By Francois Valentin of UnHerd

According to a new Viavoice poll, Marine Le Pen is now France’s second most popular politician, only behind former prime minister and potential centrist presidential candidate Édouard Philippe. This might not seem surprising at first: Le Pen has reached the last two presidential runoffs and boasts the second largest contingent in parliament. But it will still be a shock for older generations of French citizens who remember her controversial father, Jean-Marie, and the extreme origins of her party, now known as Rassemblement National (RN).

Marine has remained an immigration hardliner but has also detoxified the RN brand by tacking her party, traditionally a home for shopkeepers and small business owners, to the Left on welfare and economics. While keeping the historic south-eastern stronghold, her social stances have made the post-industrial north of France, previously a Left-wing bastion, her new fiefdom (she has been an MP in a northern district since 2017). 

Yet Le Pen’s appeal is truly national. In the first round of last year’s presidential election, she only decisively trailed Emmanuel Macron in the over-60s age category, beating the President in every working-age category. She also beat Macron in the first five income deciles. 

On the coattails of her defeat, she garnered 88 seats in parliament, making RN the second largest party in the National Assembly. As part of her branding operation, she implemented what the media dubbed the “strategy of the suit and tie”: rather than acting like rambunctious agitators, her MPs slowly built their profiles and tactfully supported cross-party initiatives. As a result, according to the same Viavoice poll, RN is now deemed the most credible party not just on immigration but also on education, welfare, pensions, energy and even on discrimination.

In stark contrast, Jean-Luc Mélenchon and his Left-wing party La France Insoumise opted for a strategy of constant parliamentary guerrilla warfare. Despite months of protests and strikes against Macron’s raising the legal retirement age to 64 years, which should have made for fertile electoral grounds for the Left, Mélenchon is now the most widely rejected French politician, with 69% holding a negative opinion of him. 

But Le Pen’s occupation of her electoral gold mine might not be completely unassailable. Éric Zemmour’s bombastic 2022 presidential run could have sunk her political career, with many ambitious RN bigwigs mulling joining Zemmour when his polls overtook hers. Eventually, she wrestled back momentum, but a domino effect felt like a distinct possibility. 

Internally, Le Pen’s young right-hand man Jordan Bardella (also the third most popular politician in France) could provide an exciting alternative with his remarkable rise from a working-class background to political wunderkind. During the 2022 campaign, she ruled out a fourth presidential run, but has since softened her position. RN has always relied on its figurehead, whether Le Pen or her father. A diverse collection of growing profiles could be a strength for the party; equally, it could pave the way for fierce internecine skirmishes. 

If Le Pen keeps control of her political lane it remains to be seen whether she has done enough to break the presidential “glass ceiling”. The French system has become a race between moribund establishment parties and fresh upstarts to snatch the coveted runoff spot against Le Pen in what has so far been a guaranteed first-class ticket to the Élysée presidential palace thanks to an instinctive “everyone but Le Pen” voting response. Mélenchon’s supporters, for example, despite their intense rejection of Macron were still four times more likely to vote for him than Le Pen in the 2022 runoff. 

With Macron out of the picture for 2027 (despite his grumblings about the “damnable bullshit” of the two-term limit), fearful centrists need not lose all hope yet. Philippe, Macron’s first prime minister, remains France’s best liked politician, according to this month’s poll. His popularity and the recurring aversion to Le Pen, even if it is increasingly strained, may be enough to fend her off.

Submitted by Gun Owners of America,

September 11th, 2001, was a turning point in American history, and for many people across the country, a day that forever changed their lives. Americans lost loved ones in the initial attacks, and many brave first responders gave their lives, saving those from the rubble during the aftermath.

But 9/11 served as a wake-up call as well. In the wake of the attacks, the Transportation Security Administration was created, and steps were taken to harden security at airports and inside commercial aircraft.

But 22 years later, the TSA is little more than “security theatre.” The agency has come under frequent criticism from journalists, politicians, and even previous heads of the agency itself.

The criticism didn’t appear out of thin air either, as undercover probes of TSA by the Department of Homeland Security revealed that in 2015, screeners did not find 95% of weapons, drugs, and explosives being smuggled through airport security. In 2017, it was again reported that TSA continues to fail above 80% of its tests.

While we certainly hope that this number continues to improve, TSA only provides its numbers of firearms found at checkpoints. These “catches” usually happen when gun owners forget their firearms in their carry-on bags.

Additionally, a House Oversight Committee report found that TSA wasted hundreds of millions of taxpayer dollars on equipment that spends most of its “useful life” in storage. During the investigation for the report, TSA tried to hide its misuse of taxpayer funds by providing “inaccurate, incomplete, and potentially misleading information to Congress in order to conceal the agency’s continued mismanagement of warehouse operations.”

