Category: Equitablog

Paul Ryan (2011): The Path to Prosperity: “Autopilot spending will soon crowd out…

…all other priorities in the federal budget, with spending on Medicare, Medicaid, Social Security and interest on the national debt eclipsing all anticipated revenue by 2025. Borrowing and spending by the public sector will crowd out investment and growth in the private sector….

Americans face the most predictable economic crisis in this nation’s history. Absent reform, the panic ahead is no longer a question of if, but rather when. A deterioration of confidence by investors in government’s ability to pay its bills will drive interest rates up, increasing borrowing costs for government, small businesses and families alike. A vicious cycle of debt will compound upon itself; the available exit options once the crisis hits will be limited; and all will involve pain…

Tim Duy: Heading into Jackson Hole: “The Kansas City Federal Reserve’s annual Jackson Hole conference is next week….

…A dovish path… the conference title itself–‘Re-Evaluating Labor Market Dynamics’–points in that direction, as it emphasizes a topic that is near and dear to Yellen’s heart…. Today we received the June JOLTS report… another gain in job openings, leading to further speculation that labor slack is quickly diminishing. Anecdotally, firms are squealing that they can’t find qualified workers. Empirically, though, they aren’t willing to raise wages…. A ‘peculiar form of logic’ indeed, but one that appears endemic to US employers nonetheless.

Meanwhile, from Business Insider:

Profit margins are still getting wider…. The nightmare scenario she wants to avoid is hiking rates only to see financial markets and the economy take such a hit that she has to backtrack. Until the Fed has gotten rates up from the current level near zero to more normal levels, it would have little room to respond if the economy threatened to head into another recession.

Gasp! Is the reality of the zero bound finally sinking in at the Fed?… The Fed needs to at least risk overshooting to pull interest rates into a zone that allows for normalized monetary policy during the next recession….

Yellen can point out that since the disinflation of the early 90’s, the Fed has not faced an inflation problem, but instead has struggled with three recessions. This on the surface suggests that monetary policy has erred in being too tight on average…. Anything other than a dovish message coming from the Jackson Hole conference will be a surprise…

Suppose you had told the Federal Reserve back in mid-2007: you are about to be hit by the biggest adverse-demand and credit-channel shock in history, which will create the largest overhang of undesired risky debt ever.

Would anyone at it then have said: “Good! Let’s lower the price level seven years from now by 5% relative to expected trend, and lower nominal GDP seven years from now by 12% relative to currently-expected trend!”?

In the five years after the Great Depression trough in 1933 nominal GDP grew by 52%. In the five years since the Lesser Depression trough in 2009 nominal GDP has only grown by 18%.

And the response from my friends in the Fed, the Treasury, and the White House is: “we did everything we could” and “everybody else has done worse”…

Jeff Faux: The Neoliberal Mind at Work: Brad DeLong’s Muddled Defense of NAFTA The election of 1988…

…stolen by the U.S.-backed ‘winner’ Carlos Salinas, revealed widespread resistance among the Mexican electorate. Protecting the rights of foreign capital in an international treaty… was designed to put the neo-liberal regime beyond the reach of Mexican democracy. DeLong seems to know there was an ugly American politics to NAFTA. In an aside he says he now agrees that Mexico’s energies would have been better put to a development strategy. Unfortunately, it’s a little late. This was the reason Mexican progressives opposed NAFTA. When I raised it during the debate, NAFTA-backers responded that this was exactly the kind of ‘statist’ thinking they had to crush. During the congressional debate, Clinton’s U.S. Trade Representative blurted out to me that ‘we have to keep the Left out of power down there’. While Cuauhtémoc Cardenas was trying to save Mexico’s capacity for self-development, DeLong was busy helping Rubin, Clinton, and the U.S. Business Roundtable do all they could to make it impossible. NAFTA was not some default ‘second-best’ policy; it was designed to kill the first-best…

So, as I said, just as I finish writing up my virtual office-hour thoughts on a framework for organizing one’s thoughts on Friedrich A. von Hayek and twentieth century political economy, along comes the esteemed Lars P. Syll with a link to an excellent piece I had never read on the same thing by Equitable Growth’s Fearless Leader Bob Solow.

