March 2018


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With almost 600 coal plants shut down since 2010, we are racing towards a grid reliability crisis of our own making. Millions of Americans are at risk of electricity price spikes from a loss of energy diversity.

Cheap natural gas, in conjunction with a regulatory onslaught on the coal industry, has reduced coal’s share of our electricity mix to 30 percent — down from 50 percent little more than a decade ago. The loss of coal plants, long the foundation of our electricity system, is coming at a high cost. It has already resulted in the loss oftens of thousands of jobs and hundreds of millions of dollars in revenue for state and local governments. Our growing reliance on natural gas is beginning to stress the grid even further.

Make no mistake, low-cost natural gas has been a blessing for the nation. It has helped reduce utility bills, create jobs in gas-producing states, and improve the competitiveness of our manufacturing sector. But natural gas demand continues to grow while efforts to block new gas production and new natural gas pipelinesgrow in tandem. Environmental activists waving a keep-it-in-the-ground bannerhave succeeded in influencing mainstream politics with disastrous consequences for energy policy. Massachusetts is case in point.

The Bay Statehas shuttered its coal fleet, resulting in a disproportionate reliance on natural gas to meet both its electricity and heating needs. On bitterly cold winter days mayhem has ensued. While the U.S. is now the world’s largest natural gas producer. Massachusetts, particularly the Boston area, has at times been home to the most expensive natural gas in the world this winter.

Gas demand has far exceeded the capacity of the region’s pipeline network to get it where it’s needed. Pipeline companies have tried building new capacity to meet the demand of the regions’ utilities. But environmental activists and their allies in the state legislature have blocked it.

Pipelines are now being challenged by activists in nearly every state they’re proposed. The Keystone XL obstruction model has become a playbook for extremists who clearly don’t care about grid reliability or consumer costs. Just ask Boston ratepayers.

But for those of us that do care, the current trends are deeply concerning. We should certainly fight to expand our gas infrastructure and take steps to push back against activist obstruction. But we would also be wise to preserve our existing coal fleet.

Congress can do its part by approving a measure that would provide a 30 percent tax credit for operating a coal plant for up to five years. Such a bill, sponsored by Rep. Larry Buschon (R-IN), is pending in the House. Providing a tax credit for coal plants will help make the electric grid more reliable and hold down the cost of electricity production by preserving energy diversity. This, in turn, will result in lower energy costs and a more competitive position for U.S. manufactured goods in world markets.

Although the short-term picture for coal is challenging, the long-term picture is cause for optimism. The U.S. has the world’s largest coal reserves — and our coal fleet is cleaner than ever. Coal should not be seen asa problem to be fixed but rather part of the solution to our nation’s current energy challenges.

