economics articles

Film: 147 toddlers infected in Uzbek HIV outbreak

2010-03-22T20:29:00.000+02:00

MOSCOW – An AIDS outbreak at two children’s hospitals in Uzbekistan has killed at least 14 children and left 133 infected with HIV, according to a documentary posted on a respected Central Asian news Web site on Monday psychology degree online.

The editor of Ferghana.ru said the 2007 outbreak was first reported in an official documentary produced by Uzbek prosecutors for government television.

But, he said, the video never aired because authorities had second thoughts about broadcasting it, fearing that it would provoke a public outcry and unfavorable international publicity.

The documentary posted on Ferghana.ru reported that 12 doctors and nurses at two hospitals in the eastern city of Namangan were convicted of treating the children with contaminated medical equipment.

According to the narrator, the health workers were sentenced to prison terms of from five years to eight years and eight months.

Uzbek officials, including prosecutors, did not return repeated phone calls from The Associated Press seeking comment.

The AP could not verify the authenticity of the documentary, which would be the first official confirmation of the long-rumored outbreak, but a former Uzbek television producer said it appeared authentic.

Daniil Kislov, editor of Ferghana.ru, said his site obtained the video from an Uzbek health official after authorities canceled plans to broadcast it.

Government officials keep a tight grip on the media in Uzbekistan, where President Islam Karimov has ruled for more than 20 years.

Several outbreaks of hospital-transmitted HIV have been reported among children in Central Asia in recent years. Doctors in the region have sometimes prescribed transfusions for routine illnesses.

Similar incidents in Kazakhstan in 2006 and Kyrgyzstan in 2007 left dozens of children infected.

The Uzbek documentary shows a series of men and women, identified as health workers, confessing and saying they deserved harsh sentences. All the interviewees spoke into a microphone with the logo of Uzbek state television.

“I am 1,00 Hot News: MEA TV airing Kan Ya Makan Music Video by Ridha Ibrahim

[Via http://roniyon.wordpress.com]

Germany as an economic role model (2)

2010-03-22T12:21:00.000+02:00

Germany, as I noted in an earlier post, shows that it is possible for a nation to maintain a high material standard of living while still competing successfully in the global arena.

Germany is the world’s second-largest exporting nation, behind China, and for many years was number one, and it has the world’s third-largest trade surplus, behind China and Japan. Be it noted that there are about 60 million Germans and more than 1 billion Chinese. At the same time German workers get six-week vacations, generous old age pensions and guaranteed health insurance.

Thomas Geoghegan, a Chicago labor lawyer, has an excellent article about this in the March 2010 issue of Harper’s magazine. He attributes Germany’s superior economic performance to its system of worker participation in corporate governance which, ironically, was imposed on Germany by the victorious allies after World War Two.

Workers have equal representation on the boards of directors of large corporations with shareholders, although the shareholders have the deciding vote in case of a tie. The important thing from the workers’ perspective is that they know what’s going on. They know the financial situation of the corporation, and they know its plans. If a company is considering moving a manufacturing operation to Asia or eastern Europe, the union can make a counter-proposal to make it economically feasible to stay in Germany.

I don’t think that is the whole story, but I do think it is a great advantage to Germany to avoid the kind of class warfare we have in the United States. Workers can suggest improvements in efficiency without fearing they will jeopardize their own jobs.

In the 1950s, Walter Reuther, the head of the United Auto Workers, reportedly urged General Motors, Ford and Chrysler to make a line of fuel-efficient cars; the companies reportedly reacted with outrage at this infringement of management prerogatives, and told Reuther to restrict himself for bargaining for pay and benefits. (I don’t have a historical reference for this, but I find it believable.)

Even if you don’t think worker participation is the cause of Germany’s economic success, the facts show that it hasn’t prevented that success.

You may say that this is all very well for Germany, but its institutions can’t possibly be transplanted to the United States. But the United States has a long history of adopting good ideas from Germany. The Joint Chiefs of Staff of the U.S. armed forces are modeled on the Prussian General Staff. U.S. corporate research laboratories and research universities were inspired by Germany models. The U.S. interstate highway system is modeled on the German autobahn. The secret of success is to take other people’s good ideas and improve upon them.

Geoghegan’s article is not available on-line, so you would have to buy a copy or read it in a public library.

[Via http://philebersole.wordpress.com]

Radical Compassion

2010-03-22T04:19:00.000+02:00

I’m sitting in front of my TV, like so many of you, watching the post-HCR vote speechifying, grinning like a fool and tearing up here and there.

James Clyburn just said that Nancy Pelosi got it done through tenacity and compassion. I’ll have more to say about this later, but I think that this combination – which I’ll call radical compassion – is what we need to move forward, and not just in the healthcare arena.

(And speaking of hope: My miniature iris is up, too.)

[Via http://kittywampus.wordpress.com]

Morality and Leadership; Pelosi is bad for America

2010-03-19T20:47:00.000+02:00

At it’s most basic level, government is a willing agreement entered into by a group of people to give up some individual liberty for the preservation of the group in general. Cicero called it a “partnership in justice.”

For example, I have consented to be governed by the laws of my city, state and nation, even though that means I can’t do everything I may want to do whenever I want to. I may not agree with every law, but by not rebelling, it proves my tacit consent.

Naturally, then, in government leaders will emerge. We need to pick sheriffs, judges, mayors, presidents, legislators, etc. But does it really matter what kind of people they are? I think it does.

We have recently heard of all kinds of votes being “bought” in order to pass the healthcare bill. A Utah Congressman’s brother is getting appointed to a judgeship in exchange for the Congressman’s vote for Obamacare. The Hill newspaper reports on some of the goodies, including $300 million in extra funding for Sen. Landrieu’s home state of Louisiana, and millions in extra Medicaid dollars for Nebraska Sen. Ben Nelson. The public doesn’t want the bill to pass, so the Dems have to make these hidden deals in order to get it passed. Outside of Obamacare, the New Jersey government has been caught in corrupt contract scandals, awarding contracts and taking a cut of the money. Many state and national politicians are caught in sexual scandals. Our government leaders have been convicted of embezzlement, lying, and tax-fraud; implicated in the disappearance of interns, campaign fraud, and abuse of intelligence to rationalize war; and unconscionable waste of taxpayers money – basically robbing us, the citizens. It’s more like reading about pirates plundering a nation than its leaders preserving it!

Polybius, a Greek from around 200BC, watched the downfall of his native Greece and the emergence of Rome as the dominating power of the era. He wrote many books on Rome’s emergence and its history. He compares Rome to other contemporary nation-states like Greece, Carthage, etc. He says in The Histories, volume III that

“But the quality in which he Roman commonwealth is most distinctly superior is in my opinion the nature of their religious convictions. The consequence is that among the Greeks, (where belief in religion was deemed foolish) apart from other things, members of the government, if they are entrusted with no more than a talent, (a piece of money) though they have 10 copyists and as many seals and twice as many witnesses, cannot keep their faith; whereas among the Romans those who as magistrates and legates are dealing with large sums of money maintain correct conduct just because they have pledged their faith by oath. Whereas elsewhere it is a rare thing to find a man who keeps his hands off public money, and whose record is clean in this respect, among the Romans one rarely comes across a man who has been detected in such conduct.”

