What Is This Foolishness?
A ‘National Tragedy’—Popcorn Is Taxed Three Ways
Bureaucrats have a tell. They have no sense of the absurd.
‘“I want to explain the whole background of the popcorn taxes to you: Salted popcorn, caramelized popcorn, plain popcorn,” said Nirmala Sitharaman at a news conference in late December. “When it comes to popcorn’s tax treatment, as long as it is salty, whether it is with salt, spiced, tangy, chilli powder, that’s all 5%. But when it has added caramelized sugar, it is no longer salty.”
‘But the 5% will apply only if the popcorn is sold loose. Put it in a sealed plastic packet and slap a label on it and the rate jumps to 12%. An accompanying press note explained further that caramel popcorn had transformed into a confectionery, and merited a correspondingly higher tax rate. The finance minister’s office didn’t respond to a request for comment.
‘The popcorn tax structure unleashed a flood of mocking memes, heated television debates and frustrated comments from prominent economists, including former advisers to the government. One called the ruling a “national tragedy.” A cartoon showed Mahatma Gandhi, famous for his march against the British colonial monopoly on the sale of salt, which was heavily taxed, marching against popcorn taxes instead. ‘
Trump axes Biden’s AI executive order
Why should the government have access to confidential corporate intellectual property?
‘The tech-focused order did have some controversial aspects, like requiring developers to share details about potentially risky models with the government by invoking the Defense Production Act. ‘
Corporate bureaucracy: The unsung hero of endless meetings and paperwork
On the anti-fragility of bureaucracy.
‘The beauty of corporate bureaucracy is its unique self-sustaining nature. Bureaucrats are like bamboo: resilient, growing stronger every time someone tries to cut them down. After all, who can truly understand the intricacies of the Compliance and Synergy Optimization Division but the people who work there? And let’s be clear, these champions of corporate process have no intention of working themselves out of a job. The notion of actually solving a problem is for those naïve souls in operations. Bureaucrats understand the real goal—keeping themselves indispensable. And they do it masterfully.’
CEOs Launch War Rooms, Hotlines to Cope With Trump’s Order Blitz
War rooms organize information in an environment of uncertainty. Yup.
‘The blitz of executive orders and memos from President Trump left business leaders—some still in the tuxedos they wore to White House inaugural galas—scrambling to make sense of sweeping changes to tax, immigration, trade and energy policies.
‘“There’s probably some shock and awe on day one,” said Nick Studer, chief executive of Oliver Wyman, a management-consulting firm. Trump is “at the peak of his power now,” and more will become clear as the administration gets into governing, said Studer, who added that few companies fully grasp the impact of potential tariffs.’
Everything is under scrutiny.
‘The penny costs over 3 cents to make and cost US taxpayers over $179 million in FY2023. The Mint produced over 4.5 billion pennies in FY2023, around 40% of the 11.4 billion coins for circulation produced. Penny (or 3 cents!) for your thoughts.’
The Washington Lawyers Who Suddenly Love Trump
It’s interesting to see firms that depend on government blackballed people who worked in the Trump administration over the past four years now scramble for credibility and access.
‘Top law firms have talented attorneys and no shortage of institutional knowledge about how the bureaucratic machinery works in the abstract. Yet they are hardly chock full of partners with high-level experience serving in the first Trump administration. This is in contrast with prominent liberal attorneys, who travel through a well-oiled revolving door between Democratic administrations and the private sector. Many firms shut that door to Republicans four years ago, depriving themselves of lawyers who worked in Mr. Trump’s first administration, alongside many who will return for the second.’
Executive Orders on AI: How to (Lawfully) Apply the Defense Production Act
Biden used the Defense Production Act for his AI order. How was restricting AI supposed to advance national defense?
Show me the target and I’ll show you the authority.
‘President Biden’s executive order on AI includes provisions that exceed the scope of the Defense Production Act’s statutory purpose, which addresses tangible supply and production crises tied to national defense. The overreach of the executive order sets a concerning precedent for unbounded executive power and could chill AI innovation in the defense context, where maintaining United States leadership is key to staying ahead of strategic competitors. The President should only invoke the Defense Production Act for genuine national defense purposes that are consistent with its lawful use, such as to ensure safe and resilient AI systems that guard against foreign threats.’
