Streetwise Professor

September 30, 2023

So, Does FTC Stand for “F the Consumer”?

Filed under: Economics,Politics,Regulation — cpirrong @ 7:09 pm

Federal Trade Commission chair Lina Khan has had her undies in a bunch about Amazon since she wrote an overly long and overly praised Harvard Law Review article about it. Now as a capo in the administrative state, Khan has the power to execute her vendetta, here in the form of a massive antitrust lawsuit against the e-commerce giant.

The case is a farrago of economic ignorance and idiocy. It brings to mind Coase’s remark (which I paraphrase) to the effect that a certain kind of mind sees a non-textbook contracting practice and immediately concludes it is an evil monopolizing practice.

Khan fanboi Matt Stoller provides a pithy summary of the FTC case, which simultaneously reveals its absurdity: “The overall point is that Amazon is degrading the shopping experience, raising prices, and yet somehow still gaining market share.”

Quite the mystery! I mean, maybe it’s possible but the “somehow” part seems rather miraculous. Ask the 1970s-80s Big Three about how degrading quality raising prices usually works out, market share-wise.

This theory brings to mind the Underpants Gnomes:

So yeah I’d really like some explanation how that works, exactly. Neither Stoller or the FTC provide it.

The specifics of the FTC case are hardly more persuasive. I’ll look at the ones they highlight in their press release.

Leading with their best?

Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.

If so, God save them.

As background, Amazon used to have a contractual term that precluded such differential pricing across platforms. The Euros no likey, so Amazon did it by algorithm (which twists Matt Stoller’s undies).

Contract, algo, whatever. However implemented, this is basically a form of resale price maintenance (RPM). My thesis advisor and mentor, the late, great Lester Telser, wrote the seminal article on the subject when I was one (so maybe the FTC should have caught up by now). Telser argued that RPM is efficient when some retailers provide costly “special services”–notably information–to their customers. This creates a potential free riding problem. Sellers can free ride off the information/special services provided by some retailers/platforms and sell at a discount at stores/platforms that don’t offer the costly service.

Amazon provides a lot of information on products, including product reviews. Offering a product on Amazon, a seller’s potential customers can learn about the product there, and in the absence of the restriction that the FTC is attacking, can then go and buy it from a platform that doesn’t incur these costs, thereby free riding on Amazon’s information provision.

Next up is a real doozy:

Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.

For one thing, I don’t see how requiring use of Amazon fulfillment on sales via Amazon raises the cost of selling on other platforms. But even putting that head-scratcher aside, where is the “coercion” here? Amazon offers a bundle. They don’t put a gun to your head forcing you to take it.

Further, there is a very good efficiency reason for this bundling. Amazon offers a delivery guarantee. If it vertically integrates into shipping, it has considerable control over whether it performs according to the guarantee. If a seller uses another shipper, Amazon has no such assurance.

Again, there is a free rider problem. Seller gets sales from customers expecting speedy delivery. Seller uses a cheap but less reliable carrier. Goods arrive late, or in bad condition. Whom is the customer mad at? To whom does the customer look for recourse? Amazon.

Vertically integrating into shipping reduces the cost of providing the guarantee that buyers like.

The FTC also apparently doesn’t understand the basic point that if alternative carriers are cheaper than doing it in house, by forcing customers to use a higher cost service Amazon reduces the derived demand for its services and its platform. Since–as the FTC also whines about–Amazon apparently prices to extract large sums from sellers, in the absence of efficiency benefits like those just described, it would be able to, and find it more profitable to let sellers choose their putatively cheaper carrier and charge the sellers a higher price to sell on Amazon.


Degrading the customer experience by replacing relevant, organic [but are they vegan????] search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.

This is basically the Stoller argument. I’ve already discussed its facial absurdity. But it’s also absurd when you dig deeper.

Search ranking is a scarce resource, and an extremely valuable one. Scarce resources have to be allocated somehow. Usually best way to allocate a scarce resource is to price it. (This is done all the time with online advertising, by the way.) So what is the best way to price this resource?

An auction? Possible–Amazon has no doubt considered that. But maybe pricing through advertising is superior. I don’t know, but given that advertising can serve a reputational branding role, and can provide information, it may well be the case that for selling information-intensive goods, or goods of uncertain quality, advertising is better than auction to prioritize search results.

What I do know is that Amazon internalizes the costs and benefits here. Meaning that they have the incentive to choose the best alternative. Lina Khan–not so much.

And I can guarantee that if Amazon allocated search ranking by auction or some other pricing mechanism, that would cause the FTC to have a meltdown too. They apparently believe that “organic” rankings (WTF are those?) sans pricing of any form are best.

Fine. Start your own platform, Lina.

And next:

Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality. 

Preferencing in the absence of some other efficiency advantage is hard to rationalize–and certainly the FTC provides no such rationale. Again, since Amazon could extract the alleged quality advantage (and perhaps cost advantage) of the third party sellers by raising its prices to them, why offer lower quality products?

Here’s one reason: by offering its own products, and competing on price and perhaps visibility, Amazon is entering the market, creating competition, and inducing third party sellers to reduce prices. Which helps consumers and drives them to use Amazon. That is, by creating competition preferencing is pro consumer.

And finally:

Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business. Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.  

Oi. Amazon charges fees. Who knew? Amazon has market power that allows it to charge high fees. Also hardly a revelation.