It has been my experience that disagrees with Bob Solow at one’s peril: not only has he already thought about and found reasons to object to your objection, but if you go further and find a reason to object his objection of your objection, he has already thought of a very good objection to that as well.

Nevertheless…

Solow sees a good, technocratic, information-theory focused economist Hayek, and a bad political pamphleteer Hayek. Solow sees the real Hayek as being the Good Hayek, whom he sees as more “moderate” than Milton Friedman–as committed in some sense that Milton Friedman is not to some level of professional technocratic economics guiding a social-insurance state that provides basic incomes, implements Pigovian taxes, enforces standards and quality, and aggressively breaks-up monopolies. It is, Solow thinks, the Bad Hayek who is the problem. And the Bad Hayek is not the real Hayek, for the real Hayek had “not meant to provide a manifesto for the far right…”

I, by contrast, see not two but three Hayeks: the good Hayek, a bad macroeconomic business-cycle Hayek, and a profoundly problematic political-economy Hayek.

The Good Hayek was, I think, very very good–much better than Solow allows. Papers in mechanism design and information theory written forty and fifty years later are footnotes (often unacknowledged footnotes) to the Good Hayek.

The Bad Hayek was, I think, very very bad. To claim that the market economy exhibited large business-cycle fluctuations only because of policy errors produced by the existence of central banks (and, sometimes, because the potential availability of a lender of last resort allowed private bankers to engage in fractional-reserve banking) was just batty: contrary to all sound theory and all empirical evidence. Only an astonishing imperviousness to both thinking deeply and looking at the world could allow clinging to such a dead-ender position. Yet Hayek did. And his epigones do.

The Political Economy Hayek is, as I said, highly problematic. First of all, there is the dodging and weaving. Here is Hayek writing to Paul Samuelson:

I am afraid and glancing through the eleventh edition of your Economics I seem to have discovered the source of the false allegation about my book The Road to Serfdom which I constantly encounter, most resent, and can only regard as a malicious distortion…. You assert that I contend that ‘each step away from the market system towards the social reform of the welfare state is inevitably a journey that must end in the totalitarian state’ and that ‘government modification of market laissez-faire must lead inevitably to political serfdom’…. How anyone who can just read my book in good faith can say this when ever since the first edition I say right at the beginning… ‘Nor am I arguing that these developments are inevitable. If they were, there would be no point in writing this. They can be prevented if people realize in time where their efforts may lead…’

And here is Hayek writing a new forward for The Road to Serfdom in the mid-1950s:

Six years of socialist [i.e., Labour Party] government in England have not produced anything resembling a totalitarian state. But those who argue that this has disproved the thesis of The Road to Serfdom have really missed… that the most important change which extensive government control produces is a psychological change… necessarily a slow affair… not over a few years but perhaps over one or two generations…. The change undergone by the character of the British people… can hardly be mistaken… Is it too pessimistic to fear that a generation grown up under these conditions is unlikely to throw off the fetters to which it has grown used? Or does this description not rather fully bear out De Tocqueville’s prediction of the ‘new kind of servitude’?… I have never accused the socialist parties of deliberately aiming at a totalitarian regime…. What the British experience convinces me… is that the unforeseen but inevitable consequences of socialist planning create a state of affairs in which, if the policy is to be pursued, totalitarian forces will get the upper hand… (I)

But we also have:

The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appears not only to be wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born… (II)

Yet, in 1956:

The most serious development is the growth of a measure of arbitrary administrative coercion and the progressive destruction of the cherished foundation of British liberty, the Rule of Law…. [E]conomic planning under the Labour government [has] carried it to a point which makes it doubtful whether it can be said that the Rule of Law still prevails in Britain… (III)

And, as Paul Samuelson wrote:

The Hayek I met on various occasions–at the LSE, at the University of Chicago, in Stockholm (1945), at Lake Constance-Lindau Nobel summer conferences–definitely bemoaned progressive income taxation, state-provided medical care and retirement pensions, fiat currencies remote from gold and subject to discretionary policy decisions by central bank and treasury agents…. This [is] what constitutes his predicted serfdoms… (IV)

To say the least, there is a difficulty in figuring out what the Political Economy Hayek believed. Solow takes the real Hayek to be (II) and regards (I), (III), and (IV) as line wobbles from the Bad Hayek that he, Solow, will overlook. But the Bad Hayek is not just “in the text”: the Bad Hayek seems to me to be well-nigh omnipresent–except when Hayek is playing the injured party in front of a social-democratic audience. “Of course I don’t want people to starve and die in the gutter!”

