Two days ago I read a note "Rotten Tomatoes" in Slate. One sentence stuck in my mind:
The Big Five have enormous operations, but tight regulations and water shortages make it impossible for them to build new canneries. So they must run their existing plants with a frightening efficiency. The California canneries operate 24/7...What? It is impossible to build new factories in California? As I am learning more about the food industry, factories are built and operate 20 - 30 years maximum, and then they are abandoned and replaced by new ones. This morning I toured a former chicken slaughterhouse complex at Har Tov, once the largest of this country. About ten years ago it was abandoned and replaced by new and more modern plants in the Negev. The place have subdivided and rented to ten medium size factories and several workshops. My client rented a ruined factory and intends to produce specialty meat products, sausages, smoked meat, etc. If California forbids the erection of new agroindustrial plants, then the whole sector is doomed to die and move to Central America. My mentor Chaim Ben Ezra (with his Sepharadi friends of Benny Gaon Holdings) has erected several tomato paste plants in the Dominican Republic, Nicaragua, Cuba, etc. Now I understand that he is going to win big.
I already learned that the permitting of a new oil refinery takes up to twenty years in the United States, in the best of the cases. The refining industry is frozen. Now I learn that the same situation reigns in the tomato paste industry, The Luddites rule in California and the State is agonizing.
36 comments:
It is the work of karma, the operation of poetic justice. Making tomato paste is as low tech as making toothpaste, one should be able to make it a shed. These mega tomato corporations were indirect beneficiaries of the tangle of food regulations that stymied the Mom and Pops. Their volume discount deals with the supermarkets put the smaller players out of business, hence the need to employ low-paid immigrants who will work long hours without complaints. Now that they are the only chickens left, they too are beginning to feel what it is like to run on a relentless treadmill. And in the background, the globalisers are ready with their chant "If the Americans cant hack it, they will have to go to wall".
California is a mess economically - they have gone from being the incubator of new industries to a place that industry avoids. California is always ahead of the US - whatever happens in California today happens 10 years later in the rest of the country (e.g. Californians drove Japanese cars long before other Americans did). Given where California is now, this is not encouraging for the rest of the country.
Eventually these statist, socialists policies will come to a dead end as they are about to in Greece, but those with vested interests (and fat civil service pensions) will fight to the bitter end to keep the status quo and even expand it. But in the end, you cannot have an economy where all business has fled and 100% of the workforce is employed by the government - or rather you can (as in the Soviet Union) but only at a subsistence level, not the current situation where government workers are paid BETTER than the private sector AND have greater job security and pensions as well.
K
Regarding tomato paste factories being low tech, I never understood the difference. You have enormous electro-mechanical equipment managed by computer programs, working at frightening velocity, why are they low tech? These plants employ armies of industrial scientists.
Regarding tomato paste factories being low tech, I never understood the difference. You have enormous electro-mechanical equipment managed by computer programs, working at frightening velocity, why are they low tech? These plants employ armies of industrial scientists.
J, I mean that I can make tomato paste with a blender, it is not as easy to make a silicon wafer.
California is a state that is exploited for many purposes. Years ago a friend of mine joined a start up to develop some device for fibre-optics, after proving their concepts in the lab (in California), they immediately set up production in China. Hobbled by my protectionist blinders, I thought that they should have let the American workers get the first bite of the cherry, but that would have been immoral according to the iron laws of economics.
Ivan, K, and J, what people in California don't understand is that, according to the Austrian school of economics, when money is punished it runs away. Also, money has a tendency to walk over to wherever the opportunity is best.
"If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia." — Jim Rodgers (commenting in 2007 CE)
In fact, Rodgers, with his wife and 2 daughters, moved from the USA to Singapore. Rodgers is selectively bullish on Asia — he likes China but not India. He says that one of the best bets over the next 30 years is the flow of commodities to China. It seems that the flow of capital and technical know-how from USA —> Japan —> S. Korea —> China has historical precedent in the British empire and, before that, in the Dutch empire. See "Wealth and Democracy: A Political History of the American Rich" (2002) by Kevin Phillips. My guess is that in 20 years both San Francisco and Los Angeles will economic disaster areas like Detroit and Cleveland are now. In another 10 to 15 years after that, all the US major metropolitan areas might be economically depressed areas. What do the 3 of you think about the US and Chinese futures?
