Category Archives: Economics

Thought for the age

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Governments have no resources. They only have spending power insofar as they can arrogate to themselves a percentage of private production; meaning government spending is a consequence of economic growth rather than an instigator. The same applies to “money.” It’s not wealth; rather it’s an agreement about value that enables the movement of actual wealth. In short, abundantly circulated money is a consequence of production as opposed to an instigator.

Forbes article via RealClearMarkets

OK, if Hornady says it’s so,I guess….

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GunsAmerica’s Digest is a good general guns and ammo site picking up articles and topics from all over. Suggested.

The Truth About Ammo – GunsAmerica Exclusive Interview With Hornady

by JORDAN MICHAELS on JANUARY 23, 2021

The emails and social media messages to Hornady’s customer service team haven’t let up in months;

“Where’s all the ammo?”

”Are you still making hunting cartridges?”

“Have you shut down due to COVID?”

“Why are you making T-shirts and not ammunition?”

“Are you hoarding ammunition?

“Are you selling all the ammunition to the government?”

A quick survey of Hornady’s Facebook page reveals of few of these missives.

So I even muttered under my breath, ‘only the Feds have the resources to buy up all the ammo, real people can’t be buying it all.’ Even if I know that’s bat shit crazy.

It was easy to sense the frustration and fatigue in Jason Hornady’s voice when he sat down with GunsAmerica last week. As the vice president of one of the nation’s largest ammunition manufacturers, Hornady has captained the company through the greatest surge in demand in the industry’s history, …

….they increased production by 30 percent last year, when they usually only grow five or ten percent each year. They ran through their entire inventory 18 times in 2020, when a normal year only sees six inventory turnarounds…. “Anything we make yesterday is shipping today,”

“Normally, a guy would buy one or two boxes. Instead, they’re buying cases,” Hornady said.

“Anyone who thinks that ammo companies aren’t trying to make and sell as much as they can, doesn’t understand capitalism,” he said. “We all like money. Nobody wants to ever make less.”

“It’s shipping all the time. We’re all shipping more all the time,” Hornady said. “The biggest thing is, be patient.”

Bottom line? Hornady and other manufacturers are working as hard as they can to meet today’s unprecedented demand.

So there you have it.

There are some supply restrictions on the input side, primer I hear is a big issue. It’s dangerous stuff and a lot is imported because it’s hard to build plant in the US. But even stuff like cardboard boxes are getting hard to get…So…. be patient, soldier on. Don’t burn through your practice stock too fast.

Point to point sub orbital

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Preparing for “Earth to Earth” space travel and a competition with supersonic airliners From NASASpaceFlight.Com an important and fun source on space activity all around the world not just NASA/US

So this seems crazy but in all honesty it has actually been a thing for a long time. It is mentioned in a lot of sixties/seventies SF not focused on space flight. It was seriously studied several times as a sort of replacement for parachute insertion of military force. And like most of those sorts of efforts there was a commercial concept to support the technology since the folks in the defense industry understood that military programs cannot support a robust industry on its own.

Just look at nuclear power, there was a reason that nuclear power stations evolved as the Navy came to realize they wanted nuclear ships. And there is a reason that small aircraft carriers and non nuclear submarines are anathema to certain parts of the Naval establishment. They know that if non nuclear CVs and SSs became common the industry required to support the nuclear fleet would become unaffordable.

https://thehighfrontier.blog/2016/03/20/straight-back-down-to-earth-a-history-of-the-vertical-takeoffvertical-landing-rocket-part-1/

People have already talked about the DoD buying Starships and using them as bombers / hypersonic weapons platforms. This is just turning the model above around.

Back in medieval times freighters and warships were the same thing, they just tacked on some fighting platforms and went at it with bows, crossbows, catapults, swords, etc. Even the Vikings probably started out as traders though always ready to ‘raise the black flag and slit a few throats’ if that looked like the right business strategy.

Anyway…sorry for the side commentary, it’s evening and I had a good dinner so I’m wandering a bit.

So, again anyway…if you look at it, a craft like the Starship, which has the performance as a single stage vehicle to haul 100 tons 10,000 miles in less than an hour has some attraction on its face….but in reality?

  • To my mind the most value dense time sensitive cargo is people but that’s years out at the least.
  • In the meantime are there cargos that are so time sensitive that something like a starship might make sense?
    • Couriered documents. Maybe
    • Mail. Does not seem like it.
    • Medical supplies only if the ship could land almost anywhere and take off again.
    • High value tech like chips? Maybe but 100 tons is overkill.
    • In fact most of the above are not 100 ton class cargos and frequency and flexibility of landing seem critical.

So dead on arrival? No there are customers who might pay for a a limited 100 ton capability. I think it would need to be anywhere in the world which is more than 10,000 miles but is probably within the capability of a modified Starship with more fuel and less cargo…or maybe an extended tank Starship could do 100 tons out to 18,000 miles (my wag of anywhere in the world from anywhere in the world.)

A somewhat smaller starship could do 10 tons 18,000 miles and probably land at just about any port or airfield as long as you can supply LOx and LNG, which is not that uncommon.

Go back to the start. If you burn a couple of hundred tons of LOx/LNG what is the cost? Does it make economic sense? Is it safe, is it going to be acceptable?

  • Economics:
    • LOx/LNG are in the same $/ton range as Jet fuel, you are burning a couple of times the fuel since you have to haul up the oxidizer with you and pay for that as well so say 4x the fuel bill.
    • The hull is in line with a modern airline.
    • If you can do a trip a day or so with support costs in the same range as a jet, it would appear to me that for the right cargo you could make it work.
  • Is it safe?
    • Well not right now but once the tech is wrung out ?? I think so.
    • the big difference is much higher energies than a jet.
    • But…your exposure time is a fraction of that of a jet over the same range. Accidents in mid flight are rare but generally lead to complete loss. Exposure time is probably the most important difference…advantage Point to Point
    • Ok so the major threat time is when you are near the ground around take off and landing, Those are shorter for the Point to Pointer.
    • And to me the difference in energy involved is immaterial…dead is dead and most of the time accidents of any magnitude in those phases are not survivable.
    • Accidents on the runway often have survivors but that is eliminated in the Point to Point case…up and down…no in between…
  • Acceptable?
    • Only time will tell, my guess is YES.
    • It will be a bit like the glamor days of the early airliners I would expect point to point for certain segments to be a real elite punch card
    • Especially as near earth space becomes an exotic but achievable location.

Exciting times indeed.

Grid growth and wealth

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A recent article about the impact of electric grid power expansion in India and Africa peaked my interest and so reviewed some of the papers on the topic spanning decades. While I obviously can’t declare definite conclusions they seem to point to problems with base assumptions made by advocates of broad electrification.

The blog post was a quick review of a couple of recent studies discussing the expansion of electric power to villagers in rural India and Kenya. The studies are very different looking for different things. But they both show that the expected economic boost from the build out of the electrical power grid has not arrived, at least not yet, and some of the data indicates a net negative impact.

In general it appears that the cost of the service is too high to pay off for these poor farmers/villagers is modest at best and in some ways is a net negative.

This is contrary the experience in places and times, most specifically the US where rural electrification was a vast boost to the economy.

The situation needs study but the thing that comes to my mind is that the served populace needs a certain amount of wealth to make use of electricity.  On its own electricity does nothing, its what it enables that is the important thing.  Many of the areas that have already electrified were both relatively wealthy and had existing in service infrastructure that could be made more productive powered by electricity rather than the prior human, animal, steam or wind power.

Today the urge is to spread the grid out into the poorest rural areas, these are subsistence farmers not commercial farmers and these people have little or no infrastructure to make more productive. Not to say that they cannot move up the chain with time but the move from subsistence to commercial farming is non trivial. Transportation infrastructure and marketing/sales infrastructure are critical while cell phones are a huge enabler the rest of the picture is still fuzzy at best.

Also one has to wonder if this uplift isn’t facing a very stiff counter wind from the global economy. It is very cheap to move products in bulk across the major transport networks it could be that farmers, selling a local staple product will find it very hard to compete even if the distance to market is relatively short.

Though this is only one data point, it seems to point out that implementation of small scale solar/battery systems for light and telecom are the most important stepping stone for these subsistence farming communities.  That the improvement of transportation infrastructure might be of value before a major build out of electrical grids.

Limitations of Pay Pal and how it’s side stepping them

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I’ve used PayPal for several years now on my iDevices and PC’s, mostly for paying a few monthly subscriptions and moving money between bank and credit union. It also enables me to pay for my minor excesses out of my ‘monthly money’ rather than the family general account. I have bought a couple of big-ticket ‘toy’ items using the credit account and then paying back over a few months, or better saving up then using PP to buy the lusted after item over the net. I think PP is a useful service and I trust it more than I do big bank credit card services though that’s a little player vs. mongo player preference rather than real in-depth analysis.

Pay Pals weakness has been the network effect. In general the more members any network has the more useful it is. While PP is pretty widely spread these days it’s not getting bigger quickly enough and I have continued to use other methods of paying for most things.

