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Your Subsidies are Undercutting My Subsidies!


NYTimes: Treasury officials say that they fear that elevated Chinese production targets are causing its firms to produce far more electric vehicles, batteries and solar panels than global markets can absorb, driving prices lower and disrupting production around the world. They fear that these spillovers will hurt businesses that are planning investments in the United States with tax credits and subsidies that were created through the Inflation Reduction Act of 2022, a law that is pumping more than $2 trillion into clean energy infrastructure.

Amazing that Yellen can say this with a straight face:

as an economist, it was her view that China could benefit if it stopped giving subsidies to firms that would fail without government support.

The post Your Subsidies are Undercutting My Subsidies! appeared first on Marginal REVOLUTION.

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68 days ago
Los Angeles, CA
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The Erosion of Financial Privacy

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Here is a bit on privacy from Eric Hughes’s Cypherpunk’s Manifesto of 1993.

Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selectively reveal oneself to the world.

…Since we desire privacy, we must ensure that each party to a transaction have knowledge only of that which is directly necessary for that transaction….In most cases personal identity is not salient. When I purchase a magazine at a store and hand cash to the clerk, there is no need to know who I am. When I ask my electronic mail provider to send and receive messages, my provider need not know to whom I am speaking or what I am saying or what others are saying to me; my provider only need know how to get the message there and how much I owe them in fees. When my identity is revealed by the underlying mechanism of the transaction, I have no privacy. I cannot here selectively reveal myself; I must always reveal myself.

Therefore, privacy in an open society requires anonymous transaction systems. Until now, cash has been the primary such system. An anonymous transaction system is not a secret transaction system. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy.

I am saddened and dispirited by the evolving situation. Privacy is losing. Cash has nearly vanished without being replaced by cryptographically private alternatives. Instead, we rely on credit cards, debit cards, Venmo, PayPal, and other systems that log every transaction in vast databases.

Cash gave us substantial privacy by default because there was no technological alternative but there was never a collective vote for cash or, sadly, a consensus for privacy. You might hope that people would demand to keep the privacy rights they they once had but no. The populace seems indifferent to the erosion of privacy. Instead, paranoia about criminals hijacks the narrative. “What about the sex traffickers and terrorists?!” they shout. People seem more than willing to give up their privacy in exchange for a promise of security–false though the promise may be. Thus, we get ever more draconian regulations, effectively strangling our financial freedom. The $10,000 cash rule, for example, is insane, a reflection of Nixonian paranoia and not fit for a free society.

If you deposit or withdraw cash in excess of $10,000, your bank must fill out a currency transaction report (CTR) on a Department of the Treasury Financial Crimes Enforcement Network (FinCEN) Form 104. The person making the deposit or withdraw must provide identification to the bank, and the bank must report details of the transaction as well as the name, address, social security number, and birthdate of the person making the deposit or withdrawal. Multiple deposits made in one day must be added together and will trigger the reporting requirement if, combined, they exceed $10,000.

Bankers are also required to file suspicious transaction reports (STRs). Withdrawing or depositing amounts just under $10,000 often does not succeed in avoiding reports to the government, because STR’s have no dollar limit. A person who withdraws $8,000 three times in a week may trigger the filing of an STR, and that person will not be notified that the STR was filed. Banks are also directed to perform account audits to look for suspicious activity. If the banking activity is not consistent with the “customer’s profile,” banks are directed to file a suspicious activity report (SAR).

Reporting requirements are not limited to banks. Business are also required to report cash transactions over $10,000. Any business (including a sole proprietorship) that receives more than $10,000 in cash in a single transaction or in related transactions must file an IRS Form 8300. If a business or individual fails to file a Form 8300 when required, the business or individual can be fined. The penalty for intentionally disregarding the filing requirement is the greater of $25,000 or the amount of cash received in the transaction not to exceed $100,000.

Currency transaction reports and suspicious transaction reports, do they not sound like something the Stasi would demand in communist East Germany? A free people would throw off this outrageous transgression. But could we get rid of such rules today? Could we even index the rules to inflation? $10,000 in 1970, when the Bank Secrecy Act was passed, is about $80,000 today.

Privacy suffers from a collective action dilemma: individually it isn’t worth much and so we don’t defend it, but lack of privacy is immensely costly when lost en masse. Moreover, our data, en masse, is worth a lot to corporations and governments. Thus privacy has few defenders and strong attackers.

We are on technology path that by default leads to less and less financial privacy. Another path exists, a path on which technology safeguards our financial privacy, but that path must be chosen and time is running short.

The post The Erosion of Financial Privacy appeared first on Marginal REVOLUTION.

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118 days ago
Keep using cash!

