American Pastoral v. American Dynamism

Mini-essays on the construction boom, dynamism (or not) of the new American frontiers, and something AI can't do. Plus good reads on NYC nightlife, exceptional children, AI's casualties, Cyborgs in DC

Random Walk welcomes you to the weekend with some good thinks and good reads.

The thinks:

• Boom, Construction, Boom

• American Pastoral v. American Dynamism

• AI definitely not doing some things

The reads:

• What Mastercard data has to say about going out in NYC (and the neighborhoods that have changed the most)

• How to raise exceptional children

• Biggest losers from AI

• Cyborgs in DC (or who wins the AI regulation game)

• The changing status of VCs (in AI and now in “Proptech”)

Stay tuned for some big announcements coming soon. In the meantime, eat, pray, and love Random Walk.

Things we think

Boom, Construction, Boom

Under the silver-linings tab, there is a manufacturing boom underway (h/t

Apricitas Economics

):

Big machines? We want all the big machines you got:

Sure, there are going to be various challenges finding workers for all this construction, like miners for for example:

But “building stuff” and paying service and trade workers to do that (instead of creating fluffy marketing copy) is probably a good trade . . . even if it means some things are going to stay expensive:

Construction and Mining Wages Go UP!

I wouldn’t have put CAT 0.00%↑ Caterpillar amongst my counterscyclical bets . . . but maybe?

The concerning thing is that this is still very much an Everything Bubble story. Construction is booming because that’s where the subsidies are . . . which not only highlights our dependency on “free money”-driven growth, but it also just keeps raising the stakes.

Anyone who says that solar and wind are now “cheaper,” isn’t being straight with you. Reallocating costs doesn’t make them go away. Before subsidies, it was cheaper to import. After subsidies, it is still cheaper to import, but now domestic manufacturers get to pass a huge chunk of the costs to taxpayers:

And pass huge chunks is precisely what they will do.

The logic of investing now to save the everything later makes sense. It does. At face value, at least. But eventually unsustainable “sustainable” initiatives will have to be sustainable, otherwise this is even more buyer’s regret to an increasingly unmanageable pile of buyer’s regret.

American Pastoral v. American Dynamism

On the subject of booms, the South is taking all the firms:

After steadily adding ~200 firms per year, the South 4X-ed that number in 2021. All the other regions also became net-losers, i.e. more firms left than joined. The pandemic definitely accelerated some things, but the overall pattern of the South winning and the Northeast and Midwest losing has been going on for a while. (That’s true of most, if not all, of the pandemic migration trends—-they were already happening, they just got more-happening.)

The other notable divergence involves the kinds of firms that are moving—the lion’s