Category: Economics, Finance, and Political Economy

  • ECONOMIC FALLACY #1 : THE FALLACY OF MEASUREMENT Fallacy Of Measurement The firs

    ECONOMIC FALLACY #1 : THE FALLACY OF MEASUREMENT

    Fallacy Of Measurement

    The first fact to understand about statistics surrounding economics is the different ways people can skew the results. People use whatever twisted statistics they think make their political point. If you want the economy to look bad then use household income rather than personal income. This is a convenient way to lie about the economy.

    This is a point Thomas Sowell makes: “household or family income can remain virtually unchanged for decades while per capita income is going up by very large amounts. The number of people per household and per family is declining.”

    Another tool for someone trying to make the situation look bad is to talk about the income gap. Saying that the gap between the rich and the poor is increasing makes it seem like the rich are getting richer, while the poor are getting poorer, or that the rich are taking from the poor. While that gap is increasing, it is mainly because it is so much easier for the wealthy to increase their incomes by large amounts. Yes, the rich are getting richer, but the poor are getting richer as well.

    This point is made brilliantly by Michael Medved in his book “The 5 Big Lies About American Business.” To paraphrase Medved, if one citizen who makes $200,000 per year shows an increase of 10 percent, he now makes $220,000. If another citizen who makes $20,000 per year has an increase of 20 percent he now makes $24,000 per year. The second person saw an increase twice as large as the first person yet the gap increased from $180,000 to $196,000. “The gap” is how you make a situation which was good for everyone look bad. There are more accurate ways to illustrate how the poor are doing.


    Source date (UTC): 2013-04-11 03:07:00 UTC

  • Values And Principles: Should The Us Government Have The Power To Tax One Group In Order To Help Another?

    all commons are redistribution. The question is whether the comons that we contribute to create either hazards, perverse incentives, and free-riding. 

    There has been an organized effort for the beter part of a century, to support rather than avoid free riding, and penalize the middle class to fund reproduction by the lower classes.

    Redistribution is probably EARNED if you adhere to manners, ethics, morals and laws – albiet the argument is too complex for this post.    If you do not adhere of manners, ethics morals and laws, it is very hard to argue that you have earned any form of redistribution.

    https://www.quora.com/Values-and-Principles-Should-the-US-government-have-the-power-to-tax-one-group-in-order-to-help-another

  • What Is A Non-functioning Market?

    I am not sure that such a thing can exist. For a market to exist it must function. If it doesn’t function it’s not a market but the lack of one. So it’s not logical.  As Bertil Hatt asks, you can mean a market that exhibits certain categories of failure, or a market that is inefficient. But not a non-functioning market.  Can you clarify wat you’re asking?  GIve us some context?

    https://www.quora.com/What-is-a-non-functioning-market

  • What Is A Non-functioning Market?

    I am not sure that such a thing can exist. For a market to exist it must function. If it doesn’t function it’s not a market but the lack of one. So it’s not logical.  As Bertil Hatt asks, you can mean a market that exhibits certain categories of failure, or a market that is inefficient. But not a non-functioning market.  Can you clarify wat you’re asking?  GIve us some context?

    https://www.quora.com/What-is-a-non-functioning-market

  • Despite The Obvious Differences In Cultural Work Ethic Between American And Chinese Workers, Why Has America Remained The Most Productive Nation Per Worker In The World?

    The chinese will lose their Work Ethic just like American Ethnicity and People and Japanese, when enough of them are in the Middle Class (social class) and urbanized that they no longer fear going back to the farm – where real hard work must be done.
    🙂

    https://www.quora.com/Despite-the-obvious-differences-in-cultural-work-ethic-between-American-and-Chinese-workers-why-has-America-remained-the-most-productive-nation-per-worker-in-the-world

  • What Is The Best Way To Learn Monetary Policy?

    I will give you a little help. There is nothing much to it.

    It is cursory in textbooks for a reason. It’s just no more complicated than maintaing a supply of money that’s high enough that interests rates are low enough, the people spend to consume and spend to invest. And not too high that you cause inflation and destroy everyone’s savings.  That’s it.  That’s all there is.  Lastly, it certainly appears that no matter what governments’ do, when you add money to an economy, you distort the information carried to everyone in the data we call prices. This distortion of information appears to exacerbate the boom and bust cycle. So no matter what you do there are consequences either way.

