http://krugman.blogs.nytimes.com/2012/05/16/jogging-for-the-exit/GREECE IS DONE – BUT SO IS THE AMERICAN EMPIRE
“The focus on Greece is right. And all allusions to these intertwined threads are worthwhile, as we wait for the American Empire to crumble under its rusty tanks.” – Sangita, Virginia.
Source date (UTC): 2012-05-16 10:47:00 UTC
http://www.caseyresearch.com/articles/will-iran-kill-petrodollarWHY DO THE LEFT QUANTITATIVE ECONOMISTS IGNORE STRATEGIC CIRCUMSTANCES? – AN Analysis Of What Our Future Might Look Like.
I always find the Keynesian quants amateurish. They select the policy that suites their ideology. It’s just another example of confirmation bias. The constantly quote data going back only as far as the second world war.
Monetary policy and spending policy are short term tools for fine adjustment of an economy. Industrial policy and Strategic policy, Education and Cultural policy for the long term construction of an economy. Monetary and spending policy serve statist and redistributionist ends, Industrial, Strategic, Education and Cultural policy serve conservative ends. Conservatives think in terms of accumulating reserves of capital, and leftists in terms of distributing it.
The United States has benefitted from 1992 onward from cheap labor, and cheap prices, due to the adoption of consumer capitalism in the post-communist world, combined with the petro-dollar which has artificially increased our purchasing power since 1973. From 1945 to the sixties we benefitted from being the only remaining industrial power, and the cheap conversion of farm labor to industrial labor. From 1840 to 1930 we benefitted from having cheap land and the ability to immigrate excess european population, which we could sell at a discount to the expanding european empires. From 1750 to 1850 we benefitted from conquering a continent occupied by a small number of stone age indigenous people.
The left economists would have us believe that our quality of life is the product of our democracy and our technology. But it is not. They are a luxury good produced by the organized application of violence in order to obtain a strategic economic advantage. Just as the greeks used organized violence to obtain trade access through the Dardanelles, the Muslims then the italians in the Mediterranean, the northern europeans in the new world.
Our temporary advantages that were born of the western advancement in violence, reason, commerce and technology, have been neutralized by our evangelism of consumer capitalism, over their strenuous objections and often violent resistance, to the rest of the human race.
We have created an inter-temporal hazard: an economic dependency upon anticipated future profits which are unsustainable in without strategic military advantages, and unsustainable a population that is polarized, and as such unsustainable as an economy and possibly a polity. Much of that polarization is caused by conflict over this very issue. And class, cultural, and race warfare can be masked through redistribution in times of wealth. But it cannot be masked in times of prolonged distress. A prolonged distress caused by the loss of those strategic advantages.
Our external debt is irrelevant. We can inflate it away with ease. But we must continue to sell debt to pay for our entire discretionary budget: every dollar of the military and every dollar of the entire federal government is paid for with debt. The other two thirds, consisting of social security, medicare and medicaid are paid for by the totality of our taxes. If the USA is unable to sell debt for petro-dollars, there is absolutely no way for us to replace one third of our budget. ie: that 1/3 which comes from debt, is in fact, 100% of the budget which our government exists to spend. Without that 1/3 that coes from debt we have no money AT ALL for our government to spend.
Now, the cautious reader might say that we will not lose 100% of our ability to sell debt. There may always be a market for american debt, simply because of the size of our economy. But again, this is a circular statement. It may only take a decrease of fifteen or twenty percent of demand for our debt to decrease the size of our economy such that our debt is no longer desirable whatsoever. At that point, people will fly to some other currency: a currency that is backed by oil and gold, and which will most likely come from the BRIC countries.
The left’s argument is that we simply can create demand by printing, borrowing and spending. Yes. But we cannot calculate a future based upon predictions that are specious. The future is uncertain.
That is the entire philosophy of conservatism: Save, Produce, Take Joy In Present Goods Over Fantasy Future Perfections, in order to avoid the error of human hubris. The very human hubris wich is the justification for progressive ideology and policy.
