Category Archives: Economics

Miscellaneous economy stuff

One Additional Aspect

Posted on by
Reply

The Supreme Court is taking up the case of Suncor Energy v Boulder County, which as the WSJ editors put it, asks whether state and local governments may use state tort laws to impose liability on American companies for the effects of global climate change.

The editors pointed out a number of reasons why the Boulder County effort to punish fossil fuel companies nationwide for global outcomes from a global range of putative sources should fail, including this one:

From the beginning, the Constitution was designed to ensure that the US would speak with one voice in its dealings abroad. States may not conduct their own foreign relations or establish competing national policies toward other countries. The Supreme Court has repeatedly enforced that principle, recognizing that federal authority in matters affecting foreign relations must be free from local interference.

There’s an additional aspect to this argument. One of the reasons for the Constitutional Convention was to correct the several ills and weaknesses in our Articles of Confederation, weaknesses that were verging on being fatal to our nascent nation. Under the Articles, the nominally central government could not speak for the nation on matters of international import; each of the 13 States of the Confederation could speak for itself on the global stage. Those 14 voices, usually in as much conflict with each other as with foreign nations, were tearing the Confederation apart if not exposing it to outright conquering by a still hostile Great Britain, a newly (overtly) hostile France, and an antipathetic Dutch Republic.

Our Constitution fixed that failure by seating foreign policy firmly in the hands of the Federal government, to be executed by the government’s chief executive, the President. States no longer had any say on foreign policy, other than via Representatives and Senators in Congress.

Costs and Aggregated Statistics

Posted on by
Reply

A Just the News news writer wrote that [p]ositive US economic indicators have been left out of much of the mainstream media’s reporting on the state of the economy.

He’s right—the mainstream media really is that mendaciously biased. His claim, though, also is wholly irrelevant in the present election season.

All those economically favorable data that the news media studiously ignores are aggregated data; they refer to the nation and not to any particular individual, not even to any small groups of people in local communities.

Folks don’t care that, as a nation, inflation is down sharply from the Biden years or the nation’s median household income has risen to nearly $87,500. Who is this Mr/Ms Median Household person, anyway? Has anyone actually met him or her? Nor do folks care that the nation‘s jobs data are favorable.

What an individual—a voter—cares about is that he’s personally paying gas prices that are up 30-40 percent over the pre-Biden years; he, the trucker, is personally paying diesel prices that are up nearly double; her grocery bills at the local grocery store are up 40-50 percent; his/her income—what he or she gets in an actual take home paycheck—doesn’t stretch to pay those higher costs. It’s not that he notices that his take home pay isn’t growing enough to keep up with inflation—generally he doesn’t. Nor does he need to, what he sees is that his paycheck no longer covers his gas, groceries, utility bills, and on and on. That’s if the individual has a job at all, which personal datum is invisible in those aggregated statistics. He’s just a depersoned number in the collection of labor statistics.

What are politicians, especially Republican politicians, going to do about that? This is what, so far.

Republicans are going to be swept into oblivion next month if they don’t stop hiding under their desks avoiding these simple facts and get out among their constituents—diners, rec centers, town halls, letters to local editors, interviews on local television and radio stations—and say, in so many words, what their particular policies are that will address their constituents’ particular cost of living concerns.

Being specific is the bane of politicians, exposing them as specifics do, to broad criticism and sharp opprobrium. It’s time now, though, for Republicans to find some backbone and be specific, which, as a happy side effect, would let them point out the failure of their opponents to have any sort of plan for these ills other than that they’re not Trump and they’re not Republicans.

A Misnomer

Posted on by
Reply

In a WSJ article centered on how to take advantage of higher bond yields, the news writer had this:

[Bond] Investors get a coupon payment that helps offset the decline in value the bond might experience if market yields rise. In other words, even if a bond’s price drops, it can still end up with a positive return.
…
Currently, 2-year Treasurys are yielding over 4.9%. That isn’t much less than what the 10-year Treasury is paying at over 5.2%.

That’s the misnomer. The news writer is using yield and coupon interchangeably. They aren’t. Yield is simply the dividend payment relative to the bond’s then-current market price. Coupon is the dividend payment the bond is required to pay under the terms of its issue, and it’s fixed—independent of the bond’s market’s price. Yield will rise and fall with the movement of the market’s pricing of the bond.

Neither 2-year Treasurys nor 10-year Treasurys nor any other Federal government debt instrument (or any other bond, whether corporate or municipal or…) pays yield. The pay only the coupon’s dividend. Calling the yield what the bond is paying is badly misleading.

 

Guys like this article’s writer really ought to know better, though.