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Ah, crypto-currencies. Whether in a bull or bear market (sometimes we see both before lunch), they bore neither fans nor skeptics.  The still-young 2018 has been rough for the nascent asset class, as the four most prominent vehicles (bitcoin, ethereum, ripple and litecoin) have declined by 42%, 39%, 40% and 74% respectively after logging spectacular gains last year.
Beyond financial losses, the pullback seems to be taking a toll.  According to Bloomberg: “Online searches for ‘bitcoin’ fell 82 percent from December highs, according to Google Trends. Tweets that mention the coin peaked Dec. 7, at 155,600, and are now down to about 63,000, BitInfoCharts says. And the number of bitcoin transactions is off 60 percent from its record on Dec. 13, according to Blockchain.info” (Almost Daily Grant’sMarch 16).
Crypto-ficcianados have lately contended with more than falling prices and waning public interest.  Yesterday, Reuters reported: “Twitter, Inc. will start banning cryptocurrency advertising [today], joining Facebook and Google in a clampdown that seeks to avoid giving publicity to potential fraud or large investor losses.”  In other words, the ubiquitous social media ads featuring author and investor James Altucher will be no more.  Altucher himself voiced his approval, telling Recode: “There are many scams and illegitimate services out there.” This afternoon, Coinbase reports that Reddit (which bills itself as “the front page of the internet”) no longer accepts payment in bitcoin for its Reddit gold membership program.
Regulators, too, are taking a stricter stance.  On Thursday, the Wall Street Journalreported that the Securities and Exchange Commission is scrutinizing up to 100 crypto-focused hedge funds: “Examiners are keen to inspect whether fund managers have bought the type of assets they advertised to investors in disclosure documents. Regulators also worry about the risk of crypto assets being stolen because hackers often attempt to breach exchanges where crypto-currencies are kept.” On March 2, Bank of England Governor Mark Carney told the Scottish Economics Conference that “the time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.”
Meanwhile, efforts at wider implementation of the blockchain in the financial industry have recently suffered what appear to be major setbacks.  Today, Reuters reports that three separate projects undertaken by financial institutions to incorporate the distributed ledger technology have been halted.  One such example:
DTCC, known as Wall Street’s bookkeeper, recently put the brakes on a blockchain system for the clearing and settlement of repurchase, or repo, agreement transactions, said Murray Pozmanter, head of clearing agency services at the DTCC.
The project, which had successfully tested with startup Digital Asset Holdings, was shelved because banks and other potential users believed the same results could be achieved more cheaply using current technology, he said. “Basically, it became a solution in search of a problem.”
As prices fall, regulators circle and big tech heads for the hills, some investors are doubling down. Yesterday, Bloomberg reported that:
While ICO’s [initial coin offerings] were supposed to disrupt venture capital, such funding in blockchain-based companies is surging, with startups raising $434 million since December, the most ever in a three-month period, according to CoinDesk data.
“If a company goes on and gets an ICO, my equity is worth more,” Frank Meehan, partner at SparkLabs Group, said. “That’s really the game right now.”
CoinDesk calculates that ICO’s have raised north of $3 billion through February, more than half of their 2017 intake.  For the sake of their limited partners, VCs best choose wisely. Bloomberg goes on to note that 46% of such offerings either failed of were unable to attain funding, while 50 of 340 ICO’s have already failed this year.
Last week, CryptoKitties (which bills itself as an ethereum-based “game centered around breedable, collectible, and oh-so-adorable creatures” who can’t be “replicated, taken away, or destroyed”)  raised $12 million in seed funding led by Andreessen Horowitz and Union Square Ventures, with Mark Pincus (founder of Zynga) and Fred Ehrsam (former founder of Coinbase) lining up as investors.
Meanwhile CoinDesk reports that ethereum founder Vitalik Buterin recently penned a blog post arguing for the institution of rent fees on his network, where “users would be asked to pay to use the network based on how long they’d like their data to remain accessible on the blockchain.”  Evidently, permanence is a relative concept.

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We have just seen that whatever increases the expense of conveying commodities from one country to another — in other words, whatever renders transport more onerous — acts in the same way as a protective duty; or if you prefer to put it in another shape, that a protective duty acts in the same way as more onerous transport.

A tariff, then, may be regarded in the same light as a marsh, a rut, an obstruction, a steep declivity — in a word, it is an obstacle, the effect of which is to augment the difference between the price the producer of a commodity receives and the price the consumer pays for it. In the same way, it is undoubtedly true that marshes and quagmires are to be regarded in the same light as protective tariffs.

There are people (few in number, it is true, but there are such people) who begin to understand that obstacles are not less obstacles because they are artificial, and that our mercantile prospects have more to gain from liberty than from protection, and exactly for the same reason that makes a canal more favorable to traffic than a steep, roundabout, and inconvenient road.

But they maintain that this liberty must be reciprocal. If we remove the barriers we have erected against the admission of Spanish goods, for example, Spain must remove the barriers she has erected against the admission of ours. They are, therefore, the advocates of commercial treaties, on the basis of exact reciprocity, concession for concession; let us make the sacrifice of buying, say they, to obtain the advantage of selling.