Source date (UTC): 2012-05-13 13:48:00 UTC
THE POOR
“The absolutely poor constitute about 12% of the US population — the majority of which is caused either by being a recent immigrant, or by the choice or necessity of domestic independence: living alone, or being a single parent with child while unable to support that domestic independence. And statistically speaking about 4% of that population will always be poor due to problematic genetics. And the inefficiency of the US system of redistribution via services rather than direct monetary contribution is more problematic than the number of poor. So, the financial cost of helping the poor in this country is not a problem. The envious middle class are the problem. And our focus on inefficiently serving the poor through costly government intervention rather than building an educated populace and an economy that satisfies the envies of the middle class is the causal problem. The question is whether we will fix it or cease to be a viable political system because we fail to.”
Source date (UTC): 2012-05-05 10:30:00 UTC
Interesting posts on Modeled Behavior in response to this post by Bryan Caplan on Econlog
Suppose there are ten people on a desert island. One, named Able Abel, is extremely able. With a hard day’s work, Able can produce enough to feed all ten people on the island. Eight islanders are marginally able. With a hard day’s work, each can produce enough to feed one person. The last person, Hapless Harry, is extremely unable. Harry can’t produce any food at all. Questions: 1. Do the bottom nine have a right to tax Abel’s surplus to support Harry? 2. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to support Harry? 3. Do the bottom nine have a right to tax Abel’s surplus to raise everyone’s standard of living above subsistence? 4. Suppose Abel only produces enough food to support himself, and relaxes the rest of the day. Do the bottom nine have a right to force Abel to work more to raise everyone’s standard of living above subsistence? How would most people answer these questions? It’s hard to say. It’s easy to feel sorry for the bottom nine. But #1 and #3 arguably turn Abel into a slave. And #2 and #4 clearly turn Abel into a slave. I suspect that plenty of non-libertarians would share these libertarian moral intuitions. At minimum, many would be conflicted. Yet bleeding-heart libertarian Jason Brennan doesn’t seem conflicted. At all. He begins by quoting one of his earlier posts:
Imagine that your empirical beliefs about economics have been disconfirmed. Imagine that a bunch of economists provide compelling evidence that life in a strictly libertarian polity would go badly. Imagine that they showed conclusively that if people everywhere were to live in a Nozickian minimal state or a Rothbardian anarcho-capitalist civil society, with everyone strictly observing property right rules, that 10% of people would starve (through no fault of their own), 80% would be near subsistence (through no fault of their own), and only 10% would prosper. However, imagine that they also show that in a liberal social democracy with significant redistribution or social insurance, most people would prosper, just as many people living in such welfare states are doing pretty well right now.
In a followup, Brennan adds:
If you are a hard libertarian, you respond to this thought experiment by saying, “Well, that’s too bad things turned out that way. But, still, everyone did the right thing by observing property rights, and they should continue to do so.”… If you have at least some concern for social justice, you respond by saying, “If that happened, that would be strong grounds to change the economic regime. In that kind of society, it’s unreasonable to ask people to observe the basic institutions and rules. They have a legitimate complaint that the rules works as if they were rigged against them. Perhaps we’d need to tweak property rights conventions. Perhaps we’d even need some sort of redistribution, if that’s what it took.”
This is a good example of what puzzles me most about bleeding-heart libertarians: At times, they sound less libertarian than the typical non-libertarian.* I’m not claiming that the “hard libertarian” intuition is certainly true. But in a thought experiment with ten people, the hard libertarian intuition is at least somewhat plausible. And once you start questioning the justice of the islanders’ treatment of Able Abel, questions about the justice of the modern welfare state can’t be far behind. Needless to say, bleeding-heart libertarians usually sound a lot more libertarian than the typical non-libertarian. Yet this just amplifies the puzzle. Unjust treatment of the able may not be the greatest moral issue of our time. (Then again…) But unjust treatment of the able is a serious moral issue. And it’s a serious moral issue that mainstream moral and political philosophy utterly ignores. My question for bleeding-heart libertarians everywhere: Why don’t your hearts bleed for the able slave? * The most egregious example is Andrew Cohen’s musings on parental licensing.
