Minor Trims on Major Issues: The Triviality of Current U.S. Debt Ceiling Negotiations.

Sunset, Yosemite Valley.

© 2013 Dliff.

CC BY-SA 3.0.

via Wikimedia Commons.

In an article today in the New York Times, Jim Tankersley discusses the ongoing negotiations between President Biden and House Republicans concerning the U.S. debt ceiling. The primary focus of these talks has been to curtail nondefense discretionary spending, which encompasses areas such as education, environmental protection, and national parks. However, this sector represents less than 15% of the government's anticipated spending of $6.3 trillion for the year. Meanwhile, the negotiations have precluded any substantial changes to Social Security and Medicare, which account for the majority of future projected spending growth, and military spending, which rivals nondefense discretionary expenditure in size.

The proposed budget cuts chiefly target areas that are not primary sources of spending growth in the upcoming years, such as education and environmental protection. The reductions could lead to a 30% decrease in many popular government programs, according to White House officials and independent analysts. Additionally, the negotiations are unfolding in the wake of a substantial spike in federal spending during the Covid-19 pandemic under both President Trump and President Biden's administrations. Despite this increase, the Congressional Budget Office expects a modest drop in total government spending for this fiscal year, followed by a rise later in the decade.

The projected increase in federal spending over the coming decades is attributed primarily to major federal health programs and Social Security. These trends were apparent even before President Biden took office. The current negotiations, with their focus on trimming relatively small parts of the budget, have been criticized from both ends of the political spectrum. The stalemate over addressing mandatory spending programs and the nation's tax system continues with no immediate solution in sight. The trajectory suggests that an agreement capable of significantly altering federal spending in the future is unlikely under the current approach.

Struggling for Equality: The Battle Over Same-Sex Marriage in Japan.

"Tokyo Rainbow Pride in 2016"

© 2016 Nesnad.

CC BY-SA 4.0

via Wikimedia Commons.

Motoko Rich and Hikari Hida from The New York Times delve into the escalating tension in Japan over the legalization of same-sex unions. Japan stands alone as the only G7 country where same-sex marriage is not legal, despite public opinion being largely in favor. However, conservative entities, notably the Shinto Association of Spiritual Leadership and affiliates of the Unification Church, propagate an opposing viewpoint, likening homosexuality to an "addiction" that can be "cured." As international pressure mounts for Japan to champion equality, lawmakers have offered a tepid response, drafting a bill calling for no unfair discrimination against LGBTQIA+ individuals, although critics argue it falls short compared to a previous failed proposal.

These religiously associated organizations exert significant influence within the conservative political sphere, even though they may not echo the sentiments of their followers or the broader public. The national Shinto association, deeply interwoven with Japan's culture and traditions, uses its ideological drive to sway lawmakers on various social matters. Concurrently, Prime Minister Fumio Kishida, acknowledging the distinct circumstances of each country, stresses the need for a comprehensive dialogue on same-sex marriage. Yet, the political sway of the religious right, demonstrated through the assassination of Shinzo Abe and the implication of the Unification Church, overshadows these discussions.

Despite these challenges, the LGBTQIA+ community in Japan perseveres in their struggle for equal rights, with an increasing number of municipalities offering same-sex partnerships and legal challenges to the constitutionality of the non-recognition of same-sex marriages. Amidst these efforts, foreign diplomats led by U.S. envoy Rahm Emanuel continue to advocate for LGBTQIA+ rights, drawing attention to the strong public endorsement for same-sex marriage. As Japan contends with demographic changes, the call for embracing diversity and immigration reform grows stronger. Corporations such as Suntory and Coca-Cola Japan signal a shift towards inclusivity, underscoring the resilience and diversity of Japan's LGBTQIA+ culture.

Banking on Trouble: The SVB Collapse and its Impact on Financial Stability.

Gregory Becker.

2015 US Department of Labor.

Public Domain.

via Wikimedia Commons.

In a New York Times article by Rob Copeland, Gregory Becker, former Silicon Valley Bank (SVB) CEO, defended his actions before a Senate Banking Committee hearing regarding the bank's failure. Becker deflected blame onto regulators, the media, and inflation-induced interest rate hikes. SVB's downfall, fueled by large investments in low-yielding government bonds and a high proportion of uninsured accounts, has triggered a debate around banking regulations. Becker, who earned nearly $10 million in 2022, faced questions about his compensation and potential return of bonuses. Senators critiqued his failure to accept personal responsibility.