People who reason in this way, I am sorry to say, are, whether they know it or not, protectionists in principle; only, they are a little more inconsistent than pure protectionists, as the latter are more inconsistent than absolute prohibitionists.

The following apologue will demonstrate this.

Stulta and Puera

There were, no matter where, two towns called Stulta and Puera. They completed at great cost a highway from the one town to the other. When this was done, Stulta said to herself, “See how Puera inundates us with her products; we must see to it.” In consequence, they created and paid a body of obstructives, so called because their business was to place obstacles in the way of traffic coming from Puera. Soon afterwards Puera did the same.

At the end of some centuries, knowledge having in the interim made great progress, the common sense of Puera enabled her to see that such reciprocal obstacles could only be reciprocally hurtful. She therefore sent an envoy to Stulta, who, laying aside official phraseology, spoke to this effect: “We have made a highway, and now we throw obstacles in the way of using it. This is absurd. It would have been better to have left things as they were. We should not, in that case, have had to pay for making the road in the first place, nor afterwards have incurred the expense of maintaining obstructives. In the name of Puera, I come to propose to you, not to give up opposing each other all at once — that would be to act upon a principle, and we despise principles as much as you do — but to lessen somewhat the present obstacles, taking care to estimate equitably the respective sacrifices we make for this purpose.” So spoke the envoy. Stulta asked for time to consider the proposal, and proceeded to consult, in succession, her manufacturers and agriculturists. At length, after the lapse of some years, she declared that the negotiations were broken off.

On receiving this intimation, the inhabitants of Puera held a meeting. An old gentleman (they always suspected he had been secretly bought by Stulta) rose and said, “The obstacles created by Stulta injure our sales, which is a misfortune. Those we have ourselves created injure our purchases, which is another misfortune. With reference to the first, we are powerless; but the second rests with ourselves. Let us, at least, get rid of one, since we cannot rid ourselves of both evils. Let us suppress our obstructives without requiring Stulta to do the same. Some day, no doubt, she will come to know her own interests better.”

A second counselor, a practical, matter-of-fact man, guiltless of any acquaintance with principles, and brought up in the ways of his forefathers, replied: “Don’t listen to that Utopian dreamer, that theorist, that innovator, that economist, that Stultomaniac. We shall all be undone if the stoppages of the road are not equalized, weighed, and balanced between Stulta and Puera. There would be greater difficulty in going than in coming, in exporting than in importing. We should find ourselves in the same condition of inferiority relatively to Stulta as Havre, Nantes, Bordeaux, Lisbon, London, Hamburg, and New Orleans are with relation to the towns situated at the sources of the Seine, the Loire, the Garonne, the Tagus, the Thames, the Elbe, and the Mississippi, for it is more difficult for a ship to ascend than to descend a river. (A Voice: Towns at the mouths of rivers prosper more than towns at their source.)

“This is impossible. (Same Voice: But it is so.) Well, if it be so, they have prospered contrary to rules.” Reasoning so conclusive convinced the assembly, and the orator followed up his victory by talking largely of national independence, national honor, national dignity, national labor, inundation of products, tributes, murderous competition. In short, he carried the vote in favor of the maintenance of obstacles; and if you are at all curious on the subject, I can point out to you countries where you will see with your own eyes road makers and obstructives working together on the most friendly terms possible, under the orders of the same legislative assembly, and at the expense of the same taxpayers, the one set endeavoring to clear the road, and the other set doing their utmost to render it impassable.

From The Bastiat Collection(2011) 

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About time. Just a monumental waste of time for so many. The only legitimate use that I have ever had for it is chasing deadbeats who owe money. It is quite a useful tracking tool.

