Month: June 2023

Adjusted for inflation, retail sales increased at an annualized rate of 2.7% from April to May. However, this small increase did nothing to change the overall downward trend in retail sales over the past year:

Tyler Cowen pointed me toward an odd new research paper today. The authors set out to determine the effect on economic growth of changing temperatures, which they broke this into two parts: steadily changing temperatures (from global warming) and temporary temperature shocks.

Their basic finding is that temperature changes have had negative economic effects on rich countries and positive economic effects on poor countries. But why? Aside from the effects of being rich or poor, it turns out that the response to global warming is fairly random. Conversely, the response to a temperature shock depends on several things: "Positive growth responses to global temperature shocks are more likely for countries that are poorer, have experienced slower growth, are less educated (lower high school attainment), less open to trade, and more authoritarian."

Here's a map of the world showing how each country has responded to temperature changes five years after they happen:

The effect of global warming is pretty consistent. North America, Europe, and Southeast Asia show negative effects while Africa and Central Asia show mostly positive effects. Only South America is variable. The United States shows a negative effect from global warming but a positive effect from temporary shocks.

The most peculiar thing is the difference between neighboring countries, which is frequently large. Brazil, for example, has an extremely negative response to global warming while Peru and Bolivia both have extremely positive responses. There are plenty of other examples like this, where responses don't change smoothly but go from one extreme to the other just by crossing a border.

The authors have no explanation for any of this. They just report their findings. It's all very peculiar.

I sure got this wrong:

I figured the boycott of Bud Light would have only a smallish and temporary effect. But it's now lasted two months and has caused Bud Light sales to plummet by about a third. When you consider that most of the decline is probably due to Republicans, it suggests that more than half of all Republicans are boycotting the brand. A Rasmussen poll confirms this, finding that 67% of Republicans support the boycott:

Surprisingly, 44% of Democrats say they support the boycott. However, there's no telling how many of them support it because of the video and how many support it to punish Bud Light for cravenly abandoning Dylan Mulvaney after the boycott began.

In any case, it's stunning how many Republicans support the boycott. This goes way beyond the MAGA crowd. The trans panic has engulfed nearly all of them.

Silhouette of a horse on a ridge on a stormy day in Trabuco Canyon.

The Fed is finally backing off its endless series of interest rate hikes—but only slightly:

The Federal Reserve is leaving interest rates unchanged for the first time since spring 2022, signaling a new chapter in the central bank’s fraught fight against inflation.

....The Fed also signaled more rate hikes would come before the end of the year....“In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” a Fed statement said.

It's about time. And it's about time that they explicitly acknowledged that all their previous rate increases might have enough built-in lags that they have yet to take full effect.

In 2014, after more than a decade of lobbying, Congress passed a bill that transferred land near Oak Flat, Arizona, to a mining company that planned to build a huge copper mine on the land. This prompted opposition—and a lawsuit—from an Apache resistance group led by Wendsler Nosie Sr., a 64-year-old Apache elder, which claims the site is sacred to them:

Apache roamed Oak Flat, which they call Chí’chil Biłdagoteel, for generations before white settlers forced them onto reservations. Nosie and the other Apache involved in the case — who go by the name Apache Stronghold — say it is sacred land blessed by their Creator and home to spiritual guardians akin to angels.

....In their lawsuit — which is now before the U.S. 9th Circuit Court of Appeals — the group argues that the deal to trade Oak Flat to Resolution Copper in exchange for other lands scattered throughout the state violates their religious rights. They say construction of the mine would prevent them from conducting their religious ceremonies and break their ties to the land forever, in violation of an 1852 treaty between the Apache and the U.S.

There's no question that Oak Flat used to be territory occupied by Apache, who were treated brutally and moved to a nearby reservation in the 19th century. An ethnographic study of Oak Flat in 2015 found areas with Apache place names, Apache camps, and ancestral archaeological sites, as well as other landmarks that “possess traditional cultural significance.” But was it ever considered sacred land?

Backers of the mine have questioned the Apaches’ religious ties to the land....Today, critics of Apache Stronghold, including some longtime residents of Superior, question the group’s religious claims to the land, saying they never saw Apache at Oak Flat until the fight over the new mine began.

....James Phillips, 33, is a member of the San Carlos Apache Tribe and a father of two. He is also a Resolution Copper employee who supports the mine....The truth, he said, is that he just doesn’t believe what Nosie preaches about Oak Flat.

“If you were to ask me if I truly believe Oak Flat is sacred, honestly no, I don’t. I’d never heard of it being sacred before,” Phillips said.

I'm not a religious person, so I probably find religious claims more tiresome than most people. I recognize that—and I also recognize that if I'm skeptical of claims that a particular tract of land is "sacred," I need to be careful. It might just be my biases speaking.

