BRIEFLY NOTED: For 2021-05-08 Sa
Things that went whizzing by that I want to remember...
First:
Duncan Black: The Story Of The Day: ‘“Everyone” expected a big jobs number today, everyone was all set for their “ZOMG LABOR SHORTAGE CANCEL THE UI” pitches, and then it was a small jobs number and they… ran with it anyway: Justin Wolfers: "This one simple trick can turbocharge the recovery: Get vaxxed, get your friends to join you, make the marketplace safe, and watch people return. If counterfactual you would have interpreted a strong payrolls report as evidence that labor demand was running ahead of labor supply stoking concern about a ‘labor shortage,’ then you shouldn’t also be in the business of seeing a weak payrolls report and yelling ‘labor shortage’…
LINK: <https://www.eschatonblog.com/2021/05/the-story-of-day.html>
One Video
Adam Posen: Against Nostalgia in Economic Policymaking:
Very Briefly Noted:
Wikipedia: Shadow & Bone (TV Series)<https://en.wikipedia.org/wiki/Shadow_and_Bone_(TV_series)>
Duncan Black: ’The kids won’t remember, but the “Torture Discourse” (and of course, the torture!) was horrific back then, a lot of people showed themselves to be monsters, and it all turned out to be both as horrific and pointless as critics said (SHUT UP STUPID HIPPIE CRITICS)… <https://twitter.com/Atrios/status/1389199019608522753>
James Medlock: ’“Monopsony” isn’t just, or even primarily, an issue of employer concentration; search frictions and job differentiation are also large factors… <https://twitter.com/jdcmedlock/status/1389011901766504451>
Angelica Oung: ’Are we about to see the Cultural Revolution 2.0 in China?…. Wen Jiabao… criticized the Cultural Revolution… veiled commentary… China is going the wrong way… using whatever political capital he has… to push back against the new Red Guard… LINK: <https://github.com/braddelong/public-files/blob/master/thread-oung-cultural-revolution-2.0%3F.pdf>
Yesterday’s Thread-of-Thread 2021-05-07 Fr:
To @causalinf:
To: @snitstwits
Von Hayek here is so weird, and so—deliberately—wrong on so many levels:
Wednesday's thread-of-thread: 2021-05-05:
Paragraphs:
Friedrich Engels: Outlines of a Critique of Political Economy: ‘The nearer the economists come to the present time, the further they depart from honesty…. According to the economists, the production costs of a commodity consist of three elements: the rent for the… land… capital with its profit, and the wages for the labour…. A third factor which the economist does not think about–I mean the mental element of invention, of thought…. What has the economist to do with inventiveness? Have not all inventions fallen into his lap without any effort on his part? Has one of them cost him anything? Why then should he bother about them in the calculation of production costs? Land, capital and labour are for him the conditions of wealth, and he requires nothing else. Science is no concern of his. What does it matter to him that he has received its gifts through Berthollet, Davy, Liebig, Watt, Cartwright, etc.–gifts which have benefited him and his production immeasurably? He does not know how to calculate such things; the advances of science go beyond his figures…. [Yet] a single achievement of science like James Watt’s steam-engine has brought in more for the world in the first fifty years of its existence than the world has spent on the promotion of science since the beginning of time…
LINK: https://www.marxists.org/archive/marx/works/1844/df-jahrbucher/outlines.htm
Steve H. Hanke: Economy & Inflation: Consumer Price Index Rise a Harbinger: ‘The dramatic growth in the U.S. money supply, when broadly measured, that began in March 2020 will do what increases in the money supply always do. Money growth will lead in the first instance (1–9 months) to asset-price inflation. Then, a second stage will set in. Over a 6–18-month period after a monetary injection occurs, economic activity will pick up. Ultimately, the prices of goods and services will increase. That usually takes between 12 and 24 months after the original monetary injection. Given this sequence, it’s as clear as the nose on your face that we’re going to see more—perhaps much more—inflation entering the system in the coming months…. A monetary approach to national income determination is what counts…. The close relationship between the growth rate of the money supply and nominal GDP is unambiguous and overwhelming…. The U.S. golden growth rate for total money (M4)… [is] 6.3 percent…. By the end of 2020, it was growing at 28.9 percent per year…. It should be obvious, even to the untrained eye, that the recent March year-over-year CPI inflation rate of 2.6 percent is simply a harbinger of what is coming in the future: more inflation…
LINK: https://www.nationalreview.com/2021/04/why-more-u-s-inflation-is-right-around-the-corner/
Longer:
Matthew Yglesias: Is Inflation Coming?: ‘Warren Buffett did his annual shareholder meeting this past weekend and told the world that “we are seeing substantial inflation…We are raising prices. People are raising prices to us, and it’s being accepted.”… It’s always important to look across the entire distribution of goods. One of Buffett’s big companies is GEICO, and car insurance rates actually are in the midst of a rare decline…. Buffett’s company is also a major shareholder of Apple stock, and the new Apple Silicon chips the company is rolling out represent a significant quality improvement and therefore quality-adjusted price decline in Apple products. This is not to say that Buffett is wrong. He’s in other businesses like mobile homes and freight railroads where prices clearly are rising.