While the TSA continues to provide “security theatre,” Gun Owners of America has ensured that real security measures can be taken by pilots.

In 2002, Gun Owners of America worked closely with US Senators and Representatives to pass into law the Arming Pilots Against Terrorism Act.

The law’s passage was an uphill battle that took over a year. From the very beginning, getting guns into airline cockpits was a struggle. The President at the time, George Bush, was only lukewarm to the idea, and the Federal Aviation Administration was flat out opposed to it. Plus ALPA, the largest airline pilots association, was initially against the idea as well. 

But thanks to the grassroots support of Gun Owners of America members and pilots nationwide, the bill gained momentum and made its way to the resolute desk.  

After the law was passed, initial estimates said that upwards of 30,000 pilots were expected to apply to carry their firearms in the air. In 2008, it was reported that one in 10 pilots carry a firearm in the cockpit. We can only imagine that the number has continued to increase over time.

To this day, pilot carry remains an instrumental part of airline security. It provides pilots with a means of stopping terrorism and defending their aircraft should it come under attack. 

So, this year, as we remember 9/11 and those we lost—GOA will continue to fight for the right to keep and bear arms and do whatever part we can to ensure tragedies like 9/11 never happen again. 

*   *  *  

We’ll hold the line for you in Washington. We are No Compromise. Join the Fight Now.

The next time someone asks whether or not you think Joe Biden’s “Inflation Reduction Act” is working, you can share with them a new research report showing that childcare is becoming more expensive than in-state college tuition in 28 out of 50 states.

In fact, on average in the United States, childcare now costs $1,031 more than public college tuition, according to a new report from NetCredit.

The report “researched the average annual fees paid for public and private college tuition and the average cost of childcare in each U.S. state” and then “calculated the difference in yearly fees paid for childcare and in-state college tuition”. 

As part of their methodology, NetCredit then “compared these costs to local average salaries to find the affordability of childcare and in-state college tuition in every state.”

Among other findings in their research was that in Hawaii, annual childcare costs $15,995 more than a year of in-state public college tuition and that childcare is most affordable in Utah, where annual costs are equal to 7.87% of the average annual salary.

The report found that coastal states were the ones where childcare was most expensive and “much of the Midwest and eastern U.S. is priced in favor of childcare”.

“Vermont and Pennsylvania are more affordable for childcare since they have the most expensive public college fees in our study,” the report noted. 

Those receiving in-state tuition in Vermont spend 24.22% of their annual wage paying for it, the study found:

The average salary in both Vermont and Pennsylvania is around $55,450, putting these states among the top 20 for average wages in the U.S. But public college costs are so high in these states as to make investing in a college education significantly less affordable than elsewhere. “About 6% of UVM’s budget is from the state, but in many states it’s 25-40%,” explains Richard Cate, vice president of finance at the University of Vermont. “Being a small rural state, we don’t have big business to help fuel tax revenue,” says Marie Johnson, director of student financial services.

Here is a glance at the highest annual childcare costs in the U.S., and their difference between in-state college tuition:

The study’s full results can be found in the above table, which you can toggle at this link.

Authored by R.J. Hauman and Lora Ries via The Epoch Times (emphasis ours),

Despite all the “victory laps” Biden administration officials have taken as they brag that their unlawful policies and processing programs have reduced illegal immigration, recent border data shows the opposite.

On top of that, there is an undeniable link between the increase in illegal entrants being welcomed into the country and an increase in violent crime, which is posing a significant threat to public safety.

This is a matter that must be addressed when Congress returns in September, and its resolution is so critical that Congress must tie it to the negotiations for funding the federal government for the new fiscal year that starts Oct. 1.

In July, as temperatures soared into the triple digits, Border Patrol agents apprehended more than 132,652 illegal aliens between the ports at the southwest border—a 33 percent increase over June, when 99,539 illegal aliens were apprehended at the U.S.-Mexico line.

The lower total in June was clearly an artificial reduction due to the abuse of the parole system, a tool this administration uses to quickly bring in as many inadmissible aliens without visas through the actual ports of entry (not around them) as possible.

Not all of these illegal aliens are the same, but certain groups present more challenges to an overwhelmed Border Patrol and are able to easily enter the United States—notably adults entering illegally with children as a “family unit” and minors who enter without a parent or guardian, also known as unaccompanied alien children.

On top of increases in both single adult and family unit apprehensions, unaccompanied children at the southwest border increased by nearly 50 percent in July compared to June.

The same Biden administration officials who have repeatedly begged Central Americans not to send their children on the treacherous journey to the United States at the hands of smugglers and traffickers have done absolutely nothing to slow their entries. Instead, their policies and methods of resettlement are encouraging more.

