Category: Economics

Australia’s 28 Years With No Recession Challenge Business Cycle Cliches

(p. 6) I had flown 16,000 miles . . .  to study . . .  the remarkable resilience of the Australian economy, which has gone nearly 28 years without a recession.

. . .

America is on the verge of its own economic milestone: The current expansion is on track to reach its 10th birthday this summer, which would also put it on record as the nation’s longest streak without a recession.

During the decade I’ve spent chronicling that growth as an economics writer, a persistent whisper has been: How long can it go? The run has been uneven, underwhelming and repeatedly on the verge of unraveling, including scary moments in 2010, 2015 and this past December. Seemingly every commentator without a good cliché blocker has referred to it as “long in the tooth.” Continue reading “Australia’s 28 Years With No Recession Challenge Business Cycle Cliches”

F.A.A. Regulations Slow Drone Innovation

(p. B2) Chinese aviation administrators, . . . , have already approved drone deliveries by the e-commerce giant JD.com and delivery giant SF Holding Co. But in the United States, it will depend on whether regulators eventually allow drone companies to have autonomous systems in which multiple aircraft are overseen by one pilot and whether they can fly beyond the vision of that pilot. Current regulations do not permit multiple drones per operator without a waiver. Operators like Wing, the drone-delivery company owned by Google parent Alphabet, have that capability.

. . .

Wing is . . .  one of several companies participating in a pilot program in Virginia. As with its testing in Finland and Australia, Wing will focus on the delivery of consumer goods, including food.

The Virginia site, in Blacksburg, near Virginia Tech, is one of 10 chosen by the Federal Aviation Administration as part of its Unmanned Aircraft Systems Integration Pilot Program.

The 10 were culled from 149 applications from “state, local and tribal governments,” agency spokesman Les Dorr said in an email. Those in the industry didn’t apply directly, but could show their interest, he said, and more than 2,800 companies responded.

. . .

While the F.A.A. has chosen the 10 pilots, the programs still need to apply for agency waivers because they will fly beyond the visual line of sight, fly at night and fly over people, fundamentals not allowed under current law. The agency is seeking comments on expanding permissible uses under current law; it is also testing to evaluate the parameters of regulation.

As a practical matter, this means that some of the pilot programs are not yet operational as they await F.A.A. approval.

That’s O.K., said James Pearce, a spokesman for the North Carolina Department of Transportation, which prefers to ensure that the drones can safely fly and that those on the ground are not exposed to any risks, including those that are self-inflicted. “We need to make sure that people know not to try to grab the drones.”

. . .

While the deliberate pace may seem slow, Mr. Levitt, like others interviewed, remains sanguine. “It’s like the red flag laws when cars began to populate the roads. You had to have someone walking ahead with a flag to warn others. That’s where we are today with drones — not being able to fly beyond the visual line of sight is like not allowing a car to drive faster than a person can walk.”

For the full story, see:

Ellen Rosen.  “No Drones at Your Doorstep, but Don’t Rule Them Out Yet.”  The New York Times (Monday, ):  B2.

(Note:  ellipses added.)

(Note:  the online version of the story has the date March 19, 2019, and has the title “Skies Aren’t Clogged With Drones Yet, but Don’t Rule Them Out.”)

Many Charities and Nonprofits Do Not Change the World

(p. A15) Opinion polls showing that present-day Democrats look more favorably on socialism than capitalism have prompted Tyler Cowen, an economics professor at George Mason University, to write what he calls a “love letter” to big business. His thesis: Corporations may lack heroic attributes, but they deserve more respect than they get.

. . .

Alongside the vilification of corporate capitalism has been a rise in the social status of nonprofits, as if the nonprofit label, by itself, signals both value and virtue. Mr. Cowen isn’t having it: He asserts that fraud is more prevalent in nonprofit organizations than in profit-making ones. What is more, “plenty of charities and nonprofits don’t actually change or improve the world or deliver any useful product at all, but rather simply continue as lost causes with no impact.”

Americans have a big stake in profits, as Mr. Cowen reminds us. “As of 2015, 55 percent of Americans had money invested in stocks . . . ,” he writes. “Even if you do not personally own many or any equities, there is a good chance your retirement fund or pension fund does.”

For the full review, see:

George Melloan. “BOOKSHELF; What Socialism Gets Wrong.” The Wall Street Journal (Tuesday, ): A15.

