You might find this post at Euro Intelligence by Wolfgang Münchau informative. It forms a sort of counterpoint to what you may have been reading in the U. S. media. Here’s the part that caught by attention:

The UK’s strategic realignment was not inevitable. It is to a large extent the result of how the EU conducted the Brexit talks. The EU leadership never missed an opportunity to criticise Brexit. Donald Tusk, former president of the European Council, aligned himself to the second referendum campaign in the UK. The EU could have, but did not, support MPs in the UK who sought compromise, like Kenneth Clarke or Stephen Kinnock.

The second mistake, even worse than the first, was the intent to force the EU’s regulatory system on the UK as a price for a free trade deal. At no point did the EU even consider what kind of strategic relationship it wanted with the UK after Brexit. The EU let anger over Brexit get in the way over rational decision-making.

The enormous cost of this stupidity is slowly becoming apparent. The UK will not flood the EU with cheap goods, as France had feared. The UK’s strategy is more subtle. It will gradually cut off from European security policy. It will also cut off from the GDPR data protection regime and financial regulation. The UK has invested more into artificial intelligence than any EU member states. It is a permanent member of the UN security council and the G7. What on earth was the EU thinking?

And no, Biden is not going intervene on the EU’s behalf in the current standoff over Northern Ireland. EU leaders have always underestimated Boris Johnson. And they always overestimated Joe Biden. A bad combination.

The EU’s diplomacy is driven by emotion and a superficial understanding of US politics, and UK politics for that matter. Why did the EU place so much hope, so publicly, into regime change in Washington last year? Donald Trump was loud and crass, but all he ever did to the EU, other than insult them, was impose tariffs. Europe never experienced anything nearly as hostile as Biden’s withdrawal from Afghanistan or the Aukus deal. But all of this was perfectly foreseeable.

Things he anticipates:

• A change in the nuclear defense policy
• Further decline of NATO
• Increasing pressures on European defense spending

I have two questions and one observation. In the post Mr. Münchau alludes to Germany’s substantial trade surplus with China. I read conflicting reports on that, something between $1 billion and $26 billion, and I don’t know how to reconcile those estimates. Germany does run a trade surplus with China (not as large as Australia’s) but even $26 billion is not a particularly big component of a $4 trillion economy. That’s the source of my question: how much should Germany be willing to sacrifice to preserve its relationship with China?

My other question is about France. Was France really worried that the UK would “flood the EU with cheap goods”? That sounds like a miscalculation to me. I would think the French would be more worried about agricultural imports and about that they should be more concerned about Romania and the Ukraine.

And here’s my observation. I’ve never had myself referred to as an Anglo-Saxon before and I’m guessing that Joe Biden hasn’t, either. As the Anglosphere draws tighter I probably should get used to it.

I found Rani Molla and Emily Stewart’s post at Vox.com on the mismatch between jobs being advertised and people being hired interesting and thought-provoking. Buried under a considerable amount of word salad (are Vox writers paid by the word?) there are some reasonable hypotheses about our present situation. Here’s the summary:

For some of the jobs available, people don’t have the right skills, or at least the skills employers say they’re looking for. Other jobs are undesirable — they offer bad pay or an unpredictable schedule, or just don’t feel worth it to unemployed workers, many of whom are rethinking their priorities. In some cases, there are a host of perfectly acceptable candidates and jobs out there, but for a multitude of reasons, they’re just not being matched.

There are also workers who are hesitant to go back — they’re nervous about Covid-19 or they have care responsibilities or something else is holding them back.

The result is a disconnected environment that doesn’t add up, though it feels like it should. The Bureau of Labor Statistics says there are 8.4 million potential workers who are unemployed, but it also says there are a record 10.9 million jobs open. The rate at which unemployed people are getting jobs is lower than it was pre-pandemic, and it’s taking longer to hire people. Meanwhile, job seekers say employers are unresponsive.

There are multiple mismatches going on:

• A mismatch between the skills being sought by employers and the skills that prospective employees have.
• A mismatch between the jobs on offer and the preferences of prospective employees.
• A mismatch between the HR algorithms used to filter the large number of resumes employers receive and the reality of hiring.

I have been complaining about that last factor for decades. The filtering programs being used don’t necessarily result in finding the right workers. Rather they preference things that are easy to search for, they subsidize the training industry, they create an opportunity for an entire industry dedicated to tailoring resumes to pass the filters, and they give a competitive advantage to outsourced workers whose resumes it is impossible to check.

