How Long Before the CEO of EXXON/MOBIL Resigns

I am not going to bother to look up the names of the players or to quote exactly. The roles of the people and the gist of their comments suffice.

For awhile the CEO of the Toyota Motor Company essentially said he was not so sure that the internal combustion engine could be replaced in the near term future. Electric cars might not meet people’s needs in a satisfactory way for a long time. To me he seemed a voice of sanity and moderation.

A day or two ago I read in the Wall street Journal that the CEO of Toyota was resigning calling for “younger” leadership. The company should be lead by someone who knew more about the car as transportation device with smart screens and electrical propulsion.

Today Exxon/Mobil earned record profits. The CEO said he believes we will need hydrocarbon energy for a long time; at least until a different energy source is developed that is as cost efficient or more cost efficient as oil. Nothing we have now meets that test. He even said that other oil companies investing less in hydrocarbon production and more in renewalable production helped Exxon take advantage of opportunities to expand and make more money.

How long before the CEO of Exxon resigns for a more enlightened individual?

Capitalism is Artificial Intelligence, Let me Explain

This is a difficult post of half-formed thoughts so it may meander or I may revise it as I think it out.

There has been a lot of discussion about Artificial Intelligence (henceforth, AI) on the Internets (what I call the Internets are blog sites, mailing lists, and YouTube presentations, social media is a different animal).

My position is that AI is not I, nor is it analogous to I.

I is a survival adaptation which provides living beings a measure of understanding and control over their physical environment. Just as the eye and the ear projected consciousness out beyond the physical edge of the organism. To a living being, physical environment is very important – it can be dangerous, it can contain needed things, it can be coerced to produce needed things. Non-living beings have no such interest in understanding and controlling their environment. The non-living have no needs or wants, they are beyond “this mortal coil.”

Then, while watching some PBS or local access channel on TV I saw an interview with George Guilder at a book fair.

He was promoting a book and the book had a thesis in it. Perhaps the book took 500 pages of dense text to develop and support the thesis. I had not read the book but I was drawn into the interview. It was hard to follow, but I got the gist of a really interesting and plausible idea.

I think he was saying that the market was not a mechanism for maximizing the exploitation of resources, as it is thought of in economics. The market is a thinking machine.

I understand that in some sense the price mechanism under capitalism is a conduit of information. I remember reading a comment that the communists were not able to find a replacement for price. Price tells you a lot about demand and supply – both very important if you want to supply the demand of people.

Communists tried factory quotas: produce 10,000 pounds of chandeliers per week. You cannot allow people just to wander into the chandelier factory and produce whatever they feel like. So the factory turned out two five thousand pound chandeliers per week. Few wanted such giant chandeliers.

They said, produce 750 chandeliers per week. They produced tiny, little, midget chandeliers way over quota. No one wanted them either.

You see the problem that they were trying to solve was an information problem: what to produce so that people got what they wanted. Without a price mechanism it was almost impossible to figure out what people wanted, and if you by chance did figure it out what they wanted, it could change in a minute. In fact it would because it is always in flux.

Guilder said that the market through the price mechanism processes information about costs, supply, demand, substitution, in real time from billions of data points, never missing anything, never stopping, never unaware. He said that the amount of value that the market could add is “unlimited.”

I would have to go back to watch the interview or read the book to confirm what I took away as his point, but I kind of get it. There is a huge amount of unmet needs in our world. At the same time there is a huge amount of resources that have not yet found a way to meet needs and therefore earn money (think of SPARC’s searching for some company to invest in). Perhaps it is is simply poor people have limited resources so are ignored. Still, Walmart makes a good living selling to the less than glitterati.

Sell to the Classes and dine with the masses; sell to the masses and dine with the classes.

Salem Massachusetts on Halloween

Since I am unaware of what most people do, I didn’t know that it is popular to visit Salem around Halloween.

We took a guided tour and it was informative. The town was settled by seamen from Gloucester and engaged in typical seaman type trade until the Revolution. After winning that we were kicked out of the British Commonwealth and all nearby ports were closed to Salem’s seamen.

They decided to sail to the Far East for spices and exotic goods. That was quite successful for a long time. Many ship slips were built in town and it prospered. The guide pointed out that the people manning the ships were children, from 12 to 20 years old, on a dangerous journey half way around the world.

The guide brought us to a memorial and said three times “There were no witches in Salem”, she continued, “in 1692 twenty innocent girls were murdered.”

The guide tied the deadly mass hysteria of 17th century Salem to the current year pieties: today Salem is one of the most tolerant communities in the State she said, why there is even a witch church with members who are all welcomed and indeed celebrated in the community. She almost said that we have purged ourselves of the dangerous hatred by accepting anything people want to do.

I thought about that as a solution to witch trials for awhile. Then I thought, the people of Salem were as sure that witches and the devil were evil as we are that Nazi’s and White Supremacists are evil. Like those earlier people we do fear and hate certain people and we will not be accepting them.

