Wednesday assorted links

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"Sonic attack" has better optics than "mass hysteria", which is certainly what it was.

Very true. But don't count out the Russian embassy over in Havana either (5% chance). When I visited (illegally) that complex was huge and menacing. Russians have good tech on torturing people (and poisoning them).

US gov testing its newest weapon? I would give it 5% too.

#5. Who are "they"?

5. I don't like the behaviour of the Cuban government, but they have absolutely nothing to currently gain, and a great deal to lose, from deliberately antagonising the US in such a manner. It defies belief that they are deliberately responsible for anything like this and they probably want the problem to go away as much as the US does.

Given the nature of the Cuban state, it seems unlikely that any 3rd party could mount such an "attack" either. So that leaves us with naturalistic explanations....

Does this same logic apply to the physical attacks and break-ins targeting American diplomats in Russia? Are those a nonsense conspiracy theory, too?

The clearest explanation is that the Cubans run a closed, totalitarian government, and they (or a faction within the government) know they will have trouble fighting the transparency that will result from official presence of Americans. Alternatively, they know the US presence means a higher presence of American spies. Or, they could be spinning some story entirely for domestic consumption. There are lots of possible motives.

Nope,

I can certainly believe Russia is harassing US diplomats.Different incentives, different behaviours. And the Russians have a clear recent history of it (which I note the Cubans do not).

Obviously, you can always conjecture some incentives for some faction in Cuba to be doing something. Respectfully, I find your suggestions implausible on the grounds of the high costs and risk to the remote and slight benefits. This would not even be covert naughtiness for which you might hope to escape internal investigation. I might have more sympathy for a rogue elements argument if the Cuban government was more sclerotic like Iran, but they run a tight ship. Even as we speak; Cuban security agents must be crawling through their own organisations triple-checking that none of their own has embarrassed the General Secretary with this affair...

It is a Qui Bono situation; Cuba is awash in Russian Expats; (they walk around smashed at most of the resorts.) Some Russians had a lot to loose under the growing entente with the Obama administration. "How can we fix that?" The best way to protect your interests in Russia is with mafia and dirty tricks as they have no rule-of-law to speak of.

As I read between the lines, they are saying that the embassy's bug jamming devices might have had a conflict with modern office electronics, creating a sonic mess. That is more likely to me, but perhaps I am falling for a scenario Tyler would have me avoid!

$1,400 for rent is a steal in San Francisco. They should really just add more stories to those buildings, though. It's a shame to both have so little space you have to build dorm rooms, and for the building next door to be just 4 stories high.

Got to love someone who can critique the steel industry in the 50's... and not acknowledge that the Unions would never have let them make the changes he is insisting should have made. And then blames the steel companies for that without ever mentioning it.

An embarrassing effort at every level.

There are no three-sentence answers. Of course, management bears some onus. There certainly were sufficient bad decisions to go around.

However, Bloomberg and et al are highly selective with facts. They start with the agenda/conclusion/narrative and employ distortions, fabrications, omissions, . . . and other logical fallacies. To them facts are ammunition.

One cause is the leftist conquest of (all levels of) education, which produces drones that lack background, context, and critical thinking capacity to detect intellectual dishonesty.

I can't decide. This tariffs-are-bad lefty-thingy is either intellectual laziness, globalist ideology, Trump Derangement Syndrome.

If high tariffs are bad for the US, why are 25%-range tariffs are working for two of the fastest-growing economies on the planet: China and India.

You think union workers object to higher wages? Or do you think higher productivity per worker requires lower wages?

I worked with union workers at Inland Steel on computer systems monitoring furnaces, a plant with a billion dollar investment plan in the 70s. They knew investment in modern operations was required.

It was Wall Street and Milton Friedman arguing against the investment.

It was economists who argued there could not possibly be demand for steel equal to the added production planned by Korea.

In the 70s, it was Korea that was dumping steel by government backed building of steel production that had no demand. But Milton Friedmann argued for importing the subsidized Korean steel and shutting down US steel mills.

He probably saw that as a great way to reduce pollution where he lived without the costs of paying workers to reduce pollution which modern steel making plants.

