Categories
USA

The Rational Voter

As of this writing, American voters look pretty rational.

Ballots are still being counted, and several states are still uncalled, but several outcomes are very likely. The President in January 2021 will be Vice-President Joe Biden. The Electoral College count will probably finalize at 306-232 (comparable to Trump’s 304-227 victory over Clinton in 2016). The Democratic party will retain control of the House and the Republican party will retain control of the Senate, both with smaller margins than before.

Partisans on either side are unhappy with this outcome. Most Republicans wanted to elect Trump to a second term. Most Democrats wanted a wider margin of victory and control of both houses of Congress. The partisans got what they deserved. Nobody received a mandate for unbridled excesses.

Democracies are efficient. That is, the result is generally a reliable expression of voter intent. That expression is not the desire of any single voter; the efficiency emerges as an aggregate of independent decisions my millions of individual voters. Voters don’t want to negotiate or compromise, but the system makes them. Politicians don’t want to negotiate or compromise, but voters make them.

The voters have spoken, and now we listen. What have they told us? A few things are clear.

  1. Americans don’t want Donald Trump as President. President Trump was their message, and they delivered it. It’s done, and now it’s time to move on.
  2. Americans are still deeply divided along partisan lines. No amount of lipstick will cover this pig. The union might dissolve in a couple decades if we don’t find a way to deal with it, but for now we can manage it.
  3. Americans aren’t ready to dissolve the union, yet. The gravest national security risk the nation faced was Donald Trump. Trump failed to deal with Russian election interference; Trump was easily manipulated by foreign autocrats; Trump was selling out American interests to foreign bidders. The Trump business has hundreds of millions of dollars in exposure to foreign parties that is still unknown. We don’t know how much, but we now know why Trump never released his taxes.
  4. Americans do not want an expansion of international engagement. Without the support of the Senate, Biden will be unable to make major international commitments or negotiate new international treaties. Our allies and negotiating partners are well-aware of this limitation.
  5. Americans want competent management. The country is about to face several crises simultaneously, including the continuing pandemic that has already killed almost a quarter-million Americans, an economic crisis that will soon leave millions homeless, which will turn into a financial crisis that will exceed the crisis of 2008. We need to deal with global warming, crumbling infrastructure, a messed up healthcare system, a messed up bureaucracy (“deep state”), and an even more messed up legislative branch.
  6. Americans don’t want Federal overreach into local affairs. Police reform is a local matter. American voters don’t want the Federal government imposing reforms through new legislation.
  7. Americans don’t want political power grabs. Now is not the time for “judicial reform”, removing the Senate filibuster, or stacking the Congress with new state representatives. It may prove to be needed later, but not now.
  8. Americans don’t want the sanctimony of the left or right. Voters rejected it both the primaries and in the general election. It’s unlikely the religious right or the “woke” left will get the message. Sanctimony will return sooner or later, but for now, the country needs practical solutions to urgently pressing problem.
Categories
USA

Election Pre-Rambles

The US elections are nearly upon us, and two factors stick out. Most people around the world are already bored of the election and just want it over. And most American voters have already decided. I won’t even bother to make a case for any candidate here.

This election will involve a lot of finger pointing, inferences of vote fraud or manipulation, and more than a little spin (i.e. lying). Amid all this, most Americans are primarily concerned that voter preferences are fairly and accurately recorded and reported by the Secretaries of State for all states.

Several points are still worth making.

