Sunday, June 15, 2025

No safety net: Insurance starts to go away

Ever since the words "insurance premium" began appearing on contracts in the Republic of Venice in 1255, modern global trade and now our broader society depend on insurance to mitigate risk of loss to enterprises and individuals for their business and personal property.

But as insurers retreat from areas made too risky for them by wildfires, hurricanes and floods supercharged by climate change, it becomes difficult to build new dwellings or continue operating businesses in disaster-prone areas.

A recent report complied by Deep Sky, a carbon removal company, illustrates just how bad things are getting in California. The key findings:

  • Home insurance premiums have shot up 42% in the most fire prone areas of California [since 2009].

  • One in five homes in extreme fire risk areas of California has lost coverage since 2019.

  • Spring fire risk in the US Southwest and Northern Mexico has reached a ten-year record.

Sunday, June 08, 2025

Trade war vise grip: China is squeezing rare earth supply and it's hurting

China is proving to be a more difficult adversary in the trade war launched by the Trump administration than previously imagined as it squeezes the world's rare earth elements (REEs) supply. I warned in early March that China had critical non-tariff weapons to bring to bear and that using them might turn out to be very painful for a world dependent on China's rare earth metal production. China currently controls 69 percent of the REEs mine production and almost 90 percent of the processing of these elements.

Why is this important? As I pointed out in my previous piece:

REEs are a group of metals, often found in deposits together, that are critical for modern electronics (such as computer hard disks, smartphones, and cameras); strong magnets used in hybrid cars and wind turbines; X-ray and MRI scanning equipment; aircraft engines; and crude oil refining. This is just a partial list. There are no viable substitutes for these metals available at any scale that would be meaningful.

When the Trump administration imposed tariffs on Chinese goods that reached 145 percent, the Chinese responded with their own tariffs on American goods of 125 percent. Those have since been dropped considerably to 30 percent for Chinese imports into the United States and 10 percent for American goods coming into China.

Sunday, June 01, 2025

Sunday, May 25, 2025

The lure of convenience: Why a national digital ID system is a really, really bad idea

We live in an age of convenience. Anything that makes our complicated lives less complicated and less difficult to navigate seems like a boon. And in the digital age—which allows us access to so much information anywhere, anytime—the lure of convenient access is very strong.

On the surface it seems sensible, for instance, to make it possible to log in to just one account for all our government services and interactions instead of having to use separate apps or an account for each service or department. And this would make sense if not for the immense dangers of concentrating such information and therefore making it an irresistible target for hackers. It's also worth considering who might be among those hackers, for example, unfriendly nations and their militaries.

But that is what the British government is proposing for the British public through the government's digital governance initiatives. You probably don't need a long litany of data breaches including those involving governments to confirm your fears. But this article describes recent ones in Britain in the context of the government's determination to roll out a national digital ID system.

Sunday, May 18, 2025

Infrastructure failure in America: Will we find a fix before the unimaginable happens?

Recent events in America's air transport system suggest that the system is becoming more prone to dangerous failures. Those failures include a January 29 mid-air collision between an Army helicopter and a passenger jet Washington, D.C.’s Ronald Reagan National Airport; a harrowing near miss between a landing passenger aircraft and an unauthorized business jet crossing the runway; a plane taxiing to the gate in Denver when an engine caught fire leading to the evacuation of all passengers, all of whom survived; and a blackout of air traffic controllers' screens for 60 to 90 seconds at Newark Liberty International Airport.

The Associated Press compiled a list of recent incidents which can be found here.

No doubt problems have been brewing for some time in our air transport system. While most of the focus is on the air traffic control system, the aging system run by the Federal Aviation Administration, it is probably important to look at America's overall aviation infrastructure which this year received a grade of D+ in the "2025 Report Card from America's Infrastructure" from the American Society of Civil Engineers (ASCE).

Sunday, May 11, 2025

"Better" AI has more "hallucinations"

Imagine you are a doctor with a patient whose hallucinations keep increasing. Of course, you might try to figure out how to stabilize the patient if possible so the hallucinations stop increasing in number. And you might be furiously trying to figure out the cause of these hallucinations so that you might reduce or eliminate them. One thing you almost certainly would NOT do is suggest that other people rely on your patient as a source of information.

And yet, that is precisely what developers of a "better" version of artificial intelligence (AI) are telling us to do. According to the linked article, "On one test, the hallucination rates of newer A.I. systems were as high as 79 percent." Contemplate that for a minute when you ask AI for help in answering a question.

Executives in the industry now admit that AI hallucinations—that is, information provided by AI tools that is just made up—will always be part of AI. The reason: AI tools use mathematical probabilities to construct responses. They cannot and will not ever have access to lived human experience and the judgement that results from that experience.

As the linked piece explains:

Another issue is that reasoning models are designed to spend time “thinking” through complex problems before settling on an answer. As they try to tackle a problem step by step, they run the risk of hallucinating at each step. The errors can compound as they spend more time thinking.

Sunday, May 04, 2025

Climate change and the Overton Window

Joseph Overton worked at the Mackinac Center for Public Policy, a Michigan-based conservative think tank before his untimely death in 2003. Overton observed that there is a narrow range of political ideas that are broadly accepted by the public as normal discourse including ideas they disagree with. Beyond that range of ideas politicians and others get labeled extremist which makes it harder to maneuver as most of the public has prejudged such people. This became known as the Overton Window.

Overton proposed that this window moves over time—women's suffrage, the end of prohibition, and gay marriage all suggest dramatic changes are possible. But the forces that wish to limit public discourse to a narrow range are so powerful that the seeming changes in the Overton window on certain subjects can often obscure a stubborn intransigence.

Climate change went from an obscure scientific phenomenon to being recognized as a central threat to civilization. Despite a broad scientific consensus and worldwide treaties such as the Kyoto Protocol and the Paris Accord, little actual progress has been made in addressing climate change. It is moving faster than ever.

In this context, two recent contrasting stories on climate change show how wide the Overton Window can appear to be without actually challenging anything fundamental in the current system.

Sunday, April 27, 2025

Yet another week off - no post this week

Your humble blogger is unexpectedly indisposed again this week and has been unable to write. It is my fervent hope that I will be back a week from today on Sunday, May 4.

Sunday, April 13, 2025

Sunday, April 06, 2025

Second- and third-order effects: Immigration, bird flu and climate

It's usually easy to predict first-order effects. Those are effects that follow directly from our actions. For example, the Trump administration's well-publicized campaign to find and deport persons not legally in the United States has had the predictable effects of causing some to leave on their own, others to hide and those who might have crossed the southern border into the United States not to, at least for now, if the large drop in border crossing and arrests is any indication.

But the second-order effects, that is, those that follow from the first-order ones, are often harder to detect and receive far less coverage. For example, Florida, which passed new draconian legislation in 2023 and began its own statewide crackdown on undocumented immigrants, began to see the second-order effects within a year. Agricultural workers were more difficult to find. Farmers could still sign them up for temporary work visas, but the federal system is difficult and costly to navigate. (To get a sense of how complex and demanding that system is, read more about it here.) The hotel, restaurant and construction industries are struggling to find people for the jobs they have open. One report estimated that economic activity in Florida has suffered a $12 billion hit due to the crackdown.

Now come the third-order effects. With the ongoing labor shortage, Florida is considering relaxing child labor laws to make more children available for jobs previously held by immigrants. In all likelihood, the state wouldn't even be considering this change had it not chased away so many immigrant laborers in the first place.