December 12, 2018

Musk Jabs the SEC as "the Shortseller Enrichment Commission"



(p. B1) Elon Musk risked reigniting a battle with federal securities regulators on Thursday when he appeared to openly mock the Securities and Exchange Commission only days after the Tesla Inc. chief executive settled fraud charges with the agency.

Seemingly without prompt, Mr. Musk sent a tweet in the early afternoon that suggested the SEC was enriching investors betting against the electric-car maker. "Just want to [say] that the Shortseller Enrichment Commission is doing incredible work," Mr. Musk tweeted. "And the name change is so on point!"



For the full story, see:

Tim Higgins and Gabriel T. Rubin. "Tweet by Elon Musk Takes Jab at the SEC." The Wall Street Journal (Saturday, October 5, 2018): B1 & B4.

(Note: the online version of the story has the date Oct. 4, 2018, and has the title "Elon Musk Tweet Mocks the Securities and Exchange Commission.")






December 11, 2018

"The Stigma of Being 'Drivers'"



(p. 6) They were arrested, suspended from jobs, shunned by relatives and denounced by clerics as loose women out to destroy society. Their offense? They did what many in Saudi Arabia considered unthinkable: getting in cars and driving.

Their protest in 1990 against the kingdom's ban on women driving failed, and the women paid dearly for it, with the stigma of being "drivers" clinging to them for years.

So last month, when King Salman announced that the ban on women driving would be lifted next June, few were happier than the first women to demonstrate for that right -- almost three decades ago.


. . .


Many restrictions on women remain, including so-called guardianship laws that give Saudi men power over their female relatives on certain matters. But the original protesters are overjoyed that their daughters and granddaughters will have freer lives than they did, thanks to the automobile.

"That I am driving means that I know where I am going, when I'm coming back and what I'm doing," said Ms. Alaboudi, the social worker.

"It is not just driving a car," she said, "it is driving a life."



For the full story, see:

BEN HUBBARD. "27 Years After Protest, a Victory Lap for Saudi Women." The New York Times, First Section (Sunday, October 8, 2017): 6.

(Note: ellipsis added.)

(Note: the online version of the story has the date OCT. 7, 2017, and has the title "'Once Shunned as 'Drivers,' Saudi Women Who Fought Ban Now Celebrate.")






December 10, 2018

Lean Supply Chains Fail to Scale Quickly



(p. A1) American factories are running short of parts.

Suppliers of everything from engines to electronic components aren't keeping up with a boom in U.S. manufacturing, which has lifted demand in markets such as energy, mining and construction. As a result, some manufacturers are idling production lines and digesting higher costs.


. . .


(p. A4) Years spent making supply chains as lean and efficient as possible are hurting big customers now as demand climbs, industry consultants said.

"Suppliers have not been willing to jump on adding capacity because they've been burned badly before," said Shiv Shivaraman, a managing director at consultant AlixPartners LLC who advises auto and machinery makers on supply chains and production processes. "You will see many people limping for a while."

Some companies are stockpiling parts to head off future challenges, potentially exacerbating the supply pressures.

"We built some inventory last quarter because we had seen the lead times extend and we are trying protect our customers," said Andrew Silvernail, CEO of Idex Corp. , a maker of pumps, valves and meters that is based in Lake Forest, Ill.



For the full story, see:

Doug Cameron and Austen Hufford. "Parts Makers' Shortages Tap Brakes on Industrial Boom." The Wall Street Journal (Saturday, Aug. 11, 2018): A1 & A4.

(Note: ellipsis added.)

(Note: the online version of the story has the date Aug. 10, 2018, and has the title "Parts Shortages Crimp U.S. Factories.")






December 9, 2018

Jason Potts Offers Advance Praise for Openness to Creative Destruction



What explains innovative dynamism? Art Diamond has written a fantastic book exploring how strong property rights, not innovation systems, should be the basis of modern innovation policy. He has done a great job in setting out the case for a classical liberal approach to innovation and technology policy, and carefully counters many of the common arguments supporting interventionist policy models. The book is full of lucid and compelling case studies and will be popular among innovation scholars and policy-makers.


