18 May 2017

Your Order is Shipping

During the campaign Neville Chamberlain Trump made a point of criticising Obambi for his use of Executive Orders. Obambi, by such talk, was the prime abuser of executive power in all the history of the country. Here's a list and you can see that Neville Chamberlain Trump is way, way ahead. On an annual basis or term basis since Truman, Obambi is at the bottom. Another big lie.

And, BTW, the count for the first 100 days is 32 for Neville Chamberlain Trump which puts his annualized total at 116. Another big lie.

Who said we're a data driven society?

12 May 2017

At Your Service

A current argument over on "Seeking Alpha" is what Moore's Law means to the notion of innovation. Moore didn't want "Law" associated with his observation.
Despite a popular misconception, Moore is adamant that he did not predict a doubling "every 18 months." Rather, David House, an Intel colleague, had factored in the increasing performance of transistors to conclude that integrated circuits would double in performance every 18 months.

This is what he actually wrote
The complexity for minimum component costs has increased at a rate of roughly a factor of two per year (see graph on next page). Certainly over the short term this rate can be expected to continue, if not to increase. Over the longer term, the rate of increase is a bit more uncertain, although there is no reason to believe it will not remain nearly constant for at least 10 years. That means by 1975, the number of components per integrated circuit for minimum cost will be 65,000.

In simple terms, he observed that the cost of a given circuit halved over time. Since the structure of such circuits obey the laws of physics, which don't change (they are further understood at times, but none have been discarded outright in a very long time), their implementation (generally, TTL) doesn't "improve" per se. But with more transistors available per mm2 to produce such a circuit, that was the easy surrogate for the cost curve. So, Moore's became that. It never was. These days, we've seen that ever smaller nodes have been at escalating cost of R&D and the machines to make such nodes.
A Skylake transistor is around 100 atoms across, and the fewer atoms you have, the harder it becomes to store and manipulate electronic 1s and 0s. Smaller transistors now need trickier designs and extra materials. And as chips get harder to make, fabs get ever more expensive. Handel Jones, the CEO of International Business Strategies, reckons that a fab for state-of-the-art microprocessors now costs around $7 billion.

In all, innovation doesn't necessarily follow the accepted wisdom. These endeavors yapped about the notion of growth for some time, but impelled by Gordon's book, have yapped ever more, and what steps governments can take to produce more of it. And see that it gets to the majority, rather than the 1%. Solow has been mentioned as the standard issue economist who ignores distribution issues in growth. There has been an exception, and from Solow's generation, William Baumol. He just passed away. I read him in grad school, but haven't paid any attention to him in decades. Too bad. I just rechecked my Gordon, and he does mention Baumol on page 173. It was Baumol's later writing that leads to that reference (from the NYT obit):
For example, he said, it takes exactly the same number of people and the same amount of time to play a Beethoven string quartet today as it did in, say, 1817. Yet the musicians who spent years studying and practicing -- and still have to eat and live somewhere while doing that -- cannot be paid the same as their 19th-century counterparts. Their wages, too, will rise, even though they are no more productive than their predecessors were. As a result, their work eventually becomes increasingly expensive compared with more efficiently produced goods.

So, what happens when Moore and Baumol meet? Ever slowing productivity, which means that there's ever less increase to worry about distributing:
"What this says is that the quality of life 30 years from now could deteriorate," Professor Baumol said in 1983, "because many of the services that we associate with quality of life will become relatively more expensive while mass-produced things become cheaper and cheaper."

And it gets worser:
"The real danger is that the nation, mistakenly thinking it must rein in runaway costs, will curtail valuable health services and render them inaccessible for the less affluent. Well-meaning reformers may take the same misstep in education, law enforcement and other handicraft services."

What is striking, to me for sure, is that the notion of service sectors not being on a productivity curve was obvious for some years. Yet I hadn't been aware of Baumol's writings from those years. At least, not consciously. I do remember that "priming the pump" isn't my idea.

The Moore's Law side of things devolves from the observation that much of PC software (the three primary ones being wordprocessing, spreadsheets, and wordprocessing) hasn't led to increases in service sectors' productivity since their original release. The primary reason, which I expect Baumol would agree with, is that such computing doesn't actually maker the user smarter (i.e., productive): I offer up Alt-A loans and London Whales as proof.
His insight about the low productivity growth in services also helped explain why overall growth in an economy increasingly dominated by services can stagnate.

One of the prime notions, again which I think is mine but who really knows, is that FIRE has been the private sectors' way to absorb the college educated in non-productive overhead labor. It may be that Baumol had figured that out too 30 years ago, although perhaps not in such inflammatory words. My bad.

