Tag Archives: economics

Germany’s Energy “Crisis”

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The Russian “slowdown” of natural gas deliveries to Germany is beginning to convince the German government that they’re overly dependent on Putin’s whims for the nation’s energy.

Minister of the Economy Robert Habeck:

The reduction in gas supplies is an economic attack on us by [Russian President Vladimir Putin]. We will defend ourselves against this. But our country is going to have to go down a stony path now.

That stony path includes what, exactly? Habeck again:

The prices are already high, and we need to be prepared for further increases. This will affect industrial production and become a big burden for many producers.

What else?

Habeck, who is a Green Party politician in the center-left ruling coalition, announced a return to “coal-fired power plants for a transitional period” in order to reduce gas consumption for electricity production.
“We are setting up a gas substitute reserve on call. “That’s bitter, but it’s almost necessary in this situation to reduce gas consumption,” Habeck said.

What not else?

Nuclear power. After then-Chancellor Angela Merkel’s panicky shutdown of Germany’s nuclear power production facilities—all of them—in the aftermath of Japan’s Fukushima nuclear power facility accident (in which there were all of 16 injuries, from hydrogen explosions, and 2 more from radiation exposure related to the accident itself, and a single subsequent fatality due to radiation-induced cancer), the German government remains steadfastly opposed to a source of energy that is utterly free of pollution, doesn’t release evil CO2 into the atmosphere, and that is intrinsically safe: modern nuclear reactors.

To the extent Germany has an energy crisis, it’s one of Germany’s own making as that nation volksmarched determinedly down two paths: its conscious decision to subordinate itself to Russian energy delivery and so to Russian energy extortion, and its equally conscious decision to eschew an utterly reliable energy source that doesn’t depend on the vagaries of wind or of sun, the latter especially in cloudy Germany.

Unsingen, in west central Germany, illustrates that latter.

The Fed and Equity

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And, no, I’m not writing about house ownership type equity. This concerns the Fed’s potentially increasing role in “social equity.”

The Wall Street Journal Editorial Board expressed concern about Progressive-Democrats trying to legislate into the Federal Reserve’s mandates the matter of “racial equity.” They’re correct as far as they went, but they based their concern on the Fed’s existing workload and on the question of how to assess “racial equity” in the Fed’s pronouncements and enforce the concept in its controls.

The Editors, though, missed the most important distinction and problem.

Whether or not “racial equity” is a matter to be taken seriously, it’s a political matter only, and so belongs only to the political branches of our Federal government—Congress and the White House.

The matter has no place in any Central Bank, including ours. The Federal Reserve’s function, in particular, is to protect our currency by protecting our economy—by working, under its existing statutory instructions, to maintain stable pricing, maximum employment, and moderate long-term interest rates (which means working to maintain stable pricing, since employment and interest rates fall out of that).

The Fed has no business or place in the political environment.

Airbus Thinks It’s Special

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Or at least, more important than the existence of a nation.

Airbus is pushing against sanctions on Russian titanium sales, amid a flurry of restrictions on the export of other Russian goods ranging from vodka to steel.

After all,

About 65% of Airbus’s titanium supply comes from Russia, according to consulting firm AlixPartners.

Of course, Russia should be let off the hook regarding its naked and barbaric invasion of Ukraine, and Ukraine should be made to pay with its existence for Airbus’ consciously developed business decisions. Airbus Chief Executive Guillaume Faury:

We think sanctioning titanium from Russia would be sanctioning ourselves[.]

And

Russian titanium sales are “one of the few areas of business where it is in the interest of no party to disrupt the current situation,” he told reporters at an aviation gathering in Doha, Qatar.

Because Ukraine and Ukrainians are just bits of trivia and flotsam, not worth the notice. This is in stark contrast with Boeing:

…before the war purchased about one third of its titanium from Russia, said at the onset of the invasion of Ukraine that it would suspend its titanium joint venture in Russia and halt purchases of the metal from there.

It’s true enough that Russia is the second largest producer of titanium in the world (behind the People’s Republic of China). On the other hand, Ukraine is—or was before the barbarian’s invasion—the fifth largest producer of titanium.

However, Russia doesn’t even make the list of the top fourteen nations with titanium reserves.

American Computer Chip Dependency

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Graham Allison, Douglas Dillon Professor of Government at Harvard University’s John F Kennedy School of Government, and Eric Schmidt, ex-Google CEO and ex-Executive Chairman of Google and its successor, Alphabet Inc, in a Monday Wall Street Journal op-ed, expressed considerable concern over the US’ growing dependency on other nations for computer chips that are critical to our economy (and to our national security, I add). They proposed three steps to alleviate this dependency.

  • double down on [US’] strength in the manufacturing of less-advanced semiconductors
  • use [US’] political leverage with the governments of Taiwan and South Korea to persuade TSMC and Samsung to form partnerships with US chip designers and manufacture advanced semiconductors in America
  • tighten the links between R&D and manufacturing

That first step, though, is tantamount to surrendering superiority in most-advanced chips to other nations, including our enemies. Emphasizing that can only come at the expense of not emphasizing as much other, more critical, steps (see below). We certainly should push our market dominance in those lesser chips, but only as a source of revenue for other chip production aspects.

The second step is as suboptimal: forming partnerships with others for chip design and manufacture works to stifle our own innovation and skills in innovation in design and manufacture technique and equipage. That makes it too easy to take the lazy way and simply copy others’ work. That costs us the skill and flexible (and intuitive) thought that underlies innovation.

The third step is the only one with real value—and that only to the extent that Government isn’t dictating those links or their nature, and only to the extent that private enterprise owns all of the output from any enterprise/government partnership (subject to some key criteria that would prevent those enterprises from simply freeloading off government/taxpayers).

Allison and Schmidt, while right to be concerned, have missed the Critical Item that’s at the foundation of breaking that dependency.

Also necessary for our gaining control of our own fate is shifting raw material production—lithium, rare earths, nickel, cobalt, and copper, for instance—to within our own borders. Not all of it, to be sure, but enough to ensure at least a core of these critical items along the entire chain from dirt in the ground to components arriving in domestic factories for assembly into finished products are produced domestically.

Even if all we accomplish is doing our own mining, that will go a long way toward short-circuiting our dependency on other nations—whether enemies like the People’s Republic of China or friends like the Republic of China—by giving us strong influence over their processing these materials into computer chips.

Pulling Patriotic Products

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Harris Teeter, a supermarket chain, used to sell, among other things, products that were distinctly pro-American—things with slogans like “Give me liberty or give me death” and “America, love it or leave it.”

Then a customer complained about their presence on store shelves—they were insensitive, after all, in light of recent mass shootings. Apparently, being pro-American, being patriotic, is insensitive today. Never mind that slogans like these have been around for decades and all the way back to the runup to our Revolutionary War.

Harris Teeter promptly folded.

Thanks for reaching out. As soon as these items were brought to our attention we put a recall request into place and these items are being removed from all store locations.
We appreciate your concern[.]

Not to be outdone, another person complained to Kroger, a chain of supermarkets and department stores, about the presence on its shelves of coozies with Arms Change, Rights Don’t printed on them. Not to be outdone by Harris Teeter, Kroger promptly folded and pulled the coozies.

Harris Teeter and Kroger may think this is a sound business decision, but it’s likely they’ve badly misread their customer base. In any event, it’s certainly true that the recall is decidedly unpatriotic and amoral.

Maybe it’s time we Americans educated these two store chains about the nature of their customer base by no longer being their customers.