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  1. If there are people in your organization who feel they are not free to suggest ideas, you lose. Do not discount ideas from unexpected sources. Inspiration can, and does, come from anywhere.
  2. It isn’t enough to merely be open to ideas from others. Engaging the collective brainpower of the people you work with is an active and ongoing process. As a manager, you must coax ideas out of your staff and constantly push them to contribute.
  3. There are many valid reasons why people aren’t candid with one another in a work environment. Your job is to search for those reasons and then address them.
  4. Likewise, if someone disagrees with you, there is a reason. Our first job is to understand the reason behind their conclusions.
  5. Further, if there is fear in an organization, there is a reason for it – our job is to (a) find what’s causing it, (b) to understand it, and (c) to try to root it out.
  6. If there is more truth in the hallways than in meetings, you have a problem. 
  7. Many managers feel that if they are notified about problems before others are or if they surprised in a meeting, then that is a sign of disrespect. Get over it.
  8. Careful “messaging” to downplay problems makes you appear to be lying, deluded, ignorant or uncaring. Sharing problems is an act of inclusion that makes employees feel invested in the larger enterprise. 
  9. A company’s communication structure should not mirror its organizational structure. Everybody should be able to talk to anybody.

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Back when Ronald Reagan was president, he pointed to many pages worth of “Help Wanted” ads in the Washington Post as one of many pieces of evidence that his economic policies were working.  His enemies on the left predictably responded that Reaganomics was merely producing jobs of the “burger flipper” variety.  The market that was the voting booth revealed Reagan’s critics as hopelessly deluded: with elections always and everywhere about the economy, he won re-election in 1984 in landslide fashion, 49 states to 1.

But to show readers just how similar and tribal left and right in the U.S. have become, consider the rollout of Flippy.  Flippy is a robot “employee” of the Caliburger chain, and he is apparently able to cook as many as 2,000 hamburgers per day.  Interesting about all this is that while Reagan’s backers once defended him against the assertion that his policies were only creating fast food jobs, modern members of the right are now criticizing lefty policies that are allegedly – drumroll please – destroying those same jobs.  It would be funny if it weren’t so sad.

In response to attempts to automate cooking, the right have happened upon what they naively presume is political gold.  They promote the illusion that the minimum wage mindlessly supported by the left is behind the rise of Flippy.  One conservative op-ed claimed that “raising the minimum wage will accelerate this [automation] trend by making even costly robots a better deal than increasingly expensive, minimally skilled workers.” The jobs the right decried in the ‘80s are apparently now really good ones that would be preserved if it weren’t for the evil left and its endless desire to foist wage floors on us.  In truth, Flippy reminds us how ridiculous both sides are.

Up front, the minimum wage should be abolished.  People should be free to transact with whomever they want, and at any wage.  They should even be free to pay companies and individuals for the right to work for them.  Many would do just that if they could apprentice under Jeff Bezos, Anna Wintour, Nick Saban, or Jose Andres.

Still, what’s missed by the right is that Flippy and others like him would be even more common if the minimum wage were zero.  As for the loony left, Flippy is a reminder that companies don’t seek out low-wage workers as much as they go to great expense to avoid them.  Caliburger’s experimentation with Flippy vivifies each of the previous assertions.

Regarding the silly notion that excessive wage floors brought on Flippy, let’s be serious.  What led to Flippy is the basic truth revealed by Caliburger executives that human burger flippers were tough to keep employed.  Simply stated, they were quitting too often.  Well, of course they were.  Low-wage jobs have long been marked by high turnover.  That’s why they’re low-wage and entry level.  People don’t stay in them long.  They attain skills, then trade them for better pay.  The turnover is very expensive for businesses given the time-wasting cost of training new employees.  Automation is a logical response to turnover; turnover that – if anything – would be exacerbated if the minimum wage were zero.  Think about it.  Are people more likely to leave low wage, or high-salaried jobs?

Furthermore, if conservatives had been able to read about Flippy free of a desire to score points against their surely mindless lefty adversaries, they would know that one Flippy costs $100,000.  Think about the previous number for a minute.  The cost of Flippy loudly reveals how little the wrongheaded minimum wage hikes have to do with Caliburger’s purchase of same.  $100,000 amounts to much more than a forced wage increase.  Flippy is a reminder of just how expensive employee turnover is.  To reduce that cost, Caliburger is spending in the six figures.

