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.

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.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, June 8.

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.

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).

"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.

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.

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.

Taking a two-week break - no post this week or next

I am taking a break this week and next and plan to post again on Sunday, April 27.

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.

America First: Can it be squared with proposed 'annexation' of Greenland, Canada and the Panama Canal?

The "America First" slogan often used by candidate Donald Trump in his first and second presidential campaigns might sound on its surface to indicate disengagement from global affairs and a focus on domestic priorities. So, it may seem puzzling that President Donald Trump is talking about annexing Greenland, an autonomous territory of Denmark, a NATO ally; Canada, a sovereign country and a NATO ally; and retaking the Panama Canal.

If, however, you see Trump's pronouncement within the context of global economic and military competition in what he perceives is a zero-sum world (a win by one side must be a loss by another), then this kind of rhetoric begins to make sense. Such a view actually implicitly presumes that resources available to global society are finite or, at the very least, worryingly scarce and therefore must be produced domestically for security reasons or extracted willingly or unwillingly from other countries.

Trouble is, there is a very long list of important minerals that the United States must get either partially or wholly from other countries in order to maintain the smooth functioning of its modern technical economy. In addition, America, which had previously been a breadbasket to the world, is now a net importer of food—though this is on a value basis, not necessarily on a tonnage or calorie basis.

DOGE and (mis)understanding AI

The general narrative in the media regarding artificial intelligence (AI) is binary. AI is either the greatest human invention ever, so powerful it will catapult us into an age of abundance for all and solve our environmental problems as well OR it is the most momentous human invention ever which is so dangerous that it could wipe out human civilization (and therefore must be tightly controlled or abandoned altogether). The trouble with binary narratives is that they fail to incorporate hundreds or even thousands of pieces of information that lead to much more nuanced narratives that might help us understand AI.

Henry Farrell is a professor of international affairs at Johns Hopkins University School of Advanced International Studies who recently published an article (along with three co-authors) entitled "Large AI models are cultural and social technologies." The article appeared in Science magazine earlier this month. So what could a professor of international affairs possibly have to say about AI? Well, it turns out quite a lot. And, in a related article, Farrell shows how our societal understanding of AI sheds light on the activities of the so-called Department of Government Efficiency (DOGE) that seeks to tear out and discard large portions of the U.S. federal government. More on that later.

First, it's worth understanding what AI really is and Farrell provides a surprisingly succinct explanation of the variant that is most in the news today, Large Language Models:

Scented dangers: Who regulates scented products?

The internet and airwaves are full of advertisements offering to make you, your home, your car and your workplace smell better. It all seems innocuous because our sense of smell is always turned on, and we seem to be fine as we breath in scents from household cleaners, body soap, shampoo, cologne, scented candles and air fresheners. But that perception is belied by invisible dangers from these products.

The headline for a piece summarizing a recent study regarding particulate pollution from indoor scented products says it all: "Scented products cause indoor air pollution on par with car exhaust." According the study, scented products are "a significant source of nanosized particles small enough to get deep into your lungs, posing a potential risk to respiratory health."

That's bad enough. But who actually regulates what goes into these products, many of which contain chemically manufactured scents? Here's what the U. S. Food and Drug Administration (FDA) says on its website: "[I]f a product such as a shower gel is intended only to cleanse the body, or a perfume or cologne is intended only to make a person smell good, it’s a cosmetic. The law doesn’t require cosmetics to have FDA approval before they go on the market."

Trade war danger: China could quickly strangle American tech with metals cutoff

There's no telling exactly where the Trump administration's trade war is going as the president authorizes tariffs and then quickly suspends them, only to authorize them again and suspend them again or provide waivers for certain industries. While tariffs on narrowly defined categories of goods to guard against unfair competition may be workable, the administration's shotgun approach to tariffs risks a cutoff of strategic minerals that could strangle America's tech industry.

As I've written before, the United States is dangerously dependent on other countries for a wide-ranging list of metals and, in some cases, completely dependent. (For more on that, see here, here, here and here.) Responses to tariffs do not have to take the form of retaliatory tariffs by the targeted country. They can take the form of export restrictions that deny the United States key commodities and products necessary to important industries.

China currently controls 69 percent of rare earth elements (REE) mine production and almost 90 percent of the processing of these elements. 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.