But this would apparently be a revelation to the FTC: it is not an antitrust violation to exercise market power gained by “superior skill, foresight and industry.” Only nefarious acts to monopolize fall afoul of the antitrust laws.

This one should be a slam dunk for Amazon’s lawyers.

One thing that jumped out at me in the complaint that isn’t in the press release: Amazon’s pricing and policies make it difficult for “single-category ecommerce companies to achieve the scale they need to succeed.”

So, who says they should succeed? Amazon’s success and the success of other platforms (e.g., Walmart) suggests that there are strong economies of scope here, which would make “single-category” platforms inefficient. We don’t want inefficient platforms to survive. If the FTC were to get its way, and somehow handicap Amazon so that inefficient single-category platforms that can’t exploit economies of scope survive, we are worse off.

One interpretation of the anti-Amazon arguments are that it is essentially using its scale and scope economies to price below the cost of alternative platforms, so those platforms don’t enter. This is analogous to Demsetz’s theory of natural monopoly, or the behavior of a dominant firm in a contestable industry (a la Baumol, Panzar, Willig). In these theories, there is no entry, but that’s a good thing because entry would be duplicative (given the scale and scope economies). Moreover, the potential for entry disciplines the incumbent’s pricing, mitigating traditional monopoly triangle losses.

The FTC’s lament about the high prices charged to sellers on Amazon’s platform highlights a major lacuna in its attack: the failure to take into account that Amazon is a two-sided platform. Pricing in two-sided platforms is quite complex, and it is impossible to evaluate Amazon’s pricing justly without taking these complexities into account.

One thing missing from the complaint is one of Khan’s law review criticisms–that Amazon uses the information generated from its operation of the platform to identify profitable entry opportunities, i.e., to identify products that Amazon can produce (or procure) and sell in competition with third party sellers.

Entry is pro-competitive, dontcha know. It tends to lower prices. I’m sure that’s news to you.

Companies perform market research all the time to identify which markets they can enter profitably because they can make products better or cheaper than incumbents. If Amazon can perform this research low cost due to the information it sweeps from the platform–great! Let them use it. (I note that an early theory of vertical integration advanced by Ken Arrow was that such integration produces information that the upstream firm can use to make better decisions.)

In sum, the FTC case against Amazon is pathetic. I would characterize it as economics free. Or maybe more accurately anti-economics.

It is also entirely untethered to any credible theory of how Amazon’s actions harm consumers, or more importantly, how eliminating the practices that the FTC decries would benefit consumers. And as my foregoing arguments show, consumers would almost certainly be harmed if the FTC gets its way.

But this is not a surprise. The Khan FTC has explicitly rejected the Consumer Welfare standard that has guided antitrust since Robert Bork first mooted it in the 1970s.

Now I have my issues with the way courts have interpreted the standard–which, alas, is largely due to how Bork framed it. A close reading suggests that Bork interpreted “consumer welfare” to mean efficiency-enhancing. The courts have typically read it to mean “lower prices to consumers.” Now in many contexts, the courts’ Cliff’s Note version leads to the right results–but not all.

That is only a reason to refine the standard, not to reject it altogether. But reject it the Biden FTC and DOJ have.

Which is why, as a general matter, and in the specifics of the Amazon case (and other cases Khan’s FTC has filed), it is more than fair to say that “FTC” really means “F the consumer.”

September 28, 2023

Come On Down! And Will the Last Business in Chicago Turn Off the Lights? Thanks.

Filed under: Commodities,Derivatives,Economics,Exchanges,Politics,Regulation — cpirrong @ 4:50 pm

Texas governor Greg Abbot has extended an invitation to the CME Group to relocate from Chicago to Texas. The exchange group may well be moveable because the city’s new mayor, Let’s Go Brandon Johnson, has mooted a $1 or $2 per transaction tax on futures, options, and securities transactions in order to fill the city’s gaping fiscal hole–despite the fact that this is currently illegal under Illinois law.

Now you might not think that a buck is a big deal, given that a T-note or crude oil contract has a nominal value of around $100 grand. But it is a big increment to the cost of executing a contract. For example, the bid-ask on a crude oil futures trade is usually about $10, and the brokerage commission adds on only a few bucks. So the tax would increase transactions costs on the order of 5 or 10 percent.

I note that the industry fought for years at efforts to impose a 15 cent futures transaction tax. What Johnson is proposing is substantially greater than that.

Now, if Johnson’s objective was actually to raise revenue, this would be an incredibly stupid idea. Rule one of taxation: tax what can’t move. Although in the floor days uprooting the exchange and taking it outside the city or the state would have been very difficult, that’s not the case in the electronic era.

Have servers, will travel. Yes, CME Group (and CBOE–which given recent developments might end up in CME) has corporate employees there, but if any city should understand that is no impediment to relocation, Chicago should given the exodus of several major corporate HQs from the Chicago area in recent years–Caterpillar, Boeing, and Tyson Foods being prominent examples.

Moreover, even before the CME says hasta la vista motherfuckers, it faces competition in some of its products from ICE, and a tax would shift business there.

Numerous trading firms (notably Citadel) have fled Chicago for reasons–namely the marked decay of the city. (And I do mean marked: even in the last two years the decline has accelerated dramatically.) The CME has certainly already put those factors on the scale when making its decision, and a sizable transaction tax would almost certainly tip the balance heavily in favor of joining the exodus.