Regarding tomato paste, I recall seeing an article about a place in Italy where women still make the paste in the traditional way by smearing the tomatoes on wooden boards to dry in the sun. In a blender you can make tomato juice, not paste. But making this stuff on an industrial scale and at a profit in a fiercely competitive commodity market where the price is cut to the bone is a completely different matter - as J says a modern computer controlled food processing plant is as complex as say an oil refinery or a power plant if not a chip fab.
The US has been living in some kind of fantasy world where all students were supposed to become computer programmers or such, so the fact that we were losing all our blue collar factory jobs to other countries was not only OK, it was a positive development. In the real world, most of the students can barely read and are barely qualified even for assembly line jobs (due to their poor work ethic), and the actual computer programming jobs are ALSO exported to India, etc. Meanwhile, you have a few billionaires who make $ on hedge funds or something and they are supposed to support the entire remaining mass of residents by their taxes. Then something goes wrong in the hedge fund business or the billionaires decide to leave for a lower tax jurisdiction and then you have a state with absolutely nothing.
Doggytwit- I encouraged my only son to begin studying Mandarin Chinese when he was in the 6th grade and he is planning to move to China when he graduates this fall. Does that answer your question?
K
It should be remembered, in this spasm of Asiaphilia, that Intellectual Property is not respected in certain prominent Asian jurisdictions, making it difficult to compete on a level playing field.
Insofar as American exports are moving towards the abstract and conceptual (eg, entertainment and software), how can the US hope to balance its trade unless it's property rights are respected?
Perhaps Jim Rodgers and his daughters can fix this little problem up. I'm sure they will get a much more sympathetic reception if they come pleading in ersatz Mandarin.
Anon.
Anon - I think it is the US that has gone down the wrong path on IP. The Constitution gave the federal government the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. " The limited times they had in mind were on the order of a decade or two, not centuries (copyright today can extend for 120 years or longer - is 120 years your idea of a "limited time"?) Patents have been extended to dubious "inventions" such as business methods (e.g. "one click ordering"). Drug companies game the system to make enormous monopoly profits - billions for a single drug - far in excess of what is needed to promote progress. There has been an attempt to criminalize what should be a civil matter and people have been fined hundreds of thousands of $ for copying a single song. In other words, like almost everything else in our society, we have taken our patrimony and made a dog's breakfast out of it at the behest of powerful vested interests. The IP laws are a lot like our laws concerning marijuana or speed limits or Prohibition - when millions and millions of people flout the law, then the problem is not with the people but with the law - good laws bear some relationship to the norms of their societies.
As the Chinese change from net consumers to net producers of IP (sooner than you think) their attitudes will change regardless of what the Family Rogers has to say.
K
PS, given that modern technology permits the perfect reproduction by every single one of the billions of personal computers on earth of exact copies of software, movies, music, etc. for pennies per copy, don't you think that staking your entire economy on this sector and the existence of some kind of fascist police force that will prevent people (especially people in jurisdictions beyond your reach) from doing what they have the easy capability to do is perhaps not the wisest choice?
K
K, yes ... good move on your part, my greatest fear is that in about 15 years most of the top 2% of the US population (top in terms of entrepreneurial, creative, technical skills) will move to China and elsewhere. That trend, combined with the Ray Kurzweil AI trend, might be almost like a nuking of the American economy. The people of the US might be primarily employed in the service businesses for Asian tourists. Fortunately, all the US rickshaw boys will be robots!
Anon, I think Rodger's 2 daughters are young enough so that can become perfectly fluent in Chinese. I think Jim Rodgers want the 2 of them to marry Chinese men and become Singaporean citizens.