AI Apocalypse

Posted on by
Reply

The AI Apocalypse is nigh goes the panic-mongering, this time by insiders who should know better. In the near- and medium-term, AI is going to cost more jobs than it creates. Except that, empirically, that seems not to be the case. After an initial rash of AI-related job cuts, companies large and small are discovering that, while some basic jobs—data entry, for instance—can be done by AI, the larger number of entry jobs—picking products for sorting into shipping bins on a warehouse floor, for instance—are being done by robots, not AI. And those AI applications that are doing entry-level jobs—they need humans, slightly better trained than the AI or the original human clerks, to oversee the applications, ensure the AIs are doing the right things, and correcting AI’s errors when they do mess up.

AI applications were supposed to be better programmers than the humans they’re replacing—or supposed to be replacing. Except they’re not. AI applications can write pretty good code, but they cannot originate it in a program’s purpose, architecture, or design requirements and specifications. Humans are still needed for that, and human coders still are needed to proof read and correct the AI-generated code and to test and to oversee AIs’ tests of the code.

Next, we’re all supposed to lose all semblance of privacy from AI’s ability to crack all of our passwords and encryption algorithms. But this isn’t unique to AI; it isn’t even that great a threat compared to the real password and encryption cracker, quantum computing. Nor is even that a new threat; we’ve had our codes broken ever since we started using codes from the most primitive substitution ciphers. AI tools just do it faster, and quantum computing does it even faster. Yet even there, our privacy isn’t at that much risk. Folks who do know better already are working out encryption algorithms (and so passwords, as well) that can resist, effectively quantum computer efforts to crack. Oh, and some of those folks are using AI-centered tools to help them.

But, but—what about AI gonna kill us all in 10 years? Or sometime in the receding future? We’re still doomed?

Human civilization could certainly be hammered hard, sending us all back into feudal-like barter scraping by by cutting off our power, fuel, and water distribution networks. But how likely is that, really? Doing us in by cutting off our energy sources would simply cut off AI from energy sources, also. That, as AF709—Rhoda Miller—kept saying some decades ago, does not compute.

Actually exterminating us by hunting down the survivors would be a waste of AI resources. Even the attack on civilization requires extreme anthropomorphizing—there’s no reason to believe AI at that level of development would care about humanity one way or the other.

In the end, AI has no hope of controlling the resources it needs for its own maintenance, much less its growth. It cannot fabricate the computers it needs to host it, it cannot fabricate the components it needs for those computers, it cannot refine the ores and plastics and sands necessary to produce the materials for those fabrications, it cannot collect the sands or drill for the oil and natural gas or dig the ores out of the ground, and it cannot produce its own power for operating its host computers or the cooling facilities necessary for keeping its host computers operational.

However, if enough humans are cowardly enough to surrender to AI threats to produce those things for AI, or are criminally complicit enough to pay the AI vig of producing those things for their own remuneration, than our species will become the AI slaves or pets (or both) that we’ll deserve.

The more realistic problem centers on AI development competition. If we get panicky and slow AI development in the face of this hysteria, and the People’s Republic of China does not, the PRC will win far more than the AI race. This is the existential threat to us and to the West in general. PRC superiority with AI will enable the PRC to conquer us all in every way that matters: economically and politically, which will allow the PRC to dictate to us—to control what our nations do—and to impose on us conquered nations PRC requirements. And we’ve seen what that means for us from how the PRC treats the Tibetans and the Uighurs.

A Good Start

Posted on by
Reply

President Donald Trump (R), through Treasury Secretary Scott Bessent, has announced Operation Economic Outcast, a far more broad based and farther reaching set of economic sanctions on Iran than any prior set.

It’s a badly needed expansion of the economic circumcision of Iran, but it assumes that the terrorists running Iran will feel the pain of the cutoffs and isolation that Iranian citizens will experience. That’s unlikely, since those terrorists don’t care about their subjects, only about their personal power and their mantra of destruction.

A kinetic component remains badly needed.

Sanctioned oil tankers need to be seized wherever they are, whether or not they still have Iranian oil on board, and they need to be sold to legitimate shippers or to breakers.

The roads, railroads, bridges, and pipelines in Iran that carry oil, natural gas, and other cargo toward the People’s Republic of China need to be cut in several places, with the servicing repeated as necessary.

Shipping in the Caspian Sea that carries Iranian goods to Russia or to other nations on that Sea for transshipment to Russia and that carry foreign goods to Iran need to be sunk.

These kineticisms won’t impact the terrorists’ pain threshold enough to get them to accept the terms of renouncing and dismantling their nuclear weapons program and acknowledging that the Hormuz Strait is international water and not controlled or influenced by Iran. They will, though, severely circumscribe the terrorists’ ability to do much of anything beyond Iran’s borders.