Month: February 2022

Yesterday I wrote about the great financial results among car companies, and that remains true. However, I also put up a chart of domestically-produced autos and suggested that nothing all that serious had changed in 2021 despite endless reports of parts shortages.

But that was wrong. I looked only at automobile sales, which are a small part of domestic production these days. If you look at all light vehicle sales, it's pretty obvious that 2021 was something of a disaster:

Sales of all light vehicles slumped by nearly 30% in 2021 thanks mostly to parts shortages. Apologies for the misleading chart yesterday.

I haven't written about the mounting evidence of Donald Trump's desperate attempts to hold onto power after losing the 2020 election, mainly because it seems like we've known most of this stuff all along. But it's true that we're now at a point where Trump is essentially admitting everything in public:

• He wanted Mike Pence to overturn the election.
• He personally asked his aides to investigate seizing voting machines.
• He has suggested he would pardon the January 6 insurrectionists if reelected.
• He asked his supporters to hold “the biggest protests we have ever had” if prosecutors try to hold him accountable.
• He tried to persuade the Georgia secretary of state to find some extra votes for him.

As always, keep in mind that his supporters don't care about any of this. Thanks to Fox News and others, they believe that Democrats stole the election and therefore Trump was justified in doing practically anything to fight them.

Was any of this illegal? Lawyers will have to chime in on that. But it sure makes Trump unfit to hold office.

The Washington Post reports that London is a "playground" for
Russian zillionaires:

For years, the moneyed streets of the British capital and its surroundings have been a really great place to hide if you’re a Kremlin-linked oligarch.

Russian millionaires and billionaires have bought up so much of wealthy areas like Belgravia in Central London that certain British neighborhoods have gained their own Soviet-inspired nicknames like “Londongrad” or “Red Square.” Activists gave “kleptocracy tours” of empty mansions suspected to be linked to the “London laundromat” for cleaning dirty money.

Much the same is true of New York City. So here's an idea. If we really want to put some pressure on Russia, the US and UK should limit tourist visas to, say, one week for all Russian residents. The oligarchs would no longer be able to spend half the year in their overseas mansions and they'd go howling to Putin. Ukraine would suddenly seem like a minor annoyance.

Would Putin retaliate? Sure. But who cares? Some tourists would be disappointed, and business folks might have to change their schedules. But they'd probably appreciate an ironclad excuse to spend less time in Russia anyway, so there's no harm there. And no Americans want to go to Russian universities or buy mansions in St. Petersburg.

Just a thought. But I suppose this will seem too extreme for all you namby pamby liberals who can't stand the idea of America showing the world who's boss. I'll bet Trump would have done it if he hadn't been cheated out of his election victory.

In the previous post I mentioned that cars were in short supply in 2021, but apparently I spoke too soon:

After the close of trading Tuesday, GM reported a net profit of $10 billion for 2021. It said full-year pretax profit, which strips out nonrecurring items, rose 47% to a record $14.3 billion. Revenue rose 3.7% last year to $127 billion.

....GM provided a robust outlook for 2022, projecting it could earn between $9.4 billion and $10.8 billion in net income this year. The company said its forecast assumes demand remains steady and there are no significant economic or supply-chain challenges.

....Ford Motor Co. is also expected to report strong profits when it releases year-end results Thursday. In October, it boosted its full-year guidance to $10.5 billion to $11.5 billion, as the company took advantage of easing supply-chain problems and cranked up fourth-quarter production.

The big car companies did suffer from parts shortages, but in the end it looks like they did pretty well. Here's some context behind all those reports of shortages:

Sales of domestic autos were down, but they've been going down for years. Unit sales in 2021 were precisely on the pre-pandemic trendline. Ditto for domestic auto production. There is little sign here of serious, sustained shortages for domestically made cars.

[CORRECTION: If you look at all light vehicle sales, including SUVs and trucks, sales were down significantly in 2021. Details here.]

More generally, here are imports of goods in 2021:

In 2021, imports soared well above our pre-pandemic level. Total imports in November 2021 were 15% higher than they were at the end of 2019. This is yet more evidence that our supply chains were not in crisis. In fact, they were producing far more goods for the US market than ever before in history.