Notice that I framed my analysis as a conditional statement: if Johnson’s objective was actually to raise revenue. One cannot be too sure these days. Mayors of city after city have taken actions, or failed to take actions, that seem designed to drive out all but the underclass and turn the polities they govern (I use the term loosely) into crime-ridden, drug infested wastelands. In fact, it’s hard to name a big city whose elected officials haven’t done that or aren’t doing it.

American Spectator writer Scott McKay calls it “weaponized government failure:” “deliberate refusal to perform the basic tasks of urban governance for a specific political purpose.” The “specific political purpose” being to drive out middle class voters who pose the main political threat to the Brandon Johnsons and their ilk.

Framed as a hypothesis, I’m hard pressed to come up with contrary evidence.

Whether that’s the true purpose behind Johnson’s transaction tax brainwave, if he moves forward with it it’s a near lock that CME will hit the road. An electronic exchange is footloose and fancy free and not beholden to any place. Where once there were “locals” whose physical presence was necessary to operate an exchange, there are now what may be called “globals” who can and do supply liquidity from anywhere.

And if it moves, Texas is a good place. No income tax for one thing. Reasonable housing costs. And as for the weather, as I told my late mom when she fought coming here: “Look, you spent four months a years indoors in Chicago. You’ll spend four months a year indoors in Houston. Just different months.”

So come on down, Terry Duffy. I’ll be here to greet you. With bells on.

September 21, 2023

The Rock of Chickamauga, Reconsidered

Filed under: Civil War,History,Military — cpirrong @ 3:07 pm

One hundred sixty years ago, the battered Union Army of the Cumberland gathered at Rossville, Georgia, near Chattanooga, Tennessee, in the aftermath of its catastrophic defeat at the Battle of Chickamauga, 18-20 September, 1863. Fortunately, logistical difficulties and the inevitable disorganization following a battle in which the victors had suffered 30 percent casualties prevented the Confederate Army of Tennessee from pressing their advantage. Consequently, the Army of the Cumberland was able to shake itself into a semblance of order at Rossville, and retreat into the defenses of Chattanooga on the 22nd.

Chickamauga was the second bloodiest battle in the Civil War, with casualties in excess of 34,000 out of roughly 125,000 men engaged. It was by far the most decisive Confederate victory west of the Appalachians, yet it was barren of strategic results. The Army of the Cumberland survived to fight another day. Besieged in its works, it neared starvation but the Lincoln administration rushed reinforcements from the Army of the Tennessee in the Mississippi River valley (under Grant and Sherman) and from the Eastern Theater (under Joseph Hooker). These forces opened a supply line, and eventually in late-November launched assaults that drove the Confederates in precipitate flight into northern Georgia.

(My grandfather’s great aunt Amanda Roberts remembered seeing trainloads of Union soldiers trundling through southeastern Ohio on their way to Chattanooga. It was an eventful summer for her. Earlier, she and her family had fled to the woods with their animals to escape John Hunt Morgan’s raiders.)

Rather than fighting the Yankees, after Chickamauga the Confederate generals fought one another. Or more accurately, Longstreet, Buckner, D. H. Hill and others fought army commander Braxton Bragg. Chickamauga was a bitter victory.

The battle was a meeting engagement fought in deep forests, which resulted in confused and confusing actions. On the first full day of action, neither side knew quite where the other was, and plunging into the woods time and again they came unexpectedly upon their adversaries, to their mutual surprise. For much of the second day, the battle took place along a relatively static line to which the Union army had withdrawn on the night of the 19th.

The actions included the attack of Cleburne’s division:

These troops are firing at my great-great grandfather, George Immel of the 92nd Ohio Volunteer Infantry, located a few hundred yards in their front. They missed! (Luckily for me. Perhaps due to the rude log breastworks that the Union troops had erected in the night. They also missed at Missionary Ridge, the entire Atlanta Campaign, the March to the Sea, and the Carolinas campaign. George returned home to sire eight children.)

Few commanders came out of the battle with burnished reputations: many saw their reputations destroyed. Union army commander William S. Rosecrans was relieved by Grant when the latter arrived in Chattanooga a few weeks after the battle. As noted before, Bragg’s management of the battle and the barren results resulted in widespread criticism throughout the South.

Only James Longstreet and George Thomas emerged from the battle looking good–and Longstreet soon undermined that by his squabbling with Bragg, his failure to prevent the Union from opening a supply line through Lookout Valley, and the disaster of his Knoxville Campaign. Thomas went down in history as the Rock of Chickamauga for his stalwart defense of Horseshoe Ridge/Snodgrass Hill on the 20th. His defense saved the Union army from utter destruction.

It must be said that the Union defense was only made possible by the decisions of small bodies of men to rally on Horseshoe Ridge, and later Reserve Corps commander General Gordon Granger’s decision to march to the sound of the guns without orders.

Thomas’ defense overshadows some dubious decisions.

Although by reputation a cautious and deliberate general (his knickname was “Old Slow Trot”), on the 19th Thomas ordered two divisions to attack into the woods on the basis of sketchy information. One of these decisions (Baird’s) was routed, and the other (Brannan’s) was roughly handled. Rosecrans’ army was in a false position, in danger of being cut off from its base at Chattanooga: Thomas should have established a solid line to protect the army’s line of communication (the Lafayette Road) and performed reconnaissance to find out where the Confederates were rather than plunging into the unknown.