Doggytwit - Even today I see more rickshaws and pedicabs in NY than I did in China. Mostly people in China take taxis that are modern compact sedans (when they are not driving their electric bicycles) I did take one ride in a 3 wheeled motorcycle taxi (sort of like what the Thais call a tuk-tuk) just for fun but it felt too unsafe to risk on a regular basis and I had the feeling that these were fading from the scene. I recall one tourist site where there was a fleet of pedicabs but they seemed to be lacking for customers.
K
K, in 1952 CE, Kurt Vonnegut published a novel "Player Piano," which is a dystopia of automation and capitalism. Have you read it? In the novel, people have their material needs satisfied, but the vast majority have no meaningful work — 95% of the population are welfare recipients or "trust fund babies" and only 5% of the population do all the really meaningful work. Have you looked at Ray Kurzweil: How technology's accelerating power will transform us (YouTube) ? If Ray is correct, then the human brain as a thinking machine will become obsolete around 2029 CE. In 10 years, almost all high-paying blue collar jobs might be automated, 5 years later 90% of all remaining jobs, and 5 years after that 100% of all jobs that rely upon thinking or physical performance except human entertainment specialities. I fear that Ray is the world's greatest living genius and that his forecast will be off by 5 years at most. I'd rather be a rickshaw geezer than see that happen!
Doggytwit - you are much better read than I am. I enjoyed Vonnegut as a teenager but as I grew older I realized that he had (in my opinion) himself fixated in his teenage years (which is what made him appealing to his "fellow" teenagers) and simplistic views perhaps because of his traumatic experiences as a POW in Dresden during the firebombing, when he was barely out of his own teenage period.
So far computers have made very limited progress in some tasks that even humans of limited intelligence find relatively easy. For example, a bilingual person with below average intelligence (say a Chicano waiter who grew up in Los Angeles) is much better at oral translation between Spanish and English than the very best supercomputer, even though scientists have been working on machine translation for 50 years. I'm not that familiar with Kurzweil's work but I'd say he is overestimating.
K
K, I think you are much better read than I am — I believe I am better "skimmed" than you are. I make the wild guess that your IQ is 135 & you have read about 2,000 - 2,500 books? In my life, I think I might have read about 1,500 books, skimmed perhaps 7,000 - 8,000 and examined perhaps 30,000 - 40,000. Also, I am monolingual. I used to try to read a tiny bit of French, German, and Spanish, but I was never successful. I have examined Dickens's "David Coppperfield" in the sense of reading 3 or 4 pages and then deciding that I never want to read it ... and so on for perhaps 30,000 or 40,000 other books. I agree that Vonnegut was a perpetual adolescent but I think maybe 40% of American men are perpetual adolescents. I am a perpetual Aspergerian. I think Vonnegut's humor is the make or break issue — if you don't like his humor then his books are no good to you. Also if you try to read a Vonnegut book twice then you've encountered all the jokes before and there's not much there. A really good book can be read 3 or 4 times with benefit to the reader.
I think the machine translation problem is essentially equivalent to the AI human-level intelligence problem. Kurzweil has studied the problem in depth and I strongly believe he is basically correct. When brain scanning and computer circuitry approach the nanoscale, then reverse-engineering of the human brain might be merely a question of identifying and imitating the basic information flow from the brain scans. Kurzweil says the intuitive linear view of technological progress needs to be replaced with the accelerating progress view. The rate of paradigm-shift keeps increasing. What you think will take 20 years will only take 15 years — the next 30 years of progress will only take 4 years. I think Kurzweil knows his stuff. However, I don't understand Kurzweil's optimism. If the Technological Singularity does take place, what will be the point of human existence? All play no work? Why would the AI superhuman robots care about people?
J, could Luddite rule be the lesser of the 2 evils? Better Luddite rule than superhuman intelligence?
"When brain scanning and computer circuitry approach the nanoscale, then reverse-engineering of the human brain might be merely a question of identifying and imitating the basic information flow from the brain scans."