Things were tough in the 70s in the greater Chicago area, but we were selling more and more computer systems in factory environments. I worked mostly with union workers. And supervisors and managers had been union workers. They all wanted more investment.

But the thing that struck me in the 70s and 80s was the dominant view that global steel demand then was at a peak. I looked around just the US and saw lots of needed investment that would require lots of steel.

The election of Reagan resulted in significant cuts in investment. And with economists arguing for importing steel at lower prices to cut the costs of investment.

The rise of free lunch economics. Cut costs to increase GDP. The less workers are paid, the more workers will buy to create higher demand.

Mulp vs The Economists.

Mulp wins - his head is in the real world and not up his ...

Lanigram the anagram

You truly embody the backwards marginal revolution.

The joke's on you guys; Mulp always wins.

Potato,

I am proud to be marginal!

I look forward to a life of tacos, beans, favelas, and lifetime unemployment - all the things our esteemed host wants for us!

"It was economists who argued there could not possibly be demand for steel equal to the added production"

Given that everyone is talking about a "glut" of steel now, it turns out that they were right.

Can you provide a high-level explanation of why unions would have opposed the new steel techniques?

Also, when steel management reported their status to Congress, did they ever mention "we want to upgrade but the unions are blocking us"?

I can see how unions would fight conversion of plants to plans with lower labor requirements, but that seems easy to beat. Open a new plant!

And in that moment it became clear that bear has never worked in a capital intensive manufacturing industry.

Hey GM, just open new plants to avoid the unions !

Sure, you are correct after all. But the plants won’t be in the US.

Article missed how Nucor ended up......

Laurel anyone?

That seems like an odd answer, given that large US manufacturers distribute their plants across the states, and there have been a number of moves to the "right to work" south for this very reason.

Saturn is an easy example.

"Saturn is an easy example."

Epic Fail!

GM tried to open a non-union plant. The UAW threatened to strike and GM caved. The plant was not only unionized, but most of the manufacturing jobs went to current GM workers who relocated from the MidWest. My high school class was chock full of Michigan kids.

Not a good telling, JWatts.

https://www.forbes.com/2010/03/08/saturn-gm-innovation-leadership-managing-failure.html

It was more complicated, but it ends up being a story of corporate and unions combining to beat back innovation.

I know that the Teamsters union on the West Coast fought bitterly for decades to resist putting bar-coding on individual containers because it would lead to fewer union jobs. Is it not reasonable to assume that something similar was involved with new steel plant automation?

It's unreasonable to assume it in the absence of actual evidence, particularly when the Europeans, who have a few powerful unions of their own, were able to modernize. If there's evidence that the big US steelmakers tried to undertake these reforms, but got blocked by unions, please provide it.

I can imagine lots of ways that the unions made steel suck. But because I tend to be anti-union, I try to make myself demand real evidence of what happened.

If the new technique is that much better but you cannot reduce your workforce, well, you can go to the new technique and have lots of slackers around.

It is kinda obvious to anyone who looked into this that the unions priced U.S. steel out of the market. This story likes like a white wash to me.

But none of this matters. It is essential for the U.S. for strategic reasons to produce their own steel, aluminum and other strategic products. So do it. MAGA

I bet you still drive that Ford Pinto, because it's American darn it, and better than any Corolla, whatever that is.

(The US auto industry went through similar decades of denial, but when they finally figured out that the Japanese had snuck by to higher quality, they addressed it. Perhaps if you are young you didn't see it.)

It’s not denial. You’re both correct.

Work rules and UAW were instrumental in destroying the competitiveness of the domestic auto industry. Management absolutely failed to act. They’re both responsible.

It is a fantastic lesson in how, as a high trust society transitions to a low trust society, it becomes uncompetitive in various industries. A worker at Toyota knows he’s got a leg to stand on. The company will fire anyone who threatens quality. If he works hard and offers Kaizan improvements he will be listened to and rewarded.

A worker at GM who offers an improvement idea, well holy shit if it reduces hours he’s been targeted by the UAW and will be destroyed. Workers don’t trust management and management does not trust the union.