Lets extend the Parable a bit: If Able needs to wear a shirt to get into a store, that’s an exchange. Cause and effect. It is a cost of entry. If Able needs to respect property rights to participate in the local market. That is a price of entry into the market. If Able needs to respect manners, ethics and morals, then that is a price of entry into the group that cooperates — even if their only cooperation is negative: to respect life and property by avoiding theft, fraud and violence. If able wants something that he canot produce, he must exchange something for it. These are all voluntary exchanges. If Able works harder than others, and they take from him, that’s involuntary taking. It’s a theft. If Able works harder than others and others exchange something with him for it, It’s not a theft. It’s voluntary exchange. If others are materially unproductive, and have nothing to trade with Able, then what else do they have? They have status. Status signals increase Able’s opportunity to be even more productive by assisting him in concentrating human capital. With that human capital he can exercise his mind, his abilities and his knowledge further. He can eventually control 80% of the resources simply because he knows best how. And others have voluntarily given that control to him. Status also improves his access to desirable mates. Desirable mates further increase his status. And with that status people who are not productive like Able, will attempt to imitate him. Since, that is the purpose of status in our evolutionary system: to inform others who to imitate. Status is our natural compensation. Status has been our compensation since before we had money, and a division of knowledge and labor. Very likely before we had speech. Perhaps before we were sentient. But wait. Now, what happens in the Parable of the island? Instead, one of the other nine people specializes not in being productive, but in preaching. In preaching redistribution. His name is Cain. Cain makes the argument that it is a moral duty to support the less productive people. Cain offers Job and Lot jobs if they forcibly take from Able in order to fulfill the moral demands of the non productive that Cain has been preaching. Cain then redistributes half of what he takes from Able, and demonizes Able for his reticence. Able is deprived of the status, the future productivity he could create with control of his assets, his influence on the others in making them more productive through imitation, and deprived of the mates he could enjoy. And his genetic legacy is even deprived of the better genes he might capture. Not only is he deprived of these things, but Cain has now stolen that status. Job and Lot have stolen his productivity, and status. This has all been involuntarily transferred (stolen) from Able, in order to profit Cain, for the benefit largely of Job and Lot, and for some symbolic benefit of everyone else. On the horizon are nine other islands. Eight of those islands succumb to the proces of involuntary transfers. One does not. On that one Island Erik is ten times as productive as all the others, and they herald Erik at the quarterly festivals. Erik organizes the other people on his island in exchange for the product of his efforts. Over time, the people on Erik’s island become increasingly more productive, and genetically more competitive. On the other islands, the opposite happens. Because it’s dysgenic. Humans object to involuntary transfers and are highly agitated by them. If the taxes are used for purposes that the productive agree with, then this objection usually disappears. But status is the human currency and money and ‘objects’ are just means of obtaining it. Because in the end, we are just gene factories algorithmically searching by trial and error for better solutions than those we have today. And we cannot alter that behavior. We will simply create black markets. This is the insight of the Propertarians. That human nature is little more than emotions attached to changes in property. On another much bigger island, the Crusoe tribe develops respect for property, but then, afterward Kevin discovers a hoard of coal that can be used for cooking fires on his property. And simply sells buckets of it at high prices to everyone on the island. The Friday tribe wants it very badly and so the Crusoe tribe must defend it. Furthermore, the Crusoe tribe already pays the cost of respecting property by forgoing opportunities for theft fraud and violence. These are a high cost for any society to develop. So, since they pay to defend the territory, and pay for property rights, they see his high prices as an involuntary transfer. The locals object because the resource is part of the island, the product of Kevin’s labors. They are comfortable paying a high price for his labor, but not for the resource, in which by any and all accounts they are shareholders. He’s not actually adding anything of value. He’s just created a toll booth, and an expensive tool booth, in order to gain access to a precious resource. He’s no different from an extortionist. This parable can be extended to answer all moral and ethical questions of politics. The reason for that explanatory power, is that human nature is propertarian in origin. We are property calculators, and our emotions reflect changes in the state of our perceived property. THe primary difference between individuals is just which property we categorize as shareholder, and what we see as individual. But emotions are descriptions in changes in state of individuals’ perceptions of property. We could not have evolved as sentient beings otherwise. It would be impossible. The change in politics over the past century and a half, has been driven largely by the inclusion of women into the work force and the voting system. They have expanded government. They have done so by using the government not to resolve conflicts in priorities, and not to concentrate productive capital, but to redistribute from the productive to the non productive using the artificie of government. The classical liberal model of institutions was designed for farmers heading nuclear families: business owners who participated in the market. But very few people actually participate in the market as business owners today. Most sell effort or skill for wages, or join bureaucracies to seek rents rather than participate in the market and its risk. And the productive class who participates in that market cannot defend itself from the unproductive classes using the institutional model built for egalitarian farmers. So the society polarizes as the factions compete over futures that are diametrically opposed to one another: one which appropriates money without status compensation, and one wich desires status compensation, and control over norms, in exchange for money. Mediterranean, Russian and Slavic men have abandoned their societies because of endemic corruption. i.e., because of Involuntary transfers. The black market won and the society is not impossible to fix. Status signals in southern italy, spain and greed are anti-social. In ireland they’re anti-productive Luddic signals. In the states, vast numbers of hispanic and african american males have developed alternative masculine signals outside of the market and outside of the nuclear family. These signals are spreading to other males who are disenfranchised. Males over 50 are dropping out of the work force (and not voting over 50 and under 34) out of hopelessness. The wealthy abandoned society in the sixties, and have been out of sight since then. We do not even know their names. Many people do not know that they even exist. Their status has been totally appropriated. And they are only members of society in sense that they reside here. You can redistribute money, but not status. Status, not money is our motivator. Society is constructed of a web of signals. otherwise it’s just a mechanical process that we each exploit for our individual benefit.