I think you are more likely to find the Real Hayek in the “shut up and be glad you were born” passage in The Mirage of Social Justice:

While in a market order it may be a misfortune to have been born and bred in a village where… the only chance of making a living is fishing… it does not make sense to describe this as unjust. Who is supposed to have been unjust?–especially… if these local opportunities had not existed, the people in question would probably never have been born at all… [for lack of] the opportunities which enabled their ancestors to produce and rear children… (V)

And that in fact those who do not shut up and be grateful are guilty of moral fault, as in The Political Order of a Free People:

By the slogan… ‘it is not your fault’… the demagoguery of unlimited democracy, assisted by a scientistic psychology, has come to the support of those who claim a share in the wealth of our society without submitting to the discipline to which it is due. It is not by conceding ‘a right to equal concern and respect’ to those who break the code that civilization is maintained… (VI)

And then there is the fascinating (and apparently missing) letter from Hayek to Thatcher, apparently urging that Thatcher go all Pinochet-medieval on Neil Kinnock and Arthur Scargill, that elicited this reply:

The progression from Allende’s Socialism to the free enterprise capitalist economy of the 1980s is a striking example of economic reform from which we can learn many lessons. However, I am sure you will agree that, in Britain with our democratic institutions and the need for a high degree of consent, some of the measures adopted in Chile are quite unacceptable. Our reform must be in line with our traditions and our Constitution. At times the process may seem painfully slow. But I am certain we shall achieve our reforms in our own way and in our own time. Then they will endure. (VII)

Why, then, do I call the Political Economy Hayek just “problematic” and not “evil”? Because I think there are some passages of great value in The Constitution of Liberty and in the three-volume Law, Legislation, and Liberty. But it is, I think, important not to pretend that the Bad Hayek elements were some kind of anomaly…

While Solow is much easier on Hayek than I would be, he is much harder on Milton Friedman.

For Solow, it is Milton Friedman who is the real Mephistopheles here. It is Friedman who over and over again would frame the issues as freedom vs. socialism, when actually the issue is “which of the defects of a ‘free’, unregulated economy should be repaired by regulation, subsidization, or taxation? Which… tolerated… because the best available fix would have even more costly side-effects?” It was Friedman whose “rhetoric… irrelevant or, worse, misleading, or, even worse, intentionally misleading… made… [the] policy discussion more difficult to have… [and] did the market economy a disservice.”

I disagree: I see Friedman and Hayek as being equally willing to call social democracy “socialism”, and equally likely to see it as corrosive of individual freedom.

But I see Friedman as being much more moderate than Hayek along a number of dimensions. First, Friedman is a true social and personal libertarian. Second, Friedman seems to me to have a more sophisticated view of social insurance. And Friedman has a belief in both democracy and educationplus a willingness to (sometimes) mark his beliefs to market–and these, I think, Hayek definitely lacked.

When stabilizing the growth of the money supply did not produce the smooth aggregate demand path that Friedman had expected, he changed his mind–and became a big advocate of quantitative easing. And Friedman’s view was explicitly that giving economic advice to Pinochet was analogous to giving economic advice to Honecker: trying to make an unpleasant regime less unpleasant for the people it ruled. Hayek, by contrast, had rather more affection for Pinochet than Plato did for Dionysius of Syracuse…

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The key paragraphs from Solow:

Robert Solow (2012): Hayek, Friedman, and the Illusions of Conservative Economics: “A Review of Angus Burgin…

…The Great Persuasion: Reinventing Free Markets since the Depression…. There was a Good Hayek and a Bad Hayek. The Good Hayek was a serious scholar who was particularly interested in the role of knowledge… [but] also knew that unrestricted laissez-faire is unworkable… monopoly power… better-informed actors can exploit the relatively ignorant… distribution of income… grossly unequal and… unfair… unemployment and underutilized capacity… environmental damage… the Good Hayek’s attempts to formulate and to propagate a modified version of laissez-faire that would work better….