Jason Potts, Professor of Economics, Royal Melbourne Institute of Technology (RMIT), Director of Blockchain Innovation Hub at RMIT. Author of The New Evolutionary Economics, and other works.



Potts's advance praise is for:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.






December 8, 2018

Rising Sea Not Due to Global Warming



(p. A17) It is generally thought that sea-level rise accelerates mainly by thermal expansion of sea water, the so-called steric component. But by studying a very short time interval, it is possible to sidestep most of the complications, like "isostatic adjustment" of the shoreline (as continents rise after the overlying ice has melted) and "subsidence" of the shoreline (as ground water and minerals are extracted).

I chose to assess the sea-level trend from 1915-45, when a genuine, independently confirmed warming of approximately 0.5 degree Celsius occurred. I note particularly that sea-level rise is not affected by the warming; it continues at the same rate, 1.8 millimeters a year, according to a 1990 review by Andrew S. Trupin and John Wahr. I therefore conclude--contrary to the general wisdom--that the temperature of sea water has no direct effect on sea-level rise. That means neither does the atmospheric content of carbon dioxide.

This conclusion is worth highlighting: It shows that sea-level rise does not depend on the use of fossil fuels. The evidence should allay fear that the release of additional CO2 will increase sea-level rise.

But there is also good data showing sea levels are in fact rising at a constant rate. The trend has been measured by a network of tidal gauges, many of which have been collecting data for over a century.

The cause of the trend is a puzzle. Physics demands that water expand as its temperature increases. But to keep the rate of rise constant, as observed, expansion of sea water evidently must be offset by something else. What could that be? I conclude that it must be ice accumulation, through evaporation of ocean water, and subsequent precipitation turning into ice. Evidence suggests that accumulation of ice on the Antarctic continent has been offsetting the steric effect for at least several centuries.



For the full commentary, see:

Fred Singer. "The Sea Is Rising, but Not Because of Climate Change; There is nothing we can do about it, except to build dikes and sea walls a little bit higher." The Wall Street Journal (Wednesday, May 16, 2018): A17.

(Note: the online version of the commentary has the date May 15, 2018.)






December 7, 2018

Bezos Richer than Rockefeller in Real Wealth



(p. A2) With a fortune exceeding $150 billion, Amazon founder Jeff Bezos was recently declared the richest person in modern history.

But is he?

The answer depends on how you account for the wealth of past contenders for the title.

There are at least five ways to do that, and each provides a different result, according to Samuel H. Williamson, an economist and president of the website Measuring Worth.

Real wealth, the most familiar yardstick, accounts for the relative purchasing power of a particular sum by adjusting it for inflation based on the Consumer Price Index.

Using that measure, the fortune of John D. Rockefeller, America's first billionaire and Mr. Bezos' stiffest competition among latter day aristocrats, would equal only $24 billion today.

Working in reverse, Mr. Bezos' fortune would amount to about $6.5 billion in 1916, when Rockefeller's riches first hit the $1 billion mark.



For the full commentary, see:

Jo Craven McGinty. "THE NUMBERS; Bezos vs. Rockefeller, a Rich History Lesson." The Wall Street Journal (Saturday, Aug. 11, 2018): A2.

(Note: the online version of the commentary has the date Aug. 10, 2018, and has the title "THE NUMBERS; Is Jeff Bezos Really the Richest of Them All?")






December 6, 2018

"New York Needs to Embrace Entrepreneurs, Not Repel Them"



(p. A15) For centuries New York has evolved. With its deep port, the city dominated U.S. trade through the late 1800s. But that wasn't enough to employ the swarms of immigrants coming through Ellis Island. So the city transformed, creating higher-paying jobs. By 1910 some 40% of all New York workers were employed in manufacturing--the garment industry, sugar refining, publishing and even bread making. My grandfather was in the millinery business. Manufacturing lasted even through the 1960s. I remember seeing shirts made in the Empire State Building. Total employment in the city peaked in 1969.