All of which brings us to the popular view on the left that investors and corporations migrate to the lowest wages possible.  What a laugh, except that such economic illiteracy is disturbing.  How could even the ignorant believe what is so brightly incorrect? Back to reality, much as Caliburger has found that low-wage workers are incredibly costly thanks to endless turnover, so do businesses of all stripes strive to pay wages and salaries that keep workers around.

Turnover is once again very expensive.  It’s so expensive that a hamburger chain is willing to spend $100,000 on a robot in order to avoid what is a costly headache.  All this is a reminder that cheap labor is the opposite of cheap, but also a reminder that handsomely rewarding entry-level work would be the path to bankruptcy for businesses.  It would be simply because entry-level workers don’t want to do entry-level work.  They’re once again looking to move up in the world. They want their work skills to evolve.  Walmart isn’t greedily paying low hourly wages as much as high pay for entry-level workers at the retail giant would still occur in concert with costly turnover. To be clear, low-wage workers are paid low wages precisely because their inevitable departures are very expensive.

All of this helps explain why low-wage workers should lovingly embrace the robot.  That robots are job-destroyers speaks to their genius.  Robots have the potential to destroy the entry-level jobs that workers plainly don’t want.  If robots can erase what’s not desired, they won’t erase work as much as the definition of “entry level” will change.  And it will change for the better as first-time jobs involve the exhibition of more in the way of skills, all at higher pay.

Until then, left and right need to try to be serious.  Fun as it is to expose either side, the wage/robot debate reveals each tribe as clueless.  Flippy isn’t “taking our burger flipper” jobs, and the fact that he isn’t reminds us how much businesses of all stripes would love to compensate exponentially more fulfilled workers at exponentially higher pay.

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All day long, we’re inundated by interruptions and alerts from our devices. Smartphones buzz to wake us up, emails stream into our inboxes, notifications from coworkers and far away friends bubble up on our screens, and “assistants” chime in with their own soulless voices.

Such interruptions seem logical to our minds: we want technology to help with our busy lives, ensuring we don’t miss important appointments and communications.

But our bodies have a different view: These constant alerts jolt our stress hormones into action, igniting our fight or flight response; our heartbeats quicken, our breathing tightens, our sweat glands burst open, and our muscles contract. That response is intended to help us outrun danger, not answer a call or text from a colleague.

We are simply not built to live like this.

Our apps are taking advantage of our hard-wired needs for security and social interaction and researchers are starting to see how terrible this is for us. A full 89% of college students now report feeling “phantom” phone vibrations, imagining their phone is summoning them to attention when it hasn’t actually buzzed.Another 86% of Americans say they check their email and social media accounts “constantly,” and that it’s really stressing them out.

Endocrinologist Robert Lustig tells Business Insider that notifications from our phones are training our brains to be in a nearly constant state of stress and fear by establishing a stress-fear memory pathway. And such a state means that the prefrontal cortex, the part of our brains that normally deals with some of our highest-order cognitive functioning, goes completely haywire, and basically shuts down.

“You end up doing stupid things,” Lustig says. “And those stupid things tend to get you in trouble.”

Your brain can only do one thing at a time

Scientists have known for years what people often won’t admit to themselves: humans can’t really multi-task. This is true for almost all of us: about 97.5% of the population. The other 2.5% have freakish abilities; scientists call them “super taskers,” because they can actually successfully do more than one thing at once. They can drive while talking on the phone, without compromising their ability to gab or shift gears.

Samantha Lee/Business Insider

But since only about 1 in 50 people are super taskers, the rest of us mere mortals are really only focusing on just one thing at a time. That means every time we pause to answer a new notification or get an alert from a different app on our phone, we’re being interrupted, and with that interruption we pay a price: something called a “switch cost.”