Update

One last point. Very low level jobs that require few skills are easier to match as should be obvious. My understanding is that about half of the jobs presently on offer fit that description.

As I have been saying for some time it may be that those jobs cannot and should not be filled. President Biden talks about “building back better”. That may mean a discontinuation of the decades-long emphasis on maximizing the number of minimum wage jobs. Don’t think that’s been emphasized? Both of the metrics used to gauge the status of the employment situation, the unemployment rate and the labor force participation rate, do that. Maybe we need an additional metric, something along the lines of a measurement of underemployment which will be devilishly hard to define.

As the pharmaceutical companies scramble to extend vaccination against COVID-19 to pre-teenagers and then to toddlers while preparing for third, fourth, or more shots for those already vaccinated in the developed world, in an op-ed in the New York Times physician Matshidiso Moeti urges the people of the developed world to think about Africa:

As the rich world rolls out Covid-19 booster shots, hundreds of millions of Africans remain dangerously exposed, still awaiting their first vaccine dose. This not only adds to the litany of harsh disparities we’ve seen around this virus, but it is also a scandalous injury to global solidarity and vaccine equity.

While early data on waning immunity is emerging around some vaccines, there’s no conclusive evidence to justify giving boosters to fit, healthy people. Third doses should be given only to the small number of people facing a high risk of severe illness and death, despite being fully vaccinated, including those with compromised immune systems. Boosters for the healthy are, effectively, a hopeful “why not.” Political decisions are getting ahead of science, diverting doses and leaving Africans with few options.

Giving healthy people boosters now is similar to sending a generous educational grant to a billionaire while others are scraping together their college tuition.

To date the “rich world” has been very good at promising to make vaccines available to developing countries but not nearly as good at delivering. Here’s the scorecard as of one month ago:

as reported by the Associated Press. I would think that the EU, Germany, France, Italy et all would want to ensure that people in African countries are vaccinated if only out of self-interest. Similarly, I think the U. S. focus should be on Mexico, Central America, and the Caribbean for similar reasons. To promise is good but following through on your promises is better.

As I see it the immigration “policy dysfunction” from which the Biden Administration is rather clearly suffering is fully reflected in the Washington Post editorial criticizing the problem:

That’s largely what Mr. Biden has done for others, especially Central American families with children, tens of thousands of whom have been admitted to the United States this year. And he did so even as administration officials urged them not to attempt to cross the border illegally. That glaring disconnect, between official dissuasion and on-the-ground leniency, has been received by Haitian and other migrants as an invitation to take their chances on reaching the U.S. border.

Now the door has slammed shut for many of them in Del Rio, especially the Haitians, whom U.S. officials began loading onto deportation flights over the weekend. It is fair to ask why Haitian migrants, virtually all Black, are being subjected to expulsion on a scale that has not been directed at lighter-skinned Central Americans.

Haiti, reeling from crime, political upheaval, economic calamity and a devastating earthquake this summer, is in no shape to handle the return of thousands of deportees. Yet that is the burden Mr. Biden is imposing, evidently in hopes of deterring further waves of migrants. Under a public health rule invoked by the Trump administration at the pandemic’s outset, asylum seekers are being deported without hearings on daily flights to Haiti.

The policy is inhumane; equally, it is inhumane to incentivize migrants to risk the perilous, expensive journey across Central America and Mexico. Having mismanaged migration in its first eight months in office, which contributed to a two-decade-high surge in illegal border crossings, the administration clearly fears a backlash at the polls in next year’s midterm elections more than it fears the wrath of immigration advocates. Republicans, sensing electoral advantage, are using border “chaos” as a cudgel.

Many of the failings in the U.S. immigration system are reflected in the mess in Del Rio: the absence of any workable channel by which migrants could apply for asylum south of the border; the massive backlog and shortage of judges in migration courts, which means asylum applicants, once admitted, may wait two or three years for their cases to be heard; and the misalignment of high domestic demand for cheap immigrant labor with an inadequate legal supply of it.

I’ll stipulate that employers want to keep wages low. Should keeping wages low be federal policy? I don’t think so. What do the editors think?

Unfortunately for the editors’ worldview, there is no such thing as an immigrant job. There are, however, entry level jobs frequently taken by immigrants but not only by newly-arrived immigrants. Those jobs are also taken by earlier immigrants, by people just entering the workforce, by people who don’t have the skills for jobs that pay higher wages, or people who prefer those entry level jobs for one reason or another. Econ 101 would tell them that high demand would be reflected in rising wages for entry-level workers; the absence of rising wages for entry level workers until very recently, as the supply of such workers declined for a variety of reasons, many of them relating to the pandemic and the policy strategies taken in response to the pandemic.