    The complicated part of monetary policy is that money moves through the economy through a very flexible and very complex network, and every single person in that network has some incentive or other.

    So what there is to understand about monetary policy, isn’t the monetary policy itself, which is really quite simple. It’s how money moves through the network of central banks, investment manks, common banks, investors, business, and consumers. 

    If you start with the treasury issuing notes, and follow the money through to the consumer, then back into the banking system, you will understand it. You will only really understand it though, when you understand human nature pretty objectively.

    If you can overlook the ideology the best book that you will find is Rothbard’s The Mystery of Banking.  That’s how it works.

    Monetary policy is not a problem of macro.  Macro is very simple.  The problem is the multiplicity of routes that money moves through an economy, and the various incentives people have, when all of them possess only fragmentary information and understanding of the entire process. 

    The truth is that we are still in the process of discovering how that process works. Very few people know. And when people think they know, in the end it turns out that they’re often wrong.

    Most of the nonsense you see on television or read in the news is just that.  If you read Mandelbrot, you’ll understand that most activity is noise, not signal, and almost all noise is speculation as changes in the discount rate propagate through the economy.  If you study economics long enough, or read Taleb for that matter, you’ll realize it’s a lot of noise.  Almost all economic activity is a function of demographics, property rights, and education – all of which are amplified by credit.

    https://www.quora.com/What-is-the-best-way-to-learn-monetary-policy

  • Can Socialism/marxism/communism Work Without The Forced Coercion Of The Productive And The Abrogation Of Private Property?

    You are getting terrible answers here, and your question is a bit confusing. So lets clarify terms a bit first, and see if we can get you a decent response:

    1) Socialism is defined as the state ownership of property, and central management of production and distribution.

    2) Communism is the absence of private property.

    Which is why your question seems odd. Instead I think  you mean ‘socialistic’ which is what we have in westen democracies today:

    3) Democratic redistributive socialism is private control of property with heavy progressive taxation of profits. This is what we do in most countries today. It preserves both the ability of individuals to conduct economic calculation and the incentives necessary for them to act in concert to fulfill the desires of others for purely selfish reasons.  THe general argument is predicated on the idea of Pareto Efficiency: that you can take something from someone and give it to something else, as long as it does not make him worse off.  Which in political terms means that the individual does not lose his incentive to produce at the same level as he does prior to the theft of his property by the government for redistribution to others.   The logic of this is that for businesses to grow and expand, consumers must have money to spend and that more additional money is made when they spend it, and so, at least in the end result, everyone is always getting better over time.  … I will not follow the entire economic cycle here but in theory and practice, to a limited extent, it is not a bad idea even if it feels immoral to many of us.

    WHY THE SOCIALIST NON-ECONOMY DOES NOT WORK

    1) Prices are an information system that tells people what they need to do to satisfy the needs of others.

    2) Without prices it is impossible for humans to plan the production of complex goods.

    3) Without prices people cannot have the information needed to have the incentives to engage in productive activity.

    4) any attempt to use computers and static means of production would be forced in to autarkic production (a need to be totally self sustaining) by relative decrease in productivity, followed by constant impoverishment (See Cuba).

    It does not work outside of the family, and only works within the family, because of parental dictatorship, and our instincts for consanguineous cooperation and care-taking.

    The world has abandoned both communism and socialism, and has assumed highly redistributive consumer capitalism   Which is ‘socialistic’ but not technically socialist.  This maintains prices, and incentives, and the ability to plan complex production while taking as much profit as possible from producers without destroying incentives.

    It appears that outside of the west, most countries have or will, adopt totalitarian consumer capitalism, which in practice, in China for example, is an oligarchy running major state industries and finance, and redistribution in the form of easy credit and public services to ‘everyone else’.   This seems to be the pattern. It is not any different from what we have in the USA,  it’s just more obvious.

    But no, since communism is the abandonment of private property, no it is not possible, ever, under any circumstance, which is why it’s been abandoned.

    Socialism cannot exist either because it is not possible for people to operate an economy without money, prices and property, becasue neigher economic calculation nor incentives can exist.

    But that has not stopped the desire for it.  Any more than people have stopped the desire for the absurdity of divinities and afterlife.  These ideas are a religious need, a spiritual need, in many people.  SO this is why they have turned to the religion of Postmodernism as the newest reformation of socialism.