On the night of the 19th-20th, and through the morning of the 20th, Thomas constantly importuned Rosecrans to reinforce the left (which Thomas held). (He sent something like 20 couriers to Rosecrans asking for the latter to send Negley’s division to the left.)

Now, it was the case that the left had to be held to prevent Bragg from interposing his army between Rosecrans and Chattanooga. That said, Thomas had easily repelled the attacks on his direct front (due in large part to those rudimentary log works), and those Confederates (of Breckinridge’s division) who did circle around Thomas’ left were defeated in detail. Moreover, Thomas had a reserve line in Kelly Field that could have been used to extend his flank beyond the Lafayette Road.

Moreover, Thomas was myopically focused on is own situation, and ignored the truly parlous situation of the Union right, which had been hammered the day before. The far right was held by Davis’ small division, that had been handled roughly in Viniard Field. Next to Davis was Wood’s division: Buell’s brigade of that division had also been hammered there.

Thomas’ constant call for reinforcements led the mercurial Rosecrans–whose judgment was probably clouded by an extreme lack of sleep–to make hurried adjustments to his line, pulling out some units to send them to Thomas and shuffling in other troops to fill the gaps thus opened up. This led to considerable confusion, not least in Rosecrans’ understanding of his dispositions. When he received a report of a gap between Woods’ and Reynolds’ divisions (the 92nd Ohio being in Reynolds’ outfit)–a gap that did not exist, but was in fact held by Brannan’s division–Rosecrans order Wood to pull out and “support” Reynolds. This opened a gap into which tragically or fortuitously, depending on your rooting interest, Longstreet’s powerful attack of four divisions poured. The entire Union right was routed, and the detritus of the smashed units–and one relatively intact one, Harker’s brigade of Wood’s division–formed the forces on Horseshoe Ridge.

Rosecrans probably deferred to Thomas due to fatigue, and the evident psychological dominance of the latter over the former. Regardless of the cause of Rosecrans’ deference, the confusion and shifting of troops caused by Thomas’ insistence on being reinforced set the stage for disaster.

Rosecrans is of course ultimately to blame because it was his responsibility to consider the position of the entire army. But Thomas pushed a psychologically fragile commander into bad decisions.

One pet peeve. I noted earlier that Thomas’ final defense occurred on what is known as “Snodgrass Hill,” a bald spur of the wooded Horseshoe Ridge. The monuments for Harker’s brigade are all located there, and it is undisputed that the repeated volleys of Harker’s brigade (the soldiers expending 100 rounds per man) were essential to Thomas’ defense.

But whom were they shooting at? The only Confederate unit in the area, Humphrey’s brigade from the Army of Northern Virginia that Longstreet brought to Georgia, suffered few casualties, and did not report making any attacks, let alone the numerous attacks directed at Harker. It was hundreds of yards south of Snodgrass Hill, and the accounts of the attacks on Harker’s line all indicate that the Confederates made it within a few yards of it.

Years after the battle, Archibald Gracie, the son of the commander of the Confederate brigade that finally breached the Horseshoe Ridge line (also named Archibald) wrote The Truth About Chickamauga, a sometimes polemical revisionist account which disputes the placement of the monuments, and the official War Department (later Park Service) account. Gracie’s book was based on a meticulous study of the Official Records and extensive correspondence with veterans of the combat there. I have always found Gracie’s case to be persuasive, but every modern account repeats the official version. The otherwise excellent Maps of Chickamauga, for example, has Harker’s brigade firing those tens of thousands of rounds at Humphrey’s distant (and stationary) troops.

Gracie more plausibly placed Harker’s brigade on what is referred to as “Hill One” of Horseshoe Ridge. That makes much more sense for many reasons.

Gracie is an interesting character. He survived the sinking of the Titanic, and wrote a book about it, though he died from the effects of the ordeal before it was published. Gracie Mansion in New York is named for one of his forebears (also Archibald). His father was killed at Petersburg.

Postscript: I edited this post to change the references to “Opdyke’s brigade” to “Harker’s brigade.” Opdyke commanded the 125th Ohio in Harker’s brigade.

September 16, 2023

I Dread the Thought of the Place: A New Standard in Civil War Battle History

Filed under: Civil War,History,Military — cpirrong @ 6:49 pm

Tomorrow (Sunday, 17 September 2023) is the 161st anniversary of the Battle of Antietam (or Sharpsburg to those daring enough to admit Confederate leanings). I have spent the days leading up to the anniversary reading D. Scott Hartwig’s massive account of the battle and its aftermath, I Dread the Thought of the Place. It is almost certain to be the definitive account of the battle for years to come.

Antietam is a battle with many moving parts, many of them moving simultaneously. Hartwig does a masterful job of describing each part down to the regimental and sometimes company level, and crucially, helping the reader understand what was going on elsewhere in the battle when X was happening at location Y.

Antietam was the bloodiest single day in American history. Perhaps the most impactful part of the book is how it gives some sense of how much carnage occurred in short periods of time in small spaces. Many paragraphs in the book describe the killing or wounding of several individual soldiers–often by name–in a single company or regiment in a period of a few minutes. The serial slaughter of color guards is particularly notable in this regard. Although of course nothing can possibly convey the shock of such violence experienced by the participants, the book individualizes the combat and its human consequences in a way that allows us to glimpse, at least distantly, how intense and concentrated the violence was.