The fact that unaccompanied children are regularly raped and exploited on their journey to the United States is a heartbreaking reality. And sadly, their lives do not improve once they enter the country, where they are then turned over to questionable, if not dangerous, “sponsors.” Many are also forced to work in unsafe conditions that violate child labor laws, go missing, or are sex trafficked.

Furthermore, teenage members of MS-13 and other violent Central American gangs continue to take advantage of current U.S. policy and the easiest, most vulnerable migrant flow and enter the United States as unaccompanied children.

More than 70 percent of unaccompanied children are teens, aged 15 to 17, according to the Department of Health and Human Services, with some adults even posing as minors.

Too many Americans and migrants themselves have needlessly died at the hands of vicious gang members who were welcomed into the country and then released into our communities. Yet another tragic instance of this took place mere weeks ago, with the media refusing to explore the reality of the situation.

Juan Carlos Garcia-Rodriguez, a 17-year-old native of Guatemala, illegally crossed into the United States and self-surrendered in El Paso, Texas, in January. He was quickly turned over to HHS custody as an unaccompanied child and released to a sponsor in Louisiana. On Aug. 19, he was arrested as a suspect in a brutal murder of an 11-year-old migrant girl in Pasadena, Texas.

At the time of his arrest, his address was not in Louisiana with the sponsor but an apartment complex in Texas where the little girl was found after having been sexually assaulted, strangled, put into a trash bag, and hidden under her bed while her father was at work.

The media continue to leave out the immigration details in their coverage of this brutal crime that should have been prevented in a concerted effort to cover for the Biden administration and keep the historic flow of unaccompanied alien children going and viewed in a positive light.

U.S. Customs and Border Protection statistics show a consistent and alarming increase of convicted criminal aliens that it encounters. As such, this horrific crime by Garcia-Rodriguez is just one of the thousands of murders, rapes, and other violent crimes that occur each year at the hands of illegal aliens in the U.S.

What is even more outrageous is the fact that Democrat politicians in the region and here in Washington continue to ignore such crimes.

The same folks who claim that everything they do related to border security is humanitarian in nature have shown more outrage over inflatable water barriers that Texas erected than the murder of an 11-year-old girl by a now-18-year-old man allowed into the country by their policies.

Enough is enough.

Republicans on Capitol Hill will soon be at a crossroads when it comes to addressing the Biden Border Crisis and funding the federal government.

It is essential that House Republicans unite behind a reasonable demand to include their already passed border security measure as part of any spending agreement that is passed to avert a government shutdown in late September.

The bill, the Secure the Border Act (HR 2), fulfilled promises made to the American people on delivering solutions to a self-inflicted crisis that harms not just cities and states along the border but every city and state around the country.

The bill’s intentions and contents are clear: It would end the crisis and restore sanity, safety, and security at our borders. A key component that helps do that is closing longstanding loopholes in the processing of unaccompanied alien children.

It is vital that this bill is a part of any agreement for the continuation of funding for the federal government.

If the federal government cannot perform the basic task of keeping our border secure and preventing instances like the murder of an innocent 11-year-old girl from happening, it should not be funded.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

The sprawling social experiment known as California faces an uphill battle on reparations, after a new poll from UC Berkeley and the LA Times reveals that voters overwhelmingly oppose the idea of cash payments for black descendants of slaves by a 2-to-1 margin.

The poll found that 59% of voters oppose cash payments vs. 28% who support the idea. Four out of 10 voters “strongly” opposed the idea.

Interestingly, just 19% of those opposed cited cost as an issue. The majority simply says it’s unfair to today’s taxpayers and wrong to single out one group for reparations.

In the Berkeley poll, when voters who oppose reparations were asked why, the two main reasons cited most often were that “it’s unfair to ask today’s taxpayers to pay for wrongs committed in the past,” picked by 60% of voters, and “it’s not fair to single out one group for reparations when other racial and religious groups have been wronged in the past,” chosen by 53%.

Only 19% said their reason was that the proposal would cost the state too much, suggesting that money alone is not the main objection.

Among Democrats, 43% favored and 41% opposed cash reparations. Republicans were strongly against the proposal at 90% with only 5% in favor. Independents were 65% opposed and 22% in favor.

Black California voters were more likely to support cash payments than any other demographic, with 76% in favor and 16% opposed, the survey found. Almost two-thirds of white voters were opposed as were 6 in 10 Latino and Asian voters. -LA Times

“It has a steep uphill climb, at least from the public’s point of view,” said poll director Mark DiCamillo, who was obviously disappointed at the results. “The idea of cash reparations is really what’s being strongly opposed,” he continued, adding “There could be other solutions that could be much more warmly received.”