The End of the Global Tax Affair
Deregulation in the US is making it easier to deregulate abroad.
‘It’ll be hard for the global tax deal to survive this opposition from Washington. European leaders love the OECD pact, but the smarter among them may realize Mr. Trump has done them a favor. He’s blown up a big legal impediment to cutting taxes on a continent whose economy needs all the help it can get.’
Trump signs order setting up DOGE with a focus on government tech
DOGE takes over the US Digital Service. This makes a ton of sense. No wonder Jennifer Pahlka has been writing prolifically.
‘Now it looks like Musk will have help on the inside, specifically from the U.S. Digital Service, a White House tech team set up by former president Barack Obama in the wake of the Healthcare.gov crash to detail out to agencies and help them with their tech efforts.
‘That team, which doesn’t have statutory backing, is now named the “United States DOGE Service,” and housed within the Executive Office of the President, per the new executive order. It remains unclear what additional parts, if any, the DOGE will have outside of and in addition to USDS.
‘The USDS administrator will be reporting to the White House chief of staff — Trump has tapped his 2024 campaign co-chair Susie Wiles for that role. In recent years, the USDS team has boasted a 200-plus headcount. Employees are hired for two- to four-year terms.
‘Agencies are also getting their own “DOGE teams” of at least four employees, which could be special government employees, a category of employee meant to work in government temporarily to give specific expertise.
‘The order directs agencies to tap those teams — consisting “typically” of a DOGE team lead, engineer, human resources specialist and attorney — in consultation with the USDS administrator.’
INITIAL RESCISSIONS OF HARMFUL EXECUTIVE ORDERS AND ACTIONS
The list is long and impressive.
Trump may not have known what he was doing the first time. He came to play this time.
Do Androids Dream of Financial Crises?
Regulators tend to look in the rearview mirror.
You know who can do that more efficiently and at lower cost? Robots.
‘And the team at the European Banking Authority is indeed getting serious — it’s just published a distinctly better than workmanlike piece on the possibility of using random forests, neural networks and similar techniques to potentially make a bit of progress towards one of the great dreams of central bank economists. That is to say, the possibility to automate the dreary and unprestigious job of bank supervision, using machines to monitor the data rather than going through supervisory returns yourself.
‘The frustrating thing about this exercise is that it always sort of works. As with indicators of financial stress (another favourite research project), there is some actual pattern and structure in the underlying data, and so the right use of statistical methodology will find it.
‘The EBA researchers actually do quite a bit better than previous efforts. “Breaches of supervisory concern levels on a few key ratios” are their better source of training data points than “actual failures”, meaning they can train a variety of models and use an ensemble approach.
‘Unfortunately, though, models like this are subject to the same fatal flaw as indicators of financial stress, which is that they’re always a finely polished rear-view mirror. When financial crises and bank failures actually happen, they tend to happen for reasons that can’t be predicted, because they’re not in the data set, because they’ve never happened before. Or at least, they’ve never happened before in exactly this way, so nobody was collecting the right data on them in the right way.’
Civil servants have been busy re-writing job descriptions to avoid scrutiny.
Sounds legit.
‘Ahead of the order’s possible reinstatement, one senior staffer said they were advised by their agency’s “front office” to edit “any job description that mentioned policy.”
‘“Managers could elect to just quietly tweak a career officials’ job description so that the functionality of the job stayed the same but would say ‘provide guidance’ instead of ‘provide policy guidance’,” the staffer told CNN. “It makes their role seem less policy and political orientated.”’
DOGE’s Challenge Is Gargantuan
How many people could credibly take on this challenge?
‘The list goes on, though it gets exponentially more tedious. One thought for Mr. Musk, Mr. Ramaswamy and DOGE is how much of this stuff is created by law and can’t be undone without Congress. Another is that leading on federal efficiency might include telling the truth about bad economic populism, even if it upsets the file-folder lobby.’