Could a Cockroach Survive a Fall From Space?

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If you’re resorting to more, uh, unconventional pest control methods, you’ll want to read this first.
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216 days ago
Reminds me of this: https://www.pinterest.com/pin/567594359266263736/

Official: Nats have promoted Eddie Longosz to VP of Player Development

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The Washington Nationals made their promotion official with Eddie Longosz taking on the position of Vice President and Assistant General Manager of Player Development and Administration in an announcement by Nationals President of Baseball Operations and General Manager, Mike Rizzo.

With a wide ranging search that we reported on weeks ago was down to three candidates that included Longosz who was the lone internal candidate, Rizzo made the decision to promote him from his role as Washington’s director of scouting operations for the past eight years. Prior to that, the 37-year-old was the team’s assistant director of scouting. In his most recent role, the team said that Longosz assisted Rizzo on all aspects of Washington’s amateur, professional and international scouting operations.

“Eddie Longosz has been integral to our organization’s success over the past 14 years. He is a tireless worker with extensive knowledge of our Minor League players, coaches and system as a whole.”

“He developed strong relationships with many of our current players during the draft process and has earned not only their trust, but the trust of those around them. Beyond his support of our draft operations, his expertise in emerging technology and analytics will enhance our process and make us more efficient.”

“Eddie is very well respected around the league, and I could not be happier to have him leading our player development system.”

— Rizzo said today

Longosz is in his 14th year with the Nationals after joining the organization in 2010 after graduating from the University of Richmond. He became a full-time scouting assistant in 2011, a role he held for four seasons before being promoted to assistant director of scouting operations in 2015.

Another interesting fact is that Longosz is a Washington, D.C. local growing up in Great Falls, Virginia with his parents who are both lawyers. He graduated from the prestigious St. Albans School in Washington, D.C. and later graduated college at Richmond in 2009 with a degree in business administration with a concentration in finance. Per his LinkedIn, he is currently pursuing his MBA at NYU’s Stern School.

Longosz grew up playing baseball on travel teams in the area and continued playing baseball through high school and college. Baseball has always been a part of his life, and the Nats since 2005 as a fan of the team. It was a dream job getting a spot with the Nationals, and then marrying into a baseball family when he fell in love with a Nats’ intern, Natalie “Nat” Garagiola, and married in the turbulent offseason after the 2017 NLDS loss. While Natalie moved on from the Nats after dating Longosz, their joint love of baseball was themed into their wedding. The cocktail napkins read, “All you need is love and baseball #EddiesGotNatitude”.

Now while Garagiola might have become an intern with the Nats as a favor to her father, Joe Garagiola Jr., who happened to have been Rizzo’s boss 20 years ago in Arizona — Longosz got his job on his own. Some connecting of the dots might lead some to believe that nepotism is now in play here with Longosz getting this promotion. As we reached out to sources who know Longosz, one former Nats’ front office employee said Eddie earned this by his hard work and accomplishments.

Personally, I will remain in wait-and-see mode for results — just like I did with De Jon Watson and before him, Mark Scialabba. But not many want to wait and see. They will believe that this was about Rizzo’s love of his own internal hires. Maybe Longosz really was the best candidate. We will see. He has a lot of work ahead of him.

This is a results oriented business as we all are aware of. While Longosz was mostly on the scouting side, he worked on trade acquisitions and extensively on the amateur draft his year.

“It’s all true you can ask anyone in baseball. Nats never went by the traditional roles assigned. Eddie is a big part of that front office.”

— a former Nats’ front office employee told us

For Longosz, he has the ability to call his father-in-law for advice, and certainly Rizzo has been a mentor to him. Going forward, he has to build out his staff after several minor league coordinators were let go, as well as a minor league coaches. There really is no time to sit back and slowly assess the situation. There are some real issues in the system that included both Robert Hassell III and Elijah Green sliding downwards out of the Top-100 prospects rankings, as well as injuries to several top players in the system like LHP Jake Bennett and RHP Cade Cavalli.

Injury prevention and moving players forward are clearly the two main goals in player development. The team still boasts three top of the farm prospects in James Wood, Dylan Crews, and Brady House, and it will be Longosz’s job to make sure they are MLB stars when they get the call which will most likely be in 2024 if all goes well.

MLB Pipeline ranked the Nats’ farm system at №10 in March to go with Baseball America’s №7 ranking. The reason that Watson might be gone is because the team acquired Crews, Yohandy Morales, and Travis Sykora in the amateur draft and did not graduate one Top-15 prospect, yet the farm system slipped in Baseball America‘s rankings to №9.