One thing that the book makes abundantly clear is the often decisive role played by artillery in the battle. Stephen D. Lee, a Confederate artillery battalion commander at the battle, called Antietam “artillery hell.” It was for Lee, given the pounding that his batteries took on the Dunker Church Plateau. But it was an artillery hell especially for infantry on both sides who were pounded by guns that had unobstructed fields of fire seldom found on Civil War battlefields. Hartwig shows that artillery played a more decisive role at Antietam than at any other battle of the Civil War, including Gettysburg. Before reading the book, I did not appreciate role of Confederate artillery in stymying Burnside’s assault on the Lower Bridge.

The book is also remarkable in its integration of the entire vertical of the battle, from the commanding generals down through each echelon to the lowest private. It describes the actions of each, and is judicious in its judgments on the command decisions at every level of command, from the captains of companies; to the field officers of regiments, to the brigade, division and corps (or wing) commanders; and finally to army commanders McClellan and Lee. These judgments are well reasoned, and often surprising: I can’t say that I’ve ever seen anyone write favorably of Samuel Sturgis, as Hartwig does! Some come in for praise–such as Hooker. Others, not so much. The acerbic D. H. Hill would certainly take issue with Hartwig’s critical assessment of his generalship. The book’s treatment of Edwin Sumner is particularly brutal, but completely warranted given the brutality that Sumner’s soldiers experienced as the result of his blundering.

Hartwig does not shy from criticizing icons, notably Stonewall Jackson. And he comes to the defense of the often-maligned, most notably Ambrose Burnside, whose generalship at the Lower Bridge (sarcastically called Burnside’s Bridge by posterity) Hartwig treats with understanding of the challenges posed by terrain, bad staff work (notably by the Army of the Potomac’s Topographical Engineers), and equivocal orders issued by AoP commander McClellan. Hartwig makes it painfully clear that McClellan did Burnside dirty in his final report on the campaign, unjustly and counterfactually putting blame on Burnside (who by that time was discredited by the disaster at Fredericksburg) in order to distract from his own failings.

The book could have used some more careful editing. There are numerous who/whom mixups. At times left and right flanks are also mixed up, which led me to have to re-read a few descriptions, map in hand. I caught at least one curious name mistake. Union brigade commander Colonel William Howard Irwin suddenly became Colonel Irvin, and remained so for the rest of the book. Although perhaps the shade of Colonel Irwin is grateful, as his rather appalling–and perhaps drunken–incompetence (that led to the butchering of the 7th Maine) can be laid at someone else’s gravestone.

I therefore heartily recommend I Dread the Thought of the Place. But be warned!: it weighs in at a massive 790 pages (and 4.25 pounds). It is not for the faint of heart or anyone looking for an introduction to the battle.

Reading the book brought home how Civil War scholarship has developed and improved in the 50 plus years that I have been devouring books on the subject. When I first went to Antietam on my own, in 1978, the standard work was James V. Murfin’s A Gleam of Bayonets, published in 1968. It was a good, say, 20,000 foot view of the battle. Stephen Sears’ 1994 A Landscape Turned Red was more detailed, giving a say 10,000 foot view of the engagement. In subsequent years, microhistories focusing on specific parts of the battle have appeared: these give you a drone’s eye view of particular actions.

Examples include David Welker’s The Cornfield and two volumes by Marion V. Armstrong on the disastrous attack of Sedgwick’s Division–one focusing on the Union side of the action, the other on the Confederate side. John Micheal Priest’s Antietam: A Soldier’s Battle focuses (as the title suggests) on the action from the perspective of those with muskets in their hands. The Brigades of Antietam and The Artillery of Antietam describe the actions of each brigade and battery in some detail. Ezra Carman’s early detailed history has been republished, including as Visual Antietam (in 3 volumes, edited by Brad Butkovich). Then there are tour guides, like Carol Reardon’s and Tom Vossler’s A Field Guide to Antietam or Ted Ballard’s Staff Ride Guide: Battle of Antietam. Moreover, there are two excellent compendiums of maps, Bradley Gottfried’s The Maps of Antietam and Brad Butkovich’s The Antietam Battlefield Atlas. (Although the maps in I Dread the Thought of the Place are good, I strongly recommend reading it with either Gottfried or Butkovich in hand.)

Thus, there is an abundance of choices to those who want to take a deep dive into Antietam. But D. Scott Hartwig’s book is pretty much one stop shopping. It tells the fascinating story of America’s bloodiest single day of battle in incredible detail. It represents a new standard in battle history.

September 15, 2023

Gaslighting About Joe’s Innocence Is Just One Front in the Gaslighting War

Filed under: Economics,Politics — cpirrong @ 11:47 am

Speaker of the House Kevin McCarthy has announced the initiation of an impeachment “inquiry” against Joe Biden.

On the substance, I’m ambivalent. Many crosscurrents here. Perhaps the most intriguing is that this might be turnabout: just as the indictments against Trump are plausibly a strategy to boost his popularity among the Republican base to ensure his nomination (in the belief he can’t win the general–though maybe they should ask Hillary about that), the House impeachment move is plausibly an effort to force the Democrats to stick with Biden (in the belief he can’t win the general–though maybe they should ask Trump about that).

