In his latest offering George Friedman declaims that the streams are crossing and that the United States is in for a social crisis, followed by a “massive economic crisis”, followed by a political crisis and a “once every 80 years institutional crisis in the federal government”.

That isn’t the actual point of his piece. His point is that when the U. S. sneezes the world catches a cold.

Here’s his conclusion:

The current political system cannot manage this situation. A solution must emerge now, to be presided over by the next president. It is impossible to explain all the details of a system failure or the need for a new political order. At this point, the only thing that can be said is that we are heading into failure, and a new president, filling everyone with joyous hope, will oversee what must be done. But what must be done remains murky, taking its bearing only from the breadth and seriousness of the failure.

I wish he wouldn’t sugar-coat it like that.

There’s a lot of fulminating over Chicago’s hosting the Democratic National Convention in 2024. Some think it’s a coup and brilliant; others think it’s colossal mistake.

I think it’s too early to tell. 2024 is a year away and we’ve just elected a new mayor. In a year Chicago’s downtown might be the safest major city downtown in the United States or it might be a combat zone. We just don’t know. We don’t even know how or if the new mayor will try to ensure the convention’s success.

I only have one thing to add. Chicago’s nickname, “the Windy City”, probably doesn’t come from the weather.

AI can’t predict the movements of the stock market. That’s the message of Gregory Zuckman’s Wall Street Journal story:

Wall Street has long used automated algorithms for tasks such as placing trades and managing risk. But investors haven’t made much progress relying on AI to tackle their biggest challenge: beating the market. While some see ChatGPT as a way to boost sales and research efforts, the investing results using AI haven’t been especially impressive.

“Progress in applying AI to investing has been limited, though innovations in language modeling could change that in the years ahead,” says Jonathan Larkin, a managing director with Columbia Investment Management Co., which manages the $13 billion endowment for Columbia University and invests in various funds.

Wall Street had a head start in AI. Four decades ago, mathematicians-turned-quants including Jim Simons, founder of Renaissance Technologies, developed algorithms to turn investing decisions over to their computers.

He and other quants have spent years using machine learning, a type of AI. They have built trading models that can extrapolate from past data to identify patterns and develop profitable trades, with limited human intervention.

But few firms have found success turning all of their operations over to machines, quants say. And they haven’t enjoyed dramatic advances with self-learning or reinforcement learning, which entail training computers to learn and develop strategies on their own. Indeed, Renaissance and others rely on advanced statistics rather than cutting-edge AI methods, say people at the firms.

“Most quants still take a “theory-first” approach where they first establish a hypothesis of why a certain anomaly might exist, and they form a model around that,” says Mr. Larkin.

One big problem: Investors rely on more limited data sets than those used to develop the ChatGPT chatbot and similar language-based AI efforts. ChatGPT, for example, is a model with 175 billion parameters that uses decades—and sometimes centuries—of text and other data from books, journals, the internet and more. By contrast, hedge funds and other investors generally train their own trading systems using pricing and other market data, which is limited by nature.

Personally, I doubt that the problem is data. I suspect it’s more that the market isn’t rational as well as being susceptible to manipulation.

You may not be following it but the dispute over reductions in the amount of water taken from the Colorado River by Arizona, California, Colorado, New Mexico, Nevada, Utah, and Wyoming is still a matter of urgent discussion. At the Wall Street Journal Jim Carlton reports on a new development:

California would have to reduce its use of Colorado River water more than current agreements require under a proposal the Interior Department unveiled Tuesday that could upend a longstanding system of water rights.

The federal agency proposed two methods by which water usage could be reduced as much as 25% next year. The seven states that tap the Colorado have been negotiating with each other since August to make voluntary cuts that could offset any new mandatory ones.

One proposal calls for equal percentage cuts for the three states at the bottom of the river: California, Arizona and Nevada. That would upend current agreements that give water districts in California more senior rights. The cuts would take effect in 2024.

The Bureau of Reclamation, part of the Interior Department, warned in August it would impose large cuts if the states that rely on the river didn’t come up with a satisfactory plan by Jan. 31. Six of the seven states—Arizona, Colorado, New Mexico, Nevada, Utah and Wyoming—in January submitted a possible framework for an agreement that would call for voluntary cuts and conservation totaling between 2 million acre-feet and 4 million acre-feet annually.