The sobering reality could put Gov. Gavin Newsom and his fellow Democrats in a tight spot, after state leaders have vocally endorsed the idea of reparations – going so far as to create California’s Reparations Task Force in 2020. The objective was to create a model for national reparations. But as the poll reveals, they are sailing against strong winds.

The task force has indeed been hard at work. They propose payments to all descendants based on a plethora of criteria, ranging from health disparities to housing discrimination. But there’s more: The group also suggests ending the death penalty, restoring voting rights to all incarcerated individuals, and implementing rent caps in historically redlined areas.

Members of the reparations task force previously said convincing non-Black Californians that the harms from slavery are still persisting today could be one of the biggest challenges for proponents.

Much of the task force’s work centered on hearing testimony from academics, economists and other experts to gather evidence of the effects of slavery and to prove the ways in which government-sanctioned policies discriminated against Black people long after slavery was abolished. -LA Times

When asked about his stance on reparations in the spring, Newsom said reparations are more than just cash payments.

“It doesn’t have to be in the frame of writing a check; reparations comes in many different forms. But one cannot deny these historical facts, and I really believe very strongly we have to come to grips with what’s happened,” Newsom told Fox News host Sean Hannity.

When asked whether the state is ‘doing enough’ to ensure that black residents have a fair chance to succeed, 29% said the California is doing too little, 22% said the state is doing too much, and 26% said it’s just enough. Nearly 1/4, or 23%, had no opinion.

By Eric Peters, CIO of One River Asset Management

“The younger generation must inherit and carry forward the spirit of self-reliance, and hard work, abandon arrogance, and engrave the passion of youth in the water just like our parents did, on the monument of history,” declared Xi, some time ago.

Youth unemployment across China continued its rise this summer. The official number approached 21% before Beijing halted its publication.

Unofficial estimates stretched to nearly 50% when one counts the “lying flat”, a term adopted by youth who are choosing to quit the rat race altogether. In previous decades, agitated youth took to the streets. New forms of hyper-surveillance make such rebellion far harder. Instead, the young simply opt out.

“The facts of countless successful lives show that in youth, if you choose to endure hardship, you will also choose to gain, and if you choose to contribute, you will also choose to be noble,” said Xi.

Parents across the world nodded in violent agreement, because of course, nothing could be truer.

“In youth, experiencing more beatings, setbacks, and tests, will help you walk a successful life,” said Xi, a cold terror slowly rising in the leader for life. The national savings rate rose further still, his subjects preparing for harder times.

China’s fertility rate collapsed to a stunning new low of 1.09 per woman (from 1.30 in 2020). This symptom of profound pessimism, if not reversed dramatically, will lead to economic and then civilizational collapse.

“In the later years of my life, I always reminded myself that hardship is an opportunity. I must persist in learning more and working more and go to difficult places to train myself,” said Xi, searching for a solution to a problem far more challenging than trade wars, chip dependencies, ghost cities, insolvent banks, stranded infrastructure built for a globalized world that is fading, not to mention his nation’s food, energy and water insecurity.

All such problems are solvable provided a nation has a growing population of ambitious, optimistic, hardworking youth. But how to lift a nation whose young consider their current circumstances, assess their future, and quietly lie flat?

Weeks after European aviation authorities flagged a London-based firm for supplying “unapproved parts” for jet engines on older Airbus SE A320s and Boeing Co. 737s, Southwest Airlines has confirmed to Bloomberg that one of these parts ended up on a 737. 

Southwest told Bloomberg in an emailed statement that bogus low-pressure turbine blades from AOG Technics were found on one of its Boeing 737 NG. The part was immediately replaced, the airline said. 

The part scandal spread across the Atlantic after the European Union Aviation Safety Agency said earlier this month, “Numerous Authorised Release Certificates for parts supplied via AOG Technics have been forged.” 

AOG sold bogus parts for CFM56 engines, the world’s best-selling turbine, to repair shops servicing Airbus SE A320s and Boeing Co. 737s. Some of these older jets are used by budget airlines. 

According to Bloomberg, CFM International, the GE-Safran manufacturing venture of the engine, “found 78 documents they say are falsified and which cover 52 CFM56 engine part numbers, along with two faked records for CF6 components.” 

AOG began operations in 2015 in the UK and has supplied an unknown amount of CFM56 parts with fake certification to the global parts market. CFM and GE noted that no engine issue incidents have been traced back to AOG’s parts. 

It may be time to ask other US airline carriers if they also used bogus AOG parts in their engines… 

By Mish Shedlock of MishTalk

Wharton professors say Ideas Are Dimes a Dozen and they put that theory to a test. But how does one determine a good idea? And what does better mean?

