Questions and Observations

Free Markets, Free People

Economic Statistics for 24 Mar 16

Durable goods orders plunged -2.8% in February, with non-transportation orders down -1.0% and core capital goods down -1.8%. Even worse, on a year-over-year basis, while orders are up 1.8% overall, ex-transportation orders are down -0.5%, and core capital goods are down -0.1%. So, basically jumbo jet orders are the only things that are up.

The Kansas City Fed’s Manufacturing index rose from -12 to a still-negative -6.

The PMI Services Flash rose from 49.8 to 51.0 in March.

Initial weekly jobless claims were unchanged at 265,000. The 4-week average fell 8,250 to 259,750. Continuing claims fell 239,000 to 2.179 million.

The Bloomberg Consumer Comfort Index fell 0.7 points to 43.6 in the latest week.

The Fed’s balance sheet rose $6.5 billion last week, with total assets of $4.493 trillion. Reserve bank credit rose $4.5 billion.

The Fed reports that M2 money supply rose by $22.8 billion in the latest week.


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A litany of failure

This is what happens when you let the inmates run the asylum:

Some St. Paul public schools are unsafe for students and teachers, writes Katherine Kersten, a senior policy fellow at the Center for the American Experiment, in the Minneapolis Star-Tribune.

A Central High teacher was “choked and body-slammed by a student and hospitalized with a traumatic brain injury,” while another teacher was knocked down and suffered a concussion while trying to stop a fight between fifth-grade girls. There have been six high school riots or brawls this school year.

Hoping to close the racial suspension gap, the district has spent millions of dollars on “white privilege” and “cultural competency” training for teachers and “positive behavior” training, an anti-suspension behavior modification program, writes Kersten.

Misbehavior is initially tolerated and as it is, it become endemic and epidemic.  What’s the penalty for doing so?  Well, teachers are punished with “white privilege”, “cultural competency” and “positive behavior” classes.

Meanwhile where the problem is centered, i.e. with the students, nothing changes.  In fact, the “authorities” then make the problem even worse:

When that didn’t work, “they lowered behavior standards and, in many cases, essentially abandoned meaningful penalties,” she writes. Students can’t be suspended for “continual willful disobedience” any more. Often, students “chat briefly with a ‘behavior specialist’ or are simply moved to another classroom or school where they are likely to misbehave again.”

Behavior has gotten worse, wrote Aaron Benner, a veteran elementary teacher, in the Pioneer Press. “On a daily basis, I saw students cussing at their teachers, running out of class, yelling and screaming in the halls, and fighting.”

Again, this isn’t rocket science. The problem students, knowing they aren’t going to be punished for their behavior, continue to replicate it and push the envelope even more.  All the liberal psychobabble that has led to this point has had inevitable result that teachers live in fear.

Teachers say they’re afraid, writes Pioneer Press columnist Ruben Rosario. He quotes a letter from an anonymous teacher, who says teacher are told there are no alternative placements for violent or disruptive K-8 students.

“(Teachers) have no way to discipline. If a child is running around screaming, we let them run around and scream. If a student throws a chair at the Smart Board we remove the other students and call for help. If a student shouts obscenities, we simply use kind words to remind them to use kind words themselves. I am not kidding. . . .

The only consequence at the elementary level is taking away recess or sending the offending student to a ‘buddy classroom’ for a few minutes.”

Who are the victims?  Well, obviously the teachers.  But there are even more victims which the dominant philosophy within this school district seems to simply ignore:

At this teacher’s high-poverty, highly diverse school, “I have many students in my class who are very respectful, work hard and care about doing well in school,” the teacher writes. “The disruptive, violent children are ruining the education of these fantastic, deserving children.”

No kidding.  So what has increasing tolerance, lower behavioral standards and the refusal to discipline brought this school system?  Failure.  It has failed the teachers who are left to deal with increasingly violent behavior.  It has failed the good students who have their ability to learn and succeed hampered by disruptive students who go unpunished.  And, in reality, they fail the disruptive students, who are never taught the hard lesson that certain behavior is unacceptable and will be punished.

Because, you know, that’s just outmoded thinking.

Oh.  And “race”:

On March 9, a veteran high school teacher was suspended for social media posts complaining about the discipline policy, when Black Lives Matter activists charged him with racism.

Theo Olson, a special education teacher at Como Park High, wrote that teachers “now have no backup, no functional location to send kids who won’t quit gaming, setting up fights, selling drugs, whoring trains, or cyber bullying, we’re screwed, just designing our own classroom rules.”

He did not mention race.

Black Lives Matter had threatened a “shut-down action” at the school if Olson was not fired.

