Economics & Industrial Policy: My view is that this podcast episode had four superb people on it—Tracy Alloway, Mackenzie Hawkins, Stacy & Joe Weisenthal—but suffered from substantial confusion as to what kind of “mess” Intel is in.
Intel is clearly in a mess with respect to delivering payouts to shareholders in the future. But that is already baked into its (low) stock price. Its assets are so sector-specific and so special-purpose that there is no way to fix that by selling off pieces, and we probably would not want to anyway because there are other two definitions of “mess” at play.
The second way Intel could be in a “mess” is if it had become a value-subtracting business as a network—if in aggregate its customers, workers, and suppliers would be better off simply abandoning the Intel production and distribution network for those of its competitors. That is not (yet) true.
The third way Intel could be in a “mess” if it were no longer a technology-forcer, building forward the value of the accumulated stock of information and idea capital that is humanity’s inheritance and glory as an anthology intelligence, plus curbing the long-run market power of its competitors and encouraging them to keep on their respective technology-development toes. So far Intel is still doing absolutely fine at that task. That is the important one. That is the one that is the reason that Intel deserves oodles and oodles of US government money.
Investors want to hear about the first. Direct customers, workers, and suppliers need to hear about the second. The rest of us ought to focus on the third. Conversations in which conclusions at one of these levels are used to answer questions asked at any of the others have the potential to lead to great confusion. And there is some of that in this podcast episode:
Tracy Alloway, Mackenzie Hawkins, Stacy & Joe Weisenthal: Lots More on the Ongoing Mess That Is Intel: ‘The US is in the midst of a big effort to bring more semiconductor manufacturing onshore. Intel is the biggest US semiconductor manufacturer. There's just one problem. Intel has really been struggling to get its fab operations up and running in a timely, efficient manner. So what's the problem, and can the company turn things around?… <bloomberg.com/news/audio/2024-10-04/int…>
“Turn things around” in which of these three senses? On the third, I see no need for a turnaround. On the second, I see no need for a turnaround (yet). On the first, I see no possibility for a turnaround: shareholders are along for the ride and have very limited constructive options.
Science Fiction: Tolkien’s underlying theology is highly, highly Augustinian: no mortal, and no immortal incarnate in Middle-Earth, can resist evil indefinitely. That is very clear throughout the original Lord of the Rings text as found in the Red Book of Westmarch. Boromir did not even touch the evil embodied in the ONE RING, and he fell to it. Ditto for Saruman. Isildur could not resist it for even an hour. Faramir escapes only because he did not touch it. Smeagol had no chance. Bilbo had to be tricked into passing the ring on, and he barely managed to do so. Frodo at the end fails. Galadriel comes within a hair of falling to it without ever touching it. Gandalf does not dare to take the ring. It is ultimately only the GRACE OF ILUVATAR that saves Middle-Earth from the One Ring, and the only individuals who do not fall are those whom PROVIDENCE saves by not testing them to destruction. Had Lord of the Rings Galadriel been placed in a locked room with the ONE RING for 24 hours, she would have fallen.
Sylas Barrett: The Rings of Power Asks Questions About the Nature of Evil in “Doomed to Die”: ‘Do we really need Sauron to be a sympathetic villain?… Sauron is given some classic cinematic moments that would normally be given to a sympathetic villain or even an anti-hero…. He endures suffering… befriends an animal…. This speech… [is a] reminder that even Sauron was, perhaps, not always evil; he was tortured and turned, just as Adar was, by someone who was at least as far above Sauron on the power scale as Sauron is above Celebrimbor…. When Celebrimbor tells Galadriel that perhaps no one in all of Middle-earth could be strong enough to resist Sauron, it seems that we are meant to wonder if anyone in creation, mortal, elf, or maiar, could be strong enough to resist Morgoth…. If Celebrimbor is right, and Sauron is deceiving himself most of all, perhaps that is the actual thematic takeaway from the episode. Perhaps the point is not being strong enough to resist, but in being open-eyed and honest with oneself. While Sauron insists that he is Celebrimbor’s victim, Celebrimbor confesses to Galadriel that he intentionally blinded himself to the truth of who Sauron was, because he wanted what Sauron offered so badly. In this confession, Celebrimbor distinguishes himself from Sauron, and takes ownership of his own part of his corruption… <https://reactormag.com/the-rings-of-power-asks-questions-about-the-nature-of-evil-in-doomed-to-die/>
Cybergrifting: This latest from OpenAI looks very much like overpromising and underdelivering. We are not tracing out the log scaling laws that they promised when they drew a line from ChatGPT2 through ChatGPT4 on log paper and made it kjeep going:
Jonathan Reiter: ‘o1 is O[pen]A[I] showing their hand. They have nothing but C[hain ]o[f ]T[hought]. The workload does not scale, and no confidence to show their work. Their research standards have diminished to the point that they are churning out derivative product with no specific architectural improvement labeled.