Wharton notes the difference between consistency and better. For example, an airplane pilot who lands aircraft with average smoothness 10 times out of 10 is better than one who is brilliant 9 times out of 10 and crashes once.

With ideas, one fantastic idea and 10 poor ones is better than 10 average ones. With that backdrop let’s dive into the article.

Abstract: ChatGPT-4 can generate ideas much faster and cheaper than students, and the ideas are on average of higher quality (as measured by purchase-intent surveys) and exhibit higher variance in quality. More important, the vast majority of the best ideas in the pooled sample are generated by ChatGPT and not by the students. Providing ChatGPT with a few examples of highly rated ideas further increases its performance. We discuss the implications of these findings for the management of innovation.

Introduction: Generative artificial intelligence has made remarkable advances in creating life-like images and coherent, fluent text. OpenAI’s ChatGPT chatbot, based on the GPT series of large language models (LLM) can equal or surpass human performance in academic examinations and tests for professional certifications (OpenAI, 2023).

Despite their remarkable performance, LLMs sometimes produce text that is semantically or syntactically plausible but is, in fact, factually incorrect or nonsensical (i.e., hallucinations). The models are optimized to generate the most statistically likely sequences of words with an injection of randomness. They are not designed to exercise any judgment on the veracity or feasibility of the output.

In what applications can we leverage artificial intelligence that is brilliant in many ways yet cannot be trusted to produce reliably accurate results? One possibility is to turn their weaknesses – hallucinations and inconsistent quality – into a strength (Terwiesch, 2023).

ChatGPT can generate ides far faster than humans. This gives them a huge edge in coming up with a few great ideas. For this study the professors gave ChatGPT and the students the same prompt.

I believe I would get a big zero in coming up with a truly innovative product idea.

Could you do this? How fast?

System Prompt “You are a creative entrepreneur looking to generate new product ideas. The product will target college students in the United States. It should be a physical good, not a service or software. I’d like a product that could be sold at a retail price of less than about USD 50. The ideas are just ideas. The product need not yet exist, nor may it necessarily be clearly feasible. Number all ideas and give them a name. The name and idea are separated by a colon.”

User Prompt “Please generate ten ideas as ten separate paragraphs. The idea should be expressed as a paragraph of 40-80 words.”

Do LLMs Enhance Productivity in Generating Ideas?

The answer to this question is straightforward. ChatGPT-4 is very efficient at generating ideas. This question does not require much precision to answer. Two hundred ideas can be generated by one human interacting with ChatGPT-4 in about 15 minutes. A human working alone can generate about five ideas in 15 minutes (Girotra et al., 2010). Humans working in groups do even worse. In short, the productivity race between humans and ChatGPT is not even close.

Still, the old saying that ideas are a dime a dozen is perhaps a tad optimistic. A professional working with ChatGPT-4 can generate ideas at a rate of about 800 ideas per hour. At a cost of USD 500 per hour of human effort, a figure representing an estimate of the fully loaded cost of a skilled professional, ideas are generated at a cost of about USD 0.63 each, or USD 7.50 (75 dimes) per dozen. At the time we used ChatGPT-4, the API fee for 800 ideas was about USD 20. For that same USD 500 per hour, a human working alone, without assistance from an LLM, only generates 20 ideas at a cost of roughly USD 25 each, hardly a dime a dozen. For the focused idea generation task itself, a human using ChatGPT-4 is thus about 40 times more productive than a human working alone.

What Is The Quality Distribution of the Ideas Generated Using LLMs?

A “stochastic parrot” can generate ideas, and LLMs do so shockingly productively. But we don’t care about quantity alone. More typically, the objective of idea generation is to generate at least a few truly exceptionally good ideas. In most innovation settings, we’d rather have 10 great ideas and 90 terrible ideas than 100 ideas of average quality.

We, therefore, care about the quality distribution of the ideas, and in particular, the quality of the best few ideas in a sample. Of course, we might as well also measure the mean and standard deviation of the three sets of ideas, and we do so. Two useful measures of the extreme values are: What is the average quality of the ideas in the top decile of each of the three samples? Which sources provided the ideas comprising the top 10 percent of the ideas in the pooled sample?

Chat-GPT generated the best-rated idea in our sample, with an 11% higher purchase probability than the best human idea. The average quality of the top decile in each of the three pools also follows the same pattern as average quality— seeded Chat-GPT ≻ ChatGPT ≻ Humans. Overall, we have 400 ideas, with an equal number generated by ChatGPT and humans. In the top 40 ideas (top decile) a full 35 (87.5%) are those generated by ChatGPT.

ChatGPT vs the Screen Actors Guild

The Screen Actors Guild (SAG) joined the Writers Guild (WGA) in coordinated strikes. The writers demand protection from Artificial Intelligence. Articles abound.