That’s just pitiful.  And the results of such poor leadership within that district are inevitable:

The same day Olson was put on leave, another Como Park teacher was attacked by two students, suffering a concussion. “The two entered the classroom to assault another student over a marijuana transaction gone bad,” an associate principal told the Star-Tribune.  Two 16-year-olds face felony assault charges.

Welcome to the blue education model in action.

~McQ

 

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Economic Statistics for 22 Mar 16

The PMI Manufacturing Index Flash for March rose 0.4 points to 51.4.

The Richmond Fed Manufacturing Index for March rose strongly from -4 to 22.

The FHFA House Price Index rose 0.5% in January. On a year-over-year basis, the index is up 6.0%.

Redbook reports that last week’s retail sales rose slightly to 0.8% on a year-ago basis, from the previous week’s poor 0.6%.


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The Junior Varsity strikes Brussels

I think we all knew it wasn’t a matter of “if”, but when.  “When” was today.

Today in Brussels was a demonstration by ISIS.   Unlike our President, they actually back their talk with action.  They’ve been saying for quite some time they were going to strike in a different way – a mass casualty way.  Previously, they were mostly interested in targeted actions, like Charlie Hebdo.

Today, it was about terror … pure and simple.  All the attacks took place outside of secure areas.  Easy as pie.  One in the waiting area to go through security at the airport and one in a subway station.  And it certainly doesn’t take a heck of a lot of sophisticated intelligence gathering.  The timing (rush hour at the subway station, any busy hour at the airport) is pretty easy to figure out.

It could have been anywhere a crowd was gathered.   But we’re not talking rocket science here.  Identify a target, recruit one or more fanatics, explosives … some assembly required (automatic disassembly guaranteed upon detonation).

It could have also happened anywhere.  In any country.  Of course, Brussels is the capital of the EU.  ISIS is big into symbolism when they strike outside their region.

The point of course is you can look for this to happen any number of times in any number of places in the (near) future.  As I said, this is their demonstration.

So where is “next”?  A crowded shopping mall on a sale day?  A stadium sports event?  A political rally?

More importantly what can we do about it … without giving up more liberty and freedoms?

Me, I’m all for taking my chances and playing the terrorist lottery.  I figure I’ve got about as much a chance of winning that lottery as I do the state’s numbers game, er, lottery.

However, that’s not what I expect to see.

Hide and watch.

~McQ

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The age of job automation

It’s closer than you think.  Last Friday I put a bit up in Stray Voltage about Dominos testing a robot delivery service in New Zealand.  And I intimated that that sort of automation would be something that would displace labor if labor got too expensive – like $15 for the minimum wage.

Over the weekend I happened across a couple of more articles.  One featured the CEO of Hardee’s and Carl Jr.’s talking about an automated restaurant he’d seen in San Francisco.  And, sure enough, his focus was on labor savings ($15 minimum wages specifically):

The CEO of Carl’s Jr. and Hardee’s has visited the 100%-automated restaurant Eatsa — and it’s given him some ideas on how to deal with rising minimum wages.

“I want to try it,” CEO Andy Puzder told Business Insider of his automated restaurant plans. “We could have a restaurant that’s focused on all-natural products and is much like an Eatsa, where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”

Pudzer’s interest in an employee-free restaurant, which he says would only be possible if the company found time as Hardee’s works on its northeastern expansion, has been driven by rising minimum wages across the US.

“With government driving up the cost of labour, it’s driving down the number of jobs,” he says. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

Good old government.  Helping out again, aren’t they (another way to make you more dependent on them)?  As Pudzer says:

“This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” says Pudzer. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”

Well no, it doesn’t. And then there’s this:

“If you’re making labour more expensive, and automation less expensive — this is not rocket science,” says Pudzer.

Well no, it’s not – er, except to Bernie supporters.  But then it isn’t necessarily easy to automate everyone’s jobs either.  But it is getting easier as technology develops.

Take the restaurant that Pudzer was talking about:

“I would call it different than a restaurant,” said David Friedberg, a software entrepreneur who founded Eatsa. “It’s more like a food delivery system.”

Last week, I was in a fast-moving line and browsed on a flat-screen monitor the menu of eight quinoa bowls, each costing $6.95 (burrito bowl, bento bowl, balsamic beet). Then I approached an iPad, where I tapped in my order, customized it and paid. My name, taken from my credit card, appeared on another screen, and when my food was ready, a number showed up next to it.

It corresponded to a cubby where my food would soon appear. The cubbies are behind transparent LCD screens that go black when the food is deposited, so no signs of human involvement are visible. With two taps of my finger, my cubby opened and my food was waiting.

The quinoa — stir-fried, with arugula, parsnips and red curry — tasted quite good.