The Bad Hayek…. The Road to Serfdom was a popular success but was not a good book…. Hayek’s implicit prediction is a failure…. The source of their alarm was not the danger from Soviet communism or Nazi Germany, but rather the… New Deal here and the Labor Party there… ameliorat[ing] and… revers[ing] the ravages of falling incomes and rising unemployment…. Lionel Robbins… Friedrich von Hayek… Frank Knight… Jacob Viner… Henry Simons…. What seems off-key (at least now, at least to me) is that they all felt themselves to be in a struggle between free markets and collectivism (or socialism) with no possible intermediate stopping point….

This apocalyptic tone survived into the period dominated by Milton Friedman… the language of the Tea Party Hayekians…. In 2004, Friedman told The Wall Street Journal that, although the battle of ideas had been won, ‘currently, opinion is free market while practice is heavily socialist’. The point to keep in mind is that ‘socialist practice’ includes the Food and Drug Administration (FDA), the certification of doctors, and the public schools…. Of course for those of us trying to live on this planet, the issue is… between an extreme version of free markets and effective regulation of the shadow banking system, or between an extreme version of free markets and the level and progressivity of the personal income tax….

THE GOOD HAYEK… had not meant to provide a manifesto for the far right…. There is no reason to doubt Hayek’s sincerity in this (although the Bad Hayek occasionally made other appearances)… [that] Knight and moderates such as Viner thought that he had overreached suggests that the Bad Hayek really was there in the text….

In the spring of 1947, with a grant from the Volker Fund of Kansas City, who were the Koch Brothers of their time, Hayek was able to bring together… thirty-nine colleagues… the Mont Pèlerin Society… [which] Burgin… endows… with more significance than it ever really had…. They… could not agree on… the permissible, indeed the desirable, deviations from laissez-faire?… Good answers are available, and many of them involve government intervention…. The inability to agree about this sort of thing, or even to face up to it, seems to have dogged the MPS…. Maybe the main function of the MPS was to maintain the morale of the free-market fellowship….

Leadership… passed… to Milton Friedman… different in style and, to some extent, even in ideology…. As his ideas and his career evolved… he moved in a different, almost opposite, direction, toward a cruder government-can-do-no-right position, certainly not given to ethical worries or even to economic-theoretical fine points…. Under Milton Friedman’s influence, the free-market ideology shifted toward unmitigated laissez-faire. Whereas earlier advocates had worried about the stringent conditions that were needed for unregulated markets to work their magic, Friedman was the master of clever (sometimes too clever) arguments to the effect that those conditions were not really needed, or that they were actually met in real-world markets despite what looked a lot like evidence to the contrary. He was a natural-born debater: single-minded, earnestly persuasive, ingenious, and relentless….

Friedman’s… most important work… consumer expenditure… important and useful… anticipated in much less satisfactory form by James Duesenberry, and Franco Modigliani developed a similar and in some ways more satisfactory theory…. But monetarism… has not proved to be tenable analytically or empirically. His Monetary History of the United States, 1867–1960 (written with the late Anna Schwartz), while highly interesting, is not a towering intellectual achievement.

Burgin… attaches a lot of importance to the respectability conferred on the political right by the ideas of Hayek, Friedman, and the others…. I would not disagree, but… Thatcher profited from an ill-judged miners’ strike and, as Lyndon Johnson famously remarked, the passage of the Civil Rights Act lost the Solid South for the Democratic Party for at least a generation.

For a serious modern reader, the rhetoric is irrelevant or, worse, misleading, or, even worse, intentionally misleading…. The real issues are pragmatic. Which of the defects of a ‘free’, unregulated economy should be repaired by regulation, subsidization, or taxation? Which of them may have to be tolerated… because the best available fix would have even more costly side-effects? To the extent that the MPS circle made that kind of policy discussion more difficult to have, it did the market economy a disservice.