Whether the moral code you adhere to comes from organized religion or not, Polybius makes clear that moral people — people who believe in and live in accordance to the natural principles of right vs. wrong; honesty is good, dishonesty is bad; fidelity and integrity are good; etc. — these are the people that make the best public servants and leaders in government.

A generation later, the Roman Cicero said that leaders that follow these moral codes are the only ones fit to govern.

Another generation or two later, approximately 160AD, Marcus Aurelius was Emperor of Rome. In his Meditations he lauds a moral character that works for the public interest in a manner that befits a ruler.

My point is that the morality question has very little to do with the Religious Right of the current political landscape. Oh sure they get their boxers in a bunch about it nowadays, just in time for the next one to fall from within their own ranks due to yet another “indiscretion.” We don’t need to look to these punters for direction, or assume when they fall that the belief in a moral code is incorrect. We have the writings and lessons of history before us. Some Roman guys from a long time ago set-up a mixed government system with an Executive Branch, a Senate, a legislative (popular assembly) body, and judges. Sound familiar? They were the world’s super power for centuries, and their system worked for over 500 years. America, by paltry comparison, is just above the 200+ years mark.

So it’s not like we haven’t been pointed the way.

James Burgh, involved in the creation of this great nation, wrote in 1774 that,

“When we elect persons to represent us we must not be supposed to depart from the smallest right which we have deposited with them. We make a lodgment, not a gift; we entrust, but part with nothing. We have, therefore, a right to know what they are saying and doing. And should they contradict our sense, or swerve from our interests, we have a right to remonstrate, inform, and direct them. By which means, we become the regulators of our own conduct, and the institutors of our own laws, and nothing material can be done but by our authority and consent.”

Compare this with Speaker of the House Nancy Pelosi, and her behavior around the healthcare bill. Not only does the American public not know what is in this bill, she is deliberately trying to keep it this way as it says on her own website. The hidden deals, millions of dollars for buying votes, and strong-arm tactics is exactly the opposite of how the representative system is supposed to work!

Pelosi and politicians like her are bad for America. Watch CNN say so HERE.

We need a way to get career politicians back into the real world – like thru term limits for Congress. And we need to be as vocal and vigilant as ever against her and politicians like her. The right to govern ourselves is a real and unalienable right that we have. When our elected representatives abuse it and take power unto themselves like Pelosi is doing – hiding the contents of a bill from the public and doing back room deals to get it put into law – we need to use our natural rights and get her and her cronies out of our government. She and politicians like her are working toward the decline of America. The history is before us.

[Via http://blog.ericmerten.com]

ALVIN S. SIMPLETON SAYS TEXAS BOARD OF EDUCATION WRONG

2010-03-19T12:53:00.000+02:00

Man, they do everything big in Texas, and they sure don’t use common sense in what they do.

No, I’m not talkin bout them thinkin bout seceding from the USA.

Worse. The Texas State Board of Education has taken it upon itself to write the textbooks on economics and history according to a conservative interpretation of US history and capitalism.

This wouldn’t be so bad ifn it weren’t for the fact that Texas is the second largest buyer of textbooks, which means the book publishers will abide by the wishes of the conservative members the State Board.

If the folks in Texas want their kids to read such distortion of economics and history, fine, but why should the rest of our kids have to accept such garbage?

Example of revisionist history: Thomas Jefferson is not considered one of the Founding Fathers.

You can read the story in the Washington Monthly (http://ww.washingtonmonthly.com/), dated March 13, 2010.

Jonathan Zimmerman, while not agreeing with the Texas State Board of Education, suggests in the Los Angels Times dated March 17, suggests students maybe should be given several points of view, which would show how we Americans often disagree about how our nation was formed. Then the students could on their own “sort out the differences.”

Now, that ain’t a bad idea. But it ain’t gonna fly cause both liberals and conservatives at the extreme edges just don’t want but one point of view on anything and that point of view must be theirs.

[Via http://lawillis.wordpress.com]

Health Care Roulette

2010-03-19T04:33:00.000+02:00

A friend and occasional Power Line contributor writes:

If [Obamacare] passes, the Dems will own every doctor complaint out there. Moreover, the complaints will multiply, and not just because care will deteriorate as demand increases and supply decreases. They are going to multiply because the care-seeking population is about to become the Baby Boomers — i.e., the most indulged, demanding and complaining generation in a hundred years, or maybe ever. The Dems are (apparently) fixing to take over medicine at exactly the time The Giant Complaining Horde shows up at the door.

Of course, the irony, as ever with these egalitarian programs, is that people with money will still come out ahead. One reason I found out about [my] liver cancer in time to do something about it was that, knowing I had a potential problem, I paid $4,000 out of my own pocket for an exotic annual physical exam beyond what insurance would reimburse.

What is actually going to happen is that there will spring up a quasi-underground medical practice for people who can pay their own bills and do not rely on Medicare or (what will become dwindling) private insurance. Indeed, this has already started to happen with boutique clinics like the one I used. If I were a shrewd businessman, I would figure out some way to franchise it, or something, and make a fortune.

The basic thing the Dems detest is inequality born of the fact that people who think about what they’re doing tend to come out ahead of people who don’t. Oh well.

And in other news, did I tell you that my doctor never returns my calls?

[Via http://cliftonchadwick.wordpress.com]

Poverty in Africa, Ctd.

2010-03-17T20:51:00.000+02:00

I recently mentioned a new paper by Sala-i-Martin and Pinkovskiy about poverty in Africa, and how the situation is much better than we tend to believe. Martin Ravallion – probably the world’s most prominent poverty expert – has now reacted. He agrees that African poverty has been decreasing over the last 15 years, but he is cautious:

We must first be clear about what we mean when we say “poverty is falling”. What many people mean is falling numbers of poor. However, Sala-i-Martin and Pinkovskiy refer solely to the poverty rate—the percentage of people who are poor. (There is no mention of this important distinction in their paper.)… Here we agree: aggregate poverty rates have fallen in Sub-Saharan Africa (SSA) since the mid-1990s. Shahoua Chen and I came to exactly the same conclusion in our research, for the World Bank’s global poverty monitoring effort, although our methods differ considerably and (no surprise) I prefer our methods. However, Chen and I also point out that the decline in the aggregate poverty rate has not been sufficient to reduce the number of poor, given population growth…

As we warn explicitly in our paper, this is not yet sufficient survey data to be confident about the (promising) downward trend for Africa’s aggregate poverty rate that Sala-i-Martin and Pinkovskiy have announced with such confidence.

Hopefully we will see a confirmation of the emerging downward trend for Africa in the years ahead, as more (genuine) data emerge. (source, source, source)

Again proof that poverty statistics may be tasty sausages but you wouldn’t want to see them made. And that’s not just the case for third world statistics. Even U.S. poverty statistics are a mess.