As post-World War II technology drove transportation costs down, manufacturing moved to the suburbs (and eventually Asia). Most large American cities stagnated. But New York transformed itself again, this time into a service economy with high-paying jobs in finance, media, fashion, law, accounting and health care. It also remained home to the most important stock market in the world. Today well over 90% of New York employment is in services, according to the New York state government.

But the city has arrived at a nasty inflection point again. New York risks becoming another Detroit. New York needs to embrace entrepreneurs, not repel them.



For the full commentary, see:

Andy Kessler. "Can New York Reinvent Itself Again? It risks becoming another Detroit if it keeps repelling entrepreneurs." The Wall Street Journal (Monday, Sept. 11, 2017): A15.

(Note: the online version of the commentary has the date Sept. 10, 2017.)









December 5, 2018

Rage at Malfunction Led to Invention



(p. B15) A business contemporary of Raymond A. Kroc, who built the McDonald's chain into the industry leader, Mr. Edgerton started Burger King with $12,000 after managing Howard Johnson's restaurants in Miami and Orlando, Fla.


. . .


In a 1998 memoir, "The Burger King: Jim McLamore and the Building of an Empire," Mr. McLamore described Mr. Edgerton as a creative conceptual thinker but also as someone who "never focused very much on details, particularly those concerning financial matters."

Early on, Mr. Edgerton estimated that profits were running at an eye-popping 28 percent of sales. But the "books" he was looking at turned out to be an assortment of papers stuffed into a peach basket showing that Insta Burger had actually lost money in its first few months.

It was hard for the partners at first. "We were losing our butts," Mr. Edgerton said in a 2014 interview for this obituary. Paying himself $50 a week, he added, "We starved together."

A major problem was the frequent breakdowns of the Rube Goldberg-like Insta broiler they had inherited. One day, Mr. McLamore wrote, "the machine began to malfunction just at the moment Dave was standing in front of it," and the grinding of its metal parts sent him into a rage.

By Mr. McLamore's account, Mr. Edgerton "reached into his toolbox and grabbed a hatchet" and sank it into the stainless steel mechanism, destroying it. He then shouted, red-faced, "I can build a better machine than this pile of junk!"

Three weeks later, Mr. Edgerton and a mechanic who ran a machine shop had produced a continuous-chain broiler, which would set a standard for all Burger King broilers and become a model for equipment in the industry.


. . .


The business took off, and by 1967 it had more than 400 units in about 20 states, particularly in the East and California, as well as in a few other countries. Its success drew an offer from the Pillsbury Company to buy Burger King.

"I really didn't want to sell out," Mr. Edgerton said, but he went along because he had found Mr. McLamore to be "a golfer first and foremost" who wanted more time to indulge his passion and who had no real need to keep working, being married to a woman of wealth.


. . .


He complained that the company, which had a series of jolting ups and downs over subsequent decades, let its menu get too big, and that its plethora of chief executives -- "bookkeepers," he called them -- had rarely had experience in the restaurant business.

Asked in the 2014 interview if he regretted walking away from an industry on the verge of a boom that could have made him a billionaire, he pondered the question for a moment and then said, "That's hindsight."



For the full obituary, see:

Robert D. Hershey Jr. "David Edgerton, 90, a Burger King Founder Who Sold His Stake for a Bargain, Dies." The New York Times (Tuesday, April 17, 2018): B15.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the obituary has the date April 16, 2018, and has the title "David Edgerton, a Founder of Burger King, Is Dead at 90.")


The memoir mentioned above, is:

McLamore, James W. The Burger King: Jim McLamore and the Building of an Empire. New York: McGraw-Hill, 1997.






December 4, 2018

Deregulation Can Revive 3% Economic Growth



(p. A17) Growth deniers are declaring that America's economy has lost its ability to grow at 3% above inflation. If that's the case, maybe we should go back to where we lost 3% growth and retrace our steps until we find it. For only with 3% or higher growth does America experience measurable progress in poverty reduction, strong job creation and income growth. If 3% growth is irretrievably lost, so is the American Dream.