An Economist article, "The prop-up job", provides an in-depth analysis of SVB's collapse. The authors posit the bank's rapid downfall exposed signs of instability in the U.S. banking system, despite post-financial-crisis regulations. The article highlights the implications of abandoning the "Lombard Street" rule of central banking, leading to potential instability. It also draws parallels to the banking crises of the 1980s under then-Fed chairman, Paul Volcker. According to historian Peter Conti-Brown, rising rates subtly affect interest-rate and credit risk, and can strain borrowers. The authors suggest that the banking system is more vulnerable than previously thought and smaller banks, especially those with uninsured deposits, may need to increase capital soon.

The "Lombard Street rule" or Bagehot's dictum, articulated in Walter Bagehot's "Lombard Street: A Description of the Money Market", argues for the Bank of England's role as a lender of last resort during financial crises to maintain stability. Bagehot proposes that in times of panic, the bank should offer high-rate loans to solvent firms against good collateral, ensuring sufficient reserves to meet demands and deter non-serious borrowers. This approach has significantly influenced modern central banking policy.

The breakdown of Bagehot's dictum has a predictable result, illustrated in Bagehot's other great work, "The English Constitution." There, he details the vital role the House of Commons plays in the British political system. Bagehot positions the Commons, including the Cabinet formed from it, as the power center reflecting the electorate's will, controlling fiscal matters, and determining legislation. Additionally, the Commons facilitates communication between the government and its people, conveying public opinions, desires, and grievances to the state and justifying state actions and decisions to the public.

Becker's congressional hearing underscores the significant role of Congress, the American equivalent of the Commons (Senate and House both being subject to popular elections) in addressing banking sector instability. This step opens a much-needed debate on banking regulations. Although the hearing was marked by partisan disagreements, it offered an opportunity to question actions leading to SVB's failure and to assess executive accountability. As Bagehot stressed, the banking system, along with regulatory bodies like the Federal Reserve and the U.S. Treasury, must ensure financial stability. Therefore, this incident should alert CEOs across the industry to the need for coordinated efforts to strengthen the banking system's integrity, even if Bagehot's dictum, as a practical matter, may apply no longer to any but the smallest of U.S. banks. 

The Battle for Democracy: Turkish Elections, Deepfakes, and the Threat to Press Freedom.

"The Demagogue"

 José Clemente Orozco, 1946.

Public Domain.

via Wikimedia Commons.

In an article today by Ben Hubbard and Gulsin Harman from The New York Times, the recent Turkish presidential elections are reported to be heading into a runoff. After failing to secure a majority, the incumbent president Recep Tayyip Erdoğan will face opposition candidate Kemal Kılıçdaroğlu in a two-week battle that could redefine Turkey's political landscape. Erdoğan, having served as Turkey's dominant political figure for 20 years, has seen a decline in his standing due to economic issues and his consolidation of power. Meanwhile, Kılıçdaroğlu represents a coalition of six opposition parties, campaigning as the antithesis of Erdoğan.

Meanwhile, David Klepper and Ali Swenson of The Associated Press this morning discuss the potential political risks posed by advanced artificial intelligence (AI) tools leading up to the 2024 elections. The availability of inexpensive and increasingly sophisticated AI technology has heightened concerns about the creation of convincing deepfakes, including fake images, videos, and audio. These deepfakes, in conjunction with social media algorithms, have the potential to spread misinformation quickly and target specific audiences, possibly leading to new levels of election manipulation. Experts like A.J. Nash from the cybersecurity firm ZeroFox warn that society is unprepared for the impact of these AI-driven media manipulations, which could be used to confuse voters, slander candidates, or even incite violence. As we approach the 2024 elections, there are increasing calls for legislative measures to combat the potential misuse of AI in political campaigns. 

That may very well be a move too far. Daren Butler of Reuters, in an October 13, 2022 article, noted Erdoğan's use of misinformation and its impact on Turkey's democracy. The article refers to a controversial law enacted by the Turkish parliament, proposed by Erdoğan, which can jail journalists and social media users for up to three years if found guilty of spreading "disinformation". Lawmakers from Erdoğan's ruling AK Party and its nationalist allies MHP, who collectively had a majority in the parliament, approved the bill despite strong opposition from both national and international critics. These critics argue that the law's vague definition of "false or misleading information" could be exploited to suppress dissent.

Engin Altay, a member of the main opposition Republican People's Party, expressed concerns that the law will further limit press freedom in a country already lagging behind in this area. The AK Party, without shame, claims that the legislation is necessary to combat misinformation and false accusations on social media, asserting it will not be used to suppress opposition voices. The fairly clear intent of the legislation is to control narratives and limit critical voices, thereby influencing public opinion. Reuters' investigation highlighted the state of media freedom in Turkey, describing mainstream media as adhering to government-approved headlines while independent and opposition media face penalties. The Venice Commission, an advisory body to the Council of Europe, expressed concerns that this law could induce a "chilling effect and increased self-censorship" ahead of the elections.