 

(Note: ellipsis between paragraphs, added; ellipsis internal to last paragraph, in original.)

(Note: the online version of the review has the date , and has the title “BOOKSHELF;‘Big Business’ Review: What Socialism Gets Wrong.”)

The book under review, is:

Cowen, Tyler. Big Business: A Love Letter to an American Anti-Hero. New York: St. Martin’s Press, 2019.

Cities Stop Recycling as Costs Exceed Benefits

(p. A1) Recycling, for decades an almost reflexive effort by American households and businesses to reduce waste and help the environment, is collapsing in many parts of the country.

Philadelphia is now burning about half of its 1.5 million residents’ recycling material in an incinerator that converts waste to energy. In Memphis, the international airport still has recycling bins around the terminals, but every collected can, bottle and newspaper is sent to a landfill. And last month, officials in the central Florida city of Deltona faced the reality that, despite their best efforts to recycle, their curbside program was not working and suspended it.

Those are just three of the hundreds of towns and cities across the country that have canceled recycling programs, limited the types of material they accepted or agreed to huge price increases.

“We are in a crisis moment in the recycling movement right now,” said Fiona Ma, the treasurer of California, where recycling costs have increased in some cities.

. . .

(p. A25)  With fewer buyers, recycling companies are recouping their lost profits by charging cities more, in some cases four times what they charged last year.

Amid the soaring costs, cities and towns are making hard choices about whether to raise taxes, cut other municipal services or abandon an effort that took hold during the environmental movement of the 1970s.

“Recycling has been dysfunctional for a long time,” said Mitch Hedlund, executive director of Recycle Across America, . . .

. . .

In Deltona, higher costs were not the only factor behind the decision last month to stop recycling. Even if the city agreed to pay the additional $25,000 a month that its recycling company was charging, there was no assurance that all the plastic containers and junk mail would be turned into something new, Mayor Heidi Herzberg said.

“We all did recycling because it was easy, but the reality is that not much was actually being recycled,” Ms. Herzberg said.

. . .

Some large waste producers are still going through the motions of recycling, no matter how futile.

Across Memphis, large commercial enterprises have had to stop recycling for now because of contamination problems. But the airport is keeping its recycling bins in place to preserve “the culture” of recycling among passengers and employees, a spokesman said.

For the full story, see:

Michael Corkery.  “More Cities Stop Recycling.  They Can’t Afford It.”  The New York Times, First Section  (Sunday, March 17, 2019):  A1 & A25.

(Note:  ellipses added.)

(Note:  the online version of the story has the date March 16, 2019, and has the title “As Costs Skyrocket, More U.S. Cities Stop Recycling.”  The online version says that the New York print version had the title “As Costs Surge, Cities’ Recycling Becomes Refuse.”  My National print edition had the title given in the citation above.)

“Macron Is Concerned with the End of the World; We Are Concerned with the End of the Month”

(p. A6) “Bosses prefer taking on temporary workers,” says Virginie Bonnin, 40, who works in local auto parts plants. “We are disposable.”

A single mother of three girls, Ms. Bonnin earns €1,900 a month. She learns on Thursday nights what her hours will be for the coming week. When her jobs end, she is sustained by unemployment benefits of about €1,400 a month.

“I’m not the worst off,” she says. “But it’s tricky.  In those times, I will not eat meat so that the kids can eat meat.” Her last summer vacation, a sacred French institution, was two years ago.

Ms. Bonnin was provoked into joining the Yellow Vests by the same measure that mobilized much of the country, a tax on gasoline that was to take effect in January.

Mr. Macron promoted it as a means of adapting to climate change. Outside major cities, where people rely on cars to get nearly everywhere, it supplied proof that the president was indifferent to the working class.  “Macron is concerned with the end of the world,” one Yellow Vest slogan put it.  “We are concerned with the end of the month.”

That accusation endured even after Mr. Macron suspended the gas tax in the face of Yellow Vest furor.

For the full story, see:

Peter S. Goodman.  “Rage of ‘Yellow Vests’ in France Intensifies Over People Left Behind.”  The New York Times (Thursday, April 18, 2019):  A6.

(Note:  the online version of the story has the date April 15, 2019, and has the title “Inequality Fuels Rage of ‘Yellow Vests’ in Equality-Obsessed France.”)

