Always weird to me how France is so insistent on clinging to its colonial empire, two decades into the 21st century, despite the headaches that causes.
The US closing off its market was totally predictable and has been priced in. You’ll notice that no Chinese EV makers made any plans to export directly into the US, even as they were selling around the world.
The US market is significant, sure, but the US car industry could easily end up where its shipbuilding industry is: hanging around thanks to government protection, catering to the domestic market, but a bit of a joke by global standards.
There are rules concerning how to determine the country of origin, involving how much value is added at each step. Final assembly doesn’t make the cut if the amount of work is too trivial. (The rules can be gamed somewhat but I’m sure the Biden administration will be putting this under a microscope.)
What is more problematic for Biden is that Chinese EV companies are building whole factories and supply chains in Mexico, so the product will be unambiguously Mexican and allowed to enter the US under the USMCA. If the US government feels strongly enough about keeping Chinese firms out simply on the basis of being Chinese, they will probably resort to threatening Mexico to strongarm them into shutting down those factories. The US has a long history of running roughshod over Mexico, so this seems pretty likely to me.
Georgia has been warned by the US not to become an adversary of the west by falling back in line with Moscow, as its parliament defied mass street protests to pass a “Kremlin-inspired” law....
There’s irony here. Europe went along with the US push to block Chinese access to semiconductors. China turns to domestic chip manufacturing, and the obvious first step is to get into mature nodes, the segment of the semiconductor industry where European firms have been successful. European Commission: shocked Pikachu face.
Inflation is a macroeconomic phenomenon. It’s silly to attack grocery stores for an economy-wide rise in the price level. As if Walmart wasn’t greedy during the 2010s when inflation was quiescent, and suddenly became greedy now, just because.
What actually caused inflation was the big spending by both Trump and Biden, not funded by tax increases. The US federal budget deficit is now over 6 percent of GDP, and is projected to keep ramping up. And the Federal Reserve has been slow to raise interest rates to sterilize various federal spending increases, like the Covid spending packages and the Inflation Reduction Act. These are classic ingredients for inflation.
So, plenty of blame to go around, but it’s mostly in Washington, not individual companies here and there.
Left to their own devices, companies want to raise prices and always have. You need a way to explain why they didn’t hike prices in the 2010s, when they were presumably just as greedy as they are now.
Put another way, inflation is about the loss of value of money itself, not individual prices going up. That’s a matter of macroeconomics: government spending, money supply, trade, etc.
So, why didn’t all these companies collude to fix prices before? Were they virtuous before? Did their turn to the dark side just happen to coincide with a large unfunded fiscal expansion?
So your story is that when all other prices happen to go up, lots of greedy companies conspire to up their prices. But why do the initial prices start going up to kick this off? Cosmic coincidence? Or is it conspiracy embedded in conspiracy?
In macroeconomics, the motivations of individual firms don’t matter, or at least we just assume all firm behave as self-interestedly as they can get away with. This was as true in the 2010s, when inflation was low, as today when inflation is high. What matters are things like fiscal policy, monetary policy, inflation expectations, etc. Not how greedy companies are – we can assume they always are greedy.
So companies in all markets in all countries attained this market concentration at the same time, triggering this? And it just happened to coincide with a big expansion in the money supply, but the expansion in money supply had nothing to do with the inflation?
No, interest rate hikes significantly postdated the inflation. Fed started hiking in March 2022, and by that time annualized CPI inflation rate had reached 8 percent. Average over 2021 was 4.7 percent. In any case, interest rates increases are to combat inflation, they are not a cause of inflation
Moreover, wages did go up. US median personal income went from $35.8k in 2020 to $40.5k in 2022. Maybe it didn’t go up as much as other prices, but there’s nothing that says all prices have to rise by exactly the same amount during an inflationary episode.
When an economy undergoes inflation, not all prices rise by the same amount. That’s one of the reasons high inflation can be so disruptive. For example, wages (the price of labor) often rise some time after other prices, to the detriment of some wage earners.
It’s pretty believable that grocery store chains have acquired enough market power that they’re able to pass on all their cost increases to customers, and more, thereby increasing their profit rate. But the fact that individual companies and sectors are well placed to cope with inflation doesn’t explain the economy-wide and world-wide inflation.
We can also look at the “companies have market power” explanation using the overall labour share, which measures how much income is going to labor vs capital, economy wide. It doesn’t seem to have shifted much during the recent bout of inflation. But again, individual wage earners have seen huge disparities, including some who have been made much worse off by the inflation.
The idea of prices going up and down by the same amount is based on an equilibrium situation. This isn’t ruled out; it could very well be that the high profits of grocery companies is transient (or “transitory” as they say). But in the short run, prices don’t move in lockstep.