And he saw no one other than other customers.  Says the author of the article:

Whether a restaurant that employs few people is good for the economy is another question. Restaurants, especially fast-food restaurants, have traditionally been a place where low-skilled workers can find employment. Most of the workers are not paid much, though in San Francisco employers of a certain size must pay health benefits and in 2018 a minimum wage of $15.

Ironic, isn’t it?  That the prototype “food delivery system” is established in a city in which government has decided it will set the wages.  The laws of economics, or “rocket science” for the Bernie supporters, begs to differ.  There’s no real advantage in terms of labor savings, if the market sets the minimum wage, but mandated wages?  Well, then it comes down to viable alternatives – and cost-wise, this is suddenly viable.  The lower wage job holders of America say – thanks government.

And beyond the obvious, there are advantages to automating:

By not hiring people to work in the front of the restaurant, he said, they save money on payroll and real estate. (There will always be at least one person available to help people navigate the iPads and to clean up.) The kitchen is also automated, though he declined to reveal how, and the company is experimenting with how to further automate food preparation and delivery.

And, fewer to call in sick, give benefits, sick days and paid vacations too.  Make an employer’s job easier, more efficient and more enjoyable and the employer will take that route every time.

“We can sit and debate all day what the implications are for low-wage workers at restaurants, but I don’t think that’s fair. If increased productivity means cost savings get passed to consumers, consumers are going to have a lot more to spend on lots of things.”

Consumers have a choice – spend more for the same thing to help someone else have more money or spend less for the same thing and have more to spend on other things they want or need.  Wal-Mart says they will choose the latter.  So do those pesky laws of economics.

The food industry isn’t the only industry that’s going to see this though:

Automation is transforming every industry. Business owners look to substitute machines for human labor. It happened to blue-collar workers in factories and white-collar workers in banks and even law firms. With self-driving vehicles, it may happen in the taxi and trucking industries. Robots and artificial intelligence machines are expected to transform health care.

Coming sooner rather than later … possibly sooner than we think.

Nowhere is the potential for job automation so obvious as it is in the on-demand economy, where many startups have grown fat with venture capital despite poor unit-economics. Uber is spending heavily to hasten the development of driverless cars. Instacart, Postmates, and other delivery-heavy startups are unlikely to stick with humans once machines—which don’t take sick days, need bathroom breaks, or threaten to unionize—can do the same jobs.

But even if you don’t work in the on-demand economy, chances are high that you or someone you know will eventually be in the same position as Fox-Hartin. Machines already exist that can flip burgers and prepare saladslearn and perform warehouse tasks, and check guests into hotels. Companies like WorkFusion offer software that observes and eventually automates repetitive tasks done by human workers. And automation has also crept into knowledge-based professions like law and reporting. When in 2013 researchers at Oxford assessed whether 702 different occupations could be computerized, they concluded that 47% of U.S. employment was at risk of being lost to machines.

~McQ

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Stray Voltage

I’d love to tell you this comes as a surprise, but in reality, yeah, not so much.  As I’ve been saying for years, I’m fine with solar power as a concept, but in execution, it’s not at all ready for prime time.

A federally backed, $2.2 billion solar project in the California desert isn’t producing the electricity it is contractually required to deliver to PG&E Corp., which says the solar plant may be forced to shut down if it doesn’t receive a break Thursday from state regulators.

This is the one that burns birds out out of the sky.

PG&E PCG, -0.02%   is asking the California Public Utilities Commission for permission to overlook the shortfall and give Ivanpah another year to sort out its problems, warning that allowing its power contracts to default could force the facility to shut down. The commission’s staff is recommending that it grant the extension Thursday.

You can probably count on it getting a “break” since a) it’s California and b) government only requires accountability from the little people and c) … solar! (Turn a blind eye to those burnt birds littering the ground.  Environmentalism and animal rights are only important when greedy corporations stand to profit.)

Meanwhile, elect Hillary, she’ll get rid of the coal mines and coal miners jobs and then we’ll simply die in the dark.

Welcome to machine world!  Robots are going to soon be taking over all those “$15 minimum wage” jobs soon:

Domino’s have developed possibly the greatest use for robots yet – safe and secure pizza delivery in what the company claims is a world first.

The company is testing pizza delivery by robot in New Zealand, known as the Domino’s Robotic Unit (DRU). The three-foot tall battery-powered unit contains a heated compartment for storing up to 10 pizzas, and is capable of self-driving up to 12.5 miles, or 20 km from a shop.

Economic reality says that when labor prices itself out of business and there is an cheaper viable alternative, people usually go with the alternative.  That’s because economic law is based in human nature, not pie-in-the-sky social justice.

You may have heard of the results of the YouGov survey that showed Millennials have a much higher regard for socialism than capitalism.  No, well, look at the Bernie camp and figure it out.  Helen Raleigh says we have to “educate” the generation about the perils of socialism because they’re to young to have seen it in action and seen the results.