Consequently, what is humane to newly-arrived Haitians (for example) is inhumane to people already holding those entry level jobs.

I have as much sympathy for the plight of Haitians as the editors but my preferred strategy for remediating their problems is somewhat different from that of the editors. I think conditions need to be improved in Haiti rather than bringing Haitians here. Sadly, Haiti was born dysfunctional and U. S. meddling in Haitian affairs has all too frequently served to make things worse. It won’t be easy but it will be more humane to more people than the strategy advocated by the editors.

If you dig through a considerable amount of word salad you’ll find a significant nugget of information in Ezra Klein’s most recent New York Times column. After spending several hundred words explaining that progressives have scoffed at the “supply side” of the economy through sheer ideological bias he observes:

But this is a lesson progressives are, increasingly, learning. This is clearest on climate. Much of the spending in the Biden agenda is dedicated to increasing the supply of renewable energy and advanced batteries while building the supply of carbon-neutral transportation options. Democrats have realized that markets alone will not solve the climate crisis. And the same is true for much else on the progressive docket.

In a blog post, Jared Bernstein, a member of President Biden’s Council of Economic Advisers, and Ernie Tedeschi, a senior policy economist for the council, framed the Biden agenda as “an antidote for inflationary pressure” because much of it expands the long-term supply of the economy.

“The transportation, rail, public transit, and port investments will reduce efficiency-killing frictions that keep people and goods from getting to markets as quickly as they should,” they wrote. “The child and elder care investments will boost the labor supply of caretakers. The educational investments in pre-K and community college will eventually show up as higher productivity as a result of a better-educated work force.”

A list like this could go on. It’s not clear whether it’ll be in the reconciliation bill, for instance, but Biden has proposed an expansive plan to increase housing supply in part by pushing local governments to end exclusionary zoning laws. And in California, that’s exactly what’s happening, as I wrote a few weeks back. A decade ago, progressives talked often of making housing affordable, but they didn’t talk much about increasing housing supply. Now they do. That’s progress.

I’m not as convinced as he that the Biden Administration has any particular interest in the “supply side” of the economy. Everything he mentions could also be interpreted as constituent service. Additionally, I don’t agree that spending more money on, say, education will ipso facto increase productivity and that is true for two reasons. The first reason is that if you cap the supply of something and make money available to buy more of it in the near term the only measurable effect will be to increase prices. That’s axiomatic, tautological. The second reason is that exactly what the money is used for makes a difference. I challenge Mr. Klein to demonstrate that spending more money on teaching interest studies, psychology, or Hungarian literature has any measurable impact on productivity one way or another. If the objective is increasing productivity they’d get a lot more bang for the buck subsidizing trade schools than community colleges. And the literature on pre-K is pretty mixed. Gains made do not necessarily persist long enough to last the recipients through high school let alone into the workforce.

Nonetheless it’s gratifying to see what I would phrase as increasing aggregate product getting more attention. Subsidizing consumption doesn’t do a lot to improve the state of the economy unless aggregate product increases. At least it doesn’t do much for the U. S. economy.

The Associated Press reports that the Senate parliamentarian has decided that bundling the legalization of millions of immigrants here illegally into the $3.5 trillion infrastructure spending bill is out of order:

WASHINGTON (AP) — Democrats can’t use their $3.5 trillion package bolstering social and climate programs for their plan to give millions of immigrants a chance to become citizens, the Senate’s parliamentarian said late Sunday, a crushing blow to what was the party’s clearest pathway in years to attaining that long-sought goal.

The decision by Elizabeth MacDonough, the Senate’s nonpartisan interpreter of its often enigmatic rules, is a damaging and disheartening setback for President Joe Biden, congressional Democrats and their allies in the pro-immigration and progressive communities. Though they said they’d offer her fresh alternatives, MacDonough’s stance badly wounds their hopes of unilaterally enacting — over Republican opposition — changes letting several categories of immigrants gain permanent residence and possibly citizenship.

which should have surprised no one.

I support giving individuals brought here illegally as children legal status but I support doing it by democratic and legal means. I also support enforcing the law even-handedly once it has been enacted. It should be obvious to everyone that the end run the Democratic majority is attempting is none of those things.

I’m seeing quite a few posts, editorials, and news article (perhaps I should say “news” articles) characterizing people who make wages of $500,000 per year as “very rich”. That must be the framing du jour.