    POSTMODERNISM

    In response to the total failure of the Communist and Socialist agendas, both in theory and in practice, most of the left intellectuals have adopted Postmodernism which is where the idea that

    Forgive the long quote here in exchange for its value:

    “In postmodern discourse, truth is rejected explicitly and consistency can be a rare phenomenon. Consider the following pairs of claims.

    1) On the one hand, all truth is relative; on the other hand, postmodernism tells it like it really is.

    2) On the one hand, all cultures are equally deserving of respect; on the other, Western culture is uniquely destructive and bad.

    3) Values are subjective—but sexism and racism are really evil.

    4) Technology is bad and destructive—and it is unfair that some people have more technology than others.

    5) Tolerance is good and dominance is bad—but when postmodernists come to power, political correctness follows.

    There is a common pattern here: Subjectivism and relativism in one breath, dogmatic absolutism in the next.  Postmodernists are well aware of the contradictions—especially since their opponents relish pointing them out at every opportunity.

    They say that the West is deeply sexist, but they know very well that Western women were the first to get the vote, contractual rights, and the opportunities that most women in the world are still without.

    They say that Western capitalist countries are cruel to their poorer members, subjugating them and getting rich off them, but they know very well that the poor in the West are far richer than the poor anywhere else, both in terms of material assets and the opportunities to improve their condition.

    Postmodernism is therefore first a political movement, and a brand of politics that has only lately come to relativism.” – Stephen Hicks, Explaining Postmodernism (2004)


    COMMUNISM->SOCIALISM ->POSTMODERNISM ARE RELIGIONS

    “Both religion and socialism started with a comprehensive vision that they believed to be true but not based on reason (various prophets; Rousseau Both visions were then challenged by visions based on rational epistemologies (early naturalist critics of religion; early liberal critics of socialism). Both religion and socialism responded by saying that they could satisfy the criteria of reason (natural theology; scientific socialism). Both religion and socialism then ran into serious problems of logic and evidence (Hume’s attacks on natural theology; Mises’s and Hayek’s attacks on socialist calculation). Both then responded in turn by attacking reality and reason (Kant and Kierkegaard; postmodernists).” – Hicks.

    CHOMSKY IS THE ONLY LEFT PHILOSOPHER
    Because he has mastered the art of using untrue language.  That is his contribution to the new religion of Postmodernism. He invented linguistic tricks that could deceive human beings.

    Cheers
    Curt.

    https://www.quora.com/Can-Socialism-Marxism-Communism-work-without-the-forced-coercion-of-the-productive-and-the-abrogation-of-private-property

  • Can Socialism/marxism/communism Work Without The Forced Coercion Of The Productive And The Abrogation Of Private Property?

    You are getting terrible answers here, and your question is a bit confusing. So lets clarify terms a bit first, and see if we can get you a decent response:

    1) Socialism is defined as the state ownership of property, and central management of production and distribution.

    2) Communism is the absence of private property.

    Which is why your question seems odd. Instead I think  you mean ‘socialistic’ which is what we have in westen democracies today:

    3) Democratic redistributive socialism is private control of property with heavy progressive taxation of profits. This is what we do in most countries today. It preserves both the ability of individuals to conduct economic calculation and the incentives necessary for them to act in concert to fulfill the desires of others for purely selfish reasons.  THe general argument is predicated on the idea of Pareto Efficiency: that you can take something from someone and give it to something else, as long as it does not make him worse off.  Which in political terms means that the individual does not lose his incentive to produce at the same level as he does prior to the theft of his property by the government for redistribution to others.   The logic of this is that for businesses to grow and expand, consumers must have money to spend and that more additional money is made when they spend it, and so, at least in the end result, everyone is always getting better over time.  … I will not follow the entire economic cycle here but in theory and practice, to a limited extent, it is not a bad idea even if it feels immoral to many of us.

    WHY THE SOCIALIST NON-ECONOMY DOES NOT WORK

    1) Prices are an information system that tells people what they need to do to satisfy the needs of others.

    2) Without prices it is impossible for humans to plan the production of complex goods.

    3) Without prices people cannot have the information needed to have the incentives to engage in productive activity.

    4) any attempt to use computers and static means of production would be forced in to autarkic production (a need to be totally self sustaining) by relative decrease in productivity, followed by constant impoverishment (See Cuba).

    It does not work outside of the family, and only works within the family, because of parental dictatorship, and our instincts for consanguineous cooperation and care-taking.