• Deadline: September 6: WGA & SAG-AFTRA To Rally For California Bill That Would Grant Unemployment Insurance To Strikers
• Deadline: September 6: SAG-AFTRA Says Dual Strikes Against Video Games & Film/TV Industry “Makes Sense” As Key Issues Of Wages & AI “Mirror” Each Other
• MovieWeb: September 7: Bill Maher Says Writers Are Not ‘Owed a Living’ as the WGA & SAG-AFTRA Strikes Continue

Hoot of the Day from the World Socialist Organization

The World Socialist Website reports US film and television writers’ and actors’ anger reaching the boiling point

The struggle by 11,000 film and television writers, members of the Writers Guild of America (WGA), is now in its fifth month, while 65,000 actors in the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) are nearing the end of their second month on the picket lines.

The militant determination of the writers and actors to fight for decent living standards and a more meaningful future for art and culture have been met with intransigence and outright cruelty by the entertainment mega-corporations united in the Alliance of Motion Picture and Television Producers (AMPTP). The companies have made clear their willingness to drive thousands of artists into misery and out of the arts and entertainment industry.

Similarly, with all its phony rhetoric about “solidarity,” SAG-AFTRA has prevented video game workers from joining the strike of their fellow union members and only this week began a strike authorization vote. Moreover, the use of “interim agreements,” allowing hundreds of productions to go ahead, has created a surreal situation of internal scabbing that weakens or negates the purpose of strike action.

Outright cruelty!?

I discussed this on July 24, asking If the Screen Actors and Writers Strikes Went on Forever, Who Would Care?

The strike started on July 14. Did you notice? Care? I don’t watch TV so I am not a good judge.

In a podcast, Maher expressed some sympathy for the writers.

“I feel for my writers. I love my writers. I’m one of my writers. But there’s a big other side to it. And a lot of people are being hurt besides them — a lot of people who don’t make as much money as them in this bipartisan world we have where you’re just in one camp or the other, there’s no in between.

You’re either for the strike like they’re f—ing Che Guevara out there, you know, like, this is Cesar Chavez’s lettuce picking strike — or you’re with Trump. There’s no difference — there’s only two camps. And it’s much more complicated than that.”

But I side with Bill Maher who says writers are not “owed” a living and that the strike demands can be excessive and unrealistic.

The strike demands of the United Auto Workers are also excessive and unrealistic.

United Auto Workers (UAW) Demands

• 32-hour workweek
• 46 percent pay raise over 4 years
• Right to strike over plant closures
• Increased retiree benefits
• Defined pension plan for all workers
• Cost of living adjustments

Bernie Sanders Comments and an Accurate Rebuttal

The irony in the UAW case is Biden is recklessly pursuing an avenue faster than infrastructure allows and that will cost UAW jobs, but increase them elsewhere, in a highly inflationary manner. Note that Biden’s Green Energy Inflation Reduction Act Needs a Big Bailout Already “What, me worry?” Some on Twitter predict, even cheer for my demise to AI writers for my stance against the UAW. Like Bill Maher. I’m not worried. Unlike Bill Maher, I am so small no one would even want to bother to try to replace me. When I started this article, I had no idea it would morph into the Screen Actors Guild or the UAW. On a day to day basis, I have no idea what I am going to write about. Could AI have produced this article better? Even if so, would it bother? In retrospect, I am terrible at producing ideas for products, but pretty good at commenting on the global economic news. If I am replaced by AI, so be it. No one is owed a living. Not the Screen Actors Guild, not the UAW, and not me.

UAW Gearing Up for a Strike, It Could be Long and Nasty

On August 29, I commented UAW Gearing Up for a Strike, It Could be Long and Nasty

Bloomberg estimates the UAW demands would add $80 billion to costs.

If the Big Three automakers gave into UAW demand, they would all go bankrupt in short order.

The fact is, EVs are easier to produce. That means fewer workers. But the workers want protection from losing their jobs. The SAG wants protection from ChatGPT.

It’s really the same story. Change happens. It’s disruptive.

Biden’s Green Energy Inflation Reduction Act Needs a Big Bailout Already

The irony in the UAW case is Biden is recklessly pursuing an avenue faster than infrastructure allows and that will cost UAW jobs, but increase them elsewhere, in a highly inflationary manner.

Note that Biden’s Green Energy Inflation Reduction Act Needs a Big Bailout Already

“What, me worry?”

Some on Twitter predict, even cheer for my demise to AI writers for my stance against the UAW.

Like Bill Maher. I’m not worried. Unlike Bill Maher, I am so small no one would even want to bother to try to replace me.

When I started this article, I had no idea it would morph into the Screen Actors Guild or the UAW. On a day to day basis, I have no idea what I am going to write about. Could AI have produced this article better? Even if so, would it bother?