http://www.businesspundit.com/iphone-costs/THE ACTUAL COST OF AN IPHONE 4s
(Of course the argument being made is that we should make them in the states rather than in china. And that’s not going to happen.)
Source date (UTC): 2012-04-30 10:17:00 UTC
1) Yes, FB is trying to pump its share price via advertising in anticipation of the IPO. We should expect advertising higher costs as the public awareness of FB’s income limitations increases. 2) Even if FB produces only 1B a quarter in revenue or only $5 per user, the costs of running that company are small in practice, and marketing expenses are controllable. It can be a profitable business. The question for investors is, can it be a GROWTH business? 3) If FB solves mail and search and duplicates the Google advertising tools, it can improve its value to advertisers even if its knowledge of customers is not as thorough as they hope, because customers will prefer less noisy searches to Google’s noisy and dirty searches. This is probably the strategic internal error they are making. They are very likely overvaluing the data about the individual in pursuit of mass advertising dollars instead of accurately valuing the desirability to the user of the interface and the protection from ‘noise’. FB will not become another Google. Google profits from the fact that its results are BAD. Because its results are bad, it can sell advertising to small business. FB however, can profit from the fact that its search results CAN be GOOD by narrowing acceptable results and narrowing advertising and therefore increasing advertising rates over those of Google. The problem Google has is that it CANNOT ATTRACT TOP BRANDS. The virtue of FB is that it CAN if it creates a walled garden. FB can strategically create a flight to quality for good brands just as Google has created a flight to opportunity for small and weak brands. “FB is television, and Google is the yellow pages.” 4) THE QUESTION FOR INVESTORS THEN is whether FB will pursue the short term trend, and continue to overvalue customer information — which looks bad but may not indicate anything other than an issue of timing — or whether FB will pursue the long term opportunity, of creating a less cluttered garden on the internet which converts their perceived weakness into a strength that is both desirable for users, consumers and for brands, and one which can rival google’s revenue, but rival it with UPMARKET revenue. The important point here, is that investors can INFLUENCE THAT STRATEGIC DIRECTION. I have no idea whether this strategy is commonly understood inside the company or without. But as one of the few people who has built a large scale technology and marketing company (Top 25 Digital Agency), and who has worked with other strategic Fortune 100 technology leaders to try to solve this problem, the business opportunity is obvious to me since Google’s challenge at attracting top brands due to its all-encompassing aspirations is legion. Google helps small business. FB can help large brands. And advertising large brands requires a bit of a garden. And FB has it. But the client interface for that business model is not Google’s. It’s more intimate. It has to be. That is what I suspect FB’s strategic error is: they’re looking in the wrong direction. That direction can be fixed however. And investors should invest in the OPPORTUNITY to create that wealth even if FB’s numbers look depressed because of timing. Curt Doolittle
http://www.capitalismv3.com/2012/04/26/is-facebook-making-a-strategic-error-or-is-their-current-problem-just-a-matter-of-timing/READ THIS BEFORE CHOOSING TO INVEST IN FACEBOOK OR NOT
–Facebook Has A Growth Strategy, But Are They Pursuing It, Or Lost In Folly?–
Source date (UTC): 2012-04-26 13:54:00 UTC
http://www.reuters.com/article/2012/04/24/us-usa-housing-rebound-idUSBRE83N0SK20120424″NO HOUSING REBOUND IN OUR LIFETIMES”
[rational argument off]
See? I said no ‘perceptible’ end to the recession through 2014, and then we run into the next major cycle shortly thereafter, with something major by 2020. That’s just obvious from the demographics, the movement patterns, the concentration of groups exiting the middle, the effect all of it has on generational cycles, and the distribution of ‘useful’ knowledge in the population. Sure, the low point is well behind us, but houses are still cheap outside of the destination cities. And baring some great policy madness, they’re going to stay that way.