Ya think Orange Julius Caesar, Laffer, or Bannon can figure that out? Don't bet on it. Just dig more coal and make our city air just as bad China cities'. Wonderful.

I Pledge Allegience to the United States of Trumpistan

I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.
I told you so.

11 May 2017

Uh Oh!

The title says it all. Here's the latest Q Poll on Orange Julius Caesar. Not that he cares, of course.
The most common responses -- "idiot," "incompetent," and "liar" -- did not reflect well on the president, whose approval ratings from the same poll are near record lows.

The most common words were:

1. "Idiot," 39 times
2. "Incompetent," 31 times
3. "Liar," 30 times
4. "Leader," 25 times
5. "Unqualified," 25 times
6. "President," 22 times
7. "Strong," 21 times
8. "Businessman," 18 times
9. "Ignorant," 16 times
10. "Egotistical," 15 times

10 May 2017

Thought For The Day - 10 May 2017

Well, we now know how this works out. Orange Julius Caesar issues pre-emptive presidential pardons to all his turncoat minions. And the obsequious Congress let's it pass. Through further election manipulation, the Right Wingnuts solidify control of Congress, ensuring that Orange Julius Caesar and his chosen successors run the USofA for the benefit of the Billionaire Boys Club.

You read it here first.

The Oracle Gets It Right

A day later, at least in the press I see, and a dollar better. This gem from Buffett:
Everything in valuation gets back to interest rates.

A good proportion of the quant, certainly macro, musings in these endeavors goes back to growth, and how that happens. Which consideration is over and above distribution, that ultimately determines whether growth is sustainable. The short answer to the latter is: if it's hogged by the hogs it dies out soon enough.

When I first mentioned Gordon's book, I was forthright in saying that the asymptote of progress was a concept I'd seen coming for a long time and had mused about in these endeavors. Gordon, between the lines, makes the same argument, which is that the globe is finite in resources and laws of nature. We've certainly found the latter, and are close to the former in the areas that matter. Real growth in economies results from new technologies which boost both productivity and output. An economy grows more prosperous, on the whole, by spreading around that additional output from tech progress. That's where the real interest rate comes from.

The theory of interest, in econ terms, rests on a static view of an economy where holders of wealth choose between consumption and (real) investment on the basis of time preference, not productivity gains. Which term boils down to: how much extra moolah does the holder demand for deferring consumption for the time of the loan? This is a zero sum game, without tech progress; aggregate consumption in the current period (and subsequent term periods) is diminished by the aggregate interest paid. Pure fiduciary investment is the version we have today. And, it's not a one-sided process. The holders of wealth may well want 10 or 20 percent return for the use of their moolah, but they'll only get that vig if the borrowers can make at least that much from real world use of the funds. And that can only happen, in the aggregate, if better mouse traps keep being made. Is the problem getting clearer?

Monopoly is the most convenient, and crude, way to generate the vig. Not so good for the public weal, however. Moreover, in the real world of investing, the base return/interest rate is the risk-less government bond. For some decades that's been the Uncle Sugar Bond. Being not entirely stupid, at least in recent perspective, said bonds are sold on auction with a fixed payment, not fixed rate. When, in times as these, there's a tsunami of idle moolah, the auction pricing driven up by excess supply of moolah drives down the interest rate. So long as that tsunami continues to circulate, governments can try to raise those fiat interest rates that they have, precious few and very short term, but there's nothing they can do about long term. The long term rate, if you follow the bread crumbs back to ground zero, is set by tech progress. As Gordon and Your Humble Servant have said, the perimeter of our knowledge of the physical world is, at most, within eyesight. At worst, we're already there, but just haven't felt the bump.

You'll know that the plutocrats have taken total control when they push through law mandating US Treasuries sell at a fixed rate.

09 May 2017

The Oracle Gets It Wrong

Warren Buffett had this to say
He said if you go back to about 1960, corporate taxes were about 4 percent of GDP and now they're about 2 percent of GDP. At that time, healthcare was 5 percent of GDP and now it's 17 percent of GDP. "So when American business talks about taxes strangling our competitiveness," he said, "they're talking about something that as a percentage of GDP has gone down from 4 to 2." Meanwhile, medical costs have exploded. "So medical costs are the tapeworm of American economic competitiveness," he said.

In some other reporting, he also said that healthcare would kill the economy. What he ignores, of course, is that healthcare has been, and is, a very strong employment driver. IOW, healthcare does good by doing good. Or, to put it another way, your taxes drive wages and thus inflation by producing un-consumables as nucular bombs and aircraft carriers. Healthcare, OTOH, produces a consumable product. A virtuous circle, as different from the vicious cycle of defense spending.

This time, the Oracle is wrong.