No matter what Elon Musk thinks, government cannot and should not be run like a business

There is a so-called U. S. government "efficiency" drive currently underway delegated by President Donald Trump to unelected billionaire Elon Musk. Whether Musk has the authority to do what he is doing has become a matter for federal courts (for example, see here and here). In this piece I want to discuss the underlying assumption behind Musk's approach and see if it makes sense, namely, whether the government should be run like a business. Spoiler alert: It shouldn't be and can't be.

That's because there are important overarching differences between the goals of government and those of a business that explain why strictly imposing business-style management on government will not work. First and foremost, business owners are allowed to freely make two important choices: 1) which products or services to sell and 2) which customers to target for those products and/or services.

Government, by contrast, does not get to choose either of these. Government must serve all residents of a jurisdiction, whether it is a city, a state or a country, and provide them with goods and services as determined by elected representatives put in office by constituents of that jurisdiction. (I'm assuming a democratic form of government. But even in autocratic regimes, no one person can determine what goods and services are necessary for every locale and so others, appointed or elected, help make and implement those decisions.)

Are computers and democracy compatible? Maybe not

The ongoing takeover of U. S. government computer network by a small cadre of radical technologists—with the blessing of the current president of the United States—demonstrates just how vulnerable democratic norms and organizations are to determined technologists who understand the central role of computers and the information stored on them in any modern organization.

With the federal IT infrastructure now increasingly under the control of this group—under what is now being revealed as the false banner of efficiency—the entire population of the United States has become exposed to various forms of manipulation, fraud, bullying, blackmail and public embarrassment. Despite privacy laws, medical records from the Veterans Administration, Medicare and Medicaid are now easy pickings. Tax and income information from the Internal Revenue Service (IRS) will now be available to unelected persons who can demonstrate no reason that would override federal privacy laws. I know that the IRS has said that the DOGE worker assigned to the agency will NOT be able to see records of individuals. First, is the claim really credible given that there is no independent third party to observe? And second, what prevents the incoming Trump-appointed IRS commissioner from changing the arrangement without telling anyone?

The information the government has on each of us could be easily copied and given to entities or individuals outside the government for whatever purpose might profit them. The centralization of control of this information and access to it by the president and his political appointees makes each one of us susceptible to attack and reprisal for our views and our affiliations and to any twisted interpretation of the facts that, even if untrue, might be plausible and damaging. Think: medical records regarding treatment for substance abuse or tax records regarding a tax dispute with the Internal Revenue Service that includes information about divorce and child custody.

Downsizing the U. S. government this way will destroy its effectiveness without increasing its efficiency

Before cutting the ranks of U. S. government employees who safeguard the nation's nuclear material and respond to nuclear accidents, it would seem wise to ask them exactly what tasks they are assigned and how they accomplish them. Apparently, that was not a consideration when the Trump administration through its U. S. Department of Government Efficiency Service (currently run by billionaire Elon Musk) began firing personnel at the National Nuclear Security Agency (NNSA).

What is happening at the NNSA is a window into why merely downsizing an organization does not necessarily increase its efficiency. On its website the NNSA explains that it has the following missions:

1. To ensure the United States maintains a safe, secure, and reliable nuclear stockpile.


2. To prevent terrorists from acquiring nuclear or radioactive material that could be used in an attack on the United States, its interests, or allies.


3. To provide effective nuclear propulsion plants to the U. S. Navy.


4. To prepare for nuclear and radiological incidents and accidents through planning, training, and exercises and respond to nuclear and radiological incidents and accidents worldwide.

Why Musk's access to U. S. Treasury payment systems risks a global financial meltdown

Whether or not you share the zeal for cuts in government spending embraced by President Donald Trump and his billionaire sidekick Elon Musk, you should know that giving Musk and his callow team of computer coders access to payment systems at the U. S. Department of Treasury risks a global financial meltdown. It doesn't make such an event certain, but it lowers the odds considerably.

Here's why:

First, the U.S. Department of Treasury processes some $6 trillion in payments each year. If that system were to come to a halt for even a relatively short period of time, the consequences would be devastating, not only for the U.S. economy but for the global economy as well.

It is also important to grasp that the Treasury Department stands behind the entire U.S. banking system. It is the lender of last resort in a banking crisis to the Federal Deposit Insurance Corporation which insures bank deposits nationwide, and because the Treasury Department has the full faith and credit of the United States government behind it, the department is a potent force for forestalling panic and crisis in the banking system.

After DeepSeek, AI developers are wrong that The Jevons Paradox will bail them out

In 1865 British economist William Stanley Jevons explained to the public that increased efficiencies in the use of resources per unit of production do not generally lead to lower consumption of those resources. Rather, these efficiencies lead to higher consumption as many more people can now afford the more efficiently produced goods which carry a lower price tag. Jevons was referring to coal, the cost of which was falling and demand for which was rising due to increased efficiencies in production. His idea became known as The Jevons Paradox.