The Democrats’ reaction is quite amusing, and telling in many ways. It also suggests that if this is a turnabout play, it’s working.

The main response is that this inquiry is totally unjustified, because there is no evidence that Biden is corrupt. For one thing, McCarthy announced an inquiry–which is a process to develop evidence. Justification of an inquiry faces a (much) lower hurdle than an actual impeachment, or a conviction and removal from office. Moreover, there is far, far more evidence in plain sight here than the predicates for the first Trump impeachment or the Mueller investigation. The former was based on allegations regarding a phone call between Trump and Zelensky which turned out not to be an accurate representation of the actual content of the call. The latter was based on the Steele Dossier and some extremely dubious hearsay (e.g., the alleged Papadopolous revelation). The Dossier was facially absurd–as I wrote immediately upon its release: the Putin gifted Trump 10 percent of Rosneft via Carter Page was obviously complete and utter bullshit.

With Biden there is: Hunter’s laptop; information from a trusted FBI source; undisputed and indisputable business dealings between Biden’s son and brother and corrupt companies (CEFC and Burisma) and oligarchs around the world; documented large flows of money through a labyrinth of shell companies; well over 100 suspicious activity reports related to Biden family members filed by US banks; testimony of Biden associates (Archer and Bobulinski in particular); contemporaneous US and European documents regarding the Ukrainian prosecutor Shokin whom Biden bragged about getting fired; Shokin’s statements; Biden’s bragging; and the now indisputable fact that Biden lied repeatedly about the absolute wall between him and Hunter’s business dealings; the fact that Hunter and Jim had nothing–zero, zip, nada–to offer Burisma or CEFC or corrupt Kazakh or Romanian oligarchs other than access to Joe Biden. And that’s just what pops immediately to mind. More than enough smoke to justify looking for a fire.

But but but . . . there’s no proof that Joe benefited personally from Hunter and brother Jim’s foreign dealings!!! the Democrats squeal. In unison.

Er, that’s the point of an inquiry, isn’t it? To determine whether Joe indeed realized a benefit. There is certainly more than enough evidence to create a reasonable suspicion of such a quid pro quo.

And ironically, one of Biden’s–and the Democrats’–primary justifications proves the existence of such a benefit. JOE LOVED HUNTER! Biden did what he did not out of greed for personal pecuniary gain, but because of his deep, abiding love for his troubled son. (Why is Hunter troubled if he had such a loving father? you might ask. And if Joe’s love is unconditional and without any strings or expectation of payback, why did Hunter sometimes express bitterness at what he had to give his father, e.g., half of his income?)

Well, let’s taken the deep, undying, unconditional love as given. That would imply that Joe benefited any time his son profited. Even if a single dime that rained on Hunter never touched Joe’s hands, all those dimes (100s of millions of them) would have given Joe immense pleasure.

Bribery involves performing an act in an official capacity in return for consideration. The showering of blessings on a son upon whom the sun supposedly rose and set in Joe’s world certainly counts as consideration for Joe.

Consider an analogy. Any corporate CEO that arranged or facilitated deals that benefited a family member would be fired, and perhaps prosecuted. Further, many government corruption allegations (I’m from Chicago, so I know!) involve actions by a government official that benefit a family member or members, without the necessity of showing that the official received any direct compensation.

Meaning that the no-direct-personal-benefit-and-he-did-it-all-for-love defense does not cut it. Even if it is true. Which is highly dubious (as the above litany of the supposedly non-existent evidence demonstrates), and which regardless is a fair subject of inquiry.

There is obviously some serious cognitive dissonance at work here. On the one hand, publicly Democrats are circling the wagons around Joe. On the other, there are clear signs of concern, and perhaps panic, in the Government Party about Biden’s electability, especially in light of his undeniable cognitive decline–from a not-too-high-to-start-with level.

As evidence of the latter, CIA sockpuppet moonlighting as WaPo columnist David Ignatius called upon Biden not to run in 2024. I also believe that the White House’s rather remarkable issuing of marching orders to the mainstream media to “ramp up scrutiny” of the House Republicans’ investigations reveals fear of an internal push–or putsch. It hardly screams confidence. Indeed, it betrays concern that the media may turn on Joe.

So we can expect more gaslighting on this. Because that is what the Government Party does best. We are gaslighted 24/7 on just about everything–not just Biden’s dealings. For example, we are told that the economy is just GREAT. Bidenomics is the BOMB, man!

But the attitude of most Americans about the economy is decidedly sour even though the data is allegedly “surreally good.” What a strange disconnect, eh, Paul Krugman?

Who you gonna believe, Paul Krugman or your lying bank account? Median household income has fallen three straight years. Note: the decline has continued the last two years, after the COVID shock. This is mainly due to the “transitory” inflation that we were told we shouldn’t worry our little heads about.

Perhaps household income figures aren’t included in the data that Paul scrutinizes. If he did pay attention to it, or did and actually told the truth, he would realize that there is no “profound and peculiar disconnect.” Household income is what people care about, and what drives their evaluation of their economic circumstances. The connect is very, very clear.

I mean, duh.

But the whole-of-government (and government pilot fish e.g., Krugman and media) propaganda/gaslighting effort never stops. You are just too stupid to know whether you are living better this year, right? Pay attention to your betters, prole! They’ll tell you how you’re doing!