Boeing Tech Kludge Designed to Avoid Cost of Re-Certification Regulations

(p. A18)  . . . , Boeing engineers created the automated anti-stall system, called MCAS, that pushed the jet’s nose down if it was lifting too high. The software was intended to operate in the background so that the Max flew just like its predecessor. Boeing didn’t mention the system in its training materials for the Max.

Boeing also designed the system to rely on a single sensor — a rarity in aviation, where redundancy is common. Several former Boeing engineers who were not directly involved in the system’s design said their colleagues most likely opted for such an approach since relying on two sensors could still create issues. If one of two sensors malfunctioned, the system could struggle to know which was right.

Airbus addressed this potential problem on some of its planes by installing three or more such sensors. Former Max engineers, including one who worked on the sensors, said adding a third sensor to the Max was a nonstarter. Previous 737s, they said, had used two and managers wanted to limit changes.

“They wanted to A, save money and B, to minimize the certification and flight-test costs,” said Mike Renzelmann, an engineer who worked on the Max’s flight controls. “Any changes are going to require recertification.” Mr. Renzelmann was not involved in discussions about the sensors.

For the full story, see:

Jack Nicas and Julie Creswell.  “Boeing’s 737 Max: ’60s Design Meets ’90s Computing Power.”  The New York Times (Tuesday,  2019):  A1 & A18.

(Note:  ellipsis added.)

(Note:  the online version of the story has the date , and has the title “Boeing’s 737 Max: 1960s Design, 1990s Computing Power and Paper Manuals.”)

Turing Award Winners’ Neural Networks “Are Still a Very Long Way from True Intelligence”

(p. B3) On Wednesday [March 27, 2019], the Association for Computing Machinery, the world’s largest society of computing professionals, announced that Drs. Hinton, LeCun and Bengio had won this year’s Turing Award for their work on neural networks. The Turing Award, which was introduced in 1966, is often called the Nobel Prize of computing, and it includes a $1 million prize, which the three scientists will share.

. . .

Though these systems have undeniably accelerated the progress of artificial intelligence, they are still a very long way from true intelligence. But Drs. Hinton, LeCun and Bengio believe that new ideas will come.

“We need fundamental additions to this toolbox we have created to reach machines that operate at the level of true human understanding,” Dr. Bengio said.

For the full story, see:

Cade Metz.  “Pioneers Whose Neural Networks Are Bringing A.I. to Life Win Turing.”  The New York Times (Thursday, , 2019):  B3.

(Note:  ellipsis, and bracketed date, added.)

(Note:  the online version of the story has the date , 2019, and has the title “Turing Award Won by 3 Pioneers in Artificial Intelligence.”)

Vernon Smith Offers More Advance Praise for Openness to Creative Destruction

Adam Smith said that we seek security–more cautious than enterprising–because we suffer more in falling from a better to a worse situation than we ever enjoy in rising from a worse to better. Yet Smith provided opportunity for James Watt, an upstart 22 year-old mechanical genius that was denied him by the local corporations; thus launching a spectacular career of innovation. Others, from Tom Edison to Steve Jobs, followed. Diamond’s book is about our need to nourish and reduce the obstacles to that creative engine; to give freedom to the flower of innovation that we all be enriched.

Vernon Smith, Nobel Prize in Economics, received in 2002.

Vernon Smith’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

“Ridiculous” to Project “Our Psychology into the Machines”

(p. A8)  . . .  the soft-spoken, 55-year-old Canadian computer scientist, a recipient of this year’s A.M. Turing Award — considered the Nobel Prize for computing — prefers to see the world though the idealism of “Star Trek” rather than the apocalyptic vision of “The Terminator.”

“In ‘Star Trek,’ there is a world in which humans are governed through democracy, everyone gets good health care, education and food, and there are no wars except against some aliens,” said Dr. Bengio, whose research has helped pave the way for speech- and facial-recognition technology, computer vision and self-driving cars, among other things. “I am also trying to marry science with how it can improve society.”

. . .

Cherri M. Pancake, the president of the Association for Computing Machinery, which offers the $1 million award, credited Dr. Bengio and two other luminaries who shared the prize, Geoffrey Hinton and Yann LeCun, with laying the foundation for technologies used by billions of people. “Anyone who has a smartphone in their pocket” has felt their impact, she said, noting that their work also provided “powerful new tools” in the fields of medicine, astronomy and material sciences.