WHEN. WHEN and IF. I'm always reminded of the Yiddish saying - IF my grandmother had a beard, she'd be my grandfather. Or alternatively , IF my grandmother had wheels, she'd be a trolley car. (Implying that she doesn't, so she isn't). In other words, a counterfactual is not really useful. Or write to me when this day comes. We know that human "computers" are massively parallel but the silicon kind work by processing 1 operation at a time sequentially. The kind of massively parallel computing that Kurzweil type AI requires would have to be based on a model of computing not yet invented, so that all the work that has been done to date is basically worthless. I agree with Kurzweil that if and when we have computers that are as smart as (and then smarter) than human, this will be truly revolutionary but I can't confidently predict that we will have these devices in 15 or 20 years or even 50 because this technology does not yet exist and no one knows a practical way to develop it.
K
K, I'm sorry I insulted you by estimating your IQ at 135— I hereby up the estimate to 145. I am getting warmer? Where I am it just turned midnight. 5 minutes ago I tried an experiment:
(A) I stood in front of a door and pointed at it 3 times.
(B) I kneeled in front of the door and prayed (in English unfortunately) aloud: Yahweh, tell me how to create 100 million Chinese Jews.
(C) Then repeated step (A).
G-d has not yet replied. Maybe G-d shall never reply?
In any case, I believe I have a plan.
Print up 100 million T-shirts with the slogan
"WHEN. WHEN AND IF. I am always reminded of the Yiddish saying -" on the front and on the back "Or write to me when this day comes."
Then give these T-shirts away to the first 100 million Chinese customers.
Having gotten the attention of the Chinese, we then hit them with THE JEWISH PROPAGANDA message:
If you become a Jew then your IQ shall increase by 10 IQ points?
What about Danny Hillis and his Connection Machine — isn't that a massively parallel model of computing that Richard Feynman helped develop the theory for? My guess is that Ray Kurzweil does know "a practical way to develop it" and can describe this way in some detail. He and his ten of thousands of colleagues have merely to follow a straightforward plan to implement the massively parallel simulation of the human brain. Am I wrong here?
Will a robot with an IQ of 10,000 be able to design a very, very good tomato paste factory?
Thinking Machines went broke in 1994 - Hillis's design was a dead end and he went to work designing animatronic Mickey Mice for Disney.
The latest hot thing is to use video graphics cards (the kind that gamers use to play high end video games) as supercomputers - they are massively parallel because you need to process all the elements on the screen at once to play a game in real time. Google "cuda".
K
K, if I may be break in here with a pedestrian moment, the pharmaceutical industry is poised to go under in a few years as most of their stuff goes off-patent and the unfortunate reality is that it takes giga-profits from their few successes to amortize their many, many failures.
When a prominent US company launched its blockbuster in China a few years ago, there were already 5 other pirated versions on the market, and all of them had simply copied the drug without having done any of the highly expensive R & D.
So although it might be wise to avoid basing your economy on anything that might be copied (ie, on knowledge or new information), the truth is there is precious little else we can sell them except raw materials (Australia), food (South African citrus) or high tech goods that are really complex and where we just about cling on to a rapidly vanishing monopoly (Boeing aircraft).
It takes $1Billion to get a new drug on to the market in the USA and by the time you succeed, you have already exhausted the majority of a limited patent life. Usually, you only have about 8 years to get it back PLUS all the rest that went to hell on the many necessary failures.
Pharmaceuticals is a very high risk business. So much easier just to sit back, avoid risk and just harvest the knowledge at the end of the process!
If anything, the patent system lacks sufficient teeth. Progress in the treatment of human disease requires immense rewards for the huge intellectual and financial risks, otherwise, as Ayn Rand well knew, we'll all just go Galt.
Good luck to you all, then.
Anon.
K, I don't think that the fact that Thinking Machines went broke has anything whatsoever to do with the basic value of Hillis's design. I think that the design was NOT a dead end — I believe it serves as the basis of massively parallel computer simulations now in use. Am I wrong here? I agree that Hillis's design is not good for AI — too simplistic. However, Kurzweil's approach is merely to copy nature's own design for the human brain. There could be aspects of consciousness that prevent this — only time will tell.
