Thursday Night Links

• The tricky thing is that it is hard to go back to the rap and scrabble of real research when you have climbed so high above it. Penguin will pay you a hefty advance for your next two hundred pages of banal boilerplate; they will not pay you for two or three years of archival research on some narrow topic no one cares about.  No matter that the process of writing on that narrow topic refills the well, imbuing you with the ideas needed to fill out another two decades of productive writing. The world is impatient. They do not have time to wait for you to reinvent yourself. There are practical implications for all this. If you are an intellectual, the sort of person whose work consists of generating and implementing ideas, then understand you are working against time. Figure out the most important intellectual problem you think you can help solve and make sure you spend your thirties doing that. Your fifties and sixties are for teaching, judging, managing, leading, and dispensing with wisdom. Your teens and twenties are for gaining skills and locating the problems that matter to you. Your thirties are for solving them. [The Scholar's Stage]
• However much Washington may have lamented political parties, though, their rise was inevitable. His vision of temporary alliances over individual questions was always a pipe dream: it might work for a polity with relatively harmonious goals, but it had to fail as soon as goals diverged and policy disagreements stopped being randomly distributed. The war for independence had been unifying because the choice was binary and the goal obvious: victory rather than defeat. As soon as the war was won, though, the options opened up and the cracks began to show. And once you begin to disagree on the level of principle — once the goals stop being shared — the same coalitions will start popping up in every policy debate. [Mr. and Mrs. Psmith’s Bookshelf] 
• For such a financialized economy, the US is surprisingly far down the list of countries ranked by insurance assets as a share of GDP: France, Denmark, Sweden, the UK, and Switzerland are at over 100% (this includes more than life insurance, but a lot of the variance will be explained by whether savers are buying annuities and life insurance policies or buying assets directly). The US is at 59%. One reason for this is that the US has a very popular set of pension programs, one of which is close to a pure annuity and the other of which is a unique product linked to a key variable cost of retirement, i.e. Social Security and Medicare. These are both basically backed by preferred stock in every American worker. But the workers don't mark that liability to market on their balance sheets, so these programs don't serve the usual intermediation function that other savings vehicles would. This setup is slowly changing, though, through the mechanism of private equity firms identifying life insurers as the perfect balance sheet for the trades they want to make. The PE/life insurance relationship actually goes pretty far back: insurance companies were often providers of the senior credit to early leveraged buyouts. [The Diff]
• Metallurgical coal production in the USA will likely decline at 3-5% CAGR for the next several years until 2030 as EAFs take share globally along with natural gas being substituted for coke as a reducing agent of iron. A consolidated integrated steel industry structure along with higher exports will help buoy metallurgical coal demand in the US for the next several years.  Past 2030, the picture becomes grim. China will start deriving more of its steel production needs through EAFs (China is targeting a 20% EAF market share by 2030) as scrap steel becomes more plentiful. With China importing less metallurgical coal, there will be excess met coal on the market. The result will be a gradual oversupply of metallurgical coal which will likely depress metallurgical coal prices until more supply goes offline. [Pernas Research]
• Among those who believe that technological change has stagnated, there are two broad categories. One social/institutional theory of stagnation, often associated with Peter Thiel, claims that the world has entered a period of technological stagnation due to avoidable social and institutional factors. Thiel and others in this camp argue that societies have chosen safety, regulation, and risk avoidance over the potential rewards of groundbreaking innovations. These critics suggest that the current technological landscape—dominated by software and digital technology—lacks the world-changing impact of past advancements such as nuclear energy or space exploration. A contrasting physical theory of stagnation, championed by Vaclav Smil, argues that technological stagnation is not a crisis but a return to the historical norm. Smil contends that the rapid technological leaps of the 19th and early 20th centuries were anomalies, and that current expectations of continuous breakthroughs are unrealistic. Smil is skeptical of overhyped promises like nuclear fusion, autonomous vehicles, and artificial intelligence, viewing them as examples of exaggerated optimism that fail to account for the complexities involved in real-world applications. [American Enterprise Institute] 
• As outlined in his 2017 Energy and Civilization and in the final chapter of the book under review here, Smil draws our attention to the problem of scale in particular. As its name implies, the digital revolution was a revolution in the representation of numbers. Moore’s law relies on the ever-smaller physical means of representing numbers (since 1975, the number of transistors in an integrated circuit has doubled about every two years). In principle, a bit of information can be encoded into a single photon (in fact, in a subatomic particle). If computation is simply moving bits around, the physical limits of miniaturized computation have no analogy in other fields of human endeavor. Contrast computation’s sustained geometrical increase in scale with advances in crop yields, energy density, transportation speeds, energy efficiency, infrastructure costs, and more. Where computational density has increased approximately 35 percent per year for the past fifty years, these other factors have improved around 1–2 percent per year. Thus, over the whole time span, they have improved by 1.65 to 2.7 times, while microprocessor performance has improved 10,000,000,000 times. Moreover, as Smil is acutely aware, the world of macroscopic change (in contrast to microscopic digital improvements) besets us with trade-offs. [American Affairs]
• Schmitz 2005 examines the productivity of iron ore miners in the Great Lakes before and after the entry of foreign competition from Brazil. For nearly a century, Minnesota mines faced no competition, save from themselves. As before, the unions’ optimal strategy was to insist on inefficient production technologies. In the initial crisis after competition came, output fell by 30% and 25% of the mines in Minnesota were shut down, but it soon rebounded to 92% of the pre-crisis level. Meanwhile, labor productivity rose 68%, and total factor productivity (TFP) rose 42%. They were perfectly capable of increasing profits by doing this earlier, but they chose not to. [Nicholas Decker]
• It will take time to scale up lithium mining, lithium refining, battery production, mining of other metals, electric vehicle part production, and electric vehicle assembly. It will take time (a long time) for the existing fleet of internal combustion engine vehicles to turn over. In fact, it will be a big day when the number of ICE vehicles in use worldwide actually begins to decline. Another issue is that, in addition to the production of the vehicles, an entire, complimentary charging system has to be created as well to replace the distribution system for gasoline. That is everything from the generation of electricity to the transmission and distribution of it to the vehicle charging locations and appliances. The transportation sector uses about 24 quadrillion BTU of energy from petroleum (annually). The electric power sector delivers only 13 quadrillion BTUs, out of a total of 37 quadrillion BTUs consumed from fuels and resources. (The electrical system is very lossy.) 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]