    The world has abandoned both communism and socialism, and has assumed highly redistributive consumer capitalism   Which is ‘socialistic’ but not technically socialist.  This maintains prices, and incentives, and the ability to plan complex production while taking as much profit as possible from producers without destroying incentives.

    It appears that outside of the west, most countries have or will, adopt totalitarian consumer capitalism, which in practice, in China for example, is an oligarchy running major state industries and finance, and redistribution in the form of easy credit and public services to ‘everyone else’.   This seems to be the pattern. It is not any different from what we have in the USA,  it’s just more obvious.

    But no, since communism is the abandonment of private property, no it is not possible, ever, under any circumstance, which is why it’s been abandoned.

    Socialism cannot exist either because it is not possible for people to operate an economy without money, prices and property, becasue neigher economic calculation nor incentives can exist.

    But that has not stopped the desire for it.  Any more than people have stopped the desire for the absurdity of divinities and afterlife.  These ideas are a religious need, a spiritual need, in many people.  SO this is why they have turned to the religion of Postmodernism as the newest reformation of socialism.

    POSTMODERNISM

    In response to the total failure of the Communist and Socialist agendas, both in theory and in practice, most of the left intellectuals have adopted Postmodernism which is where the idea that

    Forgive the long quote here in exchange for its value:

    “In postmodern discourse, truth is rejected explicitly and consistency can be a rare phenomenon. Consider the following pairs of claims.

    1) On the one hand, all truth is relative; on the other hand, postmodernism tells it like it really is.

    2) On the one hand, all cultures are equally deserving of respect; on the other, Western culture is uniquely destructive and bad.

    3) Values are subjective—but sexism and racism are really evil.

    4) Technology is bad and destructive—and it is unfair that some people have more technology than others.

    5) Tolerance is good and dominance is bad—but when postmodernists come to power, political correctness follows.

    There is a common pattern here: Subjectivism and relativism in one breath, dogmatic absolutism in the next.  Postmodernists are well aware of the contradictions—especially since their opponents relish pointing them out at every opportunity.

    They say that the West is deeply sexist, but they know very well that Western women were the first to get the vote, contractual rights, and the opportunities that most women in the world are still without.

    They say that Western capitalist countries are cruel to their poorer members, subjugating them and getting rich off them, but they know very well that the poor in the West are far richer than the poor anywhere else, both in terms of material assets and the opportunities to improve their condition.

    Postmodernism is therefore first a political movement, and a brand of politics that has only lately come to relativism.” – Stephen Hicks, Explaining Postmodernism (2004)


    COMMUNISM->SOCIALISM ->POSTMODERNISM ARE RELIGIONS

    “Both religion and socialism started with a comprehensive vision that they believed to be true but not based on reason (various prophets; Rousseau Both visions were then challenged by visions based on rational epistemologies (early naturalist critics of religion; early liberal critics of socialism). Both religion and socialism responded by saying that they could satisfy the criteria of reason (natural theology; scientific socialism). Both religion and socialism then ran into serious problems of logic and evidence (Hume’s attacks on natural theology; Mises’s and Hayek’s attacks on socialist calculation). Both then responded in turn by attacking reality and reason (Kant and Kierkegaard; postmodernists).” – Hicks.

    CHOMSKY IS THE ONLY LEFT PHILOSOPHER
    Because he has mastered the art of using untrue language.  That is his contribution to the new religion of Postmodernism. He invented linguistic tricks that could deceive human beings.

    Cheers
    Curt.

    https://www.quora.com/Can-Socialism-Marxism-Communism-work-without-the-forced-coercion-of-the-productive-and-the-abrogation-of-private-property

  • STIGLITZ SYNDROME ; UNACCOUNTABLE INTELLECTUALS “Stiglitz Syndrome” after Nobel

    STIGLITZ SYNDROME ; UNACCOUNTABLE INTELLECTUALS

    “Stiglitz Syndrome” after Nobel Prize–winning economist Joseph Stiglitz, referring to the phenomenon of public intellectuals being held utterly unaccountable for their bad predictions.

    From Taleb


    Source date (UTC): 2013-03-24 11:03:00 UTC

  • ON HOW DEBT CREATES FRAGILITY

    http://reason.com/archives/2013/03/24/how-debt-ruins-systemsTALEB ON HOW DEBT CREATES FRAGILITY


    Source date (UTC): 2013-03-24 10:06:00 UTC