My own view is that the top 1% of income earners are well-to-do; the top .1% of income earners are rich; and the top .01% of income earners are very rich. Interestingly, the tax bill being floated by the House Ways and Means committee is focused on the rich but leaves the very rich alone.

Disclaimer: I am not well-to-do let alone rich or very rich. I know quite a few people who are well-to-do, a few who are rich, and I have met a handful of people who are very rich. I also think that quite a few people see those on the next rung of the income ladder above them as “very rich”.

At Bloombeg Rich Miller warns that if the federal government does not continue to pump trillions into the economy it will just move “sideways”:

The U.S. government spent historic sums to support the economy in the pandemic. Its withdrawal will create an unusually big fiscal cliff.

The U.S. expansion looks set to slow sharply in the second half of 2022 as measures that propped up the economy during the pandemic — from stimulus checks for households to no-cost financing for small companies — fade from view.

That will be the case even if President Joe Biden manages to win Congressional approval for the bulk of his $3.5 trillion Build Back Better agenda. The spending will stretch over years, with limited impact in 2022. It will also be at least partly paid for by tax increases that slow the economy down rather than speed it up.

“We’re in for some very low growth rates” in late 2022 and into 2023, said Wendy Edelberg, director of the Brookings Institution’s Hamilton Project. “It wouldn’t surprise me if there’s a quarter here or there where the economy basically moves sideways.”

but here’s the flip side of the coin:

There is a potential benefit: lower inflation. Prices have surged this year on the back of snarled supply chains and fiscally-fueled consumer demand. “We’ll need to come off the boil,” Edelberg said, because the rapid U.S. rebound will push the labor market and the economy to their limits by the middle of next year.

My takeaway form this is that quantitative easy and excessive fiscal spending targeted at increasing consumer spending without increasing production constitute a tiger that is very difficult to dismount. Particularly in an election year.

And every year is an election year somewhere.

I found this piece at the Wall Street Journal by Christopher Mims on innovation very thought-provoking. Here’s a sample:

Should the U.S. invest in a generation of new intercontinental ballistic missiles? What has really propelled decades of consistently rising computer performance? Is research into new forms of nuclear power a dead end? And should we credit Elon Musk with revolutionizing the automobile industry, or is he just riding the coattails of history?

These are the sorts of questions that researchers who study the history of innovation and what it says about the future say we can now answer—thanks, of course, to innovation.

Much of it is devoted to the findings of this study by Anuraag Singh, Giorgio Triulzi, and Christopher L. Magee, “Technological improvement rate predictions for all technologies: Use of patent data and an extended domain description”, a graph from which is at the top of this post. Here’s Mr. Mims’s explanation of the study:

Using both previously untapped pools of data and new analytical methods, along with the usual tools of modern-day forecasting—namely, the predictive algorithms often described as “artificial intelligence”—they are taking a quantitative approach to examining how quickly technologies improve.

The result isn’t a crystal ball for what’s next. Indeed, one of the conclusions of this group of academics is that attempts to predict the exact nature of the next technological advance are doomed to fail. But their research could help us understand how quickly existing technologies are getting better.

As you might expect I have some reservations. What are they actually measuring? I’m not convinced that the number of patents filed is actually a reasonable surrogate measure for technological progress. I have read hundreds maybe thousands of patent applications. I have written one and received a patent. I think they are more reasonably considered a gauge of what people are interested enough in to invest in than in progress.

I also believe that they are looking at what is effectively a snapshot rather than the movie that represents actual technological progress. Said another way the progress in robotics may be 18.5% this year and 28.5% next year. Or .5%. Furthermore as the graph at the top of the page progress in different areas rather obviously proceeds as a “long tail” phenomenon—a few are developing very quickly indeed while most are barely developing at all. Under the circumstances what does “average rate” mean? I don’t think it has any meaning.

If the findings of this study are true, it’s relevant to the real world in a number of ways, in particular in terms of intellectual property and capital investment. In the past I have expressed my dissatisfaction with our present system of intellectual property and the findings of this study fully support my views. At the very least our system of patents and copyrights needs to be much, much more constrained both in time and in scope. Our present system is actually impeding creativity and progress rather than encouraging them.

But, if the rates of technological improvement in different areas vary based on something other that the degree of capital investment, shouldn’t there be differences in the deductibility of money spent on research and development to provide more encouragement to progress in areas in which we want greater progress but progress is lagging and less to areas in which progress is not lagging?

I would hasten to note that doesn’t even touch on a pet peeve of mine—that too often what is claimed to be R&D is actually marketing. That is especially egregious in the pharmaceutical industry.