Looking a few years into the future is like dreaming. Again, two years ago the Nats’ farm was ranked as one of the worst farm systems in MLB. Today, it is in the upper-third of all farm systems thanks to the haul received back in the Juan Soto trade and the top-heavy 2023 draft. While the draft has helped, the international signings have not produced much at all, and the team needs to hope they get something out of their expensive acquisitions of Armando Cruz and Cristhian Vaquero. There are enough team-controllable players and top prospects to fill every spot for the position players plus some backup bench spots in the year 2025.

“…Our objective we have is to win championships — not to be №1 in Baseball America.”

— Rizzo said to applause and laughs by the fans gathered at the Ballpark Bash event last year

Maybe Rizzo should order his rankings from the ala carte menu and take the best from each. Will he complain if next year the Nats are the №1 farm system? Doubtful. But chances are that Rizzo will be pulling top prospects up to the MLB roster in 2024, making it more difficult for Longosz to have a higher ranking. There is a chance that all three of the Nats’ Top-100 prospects will be playing in Washington in 2024 as well as Cavalli.

Last year was one of the few years you could compare apples to apples in the development system since no top prospects graduated. The Nats won’t have a Top-5 draft pick this year, and who knows when Bennett will be recovered from his TJ surgery. Longosz will need other prospects to step up big for this team with Hassell and Green under the magnifying glass.

“I’m optimistic. I’m excited about this time in our developmental curve with the organization. When you guys do get out there on the [Minor League side of camp], those prospects — it’s an exciting time. It’s the best group of upside players we’ve ever had here. I’ve been here since ‘day one’, and I’ve never seen it like this before.”

“You filter in — there’s 22, 23 and 24 year-olds [on the MLB roster], I think you see what we’re trying to accomplish here. That’s the first rung on the ladder to get back to a championship.”

— Rizzo said to start 2023’s spring training camp

With the team winning 71-games this year, next season could be a year to get into playoff contention. Longosz will get some credit for any prospects who get promoted and light it up. Baseball is all about results and what have you done for me lately. The player development system has their new guy, and he is officially on the clock.

The post Official: Nats have promoted Eddie Longosz to VP of Player Development appeared first on TalkNats.com.

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223 days ago
I like the Star Trek Next Generation Uniform.

Rooftops, people

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We find that consumer surplus is the primary component of social impact (dwarfing profits, worker surplus, and externalities), suggesting that consumer impacts deserve more attention from impact investors. Existing ESG and social impact ratings are essentially unrelated to our economically grounded measures.

That is from a new NBER working paper by Hunt Allcott, Giovanni Montanari, Bora Ozaltun, and Brandon Tan.

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What can be learned from White Sox history?

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Chuck Tanner and Dick Allen
Figure out a way to bring these two guys back to life, and all shall be well.

The history of the inglorious season of 1970, that is

The White Sox of 1970 have been ingloriously brought to the fore by the White Sox of 2023, as 101 losses is the most for the team since that dreaded 1970 record-setter. But while there is very little hope that the current powers-that-be in Bridgeport can keep the team from being even more woeful in the next year (or two, or three, or four), the rise from the ashes of 1970 was quick.

What can we learn from way back then?

Circumstances were different, in many ways. The Sox had only recently collapsed, after a string of 17 straight winning seasons through 1967 — not wallowed in the muck for a decade aside from two seasons bolstered by incredibly soft schedules. The amateur draft was still fairly new, and free agency yet to be.

Yet there may be some lessons in what happened. Not that Jerry Reinsdorf, et. al, ever learn anything. Or in Reinsdorf’s case, care.

How bad was 1970?

Really, really, really bad. And not just 106 losses bad.

Financially, the situation was a disaster, It was the period between Bill Veeck stints, the owner being John Allyn, who had bought out the share of his older brother, Arthur Allyn Jr. Arthur was famous as a lepidopterist, which made sense because he gave fans butterflies.

Eddie Stanky and and Arthur Allyn - Chicago White Sox
Eddie Stanky and Arthur Allyn Jr. [right], in happier days.

There wasn’t big TV or web money like today, no revenue sharing, and attendance was abysmal. The Sox had drawn more than a million or right at it through the 17 winning years, but then it dropped off to 804,000 in 1968, 590,000 in 1969, and finally 495,000 in 1970 ... and those figures were all bolstered by excellent attendance when the team played a few home games in Milwaukee.

Much of the drop was due to team performance, of course, but there was a nasty sociological factor in the late ’60s as well, with fears stirred up that Bridgeport was dangerous — which it wasn’t. Plus, the Cubs actually were the more interesting team for a short while.

As for team performance ...