Thus, the “no evidence” gaslighting on Joe’s guilt is just a piece with a broader, and indeed ubiquitous, phenomenon. We are lied to 24/7. They have to know we know they are lying. But they continue to lie. And that is the essence of gaslighting. And there are many, many fronts in the gaslighting war, of which the Joe is the personification of innocence is just one.

September 11, 2023

So, You Really Want Elon Musk Unilaterally Making US War Policy?

Filed under: Military,Politics,Russia,Ukraine — cpirrong @ 12:38 pm

Elon Musk is taking a lot of heat from the Ukraine Amen Corner over his decision not to extend Starlink internet service to cover Crimea–Sevastopol in particular–because of fears that Ukraine would launch an attack on the Russian fleet based there, and this would spur a massive retaliation by Russia. Musk has claimed in particular that he feared the possibility of a nuclear retaliation.

There are conflicting stories. The one is that SpaceX turned off Starlink coverage to Crimea precisely when Ukrainian submersible drones were inbound. Denied navigational assistance and control provided by the satellites, the drones went stupid and the attack failed. The other–which Musk laid out himself on X–is that Starlink did not cover Crimea, the Ukrainians asked him to activate its coverage there, and he declined.

The second story is more plausible than the first. How would Musk know that an attack was on its way? And there has been no evidence of any such attack: in more recent drone strikes, the Russians have provided images of beached drones and video of drones being sunk by Russian gunfire.

The umbrage from the usual quarters–illustrated by the rant from Jake Tapper–is over the top, as is the response by Ukrainian official Mykhailo Podolyak: “By not allowing Ukrainian drones to destroy part of the Russian military (!) fleet via #Starlink interference, @elonmusk allowed this fleet to fire Kalibr missiles at Ukrainian cities.”

For one thing, this assumes that the drone strike would have inflicted devastating damage on the fleet. Subsequent strikes (guided how?) have inflicted some damage, but have hardly posed a major threat to the striking power of the Russian Black Sea Fleet.

For another, since when is an American company obligated to make its resources available to a foreign country to commit an act of war against a nation with which the US is not at war, and which has the world’s largest force of nukes to boot? Indeed, do we want CEOs making those kind of choices, given that especially when dealing with someone like Putin the target would immediately attribute responsibility to the United States? Such would be a major national security policy decision and should be made by those Constitutionally responsible–although given the current government, they may not be constitutionally fitted. But even given the dubious judgment of the current administration, it is they who should be making such decisions, not corporate CEOs.

If anything, it should go the other way. Companies should be prohibited from making such clearly belligerent moves on their own hook.

Indeed, note that US law requires approval of arms sales by US companies:

The FMS sales process begins when a country submits a formal Letter of Request (LOR). Ideally, this includes both a desired military capability, and a rough estimate of what the partner is able to spend.  Sales are approved following U.S. government review and, when required, after Congressional notification. After the sale is approved, the DSCA issues a Letter of Offer and Acceptance (LOA) specifying the defense articles, training, and support being offered for delivery.  Major FMS sales formally notified to Congress are publicly announced on the DSCA website

Providing an asset complementary to things that blow up–and which are indeed necessary for the use of the things that blow up even if they don’t blow up themselves, as Starlink supposedly was in this instance–should be subject to the same strict scrutiny and approval.

And again ironies and idiocies abound here. Those who consistently condemn Putin as evil and perhaps irrational dismiss Musk’s concerns about nuclear retaliation. Those who routinely attack Musk’s actions–and his management of Twitter in particular–want to delegate war making decisions to him.

Elon making decisions about waging war on Putin. Yeah, nothing unpredictable or frightening about that, right?

It should also be noted that the United States has been extremely circumspect about supplying weapons that Ukraine could use to strike at Russian territory, and at Crimea. The hemming-and-hawing about F-16s is one example, as is the continued reluctance to supply long-range ATACMS missiles. Even approval of main battle tanks–which pose little threat to Russian territory proper–occurred only after much debate and indecision. And for years–even following Russia’s invasion of Donetsk in 2014–the US was incredibly stingy about providing even clearly defensive weapons (like ATGMs) to Ukraine.

Meaning that those who attack Musk for not facilitating Ukrainian offensive capability into Russian- and Russian-claimed territory should really direct their fire at the administration. It’s their call, not Musk’s, and they have been just as cautious–if not more–than Elon.

The utter ingratitude of Ukraine to Musk is truly astounding. He kept Starlink operational over Ukraine for months on his own tab, and it was vital to its military operations. Yet since he doesn’t cater to their every whim–even potentially very ill-considered ones that implicate the United States–they demonize him incessantly. I believe that if Musk was not so dependent on the US government generally, and the security state in particular (especially insofar as SpaceX is concerned) he would tell them to GFY.

I have been very critical of Musk on some things, more favorably disposed on others. Here is a case where he is clearly in the right.

September 3, 2023

Shell Has a Come to Jesus Moment: Will the Politicians? Alas, Probably Not.

Filed under: Climate Change,Commodities,Economics,Energy,Politics,Regulation — cpirrong @ 3:22 pm

In 2010, along with my UH colleagues Victor Flatt and Praveen Kumar, I taught what I believe was the first academic carbon trading course in the world. My lectures in the course related to the economic challenges of creating traded commodities, specifically the challenges of merely defining what the commodity is and monitoring adherence to the standards so established.