[Via http://filipspagnoli.wordpress.com]

Boss Hog -- Rolling Stone on Smithfield

2010-03-17T12:31:00.000+02:00

In the tradition of gonzo journalism developed by the legendary Hunter S. Thompson, Rolling Stone writer Jeff Tietz holds his nose and plows right into the shitstorm of a story that is Smithfield, the biggest hog producer the world has ever known. Thanks to Gaille for the tip! Now here’s an excerpt from Jeff’s story:

Dead pigs -- just part of the "collateral damage". Rolling Stone photo

“Smithfield Foods, the largest and most profitable pork processor in the world, killed 27 million hogs last year. That’s a number worth considering. A slaughter-weight hog is fifty percent heavier than a person. The logistical challenge of processing that many pigs each year is roughly equivalent to butchering and boxing the entire human populations of New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, Dallas, San Jose, Detroit, Indianapolis, Jacksonville, San Francisco, Columbus, Austin, Memphis, Baltimore, Fort Worth, Charlotte, El Paso, Milwaukee, Seattle, Boston, Denver, Louisville, Washington, D.C., Nashville, Las Vegas, Portland, Oklahoma City and Tucson.

Smithfield Foods actually faces a more difficult task than transmogrifying the populations of America’s thirty-two largest cities into edible packages of meat. Hogs produce three times more excrement than human beings do. The 500,000 pigs at a single Smithfield subsidiary in Utah generate more fecal matter each year than the 1.5 million inhabitants of Manhattan. The best estimates put Smithfield’s total waste discharge at 26 million tons a year. That would fill four Yankee Stadiums. Even when divided among the many small pig production units that surround the company’s slaughterhouses, that is not a containable amount.

Smithfield estimates that its total sales will reach $11.4 billion this year. So prodigious is its fecal waste, however, that if the company treated its effluvia as big-city governments do — even if it came marginally close to that standard — it would lose money. So many of its contractors allow great volumes of waste to run out of their slope-floored barns and sit blithely in the open, untreated, where the elements break it down and gravity pulls it into groundwater and river systems. Although the company proclaims a culture of environmental responsibility, ostentatious pollution is a linchpin of Smithfield’s business model.

A lot of pig shit is one thing; a lot of highly toxic pig shit is another. The excrement of Smithfield hogs is hardly even pig shit: On a continuum of pollutants, it is probably closer to radioactive waste than to organic manure. The reason it is so toxic is Smithfield’s efficiency. The company produces 6 billion pounds of packaged pork each year. That’s a remarkable achievement, a prolificacy unimagined only two decades ago, and the only way to do it is to raise pigs in astonishing, unprecedented concentrations.

Smithfield’s pigs live by the hundreds or thousands in warehouse-like barns, in rows of wall-to-wall pens. Sows are artificially inseminated and fed and delivered of their piglets in cages so small they cannot turn around. Forty fully grown 250-pound male hogs often occupy a pen the size of a tiny apartment. They trample each other to death. There is no sunlight, straw, fresh air or earth. The floors are slatted to allow excrement to fall into a catchment pit under the pens, but many things besides excrement can wind up in the pits: afterbirths, piglets accidentally crushed by their mothers, old batteries, broken bottles of insecticide, antibiotic syringes, stillborn pigs — anything small enough to fit through the foot-wide pipes that drain the pits. The pipes remain closed until enough sewage accumulates in the pits to create good expulsion pressure; then the pipes are opened and everything bursts out into a large holding pond.

The temperature inside hog houses is often hotter than ninety degrees. The air, saturated almost to the point of precipitation with gases from shit and chemicals, can be lethal to the pigs. Enormous exhaust fans run twenty-four hours a day. The ventilation systems function like the ventilators of terminal patients: If they break down for any length of time, pigs start dying.

From Smithfield’s point of view, the problem with this lifestyle is immunological. Taken together, the immobility, poisonous air and terror of confinement badly damage the pigs’ immune systems. They become susceptible to infection, and in such dense quarters microbes or parasites or fungi, once established in one pig, will rush spritelike through the whole population. Accordingly, factory pigs are infused with a huge range of antibiotics and vaccines, and are doused with insecticides. Without these compounds — oxytetracycline, draxxin, ceftiofur, tiamulin — diseases would likely kill them. Thus factory-farm pigs remain in a state of dying until they’re slaughtered. When a pig nearly ready to be slaughtered grows ill, workers sometimes shoot it up with as many drugs as necessary to get it to the slaughterhouse under its own power. As long as the pig remains ambulatory, it can be legally killed and sold as meat….’

Read the whole story on Rolling Stone.

[Via http://thebovine.wordpress.com]

Mighty Morphin' Power Narratives

2010-03-17T04:37:00.000+02:00

It’s interesting to witness the interplay between culture and politics which is, fundamentally, the interplay between narrative and power. Narratives that attract power tend to gain priority, which can lead to more power. Narratives that don’t attract power tend to lose priority and then lose whatever power they might have had. Successful narratives tend to attract more minds to propagate themselves to, adding power. Unsuccessful narratives tend to attract fewer minds and even lose adherents.

Successful narratives, even more insidiously, heavily punish those that don’t subscribe to them. Humans are narrative propagating machines; human adaptability can basically be reduced to the adoption of successful narratives and the rejection of unsuccessful narratives. The pressure to force everyone in a group to adhere to whatever narrative is currently successful is immense. Standing alone is an emotionally violent experience.

Author Michael Lewis became famous for the book Liar’s Poker. Liar’s Poker was originally an expose on the dysfunctional culture on Wall Street during Lewis’s time as a bond salesman at Salmon Brothers. Following the typical logic of narrative and power, Liar’s Poker instead attracted people to Wall Street. An unspoken context of Liar’s Poker implied that not only could mindless testosterone fueled jocks make their way on Wall Street without any particular skills but that they could make lots of money. Liar’s Poker became a recruiting tool and even an encouragement for the kind of Wall Street idiocy he had deplored.

As something of an act of penance, Lewis has written a new book The Big Short: Inside the Doomsday Machine. In it, he profiles four groups of investors who shorted the Housing Bubble and profited immensely from it. In an interview, Lewis commented that one commonality of these “shorts” was how socially disconnected they were. One of Lewis’s protagonists, hedge fund manager Michael Burry, was diagnosed with Asperger’s Syndrome during his shorting. Those who suffer from Asperger’s tend to have less social connectivity to others that is true of the average member of the population. Burry, for example, never socially connected with Wall Street circles, instead spending all of his time obsessively reading SEC prospectuses for mortgage-backed securities. This meant that the predominant collection of current Wall Street narratives like “there has never been a decade over decade decline in housing prices in American history” didn’t infect him. Indeed, it seems that the more isolated his position was, the happier he was. This didn’t mean he was completely free of being bombarded by the narrative. Burry’s investors, infected with the dominant narratives, constantly criticized him for his shorting of the Housing Bubble. He was vindicated at the end, making “$100 million for himself and $725 million for his investors”.

Yet he is singular for how unique he was. Most investors went happily off the cliff, carried away by a narrative that brought them huge wealth in the short-term but disaster in the long-term. My view has always been that, in the aggregate, culture lags behind events just as biology tends to lag behind events. But sometimes the day of reckoning comes quickly, even for the most successful of narratives. Priority and with it power can disappear very quickly.

Narrative crawls but history jumps.