  1. Votes are counted and reported by individual states by their respective Secretaries of States. The SOS declares the results for their state.
  2. The candidates, including incumbent Presidents, don’t declare themselves the winners.
  3. News organizations don’t declare the winners of elections. They can, and will, forecast the winners, but their forecasts carry no weight in the actual legal process.
  4. Due to the COVID-19 pandemic, this election has witnessed an extraordinary volume of early and absentee voting. According to the 2020 General Election Early Vote Statistics 92 million votes have already been cast, which exceeds two-thirds of all votes cast in the 2016 election.
  5. According to Ballotpedia:
    1. Seventeen states allow early and mail-in ballots to be counted before election day, including Arizona, Colorado, and Florida.
    2. Sixteen states allow early and mail-in ballots to be counted on election day; including Michigan, Ohio, Pennsylvania, and Wisconsin.
    3. Seventeen states require early and mail-in ballots to be counted after the close of polls on election day. Illinois and Minnesota are among them.
  6. The vote counts reported by states on election day are provisional, and in most cases will not include early and mail-in ballots. In some cases the ballots will take several days to be counted.
  7. Because of the high volume of early and mail-in ballots, and late counting of these ballots, many vote results will “flip” from their provisional results after all ballots are counted.
  8. The occurrence of “flipping”, based on the full count of votes cast, does not indicate vote fraud or manipulation. The phenomenon is not only predictable, it is widely predicted to occur.
  9. The Executive branch of the Federal government does not have any authority to order states to stop counting votes or otherwise to interfere with their efforts to complete their legal and lawful counting of all votes.

I am actually predicting a low-drama election, despite all the hype and spin going into it. It’s the best we can hope for, in any case.

Unrelated photo I took recently
Categories
USA

Slower Growth in 2018

This perspective from Hoisington Investment Management sees slower growth in 2018.

  • The consumer savings rate dropped to a 10-year low of 2.9% in November 2017, from 5.9% in October 2015. This expansion of consumer credit accounts for much of the economic growth in 2017 and will not be sustained.
  • In 1820 the economist David Ricardo theorized that funding the Napoleonic Wars through debt or through tax increases were equivalent, an untested theory called the Ricardian Equivalence. Recent anslysis has shown Ricardian Equivalence to be correct. Applied today to Trump’s tax cuts, in their words:

In short, these results align with Ricardo’s theory; although individual winners and losers may arise, a debt-financed tax cut will provide no net aggregate benefit to the macro-economy.

  • The brunt of recent tightenings by the Federal Reserve will finally start to be felt in 2018.
  • The yield curve will flatten.

Finally, their summary:

The flatter yield curve will further tighten monetary conditions. This monetary environment coupled with a heavily indebted economy, a low-saving consumer and well-known existing conditions of poor demographics suggest 2018 will bring economic disappointments. Inflation will subside along with growth, causing lower long-term Treasury yields.

Categories
Japan USA World

Midway and Counterfactual Fallacies

Real historians don’t embark in counterfactual speculations. Political pundits, armchair historians, and fiction writers frequently speculate on what would have happened if some historical event had turned out differently, but skeptics should be leery of the analysis.

In the specific instance of George Friedman’s speculations on the Battle of Midway, he makes several inferences that are worthy of scrutiny. He is correct that Japan’s rapid advances throughout the Pacific drastically changed the calculus of early war efforts. The threats to the South Pacific raised Japan’s profile significantly and endangered the “Germany First” doctrine in place prior to hostilities.

Sensing the panic, FDR personally assured Australia’s PM that the US would send at least one division, perhaps more, to ensure Australia’s security. The US also beefed up defenses along the communication lines, including Fijis, New Caledonia, and Samoa. Seen from the outside, Japan’s Imperial Navy seemed invincible, but internally they struggled under several years of war in China and six months of all-out global war that spanned the largest war theater to date: from the Indian Ocean in the west to the Hawaiian Islands in the east, from Aleutian islands in the north to Australia’s northern coasts in the south. Hatches failed to close, broken facilities awaited repair. The carrier strike force was badly in need of port time. The Imperial Army, for its part, bristled at the invasion of Australian mainland, understanding fully the manpower and logistical difficulties this would entail and suspecting their rivals in the Imperial Navy wouldn’t be up to the task.

Moreover, Tokyo also opposed Yamamoto’s plan to draw the US into a massed battle around Midway, and for good reasons. The plan completely inverted the formula that had been successful to date. Successful operations throughout the Pacific, including Malaysia and Singapore, Guam, and Indonesia, advanced under the protection of Army air units. With each success the construction of new air strips expanded the circle of protection. What the Navy proposed would require the carrier strike force to provide sustained and coordinated air support to troops landing on beaches, something it was particularly ill-suited to doing. The carrier strike force was precisely that — a strike force. It was a lethal and effective weapon that destroyed enemy naval forces with devastating and brutal efficiency. Carrier hangars were too tight and constrained to launch more than a three or for strikes before retiring to port to resupply and replace damaged aircraft and downed pilots.