(And yes, I’m still sensitive about enduring Steven Salta’s ridicule over writing catastrophe manifestos from a cabin in the woods. 🙂 Oh. I still owe him 100 bucks on that bet on Iran though. I gotta pay up on that one. 🙂 )
{/rational argument on]
Source date (UTC): 2012-04-24 21:28:00 UTC
http://www.taxfoundation.org/blog/show/28161.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TaxPolicyBlog+%28Tax+Foundation+-+Tax+Foundation%27s+%22Tax+Policy+Blog%22%29I DON’T BUY THE 70% TAX MAXIMUM EITHER. I JUST DON’T.
William McBride At The Tax Foundation Questions The Argument. (With graphs)
Source date (UTC): 2012-04-24 21:10:00 UTC
Why does wall street resist QE for example? Wall Street staff are in the business of planning and policy interferes with their plans, both by uncertainty and by impact. Like any specialization with a defined methodology and therefore a limited scope of understanding, Wall Street’s opinion is irrelevant (as @Richard Williamson says above) as their opinions are too unsophisticated to have meaning. WS is a mob not a hierarchy. WS is only material in how they REACT to change. How they react to change in the short term will be negative — to anything that interferes with their existing plans. Where ‘plans’ in this case are vague heuristic assumptions. But because they have the highest liquidity and most flexible liquidity of any industry in the market, their cost for changing plans is lower than the cost of changing plans for anyone else in the market. So, the problem with advancing QE/Spending policy is not wall street. It is politics, of which WS is just one constituency. And the problem of politics is the failure of the four groups of ECONOMIC IDEOLOGISTS to compose an economic program that PREVENTS INVOLUNTARY TRANSFERS between groups and instead BORROWS FROM AND REWARDS GROUPS. Where groups profit from different temporal positions on the human production cycle, and where that production cycle manifests itself as time preference. Your assumption is instead, that it will ‘trickle through’ the economy, making you no different from any one of the OTHER groups of economic ideologists who want to rewards to ‘trickle up’ or ‘trickle down’ or ‘trickle out from the entrepreneurial middle’. ‘Trickling’ produces all sorts of involuntary transfers, of status, of risk, of opportunity, and of wealth. We are not children, we do not have to play one note. we can compose a chord of solutions. The fantasy of the egalitarian community of common interest, for some reason, blinds left-economists and moderates alike to the inequality of function and therefore inequality of methods and incentives that different functional groups have in the economy,and by consequence the incentives of the political groups that represent them. As Kahneman argues, people fight MUCH harder to prevent involuntary transfers than they do for their own reward. This behavior MANDATES that the four major schools, each of whom represent four groups, who represent four periodicities of human planning, conduct processes of voluntary exchange between the groups rather than attempt to support one ‘team’ winning. For this reason I find the left’s position somewhat humorously hypocritical: a pot calling a kettle black. The methodology and incentives of WS are narrow and self serving, and the methodology of Keyensians is narrow and self serving. I will be proven right in time — certainly more right than the Keynesians. I look at that group the way they look at wall street: myopic because of methodologically enforced ignorance, all of which is preceded by a cognitive bias, a cognitive bias which is the product of biology not wisdom. As is evidenced by their failure to grasp the principles of human cooperation that are common sense to conservatives. The conservatives are offering compromises, and have been doing so consistently (DOE and HUD). And you don’t want to pay those compromises, so they fit and fuss over creating a distraction to avoid the fact that they just want what they want regardless of the costs to others. DEAR PROGRESSIVE ECONOMISTS. THE PROBLEM IS YOU, NOT WALL STREET, BUT YOU. THE PROBLEM IS YOU. You’re supposed to be smart. Try to be. Otherwise, if possessed of this knowledge you are just another person seeking involuntary transfers from others under the pretense that outcomes are kaliedic. But they are only kaliedic because of your ignorance. Ignorance others do not possess. In that event, you are either just another fool or just another thief. The question is whether you want to refrain from being both, and become a statesman instead. We need some. Heck, one would do. Cheers