We’re in a terrible Nash equilibrium in medium skilled work industries.

Not sure there is a fix.

It is probably fair to split the blame, but it wasn't the unions who sentenced W. Edwards Deming to the wilderness. Maybe they wouldn't have been happy to have him in the plant, but he wasn't invited by management.

Until much later, of course.

I think it is more of a "tragedy of the commons" situation. It seems to be reasonable to believe that if people made decisions based on the "long-term common good" the world would be a better place, but it really isn't clear that such an unselfish philosophy would actually be a good thing. The Eugenics movement of 100 years ago is a great example of people doing/believing bad things for the best of (long-term) reasons. Requiring any group to be less selfish than they CAN is antithetical to our freedom of choice. Look around, how many government pension systems have not abandoned the "defined benefits" model? It has been amply demonstrated that such systems are often unsupportable, and yet the politics doesn't allow us as a society to do the obvious. Blaming people in 1950, 1960, 1970 for having the same short-term outlook that we do today is just simply hypocrisy. Once we get our own union contracts tamed, then we can pontificate about how awful it is that they didn't do that several generations ago. Glass. House. Stones.

It wasn't just quality. American cars had terrible handling into the 1980's. You had to buy a Japanese car or certain European cars to get a car with good handling, like nearly all cars have today.

I remember our 1972 Oldsmobile Delta 88, it was a land yacht in the true sense.

"It is essential for the U.S. for strategic reasons to produce their own steel, aluminum and other strategic products."

And they should employ as many workers as possible. Everyone should make steel in their backyards. It will be a great leap forward, just like Chairman Trump wants. MAGAAAAAAA!!!!

Seriously, what is our "steel deficit"? How much do we consume, and how much do we produce?

If we use 100 mega-units a year and consume 110 mega-units a year, this is not a strategic vulnerability. In case of war that closes our ports, the price of steel goes up a bit and we get along fine.

s/use/produce/

The bigger issue I have with the article, which is quite typical of discussions on a given industry's "competitiveness", is that not every industry can survive, regardless of what management does. That's a fallacy of composition. One can't analyze one industry in isolation. Trade is about *specialization*. We produce some products, other countries produce other products, and all gain from specialization. So, the proper comparison is not between US and foreign steel; it's between US steel and US Other Industries like software, Hollywood films, cars, whatever. Why did we choose to invest in Other Industries instead of new steel technologies?

US steel executives did not choose between old steel technologies and new steel tech. The *capital markets* directed capital towards *US Other Industries* instead of new steel tech. US steel didn't invest in the new tech because the return on investment wasn't large enough to compete with investment opportunities in Other Industries. Even if US steel was throwing off cash that could have been re-invested in new steel tech, if Other Industries' investments were better, then capital markets would have guided US steel executives to return capital to shareholders for redeployment into Other Industries. (See Tyler's article about share buybacks.)

So, one can only make a case that US steel should have done better by making a case that Other Industries should have done worse. Which US industry should have declined or have been prevented from flourishing to allow US steel to avoid decline? Trade is like musical chairs: three US chairs, three chairs abroad, six industries. No matter how well or poorly each individual industry is managed, when the music stops three industries will not find a place in the US and will end up abroad. Why can we not have six chairs? Because the same worker, electricity, land, etc. cannot simultaneously be deployed in a steel plant and a car factory (or software firm, or film studio, etc.). The finite number of chairs results from having finite economic resources.

Trade competition is not a competition between US steel and foreign steel for customers. It's a competition for *resources* between US steel and US Other Industries. Even if one insists on thinking in terms of competition for customers, the competition is between two cross-national teams: (1) US steel + foreign Other Industries vs. (2) US Other Industries + foreign steel. That's what economic "nationalists" don't seem to understand.

The Unseen. The Unseen. The Unseen.

It can’t be competitive in Germany and japan and uncompetitive here.

It’s not about capital markets.

It’s the same shit about why building a subway is so expensive in the US.

This is rent seeking. This is unions and a dying industry.