Did America actually experience 3% real growth to start with? Yes. In the postwar era, the U.S. averaged 3.4% annual growth from 1948 through 2008. We averaged 3% growth for half of the George W. Bush presidency (2003-06). From 2009-12, the Obama administration, the Congressional Budget Office and the Federal Reserve all thought they saw 3% growth just around the corner. If the possibility of 3% growth is gone forever, it hasn't been gone very long.


. . .


While Obama apologists like to claim that labor-productivity and labor-supply factors preclude 3% growth, most of the growth constraints we face today are directly attributable to Mr. Obama's policies.


. . .


A tidal wave of new rules and regulations across health care, financial services, energy and manufacturing forced companies to spend billions on new capital and labor that served government and not consumers. Banks hired compliance officers rather than loan officers. Energy companies spent billions on environmental compliance costs, and none of it produced energy more cheaply or abundantly. Health-insurance premiums skyrocketed but with no additional benefit to the vast majority of covered workers.

In a world of higher costs, productivity plummeted. Productivity measures the production of things the market values that flow from the employment of labor and capital. Try listing the Obama-era regulatory requirements that generated the employment of labor and capital in ways that actually produced something you buy.


. . .


Bad policies--not bad luck or a loss of God's favor--have driven down labor productivity and the labor supply. We can change those policies.


. . .


With 3% growth, the American dream is achievable and virtually anybody willing to work hard can live it. Let 3% growth die and a lot of what we love most about our country will die with it.



For the full commentary, see:

Phil Gramm and Michael Solon. "Finding America's Lost 3% Growth; If the country can't grow like it once did, then the American Dream really is irretrievably lost." The Wall Street Journal (Monday, Sept. 11, 2017): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Sept. 10, 2017.)






December 3, 2018

Barcelona Fines 136-Year-Old Basilica for Lack of Building Permit



(p. A4) The Sagrada Familia basilica in Barcelona has worldwide fame as an architectural treasure, the dreamlike masterpiece of the Catalan architect Antoni Gaudí, which draws millions of visitors a year though it is still under construction, 136 years after work began.

What it has not had for more than a century, according to the city, is a valid building permit.

The Sagrada Familia basilica has agreed to pay city authorities 36 million euros, or about $41 million, over 10 years to settle the dispute over the legality of the work and help pay for transportation improvements around the basilica.


. . .


The Sagrada Familia's board had denied any wrongdoing, saying that it had a building permit -- one issued in 1885 by Sant Martí de Provençals, which was an independent town at the time. Barcelona officials contend that after Sant Martí was absorbed into the city several years later, the construction required a Barcelona permit; the board says that for more than a century, no one asked for any such thing.



For the full story, see:

Raphael Minder. "A Barcelona Gem, And a Scofflaw?" The New York Times (Saturday, Oct. 20, 2018): A4.

(Note: ellipsis added.)

(Note: the online version of the story has the date Oct. 19, 2018, and has the title "Sagrada Familia, a Barcelona Masterpiece, and Scofflaw?")









Eight Most Recent Comments:



PaulS said:

The "Machines Are Not Capable of Creativity" argument and the no-human-obsolescence argument seem to talk directly past each other. After all, the present-day world is stuffed to the brim (and well beyond) with government and other regulations expressly designed to suppress "creativity" at all cost, in the name of "safety". That is, in a context of irrationally radical risk aversion - the quest for absolutely zero risk - the societal "we" often seek to rid ourselves of "creativity".

Thus, "creativity" has become largely restricted to a minuscule minority (further shrunken by metastasizing copyright and patent regulations that concentrate funds ever more narrowly), and/or, sometimes, to tasks that matter little, such as entertainment. Most "jobs" or "gigs" are left as tightly controlled drone work. "True" artificial intelligence is thus utterly unnecessary to obsolete most of the humans performing them. "Big Data" and "Big Software" will completely suffice. (The last thing you want in a self-driving taxi, or even in a political-correctness-driven professorship, is "true" AI: at least for now, it would be a lawsuit magnet, far too unpredictable.)