The logistics of Operation Midway stretched the Imperial Navy’s capabilities — the military operations alone consumed nearly a quarter of Japan’s strategic fuel reserves. Tokyo estimated 60 transports per month would be required to support the islands if they could be taken, spending half their time empty on the return trip. Civilian transports would be harassed by American subs. The islands were within range of US strategic bombers from O’ahu; Japan’s smaller bombers, however, could not counter. Any detached analysis would show that attacking Midway was lunacy, and by all rights Yamamoto’s plan should have been dead on arrival, were it not another piece of lunacy. On April 18, 1942 sixteen B-25B Mitchell medium range bombers (normally land-based) launched from the USS Hornet to sprinkle a smattering of bombs around Tokyo and other locations on Honshu island. Though militarily insignificant, the Doolittle Raid solidified support for the only detailed plan then being advocated by any of the services that would strike back directly at the Americans.

Precisely because of these considerations Nimitz wasn’t concerned about losing Midway, but his confidence in his intelligence led him to believe that he could conduct a surprise counterattack that would catch the Imperial Navy off guard. The Navy’s achievements in the Coral Sea also led him to be believe that his own naval dive bombers were a match for Japan’s. Nimitz also assessed his disposition of forces better than subsequent historians, who repeatedly described Nimitz’s capabilities as crippled and desperately outnumbered. Nagumo brought 20 warships and four carriers with 248 aircraft. Nimitz brought 25 warships, three carriers, and 233 carrier aircraft. In addition the Army rounded up another 120-odd aircraft on Midway, plus a significant number of AA guns in direct defense of the island. Arguably it was Nagumo who was outnumbered, having lost his decisive edge in Carrier Division 5 due to complications in the Coral Sea and the subsequent repair and refitting of the carriers.

Nimitz knew the quality of pilots he was up against, and the nature and importance of the battle. The Midway islands were not existentially important to him then (as they are not existentially important to us today). It is unlikely he would have sacrificed the carriers casually once their presence had been revealed. The surviving carriers would have retired west to the protection of the forces on O’ahu, already considerably strengthened after the Pearl Harbor attacks, and plotted how to fight another day.

Even if you assumed a complete naval victory for Japan, Freidman makes an erroneous assumption that victory of the islands would have been assured. This is far from the truth. The Marine Corps had placed 3,000 and 4,000 troops on both islands, buried communication cable throughout, fortified both islands with anti-air and anti-ship cannons, and hid tanks inside a grove of trees. Japan’s landing forces of 800 and 1,000 lacked nearly everything: marine landing craft, coordinated air or naval cover, and any kind of doctrine for marine landings. This lack of capability showed up several times throughout the war. The carrier strike force was just that — a strike force, and couldn’t sustain the kind of bombardment and cover required in a major marine landing. The reality is 1,800 Japanese navy and army troops would have been slaughtered by American machine gun fire during a brutal 150-200 meter march over submerged reefs and sandy beaches without cover.

Friedman also speculates on Japanese incursions against the Soviet Union, drawing the Soviet Union out of battle with Germany. No such operation was even conceived by the Imperial Army, because of the logistical challenges inherent in it. Whereas Japan wasn’t seriously considering either major operations against either the Soviet Union or all out invasion of Australia, Friedman speculates Japan could have achieved both simultaneously.