As you might imagine California officials aren’t happy with this development—they don’t want the Golden State to be treated equally with Arizona and Nevada.

The dispute pits agricultural, home building, and environmentalists at odds with one another. The DoI proposal is presumably intended to provide an incentive for the states to arrive at their own solution.

I have a question of law. Why aren’t the proceedings of the House Judiciary Committee shielded from exactly the sort of suits that Manhattan District Attorney Alvin Bragg has apparently filed against Jim Jordan under Article I Section 6 Clause 1 of the Constitution?

SECTION 6. Clause 1. The Senators and Representatives shall receive a Compensation for their Services, to be ascertained by Law, and paid out of the Treasury of the United States. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.

The emphasis is mine. My question is not about whether Rep. Jordan should meddle in Mr. Bragg’s prosecution: I don’t think he should. It’s about the legality of the suit filed by Mr. Bragg.

Update

I think that the House subpoenas of documents relating to Mr. Bragg’s investigations are a stretch, something it’s quite possible the House has no authority to do. I would think they’d need to show that federal money was being used in the investigation.

Walter Russell Mead in his Wall Street Journal column thinks he has found the culprit responsible for killing nuclear non-proliferation—Barack Obama:

As President Clinton told the Irish news service RTÉ last week, the Ukrainians resisted American pressure to denuclearize: “They were afraid to give them up because they thought that’s the only thing that protected them from an expansionist Russia.” But Americans, as Mr. Clinton’s secretary of state Madeleine Albright once put it, “stand tall. We see further than other countries into the future.” And so the Clinton administration pushed another message on the Ukrainians: The rules-based international order would protect Ukraine’s future better than anything as anachronistic as nuclear weapons.

“I feel terrible about it,” Mr. Clinton told RTÉ, arguing that now Americans must help Ukraine in a crisis brought on in large part by their trust in our word.

The real situation was complicated. Russia still controlled the nuclear weapons left on Ukraine’s territory. They were less a Ukrainian hedge against Russian adventurism than outposts of Russian power on Ukrainian soil. Nevertheless, with hindsight it appears that trusting the word of a U.S. president and the rules of the international order rather than relying on a nuclear deterrent was a blunder of historic proportions.

Bill Clinton’s reflections come as the barriers to nuclear proliferation are rapidly weakening around the world. Russia and China are abandoning all pretense of opposing the North Korean arsenal. In South Korea, polls show that 70% of the population believes that the time has come to follow the North’s lead. In the Middle East, Iran’s relentless progress toward nuclear weapons is touching off the long-feared regional proliferation cascade. Saudi Arabia and the United Arab Emirates are taking the first steps toward acquiring the capability to enrich uranium. Turkey is unlikely to lag far behind as nuclear weapons become a normal part of the arsenal of middle powers. Nationalists in countries such as Brazil and Argentina will want their countries to join the expanding nuclear club.

The fight against nuclear proliferation has been a centerpiece of American foreign policy since the first bombs fell on Japan in 1945. American diplomacy tried and failed to stop the Soviet, British, French, Chinese, Israeli, Indian, Pakistani and North Korean programs. The Non-Proliferation Treaty went into effect in 1970 and was permanently extended five months after the 1994 signing of the Budapest Memorandum. In that memorandum, Russia, the U.S. and U.K. agreed not to threaten or attack Ukraine, Belarus and Kazakhstan, and to consult on helping if they were attacked; also, the three former Soviet republics joined the NPT as nonnuclear states. The NPT has been hailed as a cornerstone of the rules-based international order. Backers hoped that nonproliferation was only the start. Ultimately the nuclear powers would follow the example of Ukraine and give up their nuclear arsenals in the service of world peace.

History will name Barack Obama as the man on whose watch nonproliferation definitively failed. His waffling response to Russia’s 2014 invasion of Ukraine not only marked the end of the post-Cold War holiday from history; it also marked the death of the dream that the leaders of the democratic world had the strength and vision to uphold the principles of the rules-based international order in the face of a ruthless opponent. It further taught the world that nuclear weapons are a better defense than American pledges. Coupled with the failure to address North Korea’s nuclear progress and the Iran deal’s sunset clauses, which made the treaty about delaying rather than blocking Tehran’s nuclear advances, Obama-era diplomacy made clear that, despite high-flown rhetoric to the contrary, Washington had no plan to stop the spread of nuclear weapons.