With the definition of "safety" steadily metastasizing to include even the most utterly trivial discomforts (viz. the campus 'snowflakes'), the only excuse left for most jobs to exist might be a desire for "the human touch". Indeed, the lack of said touch is one complaint about kiosks that replace restaurant counter clerks or waiters.

But once the primary justification for jobs to exist is to enable the most affluent to go on receiving "the human touch" - i.e. to enable them to pull rank - the process will not end well. People hate to be on the receiving end of rank-pulling. We will become stuck with either a guaranteed-income approach, or else a widespread, intensely Luddite reaction.

This is all destined to become "interesting" - but likely, alas, mainly in the accursed sense.



PaulS said:

Probably this should be unsurprising for a number of reasons, even going beyond the article.

Today's zeitgeist, of course, tells us that everyone should become a Web designer living four to a tiny dorm room in a skyscraper in grossly overpopulated urban California. As if most tech products haven't been fully mature for years or even decades, with updates mainly confined to befuddling customers with never-ending capricious changes to the functions of device or software controls (e.g. quick, how exactly do you summon up the "home screen" this week? Or is said screen now a wholly inscrutable tri-level icon-menu?)

So, what use are more techies? But even if there are better things to do, many such things "don't get no respect" amidst the STEM panic.

Then there's the seasonal aspect. The great majority of construction - homes and otherwise - seems to be done, these days, in the torrid (and ever-rising, especially in paved-over urban areas) heat of high summer. This is not completely new, but, well, air-conditioning has been widespread for decades now. There's no longer much need or desire to go outside to escape the even worse heat inside buildings and houses. Even poor-ish countries like China are rapidly acquiring A/C.

Now, once central heat became widespread, people stayed inside to escape the freezing, dark depths of winter. That is a trope, for example, with Christie's Hercule Poirot, derided as a "dandy" by his presumably more manly fictional contemporaries, for disliking cold, chilly old English houses lacking proper heat. And indeed, rather little outdoor construction goes on in the north in January.

Given that, why wouldn't sensible people now also want to stay inside during the blistering heat of high summer? Certainly, there are many ways to earn a living without torturing oneself in a furnace. (And, ignore all the caterwauling, why wouldn't sensible kids want to play video games in a nice comfortable living room instead of parboiling miserably outside?)

At the end of the day, construction - i.e. working under awful conditions few humans wish to tolerate any longer - seems like a great opportunity for robotics. Alas, what is hyped as "artificial intelligence" (AI) is usually nothing of the kind, or else is so ultra-narrowly specialized (think chess or go) as to be of little or no broad use. Nonetheless, a great deal of robotics can be built already without true AI, and such AI will eventually arrive too.

So why isn't more robotics used? Why isn't more outdoor construction shifted away from high summer, as it is from the worst of winter, i.e. to spring and fall? Why isn't there tremendously more factory prefabrication? Why do so many construction sites - buildings and highways - still look, despite the use of diesel engines and such, so very nineteenth-century?



PaulS said:

Wonderful. Let's go for strict temporal gating as well as spatial gating. Exile everyone not made of money to the anti-social hours of the clock as well as the monster commutes of the far reaches of Queens and Staten Island. How about fixing the subways, and abolishing the nonsense that makes it take 90 years to build one small 2nd Ave line? How about dispersing the overconcentration of people a bit? It's a huge country and modern communication exists. How about paying for same by taxing the living daylights out of the billionaire rentier class who create the problem by forcing ever more people to cram into highly dysfunctional megacities as the price of having any income at all? You gotta love the nexus between airheaded liberals who want to pile everyone on Earth with a sob story into a few US-ian megacities (rather than fix their own governments and problems), and economics types who then want to punish the very same folks by blocking off absolutely everything with an extortionate toll gate. Not.