The trials were in 1692, those poor girls had none of the protections of the Constitution. If you are a member of a hated group, or accused of being part of a hated group, there are significant protections in Anglo-law, unavailable to those accused of witchcraft in 1692.

If the trials were in 1792 there would have to be an indictment by an independent grand jury, no church officials could do more that accuse. There would be a jury trial before 12 of their neighbors any one of which could stop the madness.

The charges against them would have to be proven beyond a reasonable doubt.

They would have a right to legal counsel, and if they were found not guilty it would end there but if found guilty there would be an appeal to a different higher court.

None of those protections of the accused applied to the 20 girls murdered in 1692. Maybe a great failure of justice would have still occurred, but I put more faith in due process and fair legal procedure than in expecting people to discard their hate, fears and prejudices.

Why the Progressive Hate America

Don’t know where I read it, but after reading it, it was like a hazy solution where some added chemical participated all the suspended particles and left a crystal clear beaker.

The left (Progressives) hate America because America is a living rebuttal to their world view.

The left believes that the better people, those who have expertise and knowledge and credentials, should have the power to impose their dictates on everyone else. There should be central planning. The government should do things (backed by force) to make us all live better. They will improve our health, our environment and our grace by making the country more socially just. They will require all these things in accordance with their beliefs.

America experimented with freedom, allowing each person a large measure of personal sovereignty (that means personal control of themselves and their actions and their production).

Surely all right thinking people knew that allowing the riffraff freedom would lead to bad results. They need us to guide them after all.

America became a prosperous place with no central bureau to determine the production of steel or cars or anything. America became a military power. America became an attractive place to live, with order, and prosperity and freedom for individual differences. Most of all, America became fair enough that people form everywhere wanted to come live here notwithstanding the difficulties of adjusting to a different culture.

What a reproach for the elitists. Every minute that America exists and muddles through is a reproach to their world view. Thus they seek to destroy America.

Why Are There So Few Shortages Under Capitalism?

The United States is a fairly capitalistic country. People, when they go to the store to buy something, seldom encounter the answer, “There is none.”

Today in India there is a severe shortage of oxygen for hospitals. I saw an interview on TV where the Prime Minister defended his actions, he said that more oxygen was sent to Mumbai than requested by the local authorities.

Of course when these central planners were allocating the nation’s oxygen supplies to cities and regions, they had no knowledge of future needs. They did not know Coved would flare up. Does that mean that Covid was responsible for the oxygen shortages? In a sense yes, but also the way they centrally allocated oxygen was responsible for the shortages – because a different distribution system could avoid shortages.

Central planners never know future demand. They make a guess based on past patterns of demand.

Under Capitalism there is an automatic mechanism that avoids shortages. It is called price.

When hospitals discover that they need more oxygen than they planned for and can buy they bid up the price to get new sources of supply.

The higher price does two things: (i) it causes more supply and (ii) it causes less consumption. This is practically magic because that is exactly what you want: more oxygen and fewer people using oxygen.

So if in Mumbai an oxygen tank sells for $10 and in other cities it sells for $5, people who have oxygen tanks think of ways to ship them to Mumbai. This is a good result for people in hospitals that need oxygen to survive.

On the other hand, people who use oxygen face higher prices. A welder who uses oxygen tanks possibly cannot charge his customers enough to buy the new higher priced oxygen. It is no longer profitable for him to use oxygen. Less supply is used.

The fly in the ointment is that the price goes up. The hospital has to pay much more for its oxygen supplies. No one likes to pay more for anything. If the government said that in the face of shortages suppliers can not charge more for an essential product you would get exactly what you have now under central plannin: people suffocating in hospitals because no new supplies rushed to their aid and no other users of oxygen suspended their use. The law forbidding price hikes in the face of shortages would cut off the function of the price mechanism and forbid more supply for the hospital patents and less use by welders.

Capitalism Ties Consumption to Production

One of the great benefits of a capitalistic society is the material abundance enjoyed by the people.

I believe the reason people under capitalism enjoy such material abundance is because consumption is linked to production.

Under capitalism, if you are a child about to become an adult, and you want to have some spending money of your own instead of begging the parents, what do you do? You get a job. More precisely, you find an enterprise of some sort that produces stuff for other people and you offer to help them out for money.

The enterprise gets money because it provides for the wants or needs of people. It gets money because it produces.

To the extent possible, the enterprise employees people who contribute to its purpose. People who are rare to find or contribute more get paid more.

Now think of the socialist or centrally directed society.

People generally are entitled to a salary or stipend when they reach a certain status: student, or adult, administrator. The people in command determine what you get, not a market.

The idea of a uniform basic income, no matter what you do of if you do anything, is clear collectivism/socialism. The political process yields consumption. Your production is irrelevent.