The proliferation of misinformation, further magnified by artificial intelligence, presents a considerable challenge to democratic values, underlining the indispensable role of press freedom. Drawing parallels with Kléōn's emotional manipulation in the Mytilenean Debate, contemporary misinformation leverages public sentiment, especially anger, to influence portions of the electorate. However, Aristotélēs maintained that the robustness of democracy resides in the collective wisdom of its populace. This collective wisdom, cultivated from a variety of perspectives and experiences, tends to yield clear choices, exemplifying the tenacity of democratic systems. There's an expectation that the probabilities underpinning the Condorcet Jury Theorem have remained (mostly) unaffected by misinformation. However, it's almost certain that augmenting governmental control over information could lead to a detrimental shift. Other than ongoing voter education, few options exist to ensure that clear choices will still surface in the aggregate. The freedom of the press remains a key factor in assuring that the electorate is well-informed and capable of exercising its collective wisdom, thereby reinforcing the effective functioning of democratic systems, despite the emergence of AI-powered misinformation or even more worryingly, justifications for state control of the press based on such grounds.

Red States, Blue Cities, Dynamic America.

     

     

"President Barack Obama and Cabinet."

White House East Room, September 10, 2009.

Public Domain.

via Wikimedia Commons.

In today's New York Times, David Brooks discusses the trend of people migrating from blue states to red states in the US. Between 2010 and 2020, the fastest-growing states were mostly red, such as Texas, Georgia, Florida, Tennessee, and South Carolina. This growth is attributed to lower taxes, fewer restrictions on home construction, lower housing prices, and more pro-business policies. However, the growth in red states is concentrated in metro areas, often blue cities in red states. The dynamic success stories are a result of a red-blue policy mix where Republicans provide a business-friendly climate and Democrats influence education, social services, and civic atmosphere. The column argues that no political party is currently embracing this policy blend, which has proven effective in creating a dynamic and cosmopolitan society. The author suggests that the Democratic Party's growing strength in Southwestern states could potentially give rise to a new kind of Democrat that promotes this policy mix.

David Brook's career began as a police reporter in Chicago, and he recognizes the significant impact it had on his perspectives. His experiences on the crime beat shifted his views from a more liberal standpoint to a more conservative one. Brooks seems to be highly conscious of the concept of black-and-white morality, which leads him to seek a balanced approach where both sides of an argument have valid points. In essence, Brooks proposes that a third option, which incorporates ideas from both sides, is often attainable.

Here, I think Brooks misses some of the essential characteristics of how cabinet-style dynamics function, which I generally accept as a starting point for analysis of most government decisionmaking. In "The English Constitution," Walter Bagehot highlights the significance of blending old and new minds in the British parliamentary cabinet system for effective governance, emphasizing the importance of secrecy and trust in maintaining unity and functionality. By combining experienced ministers' continuity and institutional knowledge with new ministers' fresh ideas and energy, the cabinet can adapt to changing circumstances and address contemporary issues. Secrecy ensures confidential cabinet discussions and disagreements, fostering open dialogue and consensus-based decisions. Trust among cabinet members is essential for upholding collective responsibility and loyalty, even when personal disagreements occur. Ultimately, Bagehot argues that the balance of experience and innovation, combined with secrecy and trust, contributes to the effective functioning of the government.

Bagehot argues that the most dangerous person to a cabinet government is the disloyal insider. A disloyal insider can undermine the collective responsibility principle, where all ministers must publicly support cabinet decisions, even if they personally disagreed during internal discussions. By breaking this trust and revealing confidential information or dissenting opinions, the disloyal insider can weaken the solidarity and unity of the cabinet, disrupt its decision-making process, and potentially harm the government's credibility and stability. Thus, Bagehot emphasizes that disloyal insiders pose a significant threat to the cabinet government's effectiveness and overall political structure.

Bagehot's central argument highlights the importance of consensus in a government composed of both cautious old minds and and fresh energetic ones. Brooks fails to consider that a political party's drive to act stems from their shared values and the aspiration to advance them. Brooks appears to suggest that experienced and fresh minds together would embrace a logical compromise on the very shared values that unite them. However, it is more probable that both groups would view this approach as flawed and dismiss those promoting it.

Brooks doesn't offer realistic solutions for a feasible third way, and his argument appears at odds with the realities of media influence and political communication. Rather than individuals blending positions, a stronger argument would recognize that blue cities in red states play a vital role in holding their governments accountable, encouraging debate, and preventing complacency in the ruling red-state governments. By remaining committed to the nation and their democratic values, these blue cities enhance the political system's stability and effectiveness while pushing the red-state governments to improve and refine their policies. Ultimately a stronger America emerges from that dynamism, as has been noted in the Economist recently. 