In retrospect, I am terrible at producing ideas for products, but pretty good at commenting on the global economic news.

If I am replaced by AI, so be it. No one is owed a living. Not the Screen Actors Guild, not the UAW, and not me.

Equities sold off last week and rotated out of cyclicals and low quality assets as an uncomfortable combination of rallying rates & commodities prices derails the goldilocks soft landing scenario, triggering a readjustment of the market optimism.

The smell of stagflation – not goldilocks – was everywhere with ‘inflation expectations’ too hot…

Source: Bloomberg

…and growth expectations (‘hard’ data) too cold…

Source: Bloomberg

As Goldman notes, rallying rates and commodities are derailing the goldilocks soft landing scenario.

Cyclicals and long duration assets have been rallying jointly over the summer on the narrative of strong growth but limited headwinds from rising rates.

This is no longer the case and cracks are appearing, sending rate-change expectations hawkishly higher…

Source: Bloomberg

The uncomfortable combination of rallying oil and US long end breaking up is disrupting this equilibrium and triggering a rotation into the “persisting inflation & sticky rates” narrative, adding pressure on equities and valuations.

Cyclicals continue to trade rich relative to PMIs & fading China momentum across regions, but are beginning to close this dislocation as highlighted mid-August.

Additionally, growth seems less durable in Europe, with underwhelming manufacturing production, making it all the most remarkable to see EU Cyclicals holding up as banks got unwound.

And finally, the credit risk component is seeing limited focus, although as highlighted by Rich Privorotsky in his daily note: according to the Fed, 37% of non-financial corporates are in distress in what should be a positive growth backdrop.

Given the dramatic tightening in lending standards, one has to wonder at credit spreads optimism…

Goldman warns, there’s room for disappointment as goldilocks hope fades:

Sentiment has cooled down a bit from July extreme greed but still remains optimistic on overall, leaving room for disappointment.

The VIX fell below 14, IG credit spreads are at the tightest of the year, the AAII bull bear index has bounced back to greed territory, the GS risk appetite index remains range bound c. 0.6 Z-Score – all consistent with investors just back to school and yet to adjust to the evolving macro backdrop.

Notably, our cross asset team noted that market correlation to macro growth surprise turned negative, suggesting rates are now high enough and that additional increases are seen as punitive from here .

US non-profitable tech underperformance is consistent with this dynamic…

The problem for Goldilocks believers is Energy.

Oil and Gas supply restrictions triggered sharp moves in the commodity space.

Oil is on the move and too hot to handle, breaking key resistances and now at the highest levels since Nov 22. This seems incompatible with 5y5y breakeven down…

…and suggesting room for upside inflation surprise, and therefore higher rates and PE compression.

Supply/demand dynamics catalyzed this move, with SPR starting to re-build, Saudi cutting production, and Australia strike pushing gas prices higher.

Besides, it is interesting to note growing concerns on the implications of rising energy prices ahead of the winter season among investors.

On the technical side, systematic flow is turning positive on the short term – however, CTA positioning in US equities remains very long c. 82nd 12m%ile, pointing at limited room for incremental demand from this investor base.

September seasonality dynamics tend to benefit consensual longs & Momentum…

…while Most Shorteds tend to underperform looking at data back since 2008.

China uncertainty remains a key factor for investors and Pro Subs can read the full note here…

By Jean-Laurent Cadorel of Exante Data

• Monetary policy matters in the short-run through its impact on asset prices, demand, and activity;

• Yet in the long run the economy is assumed to gravitate towards some “natural” rate of activity independent of such monetary actions;

• A growing number of researchers are asking, however, whether monetary policy can have hysteresis effects and impact the natural rate through innovation activity.

THIS YEAR’S Jackson Hole gathering was themed “structural shifts in the global economy.” Policymaker speeches garnered the most attention, of course. But there were also the usual academic contributions. And of these perhaps the most talked about was Monetary Policy and Innovation by Yueran Ma of the University of Chicago and Kaspar Zimmermann of the Leibniz Institute for Financial Research.

Ma and Zimmerman argue monetary policy can have hysteresis effects on the economy through the financing of innovation; lower innovation can lead to lower growth and less desirable macroeconomic outcomes. The authors show this empirically using monetary shocks constructed à la Christina Romer and David Romer and a variety of measures of innovation in the United States. They find statistically significant and economically large effects using local projections.

This result matters because it changes central bank calculus. For example, Taylor Rules implicitly assume the natural rate of interest is independent of the rate of interest set by the central bank—the natural rate being that “ground out” by frictionless markets, per Milton Friedman’s analogue in unemployment. And it is assumed the central bank anchors the money rate of interest to the natural rate of interest (per Woodford). So if economists now show monetary policy impacts the natural rate, Taylor Rules may need some rethinking: how can we target a natural rate of interest using a money rate if the latter impacts the former?