Now under Socialism people do have to produce, or else there is nothing to consume. That is the reason that under Socialism there are always shortages of everything. Production has to be coerced at force. Ultimately leading to the horrific death toll of socialistic regimes.

Did Big Business Suddenly Become Woke?

Big Business in America for the past 200 years kept its public face politically neutral. Big oil said put a tiger in your tank and that was just about the end of it.. Suddenly advertisements and actions practically proclaim they are on board with the progressive movement, lock, stock and barrel. Big tech bans orange man bad.

Did top management and the directors suddenly become woke? No. Anyone with some experience living in or studying autocratic governments can recognize what is going on. Big Business is trying not to be the first person to stop clapping after comrade Stalin finishes speaking. They are loudly demonstrating that they are on board with whatever the powers that be want them to be on board with, and no one on Earth is more enthusiastic than they. Why they can clap all night after everyone else goes home.

We have crossed the black hole event horizon where everything is sucked into the power gravity well of the US Government. The government has increased its power bit by bit every year since the Constitution was ratified. Now it is all powerful.

Scholars of such absolute authority know what the clapping monkeys do not yet. Clapping long and hard may not save you. Approved thoughts will become more and more extreme, people will jockey for power by denouncing other woke people, the most ruthless and the most murderous will rise to the top.

Do Corporations Run America?

I chuckle when I hear corporations run America

Very well meaning and smart people are always saying that corporations buy politicians and have too much influence on policy in America.

Well lets visit some of the most powerful corporations of the last decades and see what their influence got them.

There was IBM, so powerful the Antitrust Division of the Department of Justice, Southern District of NY spent years in litigation to stop the monster. No antitrust verdict ever came in, IBM wasted away as many corporations did when faced with new competitors. Do you fear IBM today? Many people did years ago.

Xerox was a power, Kodak was a power, GE was a power, US Steel was a power, General Motors was a power (does anyone fear GM today, or do we hope it will eek out existence long enough to pay our father’s retirement?), Bell Telephone was so powerful it was broken up into regional companies (wasted effort as the internet made it irrelevant and other companies took over its market), Exxon-Mobile was a great power, until it was no longer a great power.

But somehow their power was not sufficient to ensure their survival in the Dow Jones Industries.

The department of Indian Affairs still exists. The major universities still exist with the same institutions at the top that were at the top 200 years ago (Harvard, Yale, Princeton). But the corporation which run America somehow waste away to be replaced by new social media companies. Weird power they have that does not insure even their survival.


Headlines Blare: Trump Paid No Taxes for 11 Years.

I used to work for a law firm that was fairly high powered in tax. The firm will remain nameless but it gave tax advice to Sir Paul McCartney. I did no tax work for them. From what I hear, the firm found a way to make income from intellectual property, like rights to songs, nearly income tax free.

I conjecture that this became so popular and such an attractive idea that Apple, Google, Microsoft and others followed. Their intellectual property, like the rights to songs, could be placed in corporations domiciled in a country that did not tax royalties much. Then, as much of their income as possible would be paid as a royalty payment to their affiliate that owned the intellectual property. I think it involved Holland (called Double Dutch) or Ireland (there is a whole street of modern high tech offices in an otherwise bleary Dublin).

The whole point of this is that, if this story is true, I am in awe of President Trump’s tax lawyers. Real Estate is one of those fields where cash flow can deviate from taxable income because your property may be depreciating (loosing value) more than it is paying you in cash. On paper for taxes your are loosing money, but in reality tax depreciation is not “lost market value” of the property – it is just a fictional assumed loss. Your property could be worth more but the tax code allows you to depreciate a portion of what you paid.

A good tax advisor should minimize the taxes paid by their client. Millions of transactions every day are done because words in the tax code make the transactions advantageous. If you fund a 529 plan for your children’s education you are doing what my firm did for its clients. If you contribute to a 401(k) or other tax advantaged retirement plan, you are doing what my firm did for its clients. If you have a Health Savings Account, you are doing what my firm did for its clients.

AI is to Intelligence :: Instinct is to ???

I contend that Artificial Intelligence is not intelligence at all.  It is not thinking at all.  It is an algorithm that finds statistical correlations, a sort of mock inductive reasoning. AI is like inductive reasoning because inductive reasoning looks for correlations and then tries to devise a reason for the correlations. AI is one half of the way to inductive reasoning: it looks for correlations.
The reason I think AI is definitely not intelligence is because one could not even imagine AI performing the scientific method.  That is, one could not imagine an AI program detecting correlations in data, postulating a hypothesis that could explain the correlation, and then devising an experiment that would falsify or tend to confirm the hypothesis.
AI could predict that after x there will be y because it saw millions of instances of y following x, but it could not formulate a reason for y following x.  It is just not the nature of AI or what we ask it to do. It could not possibly predict any necessary consequence of y following x because of an abstract construct of concepts about x and y.