For example, they do not show full chain. They don't truncate it. They just summarize it using another model run. Why do this? Are they so afraid to show their own work? Are they so rushed to make their own operations non-reproducible?
To be sure I understand why. It's dogfooding. It's giving the people what they want - greater accuracy via the simplest (by design that is) form of info theoretic optimization. But you can throw tokens at that same sequence learner and expect consistent inferencing.
o we should take this as deliverable trumping science, for the company to deliver to keep their shareholders happy, rather than produce novel work. I just don't think this covers their $100b vig… <x.com/jonathanmreiter/status/1834732087…>
Economics: Now sixteen months since the US economy touched down in its inflation-reduction soft landing Ideally, when your inflation forecast is at target and when the labor market is in balance policy should be at neutral. Policy is not at neutral. And at the current pace of Fed easing, will not get to what we think of as neutral for another year. That is a 28-month lag period in which the Fed will have been behind the curve and excessively restricted. Those seem to me to be outsized downside employment and production risks to run:
Neofascism: I really do not think Mitch McConnell is voting for Donald Trump a month and a half from now:'
Mitch McConnell: ‘“I have spoken before about Hungary's decade-long drift into the orbit of the West's most determined adversaries. It is an alarming trend. And nobody—certainly not the American conservatives who increasingly form a cult of personality around Prime Minister Viktor Orban—can pretend not to see it. Hungary's leaders are cozying up to Moscow, Beijing, and Tehran in private. They are doing it publicly and vocally as well….
Then there is Budapest’s relationship with the Islamic Republic of Iran. Hungary's Foreign Minister has bemoaned that ongoing international sanctions make it ‘really challenging to build effective economic and trade cooperation’ with the world's most active state sponsor of terror….
Hungary’s leaders have made no secret of their conviction that the future is one of American decline. The future is one of American decline—that is the Hungarian view. They are not hiding the ways they are preparing for American weakness and betting on our failure.
There is nothing tough about bowing to autocrats, and there is nothing for American leaders to gain by praising those who do. Subservience to revanchist powers is not an American value. But far more importantly, it is not in America's interests…
Journamalism: Exceptionally low-quality non-thought from Malcolm Gladwell. 200,000 people convinced by grifters to let COVID kill themselves so they can make small amounts of money should horrify Malcolm Gladwell. It doesn’t. Instead, there is “something beautiful about opening up access” to commit large and deadly frauds. And “uncurated expertise” is one hell of an oxymoron, and in this case a very deadly one:
Peter Hotez: ‘This from Mr. Gladwell’s NYT interview today. Perhaps he doesn’t realize the scope of what happened. It’s not “a lot of people” it’s 200,000 Americans who died needlessly because of a politically-driven/predatory antivaccine disinformation campaign. They were victims of predation… <x.com/PeterHotez/status/183925987016117…>
Malcolm Gladwell: ‘People increasingly want uncurated expertise. Now does that sometimes create problems? Yeah, a lot of people didn’t take the Covid vaccine and died as a result. That’s really unfortunate. I’m am fully aware of hat happens when you let a hundred flowers bloom. But I am also aware that at times there is something beautiful about the fact that we are opening up access to people in a way we never did before…
Neofascism: Fellow-traveler Mike Johnson, a true Franz von Papen for our days—but much more gutless than Franz von Papen was:
Acyn: ‘[Speaker of the House Mike] Johnson: “Clay Higgins is a dear friend of mine and a colleague from Louisiana, and a very frank and outspoken person. He's also a very principled man. I didn’t even see it but he tweeted something today about Haitians.”
