Category: Current Affairs

The Amazon nuclear project

Nuclear power plants are designed to withstand a plane crash. We are now getting a live experiment in whether the nuclear sector is built of similar stuff, after federal regulators dropped a bomb on Friday night. In a 2-1 vote, the Federal Energy Regulatory Commission rejected an amended interconnection agreement for the deal that sparked a frenzy for nuclear power stocks earlier this year: Amazon.com’s acquisition of a datacenter co-located with a reactor owned by Talen Energy Corp. Few saw it coming, and the sector dived on Monday morning.

Here is more from Bloomberg, via Nicanor.

How much is a rare bee worth?

Plans by Mark Zuckerberg’s Meta to build an AI data centre in the US that runs on nuclear power were thwarted in part because a rare species of bee was discovered on land earmarked for the project, according to people familiar with the matter.

Zuckerberg had planned to strike a deal with an existing nuclear power plant operator to provide emissions-free electricity for a new data centre supporting his artificial intelligence ambitions.

However, the potential deal faced multiple complications including environmental and regulatory challenges, these people said.

Here is more from the FT.

Germany fact of the day, the work culture that is German

Workers missed an average of 19.4 days because of illness in 2023, according to Techniker Krankenkasse, the country’s largest public health insurance provider.

Preliminary figures suggest the trend is on course to continue its upward trajectory, TK told the Financial Times, exacerbating challenges for an economy that many expect to contract for the second year running in 2024.

While it is notoriously difficult to compare data from country to country, Christopher Prinz, an expert on employment at the OECD, said Germany was “definitely among the higher countries” when it came to sick leave.

study published in January by the German Association of Research-Based Pharmaceutical Companies (VFA), an industry body, found that were it not for the country’s above-average number of sick days, the German economy would have grown 0.5 per cent last year, rather than shrinking 0.3 per cent.

Here is more from Laura Pitel at the Financial Times.  Via Roland Stephen.

South Africa update

President Cyril Ramaphosa earlier this month said economic progress since the formation of the new coalition in June meant annual GDP growth could triple to 3 per cent after a decade at less than 1 per cent.

But in the government’s first half-year budget on Wednesday, finance minister Enoch Godongwana cut the growth target for this year to 1.1 per cent from the 1.3 per cent target set by the previous government in February. Over the next three years, he said he expected GDP growth to average 1.8 per cent.

Here is more from the FT.

My Conversation with the excellent Christopher Kirchhoff

Here is the audio, video, and transcript.  Here is the intro:

Christopher Kirchhoff is an expert in emerging technology who founded the Pentagon’s Silicon Valley office. He’s led teams for President Obama, the Chairman of the Joint Chiefs of Staff, and CEO of Google. He’s worked in worlds as far apart as weapons development and philanthropy. His pioneering efforts to link Silicon Valley technology and startups to Washington has made him responsible for $70 billion in technology acquisition by the Department of Defense. He’s penned many landmark reports, and he is the author of Unit X: How the Pentagon and Silicon Valley are Transforming the Future of War.

Tyler and Christopher cover the ascendancy of drone warfare and how it will affect tactics both off and on the battlefield, the sobering prospect of hypersonic weapons and how they will shift the balance of power, EMP attacks, AI as the new arms race (and who’s winning), the completely different technology ecosystem of an iPhone vs. an F-35, why we shouldn’t nationalize AI labs, the problem with security clearances, why the major defense contractors lost their dynamism, how to overcome the “Valley of Death” in defense acquisition, the lack of executive authority in government, how Unit X began, the most effective type of government commission, what he’ll learn next, and more.

Excerpt:

COWEN: Now, I never understand what I read about hypersonic missiles. I see in the media, “China has launched the world’s first nuclear-capable hypersonic, and it goes 10x the speed of sound.” And people are worried. If mutual assured destruction is already in place, what exactly is the nature of the worry? Is it just we don’t have enough response time?

KIRCHHOFF: It’s a number of things, and when you add them up, they really are quite frightening. Hypersonic weapons, because of the way they maneuver, don’t necessarily have to follow a ballistic trajectory. We have very sophisticated space-based systems that can detect the launch of a missile, particularly a nuclear missile, but right then you’re immediately calculating where it’s going to go based on its ballistic trajectory. Well, a hypersonic weapon can steer. It can turn left, it can turn right, it can dive up, it can dive down.

COWEN: But that’s distinct from hypersonic, right?

KIRCHHOFF: Well, ICBMs don’t have the same maneuverability. That’s one factor that makes hypersonic weapons different. Second is just speed. With an ICBM launch, you have 20 to 25 minutes or so. This is why the rule for a presidential nuclear decision conference is, you have to be able to get the president online with his national security advisers in, I think, five or seven minutes. The whole system is timed to defeat adversary threats. The whole continuity-of-government system is upended by the timeline of hypersonic weapons.