That said, claims of sacred land frequently seem to pop up a little too conveniently when Native groups oppose a project of one kind or another. In this case, huge swathes of New Mexico and eastern Arizona are historic Apache territory, but which parts are sacred? Not all of them, certainly. And the truth is that it's hard to find any mention of Oak Flat being sacred that's not tied to the proposed mine. Even in a 2007 letter from six Apache tribes that is tied to the mine, they refer solely to Oak Flat's "unique recreational and historical values" and explicitly claim only that Apache Leap—an outcrop two miles from the mine site—is sacred. But Resolution Copper has already agreed to leave Apache Leap alone.

So . . . it's a little hard not to be skeptical. With no disrespect intended, it would be nice for Native Americans—and everyone else—to designate their sacred areas now, instead of waiting until they have something to oppose. It's not as if this would be impossible: many areas, like Apache Leap, are already designated. Why not do them all?

Over at his substack, Matt Yglesias muses about television and suggests that maybe it's something we should panic about:

As Tim Cook encourages us to spend more time sitting alone in dark rooms, enjoying immersive audiovisual experiences, I can’t help but think that the panickers, at least those of the last few decades, might have been on to something.

....The unprecedented cornucopia of entertainment at our fingertips (ubiquitous smartphones, great televisions, streaming anywhere, on-demand everything) is very much a mixed blessing that is significantly exacerbating loneliness and other social ills.

....The mistake of the moral panickers has been to pay too much attention to the content of the entertainment and not enough to their form. Something that you do with friends, whatever it is, has some useful spillover effects in terms of strengthening social bonds. Something that you do in isolation does not.

This makes sense. There's only one problem with it:

It's certainly true that TVs have gotten better and TV content is higher quality. Nevertheless, TV watching has been steadily decreasing for the past two decades.

This data isn't perfect. For one thing, it doesn't tell us anything about young kids. For another, it's based on diary entries that include only the simple option of "Watching TV." There's no telling if respondents interpret this as all TV, including streaming on phones and tablets, or only TV watched on a conventional big screen.

Still, it's highly suggestive that although young people have more and better TV options than ever before, they're watching less of it. Instead, gaming and computer use have gone up and outdoor activities have stayed steady:

So TV watching—which is often done alone—is down while sports are as popular as they've ever been. At the same time, gaming and social media, which are typically done with other people, are both growing. Gaming has more than doubled since 2003 and social media use has skyrocketed.

Excessive screen time overall may be a problem. But TV specifically? Probably not.

If yesterday was CPI day then today must be PPI day. Here's what the Producer Price Index looks like through May:

If you look at goods and services separately, even the PPI for services was up only 2.9%—largely because of autos and auto parts. That's an excellent number since services are the prime contributor to recent inflation.

All of these numbers should feed through into consumer inflation over the next few months. It's yet another reason¹ to think that inflation is already set to decline throughout the rest of the year and the Fed has no reason to hike interest rates yet again.

¹There are many reasons to think this:

• PPI inflation is very low.
• CPI inflation is dropping.
• Fed interest rate hikes should take effect over the next six months.
• Global supply chains have completely recovered from the pandemic.
  .
• Housing inflation, when properly measured, is about zero.
• Fears to the contrary, wage growth has been restrained and there's no evidence of a '70s-style wage-price spiral. And wages probably don't matter that much anyway.
  .
  

Section 702 of the FISA Act allows agencies like the NSA to eavesdrop on foreign nationals overseas. It prohibits spying on US citizens or anyone who's within the United States.

But sometimes NSA ends up collecting the communications of US citizens anyway. Quite often, in fact. This is legal as long as it's not intentional.

In practice, then, NSA maintains a huge database of information about the communications of US citizens. Agencies like the FBI are allowed to query this database, but only under strict rules. The primary rule is that queries can only be done if they are related to foreign intelligence or are likely to show evidence of a crime.

But sometimes mistakes are made. I missed this when it first came out because I was lolling around at City of Hope, but a recently released FISA court document tells us just how often the FBI has misused this database to target American citizens:

278,000! And this is over a period of about a year-and-a-half from 2020 through 2021. Non-compliant queries included:

• 360 queries regarding drugs and gangs.
• 23,132 batch queries regarding the January 6 Capitol riots.
• 19,000 queries of donors to a congressional campaign.
• 467 queries of defense contractors.
• 483 queries of visitors to something that was redacted.
• 133 queries of people arrested during the George Floyd protests in 2020.

In all of these cases and more, the Department of Justice concluded that the queries were unlikely to retrieve either foreign intelligence or evidence of a crime. Nor is this anything new. It comes on top of what the FISA court calls a "historical pattern of non-compliant queries conducted by the FBI."