Reporter: “He told them to get out of the country by Jan 20th”
Johnson: “Ok. He was approached on the floor by colleagues who said that was offensive. He said he went to the back and he prayed about it, and he regretted it, and he pulled the post down. I'm sure he probably regrets the language he used. But you know, we move forward. We believe in redemption around here”…
MAMLMs: SubStack’s MAMLM has views on what I liked to read on it last summer:
A newsletter on economics, geopolitics and history from Adam Tooze. More substantial than the twitter feed. More freewheeling than what you might read from me in FT, Foreign Policy, New Statesman.
Neofascism: Flooding the political zone with lies you admit to be lies is, I suppose, an “ethos”. Maybe we should call it that?:
John Ganz: Only in America: ‘What really seems crazy to me now is that there was ever a “fascism debate” at all. While we have Robinson and Vance accusing the Haitian migrants in Springfield of spreading disease while openly admitting that the stories are lies, what else can you possibly call it? Okay, maybe you still don’t want to say that word. Can we at least agree it all sounds totally psychotic? I used to say it was the politics of national despair, but the politics of national psychosis might be more accurate. In 1933, the British ambassador to Berlin, Sir Horace Rumbold, cabled back to London the following warning: "I have the impression that the persons directing the policy of the Hitler government are not normal." We are not in 1933 by any means, but these people certainly give the same impression… <unpopularfront.news/p/only-in-america>
Neofascism: The truly deplorable JD Vance and Donald Trump—and all their truly deplorable allies—are trying via stochastic terrorism to take America into a very bad place: in one which they break the country, take the much smaller half for themselves, and try to make that much smaller half hate their own country—and especially hate some of the greatest parts of it:
Bill Kristol & Andrew Egger: Vance, Trump, and The Politics of Hate: ‘Republican political operatives profess to be unhappy that Trump and Vance have veered away from… the border… [and] have gotten “distracted” into a debate about legal Haitian migrants who’ve come to Springfield to work legally. Or is it a distraction? Might Vance and Trump know what they’re doing? Perhaps a pure play on racism and nativism is more effective politically than a somewhat complicated debate about the border—especially after Trump killed the border bill…. It’s striking that Trump and Vance are willing to make this campaign so clearly a referendum on nativism and racism…. Such efforts have been aided by sophisticated allies who don’t quite join in the campaign, but certainly don’t go out of their way to denounce it or repudiate it…. In the ranks of the Republican establishment and conservative elites… you hear… in the face of disgusting bigotry and dangerous incitement… the sounds of silence… <thebulwark.com/p/vance-trump-and-the-po…>
and:
Dan Drezner: Donald Trump and JD Vance Are Attempting Domestic Terrorism by Proxy: ‘The GOP ticket is wreaking violent havoc in its own backyard…. To wind the clock back a month… legal Haitian immigrants into the small town of Springfield, Ohio… a complex picture…. Ten years ago, Springfield was hemorrhaging population and vitality. A concerted effort by state and local authorities to attract manufacturing investment paid off—and a lot of those factories hired legal Haitian immigrants over the past few years…. On the plus side, the town is growing again and the Haitians have created thriving cultural neighborhoods in the town. On the minus side, city services like hospitals and schools are now overburdened. This caused local officials to request more federal support. It also caused some angry locals to pop off on social media and at public forums. Enter JD Vance and Donald Trump, who saw a city that spoke to their campaign theme of immigration restrictionism and then poured kerosene on the entire town….