[Via http://committeeofpublicsafety.wordpress.com]

Adam Smith - Monopolies - Oregon - Montana Territory and the Land Run of 1889

2010-03-15T12:50:00.000+02:00

Adam Smith – Monopolies Oregon – Montana Territory and the Land Run of 1889 Adam Smith From Wikipedia, the free encyclopedia Adam Smith (baptised 16 June 1723 – 17 July 1790 [OS: 5 June 1723 – 17 July 1790]) was a Scottish moral philosopher and a pioneer of political economics. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. Smith is widely cited as the father of modern economics. Smith studied moral philosophy at the University of Glasgow and Oxford University. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations, publishing it in 1776. He died in 1790. Monopolies The term Robber baron was popularized by U.S. political and economic commentator Matthew Josephson during The Great Depression in a 1934 book.[1] He attributed its first use to an 1880 anti-monopoly pamphlet in which Kansas farmers applied the term to railroad magnates. The informal term captains of industry may sometimes be used to avoid the negative connotations of “robber baron”.

Five Points (or The Five Points) was a notorious slum centered on the intersection of Mulberry, Anthony (now Worth St.), Cross (now Mosco), Orange (now Baxter), and Little Water Street (no longer exists) on Manhattan island, New York City, New York, in the United States. Today, the Five Points would be located about halfway between Chinatown and the Financial District. The name Five Points derived from the five corners at this intersection.

The neighborhood features in the book The Gangs of New York by Herbert Asbury, published in 1928. In the 1970s, the book inspired director Martin Scorsese to make a film set in The Points, which he accomplished with 2002’s Gangs of New York. In The Sting, mob boss Doyle Lonnergan (Robert Shaw) is known to come from Five Points; as part of the plan to gain Lonnergan’s confidence, Johnny Hooker (Robert Redford) claims to be from the same neighborhood.

Robber Barons Bill the Butcher Gangs of New York – Trailer Northwest Territory On July 13, 1787, the Confederation Congress passed the Northwest Ordinance. The act created the Northwest Territory. It also established a form of government and specified how the various parts of the Northwest Territory could become states. The Northwest Ordinance required the creation of at least three but not more than five states from the Northwest Territory. The first state to be formed from the Northwest Territory was Ohio, the seventeenth state of the United States of America. While the United States government had now established how the Northwest Territory would be governed, Native Americans living in the area refused to agree to American control of the region. From the Northwest Territory’s creation in 1787 until well after Ohio statehood in 1803, bloodshed between white settlers and the Indians continued in the American Northwest Oregon Territory The Territory of Oregon was an organized incorporated territory of the United States that existed from August 14, 1848, until February 14, 1859, when the southwestern portion of the territory was admitted to the Union as the State of Oregon. Originally claimed by several nations, the region was divided between the U.S. and Great Britain in 1846. When established, the territory encompassed an area that included the current states of Oregon, Washington, and Idaho, as well as parts of Wyoming and Montana. The capital of the territory was first Oregon City, then Salem, followed briefly by Corvallis, and lastly as Salem, the seat of government for the State of Oregon. Montana Territory The Territory of Montana was an organized incorporated territory of the United States that existed from May 28, 1864, until November 8, 1889, when it was admitted to the Union as the State of Montana. Land run

Land run (sometimes “land rush” ) usually refers to a historical event in which previously-restricted land of the United States was opened for homesteading on a first arrival basis. Some newly opened lands were sold first-come, sold by bid, or won by lottery, or by means other than a run. The settlers, no matter how they acquired occupancy, purchased the land from the United States Land Office. For former Indian lands, the Land Office distributed the funds to the various tribal entities according to previously negotiated terms. The Oklahoma Land Run of 1889 was the most prominent of the land runs, although there were several others enumerated below.

There were seven land runs in Oklahoma:

Land Run of 1889 took place at high noon on April 22, 1889 and involved the settlement of the Unassigned Lands (most of modern day Canadian, Cleveland, Kingfisher, Logan, Oklahoma, and Payne counties).
September 22, 1891: Land run to settle Iowa, Sac and Fox, Potawatomi, and Shawnee lands.
September 23, 1891: Land run to settle Tecumseh, the pre-designated location of the county seat of County B, later renamed as Pottawatomie County.
September 28, 1891: Land run to settle Chandler, the pre-designated location of the county seat of County A, later renamed as Lincoln County.
April 19, 1892: Land run to settle the Cheyenne and Arapaho lands.
September 16, 1893: Cherokee Strip Land Run. The Run of the Cherokee Strip opened nearly 7,000,000 acres (28,000 km²) to settlement on September 16, 1893. The land was purchased from the Cherokees for $7,000,000. It was largest land run in United States history.
May 23, 1895: Land run to settle the Kickapoo lands.
In honor of Oklahoma’s Centennial, an Oklahoma Centennial Land Run Monument is currently being built by Oklahoma artist Paul Moore in his Norman, Oklahoma studio. As elements of the 47 piece monument are finished, they are to be installed in lower Bricktown, Oklahoma City. When completed, the monument will be approximately 365 feet (111 m) long, making it one of the largest bronze sculptures in the world.

THE RUSH TO OKLAHOMA

Oklahoma! Oklahoma! – Trailer

This isn’t Commie propaganda, it’s what your teacher’s taught you in school so turn off the babbling idiots like Beck, Limbaugh, Hannity and O’Reilly long enough to remember what you were taught in school?? Jeez!! You wanna put the Robber Baron’s back in the Drivers seat when you no longer have the West to settle and start over when the proverbial shit hits the fan under pure unbridled, unregulated capitalism that maybe was only ever really in effect from the 1890’s ( and forget about TR and Wilson to boot?) till the crash of 1929, maybe the public schools were really bad back when you were in school too, nah, you know better, turn off FOX, it’s that easy?? U know Glen, these crazy papists come over here and want a hand out and turn our cities into war zones with their vices and odd religions, and don’t even get me started about those crazy Mormons that believe in Vishnu or something weird like that? Somebody ought to look into their UnAmerican views in Congress? In the late 19th century, Democrats would call the Republicans “Know Nothings” in order to secure the votes of Catholics. Since the early 20th century, the term has been a provocative slur, suggesting that the opponent is both nativist and ignorant. Bob Jones Reposts Mormon, Catholic ‘Cult’ Reference Doctor PaisleyPaisley’s use of the title’Dr’ derived initially from a 1954 qualification from the outlawed American Pioneer Theological Seminary in Rockville, Illinois. Later this was somewhat legitimised by an honorary Doctor of Divinity degree awarded by Bob Jones University

West Side Story – America West Side Story-Tonight West Side Story (1961)

[Via http://dummidumbwit.wordpress.com]

Looking to America's First Financier

2010-03-15T04:50:00.000+02:00

In a time of ever more alarming reports on the financial condition of our country, Alexander Hamilton, who did more than any other to establish America’s financial system, is a useful figure to return to. I recently read a 1931 biography of Hamilton entitled Alexander Hamilton: First American Business Man. (1) The author, an economic historian at Cornell University named Thomas Irving Warshow, focused on what he regarded as essential about his subject: Hamilton’s role in the development of the business and financial systems of the United States.