The 1970 White Sox had five starters with an OPS+ better than 100 (led by Ed Herrmann), Bill Melton hit 33 homers, and future Hall-of-Famer Luis Aparicio hit .313 and walked more than he struck out. But the Sox were still 19th (of 24) in runs and 21st in OPS, partly caused by being (you’ll note a certain similarity here) 22nd with just 477 walks.

On the pitching side, only one team gave up more runs, and the team ERA was dead last, despite excellent years from pre-surgery Tommy John and reliever Wilbur Wood. The staff gave up more homers than all but two teams, and ran 16th in walks allowed.

Part of the reason the runs allowed total was so bad was that (bet you see this pattern) the fielding was horrible ... 22nd in fielding percentage (of only 24, remember), third-most errors committed, 19th in defensive efficiency. That may actually be a little better than the current team, but not by much.

So, what did they do?

Ed Short had been the general manager since 1961 and had seven good years before the fall, but the fall was fast, with losses of 95, 98 and 106 games made 1968-70 the worst three-season stretch in team history — and there was no pretense of “rebuilding” to use as an excuse. On September 2, Short was out, though he did have one last positive in drafting Terry Forster and Rich Gossage that year (also Jerry Hairston, for you JH fans).

Stuart Holcomb was named GM, which was even stranger than naming a proven incompetent from within the organization, because Holcombe had spent his career as a football and basketball coach and AD of Northwestern, and had been GM of the Chicago Mustangs soccer team, also owned by the Allyns. Unlike any recent and current honchos, though, Holcombe knew that he didn’t know what he was doing, and two days after getting the job hired Roland Hemond away from the Angels to be director of player personnel.

SPORTS-BBA-WHITESOX-HEMOND-TB Charles Cherney/Chicago Tribune/Tribune News Service via Getty Images
Roland Hemond visiting spring training in 2003.

Hemond, famed for his research work (such as it could be back when computers would have taken up an entire infield), would eventually be officially named GM, part of a career that led to a lifetime achievement award from the Hall of Fame. among many other kudos. And Hemond brought with him the manager of the Angels Triple-A team in Hawaii, 42-year-old Chuck Tanner, who had led the Islanders to a season still listed among the best in minor league history.

Note that Tanner was not brought from a terrible team, but a terrific one, and had managerial experience, albeit in the minors. What a concept!

Tanner technically replaced interim manager Bill Adair, who had taken over after Don Gutteridge was fired when Hemond took over in September. Adair had the helm for a rather inauspicious 3-13 finish to the season, but that was not any form of omen. The resurgence was under way.

After the purge came the resurge

The initial trade moves by the new front office were not auspicious. Chicago did get Pat Kelly from the Royals for not much, and picked up Tom Bradley and Jay Johnstone from the Angels for Ken Berry and a couple of washouts, but the biggest trade of the year was a flop.

The White Sox sent the shortstop who was the face of the franchise (sound familiar?) and who just happened to be heading toward the Hall of Fame (not toward being a trivia question, as may be the current case) to Boston for Luis Alvarado and Mike Andrews. Aparicio was 36, but turned out to still have a couple of good years left, while Alvarado was a complete bust and Andrews had a good season in 1971 but then headed down to Mendoza Line-territory, to wind up most famous for being horribly mistreated by A’s owner Charley Finley during the 1973 World Series.

But Tanner came to the rescue.

The laid-back new manager pulled Wood out of the bullpen and put him in the starting rotation, and the portly knuckleballer responded with a 22-13 record and a 1.91 ERA over 334 innings. That’s right, 334. Of course, Wood mostly just played catch with Herrmann, Bradley, though threw 286 innings and went 15-15, and John picked up 13 wins.

Chicago White Sox v Boston Red Sox Focus on Sport/Getty Images
Why doesn’t this man have a statue at the GuRF?

Those were the days of four-man rotations, and of starting pitchers not getting gassed so easily, or injured so often, but still ...

(Tanner would pull the opposite trick with Gossage, turning him from starter to reliever. That took a couple of years to work out, but then it was a straight shot to the Hall of Fame for Gossage.)

Overall, in 1971 the Sox jumped from 24th in ERA to fifth, and finished third in FIP. They were fifth-best in issuing walks, a huge change from 22nd.

The offense came to life somewhat as well. Melton hit 33 dingers again, and the team moved up to 14th in runs and 10th in OPS. It even walked almost 100 more times, moving up to a tie for fifth. (imagine what such a shift in walks issued and taken could mean today ... though it’s highly unlikely either will occur.)

The fielding even improved a little, moving up from dead last in defensive efficiency to 19th.