But Larry Summers cited inflation concerns as an objection to the American Rescue Plan Act and is now citing Buffett’s remarks as vindication of those concerns. That seems way too fast to me. Buffett also described the economy as “red hot.” I think if you’d gone to Biden in January and said “Mr. President-Elect, if we do this, the economy will be red hot by summer” he’d have said, “good plan, let’s do that.”…
Is inflation so high that the Fed needs to do something different or we should sharply regret ARP?… Is inflation high enough that concern about inflation should inform fiscal policy going forward? Is it time to think about supply-side policy… as the primary tool for bolstering economic growth in the future? My answers are “no,” “maybe,” and “yes.”… Oe of the many good things about finally being in an okay situation demand-wise is that it should let us have a constructive supply-side politics…
LINK: <https://www.slowboring.com/p/inflation-worries>
Patrick Wyman: American Gentry: ‘The area’s elite… [the] wealthy, largely agricultural property-owning class. They mostly owned, and still own, fruit companies…. The other large-scale industries in the region, particularly commercial construction, revolve at a fundamental level around agriculture: They pave the roads on which fruits and vegetables are transported to transshipment points, build the warehouses where the produce is stored, and so on…. They have a trusted and reasonably well-paid cadre of managers and specialists in law, finance, and the like—members of the educated professional-managerial class that my close classmates and I have joined—but the vast majority of their employees are lower-wage laborers. The owners are mostly white; the laborers are mostly Latino, a significant portion of them undocumented immigrants. Ownership of the real, core assets is where the region’s wealth comes from, and it doesn’t extend down the social hierarchy….
This kind of elite’s wealth derives not from their salary—this is what separates them from even extremely prosperous members of the professional-managerial class, like doctors and lawyers—but from their ownership of assets. Those assets vary depending on where in the country we’re talking about…. Depending on the political culture and institutions of a locality or region, this elite class might wield more or less political power. In some places, they have an effective stranglehold over what gets done; in others, they’re important but not all-powerful…. Because their wealth is rooted in the ownership of physical assets, they tend to be more rooted in their places of origin….
Gentry classes are a common feature of a great many social-economic-political regimes throughout history…. Most of the United States’ wealthy elite… own $2 million houses on golf courses outside Orlando and a condo in the Bahamas, not an architecturally designed oceanfront villa in Miami…
LINK: <https://patrickwyman.substack.com/p/american-gentry>
Ian King & al.: Chip Shortage 2021: Semiconductors Are Hard to Make & That’s Part of the Problem: ‘Shortages of semiconductors are battering automakers and tech giants, raising alarm bells from Washington to Brussels to Beijing. The crunch has raised a fundamental question for policymakers, customers and investors: Why can’t we just make more chips?…. The simple version is that making chips is incredibly difficult—and getting tougher. “It’s not rocket science—it’s much more difficult,” goes one of the industry’s inside jokes.
The more complicated answer is that it takes years to build semiconductor fabrication facilities and billions of dollars—and even then the economics are so brutal that you can lose out if your manufacturing expertise is a fraction behind the competition. Former Intel Corp. boss Craig Barrett called his company’s microprocessors the most complicated devices ever made by man….
Manufacturing a chip typically takes more than three months and involves giant factories, dust-free rooms, multi-million-dollar machines, molten tin and lasers. The end goal is to transform wafers of silicon—an element extracted from plain sand—into a network of billions of tiny switches called transistors that form the basis of the circuitry that will eventually give a phone, computer, car, washing machine or satellite crucial capabilities…. Intel’s first microprocessor—the 4004—was released in 1971 and contained only 2,300 transistors with a node size of 10 microns, or 10 millionths of a meter…. Intel’s undisputed leadership… ended between 2015 and 2020 when rivals Taiwan Semiconductor Manufacturing Co. and Samsung… started building chips with… dimensions down to 5 nanometers, or 5 billionths of a meter….
Chips consist of as many as 100 layers of materials. These are deposited, then partially removed, to form complex three-dimensional structures that connect all the tiny transistors. Some of these layers are just one atom thin. Machines made by Applied Materials Inc., Lam Research Corp. and Tokyo Electron Ltd. juggle a host of variables, such as temperature, pressure, and electrical and magnetic fields, to make this happen. One of the most difficult parts of the process is lithography, which is handled by machines made by ASML Holding NV. The company’s gear uses light to burn patterns into materials deposited on the silicon. These patterns eventually become transistors. This is all happening at such a small scale, the current way to make it work is to use extreme ultraviolet light….
Chip plants run 24 hours a day, seven days a week. They do that for one reason: cost. Building an entry-level factory that produces 50,000 wafers per month costs about $15 billion. Most of this is spent on specialized equipment—a market that exceeded $60 billion in sales for the first time in 2020. Three companies—Intel, Samsung and TSMC—account for most of this investment. Their factories are more advanced and cost over $20 billion each. This year, TSMC will spend as much as $28 billion on new plants and equipment. Compare that to the U.S. government’s attempt to pass a bill supporting domestic chip production. This legislation would offer just $50 billion over five years. Once you spend all that money building giant facilities, they become obsolete in five years or less. To avoid losing money, chipmakers must generate $3 billion in profit from each plant…
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