"US steel executives did not choose between old steel technologies and new steel tech. The *capital markets* directed capital towards *US Other Industries* instead of new steel tech. US steel didn’t invest in the new tech because the return on investment wasn’t large enough to compete with investment opportunities in Other Industries."

The new steel technologies were quite profitable when implemented by a then-much-small US corporation, NUCOR.

Neither company executive nor capital markets are perfect decision makers, or anything close to it.

Are there no unions in Europe? Why were the European companies able to make these changes while US ones weren't?

1. I might be wrong on this, but wasn't part of the reason the Germans and Austrians were able to build new, state-of-the-art factories after WWII is that we had demolished the old ones? I'm sure the steel industry, like most legacy industries, responded poorly, but often it's just hard to change what you are doing. Most outside commentators seem to ignore this fact when they talk about a company or an industry's missteps. It's usually easier to start from scratch.

So, protecting the US steel industry is the wrong move, still. Whether the lack of move to new technologies was assisted via destruction of the existing infrastructure, or hindered by managerial myopia, or (as Bill Kilgore mentions) hampered by labor unions, the long run effect is the same: efficiency wins out, and any tampering with that process can only buy time, not net success.

...heavy government "tampering" defeats efficiency even in the long run

it's highly inefficient for the Red Chinese government to subsidize steel exports with Chinese tax money --- however. it's a bonanza for U.S. steel consumers. Americans should buy all the cheap Chinese steel that they can --- steel is a very durable product, easily stockpiled for future use,

Current U.S. steel industry is never irreplaceable. It can be replaced at a future date, or multiple foreign supliiers can meet U.S. demand. Steel might even be replaced by better materials in the long run.

'is that we had demolished the old ones'

Not precisely - this integrated blast furnace complex was in operation until 1986. 'No other historic blast-furnace complex has survived that demonstrates the entire process of pig-iron production in the same way, with the same degree of authenticity and completeness, and is underlined by such a series of technological milestones in innovative engineering. The Völklingen monument illustrates the industrial history of the 19th century in general and also the transnational Saar-Lorraine-Luxembourg industrial region in the heart of Europe in particular. The Ironworks are a synonym for and a symbol of human achievement during the First and Second Industrial Revolutions in the 19th and beginning of the 20th centuries.

The iron-making complex dominates the townscape of Völklingen. It contains installations covering every stage in the pig-iron production process, from raw materials handling and processing equipment for coal and iron ore to blast-furnace iron production, with all the ancillary equipment, such as gas purification and blowing equipment.

The installations are exactly as they were when production ceased in 1986.' http://whc.unesco.org/en/list/687

Having visited the complex a few years ago, it is obvious why bombing a blast furnace with conventional explosives is pretty much a waste of time. Trying to destroy the infrastructure (think rail, worker housing, dams generating electricity, etc) were the preferred strategic bombing methods to reduce iron production. The same applies to an oil refinery, by the way, as demonstrated at Ploesti during WWII. 'Ploesti: The Great Ground-Air Battle of 1 August 1943' is a fantastic book, by the way - https://books.google.de/books?id=KV8Ma-VA6fIC&pg=RA1-PA180&redir_esc=y , especially for anyone stupid enough to believe that the American military has been unaware of the critical importance of oil in warfare since the early 1930s, when strategic bombing became a realistic concept. However, even when employing a massive effort called Operation Tidal Wave, this was the result - "no curtailment of overall product output." Refineries, like blast furnaces, are the sorts of places where extremes - including explosions - are part of running such a facility.

They lost the physical plants, but they retained the human capital and know-how.

That was more of a problem where the Russians were able to pack up factories and ship them eastwards. Generally, blast furnace complexes survived conventional bombing without major problems. The real problem was that they were simply not that efficient - see above about Völklingen, which had its last 'modern' upgrade done in 1935, and which then remained in business for the next 51 years, mainly done in by that fact that its air pollution was no longer acceptable. (For example - 'Approximately in the same time, sintering technology offered new opportunity to recycle waste products from the smelting process, i.e. ore dust, blast furnace dust. The largest sintering plant in the world was built in Voelklingen in 1928. Materials with a grain size that is too fine for use in the blast furnaces were heated to 1200°C to form a sinter cake in the sinter plant and then broken into the proper grain sizes.