When the Chinese-based artificial intelligence (AI) upstart DeepSeek demonstrated last week that complex and powerful AI can be delivered for a tiny fraction of the cost and resources of current AI tools, DeepSeek's competitors cited The Jevons Paradox and told investors not to worry. Demand for AI would now grow even more rapidly in response to greater efficiencies and thus lower costs.

What those competitors failed to mention is that DeepSeek's breakthrough is great news for buyers of AI tools, but very bad news for current developers who are sellers of those tools. DeepSeek is giving away free or at only 3 percent of competitors' prices (for those needing application programming interface services) something comparable to the very expensive products of its competitors. This suggests that the hundreds of billions of dollars spent developing those expensive tools may have just gone up in smoke. That investment may never be recouped.

Democratization of AI spurts ahead: More power to individuals for mischief

While the world was focused on the actions of the Trump administration in its first week, a little-known Chinese startup startled the tech world last week with the release of an open source artificial intelligence tool that for a fraction of cost and resources of American competitors such as ChatGPT matches and in some cases outperforms its American rivals.

The company, DeepSeek, has gone even further, making its eponymous tool available for download for free. Only those seeking to use the company's application programming interface―something which allows the tool to interface more easily with existing programs—must pay a fee that is only about 3 percent of that of other tools.

DeepSeek sheds light on two important issues. First, U.S. export controls on advanced computer technology, both hardware and software, are meaningless against a rival that has a highly educated population with the training and tools to work around such controls. The lack of resources essentially forced the DeepSeek team to solve problems related to efficiency that they would not have bothered to tackle if U.S. technology had been available. The team ended up producing a superior, much more cost-effective product as a result. In my December 2024 piece "U.S. China trade war: Is the latest battle really tit for tat?" I wrote:

Wishful thinking? Sweden building nuclear waste site to last 100,000 years

The sensible Swedes like planning ahead. This time its storage for nuclear waste from its own nuclear industry—storage that is supposed to last 100,000 years. Nuclear power currently provides 40 percent of Sweden's electricity from six operating reactors. The Swedes expect to fill the storage site—"60 km of tunnels buried 500 metres down in 1.9 billion year old bedrock"—sometime by 2080 at which time it will be closed.

For understanding whether the target of 100,000 years of successful storage is plausible, I suggest a trip back 100,000 years to understand what surprises might be in store over such an interval. One hundred thousand years ago the Bronze Age, the age when humans first started to refine and work with metal, was still 97,000 years in the future.

It might seem that not much happened in those 97,000 years, but actually a lot that could challenge such storage schemes did. For example, somewhere around 71,000 to 74,000 years ago Mount Toba, located in modern-day Indonesia, erupted in a supervolcano thought to be the largest in human history. The eruption was two orders of magnitude (100X) larger than another famous Indonesian volcanic eruption, Mount Tambora, which caused what is now referred to as "the year without a summer" in 1816.

Elevator 'crisis' as symptom of our infrastructure predicament

I recently noticed that the elevator at my favorite cinema has been out of order for weeks now. The less mobile patrons need that elevator to transport them downward to this underground theater. I then learned of America's "elevator crisis" and my mind wandered to the struggle to maintain the Roman Empire. I'll explain the connection below. But first a refresher on Rome's predicament:

The Roman emperor Trajan brought the Roman Empire to its greatest extent during his reign (98 to 117 A.D.) with his successful conquests in what we today would call the Middle East. Rome's many conquests had been financed by booty taken from the conquered.

But its hold on the sprawling empire—one that reached from northern England to southern Egypt, from Spain in the west to what today is called Iraq in the east—would henceforth have to be financed by rising taxes and inflated currency. The money was needed to pay for armies and naval forces to defend the empire's very long land and maritime borders. Building an empire turned out to be less expensive than maintaining one, including building and maintaining the infrastructure of roads and military and political outposts needed to protect and administer it.

What happened to Rome's maintenance bill happens in any system of infrastructure as it expands. The existing infrastructure must be maintained even as new infrastructure is built. Eventually, it becomes very expensive 1) to pay collectively for maintenance of all existing infrastructure and 2) to pay for increasingly aging infrastructure that requires extra expense.

Taking a break - no post this week

I am taking a break this week and plan to post again on Sunday, January 12.