn’t make us happy in any fundamental way, but it would put serious strains on family budgets if all that junk got expensive again.”
Maybe. But I doubt if the strains would really be all that serious over time. If manufacturers did not have vast reservoirs of low-wage labor available for production of a particular product, then the incentives to improve productivity when making that product with high-wage labor would be greatly increased. Capital investment that makes no sense when you are paying workers $1.50/hour may make great sense when you have to pay $15/hour. Furthermore, product designs themselves can often be changed in minor ways to make them more manufacturable; again, this would help reduce the cost impact of domestic or other high-wage-country manufacturing.
I doubt if the strains on family budgets resulting from such changes in production-labor costs would have anywhere near the impact that has resulted from dysfunctional public schools (resulting in a need to pay for private schooling or move to a pricier neighborhood), unreasonable constraints on home-building, and out-of-control administrative and facilities spending by universities, coupled with irresponsible marketing of degree programs and student loans by same.
One thing that has definitely been beneficial about China’s export trade is the drastic reduction in poverty in that country; this reduction is indeed something that we should all celebrate. I suspect, however, that given economic liberalization, China could probably be doing just as well or almost as well with an economic approach that is not so extreme in its trade orientation but more focused on satisfying domestic demand…and this would probably be much more sustainable for them in the long run.
Also, here are some additional links on US wage trends for anyone who’s interested: