LT #17 - Top Links - October 2023
The collapsing geopolitical order: coups in Africa, terrorism in the Levant, ethnic cleansing in Azerbaijan. Historic antitrust action, collapsing markets, cheap wind and solar - and more.
War and Ethnic Cleansing
You’re not going to like what comes after Pax Americana - Welcome to the jungle. With the US weakening, distracted, and bogged down - emerging players and bad actors are growing bolder. From Russia, to Hamas, to Azerbaijan, to Serbia, to the full suite of 7 coups in Africa in the last 3 years.
Foreign Exchange World Roundup September 30 - October 1 - More than 100,000 Armenian people have been evacuated and fled Nagorno-Karabakh after the Azerbaijani government annexed the area and threatened mass violence.
Interesting Tidbits
How weight loss drugs stopped a Danish recession - American obesity to the rescue
Our climate change debates are woefully out of date - Solar and wind are now fully competitive with fossil fuels. the prices of lithium ion batteries fell 8% just in August, and 24% in just the last 9 months. We don’t need to stop using energy to combat climate change - we can just switch to cheaper energy sources and use more energy.
Antitrust in Full Force
The FTC Sues to Break up Amazon Over an Economy-Wide “Hidden Tax”
Once it achieved monopoly power, Amazon squeezed on price through fees to third-party sellers. As a third-party seller, you pay fees for listing on Amazon; for using Amazon’s warehouse services, known as Fulfillment by Amazon (FBA); and for advertising services. If you don’t pay, you don’t get put in a place on the site where consumers click. "Advertised products on Amazon,” reads the complaint, “are 46 times more likely to be clicked on when compared with products that are not advertised." And these fees have all increased steadily over the years.
At this point, the price Amazon charges these third party sellers has grown to nearly 50% of its revenue. It is this money, estimated at $123 billion in total last year, that pays for “free” shipping, as well as its video service, its music service, Twitch, and everything else that comes bundled with Prime. These third-party sellers in turn raise their prices to consumers, aka you and me, and then send that money back to Amazon in the form of fees.
Today, Amazon tells sellers that if it detects a lower price for their products on any other online store, they will be punished, which is to say, their ability to get their products onto a place on the Amazon website where customers click will go away. The net effect, as Amazon itself wrote, is that "prices will go up."
Markets in Turmoil
Wolf Street: Unrealized Losses on Securities held by banks. +8% to $558B. How do you lose 47% on 30-year treasuries. Buy at an auction in Aug-2020.
The disturbance of spring 2020 was both profoundly alarming and dangerous. Whether you regard the denouement - direct Fed stabilization - as a disaster depends on your worldview. It depends on how squarely you are willing to face the historical fact that our modern monetary and fiscal constitution profoundly entangles the state and the private financial system and it is the central bank that forms the ultimate backstop. You can reasonably advocate for a system that is even more transparently backstopped by the central bank. You can also reasonably prefer a new iteration of public-private partnership with new rules, new participants and new backstops. What Menand and Younger’s wonderful essay shows to be a fantasy is any idea of a fiscal and monetary system based on rigid separation, a “free” capital market, or a “privatized” money supply.
Contra the Left
Are labor unions raining on America’s parade? - How the transition to EVs and reshoring of manufacturing to the United States is being hampered by domestic labor.
How boys are raised to kill - Darrell Owens describes the sources and causes of crime in Oakland.
The vast majority of poor people don’t commit crime and Black women’s homicide rate is lower or equal to their proportion of the population. Thus, while focusing on the race of offenders excites right-wingers and focusing on offenders being poor excites left-wingers, gender is the big elephant in the room.
A Georgist Case for Free Banking
Free banking in the simplest sense is just free-market banking. In pure free banking, there is no central bank, there are no legal tender laws, and the government would in general not privilege any particular currency. With free banking, the money supply and interest rates are left to be determined by the free market.
So to recap, there are probably a few straightforward (but politically challenging) ways for governments to revamp procurement and save a lot of money:
Limit extraneous requirements and try to buy existing commercially available products whenever possible.
To the extent you need specialized development, try to use the opportunity to seed a new industry rather than create a separate walled-off procurement niche, and solicit new bidders with transparent criteria.
Monitor existing contracts by adherence to pre-specified goals, don’t micromanage how contractors achieve the end objective, don’t change the objectives half-way through, and oversee the whole enterprise through well-staffed and compensated public servants.
Western leftists have lost the plot - gleeful support for the massacre of innocents is simply inhumane. Noah Smith elaborates in nuance and detail in this podcast defending why apartheid is the appropriate term for what’s happening in the West Bank, describing the cold war between Iran and Saudi Arabia, and how drones - Iranian drones - have rendered the tank obsolete and permanently changed warfare. He also offers a solution: the 3 state solution to the Israel-Palestine conflict.
That’s all! See you next month!
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