PaulS said:

"when the alternative is to have $10 and go thirsty"

In the real world, the politics will get "interesting" with respect to folks who *don't* have $10 to pay for what normally costs $1 or $0.10, and will therefore go thirsty, or be stranded, or worse. Then, also be aware of simple resentment. Then, aggravate the anger with runaway inequality so extreme that the elites running the show will not be inconvenienced in the slightest by any likely level of 'gouging'. Then brace for a social explosion.

All told, it seems fatuous to expect very many people to be happy about being charged, say, an entire car payment just to get home across town from the holiday party. (It seems even more fatuous to expect happiness when the 'gouging' comes as an ongoing life-upending surprise, as with I-66 in Virginia.)

It helps to instead ground oneself in reality. After doing so, it's ridiculously easy to imagine the relevant government and/or employer simply declaring, for example: "If you wish to be allowed to drive a taxi at all, then you will make yourself available, to some specified extent, even at times that may be inconvenient for you."

Indeed, such rules and regulations are utterly banal and commonplace. Nary a soul would weep for Uber if it and its drivers were regulated - even rather harshly - in such a manner. Of course, some souls would become exercised over the minor economic inefficiency of such regulation, but they would number far too few to matter.



PaulS said:

"Dr. Gray was skeptical about the causes of climate change, prompting vitriolic exchanges with other scientists. Judith A. Curry, who was chairwoman of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology, accused him of 'brain fossilization.'"

I had no idea. These days, after all, Curry is very much in the doghouse as a "climate denier". Wow. What, then, can we deduce about the typical (or merely politically-correct?) level of hysteria in the "climate community"? Of course, many in said "community" would force most of us back into the Stone Age while they themselves continue to jet across the world at whim to attend "conventions" in order to signal virtue by delivering half-hour diatribes on saving the "planet" from impending doom.

Maybe, then, The Donald is right (???!) that it is fairly safe to behave just as the doomers do, and ignore the threat - and their own diatribes - as a practical matter? Wouldn't that be weird?



PaulS said:

Another case in point: between them, Google, Tesla, and others have spent countless billions on mapping the USA, enough for at least $1000/mile including every last obscure Forest Service track. That should be more than enough to catalog everything down to the embossing style on every manhole cover. And yet a person can find their way to Grandma's new house with vague turn-by-turn directions or a vague line-sketch that shows no details whatsoever about the road surface or the sidewalks or the crosswalks. And a person will manage the task without needing, in advance, a finely detailed map of the current construction projects, including lane changes etc. But that severe incompleteness won't stop morally-posturing politicians from forcing autonomous cars onto the populace years or even decades before they are actually ready for unsupervised consumer use. That is the essentially only kind of use they will get in the real world. After all, politicians love to posture, they love to toady up to rent-seeking billionaires, and they love photo-ops of themselves gawking at shiny new tech gadgets. Note that when signals were first installed on the Chicago El, the accident rate went up for a time, as trained motormen became careless about watching where they were going. Not-so-trained consumers will be far too busy fiddling with their phones to be ready to take over on a split-second's notice.



PaulS said:

And there will be unicorns. So we'll have some remote working, but we'll be jailing ever more techies in a few obscenely overcrowded, otherworldly-expensive megacities. Just as Microsofties once told us wasting two days on the now-infamously godawful airlines just to physically attend an hour meeting was going away, but both the meetings and the airlines only got worse and worse.

So not really a big deal, just another stylistic business fad. Those come and go like mayflies - while being crammed, confined, and nailed down, remains eternally.



rjs said:

there's a lot GDP doesnt capture, but i'm not sure where Feldstein is coming from about statins...the consumption of drugs is included in the non-durable goods component of PCE, consumption of health care services by themselves account for 12% of GDP, and R & D would be included in investment in intellectual property products.. the problem is that everyone is trying to make GDP into something it's not...it's a measure of goods and services produced by the economy, full stop. it's not intended to measure increases in life expectancy or well being, or any other intangibles..





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