Sometimes the switch from one task to another costs us only a few tenths of a second, but in a day of flip-flopping between ideas, conversations, and transactions on a phone or computer, our switch costs can really add up, and make us more error-prone, too. Psychologist David Meyer who’s studied this effect estimates that shifting between tasks can use up as much as 40% of our otherwise productive brain time.

Every time we switch tasks, we’re also shooting ourselves up with a dose of the stress hormone cortisol, Lustig says. The switching puts our thoughtful, reasoning prefrontal cortex to sleep, and kicks up dopamine, our brain’s addiction chemical.

In other words, the stress that we build up by trying to do many things at once when we really can’t is making us sick, and causing us to crave even more interruptions, spiking dopamine, which perpetuates the cycle.

More phone time, lazier brain

Our brains can only process so much information at a time, about 60 bits per second.

The more tasks we have to do, the more we have to choose how we want to use our precious brain power. So its understandable that we might want to pass some of our extra workload to our phones or digital assistants.

But there is some evidence that delegating thinking tasks to our devices could not only be making our brains sicker, but lazier too.

The combination of socializing and using our smartphones could be putting a huge tax on our brains.

Researchers have found smarter, more analytical thinkers are less active on their smartphone search engines than other people. That doesn’t mean that using your phone for searching causes you to be “dumber,” it could just be that these smarties are searching less because they know more. But the link between less analytical thinking and more smartphone scrolling is there.

We also know that reading up on new information on your phone can be a terrible way to learn. Researchers have shown that people who take in complex information from a book, instead of on a screen, develop deeper comprehension, and engage in more conceptual thinking, too.

Brand new research on dozens of smartphone users in Switzerland also suggests that staring at our screens could be making both our brains and our fingers more jittery.

In research published this month, psychologists and computer scientists have found an unusual and potentially troubling connection: the more tapping, clicking and social media posting and scrolling people do, the “noisier” their brain signals become. That finding took the researchers by surprise. Usually, when we do something more often, we get better, faster and more efficient at the task.

But the researchers think there’s something different going on when we engage in social media: the combination of socializing and using our smartphones could be putting a huge tax on our brains.

Social behavior, “may require more resources at the same time,” study author Arko Ghosh said, from our brains to our fingers. And that’s scary stuff.

Should being on your phone in public be taboo?

Despite these troubling findings, scientists aren’t saying that enjoying your favorite apps is automatically destructive. But we do know that certain types of usage seem especially damaging.

Checking Facebook has been proven to make young adults depressed. Researchers who’ve studied college students’ emotional well-being find a direct link: the more often people check Facebook, the more miserable they are. But the incessant, misery-inducing phone checking doesn’t just stop there. Games like Pokemon GO or apps like Twitter can be addictive, and will leave your brain craving another hit.

Addictive apps are built to give your brain rewards, a spike of pleasure when someone likes your photo or comments on your post. Like gambling, they do it on an unpredictable schedule. That’s called a “variable ratio schedule”and its something the human brain goes crazy for.This technique isn’t just used by social media, it’s all over the internet. Airline fares that drop at the click of a mouse. Overstocked sofas that are there one minute and gone the next. Facebook notifications that change based on where our friends are and what they’re talking about. We’ve gotta have it all, we’ve gotta have more, and we’ve gotta have it now. We’re scratching addictive itches all over our screens.

Lustig says that even these kinds of apps aren’t inherently evil. They only become a problem when they are given free reign to interrupt us, tugging at our brains’ desire for tempting treats, tricking our brains into always wanting more.

“I’m not anti technology per se,” he counters. “I’m anti variable-reward technology. Because that’s designed very specifically to make you keep looking.”

Lustig says he wants to change this by drawing boundaries around socially acceptable smartphone use. If we can make a smartphone addiction taboo (like smoking inside buildings, for example), people will at least have to sanction their phone time off to delegated places and times, giving their brains a break.

“My hope is that we will come to a point where you can’t pull your cell phone out in public,” Lustig says.

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