Oh, by the way, there’s no way to defend against them, so forget the fact that they’re nuclear capable — if you want to take out an aircraft carrier or a service combatant, or assassinate a world leader, a hypersonic weapon is a fantastic way to do it. Watch them very carefully because more than anything else, they will shift the balance of military power in the next five years.

COWEN: Do you think they shift the power to China in particular, or to larger nations, or nations willing to take big chances? At the conceptual level, what’s the nature of the shift, above and beyond whoever has them?

KIRCHHOFF: Well, right now, they’re incredibly hard to produce. Right now, they’re essentially in a research and development phase. The first nation that figures out how to make titanium just a little bit more heat resistant, to make the guidance systems just a little bit better, and enables manufacturing at scale — not just five or seven weapons that are test-fired every year, but 25 or 50 or 75 or 100 — that really would change the balance of power in a remarkable number of military scenarios.

COWEN: How much China has them now? Are you at liberty to address that? They just have one or two that are not really that useful, or they’re on the verge of having 300?

KIRCHHOFF: What’s in the media and what’s been discussed quite a bit publicly is that China has more successful R&D tests of hypersonic weapons. Hypersonic weapons are very difficult to make fly for long periods. They tend to self-destruct at some point during flight. China has demonstrated a much fuller flight cycle of what looks to be an almost operational weapon.

COWEN: Where is Russia in this space?

KIRCHHOFF: Russia is also trying. Russia is developing a panoply of Dr. Evil weapons. The latest one to emerge in public is this idea of putting a nuclear payload on a satellite that would effectively stop modern life as we know it by ending GPS and satellite communications. That’s really somebody sitting in a Dr. Evil lair, stroking their cat, coming up with ideas that are game-changing. They’ve come up with a number of other weapons that are quite striking — supercavitating torpedoes that could take out an entire aircraft carrier group. Advanced states are now coming up with incredibly potent weapons.

Intelligent and interesting throughout.  Again, I am happy to recommend Christopher’s recent book Unit X: How the Pentagon and Silicon Valley are Transforming the Future of War, co-authored with Raj M. Shah.

Don’t bet against the dollar

That is the topic of my latest Bloomberg column, here is one point of several:

The crypto revolution also seems to be heading in some dollar-friendly directions. Much recent crypto growth has come in the area of stablecoins, as evidenced by Stripe’s acquisition last week of Bridge. Most stablecoins are denominated in dollars, and typically they are backed by dollar-denominated securities, if only to avoid exchange-rate risk. If “programmable monies” have a future, which seems likely, that will further help the dominant currency — namely, the US dollar.

You might think that other monies will become programmable too. But since stablecoins often are most convenient for international transactions, as well as for internet-connected transactions, the most likely scenario is that stablecoins concentrate interest in the dollar. The US has by far the most influence of any nation over how the internet works.

The piece has other points of note.

The robustness of coal?

Coal consumption in 2030 is now estimated 6% higher than only a year ago. That may sound small, but it amounts to adding the equivalent of the consumption of Japan, the world’s fourth-largest coal burner. By 2030, the IEA now believes coal consumption will remain higher than it was back in 2010…

One notable statistic: Two-thirds of the total increase in energy demand in 2023 was met by fossil fuels, according to the IEA.

Here is more from Javier Blas at Bloomberg.  Via Nicanor.

New report on nuclear risk

Phil Tetlock is part of the study, from the Forecasting Research Institute.  Obviously this is very importnt.  From Tetlock’s email to me:

“In brief, this study is the largest systematic survey of subject matter experts on the risk posed by nuclear weapons. Through a combination of expert interviews and surveys, 110 domain experts and 41 experienced forecasters predicted the likelihood of nuclear conflict, explained the mechanisms underlying their predictions, and forecasted the impact of specific tractable policies on the likelihood of nuclear catastrophe.

Key findings include:

  1. We asked experts about the probability of a nuclear catastrophe (defined as an event where nuclear weapons cause the death of at least 10 million people) by 2045, the centenary of the bombings of Hiroshima and Nagasaki. Experts assigned a median 4.5% probability of a nuclear catastrophe by 2045, while experienced forecasters put the probability at 1%.

a.       Respondents thought that a nuclear conflict between Russia and NATO/USA was the adversarial domain most likely to be the cause of a nuclear catastrophe of this scale, however risk was dispersed relatively evenly among the other adversarial domains we asked about: China/USA, North Korea/South Korea, India/Pakistan, and Israel/Iran.

  1. We asked participants about their beliefs on the likely effectiveness of several policy options aimed at reducing the risk of a nuclear catastrophe. Two policies emerged as clear favorites for most participants: a crisis communications network and nuclear-armed states implementing failsafe reviews. The median expert thought that a crisis communications network would reduce the risk of a nuclear catastrophe by 25%, and failsafe reviews would reduce it by 20%.”

You will find the report here.

AfD vs. Bauhaus

By their aesthetics shall ye know them:

It shaped modern industrial design and continues to inspire architects and product designers the world over, but to some on Germany’s far right, Bauhaus is nothing to celebrate.