I think that the Chinese might need a new religion:
"Jewish Taoism". ... a very simple religion:
Be wise. Be fair. Be honest. ... and imitate the best of Judaism and Western scientific and skeptical thinking ... and continue the rituals of Tao ... but don't take them too seriously.
There are two fundamental facts about God:
(1) God does not exist in the sense of science.
(2) God does exist as a kind of placebo mechanism.
The same holds for the spirituality of Tao. Could the Chinese buy into this?
Anon, you say that "the pharmaceutical industry is poised to go under in a few years ... If anything the patent system lacks sufficient teeth." I think that there is a high probability that you are correct. With high tech, it seems to me that there is a strong winner-take-all trend ... in the 1950s IBM, in the 1990s Microsoft, and now Google. I think we might see a winer-take-all phenomenon in nation-versus-nation capitalism in which China is like the "Coca-Cola" of nations. Anon, do you agree?
Not really, they have inherent issues here which I can best discuss in a few days' time.
Anon.
Sorry, but the "we need to overcharge you tremendously to fund R&D" thing is a load of BS. The drug companies spend more on TV advertising than they do for R&D. A lot of the major drugs were developed overseas by small pharm. cos. and then licensed to the big guns with the marketing power. A lot of the "new" drugs are just variants on the old ones that are just barely different enough to qualify for a new patent and are no better. Even if true, why is it that US consumers have to fund R&D for the whole world? US drug prices are sometimes 10x what they are elsewhere.
K
Copying nature is not always the best approach . Early attempts at flight tried to flap the wings like a bird does - that didn't work. Wheels are unknown on fast running animals. Etc.
K
I always thought of the Chinese as being more or less atheist (even before Communism), Confucianism, ancestor worship and Taoism being not quite religions in the Western sense. But I was shocked to see that there are many serious Chinese Buddhists (despited decades of repression by the govt) and that the form of folk Buddhism practiced is rather crude - more or less what I would call idol worship, where you bring offerings to a statue. For some reason this religion, which is very un-Chinese (first Indian, then Tibetan) on many levels (aesthetic, philosophical) appeals to the Chinese anyway. I couldn't figure out what the appeal was.
K
Sadly,K, you are substantially misinformed. The fault is predominantly the enormous obstacles we impose on drug companies to prove efficacy and safety, and the huge costs of ongoing drug development even post approval to achieve new indications.
No doubt they make a handsome profit on small molecules in terms of the profit margins over cost of goods but that us not the point. The point is all the regulatory stuff they have to measure up to, in order to get approval and also the many failures that have to be paid for. Why would they have to buy in so many of their drugs from biotech companies if it were so easy to design new ones? And also, most biotech companies go belly up, with just a very few lucky ones succeeding.
Your point about the asymetry of the US paying for drug development costs for the whole world is entirely legitimate, however. But truth be told, no-one else can afford it. If you shut down the USA, as Obama and Pelosi want to do, it is back to the dark ages for everyone.
You cannot have it both ways. If society imposes massive costs on drug developers IN ADDITION to the high inherent failure rate, these costs have to be recouped.
I don't doubt that human nature sometimes operates in commercial enterprises just like anywhere else, and some companies try to overdo it from time to time. But any one who thinks the drug companies are systematically and obviously overdoing it can just buy their shares, or pool money to start a company of their own. Is it so easy? I don't think so, but you are free to try.
Anon.
"I don't doubt that human nature sometimes operates in commercial enterprises just like anywhere else, and some companies try to overdo it from time to time."
You know the old saying - a billion here, a billion there and soon you are talking real money. The "overdoing it" is massive and the "from time to time" is everyday. These folks have the money and power to buy Washington, as they just have in the health care bill and they did before in the prescription drug benefit (where it was specifically forbidden for the government to try to negotiate drug prices). Each new law brings them millions of new customers with drugs paid for by the government.