Springfield officials pushed back hard…. The Springfield Police Department… the Republican mayor… the Republican governor of Ohio… “Look, there’s a lot of garbage on the internet and, you know, this is a piece of garbage that was simply not true. There’s no evidence of this at all.” He also praised the Haitian residents of Springfield as being partially responsible for Springfield’s “great resurgence…. Trump and Vance have been unapologetic….
The threats of violence have caused the Republican elected officials in Springfield to plead for the GOP ticket—which includes the junior senator from Ohio—to shut the hell up…. Vance told CNN’s Dana Bash that he didn’t care whether the stories were accurate or not: “If I have to create stories so that the American media actually pays attention to the suffering of the American people, then that’s what I’m going to do.” As Jamelle Bouie noted in the New York Times, Vance’s position is both morally and factually indefensible…. Trump and Vance’s willingness to lie, deceive, and stigmatize minorities is behind the threats of violence affecting Springfield, Ohio this week. They are attempting domestic terrorism by proxy… <danieldrezner.substack.com/p/donald-tru…>
Economics: The last piece of information that one could really call “news” about where the economy is right now and where it is going came out on September 6, ten days ago now. Since there has been no information about the economy, interest rates—which are based on Wall Street assessments of where it is and expectations of where it is going—should have been constant since then. Right? Right? Wrong!. Safe real future wealth ten years out is now 0.7% more valuable in today’s dollars than it was on September 6—a very big move over a no-information time. Why?
The answer is that the thinking of the Federal Reserve has become an additional source of uncertainty. But the Fed is supposed to damp economic uncertainty, not amplify it:
David Goodman: 25 or 50?: ‘For markets, the big question going into the week is whether the Fed will opt for a 25- or 50-basis-point cut on Wednesday. Traders see that as a very close call, although they slightly boosted bets on a larger move today after virtually discounting the possibility entirely last week. That brought the yield on two-year US bonds back toward the lowest level in two years and weighed on the dollar. Analysts at Edmond de Rothschild summed up the mood, writing that “there has rarely been so much uncertainty over central bank intentions”… <bloomberg.com/news/newsletters/2024-09-…>
Economics: I would say the U.S. touched down on its soft landing fifteen months ago, decelerated on the runway, and is now taxiïng to the terminal. And my colleagues and fellow panelists on the FT-Booth survey appear to agree:
Colby Smith: US economy is heading for soft landing, FT survey says: ‘GDP to keep expanding while unemployment will remain relatively low, economists predict…. GDP growth will be 2.3 per cent in 2024 and 2 per cent in 2025, according to the median estimates…. Unemployment will rise to 4.5 per cent by the end of this year, slightly above the current rate of 4.2 per cent…. The core personal expenditures [chain price] index—the Fed’s preferred inflation gauge—will fall to 2.2 per cent from 2.6 in July [on a trailing year basis], the [average of the] economists predicted….
“It’s a shockingly smooth landing,” said Dean Croushore, who served as an economist at the Fed’s Philadelphia Reserve Bank for 14 years and participated in the survey. “Fundamentally, things are still pretty strong across the board.”… The Fed has made clear it does not want to see the labour market worsen beyond current levels…. The Fed next week is widely expected to cut interest rates from the 23-year high of 5.25-5.5 per cent it has held since last July, although the decision to cut by half a percentage point or a more traditional quarter-point remains a close call…<https://www.ft.com/content/022bb11b-c340-4059-b9b7-30481a02174c>
I don’t think it is a close call in the minds of the FOMC meeting participants. I place great weight on Chris Waller’s statements that “he was ‘open-minded about the size and pace of cuts’ and would back a larger cut ‘if the data suggests the need’. But he said he expected any move would be ‘done carefully’.” The thing is: Waller’s analyses strongly suggest, to me at least, that the Federal Funds rate right now, given the data, should be 1.0%-points below where it now is, at least. Yet he does not feel impelled to say that the Fed should move quickly to place the Federal Funds rate where his models, at least as I read them, say it should now be. That is very puzzling to me. But it is what it is.