A Salty Solution to Lithium Woes?

     

"Containerized Vanadium Flow Battery"

UniEnergy Technologies

CC BY-SA 4.0

via Wikimedia Commons.

The New York Times' Keith Bradsher writes today about the development in China of batteries that use sodium instead of lithium, a far cheaper and more abundant material. Sodium batteries have the advantage of keeping almost all of their charge when temperatures fall far below freezing, which is an issue for lithium batteries. Recent breakthroughs mean that sodium batteries can now be recharged daily for years, which has been a key advantage of lithium batteries.

Sodium batteries are being developed at Central South University in Changsha. Chinese companies are leading the way in commercializing the technology, and they have figured out in the past year how to make sodium battery cells so similar to lithium ones that they can be made with the same equipment.

A significant challenge, however, is where to get the sodium. While salt is abundant, the United States accounts for over 90 percent of the world’s readily mined reserves for soda ash, the main industrial source of sodium (Chinese ventures generally use expensive synthetic soda ash). Another question hanging over sodium is whether lithium will remain costly. Lithium prices quadrupled from 2017 to last November, but have since dropped by two-thirds.

As Bradsher notes, utility companies could benefit from using sodium batteries, but they face unique challenges due to the regulated nature of their operations. These companies have to plan well in advance because they need regulatory approval to recover costs and adjust prices. Furthermore, utility assets like power plants and transmission lines can last for decades. Many of the facts that need to be ascertainable for utilities to implement sodium batteries are still question marks, as there's no prior history or long-term operational record.

Batteries are an increasingly important technology and the investment is definitely news. It's a tough area for a reporter to work in because a pair of the subjects (Technology, China) have familiar tropes that can get in the way. The national security implications of battery technology, though, do appear to be ones that the United States is taking seriously, as NPR's All Things Considered reported in August of 2022 in the case of vanadium redox flow batteries. Batteries are a component of green energy, and expecting foreign direct product rules to come into effect concerning the same may be a mere matter of time.

Disruption versus Destruction.

Today's edition of the New York Times caught my eye with an article by Cade Metz regarding Sam Altman, the CEO of OpenAI, and their chatbot, ChatGPT. The article weaves between Altman's biography, the product, and the nature of the firm. The article references Altman's belief in "effective altruism," a rational approach to maximizing global impact through evidence-based decision-making. The article's almost treats the life story of a CEO as a political biography, as a source to establish the legitimacy of the company and the technology.

A tech firm CEO, much like a head of state, serves as a unifying force that seeks to transcend divisions and foster a sense of identity and shared values around the company. Sam Altman's "effective altruism" is here like the "dignified" aspect of a monarchy, providing reassurance to the public and calming concerns about the impact of AI. Meanwhile, the "efficient" aspect of a tech firm, responsible for developing and implementing technology, operates on business principles necessarily different from the legitimizing elements of the firm's leadership.

While the New York Times article illustrates the role of a technology CEO in shaping public perception, it is crucial to remember that the efficient aspect of OpenAI is far different than the personality of Sam Altman. Effective altruism has little to do with the actual impact of the technology. It is vital to focus on the potential risks of disruptive new technologies, as their misuse in authoritarian hands has been destructive. "Effective altruism" could very well be serving as a distraction here, rather than a guarantee of responsible AI development.

The Holographic Universe.

Juan Maldacena

Discoverer of the 

AdS/CFT correspondence.

The New York Times wrote recently on the Holographic Universe, something that the truly great PBS Space Time has visited as a topic repeatedly. The interesting point is always, for me, that the information content of any three-dimensional space is limited to the number of bits that can be encoded on an imaginary surface surrounding it, and that limit is defined by the Planck length. The consequences of this are mind-bending.  

"'It's completely crazy,' [says Leonard Susskind], in reference to the holographic universe. 'You could imagine in a laboratory, in a sufficiently advanced laboratory, a large sphere — let’s say, a hollow sphere of a specially tailored material — to be made of silicon and other things, with some kind of appropriate quantum fields inscribed on it.' Then you could conduct experiments, he said: 'Tap on the sphere, interact with it, then wait for answers from the entities inside ... [o]n the other hand, you could open up that shell and you would find nothing in it,' he added. As for us entities inside: 'We don’t read the hologram, we are the hologram.'"

Wikipedia has a dense, but good article on the same subject. This also leads to the AdS/CFT correspondence, which really makes a lot more sense after watching this video from Matt O'Dowd.