Words Have Meaning?

Them Cheatin Canadians

Well, I suppose the truth had to come out eventually. Turns out the seat of Tech Growth isn't where you might expect, if you drink The Manchurian President's Flavor Aid. It's Toronto. Those wily Canadians are using currency manipulation and open border to drain our precious bodily fluids. We must attack before it's too late. Once a friend, now an enemy.

The capital of Canada's Ontario province created 28,900 tech jobs last year, up 14 percent from 2016. Toronto's more than 241,000 tech employees represent a 52 percent increase during the last five years, according to CBRE.

The Doctor Is In

Recall the mentioning of that old saw, Dr. Copper? Well, a major American copper corporation had this to say (8:09):

Despite the recent decline in copper prices associated with the uncertain impact on the global economy of recent international trade actions, we remain positive on the outlook for copper prices given limitations on supply and the important role of copper in the global economy. To date, we have not experienced a decline in demand for our products, but will be prepared to adjust our plans if necessary to respond to market conditions.

I guess all is well. "What you're seeing and what you're reading is not what's happening."

Here's what's happening to the good Doctor. A bit of whistling past the graveyard. Ya think.

Thought For The Day - 22 July 2018

'60 Minutes' is in re-run mode, so we've just seen the piece on Hubble. I'm a sucker for such science. One might wonder whether The Manchurian President gives a hearty shit? Probably not. Real Americans don't care about real science.

Thought For The Day - 18 July 2018

Dear Dear Leader:

It's not about how kissy face you are with Vlad the Impaler, or other dictators; it's about doing what's best for the USofA. Sucking up to Vlad may get you your Trump Tower Moscow, but that's not in the USofA best interest. And, what's this about the SS blocking subpoenas for Jared?? So, I guess you've decided that The Family is above the Law?

Thought For The Day - 16 July 2018

Well, given the events of today, now would be the right time to apply to the Small Business Administration for a fat loan for my start up, The White Boy Brown Shirt and Jackboot Co. Ya think?

Quant's Hubris - part the third

Once again, we find quants being utterly, and arrogantly, innumerate. Here is a piece telling quants how to build a "database". It's not, of course. Just a flat file your Grand Pappy would be happy with. Gad. We're into serious civil regression.

Commandment 1: all your data shall fit into one single dataframe

And it goes on to be worse. Sigh.

Quant's Hubris - part the second

"Regular reader, by now, knows one of the mantras: "the bane of the capitalist is capital". Meaning, of course, that using capital to get rich by substituting machines (hardware and/or software) for people reaches a tipping point. Not just the wall of diminishing returns, but the abyss of unremitting sunk cost. That's just a fancy way of saying that automation methods become more expensive, as unit cost."

Thus begins Part the First (not then known to be yet another serial) of the capitalist's dilemma. Capital, the real physical kind at least, makes its value-add either (or both) by replacing labor while keeping output static, or by increasing output with the same labor. The problem for the capitalist is that as automation (not to mention robotics) moves ahead, labor is gradually (or instantly) removed, thus removing yet more folks from earning and no further benefit from labor substitution. The only way for the capitalist to win when the labor component reaches that tipping point, is to push more output with all those magnificent machines. But can that be done as labor continues to be ejected? Fewer folks earning, whatever happens to GDP, inevitably leads to diminishing demand. Macro, anyway. The reason there's a fraction of the coal miners today vis-a-vis 1940 is not the EPA or other effete bureaucrats, but massive changes in how coal is mined. More machines, less underground extraction (aka, hill topping), poof! There went the jobs. The Kenyan President had nothing to do with it.

Quite the same thing has happened in general manufacturing. First, New England manufacturers departed for the labor antagonistic South. Still aiming to sell to the remaining higher wage North, of course. Thence to Mexico and Central America and Caribbean. And thence to Asia, China as poster child.

There's been a paper making the rounds of the innterTubes for a while now, and makes another appearance today. The in-your-face number is $8.46 as the China specific value-add to an iPhone7. Naturally, one can go find whining that such a number is way too low, but that's not the main point of this missive.

The main point is that amount of direct labor in making an iPhone is teeny, no matter the dollar value. Most of the value in such things is delivered by automated processes; almost no humans touch semi-conductor in production these days. Robots, even. And, of course, China didn't steal American jobs, Steve Jobs and his friends sent them away. And, of course, Apple's source isn't even a Chinese (the big one on the continent), but from that little island called Taiwan.

The authors, without resorting to irony (I would, fur shur), say that Foxconn got about $3,000,000,000 (or may be $4,000,000,000) to make a plant in Wisconsin. Welfare queen. Taxpayers shouldn't pay for sports facilities, either, but that's another show. If you want a rundown, here's one.

To land the massive Foxconn factory, Gov. Scott Walker has committed the state to paying more than eight times as much per job as Wisconsin will provide under similar job creation deals struck last year, a Milwaukee Journal Sentinel analysis has found.

So, the next logical question: does capital hang around after such incentives end? Way back in 2012, the Failing New York Times published an extensive piece on corporate extortion. Worth the read.