The FBI claims that it has finally cleaned up its act and that searches of US citizens are down 94% since 2021. But if the non-compliance rate has stayed the same, this still comes to about 11,000 non-compliant queries per year. It's no wonder that both Democrats and Republicans on the Senate Judiciary Committee are skeptical about renewing authorization for Section 702:

“I will only support the reauthorization of Section 702 if there are significant, significant reforms,” said Senate Judiciary Chairman Richard J. Durbin (D-Ill.). “And that means first and foremost, addressing the warrantless surveillance of Americans in violation of the Fourth Amendment.”

....Lindsey O. Graham (R-S.C.), said that in the United States broadly, “there’s a warrant requirement to investigate an American citizen for wrongdoing. And we don’t want this to be used to get around that requirement. So bottom line is, let’s reauthorize this program and build in some safeguards.”

....“Why should we ever trust the FBI and DOJ again to police themselves under FISA when they’ve shown us repeatedly over more than a decade that they cannot be trusted to do so?” Sen. Mike Lee (R-Utah) said.

The Biden administration wants Section 702 renewed and says that a warrant requirement for searches of US citizens would clog up the courts. But this is only true if you assume the FBI should be doing such a vast number of queries in the first place. If they limited themselves to cases where there was truly evidence of a crime—as they're supposed to—the number of warrants they'd need would plummet.

The history of mass surveillance has made it crystal clear that we can't rely on mere administrative approval for searches of digital communications databases. In case after case after case, this leads to abuses—which should surprise no one. Cops are always going to take shortcuts because their only motive is to catch bad guys, full stop. This is barely even a criticism of cops. It's just the nature of their job. The only way to make sure they do it legally is to require warrants that show probable cause, and then throw cases out of court if a warrant turns out to be deficient. This is what Congress should require before they reauthorize Section 702.

The Associated Press reports today on "The Great Grift," a combination of the plundering of COVID-19 aid programs by fraudsters and plain old mistakes in doling out the money:

All of it led to the greatest grift in U.S. history, with thieves plundering billions of dollars in federal COVID-19 relief aid intended to combat the worst pandemic in a century and to stabilize an economy in free fall.

An Associated Press analysis found that fraudsters potentially stole more than $280 billion in COVID-19 relief funding; another $123 billion was wasted or misspent.

....How could so much be stolen? Investigators and outside experts say the government, in seeking to quickly spend trillions in relief aid, conducted too little oversight during the pandemic’s early stages and instituted too few restrictions on applicants. In short, they say, the grift was just way too easy.

The story is long and a little hard to follow in places, so I simplified things with a summary chart:

Mistakes in handing out unemployment checks plus a small number of mistakes in mailing out stimulus checks add up to $123 billion. Total fraud depends on whose estimate of the Paycheck Protection Program you believe. The lower estimate produces a total of $182 billion in fraud. The higher estimate produces a total of $280 billion.

Add it all up and you get a grand total of $300-400 billion, or 7-10% of the pandemic money spent so far. A big part of the fraud came from the Economic Injury Disaster Loan and Paycheck Protection programs, both of which were administered by the Small Business Administration. SBA, which is a smallish agency, was overwhelmed by the vast scope of the programs and the need to get money out fast:

In the haste, guardrails to protect federal money were dropped. Prospective borrowers were allowed to “self-certify” that their loan applications were true. The CARES Act also barred SBA from looking at tax return transcripts that could have weeded out shady or undeserving applicants, a decision eventually reversed at the end of 2020.

Michael Horowitz, the pandemic watchdog chairman, criticized the government’s failure early on to use the “Do Not Pay” Treasury Department database, designed to keep government money from going to debarred contractors, fugitives, felons or people convicted of tax fraud. Those reviews, he said, could have been done quickly.

....In less than a few days, a week at most, Horowitz said, SBA might have discovered thousands of ineligible applicants. “24 hours? 48 hours? Would that really have upended the program?” Horowitz said. “I don’t think it would have. And it was data sitting there. It didn’t get checked.”

Unemployment fraud and mistakes were similar, but on a state level. Most states simply weren't prepared for a sudden, huge increase in unemployment payments, and their systems were often old and creaky. In Ohio, for example, State Auditor Keith Faber says nobody was prepared for what hit them:

The state’s unemployment agency “took controls down because on the one hand, they literally were drinking from a firehose,” Faber said. “They had a year’s worth of claims in a couple of weeks. The second part of the problem was the (federal government) directed them to get the money out the door as quickly as possible and worry less about security. They took that to heart. I think that was a mistake.”

There is, obviously, an inherent tension between getting aid out fast and getting it out right. They're both legitimate goals. Was a 7-10% penalty worth it in order to help lots of people quickly? I'm not sure I can confidently answer either way.