History: I do not get this at all!:
Matthew Walther: The Rise of Post-Literate History: ‘Riley-Smith was a sounder and more scrupulous historian than Runciman; he was careful, precise, analytical, but he wrote with considerably less élan than his predecessor, for whom the Crusades were essentially a series of barbarian invasions—the sacking of the refined and cosmopolitan East by the uncouth and venal younger sons of minor French lords. This vision—which owes as much to Sir Walter Scott as it does to the author’s continent-spanning archival research—was all but totally dispelled in a series of books written between over the span of half a century by Riley-Smith, who, at the time of his death in 2016, was universally considered the preeminent authority on the Crusades in the English-speaking world. Yet it is Runciman’s version of the Crusades that has endured and proved more culturally pervasive…. To write as well as Runciman did, while politely disdaining what he called “the mountainous heap of the minutiae of knowledge,” is to guarantee one’s place among the elect of Clio. But suppose some golden-voiced follower of Riley-Smith’s were to emerge. Could he finally displace Runciman? I suspect the answer is no…. The exigencies of modern academic publishing, declining levels of general culture… less like sloppiness or indifference and more like a positive hostility toward good writing among peer reviewers… the atrophying of readers’ own attention spans… it seems to me unlikely that we will ever see a classic on the order of Runciman capture the public imagination. Historiography is becoming stuck… <https://www.compactmag.com/article/the-rise-of-post-literate-history/>
Runciman’s history is a history of the Latin Kingdom of Jerusalem, of its remnants after its fall, and of the expeditions of west European warriors to Middle East that at least purportedly attempted to support and save it.
In Riley-Smith’s view, “crusades” are a very different thing than Runciman’s narrative story centered on the Latin Kingdom of Jerusalem and of the catastrophes of 1187 at Hattin and 1204 at Constantinople. For Riley-Smith, “crusades” are “a subcategory of Christian holy war… distinguished… from other wars by… key procedural elements... proclamation by the pope… explicit association with the liberation of sacred land… vows of a special kind made by the fighters, who enjoyed in consequence particular temporal (i.e., worldly) and spiritual privileges…” The crusades thus include: “the first crusade… early crusader states… anti-Jewish violence in Europe… Sicily… the Iberian peninsula… north Europe… additional crusades in Europe… papal enemies… heretics… papal adversaries… the Atlantic…. the Great Schism… Hussite crusades… against the Ottomans… [the] Reformation… the Caribbean and the Americas…” To say that Riley-Smith by using the word “crusade” to mean something very different than Runciman did has in some way “totally dispelled” Runciman’s Grand Narrative of the “sacking of the refined and cosmopolitan East by the uncouth and venal younger sons of minor French lords”—that seems to me to demonstrate an astonishing lack of understanding.
Economic History: If you want to say that humanity as an anthology intelligence faces a resource-scarcity production problem, a wealth-distribution problem, and a wealth-utilization problem, are not all three of those "economic problems"? They just require a different kind of economics in order to think about them than the one we have today:
Paul Crowe: ‘Something that stuck with me is a line from Clark's Farewell to Arms where he says (something like) "from the perspective of economic history there are really only two important events in human history, the neolithic revolution and the industrial revolution." That and the hockey-stick graphs. It is, of course, a massive generalization and simplification, but that is the nature of such course take-aways.
My other candidate would be the 1500 turning point for Europe: when the "west" began to become the "west" as we tend to think of it today -- along with all the complexities and contradictions that talking about "the west" involves.
Maybe one more with an eye to the future: Keynes' very provocative and oracular pronouncement (for we his grandchildren) that we have solved the economic problem and must now turn to the permanent problem… <braddelong.substack.com/p/econ-135-cour…>
Journamalism: Does anybody want to argue that Jeremy W. Peters, Jack Healy and Campbell Robertson should not immediately leave the journalism profession, this hour?