Margaret Sullivan: On Alexandra Alter, Craig Shirley, and Rick Perlstein: Was an Accusation of Plagiarism Really a Political Attack? “There’s a problem here…

…An article about polarized reaction to a high-profile book is, of course, fair game. But the attention given to the plagiarism accusation is not. Yes, the claim was ‘out there’ but so are smears of all kinds as well as claims that the earth is flat and that climate change is unfounded….. By taking it seriously, The Times conferred a legitimacy on the accusation…. And while it is true that Mr. Perlstein and his publisher were given plenty of opportunity to respond, that doesn’t help much…. The Times is saying: Here’s an accusation; here’s a denial; and, heck, we don’t really know…. Readers frequently complain to me about this he said, she said false equivalency — and for good reason. So I’m with the critics. The Times article amplified a damaging accusation of plagiarism without establishing its validity and doing so in a way that is transparent to the reader. The standard has to be higher.

Must- and Shall-Reads:

1. Scott Lemieux: Halbig Trooferism: ‘Nice catch by Abbe Gluck: ‘It is no secret that the people bringing the challenge to the Obamacare subsidies in the Halbig and King… are some of the same people who brought the 2012 constitutional challenge…. What’s less known, however, is that in the 2012 constitutional case, these same challengers filed briefs describing Obamacare to the court in precisely the way they now say the statute cannot possibly be read….’ It must be remembered here that the… challenge to the ACA… [must] show that there is no other reasonable interpretation of the statute…. The argument that the statute could not possibly have meant what everyone on both sides of the political spectrum thought it meant in 2010 is so preposterous it’s profoundly embarrassing that even two federal judges bought it. This litigation, admittedly, does seem to be based on a principle… that it’s not a lie if you [claim to] believe it.”

2. Simon Wren-Lewis: On Macroeconomic Forecasting: “Macroeconomic forecasts produced with macroeconomic models tend to be little better than intelligent guesswork. That is not an opinion–it is a fact…. The sad news is that this situation has not changed since I was involved in forecasting around 30 years ago. During the years before the Great Recession (the Great Moderation) forecasts might have appeared to get better, but that was because most economies became less volatile. As is well known, the Great Recession was completely missed…. Does that mean that macroeconomics is not making any progress?… [This] raises an obvious question: why do people still use often elaborate models to forecast?… Why use the combination of a macroeconomic model and judgement to do so, rather than intelligent guesswork?…”

3. Sahil Kapur: GOP States Give Up $423 Billion By Rejecting Medicaid Expansion “The 24 states which refused to expand Medicaid under Obamacare are poised to give up $423.6 billion in federal funds over a decade and keep 6.7 million residents uninsured, according to a new study by the Urban Institute and Robert Wood Johnson Foundation…. Since September 2013 the number of uninsured fell by 38 percent in expansion states and just 9 percent in non-expansion states, the study found…. The study pointed to other economic costs for non-expansion states, notably the higher cost of uncompensated care for hospitals, who are legally required to provide emergency care for patients whether or not they’re insured…

4. Jared Bernstein: Fed Vice-Chair Stan Fischer on Whether Stronger Actual Growth Can Boost Potential Growth: “Stan poses the right question… this part of his answer is particularly important[:]… ‘There are good reasons to believe that some of the surprising weakness in labor force participation reflects still poor cyclical conditions…. It may also be possible to reverse or prevent declines from becoming permanent through expansive macroeconomic policies.’… The implication for current policy is clear: we need to run a high-pressure economy for a while not just to close existing output gaps but to increase potential growth by pulling more people and capital investment back into the economy…”

5. bspencer: The Lego Movie: “This movie surprised me by being as cute and clever as it was. The cast was great, the voice work was great, Morgan Freeman took a break from playing dignified serious characters by playing a dignified funny character, and the whole thing was consistently funny. When you get to the live action part, you get a really fun and surprisingly poignant twist. Plus there’s a unicorn-cat. Really, what more do you want?”