Motivation

Over the second half of the last century, macroeconomics has come to a compromise between the extreme (Keynesian) view than monetary policy is ineffective (in a liquidity trap) and monetary policy is all that matters (the extreme monetarist view). Today, it is generally understood that monetary policy has short-run effects but is neutral in the long run—Patinkin’s classical dichotomy prevails.

Discussions about monetary policy have therefore focused on its short-run impact while natural forces are expected to do their work on the supply side of the economy.

The paper by Ma and Zimmerman is part of a small but growing body of work interested in possible longer-term consequences of monetary policy which may operate through innovation and technological progress. They adopt a New Keynesian perspective with endogenous total factor productivity (TFP). Monetary policy influences firms’ incentives to develop and implement innovations.

For example, following monetary policy contractions, reductions in aggregate demand can decrease profitability and incentives for innovation. Tighter financial conditions and lower risk appetite can decrease funding for innovation. A slower pace of innovation may then have lasting effects.

This paper tests the effects of monetary policy on innovation activities, using a variety of metrics of innovation: aggregate investment in intellectual property (including R&D) from national accounts, the R&D spending of public companies, and measures based on VC investment and patent filing.

Results

The authors observe meaningful changes in innovation activity in the years following monetary policy shocks. First, investment in intellectual property products (IPP) in the national accounts (NIPA) declines by about 1 percent. The magnitude is comparable to the decline in traditional investment in physical assets. R&D spending in Compustat data for public firms declines by about 3 percent.

Second, VC investment is more volatile, and declines by as much as 25 percent at a horizon of 1 to 3 years after the monetary policy shock. Third, patenting in important technologies measured by Bloom et al. (2023) declines by up to 9 percent 2 to 4 years after the shock. Patenting in other technologies declines by less than patenting in important technologies according to the importance classification in Bloom et al. (2023).

An aggregate innovation index constructed by Kogan et al. (2017) using estimates of the economic value of patents also declines by up to 9 percent. Based on this paper’s output and total factor productivity (TFP) sensitivity to the aggregate innovation index, a 9 percent decline in the index can contribute to 1 percent lower real output and 0.5 percent lower TFP 5 years later.

Mechanism

For the transmission mechanism from monetary policy to innovation activities, Ma and Zimmerman find indications that both demand and financial conditions are relevant.

First, by decreasing demand, monetary policy tightening can reduce the profitability of developing new products and the incentives to innovate (Shleifer, 1986; Fatas, 2000; Comin and Gertler, 2006; Benigno and Fornaro, 2018). In the data, they observe a stronger decline in both R&D and patenting in more cyclical industries. They also observe that patenting declines after monetary policy tightening among both public and private companies, and among both large and small public companies. To the extent that large public firms have abundant financial resources, the slowdown of innovation activities among these firms is likely driven by reduced demand.

Second, monetary policy tightening can affect financial conditions and reduce the appetite for risk-taking (Bauer, Bernanke, and Milstein, 2023; Kashyap and Stein, 2023). In the data, they observe that VC investment for both early-stage and late-stage startups declines after monetary policy tightening. To the extent that early-stage startups are still in the product development phase and may not have products coming to the market immediately, reduced funding could reflect less appetite for investing in risky endeavors.

Conclusion

The Ma and Zimmerman contribution is an important empirical counterpart to recent papers exploring the possible longer-term consequences of monetary policy, which may operate through the influence of monetary policy on innovation and technological progress (Stadler, 1990; Moran and Queralto, 2018; Modery et al., 2021; Grimm, Laeven, and Popov, 2022; Amador, 2022; Fornaro and Wolf, 2023; Jordà, Singh, and Taylor, 2023).

The authors document the response of innovation to monetary policy using a collection of measures.

The results suggest that monetary policy could have a persistent influence on the productive capacity of the economy, in addition to the well-recognized near-term effects on economic outcomes. Rising interest rates since 2022 and a substantial decline in venture capital investment highlight how relevant these issues are. Recent breakthroughs in AI raise the hope that another technological revolution could be on the horizon.

What does this mean for policy? The authors argue their contribution does not imply monetary policy should be more dovish. A number of economic observers have highlighted the misallocation of capital (excessive housing construction) or the emergence of asset bubbles (in debt markets, housing, and cryptocurrencies) due to the low level of interest rates.

Striking the right balance between these two sides requires evidence and the authors contribute a persuasive set of results to the debate. But as they also point out. it is possible that the effects of monetary policy on innovation cancel out over the complete cycle. So, for now, the policy conclusions are not clear.