So, the House of Representatives has removed Speaker Kevin McCarthy. My reaction was materially the same as James Joyner’s: now what? Mr. McCarthy has said he won’t seek the speakership again. There won’t be a vote until next week.

IMO the Republicans have shot themselves in the foot. I fail to see how a new speaker will accomplish anything other than stalemate. That’s what a very closely divided House in which neither side will vote with the other means.

I must say that I disagree pretty drastically with George Friedman’s assessment of the war in Ukraine:

The U.S. reached its goal, while Russia and Ukraine have not and will not. However, neither have they been crushed. Ukraine is now a divided country but enough of it is intact to claim victory, and Russia has pushed past its old border enough to claim a small victory. Both could claim humanitarian reasons for ending the war.

But now the dead creep. They gave their lives for nothing but the pretense of victory, as no rational person will think of the outcome as contempt for the dead. So having fought and defended for coming on two years, how the war ends is reasonably clear. How long will it take for the leaders to admit what is obvious? Everyone lost this war, and in due course so will the leaders. And that is what will delay the inevitable peace.

We agree in that everybody will lose. I disagree that the United States has gained anything. It may even be that Russian military strength has actually grown—there’s nothing like field experience to hone military doctrine. Furthermore, it illustrated the limits of economic sanctions and the futility of trying to teach others the American way of war.

At Foreign Affairs three scholars, Zongyuan Zoe Liu, Michael Pettis, and Adam Posen, weigh in on what has produced the Chinese economy’s present situation. All three are worth reading but my views align most closely with Mr. Pettis’s:

The problems facing the Chinese economy are not the consequence of recent policy shifts; they are the almost inevitable result of deep imbalances that date back nearly two decades and were obvious to many economists well over a decade ago. They are also the problems faced by every country that has followed a similar growth model

In particular China has depended, like the Soviet Union before it, on moving relatively unproductive labor from agriculture to manufacturing. Unlike the Soviet Union it did so without reducing agricultural production, a notable triumph.

But that has run out and it won’t produce the additional growth it needs to transform China into a high income country through malinvestments. And malinvestments are inevitable in a planned economy, particularly with incentives that local officials have.

Twenty years ago I believed that China could transform itself adequately. Now I’m not so sure.

In his Wall Street Journal column Walter Russell Mead predicts that, in the event he is re-elected, President Trump’s second term foreign policy will be “Trumpier”:

A second Trump term would almost certainly be “Trumpier” than the first. For much of his first term, Mr. Trump surrounded himself with well-known conservative foreign-policy figures and senior military leaders, often deferring to their advice. More experienced, more confident in his own judgment and less deferential to others’ expertise, Mr. Trump likely will fill senior positions with people who reflect rather than challenge his instincts and priorities.

There will be resistance from inside the government, but this time around it won’t come from senior officials, only from career civil servants in the Pentagon, State Department and the Treasury, aided by allies in the intelligence world. Expect explosive leaks, bureaucratic slow-walking and a permanent state of trench warfare in the government machine.

suggesting he’s likely to drive a wedge between the U. S. and our NATO allies, focus more closely on the Western hemisphere (immigration in particular, and devote less attention to climate change.

If he’s trying to scare me, he’s not succeeding.

In the wake of my post on the anniversary of Healthcare.gov, I was gratified to see Megan McArdle devote her Washington Post column to a consideration of the the effectiveness of the ACA in reducing healthcare spending. Short version: it hasn’t been particularly effective.

This is not because people haven’t tried hard enough. Obamacare contained a lot of elements that were expected to realize significant cost savings while actually improving the quality of care.

Among the strategies considered was innovations in preventive care. Despite the considerable sums of money spent that hasn’t been effective:

Preventive care turned out to cost more than it saved, in part because doctors may need to treat a lot of minor conditions to prevent one serious health crisis.

Here are some of the other missteps:

Expanding the number of insured turns out to make emergency room visits rise, not fall, because newly insured people worry less about the cost. A program to reduce hospital readmissions among Medicare patients may have killed thousands, as hospitals tried to avoid admitting patients who might trigger a readmission penalty. A plan to promote new insurance co-ops, a kind of voluntary public option, saw almost all of them fail within six years.

BTW declines in life expectancy are not due to COVID-19:

Source
unless COVID-19 is a time traveller since the decline began in 2014.

She concludes that controlling healthcare costs is politically impossible:

It’s not that we don’t know ways to save money. The system could be run more efficiently by reducing slack, but this would make people wait longer for many tests and treatments, as Canadians and Brits do. Doctor salaries, which averaged $316,000 in 2021, could be trimmed to the levels of German doctors ($183,000) or those in Britain ($138,000). The government could mandate lower drug prices, which would result in Americans losing access to medicines that aren’t worth making at the mandated price, as well as many that aren’t yet developed.

The problem is that these savings aren’t free. Nor are many other potential savings that space prevents me from naming, and that you are perhaps even now preparing to shoot me an email about.

The savings come attached to significant other costs, making them too politically expensive to contemplate. Try to cut doctors’ salaries almost in half, and they will freak out. Tell everyone else that they can’t have the fancy new drug they just read about, or that they have to wait half a year to see a specialist, and they will freak out, too. Politicians know this and won’t take the risk.

Sadly, that dodges the question: can healthcare costs continue to rise? Increasing healthcare spending was one thing when, as in 1960, we devoted 5% of GDP to it. Spending 20% of GDP on it is a different matter.

