Historical conservationists are the bad guys

 Economist:

[Cambridge, MA] is “becoming a barbell society,” ...The poor got help and the wealthy lived well, but ... young families leave for cheaper places. “One of the biggest signs that something was going wrong,” says Mr Azeem, is “when you can’t create space for the next generation.” 

But now, they are relaxing zoning to allow " six-storey residential buildings citywide ... People are waking up to the fact that land use regulation has something to do with housing costs”. 

But: “The minute someone tries to put a six-storey building in a residential zone that has historically been no higher than 35 feet, there’s going to be immediate negative pushback,” from "powerful historic conservationists"

Can income buy happiness?

 

Economist: 

The magazine article focuses on explaining "residual" happiness, the vertical distance between the line and the observation), i.e., how happy is a country controlling for its GDP. 

But elephant in the graph is the HUGE positive correlation between GDP and Happiness, likely caused by innovation, free markets, and less regulation, topics the left-leaning magazine doesn't want to talk about.

Compensating differentials: wind turbines

From MarginalRevolution:  Danish houses near wind turbines have 12% lower prices.

The Grumpy Economist on Foreign aid: "send a person a fish every day, and he forgets how to fish."

John Cochrane recommends the Economist article Aid cannot make poor countries rich.

From 2004 to 2014, foreign aid increased by 75%, but it didn't help:

• 2004, William Easterly: aid was just as likely to shrink the world’s poorest economies as to help them grow. 
• 2005, World Bank: grants and loans did not move the needle on growth. 
• 2019, IMF reached a similar conclusion. 
• 2025, Centre for Global Development, “There is no country that has really grown from aid.”

In what seems like evidence-based decision-making by the donors:

• President Trump has stopped much of US foreign aid.
• Sir Keir Starmer chopped Britain’s aid budget from 0.5% to 0.3% of GDP.
• France, the most generous Western donor after America, will this year reduce aid by 35%.
• Germany is considering cuts, too.

Effects of Tariff increases

Article by Joshua Hendrickson

The U.S. dollar is the world’s reserve currency, and the U.S. Treasury security is the global reserve asset. This means, respectively, that the dollar is the primary currency used in international trade, and that foreign central banks and other institutions store wealth in terms of dollars with Treasury securities.

...the dollar, because of its reserve status, tends to be overvalued. This makes foreign goods cheaper for U.S. consumers, but it also makes foreign labor and production cheaper ... a dynamic that has hollowed out America’s industrial base.

...

While imposing duties on imports will raise prices for American consumers, it will also appreciate the value of the dollar, ...

Tariffs might generate some revenue in the short run, but their larger effect—bringing countries to the negotiating table—could help the Trump administration achieve its [other] long-term objectives.

Software Deveopers and AI

I ran across this image that seems to support the idea capital/labor substitution in software development (see earlier post). Stack overflow is the preeminent site for software developers to get coding questions answered and/or find bits of code that will solve a current problem. But, being human intermediated, it could be slow and sometimes trolls will lead you astray. Its site volume seems to have started to decline with the advent of ChatGPT, the first, and most widely used LLM. Chat GPT can provide answers instantly, though some it may take some "prompt engineering" to get the specific answer you need.

Interestingly, much of the relevant training data come from stack overflow. Which means that asking ChatGPT is asking stack overflow but with computer intermediation. If ChatGPT allowing coders to get answers faster is leading to a decline in the demand for software developers, this suggest that AI is making software developers so much more productive that there is less demand for them. (edited)

Tariffs May Not Boost Domestic Investment

Alcoa would seem to benefit from an increase in demand for domestically produced aluminum from the imposition of 25% tariffs on steel and aluminum. All they have to do is ramp up existing US capacity. This quote from Alcoa CEO William Oplinger.in the WSJ suggests maybe not.

“We make decisions around aluminum production that have a horizon of 20 to 40 years,” he said. “We would not be making an investment in the United States based on a tariff structure that could be in place for a much shorter period of time.”

Who knows what tariffs would be under the next administration. Instead, he is bracing for a loss in 100,000 U.S. aluminum industry jobs due to tariffs targeting the metal. He is not explicit, but this would be the case if customers plan to cut back purchases due to their reduce operations or their ability to find cheaper substitutes. 

Innovative Strategic Levers

Is narc'ing on your competition the prisoners' dilemma equilibrium?

Egg Market Makers

The WSJ reports on the Egg Clearinghouse, or ECI while we are in the midst of the recent dramatic egg shortage and increase in egg prices.

While the article mentions that some have suggested price gouging, it seem more likely that supply has shifted in because temporarily, there just are not enough egg laying hens to supply the market.

The deadliest outbreak of avian flu in history has resulted in the death of more than 100 million U.S. chickens, turkeys and egg-laying hens since 2022, according to the Agriculture Department. Once infections are identified in a single bird on a farm, whole flocks are often eliminated to prevent further spread, creating supply shortages in some regions and grocery stores.

As a consequence, the number bids to buy eggs is now more than double the offers to sell. 

 

 

 

Wither the Software Developer?

The employment market for software developers sucks right now. ADP released a study from their payroll data in June, 2024 that included this graph.

It hasn't got better since. But why the severe and persistent decline?

• The decline begins in Spring 2020 so responding to the COVID-19 pandemic could be a cause. But this does not explain why the decline continues.
• The growth of AI is making them so much more efficient that you need fewer of them. But this may only explain maybe the last two years or so.
• The growth of cloud computing means that much of what software engineers do is outsourced to a supplier that can eke out economies of scale in software development. With Software as a Service (SaaS), code can span multiple enterprises instead of being used solely in-house. 

Evidence for this last explanation comes from the timing of cloud computing adoption.

Whichever the cause, I think a takeaway is that all explanations will persist and the market may not rebound very soon.