Peter Goodman of the New York Times writes today about our supply chain crisis:

With the havoc at ports showing no signs of abating....Many months, and perhaps years, are likely to transpire before the chaos subsides....Mayhem at factories, ports and shipping yards....The tightness in warehouses helps explain why American ports remain seized by dysfunction.

Yikes!  The message here is pretty clear: we're screwed. How is this playing out?

Over the last three months, container ships unloading goods have remained at American ports for seven days on average, an increase of 4 percent compared with all of 2021 and 21 percent higher than at the start of the pandemic, according to FourKites, a supply chain consultancy based in Chicago.

So on average, all this havoc, chaos, mayhem, and dysfunction has caused the time container ships spend at American ports to skyrocket from . . .

. . . about six days before the pandemic to seven days today.

Am I the only one who thinks this doesn't really seem all that disastrous? Obviously some ports are in worse shape than others—Los Angeles is the go-to example—but the nationwide average is what really matters. And it just hasn't changed that much.

This whole crisis framing really needs to stop. By now it should be obvious to everyone that our problem isn't a "supply chain crisis." Our problem is that we're experiencing sharply higher demand that nobody predicted, and even then only for certain products. In other words, our supply chains are producing more than they have before, but we haven't been able to ramp up our infrastructure instantly to handle it. That would be true no matter what. It's baked into the cake when you have to deal with a sudden change that no one forecast.

I don't have the chops to write this, but I'm pretty convinced that given the length, severity, and global reach of COVID-19, our supply chains have managed surprisingly well. There are miscellaneous shortages here and there, but nothing very severe. Maytag says you might have to wait a few weeks if you want a new washing machine. Cars are in short supply because car manufacturers are idiots who assumed COVID would depress demand forever. Supermarkets often have a few items that are temporarily out of stock. Most of this just isn't that serious.

Overall, I think this is pretty impressive performance. Who's the expert who can tell this story?

Doesn't this racoon look cute? And it probably is, right up until the point where you get up close and it suddenly decides to rip your arm off.¹ This is one of the fauna of the Honey Island swamp in Louisiana, and was plainly quite used to tourist boats wandering by. I imagine food is frequently thrown their way by the boat captains.

¹Or run away, which I suppose is more likely.

If you look at a variety of data—consumer sentiment, presidential approval, etc.—they all start to turn down around May or June of last year. This is well after the January 6 insurrection, so that's probably not to blame. Ditto for President Biden's inauguration. And it's well before the Afghanistan withdrawal, so that's not to blame either. Nor was there anything new going on with COVID. In fact, this was after vaccines had been widely taken up and COVID case rates were close to zero.

So what happened? The best fit with the data seems to be inflation. Inflation started to rise in March and hit 5% by May. TV news was flooded with horror stories about the price of milk and bacon. Gasoline prices had been going up for a while and breached the three dollar barrier in the middle of May. Wages failed to keep up with inflation. Federal assistance programs were still up and running, but warnings were everywhere that they had only another few months to go.

From an employer point of view, supply chain problems were causing havoc everywhere. Unfilled job openings hit 10 million and the Wall Street Journal warned that workers now had all the leverage and could quit at a moment's notice if they weren't treated with kid gloves. And prices were going up for corporations too.

Sure, the economy was growing and unemployment was low. But the former was mostly invisible and jobs seemed unusually precarious. Employers complained they couldn't find workers, but workers scoffed, complaining that hiring requirements had become ridiculous and finding a new job was harder than ever.

These are not huge problems, and so far they're fairly short-lived. All things considered, with COVID vaccines readily available, schools mostly returning to normal operation, and nearly everyone employed, we should be pretty happy. But even small problems can be hard to bear when you layer them on top of a seemingly endless COVID-19 pandemic. It's just one damn thing after another.

And there's not much anyone can do about this. We just have to wait it out.