In spite of these recycling efforts, emissions were still high, thus hampering environment. The blast furnace blew 32 tons of dust daily into the atmosphere.' http://www.totalmateria.com/page.aspx?ID=CheckArticle&site=kts&NM=106

Further, Völklingen represented the sort of integrated facility that was later found in the U.S. Unfortunately, I cannot find anything in English concerning how this integrated plant became a world wide model.

What's happening here? Prior is using facts?

#1 - good conventional article on why the US feel behind in steel (forced oxygen and scrap steel remelted) but did not mention "continuous casting", https://en.wikipedia.org/wiki/Continuous_casting I vaguely recall newer, non-legacy, non-US plants employed CC. I could be wrong but it deserved a mention.

"the Germans and Austrians were able to build new, state-of-the-art factories after WWII is that we had demolished the old ones?"

Don't give Trump any ideas.

It's a popular myth that WW2 destroyed most of Germany's industrial capital stock. This myth is plain wrong. Actually due to the war's massive investment in capital stock by 1945 Germany had way more industrial capital than in 1939. For example, Germany's stock of machine tools increased from 1.4 million machines in 1938 to 2.2 million in 1945 while the war only destroyed 0.13 million units or 6% of their post-war stock.

So blaming physical war damage for the loss of US steel competitive advantage is nonsense. In fact, German steel production peaked at roughly the same time as US steel production did: US production peaked in 1969 and in Germany in 1970. What happened was the countries with cheaper labor started to produce steel in large quantities while developed economies began to shift away from steel into more technologically intensive industries. Today developing countries like China, Turkey, Brazil and India account for the bulk of the world's steel production. Steel was a high tech good 100 years ago so only developed countries produced it, now it's a commodity produced by developing countries.

Also, I should point out that Austria, where electric arc furnaces were first popularized was not bombed significantly in WW2, specially compared to northern Germany. Nor there was much physical destruction in Austria since the war was over before allied troops occupied that country.

People anyway overrate the importance of physical capital, what really matters is intangible capital, the knowledge to be able to build and operate something. You can see this by how quickly developing countries were able to build steel and car plants, it took a trivial amount of their national capital to build the steel and car plants in China after liberalisation of their economy post 1980s.

Another point, mature capital intensive businesses are in a constant fight to the death to remain profitable because the basic technology is available off the shelf so entry barriers are low, so the only way to survive is constant innovation to improve efficiency, even a small impediment to improving efficiency like unions adds up over time.

'even a small impediment to improving efficiency like unions adds up over time'

Which certainly explains Germany's industrial decline. Oh, wait .....

'It’s a popular myth that WW2 destroyed most of Germany’s industrial capital stock.'

Half true - in the areas the Russians occupied after WWII, a lot of Germany's industrial stock was shipped eastward.

Maybe as well as the 'broken window fallacy' we should refer to the 'broken factory fallacy'.

"In case of sonic attack on your district, follow these rules."

#3 the woman profiled in this story is hillarious. Deeply unhappy lunatic divorcing her husband to flee to San Francisco to live in a dorm room at thirty something. Thst is the definition of a loser. Markets this psychotic move as "finding herself". Good template for old childless nihilistic feminist nutjobs. Sad!

She has a flower in her hair. 😀

Let me guess, James Chapman. You're vaguely Aspergian, neckbearded, in an unhappy marriage to a woman who is slowly coming to despise you, you're gaining weight and you spend hours gaming a day, you are happiest with numbers and find most people baffling and boring.
Any of that work for you?

Nope, young lawyer with a long term girlfriend. Run a sub 6 mile, run near half marathons every weekend, have a almost a underweight bmi, would destroy you in any physical activity. Nice try tho catlady.

Underweight bmi, for sure. LOL.

The excellent "Economics of Strategy" by Besanko et al. has several case studies about the steel industry. The sunk cost of existing technology and human capital to operate it, proximity to preferred types of ore, unionization and labor restrictions all contributed to the slow innovation rate of the US steel industry. Shielding the industry from competition by tariffs and the resulting bad management made matters worse, for sure, but it wasn't the only cause.

