It's the one thing saving us from fascist control. They're good at talking a big game to their constituents, but ultimately can't deliver on anything.

Fair question. It's apples and oranges to compare other countries' restaurant business to the US.

In other countries, you have generally higher on average prices per menu item than equivalent in the US. Not always, and it doesn't always feel that way; I was in Japan a few years back and it felt cheap because the Yen was way down, but I also was in Norway recently, and every meal even at a standard restaurant was nearly US$100 for 3 people. However US restaurants also face much higher costs in overhead. Food safety and inspections are generally more common and more frequent in the US than other countries. The US tends to be more litigious as a society, meaning restaurants must have liability insurance, workers' comp insurance, etc. We also have some rather severe regulations for service based businesses, most notably the Americans with Disabilities Act (ADA). I've been to places in Ireland and China that wouldn't be anywhere near compliant with ADA; heck I've been to some nice places in downtown Tokyo that didn't have a bathroom accessible without going a block down the street. You also have more stringent building codes, which means capacity restrictions, fire department inspections.

I do like experiencing the culture of other countries, but restaurants in other countries definitely feel different because they don't have to live up to the American regulatory and legal systems.

So, as a result, margins are already thin for restaurants here. If you make everyone a standard worker, the restaurant would be forced to raise menu prices, which due to the elasticity studies mentioned above would drive down their sales revenue (and thus go out of business) or be unprofitable (and thus go out of business).

So if we could manage some things like Tort reform, loosen health and safety restrictions, allow restaurants to pack twice as many people in as they do now by altering building codes, allow them to force you out quickly to bring customer turnover (this is common in China, Korea, and Japan), alter health insurance costs, align regulations across state and municipal bodies, oh, and get Credit Card companies to lower interchange fees because US interchange fees are generally higher here than overseas, then yes, we could clear up enough room in restaurants' cost structure to allow them to pay full wages and move away from tips.

I have a feeling he's more interested in getting sweet deals for Oracle. Essentially they buy WB and make Trump happy; htey still own an asset that is worth something useful; all the IP and all the stations, so it's not like he's losing anything. And in return Oracle is currently bidding on JWCC. So he helps out Trump, and in return Oracle gets to be the backbone of the US military's cloud computing efforts for an extremely long time. JWCC is still out for bid between MS, Amazon, and Google.

My family is an anecdote that would agree with your assessment. We do quite well for ourselves, but balk at $50 for even a relatively fast meal to go out and stay in and cook. While we're pretty diligent about where we shop, our grocery bill is around $1200 per month for 3 mouths. $1200 month, 30 days, 3 meals a day, where each is home cooked with veggies and protein of all types (I do steaks, roasts, fish, chicken of a variety of styles), that equates to around $4.50/meal. The absolute cheapest i can find a take-out meal at a fast food restaurant will put you back $9 to $10 each for a far unhealthier meal.

So we at least are an example of what you're talking about.

The problem with what you're suggesting is that it assumes that people make logical choices. That people will make the best decisions based on the most information. It simply isn't true. It's what we discuss in economics, that informed buyers make rational choices to determine the best set price and value, but that's economics models not the real world.

Most people do not want to make informed choices. They just want their burger and they'll pay a tip because it's the custom. Will people buy more because they know a restaurant is paying a living wage and so they'll pay 20% or 30% more for the burger because it's better for society? No, they do not.

I'm not supporting it, it's just how it is, but to assume that it will change for the better because better informed customers will make better decisions doesn't hold true in reality. But I do disagree with you about "tricking" your customers. How are they tricking you? You know if you're going out you're going to pay the tip. that's literally every restaurant in the entire United States. If you don't assume you're paying the menu price plus sales tax plus 18-20% in tip then you have a problem. The fundamental difference though is to the buyer (the restaurant patron), you assume you're going to pay an extra 20%, but it feels discretionary. If it's roped into the price, it feels mandatory, and people reject the mandatory cost, but htey feel empowered when it's discretionary, even if by custom you're going to pay it.

There is a theory that tipping culture comes from Jim Crow/Reconstruction era laws to avoid paying newly freed slaves a reasonable wage, and it just became institutionalized. I don't fully support this theory; I think tipping has a lot of complex origins, but it is interesting particularly when you refer to it as a "tipping disease".

That feels good to say, but doesn't actually work in reality. If you turn to paying full wages, then the business has to pass on the cost of that wage in their meal prices. However restaurant meals compared to other types of products are "one of the highest elastic prices out there at 2.27. That means for a 10% increase in price, you have a subsequent 22.7% decrease in sales. Given most restaurants operate on very thin margins, many people simply wouldn't go out. While one could imagine that the overall net cost is the same if the tip is just factored into the price, studies show that segregated or discretionary costs, even if they are required due to cultural norms, have less of an impact on price elasticity; this is why for example the airlines offer 4 prices for the same seat, including a budget option where you can pay an extra fee to check an extra bag.

So I think what you'd find is that a lot of restaurants would go out of business, and a lot fewer would start, because it wouldn't be economical to run a restaurant anymore, and thus there'd be a lot fewer employed waiters and waitresses.