Over at Recode, the appropriately named Peter Kafka tries to explain Web3 today. This is an impossible task since no one agrees about what Web3 is, and I found myself laughing throughout the entire piece. This isn't Kafka's fault. In fact, I was only laughing because he did a good job of representing all sides of the Web3 boondoggle. Here's how he begins:

Let’s start here: At its core, Web3 is a rebranding of crypto and blockchain, the technology based around a worldwide network of computers that talk to each other and validate and record transactions without human intervention or centralized oversight.

God knows, crypto and blockchain could use a rebranding, but inventing a brand new internet that's dependent on a slow, user-unfriendly, and highly tech-heavy pair of technologies is probably not the way to do it.

Then there's a bit that I won't excerpt—scroll down to "But Web3’s most fervent evangelists" if you want to read it—which describes the almost pathetic reason behind this yearning for a new web: all the good real estate on the current web has already been taken by the likes of Facebook, Google, Hulu, the New York Times, and so forth. So please, can't we just start over?

But my favorite part is Kafka's description of DAOs—decentralized autonomous organizations—which have produced some epic objects of Twitter snark over the past few months:

But more rational people who talk up DAOs think they are an excellent way to quickly and fairly spin up groups of people to work together, whether it’s a full-fledged company or a one-off project. You can, say, efficiently hand out equity stakes in a project to financial investors, strategic partners, and people who are actually working on it — all stuff that traditionally takes lots of lawyers and paperwork and time, and gets even more complicated if those participants live in different states or countries.

....I’ve talked to very sober people who tell me DAOs will be transformative for, say, startups that want to quickly get off the ground: One investor tells me the difference in speed is like the difference between email and the kind that arrives in an envelope.

“Right from the beginning of any project, you can now have an instrument of sharing the value of that project with more stakeholders,” says Jonathan Glick, an entrepreneur and investor who’s become intrigued by Web3 in general and DAOs in particular. “It is a quantum leap improvement in the way to organize people around projects.”

This is patently ridiculous. You can already spin up a group of people to work together in very little time using the ordinary old internet—but only if you're willing to dispense with all those tedious contracts and things that take "lawyers and paperwork and time." That might be all right if you're starting up a lemonade stand with your sister, but certainly not for anything more complicated. And I'd advise against this lackadaisical approach even for the lemonade stand no matter how much you trust your sister.

There's a techno-utopian belief in some quarters that blockchains can encode self-executing contract provisions, many of which are described as "interesting." But nothing is self executing and even the most interesting provision can be written down in English too. More to the point, a contract provision is meaningless unless there's someone to interpret and enforce it. That's where the lawyers, courts, and police forces come in. And once they're involved, what does blockchain buy you?

I remember back in the heady days of the 1990s arguing with evangelists about the web. The evangelists were certain that the web would put traditional marketing out of business because traditional marketers were just too slow and clumsy to understand the ethos of digital-native web users who disdained the obvious lies and hype of old-school product peddlers. Their naivete was almost charming. Big corporations pay a lot of money to employ the best marketing minds on the planet. And you think these guys will never figure out the web? I just laughed. Not only will they figure it out, they'll own it within a few years. And they did.

The same is true for all this new twaddle. We already have well-known ways of recording transactions that are faster, more efficient, and at least as trustworthy as blockchains. We have well-known ways of using crypto to encode things and well-known ways of creating reliable money. And contracts require lawyers and courts and terms of art because that's what it takes to protect everyone's interests—something that techno-evangelists are notoriously bad at acknowledging. It's no coincidence that the only real use case so far for blockchain-based cryptocurrencies is black market transactions where you actively don't want lawyers or contracts or police forces involved.

Surely the great lesson of Web1 and Web2 is that people are people no matter what technology you're using. The internet can certainly produce changes at the margins,¹ but it changes neither human nature nor hundreds of years of commercial practices encoded in laws, contracts, court opinions, treaties, and industry norms. You may not like our current Web2, but creating a brand new one won't change anything without some very heavy handed rules indeed. And getting rid of heavy handedness is the whole point of Web3, isn't it?

¹For example, my observation that "The internet makes smart people smarter and dumb people dumber." Though I make exceptions for certain very smart people.