As the East German city of Dessau prepares to celebrate next year’s centenary of the famed design school’s move there, the far-right Alternative for Germany (AfD) has urged local legislators not to glorify Bauhaus’ cosmopolitan style ethos, saying it negated regional traditions.

The AfD’s proposal, debated and roundly rejected by the state parliament of Saxony-Anhalt earlier this week, sparked a predictable outcry: Bauhaus was part of the interwar flourishing of German avant-garde culture that was stamped out by the Nazis when they came to power in 1933.

There are many losers, so it is a debatable question today which political movement has the best aesthetics…

Principles of Economics Textbooks and the Market for Ice Cream

Rey Hernández-Julián and Frank Limehouse writing in the Journal of Economics Teaching write that very few principles of economics textbooks deal with modern information and digital tech industries:

The main takeaways of our review are highlighted by two stand-alone textboxes found in Mankiw’s (2023) textbook. This textbook has been regarded as one of the most dominant players in the principles of economics textbook market for over 20 years. In the introductory chapter of the 10th Edition (2023), “Ten Principles of Economics” there is a stand-alone textbox with the Netflix logo with the following caption: “Many movie streaming services set the marginal cost of a movie equal to zero”. However, there is no further explanation of this statement in the chapter and no presentation of the concept of zero marginal cost pricing in the remainder of the entire textbook. In Chapter 2 (“Thinking Like an Economist”), there is an In the News article from the New York Times, “Why Tech Companies Hire Economists”, but very little coverage in the text on how to apply microeconomic concepts to the tech industry. These two discussions of the tech industry in Mankiw’s text exemplify many of our findings from other texts….updated examples from the modern economy seem to be afterthoughts and detached from the central discussion of the text.

…There are some notable exceptions. The most significant coverage of these questions is in Chapter 16 of Cowen and Tabarrok’s Modern Principles of Microeconomics, 5th edition (2021). In this chapter, the authors discuss platform service providers, such as Facebook, Amazon, Google, Visa, and Uber, and the role they play in competing “for the market,” instead of “in the market.” They also discuss why the prevailing product is not necessarily the best one, how music is a network good, and why these platform services may give away goods for ‘free’.

I would also point out that our example of a constant-cost industry (flat long-run supply curve) is domain name registration! As we write in Modern Principles:

Now consider what happens when the demand for domain names increases. In 2005, there were more than 60 million domain names. Just one year later, as the Internet exploded in popularity, there were more than 100 million domain names. If the demand for oil nearly doubled, the price of oil would rise dramatically, but despite nearly doubling in size, the price of registering a domain name did not increase…the expansion of old firms and the entry of new firms quickly pushed the price back down to average cost.

In short, it’s called Modern Principles for a reason! Tyler and I are committed to keeping up with the times and not just adding the occasional box and resting on our laurels.

See Hernández-Julián and Limehouse for some further examples of how to introduce modern industries into principles of economics.

Does it matter who Satoshi was?

That is the topic of my latest Bloomberg column, here is one excerpt:

It also matters if Satoshi was a single person or a small team. If a single person, that might mean future innovations are more likely than generally thought: If Satoshi is a lone individual, then maybe there there are more unknown geniuses out there. On the other hand, the Satoshi-as-a-team theory would mean that secrets are easier to keep than people think. If that’s the case, then maybe conspiracy theories are more true than most of us would care to admit.

According to many speculations, Satoshi came out of a movement obsessed with e-cash and e-gold mechanisms, dating to the 1980s. People from those movements who have been identified as potential Satoshi candidates include Nick Szabo, Hal Finney, Wei Dai, David Chaum and Douglas Jackson, among others. At the time, those movements were considered failures because their products did not prove sustainable. The lesson here would be that movements do not truly and permanently fail. It is worth experimenting in unusual directions because something useful might come out of those efforts.

If Peter Todd is Satoshi, then it’s appropriate to upgrade any estimates of the ability of very young people to get things done. Todd would have been working on Bitcoin and the associated white paper as a student in his early 20s. At the same time, if the more mainstream Adam Back is involved, then maybe the takeaway is that rebellious young people should seek out older mentors on matters of process and marketing.

I believe that in less than two years we will know who Satoshi is.

Saudi construction project of the day

Saudi Arabia is preparing to begin construction work on its next giga-project: a cube-shaped skyscraper big enough to fit 20 Empire State Buildings.

The Mukaab will be 400-meters on each side when construction is finished, which would make it the largest built structure in the world. The building will be the centerpiece of New Murabba, a community the country hopes will be a new destination within the capital city of Riyadh.

“It’s masquerading as a building today but it’s so much more,” Michael Dyke, chief executive officer of New Murabba, said in an interview. “Ultimately, a capital city the size of Riyadh deserves to have a global, central icon as other capital cities do.”

Here is more from Zainab Fattah at Bloomberg.  Here are various images based on artist renderings.  Here is further information.