Despite all the accolades, Dr. Bengio recoils at scientists being turned into celebrities. While Dr. Hinton works for Google and Dr. LeCun is the chief A.I. scientist at Facebook, Dr. Bengio has studiously avoided Silicon Valley in favor of a more scholarly life in Montreal, where he also co-founded Element A.I., a software company.

“I’m not a fan of a personalization of science and making some scientists stars,” said Dr. Bengio, a self-described introvert, who colleagues say is happiest when hunched over an algorithm. “I was maybe lucky to be at the right time and thinking the right things.”

Myriam Côté, a computer scientist who has worked with Dr. Bengio for more than a decade, described him as an iconoclast and freethinker who would feel stymied by the strictures of Silicon Valley. A communitarian at heart, she said, he shuns hierarchy and is known for sharing the profits from his own projects with younger, less established colleagues.

“He wants to create in freedom,” she said. Citing the credo of student rebels in 1968 in Paris, where Dr. Bengio was born, she said his philosophy was: “It is forbidden to forbid.”

That, in turn, has informed his approach to A.I.

Even as Stephen Hawking, the celebrated Cambridge physicist, warned that A.I. could be “the worst event in the history of our civilization,” and the billionaire entrepreneur Elon Musk has cautioned it could create an “immortal dictator,” Dr. Bengio has remained more upbeat.

. . .

. . .  he dismissed the “Terminator scenario” in which a machine, endowed with human emotions, turns on its creator. Machines, he stressed, do not have egos and human sentiments, and are not slaves who want to be freed. “We imagine our creations turning against us because we are projecting our psychology into the machines,” he said, calling it “ridiculous.”

For the full story, see:

Dan Bilefsky.  “THE SATURDAY PROFILE; Teaching a Generation of Machines, Far From the Spotlights of Silicon Valley.”  The New York Times (Saturday, March 30, 2019):  A8.

(Note:  ellipses added.)

(Note:  the online version of the story has the date March 29, 2019, and has the title “THE SATURDAY PROFILE;  He Helped Create A.I. Now, He Worries About ‘Killer Robots’.”)

Peter Boettke Offers Advance Praise for Openness to Creative Destruction

Prometheus didn’t ask permission for Zeus to bring fire to the humans. It cost him dearly, as Zeus punished him in a rather vicious manner. But human beings were made infinitely better off with fire. Art Diamond relays this story to us precisely because he wants us to understand the great benefits that entrepreneurial innovation deliver for mankind, and yet how the true innovator is often despised and disrespected by the prevailing orthodox establishment. If Prometheus had to get permission before giving fire to man, then man would have never gotten the benefits of fire. Similarly, if our entrepreneurial innovators had to get permission prior to introducing their innovation, we would still be walking around or perhaps at best riding on the backs of beasts but I doubt we would have seen the benefits of automobiles, let alone planes, and we would very well not have modern conveniences such as indoor plumbing, let alone air travel, cell phones, and the world wide web.

Peter Boettke, Professor of Economics & Philosophy, George Mason University; Director F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center.

Boettke’s advance praise is for:
Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, forthcoming June 2019.

Janet Yellen Values Non-Ph.D.s at Fed

(p. A2)  Sen. Ben Sasse, a Nebraska Republican, nicely captured this sentiment by saying about Mr. Moore, an advocate for lower taxes and other conservative causes: “Steve’s nomination has thrown the card-carrying members of the Beltway establishment into a tizzy, and that says little about Steve and his belief in American ingenuity, but a lot about central planners’ devotion to groupthink.”

Anti-elitism is an odd look for Mr. Sasse, Ph.D. (Yale) and former college president (Midland University), but he’s hardly alone.

. . .

Economics can be insular, and even Janet Yellen, who chaired the Fed before Mr. Powell, agrees the Fed has been top-heavy with Ph.D. economists like her. “It’s not always been clear that this led to an improvement in policymaking,” she said in a 2012 interview for an oral history of the Fed, released Friday [April 12, 2019]. She praised the contribution of non-economist governors who, she says, are always asking themselves if the arguments of economists are “relevant to the world as I’m experiencing it through my contacts, whether they’re bankers or businesspeople or whatever?”

For the full commentary, see:

Greg Ip.  “What You Need to Be on the Fed…and It Isn’t a Ph.D.”  The Wall Street Journal  (Monday, 9):  A2.

(Note:  ellipsis, and bracketed date, added.)

(Note:  the online version of the commentary has the date 9.)