To assume that Japan successfully invades Midway, you have to assume that Nimitz lacked the intelligence to launch a surprise counterattack. At this point Japan might have been able to overwhelm a smaller contingent of US Marines normally stationed on the atoll. Nimitz could simply have waited for the carrier strike force to retreat, which it inevitably must have done within days or weeks, at which point he could bring long-range bombers from O’ahu and carrier-based forces to bear against the small contingent of forces that Japan left in place. Assuming he calculated it was worth bothering to do so. Despite the great interest given to Wake Island during its 15 day siege in the opening salvos of battle, the US never retook it. Cut off from supply lines, the Japanese garrison withered on their own, and similar fate may have awaited a Midway garrison. The remaining carriers in place in 1942 (three or four, depending on how you play out your counter-factual analysis) possessed a variety of potential targets for continuation of hit and run operations they had undertaken prior to the battle.

What the Battle of Midway bought the US was operational tempo and strategic flexibility. The US could launch a major operation in Guadalcanal and force Japan to counter, instead of waiting to counter Japanese moves. This ultimately shortened the war by one to two years, but didn’t fundamentally alter the basic constraints that Japan faced or the advantages that the US possessed for fighting a long, total global war.

Categories
Japan USA World

Sugar Intake Guidelines

The World Health Organization publishes health guidelines specific to sugar intake. Their observations and recommendations include:

  • WHO GuidelinesA  strong recommendation for limiting free sugar intake (including monosaccharides and disaccharides, and including those naturally present and those added by manufacturers) to 10% of total caloric intake.
  • A weak recommendation for limiting free sugar intake to 5% of total caloric intake. They found no health detriment when achieving this more stringent level.
  • For those already under these guidelines, they do not recommend increasing free sugar intake to guideline level. For those deficient in total caloric intake, increasing free sugar intake is not an appropriate strategy when other forms of caloric intake are available.

For me, a tall adult male, with a daily 2,600 Calorie diet (and 4kcal/g of energy in sugar) the looser guidelines lead to a daily intake limit of 65g of sugar, or one 20 oz bottle of Coca Cola (240 Calories).

For women or children, the sugar intake guidelines will be significantly lower, due mostly to lower total caloric consumption. Applying the more stringent 5% standard to children will limit total intake to a fraction of a 12 oz can of Coca Cola.

The WHO provides no guidelines on the intake of artificial or substitute sweeteners or sugar alcohols. However, these substitutes are generally used in processed foods that do not generally provide the same health benefits as whole foods such as whole grains, fruits, and vegetables.

Dietary GuidelinesThe USDA now recommends limiting sugar consumption to 10% of total caloric intake. USDA guidelines generally emphasize a calorie balance for maintaining body weight. Therefore their recommendation is derived from the requirement to meet other nutritional requirements with the remaining balance of calorie consumption. A similar argument applies to their recommendations on saturated fat intake (10%).

The Japanese government does not make sugar-specific intake recommendations. In general this is because childhood and adult obesity are lower there. However, in 2000 the ministry announced its “spinning top” (upside-down food pyramid) that permits a moderate amount of snacks and confections. Given the overall lack of sugar otherwise in the diet, Japanese guidelines are probably consistent with WHO recommendations.

 

 

Categories
Climate Change USA World

Making America Irrelevant Again

President Trump has done it: he has ignored the advice of his saner advisors (i.e. Tillerson, Ivanka) and withdrawn from the United States from the Paris climate deal negotiated by the Obama administration in 2015. The announcement is all over the news cycle.

Global climate change is the greatest moral and existential crisis of our time. Broad scientific consensus is difficult to achieve (scientists are very competitive), but on this issue the consensus is nearly unanimous. Science denialism is prevalent only among US politicians.

Less unanimous is how to address the challenges, because those are largely political questions, therefore involve who wins and loses, who pays, and how to balance long-term and short-term costs and benefits.

How foreign countries respond is up in the air. Already there are calls to boycott America. The most effective mechanism would be a carbon tax, based on the amount of carbon dioxide released in the manufacturing of products and their constituent products. If necessary the taxes raised can be used to offset other forms of taxes and remain revenue neutral.

Moreover, countries that adopt a carbon tax can avoid multiple-taxation by waiving taxes on imports from countries that have adopted a similar carbon tax. Import taxes will be imposed on products from countries that do not comply. American exporters would therefore be placed in a situation of paying the taxes anyway, in spite of the stranglehold of special interests over the US body politic.