Jeremy W. Peters, Jack Healy & Campbell Robertson: Pundits Said Harris Won the Debate. Undecided Voters Weren’t So Sure: ‘Voters said the vice president talked about a sweeping vision to fix the country’s most stubborn problems. But they wanted the fine print… <nytimes.com/2024/09/11/us/politics/unde…>
As Kieran Healy says:
Kieran Healy: ‘The image of a substantial contingent of “undecided” voters watching the debate, listening to Trump go on about cat-eating immigrants, thoughtfully stroking their chins, and remarking to their spouse that they should like to hear more “fine print” from Harris on policy is quite delightful, really… <threads.net/@kjhealy/post/C_xtSdcRosV>
Economics: The “shelter” index as reported by the BLS continues to be at substantial variance with reality—reporting price increases in housing costs that are simply not happening out there in the world. Even so, reported numbers and the 0.5%-point per year gap between the CPI and the Federal Reserve’s PCE chain-inflation price index tell us that inflation has been at the Federal Reserve’s target level for more than a year. The touchdown part of the economy’s soft landing took place last summer. And if one marks the shelter component down to reality, the inflation reality right now is that it is at a level lower than the target the Federal Reserve seeks to hit:
BLS: ‘The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2[247] percent on a seasonally adjusted basis…. Over the last 12 months, the all items index increased 2.5 percent…. The index for shelter rose 0.5 percent in August and was the main factor in the all items increase…. The index for all items less food and energy rose 0.3 percent in August…. The all items less food and energy index rose 3.2 percent over the last 12 months… <bls.gov/news.release/cpi.nr0.htm>
So why—with the labor market weakening, and thus further downward pressures on the inflation rate gathering—is policy not in neutral? Yes, Chris Waller says that now is not a time for patience but for action in reducing interest rates. But surely the action needed is a monetary policy that is neutral, or even a little bit stimulative, rather than to take steps over the next year to shift from a substantially restrictive monetary policy to a moderately restrictive one. Isn’t it?
And, of course, things are complicated by the Federal Reserve’s failure to provide meaningful forward guidance. To what level—were inflationary and deflationary shocks to balance each other over the next five years—does the Federal Reserve believe it should guide interest rates in the future, and how long does it think it ought to take to get there? “We are going to ease for a while, until we decide it is time to stop” is not, I think, the kind of “data dependence” that makes anybody happy.
American Nationalism: What happens when we move from Andrew Jackson the campaigner and Jacksonianism the movement to Andrew Jackson the administrator and the policies of the Jackson administration? I find myself largely at sea. It is very hard, very hard indeed to figure out what was actually going on inside the Jackson administration. If you have a good source you trust—or think you do—I would love to know what it is. He hated Nicholas Biddle. He hated John C. Calhoun. He hated the Five Civilized Tribes. And did anything else really drive his personal policy? And how did that mix into what was the mélange that became his administration's policy? Everyone writing I have studies brings their own spin—usually for reasons strongly connected with the contemporary politics of their day—and selects the items they like best from the buffet:
Brad DeLong: "The Hunters of Kentucky": The Jacksonian Thread of American Nationalism: ‘What I see as the third of the major strains of American national identity—behind Massachusetts-Puritan and Virginia-Cavalier: Kentucky-Frontier. No, Andrew Jackson’s victory at the Battle of New Orleans wasn’t due to a band of mythical sharpshooters—the "Hunters of Kentucky"—but within a decade, that legend became an inseparable part of Jackson's image. & it became unwise to dispute it in an American bar. & so by 1829 for Jacksonians Jackson’s inauguration was the moment when America was rescued from both external and internal enemies, & it was only by trusting & following his policy twists-&-turns & taking his shifting set of enemies as their own that they could be & remain truly free. This was & is the Kentucky-Frontier strain of American nationalism, and it is powerful & mythical to this day, & its mythical nature does not reduce its power… <braddelong.substack.com/p/the-hunters-o…>
Bray Hammond's "Banks and Politics in America" still, IMO, remains the definitive work on Jacksonian economic policy. He doesn't spend much time psychoanalyzing Jackson, however.
Bray Hammond's "Banks and Politics in America" still, IMO, remains the definitive work on Jacksonian economic policy. He doesn't spend much time psychoanalyzing Jackson, however.