In the existing biographies of Hamilton, there is but little emphasis on this portion of Hamilton’s activities, yet it was as financier and business man that our first Secretary of the Treasury proved his immortality. For as a man, he was not noble; as a politician, he was not an eminent success; as a statesman, apart from financial measures, he was not superior. But as a business man, not in all his period was any man to match him, nor in all the years of American history can any figure dwarf him in this, his natural field. (p. ix-x)

There is something dubious about Warshow’s characterization of Hamilton as a “businessman” rather than a statesman, but his narrative does have the virtue of keeping the focus on certain highlights of his career. It is impossible not to be riveted by Hamilton’s life story. The magnitude of his role in shaping our basic political and economic institutions is difficult to exaggerate. For all those Americans who have been taught to see the Founders as “immigrants,” Hamilton’s story serves as a corrective. Born out of wedlock in the British West Indies, he was derided as a “foreigner” by enemies like Jefferson. But this misses the larger point: our founding fathers were not immigrants to this nation; they created it. Hamilton rightly is ranked among the most important among them.

When Hamilton traveled to New York in 1772 to pursue an education, he had while still a teenager already served as general manager of the largest trading operation in the West Indies. He helped to win the Revolutionary War as Washington’s military secretary from 1777 to 1781. With his essays in the Federalist Papers and active campaigning, he secured the adoption of the Constitution. As Secretary of the Treasury he engineered the federal assumption of the states’ debts from the Revolutionary War and established the first United States Bank. He planned and organized the first large business corporation in America, the Society for Establishing Useful Manufactures (S.U.M.). He was a strong proponent of strengthening manufacture through protective tariffs, a policy argued for by Patrick Buchanan and at the Economic Nationalist site. He was an instrumental proponent of the “Federalist” philosophy whose conflict with “Jeffersonian Democracy” was basic to early American politics and continues to resonate today. Were it not for the public exposure of an amorous indiscretion and his capacity for making enemies, he might have been President. Instead, he squandered his life before he had reached 50 in a needless duel with Aaron Burr.

In his zeal to grow the economy, Hamilton was too tolerant of speculation and profiteering, and a number of scandals surrounded his tenure as Secretary. Yet he did not grow rich and does not seem to have ever used his political power for personal gain. He built up a financial system that provided the indispensable precondition for industrialization: sufficient access to credit. Warshow expresses “liberal” (in the 1931 sense of the word) reservations about Hamilton’s legacy, while seeing his contribution to American industrialization as beyond questioning:

In this entire plan Hamilton accepted the principle of exploitation. With the larger social effects of his program – the consequences to the working classes, congestion of population, the entire labor problem – he did not concern himself. Political fallacy though it was, it was not in harmony with his temperament or his principles [to so concern himself]. Material splendor and power were his vision and his plan. With the singleness of purpose so necessary to the successful large man of business he blazed the path to our present-day material prosperity. Without Hamilton we might be a happier people, but not the great commercial nation. Woodrow Wilson has said of America’s first business leader: “A very great man, but not a great American.” Deficient in liberalism, indeed; but then, what great debt does industrialism owe to the leaders of liberalism? (p. 179)

Russell Kirk, while describing Hamilton’s conservative vision of a virtuous, if privileged, aristocratic class running the helm of society, makes trenchant criticisms of his industrialist and nationalist views that are somewhat germane to Warshow’s.

[H]e ignored the probability that the industrialized nation he projected might conjure up not only conservative industrialists, but also radical factory-hands – the latter infinitely more numerous, and more inimical to Hamilton’s old-fashioned idea of class and order than all the agrarians out of Jefferson’s Virginia.” (2) Kirk feels that the trends towards industrialization and centralized government would have proceeded without Hamilton’s almost fanatic encouragement, and quite possibly in a healthier manner that could have prevented the rupture of the Civil War.

Nevertheless, from the present-day perspective, Hamilton’s thinking holds plenty of value to conservatives. Many of his intuitively held positions could be tools of salvation if adopted by our present-day business and political leaders. Hamilton held that the integrity of a nation rested on its credit, and his achievement was to make United States into a nation that could be relied on to pay off its debts. His establishment of the national credit appears to have been largely squandered by the current custodians of his legacy, but it is never too late to return to common sense on these matters. We are the inheritors of Hamilton’s practicality as well as of Jefferson’s idealism, and in the end we will get done what needs to get done.

Notes

(1) Robert Irving Warshow, Alexander Hamilton: America’s First Business Man, Garden City, NY: Garden City Publishing, 1931.

(2) Russell Kirk, The Conservative Mind From Burke to Eliot (Seventh Revised Edition), Chicago: Regnery Books, 1986.

[Via http://heritageamerican.wordpress.com]

What drives us to Succeed (what makes good Doctors good?))

2010-03-12T20:56:00.000+02:00

A thought occurred to me today. We pay doctors an awful lot. And then of course we demand that they pay high medical practice insurance, and their educational costs are pretty darn high, too. Why do we pay doctors so much?

Well, the services that doctors give us improve our lives and even allow us to continue living when we might otherwise die. Life is pretty valuable to most of us– and it might be useful to examine the age in which we live, and what things teach us that life is so valuable. Perhaps it might even be useful to study violence as seen through the lens of the extreme value of life. Not only does violence seem more abhorrent to most of us– it is also perhaps more potent as a form of expression and as an influence upon us in our world of relative peace (not to discount the current conflicts in the world). Sorry– bit of a tangent there.

So the value of life is part of why we pay doctors so much. Perhaps we pay doctors a lot because their services are scarce as well. So we currently have 1)value of life, 2) scarcity of medical services, and here’s another one I’ll introduce, but as a question– Does paying doctors more actually improve their service?

Or, supposition 3) the improved service that higher pay can buy, not in the form of better technology or the like, but in improved performance for higher pay.

In some jobs, higher performance means better pay, but in other jobs this is seen as ineffective. Ex: Business consultants are paid more if they have more prestige, experience or success under their belt. However, the consensus isn’t the same about High School teachers– some still think this would be useful or a true principle, but others (I think most people) disagree.

The basic reasoning may have something to do with how ’sure’ results seem to be for each of these professions or situations.

So, does it really work? Or should we rate doctors in other ways? How do we get better service from doctors?

[Via http://elkym.wordpress.com]

Green Jobs Debate

2010-03-12T12:48:00.000+02:00

The Economist is hosting a green jobs debate between former Green Jobs Czar Van Jones and Andrew Morriss, one of the authors of “The Green Jobs Myth”. The pre-debate vote of reader support for the statement “This house believes that creating green jobs is a sensible aspiration for governments” was close to 50-50, so this one could go either way.

When green jobs are created by the public sector they are at best a coincidental byproduct of other worthy goals. Making green jobs an explicit policy goal means having two contradictory objectives: maximizing efficiency, that is output per dollar, and maximizing jobs, that is maximizing workers per output. If you consider that jobs cost dollars, these goals are almost exactly opposite. The only way they don’t work against each other is the extent to which you can costlessly exchange capital for labor, a rare if non-existent condition. Remember, maximizing workers per output is the same as minimizing output per worker.