The fundamental problem we have in our health care system (and this includes drugs) is that the people incurring the expense are not the people paying - if I went to a restaurant and I knew that someone else was picking up the check I wouldn't care how high the menu prices were or whether I ordered the steak or the pasta .
K
On the other hand, how poor and sick people could pay for the drugs and the treatment? Health care is necessarily asimmetric: young and healthy people, who work, dont need it; old and sick people need it and cannot pay for it.
Here in Israel we have socialized medicine, and it is very good. The only problem I see is that the government is unable to resist popular pressure and the cost tends to grow all the time. There is a "basket" of free approved drugs, and some very expensive drugs are not covered. The papers and TV make weeping human dramas from the unfortunate people with the uncovered disease, and the government always gives in and includes it in the "basket".
And of course the corruption that goes with government rationing scarce goods. People with influence in the government secretly has access to free expensive treatments (like having their heart operation in Houston and not in Ashkelon) while the common run of Israelis ignores this setup and is operated by students.
Probably everyone should be entitled to some level of basic healthcare, just as we don't allow people to starve to death if they don't have the money to buy food. But is everyone entitled to a knee replacement? Viagra? Face lifts? Should someone who is 90 receive a kidney transplant? If we don't ration care according to the market system (which is how we ration all other goods) then it gets rationed some other way - thru corruption, waiting lists, the political system, etc. Rich people live in nicer houses than poor people. They drive nicer cars (or the poor have no cars at all). They go to nicer restaurants. When they die they get bigger gravestones. Why is healthcare the exception where everyone has to be exactly the same?
K
To be continued.
Have to catch a flight.
Anon.
"This morning I toured a former chicken slaughterhouse complex at Har Tov, once the largest of this country."
Mostly Palestinians work there don't they...don't see many Jews working in mass-food factories do you? Is meat and food handled by the Palis considered 'kosher'?
You people are insane if you think China will pull ahead of the USA soon...aside from a few factory cities here and there, the vast interior of China is still almost entirely rural and undeveloped full of backward 'peasants' far dumber than any American redneck. All the action in China is in a few overpopulated and horribly polluted coastal cities.
More than anything, China is headed for a population crash.
Anon. - you contradict yourself - on the one hand there are lots of rural Chinese peasants who are a "reserve army of the [under]employed" and the cities are overcrowded. OTOH, they are headed for a population crash. Either the current situation is bad and having fewer people will make it better or vice versa. Which is it?
My guess is that they will make the same transition that Japan and Korea made and the US before it - eventually the countryside will empty out and they will become largely urbanized, at higher wages because of the reduced workforce.
K
Nayra - not many Palestinians work inside Israel anymore - a few bad apples spoiled it for everyone else by blowing themself up and taking as many Jews as possible with them. Guest workers from other countries have replaced them.
As long as a Jewish ritual slaughterer (shochet) does the actual slaughter, non-Jews are allowed to work on other aspects.
K
Nayra,
No Palestinian or Israeli is working in Tnuva Corp.'s FORMER chicken slaughterhouse.
As said, the company moved its operations to the Negev, where erected a modern factory.
Now it is renting out the vetust buildings and small entrepreneurs are re-making the place.
You are wrong about Israel. Zionism succeeded in creating a Jewish proletary class, and Jewish workers are manning the factories. You should know that Israeli population is not like American Jews, it is a mixed multitude that immigrated from all over the world, and we have Jews of any colors and sizes. You should visit Israel to have a look at Israelis. It is not what you imagine, we are not all Wall Street speculators or Hollywood producers.
For people who are used to "Jews", as in North American Jews, or South African Jews, who were, and mainly are, Ashkenazim with quite remarkable intelligence, culture and acumen, Israel does indeed come as something of a surprise.
But Israel could not be held together solely by people like this; by artists, musicians, lawyers, cosmologists, writers, entrepreneurs, doctors, political activists, radical thinkers and businessmen. You need also soldiers, policemen, farmers, laborers, etc, and it is counter-intuitive to see this latter sort of work being done by Jews. And much of it is; on my experience, I do not agree it is all being contracted out to third-world gastarbeiters.
Anon.
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