The result? A 79-83 record, good for third in the AL West. Quite a leap from 56-106. If the current team added 23 wins, 2024 would sport a 84-78 record and almost surely be vying for the AL Central title.

Ha-ha. Just put that in as a joke.

And even more resurge

Hemond had been pursing Dick Allen in trade since he took the job in Chicago, and in December 1971 the White Sox sent John and .209-hitting utility infielder to the Dodgers for him, which may well be the last time the Dodgers lost a trade to the Sox. Allen, who was sometimes beset by demons either totally from outside his control (vicious racism when he was with the Phillies — from their own fans and at least one of his own teammates) or from within, had had a mere 151 OPS+ with LA, low for him.

With the White Sox and under Tanner, Allen’s troubles were in the past. Allen hit for an astounding 199 OPS+ with 37 homers, 113 RBIs (in a strike-shortened 154 games), a .308 average and MLB-leading .420 on-base percentage. He cruised to the AL MVP and led the White Sox to an 87-67 record. That would have been good enough to win the AL East, but not to top Oakland’s 93-62 in the West.

(I occasionally got to watch Allen hit from the vantage point of the press box, and I still believe that when he connected you could see the side of the ball go flat. He’s the best hitter I’ve ever seen, and it’s a shame modern measurement techniques didn’t exist, so we could know just how hard he did hit the ball.)

Chicago White Sox Focus on Sport/Getty Images
Dick Allen at bat. (You can’t see the ball because he knocked it flat.)

The rest of the offense joined in, with six starters with an OPS+ better than 100, with Carlos May at 148, and Melton against hitting 33 round-trippers, though Chicago was still only 11th in MLB in runs and 10th in homers.

On the pitching side, Wood turned it up a notch to 376 2⁄3 innings and a 24-17 record and 2.51 ERA. Stan Bahnsen, who had been picked up from the Yankees for Rich McKinney, went 21-16 and Bradley was 15-14, both of them pitching more than 250 innings. Forster and Gossage led the bullpen (especially Forster), but the team was still only 10th in ERA, though first in FIP.

How could that difference be? The defense, of course — 18th in efficiency and dead last in range factor. Some things just don’t change.

Still, in two years the White Sox went from 56 to 79 to 87 wins, with the 87 coming in a shorter season. For those of us who had just become fans (I got out of the Navy and moved to Chicago during the 1971 season), it was quite a ride.

And it was all terrific after that, right?

Well, er, uh, no.

The record dropped to 77-85 in an injury-riddled 1973, then 80-80-3, 75-86, and 64-97 before 90 wins in 1977. Only 1975 was a miserable attendance year, though.

Part of the problem was a tendency to make first round draft choices who wouldn’t sign (Danny Goodwin) or never amounted to much of anything (whole bunches).

Allen was hurt much of 1973, but rebounded to another huge year in 1974 before he walked out on the team/retired at the end of the season, thus essentially given away to the Braves, who then sent him on back to the Phillies where his hitting went downhill. Also going downhill was the whole offense in 1973, with homers in particular hard to come by — 10th out of 12 AL teams.

On the pitching side, Wood continued to be outstanding for several more years, Bahnsen for one or two more. Some guy named Steve Stone joined the rotation for a year and wasn’t much good, but did well in a second Sox stint beginning in 1977.

So what happened to the guys at the top?

Amid rumors of a move to Seattle, John Allyn sold the Sox back to Veeck in December 1975, just in time for free agency to kick in. Veeck had been a big supporter of the players but didn’t have the money to compete in the new financial world, so he tried to sell the team to Edward DeBartolo in 1980 — and when the league refused that, made a sale to another group in 1981.

We all unfortunately know how that has worked out.

Hemond, who just died two years ago, stayed as GM through the 1985 season, then moving on to the Orioles. He actually came back for a short stint as a Sox executive from 2001-07, which of course includes the 2005 championship.

Tanner was ousted after the 1975 season, moved on to Oakland for a year, then to Pittsburgh, where he led the team to a World Series victory in 1979. He continued managing through 1988, and died in 2011.

So what are the lessons to be learned?

How about: Get a general manager who is up on all the latest ways to gather information and evaluate players (one of Hemond’s many awards from the SABR folks) and not some hack who has already proven incompetent in another role in the organization.

And then: Get a manager who has had success at the helm but is still young enough to have solid energy and relate to the team, not some coach from a terrible team whose only visible skills are spouting platitudes, throwing rookies under the bus and sucking up to his veterans and bosses.

Don’t be set in your ways when it comes to handling the pitching staff, but be ready to make major changes in who does what if that looks right.

And, oh, yes — it doesn’t hurt to pick up a superstar.

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249 days ago
Don't wait 70 years to embrace the home run.
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