The easiest defense of green jobs is to contrast it with doing nothing, The most difficult defense is to contrast it with a gas tax or cap-and-trade. This is where Jones is at his weakest:

Furthermore, governments will need to go beyond a simple cap-and-trade system for global warming pollution. Renewable energy standards and codes for energy efficiency will help build markets. Green banks and new financing tools will use public underwriting to help unleash private capital. And public investments in infrastructure will create a platform for innovative businesses to thrive and hire more workers.

Notice that when contrasted with cap-and-trade, the actions that he argues the government needs to take are completely unrelated to the kind of policies promoted by green jobs fans. For instance, weatherization would not fall under any of these categories, nor would direct subsidies to particular companies or technologies. Unless that’s what he means by “green banks… will use public underwriting” is that “the government will subsidize things”, in which case he hasn’t really made an argument so much as an assertion. Once the cost of pollution is priced into polluting, there is no more externality. What is the remaining justification for government action? He has dodged a very critical question here.

Jones is most successful in arguing that since government intervention in energy markets is inevitable and desirable, they need to explicitly prioritize green technologies, and cannot simply let the market handle it. This is a good argument for why the government should consider the environmental impact of it’s regulatory actions.

As to whether or not green jobs policies are protectionism, he argues that “In this context, policy is not a restraint on trade. It is a driver of innovation”. However, in reality it almost certainly is. When a policy goal is to maximize American jobs, that has the effect of a “Buy American” provision. Here’s one recent example:

…when American stimulus funds subsidized a joint U.S.-China wind-power farm in West Texas, it turned out that Texas stood to get 30 permanent jobs to China’s 3,000. After Sen. Charles Schumer (D., N.Y.) protested, the Chinese agreed to build a wind-turbine factory in Texas.

Clearly, prioritizing American jobs is highly correlated to prioritizing American investments, which is protectionism.

[Via http://modeledbehavior.com]

Ignorance Is Bliss

2010-03-12T04:39:00.000+02:00

Ignorance seems to be bliss in America… The American people don’t want to care about things that are happening in this world. The more important the issue, the less people truly care to understand.

In my economics class, we were shown a picture of a statue of Mao Zedong with his right arm raised and we were asked to identify him. A girl raised her hand and said, “It’s Hitler!” Everyone agreed with her and were upset to find out that it wasn’t him. First off, under the statue there was a sign that had Chinese characters, so I find it hard to believe it was Hitler. And besides, if they knew world history they would know that during WWII, China was was an Ally and was helping us fight against the Axis powers…

Another example from today was in my class following economics. Two girls walked into the room proclaiming that they would catch a cold because the room was cold. I couldn’t believe that they were serious. Cold temperature doesn’t make you sick; all it does is weaken your immune system, allowing you to get sick easier. You don’t get sick from temperature…

I’m not sure if that last example fits with this or if it just shows how stupid people really can be. Nonetheless, ignorant people piss me off and just completely annoy me to no end…

Here’s a video to show how stupid Americans can be; they don’t even understand that they’re being made fun of.

[Via http://chelseastonger.wordpress.com]

Walmart discriminates against little Caucasian girls

2010-03-10T20:57:00.000+02:00

…or something.

Guys, Ballerina Teresa was on clearance. If she was “devalued”, it was because Louisiana Negro consumers didn’t pony up the $6 to do their bit for Mattel’s and Walmart’s bottom line….so who actually did the devaluing here? I don’t know if the issue is that Louisiana Negroes don’t like Barbies, or don’t like black Barbies, or can’t relate to ballerinas …and it really doesn’t matter; the product has to go. Would you be happier if Walmart had raised the price to $50? No, because that would have been discriminatory. So it’s not discriminatory if Ballerina Barbie is still $6? It’s not a good thing that poor girls can now buy a doll for 50% off? Come on, I thought we lived in the post-racial age. Millions of Americans didn’t vote for America’s first Black Red President so they could hear race-pimping psychologists whine about trauma to kids’ self-image. Then they claim that Negros buy more Caucasian dolls than vice-versa…hmmm, maybe that’s where the self-image problem is?? Do we need doll apartheid? Mandatory gene tests to make sure you have sufficient African genetics to own a Teresa (or of course Eurogenes for Barbie)?

The racial insensitivity didn’t happen when they dropped the price; it happened when they ordered too many Ballerina Teresas. I’m sure they won’t make that mistake again. Get over it!

[Via http://jeffreyquick.wordpress.com]

Beteille on Raj

2010-03-10T12:57:00.000+02:00

Here is Beteille on the economist K N Raj:

I cannot assess Raj’s contribution to economic science, nor is this the place or the time to do so. But he certainly was an inspiration to many both within and outside his own discipline. P.N. Dhar, who was both his friend and his rival, was bemused by the admiration Raj was able to attract. Shortly after he joined Indira Gandhi’s office as her adviser, he prepared a note for her with great care and some satisfaction. When he went to see her about the note, the first question she asked him was, “What does Dr Raj think of this?” It mattered to many people what Raj thought of them and their work. It certainly mattered to me.

In 1968, I was awarded a Jawaharlal Nehru Fellowship for two years. I chose as my subject the study of agrarian social structure, at that time a somewhat unusual choice for a sociologist. My choice was influenced to a large extent by my association with Raj. I was determined to show him that sociologists had something to say about class and not just about caste, but that they had their own approach to its study. My colleagues in the department of sociology were a little puzzled by my choice of subject, and some even thought that Raj was turning me into a Marxist.

Take a look!

[Via http://mogadalai.wordpress.com]

Sinking In Debt ?

2010-03-10T04:13:00.000+02:00

As opened my mail today I noticed a letter from the U.S. Dept. of Commerce. I opened it and found a two paragraph letter informing me that next week I would be receiving a form from the 2010 census and that it was very important that I fill out the form and return it promptly. Beyond that the letter said nothing that any half-wit would not already know. The longer I looked at that letter the angrier I became. Our Nation has a 1.4 billion dollar deficit projected. Everyone acknowledges that the debt is unsustainable and that our currency is becoming worthless as a result. All manner of lip service is given to ways to cut waste in govt. spending. The President talks about how we can cut waste in Medicare spending. Who are we kidding? If it wasn’t obvious to someone in govt. that this letter, that was sent out to every home in the U.S., was unnecessary and a huge waste of the taxpayer’s money then we don’t have a chance of ever getting this thing under control. This letter was unnecessary, but even if it had been necessary it could have been sent next week with the census form. Who knows how many millions of Dollars in savings this would have amounted to? I called my Congress person’s office to register my unhappiness about the waste of my taxes on this boondoggle. I hope everyone who receives one of these letters will do the same.

[Via http://seniordiscount.wordpress.com]

Idiot in US Senate

2010-03-08T20:57:00.000+02:00

Sen. Mike Johanns, R-Neb. suggested that U.S. should consider banning Japanese cars until Japanese government guarantees that their cars have no defects.

http://www.usatoday.com/money/autos/2010-03-02-toyota-hearing-japanese-cars_N.htm

One small problem though: all the cars being recalled were assembled in the U. S.

Mr. Jahanns should also seek banning the sale of GM, Ford and Chrysler cars in the U.S. and other countries unless the US government promises that there will be no recalls from these companies.