$2000 a month for a dorm room in the Tenderloin is a bad deal even by San Francisco standards.

#2 Because nothing ruins potato chips quite like potatoes.

Yeah, about the only thing worse than calling crispy food made without potato "potato chips" is calling sea jellies "jellyfish."

#5 ok these guys showed the 7 KHz sound could come from mixing, intermods produced when waves( sound waves in this case ) go through a non linearity; the original sounds may have been inaudible but the intermod products are audible.

Possible, yes, that it is the cause of the 7 Khz sound but is that sound related to the symptoms ? why is a 7 KHz sound wave causing the symptoms. It’s really doubtful that it would.

#5 -- So, to explain one mystery 7 kHz signal, we merely have to assume two mystery signals, one at 25 kHz and one at 32 kHz.

Is there somewhere where we can read (good) answers to #4

Is there somewhere where we can read (good) answers to #4?

#1 - best to go back and read Richard Preston's "American Steel: Hot Metal Men and the Resurrection of the Rust Belt. It chronicles the evolution of Nucor and the technology behind the electric arc furnace. It started as a two parter in The New Yorker way back in 1991 and is really a good overview of things and how technology shifted from the large integrated steelmakers. Amazon link: https://www.amazon.com/American-Steel-Metal-Resurrection-Rust/dp/013029604X

1. Sure, American steel lagged in innovation, but nobody produces better social media and digital advertising than we do.

5. My windows rattle at night for no apparent reason (no wind, etc.), creating a low volume sound that keeps me awake. I also can hear drones out over the marsh at night. Are the two connected? Why don't these things happen during daylight hours? Who is responsible? I suspect the nuclear submarines at the nearby base. And I don't feel so well. Could it be leaking nuclear gas from the subs that are causing the rattling that keeps me up at night and causes me not to feel so well? Or is it because I spend too much time on this blog?

You should not drive or operate machinery until you know how Marginal Revolution will affect you. Drugs and alcohol may increase regrettable comments. May contain nuts.

1. Why didn’t steel companies make large capital investments? Because Big Labor could the hold such investments hostage. Can’t anyone remember the steel strikes? Congratulations to Nucor for not allowing the unions to kill them off. If Trump wanted to protect domestic industry, he would do well to forget tariffs and instead repeal the NLRA or at Davis-Bacon.

You might learn something by reading Cowen's link.

Well, The Homestead Works, once owned by Carnegie Steel and famous (or infamous) for its 1892 labor dispute, was repurposed into Waterfront Shopping Center.

But, they saved the smokestacks!

#3. The dorm rooms remind me of nineteenth century NY tenements, which grudgingly added more air shafts, windows, and private bathrooms only as the city housing standards ratcheted up.

#5 Talk about FFTs and nonlinear dynamical systems gives me a boner.

Math rules! Weenies study economics!

#5. IEEE Spectrum has become a poorer-quality engineering publication in the last decade. It seems to me to be moving toward the Popular Science of my childhood.

#3: a sensible experiment to overcome the loneliness of urban living.

I often think that protectionism is the equivalent of being anti-patriotic, its proponents think that their countrymen are still simply unable to compete with those clever hard working foreigners so we had better coddle them. Of course as any parent knows, protecting your loved ones from harsh realities may make everything more harmonious in the short term but can have bad long term consequences.

3: Why not just call them SROs (single room occupancy)? SROs have been, and still are, an inexpensive form of housing for tenants of durations that can be temporary or indefinite

#3, this is exactly what we need for an "easy win" in disrupting complacency. Tyler needs to do a deeper dive into this and similar arrangements e.g. WeLive in DC. With a 8,000 person waitlist demonstrates the demand is significant yet this new type of housing, which is more social and hip than traditional SROs is in the early stages of something much bigger.

We not only need a steel manufacturing capability, but a reinvestment in horse cavalry, too! It is a serious national security issue: what would happen if we need the cavalry to come to our rescue? And what about the canvas industry? My god, how long would it take us to build and launch a three masted (wooden) frigate if we should ever need it?

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