6. Claude B. Erb: Betting on ‘Dumb Volatility’ with ‘Smart Beta’ “It is possible that some investors make the ‘dumb mistake’ of ‘buying high and selling low’. This may create ‘dumb volatility’ which might allow some smart beta strategies to exploit the ‘behavior gap’ by ‘buying low and selling high’. ‘Live data’ suggests 1) the value-added from exploiting dumb volatility has been about 2-4% per year, 2) dumb volatility strategy risk-adjusted-returns have been similar, 3) there could be a ‘dumb volatility return frontier’ offering more ‘return from dumb volatility’ in exchange for more ‘dumb volatility’ and 4) some dumb volatility strategies have achieved Warren Buffett-like ‘value-added’. A six factor model shows no evidence that traditional factors, such as ‘size’ and ‘value’, drove the dumb volatility return. Going forward, the ability of a strategy to absorb capital will be an important economic moat.”

7. Melvin Backman: Kansas runs afoul of the SEC over pensions: “The Securities and Exchange Commission… says the state’s public employees’ retirement system committed securities fraud by not telling investors how underfunded the pensions of its 155,000 workers were…. ‘We are pleased that the SEC did not seek any financial penalties or make any claims of intentional misconduct’… said Jim Clark, Kansas’ Secretary of Administration, in a statement…. The SEC said Kansas raised $273 million in bonds in 2009 and 2010 but failed to disclose to investors how badly the pension situation was. That meant that the bonds’ buyers didn’t know which obligations would be competing for state money that would be used to pay them back. Kansas’ finances have come under scrutiny of late. Last week. Standard & Poor’s downgraded Kansas’ credit rating last week because its tax cuts were more expensive than legislators initially let on.”

8. Jared Bernstein: Antidotes to Samuelson’s Free-Floating Anxiety re Slack and Inflation “Just a quick note re the [Robert] Samuelson piece this AM suggesting that maybe the Fed should raise rates sooner than later. Or maybe not. Actually, all he seems to be saying here is: ‘maybe they should start fighting inflation now, or maybe they shouldn’t; we can’t really tell how much slack there is; but it would be terrible if inflation spirals out of control; but there’s still at least some slack; so we should just be nervous.’ Actually, that’s not as incoherent as it sounds…. Our nervousness can be reduced by thinking through two basic sets of points. First, the diminished relationship between slack and inflationary pressures… and two, the mechanics by which wage growth feeds into price growth…. This point re the changing empirics of slack and inflation is widely known and Samuelson should incorporate it…. Second… Samuelson… need[s] to understand and appreciate at least three mechanisms by which wage gains would not be inflationary, as Baker and I explain here…. The current state of key [economic] variables… given productivity growth, there’s room for a point-and-a-half faster wage growth without undue pressures on unit labor costs… [and] there has been a large shift… from wages to profits…. Wage growth paid for by a shift back toward to a more normal split…is non-inflationary…. And this argument isn’t just academic: millions of jobs and paychecks depend on it.”

And:

• Ayako Saiki and Jon Frost: How Does Unconventional Monetary Policy Affect Inequality? Evidence from Japan
• Stanley Fischer: The Great Recession: Moving Ahead
• Chad Jones: The Macroeconomics of Piketty
• Pascal Michaillat and Emmanuel Saez: Unemployment, and product and labour-market tightness

Should Be Aware of:

1. Zaid al-Ali: Iraq’s Rot Starts at the Top “We have learned since 2003… that merely ensuring that there are ministers from each of Iraq’s main communities — Shiites, Sunnis, Kurds and minorities like the Chaldeans and Turkmen — will not ensure that they will represent those communities’ interests, let alone the national interest…. Prime Minister Nuri Kamal al-Maliki has deservedly been the focus of criticism, given his authoritarian exercise of his constitutional powers, his paranoia and his blindness to real dangers. But the rest of Iraq’s elite has not done any better…. Our political class behaves as if there is no crisis, because for them, there is none: If it comes to it, they can pack their bags and leave with their families…. Iraq’s problems are… as always, political…. The most America can do now — alongside its actions to provide humanitarian relief and keep ISIS at bay — is to support the political process with fair advice. Iraq’s existence as a nation hangs in the balance.”