Aside from market power or collusion, there are other reasons prices could shift more quickly for some sectors than others (even as all prices are going upward). For example, does the industry rely on long term contracts or short term contracts? Is inflation hedging widely available for the goods and services in question? Is the activity more or less sensitive to interest rates?
But these are questions about relative prices. Instead of playing a game of whack a mole, better not to set off inflation in the first place.
In the past three days, Russian troops, backed by fighter jets, artillery and lethal drones, have poured across Ukraine’s northeastern border and seized at least nine villages and settlements, and more territory per day than at almost any other point in the war, save the very beginning.
From what I’ve read, this is mainly a distraction. Russia hasn’t committed enough troops for a serious invasion of Kharkiv oblast; their objectives is to tie up Ukraine’s reserves and keep them away from the fighting in the east.
If AI really was such a game-changer, it would increase the chances of finding extraterrestrial aliens, not decrease it. If AI allows for superhuman feats of intellect and engineering, then even if 99.9% of all strong AI leads to the destruction of the original civilization, you’d only need the 0.1% of civilizations that develop stable benevolent civilization-boosting AI (let’s call them The Culture). Those would spread around, and we would have seen them. So we’re back at Fermi’s paradox.
“The wealthy and corporations” have choices of how to invest their money. If housing supply is sufficiently elastic to meet demand, they’ll find somewhere else other than housing to put their money. Ain’t nobody trying to corner the Chinese real estate market in 2024, for instance (*).
There are a few places where land shortages genuinely constrain housing supply, like Singapore and Hong Kong. But the US has tons of land; things are simply not well optimized. That, plus high interest rates due to fiscal/monetary mismanagement.
(*) Not saying the Chinese real estate market is worth emulating.
This is an unserious proposal. Germany spends about 1.5 percent of its GDP(*) on defence, much of it wasted, and increasing it to even 2 percent has involved painful and extended political wrangling. If the country collectively cannot find the will to tweak its budget to fund a modest increase in defence spending, it is not going to countenance universal conscription.
But the point remains: 2% of GDP is the NATO target, getting even to that point for Germany has been like pulling teeth, and a serious implementation of universal conscription would be a much bigger ask.
Eh, I think this is excusing too much. There’s a lot of territory between “writing blank checks with no oversight and reporting” and “a process so anal, only 7 EV chargers are built nationwide over two years”.
People have been reliant on “ole’ techno-solutions” since the dawn of humanity 2 million years ago on the African savannah, long before capitalism was even a thing. Just sayin’.
You could similarly argue that phone makers should concentrate on making and taking calls. Turns out, that’s not what consumers care about once a certain bar is cleared (a pretty low bar; call quality is notably bad on many modern cellphones). They care more about other stuff like… being good at navigation.
This has been put to the market test in China. For EV purchases, most consumers turn out not to care about the “car” aspects beyond a certain point. If the car drives okay and has acceptable safety, what matters is the Internet-based bells and whistles.
France imposes state of emergency in New Caledonia as unrest continues (www.npr.org)
Always weird to me how France is so insistent on clinging to its colonial empire, two decades into the 21st century, despite the headaches that causes.
China Isn’t Scared Of Biden’s Big Bad EV Tariffs (jalopnik.com)
Biden's new China tariff wall faces leakage via Mexico, Vietnam | Reuters (www.reuters.com)
US warns Georgia not to side with Moscow against the west (www.theguardian.com)
Georgia has been warned by the US not to become an adversary of the west by falling back in line with Moscow, as its parliament defied mass street protests to pass a “Kremlin-inspired” law....
Europe eyes car chips as next battleground with China (www.politico.eu)
Commission will start questioning its industry about competition with China and others on older-generation microchips....
Biden hikes tariffs on Chinese EVs, solar cells, steel, aluminum (apnews.com)
Climate change and inflation are both important, so we’re going to make it as expensive as possible to switch away from fossil fuels.
Google accidentally deleted a $125 billion pension fund's account (qz.com)
Democrats Ask Biden to Investigate Grocery Store Price-Fixing (time.com)
Russian forces push deeper into northern Ukraine (www.bangkokpost.com)
In the past three days, Russian troops, backed by fighter jets, artillery and lethal drones, have poured across Ukraine’s northeastern border and seized at least nine villages and settlements, and more territory per day than at almost any other point in the war, save the very beginning.
Creepy Study Suggests AI Is The Reason We've Never Found Aliens (www.sciencealert.com)
How Airbnb accidentally screwed the US housing market and made $100 billion (www.arktrek.shop)
Germany may introduce conscription for all 18-year-olds (www.telegraph.co.uk)
The US planned to install thousands of EV chargers. Only 7 have been built. - The Washington Post (www.washingtonpost.com)
web.archive.org/…/ev-charging-stations-slow-rollo…
Scientists have figured out way to make algae-based plastic that completely decomposes (abcnews.go.com)
Biden really, really doesn’t want China to flood the US with cheap EVs (www.theverge.com)