PP has solved at least part of this growth problem by moving into the credit card world. Establishing a PayPal Master card in place of its own credit account. This enables users to pay through the immense existing credit card infrastructure but use the PP ‘back office.’

In one sense it’s a bit sad that PP had to just become another credit card. But they do provide a lot of other services and a way to manage and move your money around in the banking system.

The truth is always so much more interesting than the crap I learned in school

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The Truth About the “Robber Barons”
Mises Daily: Saturday, September 23, 2006 by Thomas J. DiLorenzo
It’s long but interesting, after reading it think about what has been going on around us for decades, longer really, since what is discussed in this fascinating piece has only gotten worse since the long dead protagonists passed from the stage:

The American economy has always included a mix of market and political entrepreneurs — self-made men and women as well as political connivers and manipulators. And sometimes, people who have achieved success as market entrepreneurs in one period of their lives later become political entrepreneurs. But the distinction between the two is critical to make, for market entrepreneurship is a hallmark of genuine capitalism, whereas political entrepreneurship is not — it is neomercantilism.

In some cases, of course, the entrepreneurs commonly labeled “robber barons” did indeed profit by exploiting American customers, but these were not market entrepreneurs. For example, Leland Stanford, a former governor and US senator from California, used his political connections to have the state pass laws prohibiting competition for his Central Pacific railroad,[1] and he and his business partners profited from this monopoly scheme. Unfortunately, the resentment that this naturally generated among the public was unfairly directed at other entrepreneurs who succeeded in the railroad industry without political interference that tilted the playing field in their direction. Thanks to historians who fail to (or refuse to) make this crucial distinction, many Americans have an inaccurate view of American capitalism.

As a header for the article, DiLorenzo has this quote:

Free-market capitalism is a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at. State capitalism consists of one or more groups making use of the coercive apparatus of the government… for themselves by expropriating the production of others by force and violence.
— Murray N. Rothbard, The Logic of Action (1997)

So the taxonomy here is:

  1. Free market capitalism
  2. Political ( crony) capitalism
  3. State capitalism

But the whole story is much more complex than this article outlines, since all of the actors in the dance, (‘good’ guys and ‘bad’) were acting out of self interest, enlightened self interest, altruistic self interest and more darkly unconscious self interest, based on very, ( by today’s standards, very, very) poor information and worse theories of cause and effect. It is all but certain they were trying to do the best they could for the audience they cared about (sometimes but rarely, just themselves.) Even monsters think they are doing the right thing (sometimes via massive self delusion admittedly) whatever outside observers perceive.

URK! The sound made after the breath has been knocked out of you

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Both me and the American economy. And they still don’t get that it’s all about the intersection of bad and vastly too much regulation
This and more at PJMEDIA: Stephen Green, The Bistromath economy
My emphasis

2.3 million — number of Americans “marginally attached” to the labor force.

-720,000 — change in civilian labor force in October.

815,000 — number of discouraged workers in October.

62.8% — labor force participation rate.

-0.4% — change since September.

13.8% — underemployment rate (U-6) in October.

More bistromathic mathematics:

+0.2% — change in U-6 since September.

14.2% — U-6 in January, 2009.

-0.4% — U-6 improvement after 52 months of economic recovery.

??? — actual unemployment rate, following revelations of data manipulation by Census Bureau during lead-up to 2012 election.

7949.09 — DJIA, January 20, 2009

16,064.77 — DJIA November 22, 2013

200% — increase of DJIA since January 20, 2009.

$22.01 — U.S. average hourly wage, January, 2009.

$24.10 — U.S. average hourly wage, October, 2013.

9% — increase in U.S. average hourly wage since January, 2009 (not adjusted for inflation).

10.61% — cumulative inflation since January, 2009.

< 0% — increase in average hourly wage since January, 2009

2.5% — second quarter U.S. GDP growth, annualized.

2.0% — third quarter U.S. GDP growth, annualized.

2.0% — fourth quarter US GDP growth, projected.

< 3.0% — 2014 U.S. GDP growth, projected.

1.67% — average U.S. GDP growth under George W. Bush, including 9/11 and 2008 financial meltdown.

Just over 1% — average U.S. GDP growth under Barack H. Obama, including stimulus and recovery.

$1,020,000,000,000 — stimulus injected into U.S. economy by Federal Reserve in 2013 (planned).

$313,695,000,000 — U.S. GDP growth in 2013 in dollars (projected).

3.25:1 — ratio of Fed stimulus dollars to each new dollar of economic growth.

…

62% — percentage increase in U.S. debt since January 20, 2009.

56% — increase in U.S. debt after eight years of GW Bush
…

38 — months remaining in Obama administration.