I think that nuclear non-proliferation was killed long before 2014 and the blame belongs to none other than Bill Clinton. To the clue mentioned by Mr. Clinton himself I would add:

• NATO expansion
• Failure to react to North Korea’s obvious prevarications regarding nuclear weapons
• the “Agreed Framework”

Much of North Korea’s nuclear development activities took place under Bill Clinton’s and George W. Bush’s watches. You can’t blame Obama and let them off the hook.

Catherine Rampell expresses outrage in her Washington Post column over how little Americans pay in taxes and what she refers to as “the disconnect between the direction of tax changes and the direction of Americans’ views of their taxes”:

Alas, there’s not remotely enough money on those would-be money trees to pay for all the things that Democrats want. Or even the things that past Congresses have already committed to: Recall that the United States already has large fiscal deficits in the years ahead, even without creating new programs. We also already have a lower overall tax burden as a share of the economy than most rich countries, which generally have broader tax bases and higher average rates than we do.

Including for the middle class.

By all means, raise taxes on the ultrawealthy. They should pay more. But if we really want a more robust welfare state, or even to sustain the welfare state we’ve already promised, that probably requires higher taxes from most of the rest of us, too.

I have two answers for Ms. Rampell, one reasoned and one snarky. Reasoned first.

Here in the United States we pay less in taxes than Denmark or France, slightly less than Germany, roughly the same as in the UK, and more than in Canada, Japan, and Australia. Rough numbers for U. S. taxes are 19% of GDP for federal taxes, 15% for state and local taxes. Most comparisons between countries ignore that in the U. S. we are taxed by multiple levels of government.

However, we get tremendously less for what we spend than in any other country. We pay more in absolute dollars, more per capita, more as a percentage of GDP for education, healthcare, law enforcement, defense, and everything else on which government spends money than practically any other comparable country. We pay more per mile of road constructed or foot of bridge constructed than other developed countries.

For our money we get worse outcomes in education and healthcare, declining lifespans, more violent crime, and roads and bridges that are falling apart. A typical American wonders “why spend more?”

Why do we get worse bang for the buck? I’m open to suggestion. I attribute much of it to low social cohesion. We are much more diverse than most other countries. You could also say “individualism”. Everybody including government officials is “looking out for #1” and not overly scrupulous about it. Other possible explanations are the ever-popular waste, fraud, and abuse which I suspect translate into about the same thing.

I think the line of least resistance is improving return on investment rather than increasing taxes.

Now for the snarky response. Based on records available publicly Ms. Rampell has a household income of around $350,000/year. That places her family well within the top 2% of income earners. What is holding her back from sending more of the money she earns to the federal government?

The reaction of the editors of the Washington Post to the recent intelligence leak was similar to my own (just later):

The trove of roughly 100 leaked U.S. classified documents, some marked “top secret,” is a sensational intelligence breach and, according to some sources, a highly damaging one. But more than the juicy tidbits contained in the material, much of which involves detailed information pertaining to the war in Ukraine, the most sensational, and damaging, aspect of the story might be the fact of the leak itself. And on that score — how and why the documents came to see the light of day — very little is known.

If most of the documents are genuine, as they appear to be — with apparent alterations intended to exaggerate Ukrainian casualty estimates and minimize Russian ones — then U.S. authorities will urgently need to trace the leak’s provenance. The Justice Department has launched an investigation intended to do just that. The Biden administration will also be faced with some damage control based on information that was contained on some leaked briefing slides suggesting Washington has been spying on its own allies, including South Korea and Ukraine itself.

However, I thought they were being bafflingly discreet in their editorial. As I noted the fact of the leaks reflect incredible sloppiness on the part of U. S. intelligence. With even barely competent handling of those materials no investigation should be necessary. They should already know the source the leaks and dealt with him or her, presumably by prosecution. If so many people had access to all of those document as to make it impossible to determine, that itself is problematic.

I’m confused. Is occupying and disrupting the seats of legislations right or wrong? Democratic or undemocratic? Son of the lawyer that I am I’m predisposed to think it’s always wrong and undemocratic. Does it depend on circumstances?