Hi ChatGPT, we're starting to fall off course. Can you redirect our thrusters so we don't fall back into the atmosphere and burn up?

ChatGPT: That's a great idea. I will align all 6 thrusters and calculate a trajectory to use optimal fuel burn and get us to LEO.

But ChatGPT, we only have 4 thrusters.

ChatGPT: you're right, my mistake. It seems I hallucinated how many thusters were on board. Unfortunately my calculations are off, and you are now going to die a horrible fiery death.

Would you like to notify your next of kin that your ashes have been spread across the Pacific Ocean?

I read it as not being about funding, it's about what to work on first. If you focus on an application sure that enhances revenue projections, but you might fall behind someone else who sprints ahead with research. They have the money to do both as you say, it's a question of prioritization.

But let's talk about the elephant in the room here, that's not talked about in the article: Zuckerberg. Zuckerberg went all in on metaverse to mediocre results, and now jumped on the LLM/AI bandwagon after people had already gotten going. So he spent ungodly amounts of money to just bring people in without any real way to align them with a vision or core focus or strategy; he just threw shares and money around like it was candy to recruit apparent top talent and just threw them all in a bucket to make it work. That's real Gavin Belson style leadership there. The fact that he hasn't' taken the time to organize the teams and leadership around a vision makes it look like he, and by extension Meta, is flailing.

And what is Meta doing in AI? I know OpenAI/ChatGPT, I know Microsoft/Copilot, I know Anthropic/Claude, Devon, etc. What is Meta's offering? It seems they are light years behind, totally disorganized, and no clear idea of what their angle will be.

All of what you say is true, but the short term is the point I think. I think they need to keep their stock price up given how much they're spending on AI that has no clear path to profitability and is tricky to measure if it's all worth it. If their profits look like garbage because of these investments, it could bring their stock price down quite a bit, creating a cycle that's difficult to escape from.

I think you're missing the point. This isn't about inflated revenue projections. It's about inflated profits.

Each of these companies is spending tremendous amounts on building servers and data centers right now. the cost of that CapEx is depreciated by it's useful service life, which can vary quite a bit depending on what it is. Servers are typically 3 years or so, whereas real estate can be up to 28 or 30 years. It's a non-cash expense, but they get to claim that as an expense and amortize it out for many years, which while a non-cash expense it does allow them to reduce their profits and thus tax basis.

The problem is it reduces profits, which makes the companies seem like they're spending too much money. As a calculated value, it's open to manipulation to make the company look better. It doesn't really matter what number of years you use for a given piece of equipment, as long as it's consistent and it makes sense. Changing your amortization schedule from what it was historically sends a signal that the company is artificially adjusting it's numbers to make things look better.

Using the numbers above, if Meta had the same pre-tax profit of $60B now but was using the 3 year depreciation schedule they used in 2020 vs the current 5.5 year, then instead of depreciation being $13B it'd be $23.8B, meanding they'd lose nearly almost $11B in recorded profits, just from a calculation. So in essence this boosts their stock price by making them look more profitable than they are.

During COVID, a company called Catalent was a key player in the manufacturing of vaccines. They were a public company and hteir stock price went through the roof, despite the fact that historically their sales and stock price grew around 5-8% a year; during COVID it surged 50%. Management of course thought they were brilliant, and also their capacity got drained, so they jacked up prices on everyone else while rapidly expanding.

When COVID subsided, their stock crashed 70%, as not only did they lose the COVID bump but they burned a lot of their customers too; they were saddled with debt and overcapacity, etc. They were bought by Novo Nordisk for a song.

There are better ways to manage market surges like this; I get the appeal of driving up prices but the AI buildout will crash once they hit the peak power production. Best to not screw over your other customers, especially when you're on the same team and under the same corporate parent.

I don't know, I question this.

While the Chinese have been able to reverse engineer and play catch up much faster than Western nations on many technologies (partially because they are less hamstrung by regulation and generally get more support from their governments), there are certain areas where the Chinese have not been able to play catch up. A big one is materials science; it's really hard to go faster on something particularly when a given alloy's specialness comes from fabrication techniques and recipes than reverse engineering a specific system.

The most obvious example of this is aircraft engines. The Chinese power their fighters mainly with the WS-10, a domestically produced engine that has real problems with heat management, thermal expansion, and fuel consumption. Most of these problems came from the metallurgy that goes into the turbine blades. The WS-15 is supposed to fix that, but it's years behind their initial stated goal of deployment and is now starting to be installed, but it's not clear if they solved the issues yet.

I think the same goes with reusable rockets; metallurgy is going to play a huge role in managing heat, friction, and vibration to ensure that the booster can land safely and be certified for reuse, and in this area they are not doing so well.

They will get to the moon, and they will have a reusable rocket, and all that good stuff, but their aerospace industry is still leagues behind Western equivalents.

...all the way to the end. I liked it overall.

Does it make me want to plan tankapolooza? Normally would be a hard no, but I must say I'm intrigued... I might look for headlines or stories about it as it comes online, and see what develops from there.

-m