Same thing for Benz, BMW, Volvo and Hyundai too.

Yeah, let’s get the trade war started!

[Via http://hslu.wordpress.com]

Global Shipping Routes

2010-03-08T03:58:00.000+02:00

Via Paul Kedrosky, a look at the most important global shipping routes and ports. No surprise that there are only two U.S. ports, and they are both petroleum centers. Click image for larger version.

Pablo Kaluza et al., “The complex network of global cargo ship movements,” (January 13, 2010)

[Via http://blog.accordionpartners.com]

Cleansing China's environmental soul

2010-03-05T20:54:00.000+02:00

The world’s biggest polluter seeks to cleanse their soul and win a brand new image as an environmental champ.

After the failure of the Copenhagen Summit – which ended in a sort of deal-no-deal agreement many blamed mainly on the Beijing government for its opposition not only to a legally binding agreement but to any agreement at all – China may start its first city-wide carbon cap-and-trade system by June in what may be seen as a trick to win global confidence back.

Site of the new diplomatic strategy is the northeast port city of Tianjin whose government is planning to impose a mandatory limit on energy used to heat buildings in the first half of this year. Property managers able to reduce energy use to below the limit will earn credits they can then sell.

China has pledged to reduce its carbon-dioxide output per unit of gross domestic product by 40 percent to 45 percent by 2020 compared with 2005 levels. Premier Wen Jiabao in January called pollution in the nation “grim” and said the government will strictly limit emissions from coal-powered generators, cement and steel producers.

The Chinese People’s Political Consultative Conference, the top advisory body to the nation’s parliament, this week proposed additional measures to cut carbon emissions. Premier Wen addressed the opening session today of the parliament’s annual meeting in Beijing and deliver what amounts to China’s State of the Union speech.

The Tianjin program, China’s first market-based carbon trading plan, was established by Arreon and the Tianjin Climate Exchange. The exchange is a venture between a unit of China National Petroleum Corp., the country’s largest oil and gas company, the Tianjin Property Rights Exchange and the Chicago Climate Exchange, according to its Web site.

“On the one hand, Tianjin needs to develop very quickly,” said Mu Lingling, deputy general manager of the Tianjin Climate Exchange. “On the other hand, it has to provide environmental protection.” The emissions trading program can help the nation achieve both targets, Mu said.

Beijing and Shanghai are also working on carbon trading programs and are in a “horse race” with Tianjin to develop emissions trading systems for the nation, Shi said.

Tianjin, about 120 kilometers (75 miles) southeast of the Chinese capital, recorded its pilot trades in carbon emissions allowances last month in a trial program covering heating suppliers serving more than 2 million square meters (21.5 million square feet) of residential buildings.

The Tianjin program was designed along the principles of cap and trade methodology, the government’s five-year economic plans and third-party auditing of emissions, said Dan Barry, deputy director of global carbon at Gazprom’s marketing and trading unit in London, which agreed to buy some allowances in the pilot phase.

[Via http://reportingtheworldover.wordpress.com]

Liberaltarian Bargains, Part II

2010-03-05T12:37:00.000+02:00

I won’t let the rejection of the last liberaltarian bargain I proposed deter me. There are others out there. For example, you have Matt Yglesias’ enthusiastic support for getting rid of “tax expenditures”. These are the millions of little tax cuts that turn us all into special interest groups, which according to Andrew Leonard of the Fiscal Times add up to $1 trillion a year and are growing at several times the inflation rate.

You know these tax cuts, they are the political bread and butter of stump speeches and debates. They allow politicians to say things like:

“I voted for a tax break for working mothers who want to back to school and learn the skills for tomorrow’s green jobs!”

“I voted for a tax break for sustainable health insurance for the children of veterans that would have provided health care and green manufacturing jobs for a million working class South Carolina children, and my opponent voted against it!”

“Senator Dickle and I passed a bipartisan small business investment tax credit that helped entrepreneurs create manufacturing jobs for middle class families; just like Dan Bindle from Dumpsville Alabama who used that tax credit to reopen his grandfathers tugboat factory and put 2,000 sustainable-small-business-working-mother-veteran-entrepreneurs back to work!”

They’ve got the buzz words of “tax credit” and “tax cut”, with all of the benefit of being highly targeted to achieve maximum political value. It’s this high political value that makes me skeptical we’ll ever get rid of them in any significant and permanent way. Remember, if they are designed for maximum political upside as a “tax cut”, they will have maximum political downside as a “tax raise”. Pity the politician who votes to “raise taxes” on working mothers who are going back to school to… you get the point.

[Via http://modeledbehavior.com]

Europe 2020: Commission proposes new economic strategy in Europe.

2010-03-03T20:44:00.000+02:00

The European Commission has launched the Europe 2020 Strategy to go out of the crisis and prepare EU economy for the next decade.

The Commission identifies three key drivers for growth, to be implemented through concrete actions at EU and national levels: smart growth (fostering knowledge, innovation, education and digital society), sustainable growth (making our production more resource efficient while boosting our competitiveness) and inclusive growth (raising participation in the labour market, the acquisition of skills and the fight against poverty). This battle for growth and jobs requires ownership at top political level and mobilisation from all actors across Europe. Five targets are set which define where the EU should be by 2020 and against which progress can be tracked.

President Barroso said, “Europe 2020 is about what we need to do today and tomorrow to get the EU economy back on track. The crisis has exposed fundamental issues and unsustainable trends that we can not ignore any longer. Europe has a growth deficit which is putting our future at risk. We must decisively tackle our weaknesses and exploit our many strengths. We need to build a new economic model based on knowledge, low-carbon economy and high employment levels. This battle requires mobilisation of all actors across Europe.”

First of all, Europe must learn the lessons from the global economic and financial crisis. Our economies are intrinsically linked. No Member State can address global challenges effectively by acting in isolation. We are stronger when we work together, and a successful exit therefore depends on close economic policy coordination. Failure to do so could result in a “lost decade” of relative decline, permanently damaged growth and structurally high levels of unemployment.

The Europe 2020 Strategy therefore sets out a vision for Europe’s social market economy over the next decade, and rests on three interlocking and mutually reinforcing priority areas: Smart growth, developing an economy based on knowledge and innovation; Sustainable growth, promoting a low-carbon, resource-efficient and competitive economy; and Inclusive growth, fostering a high-employment economy delivering social and territorial cohesion.

Progress towards these objectives will be measured against five representative headline EU-level targets, which Member States will be asked to translate into national targets reflecting starting points:

75 % of the population aged 20-64 should be employed.
3% of the EU’s GDP should be invested in R&D.
The “20/20/20″ climate/energy targets should be met.
The share of early school leavers should be under 10% and at least 40% of the younger generation should have a degree or diploma.
20 million less people should be at risk of poverty.

In order to meet the targets, the Commission proposes a Europe 2020 agenda consisting of a series of flagship initiatives. Implementing these initiatives is a shared priority, and action will be required at all levels: EU-level organisations, Member States, local and regional authorities.