Now, this may seem trivial, but even something like “wheat” poses challenges due to heterogeneity related to quality (even within a given variety, such as soft red winter wheat) and monitoring whether the wheat traded under a contract adhered to the relevant terms agreed to by the parties. Indeed, as I noted in an early article of mine, the genesis and early development of commodity exchanges like the Chicago Board of Trade and the Liverpool Cotton Exchange was not driven by the desire to trade futures: these were cooperative, private efforts to define property rights and to create a mechanism to standardize commodities and to adjudicate contractual disputes primarily over quality. Only after these challenges were met was it possible to trade futures. Standards (and their enforcement) are obviously a necessary condition for trading standardized instruments like futures.

The major intended takeaway from my lectures in 2010-11 was that the problems of standard definition and especially standard enforcement were even more daunting in carbon than in traditional commodities like wheat or cotton, and that this was especially true with respect to carbon offsets–things like contracts to plant trees to capture carbon.

How do you define what is being bought and sold? How do you monitor whether the offset contracted for performs as agreed? How do you address contract performance failures? The Chicago Board of Trade struggled for years to overcome these issues in wheat and corn and oats in the post-Civil War era, even though the trade was relatively geographically concentrated, the contracts were of relatively short duration (typically for a single consignment), and the commodity was relatively simple.

All of these challenges are far greater for carbon, let alone for offsets. Sources of carbon emissions are numerous and diffuse and costly to monitor. With respect to offsets, they are highly heterogeneous; have very long lives; require continuous investment and upkeep; and have highly unpredictable performance (e.g., the forest that you plant may burn down, or be ravaged by insects). These contracts are far more complex than a deal to buy 10,000 bushels of SRW winter wheat for delivery in Chicago next month. Moreover, many offsets are located in countries with weak–and sometimes close to non-existent–legal systems.

Furthermore, the incentives of the parties to these agreements can be perverse, especially for “voluntary” offsets. A buyer who pumps its ESG score by purchasing offsets that turn out not to perform seldom suffers serious adverse consequences (although there is some backlash against “greenwashing”), and the seller has a strong incentive to collect the cash and not make the necessary expenditures to ensure that the offset performs as promised.

I taught the class in the immediate aftermath of the Global Financial Crisis, and I suggested that there were a lot of similarities between offsets and the kinds of deals that wreaked havoc in the banking system in 2008-2009, where bankers paid their bonuses upfront based on imagined profits predicted by highly speculative models to be realized over several years churned out garbage securities.

In 2010 I was therefore extremely skeptical about the viability of markets for offsets. And the defects that I talked about have been increasingly recognized in the last year or so.

I believe that the actions of Shell during the last week represent an authoritative recognition that these predictable–and predicted–problems have come to pass. Like other (especially European) energy firms. Shell made ambitious carbon reduction pledges that it intended to meet largely through the use of offsets. But reality has reared its ugly head, and Shell is all but abandoning this strategy. Other companies (e.g., Microsoft) say that they are still committed, but if they are even remotely interested in spending their shareholders’ money wisely, they will eventually have the same come to Jesus moment as Shell.

A Shell-funded mangrove restoration project in Senegal (Bloomberg).

This represents another grievous blow to the ambitions of the Net Zero fanatics. Offsets are a major component of Net Zero plans. Renewables are another part–and reality is catching up with that too (as the travails of Danish renewables developer Orsted and German turbine manufacturer Siemens demonstrate).

But will the fanatics be deterred? Alas, it appears not. Indeed, they appear to be doubling down, as illustrated by lunatics like Michael Gove:

Net Zero and the policies intended to bring it about–including extensive reliance on renewables and offsets–are a guaranteed recipe for an impoverished future. This was predictable–and predicted–more than a decade ago. But when will the madness end? I am guessing not before these policies cause economic catastrophe.

September 2, 2023

Did They Send the Families a Bill for the Missiles?

Filed under: History,Russia — cpirrong @ 12:41 pm

In its concerted effort to ensure that Yevgeny Prigozhin will not become a venerated martyr, the Kremlin consigned the late Wagner impresario’s funeral to an obscure cemetery in a gritty part of St. Petersburg, limited attendance to his family members, and deployed considerable police and military resources to prevent anyone from going to the cemetery. They also attempted to undermine the development of a shrine by requiring the burial of the three main Wagner figures who went down in flames–Prigozhin, Valery Chekalov, and Dmitry Utkin–in separate locations (although that risks the creation of three sites of veneration, no?)

Perhaps the families should be grateful that funerals were even permitted. In Soviet times, the NKVD and KGB would send the families of those they shot a bill for the bullets used to kill them.* Did the FSB send the families of the Wagner casualties a bill for the S-300 missiles used to shoot them down? Or for the bomb, if that’s what did it?

Indeed, the Wagner leadership may be considered lucky as compared to their employees. There are reports that at least one cemetery of Wagner soldiers KIA in Ukraine is being obliterated.

There are also reports of the Kremlin and the MoD moving rapidly to seize control of Wagner assets and operations in Africa. This would represent a reprise of the early Putin policy of eliminating the Russian mafias by incorporating them into the state structures: it was a takeover, not an elimination.

*Someone on X pointed out to me that Indonesia still does this.

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