2. D.R. Tucker: Speak Softly, and Carry a Big Stick: “The [National Review’s] brief… nowhere makes the case that it is scientifically ‘fraudulent’, instead claiming the word was used in a way meant not to imply actual fraud…. NR’s legal team is trying to avoid trial, so all who were hoping to read Lowry’s promised discovery dirt can forget it. Clearly, Lowry is no longer confident that his magazine can beat Mann…”

3. Jonathan Weiler: “Virtually every comment on Hamas in American media includes the assertion that the group’s Charter rejects Israel’s right to exist, it’s worth noting the following from the Likud Platform of 1999: a. “The Jordan river will be the permanent eastern border of the State of Israel.” b. “Jerusalem is the eternal, united capital of the State of Israel and only of Israel. The government will flatly reject Palestinian proposals to divide Jerusalem”. c. “The Government of Israel flatly rejects the establishment of a Palestinian Arab state west of the Jordan river.” d. “The Jewish communities in Judea, Samaria and Gaza are the realization of Zionist values. Settlement of the land is a clear expression of the unassailable right of the Jewish people to the Land of Israel…. The Likud Party has never in its statements of principles, accepted a Palestinian State. Its electoral partner, Yisrael Beitenu, has likewise categorically rejected the possibility of an independent Palestinian State, insisting that the idea is nothing more than a ploy to facilitate the destruction of Israel. The Hamas charter, of course, does more… a vile document that echoes some of the worst anti-Semitic tropes of the modern era. But on the central question of one side denying the other’s legitimacy… symmetry…. Too much political discussion in the United States about Israel/Palestine proceeds from the premise that Palestinians have no other interest than to destroy Israel and drive the Jews into the sea. Therefore, it is said, well-intentioned Israel has no viable negotiating partner for peace…. In fact. Likud leaders have said unequivocally that no two-state deal is possible…”

Science fiction writer Charlie Stross sends us to:

Haul Train: “The first significant change in rigid haul truck design for 60 years…

…ETF Mining Haul Trains are the answer to the demand for even larger payloads than current Ultra-Class Trucks offer. The innovative design results in the lowest cost per ton in the industry…. Unique to ETF, each truck irrespective of capacity can operate together with others of the same capacity as a ‘Haul Train’ two; three, four or more individual trucks can easily be linked together using a steel arm carrying an enclosed armoured data cable within its structure. Information data from the first operator controlled truck is transmitted via the link arm to the following trucks guiding and controlling all important operating functions like engine power, steering direction and brakes, just as if each unit had separate operators following each other.

The real operational advantage soon becomes very obvious, for every train there is just one operator, so as unit numbers increase payload capacity go ‘up’ while operator costs come ‘down’. Each haul train features ‘side dumping’ capability, each truck can dump individually or together at the same time at the dump area and crusher. If for any reason the mine plan should change requiring fewer units in the train each truck unit can be de-coupled, allowing each truck to operate independently. This unique configuration provides a mine wishing to increase operating capacity simply by increasing the number of trucks in the train. ETF Mining Haul Trains can be used on the same roads where current Large Haul Trucks are operating with existing haul road profiles and bend radius. Side-tippers are standard…

The remarkable thing about this advertisement is the stress on how the “enclosed armoured data cable” allows the mind to economize on * truck drivers*. Figuring out a way to–sometimes–remove four out of five truck drivers from the necessary resources to make the mine operate is a huge selling point. But, then, if you are paying $50,000/year for a skilled mine-truck driver, that is $500,000 over the ten-year life of a truck that costs $1,000,000 (or more). The cost of getting the human brain is not the bulk of the cost of running the truck, but it is a significant proportion, and economizing on it by replacing drivers and slaving the follower trucks to the leader is a powerful potential source of economy.

I do not know whether the lesson to draw is that human brains still add immense value–look at how much of the cost of even the most capital-intensive mining operations is skilled human labor–or that a great many things that humans do today that are well-paid are ripe for disruption as soon as our technologists can figure out how to use silicon to mimic the skills of we shoebox-sized 50-watt supercomputers well enough…