She says:

So if you are a survivor of socialism, whether from the former Soviet Union, China, Cuba or Venezuela, speak up and share your stories. Don’t limit yourself to just your families and friends. Make yourself available to your community, especially neighborhood schools. Contact the local high schools and ask them if you can come to their social science or history class and speak to the kids directly. I’ve spoke at several high schools before. Rather than telling them that 20-30 million Chinese people died during the three famine caused by Mao’s disastrous policy, I shared with them the story of an uncle I never met. He was born during the famine. My grandmother was too hungry to produce any milk to feed him, and there was no baby formula available. He died in my grandmother’s arms. While I was sharing this story, those teenagers were spell bound. No one was checking their iPhones. Many of them came to shake my hand afterwards and said “thank you.” It was a rewarding experience for me.

One problem, Helen.  Where this is really needed would likely find you booed off the stage, while The New Red Guard demonstrated and called you a racist and hate monger.  Other than that, you’re precisely right.

Melissa Click, the asst. Professor fired by the University of Missouri because of her conduct, just won’t go away and has a new whine now:

As a Media Studies scholar, I understand how the increased surveillance resulting from advances in technology like digital recording and wireless broadband has come to mean that our mistakes will be widely broadcast — typically without context or rights of rebuttal — exposing us to unprecedented public scrutiny.

But I do not understand the widespread impulse to shame those whose best intentions unfortunately result in imperfect actions. What would our world be like if no one ever took a chance? What if everyone played it safe?

It has nothing to do with “shaming”, Ms. Click.  It has to do with accountability.  Intentions don’t mean squat.  Actions do.  Welcome to the real world.  Now, go away.

And finally, this visual pretty much says it all, doesn’t it?

Part-MVD-Mvd6755462-1-1-0

Have a good weekend!

~McQ

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A corrupt, inept and bullying government is cause for change

Glenn Reynolds makes the following observation while talking about Merkel’s refugee debacle (one with which I agree):

Fascism, like communism, is an opportunistic infection of the body politic, one that occurs when the institutions — and officeholders — of liberal democracy are too corrupt, or too weak, or both, to sustain business as usual. If you don’t like this outcome, don’t be weak and corrupt.

We’re headed over the same waterfall.  Over the years, we’ve seen our republic sink into political cess pit of the worst sort.  Corruption, cronyism, selling of political favors, governmental bullying, factionalism .  Add to that uncontrolled and unpunished bureaucratic over reach, government infringements on rights to a previously unheard of level, the law used as an oppressive tool instead of a protective one and uncontrolled spending resulting in massive debt.

The government, as first designed, has ceased to function that way.  The lines of separation between the 3 branches of our government have become so muddled and indistinct that that the government is almost unable to do its most basic job.   What we’ve seen is the willful ignoring of the Constitution by all three branches that has brought us to the point that those in power are now thought of more as enemies of the people than representatives.

Paul Rahe points out one of the reasons we’re where we are today:

The truth is that modern liberty depends on the power of the purse. All of the great battles in England in the 17th century between the Crown and Parliament turned ultimately on the power of the purse. The members of Parliament were elected at least in part with an eye to achieving a redress of grievances, and that redress was the price they exacted for funding the Crown. Our legislature has given up that power. Our congressional leaders claim – once the election is over – that they have no leverage. If that is really true, then elections do not matter, and a redress of grievances is now beyond the legislature’s power. Absent that capacity, however, the legislature is virtually useless. Absent that capacity, it is contemptible — and let’s face it: the President and those who work under him have showered it with contempt.

That basic contempt for the law, the demonstrated weakness when it comes to doing their job, their capitulation to special interests and greed and their ignoring the fact that the vast majority of people, on both sides of the political isle, are fed up with them and what they’ve built is where the electorate’s rage is grounded.

Tell me, does this remind you of any period or periods in history?  Certainly faint echoes at least.  Many of the dynamics at work then don’t exist now, but the fact that government wasn’t working for the majority in those two instances can also be said about what is happening here now.  Why else would a billionaire reality TV show star and a clueless socialist be as popular as they are?

It is another cry for drastic change in the way our representatives do their job and the way our government is run.  Obama was the same thing.  Now the choice is even worse.

Lump that all in with a historically and economically illiterate citizenry and it is a dangerous mix.

This is all headed for a showdown somewhere down the road, either soon or in the near future.  The question is, what will survive the event when it happens?  And is it possible that we can somehow see a leader emerge who can articulate the building rage (Sanders and Trump can do that) and actually LEAD us to reforming government to the point that it is again on the track it was originally supposed to be on?

For the first question, I have no idea.  As for the second, I have no confidence that such a person exists at this point and if he or she does, that this is at all recoverable.

~McQ

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