Can this really be true? At The Telegraph former UK Defense Minister Ben Wallace is quoted as claiming that the average age of Ukrainians at the front is over 40:

Putin is desperately grasping at the final two things that can save him – time and the splitting of the international community. Britain can do something about both. We must help Ukraine maintain its momentum – and that will require more munitions, ATACMSs and Storm Shadows. And the best way to keep the international community together is the demonstration of success.

Ukraine can also play its part. The average age of the soldiers at the front is over 40. I understand President Zelensky’s desire to preserve the young for the future, but the fact is that Russia is mobilising the whole country by stealth. Putin knows a pause will hand him time to build a new army. So just as Britain did in 1939 and 1941, perhaps it is time to reassess the scale of Ukraine’s mobilisation.

I have no idea how he would know that, whether that’s accurate, or what it implies. I also have no idea how fit a 40 year old Ukrainian is.

For comparison the average age of U. S. soldiers in Europe in 1945 is estimated at 26.

From Bloomberg via American Enterprise Institute Hal Brands outlines a strategy for a longer war in Ukraine:

Even now, the peace Putin wants would leave Ukraine indefensible and dismembered. So unless the US opts for disengagement — tantamount to Ukrainian defeat — it needs to start addressing the problems a longer war will confront.

The first involves assessing, and perhaps adapting, military strategy. Ukraine’s current offensive initially struggled because the country sought to mimic Western tactics without the advantages, such as air superiority, Western militaries have come to expect.

The US and its allies need to start equipping Ukraine now for operations in 2024 and after. The question is whether they should be preparing Ukraine for a similar offensive next year, or perhaps helping it employ a more familiar, if less ambitious, strategy of attrition. This would involve localized offensives combined with ramping up long-range strikes meant to sever Russia’s supply lines and gradually make its military position unsustainable.

Second, a longer war may require accepting higher risks of escalation. At the outset, Washington stepped across Putin’s red lines gingerly. More recently, the US has committed to provide sophisticated capabilities such as Abrams tanks and F-16 fighter jets.

These commitments are meant to show that Putin can’t simply outwait the West. But if a new theory of victory involves coercing, rather than directly evicting, Russian forces, Ukraine will need longer-range ATACMS missiles and other systems to vastly increase the pain it inflicts by targeting Putin’s forces wherever they occupy Ukrainian soil.

Third, Washington must tighten the economic squeeze. Sanctions have injured but not crippled Putin’s economy, which continues to churn out weapons for the war. The Treasury and State Departments are already cracking down on sanctions evasion, with the announcement last week of further penalties on 150 individuals and entities. The next step might be lowering the price cap the Group of 7 imposed on Russian oil sales, to reduce Putin’s revenue without throwing global energy markets into chaos.

Fourth, Washington must prevent a long war from becoming a source of weakness and distraction. The record to date is encouraging: Since February 2022, the US has dialed up production of artillery shells and other weapons, while expanding and strengthening its global alliance network.

There are several points missing from Mr. Brands’s outline. Most critical is who will be fighting the war in Ukraine? We don’t actually know what Ukraine’s casualty rate has been. We can assume that the figures we’re receiving from both the Ukrainian and Russian governments are lies. Is the plan to add NATO regulars in addition to the irregulars who are already fighting? How can that be accomplished without the conflict turning into a nuclear exchange?

At this point Ukraine is using the annual U. S. production of artillery shells in a matter of days. In order to supply Ukraine with the munitions it needs to fight a long war of attrition, we will need to produce many more faster and to do that we must increase our base of heavy industry and the high-density energy that requires. We can support Ukraine or decarbonize our economy. We cannot do both.

From the Department of LOL comes this post by Jeremy Majerovitz of the Federal Reserve Bank of St. Louis. The graph above pretty much says it all but this is his conclusion:

Economic forecasters provide useful information about the future state of the economy. But making predictions is hard, especially about the (distant) future. Even though forecasts can help, we must live with significant uncertainty about future economic conditions.

The TL;DR version of the piece is that although economists are pretty good at telling whether we’re in a recession now the precision of their forecasts decreases rapidly the farther in the future they’re projecting. When we say “future” we’re talking about quarters, 90 day periods, not years.

In a piece at The Hill Nick Bloom says it does and the numbers prove it:

The numbers paint a picture of small, positive productivity gains for hybrid work. The savings in commuting time more than offset the losses in connectivity from fewer office days. In contrast, the impact of fully remote working on productivity is typically mildly negative. Fully remote workers can struggle with mentoring, innovation and culture building. However, it appears this can be reversed with good management. Running remote teams is hard but done well can deliver strong performance.

But this is about more than just worker output. Firms care about profits — not productivity.

Working from home massively reduces overhead. It drives down recruitment and retention costs, as employees value working from home. Fully remote companies also slash office costs, and cut wages bills by enabling national or global hiring. Indeed, the widespread adoption of working from home has been a triumph of capitalism. Higher profits have led millions of firms to adopt this, generating the five-fold increase in home working many of us now enjoy.

It’s hidden a bit but that “global hiring” aside is important. I am presently leading a team of about 20 people. I’m the only one in the United States. The rest are in India, Ukraine, Serbia, and Mexico. The cost of paying that team is significantly lower than paying a comparable team comes into the office every day. The trick is in “comparable”. IMO the productivity of the team is not comparable to a completely local, stateside team on a head to head basis.

I actually think the issue is more complex than Mr. Bloom realizes and than the way it is usually presented. I think that WFH works for the people for whom it works and for the jobs for which it works. I can’t tell you who those people or what those jobs are but it isn’t everyone or everything. I can tell you some of the qualities the people for whom WFH works must possess. They must be self-starters, conscientious, and focused as a start. I could be wrong but I think that fewer and fewer people have those qualities.