Thursday, July 20, 2023

Thursday Afternoon Links

  • I think it’s great that MMA is the rising American national sport, that Mark is training so hard in it (and getting jacked), that Elon, a past martial arts aficionado in his own right, is challenging Mark to a fight, and that both Mark and Elon are top-end role models for children in our society, including my own – whether they end up fighting in the Colosseum or not! If it was good enough for Heracles and Theseus, it’s good enough for us. [Marc Andreessen]
  • The US Navy is complacent after lacking a competitor for so long. Modern carrier design reflects that. Thankfully physics has little to say about how much a carrier needs to cost. The new USS Ford weighs 100,000 tons. Steel costs ~$700/ton, so the basic materials are only $70 million. Very Large Crude Carriers (VLCCs) are roughly the same size. They cost ~$90 million, barely more than steel and engines. Crew quarters for 5000 sailors, nuclear reactors, radars, catapults, flag accommodations, specialized systems, and general government bloat get you to a $10+ billion ship. [Austin Vernon]
  • Pipe volume increases faster than surface area as diameter increases. It gets cheaper as the size goes up. And the cylinder shape makes a strong pressure vessel that many chemical processes require. Chemical plants are a series of pipes. There is the piping, heat exchangers (little pipes in a big pipe!), reactors, and contact towers. Another feature is that it is cheap to oversize the pipes. Almost all new plants have much bigger pipe diameters than required, and contact towers are taller than necessary. Plant owners can increase production by upsizing the expensive horsepower (compressors, turbines, pumps) without rebuilding the facility. [Austin Vernon]
  • The electric vehicle transition can only happen as fast as the slowest one of these steps. All it takes in a series process (as opposed to parallel) is one bottleneck to delay the whole process. So, it seems like an electric vehicle transition is possible but it will be slow. And, in particular, the bottlenecks mean that it will be unexpectedly slow, which will continually discourage investment in oil production, which in turn should prolong the profitable part of the capital cycle. [CBS]
  • Twenty-five years ago, Neil Howe and the late William Strauss dazzled the world with a provocative new theory of American history. Looking back at the last 500 years, they’d uncovered a distinct pattern: modern history moves in cycles, each one lasting roughly eighty to one hundred years, the length of a long human life, with each cycle composed of four eras—or “turnings”—that always arrive in the same order and each last about twenty years. The last of these eras—the fourth turning—was always the most perilous, a period of civic upheaval and national mobilization as traumatic and transformative as the New Deal and World War II, the Civil War, or the American Revolution. Now, right on schedule, our own fourth turning has arrived. And so Neil Howe has returned with an extraordinary new prediction. What we see all around us—the polarization, the growing threat of civil conflict and global war—will culminate by the early 2030s in a climax that poses great danger and yet also holds great promise, perhaps even bringing on America’s next golden age. Every generation alive today will play a vital role in determining how this crisis is resolved, for good or ill. [Fourth Turning]
  • At the start of this year, I highlighted a new data series from researchers at the Bureau of Labor Statistics and Cleveland Fed, calling it “the most important new inflation indicator.” That is a title I do not bestow lightly. Their research addressed a massive concern with official measurements of rent prices, which alone make up roughly one-third of the Consumer Price Index (CPI). To accurately calculate housing inflation, it's necessary to measure contract rents—the amount tenants are currently paying—instead of the rents for homes that are currently for lease. That in turn requires repeatedly surveying a large sample of housing units—most of which will have longer-term leases that last for a year or longer and are often just re-signed by the preexisting tenant upon expiry. The end result is an extremely accurate way of measuring average prices, but a thorny problem for policymakers—official inflation always reflects shifts in average rents, not new rents, and therefore lags current macroeconomic conditions significantly. Since housing inflation is the single most cyclical component of overall inflation and also the most heavily influenced by monetary policy, it’s especially important to get an accurate hold on rent prices—making this lag a major problem. [Apricitas Economics]
  • What do you think was the response of “moderate” Russians to all of this? Academics and journalists and liberal politicians and forward-thinking businessmen, that sort of people. If your guess is that it horrified them and caused them to grudgingly support the forces of order, you would be...wrong. In fact, quite the opposite: making excuses for terrorism became trendy. Lawyers and teachers and doctors and engineers held fundraisers for terrorists, donated to charities that supported insurrectionary behavior, and turned their offices into safe houses. Apparently chaos and death were one thing, but it was much, much scarier for your friends and neighbors to think you might be a reactionary. [Mr. and Mrs. Psmith’s Bookshelf]
  • One of my catch-phrases is price discrimination explains everything. By that I mean that most of the strategic decisions that firms make in marketing their products are attempts to implement price discrimination. This in turn helps them to cover overhead. Business strategy ignores the marginalist rules. Managers put a lot of effort into coming up with ways to implement price discrimination. They don’t put effort into making marginalist calculations. Conversely, economics textbooks ignore business strategy. They devote little attention to price discrimination. We need The Overhead Revolution. [Arnold Kling]
  • The market is screaming for batteries that don’t use nickel or cobalt, and companies are delivering. Even Tesla thinks 2/3 to 3/4 of their cars will use lithium iron phosphate batteries. Only luxury vehicles and some semi trucks will use nickel batteries (and cheaper manganese might substitute for some of the nickel). The performance of lithium iron phosphate battery vehicles has improved because companies are figuring out how to make their cars more efficient and remove unnecessary packaging and structure from the packs to reduce weight. Sodium-ion batteries lack the performance of lithium batteries but are much better than lead-acid batteries that power most electric cars. Consumers will happily trade up as they get richer. [Marginal Revolution]

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