The Natural-Gas Glut Has Evaporated, Driving Prices Higher

Greater demand and less supply has pushed up prices for natural gas by 96% from a year ago. (WSJ, June 2021)

The World Relies on One Chip Maker in Taiwan, Leaving Everyone Vulnerable

Is TCSM a monopoly or a near-monopoly? (WSJ,June 2021) 

"Its technology is so advanced, Capital Economics said, that it now makes around 92% of the world’s most sophisticated chips, which have transistors that are less than one-thousandth the width of a human hair. Samsung Electronics Co. makes the rest. Most of the roughly 1.4 billion smartphone processors world-wide are made by TSMC.

It makes as much as 60% of the less-sophisticated microcontrollers that car makers need as their vehicles become more automated, according to IHS Markit, a consulting firm."

"Semiconductors have become so complex and capital-intensive that once a producer falls behind, it’s hard to catch up. Companies can spend billions of dollars and years trying, only to see the technological horizon recede further.

A single semiconductor factory can cost as much as $20 billion. One key manufacturing tool for advanced chip-making that imprints intricate circuit patterns on silicon costs upward of $100 million, requiring multiple planes to deliver."

ROOFS OR CEILINGS?

Milton Friedman and George Stigler use historical accounts from San Fransciso and New York City to compare the effects of using price to ration housing with what happens when the government imposes rent controls. (FEE, 1946). They classify what happens when the government imposes rent controls as using chance and favoritism to ration housing.

Here are some money quotes.

1. "In both 1906 and 1946, San Francisco was faced with the problem that now confronts the entire nation: how can a relatively fixed amount of housing be divided {that is, rationed) among people who wish much more until new construction can fill the gap? In 1906 the rationing was done by higher rents. In 1946, the use of higher rents to ration housing has been made illegal by the imposition of rent ceilings, and the rationing is by chance and favoritism. A third possibility would be for OPA to undertake the rationing."
2. "Advertisements in the San Francisco Chronicle again document the effect of rent ceilings. In 1906, after the earthquake, when rents were free to rise, there was 1 'wanted to rent' for every 10 'houses or apartments for rent'; in 1946, there were 375 'wanted for rent' for every 10 'for rent.'”
3. "Rent ceilings, therefore, cause haphazard and arbitrary allocation of space, inefficient use of space, retardation of new construction and indefinite continuance of rent ceilings, or subsidization of new construction and a future depression in residential building. Formal rationing by public authority would probably make matters still worse."

Who-d a-Thunk It? Mandated minimum wage increases have adverse effects and lead to lower compensation?

A new paper reports that increase in minimum wage reduces average hours worked per employee. (AIE, June 2021) The reduction reduces the take-home pay of each worker and reduces compensation even further when the workers no longer qualify for health insurance and retirement benefits. The study also reports that the number of (part-time) workers increases when the minimum wage increases.

Renewable-Fuel Push Drives Soyoil Prices to Record High

"Demand for [soybean] oil is growing, however, from the biofuels industry, a chief part of the push toward renewable energy highlighted by President Biden’s call for the U.S. to cut carbon-emissions levels in half by 2030." (WSJ, June 2021) The increase in demand => increase in price. The quantity traded is also increasing and will increase more when farmers have more time to convert to soybeans from other crops. What will happen to the prices or the other crops?

Copper Boom Has BHP, Freeport Picking Through Waste

Companies are extracting copper from what was formerly waste because the price has increased. (WSJ, June 2021) The increase in price => extraction => increase in quantity supplied.