A more caustic review, and newer, is here.

What's being discovered, but only occasionally acknowledged, is that the farm-to-factory paradigm of the 20th century no longer holds. Back then, factories absorbed displaced farm hands since skill level wasn't an impediment. Today, we've two problems: 1) new jobs are a fraction of those eliminated, and 2) new jobs simply can't be done by those displaced.

The answer, of course, is socialism, wherein the net winners compensate the net losers. GDP grows, demand is maintained, and technology can continue. If technology reaches a point where it serves only to eliminate macro-demand, it's game over. Reducing price through cost reduction of automation is meaningful only to those who remain with income sufficient to afford the new, lower price. As income concentrates, the number of demand units, aka people, diminishes. Jay Leno may have hundreds of old cars, but that doesn't do much for Ford or GM.

Let The Battle Begin

It should come as no surprise that I remain a Bayes skeptic. Imagine my amusement (of a macabre nature, naturally) reading this review of Biogen's latest Alzheimer's trial.

Study 201 used adaptive randomisation to enrol 856 subjects with mild Alzheimer's disease across five dose levels. It used a complex Bayesian statistical model to yield a faster result than traditional designs.

You should read the article through. There are issues, in the author's view, beyond the use of Bayes. One might infer that some or all of these other issues are, to steal a word, co-linear with the choice to leverage Bayes.

Alzheimer's is a dread, particularly for those of us past 40 or so. Finding clinical trial failure supportive is perverse, to say the least. On the other hand, sponsors shouldn't (and should really be prevented from) "torture" data to defend a compound. And in this kind of case where the history, even of this compound, with the target is universally negative. What's worse, Biogen isn't some pump&dump nano-cap San Diego bio, either.

Go to your corners and come out fighting!

RC and A MoonPie

One of Dr. McElhone's more fun adages went, sort of: "breakfast is an RC Cola and a MoonPie". At the time, I don't think I'd ever seen a MoonPie, New England and all that. Just to confirm, I consulted The Wiki, happily discovering I remembered correctly. The little grey cells aren't all done.

There is a custom for eating Moon pies with RC Cola, although the origin of this is unknown.

He also had a long held antipathy for pie charts. That's more common these days. Thanks to the folks at MicroSoft we get an R version of a different kind of "pie" chart. Not only is it a really effective way to present data, but look closely. Orange Julius Caesar is gulling you. Again.

I Still Hate Neil Irwin - part the eleventh

This time, just go read the piece. As Crooked Hillary said, her votes came from the counties that produces 65% of GDP. In other words, well fed, well educated, healthy folks do better. As pointed out here many times, the pool of white grievance is the result of unfed, uneducated, unhealthy fish belly folks voting in governments which grind them under the boot heel. And, of course, they blame Democrats. Low information voting at its finest.

Just go read the piece. I will note that Virginia, led by the DC suburbs, is throwing off the burden of Dixie. West Virginia, not so much.

Individual proposals aside, experts haven't formed a consensus on how to make economically moribund places feel more like economically dynamic ones. But it is clearer than ever that this divergence explains much of what ails the United States' economy, and just maybe its politics, too.

Quant's Hubris

Regular reader, by now, knows one of the mantras: "the bane of the capitalist is capital". Meaning, of course, that using capital to get rich by substituting machines (hardware and/or software) for people reaches a tipping point. Not just the wall of diminishing returns, but the abyss of unremitting sunk cost. That's just a fancy way of saying that automation methods become more expensive, as unit cost. And it's not just cheap Chinese hands beat robots; it's that robots aren't necessarily adept. We all do remember the smartest guys in the room? Will Musk end up a latter day Lay? We'll see what happens.

Well, Tesla is an exploding data point (oddly, the NYT version???).

Ron Harbour, a partner at the consulting firm Oliver Wyman, noted that in his annual survey rating auto plants worldwide, the most efficient ones use a lot of manual labour. "The most automated ones are at the bottom of the list," he said.

The money quote:

Two assembly lines inside the plant already exist to handle at least some of those tasks, but they have proved troublesome and perform the work more slowly than Musk had hoped, in part because Tesla used robots for tasks that are better left to humans.

Tesla engineering executives acknowledge that the company overestimated the rate at which it could produce cars and designed a production system that proved to be too complicated — a problem that Musk lamented at the company's June shareholder meeting.

"One of the biggest mistakes we made was trying to automate things that are super easy for a person to do but super hard for a robot to do," he said. "And when you see it, it looks super dumb. And you are like, wow! Why did we do that?"

As the title says, the quant's hubris.

Here's the other thing to consider. We've built a global economy on petroleum just because we've found gobs and gobs of it. In order to replace the internal combustion engine with some sort of electric (battery?) vehicle, we must needs have an equivalent supply of some other substance. Lithium? World reserves of it are speculative, but

And if that happens, the 365-year supply would be less than a 17-year supply (13.5 million tons of reserves divided by 800,000 = 16.9 years).

And, of course, that assumes we could economically mine, refine, and produce such batteries. Good luck with that.