According to the New York Times, the withdrawal process will require several years, leaving the final withdrawal up to voters in the 2020 election.

Categories
USA World

US Policy Avoided This Disaster for 70 Years

Merkel is calling for European countries to look out for their own interests. US policy evaded this outcome for 70 years, and Trump destroyed it in 3 days.

Europe descends into a continent-wide war ever 40 years whenever European powers pursue self-interests in complex alliances. And, no, this time is not different.

How fast the slide into World War III occurs depends on how much Trump appeases Putin. At the moment the signs aren’t good. Russia is economically weak and militarily potent, which is a dangerous combination in a proud and traditional power, especially a waning one.

https://apple.news/A7JVPOxddSYajzhqhwJs9vQ

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USA

Pledge of Allegience

pledge-of-allegience-flag-001

Categories
USA

Productivity Growth

Growth of economic productivity underlies improvements in well-being of the economy’s participants. This occurs because the price of goods and services decline in real terms, even as incomes rise.

Thus if you want to know how the participants of an economy are faring over the long term, the most important number to look at is productivity. GDP growth alone can be misleading because growth may come simply from increases in the working age population.

This chart from JP Morgan’s 4Q 2015 Guide to the Markets, showing that US productivity growth in the last decade is the lowest in the post-war period,  is the most concerning in the entire document.

Microsoft_PowerPoint_-_MI-GTM_4Q15_pptx_-_j_p_-morgan-guide-to-the-markets-u_s_-4q2015What is not yet clear is whether this is an anomaly or a trend. What is also not clear are the causes:

  • Declines in productivity improving investments?
  • Demographic changes?
  • Declines in quality or adaptability of worker skills?
  • Shifts from manufacturing to services?
  • Failure of investments in Information Technology?
  • Failure of capital markets to correctly allocate capital?

Or is this simply a bookkeeping or measurement problem? Are we simply unable to measure some forms of value creation, such as from open source software or “free” services such as Facebook or Twitter?

Categories
Japan USA World

South Dakota Residency for Citizens Living Abroad

For US citizens living abroad, participating in domestic business and society can be challenging. One of the most challenging aspects can be obtaining a driver’s license in a state where you no longer reside. All states require demonstration of residency, and nearly all states mail your new or renewed driver’s license to your address on file.

The State of South Dakota caters to a subset of the US population who “travel full time” by relaxing several requirements. People who travel full time are only required to maintain a Personal Mail Box (PMB)1 service in South Dakota, and only need to provide a receipt from a local hotel, motel, or camping ground when applying for a license.2 The Driver Exam Station creates and hands over the license immediately.

For myself the process was relatively fast and smooth. I arrived approximately 8:15am and was handed a number and application form. I had to wait only 15 minutes for my number to be called, and the process of reviewing documents, taking the photo and digitized signature, and printing the card required only about 20 minutes. The following documents were required:

  1. Residency Affidavit
  2. Driver’s license application form
  3. Passport for proof of US citizenship3
  4. Social security card for proof of taxpayer status3
  5. One letter or postage addressed to the PMB4

Because I held a valid license from another state, the Driver Exam Station did not require either the written or driving portions of the exam.

Moreover, voter registration was relatively painless. People who travel full time using a PMB service must appear in person at the county auditor’s office. There was no line at the voter registration section and the application form required about five minutes.5 The person who verified the application only needed to check my South Dakota identification.

Less than a week later my registration has still not appeared in the online registration database. I have not yet attempted South Dakota’s absentee voting process, but I suspect it will be inferior to Oregon’s absentee ballot that I used in the last election.


  1. My PMB is Your Best Address, but there are several alternatives. 
  2. The receipt must contain the address of the PMB service. 
  3. Alternative documents are accepted. See the South Dakota Department of Public Safety website
  4. A copy of the PMB contract is would also be accepted in lieu of a letter. 
  5. The residence address is that of the hotel I stayed the prior night. The form contains a separate section for mailing address, in which I used my PMB address.