Innovation union – re-focussing R&D and innovation policy on major challenges, while closing the gap between science and market to turn inventions into products. As an example, the Community Patent could save companies 289€ million each year.
Youth on the move – enhancing the quality and international attractiveness of Europe’s higher education system by promoting student and young professional mobility. As a concrete action, vacancies in all Member States should be more accessible through out Europe and professional qualifications and experience properly recognised.
A digital agenda for Europe – delivering sustainable economic and social benefits from a Digital Single Market based on ultra fast internet. All Europeans should have access to high speed internet by 2013.
Resource-efficient Europe – supporting the shift towards a resource efficient and low-carbon economy. Europe should stick to its 2020 targets in terms of energy production, efficiency and consumption. This would result in €60 billion less in oil and gas imports by 2020.
An industrial policy for green growth – helping the EU’s industrial base to be competitive in the post-crisis world, promoting entrepreneurship and developing new skills. This would create millions of new jobs ;
An agenda for new skills and jobs – creating the conditions for modernising labour markets, with a view to raising employment levels and ensuring the sustainability of our social models, while baby-boomers retire ; and
European platform against poverty – ensuring economic, social and territorial cohesion by helping the poor and socially excluded and enabling them to play an active part in society.

The ambition of Europe 2020 means that leadership and accountability must be taken to a new level. The Commission invites Heads of State and Government to take ownership for this new Strategy and endorse it at the Spring European Council. The role of the European Parliament will also be enhanced.

The governance methods will be reinforced to ensure that commitments are translated into effective action on the ground. The Commission will monitor progress. Reporting and evaluation under both Europe 2020 and the Stability and Growth Pact (SGP) will be carried out simultaneously (while remaining distinct instruments) to improve coherence. This will allow both strategies to pursue similar reform objectives while remaining as separate instruments.

[Via http://reportingtheworldover.wordpress.com]

The Conventional Wisdom, or Lack Thereof

2010-03-03T12:07:00.000+02:00

“The conventional wisdom” is a phrase that has somewhat ironically taken a turn for the more sincere and genuine, especially given that John Kenneth Galbraith intended for the term to signify the ideas most commonly accepted or acceptable without regard for their truth (and most often, that are accepted in spite of their lacking validity). Of course, all things being equal, the more support a proposition has in terms of empirical observation, the more likely it is to be correct. However, our conventional wisdom is often based on common accounts of certain events rather than from direct and empirical observation; our shared source itself may have been subject to some degree of bias or impermanence. The concept of “mesofacts” demonstrates that it need not have even been an error so much as a lack of continuous inquiry that may result in a disastrously incorrect conventional wisdom.

Mesofacts are the facts that change neither too quickly nor too slowly, that lie in this difficult-to-comprehend middle, or meso-, scale. Often, we learn these in school when young and hold onto them, even after they change. For example, if, as a baby boomer, you learned high school chemistry in 1970, and then, as we all are apt to do, did not take care to brush up on your chemistry periodically, you would not realize that there are 12 new elements in the Periodic Table. Over a tenth of the elements have been discovered since you graduated high school!

A more significant problem is that people’s political values and positions are rarely derivations of empirical observations, and in this sense, very few things are equal. Indeed, when it comes to politics, I would re-assert Galbraith’s original thesis, which was that “the conventional wisdom” contains pervasive errors, and the conventional wisdom is potentially dangerous. For example, conventional wisdom would posit that a country should strive for the highest quality of health care possible. After all, what’s more important than one’s health, the conventional thinker would ask. The problem is that the practical implications of such policies are never considered by the conventional thinker who often hold values that are not subject to comparison:

That decrementally cost-effective innovations are so rarely described in the health-care literature suggests that medicine is distinct from most other markets, in which cost-decreasing, quality-reducing products are continuously being introduced—think IKEA, Walmart and the Tata car. Several reasons may explain this “medical exceptionalism.” First, there is fundamentally a lack of incentives both for physicians to control costs, especially under a fee-for-service regime, and for patients to demand less expensive treatment when insurance shields them from the direct costs of care. Second, medical “bargains” frequently come with health risks, and trading health for money strikes some as vulgar, regardless of ratio. The inherent ethical unease that decrementally cost-effective innovations can elicit poses a serious public relations and marketing challenge.

Moreover, the conventional thinker need not consider the process required of adapting his or her political preferences to reality in a representative democracy. They just have to whine and insist that someone else do it for them. The problem is that usually, the representatives do the same thing, and the buck gets passed from voter to politician to industry, without any intervening oversight to ensure that the policy goals are actually achieved. Eliot Spitzer apparently makes that point simply and directly enough for the conventional thinker in his latest book. To paraphrase, in a cut-and-paste fashion, for the sake of the conventional thinker:

Rule 1. Only government can ensure integrity, transparency, and fair dealing: To protect the market, government had to come in and say something very simple: tell the truth to your customer…There are certain core values—values that we as a society embrace—that the marketplace simply will not address.

Rule 2. In the face of externalities, government must intervene to change the way the market behaves: When companies get too big they underperform because they cannot be managed. Too-big-to-fail is too-big-not-to-fail.

Rule 3. The government needs to intervene on behalf of core values: Regulators don’t need additional power, they just need to use their existing power appropriately. And this will not happen unless different people are in charge…Corporations run the economy and they should. But if we don’t run our corporations properly, then we will not get ourselves out of this pit…Taxpayers have been getting the short end of the stick in everything we’ve been doing. The Treasury Department is not negotiating for us.

It’s just too bad that the conventional thinker is also probably more likely to be distracted by Spitzer’s marital infidelities than his policies if he were to ever consider running for public office again, almost by definition: those are the ideas more easily and universally accepted. Sigh.

[Via http://newprint.wordpress.com]

Greece must make more cuts, not clear how much: EU

2010-03-03T04:27:00.000+02:00

BRUSSELS (Reuters) – Greece must tighten its belt further to reach this year's deficit-cutting target, but it is not yet clear by how much, the European Commission said.

Economic and Monetary Affairs Commissioner Olli Rehn on Monday discussed with Greek authorities the need for deficit-cutting measures on top of those already taken by Athens.

No bailout plans were discussed, but "both parties understand … there is a need for additional measures and these should be presented as soon as possible… in order to make sure that the target of 4 percent is reached," Commission spokesman Amadeu Altafaj said Tuesday.

Greece has committed to cutting its budget deficit to 8.7 percent of gross domestic product this year from 12.7 percent in 2009 and to bring the deficit to below the European Union ceiling of 3 percent in 2012.

Altafaj said he "cannot quantify" how far short of the 4 percent target the measures already announced have left Greece.

The size of the gap was still under discussion between Greek and EU experts and "at this point we are waiting for the new measures to be presented."

The ambitious austerity program hopes to calm debt markets that have been demanding increasingly high premiums for lending money to Greece amid concerns that Athens might at some point not be able to service its debt, which stands at more than 120 percent of GDP payday loan no faxing.

Market concerns persuaded euro zone countries to issue a statement on February 11 declaring that, if the need arose, they would move to safeguard the financial stability of the 16-country euro zone.

But they gave no details of a potential rescue plan and instead put more pressure on Athens to deliver on its austerity plan.

Monday's discussions with Rehn "were about efforts to correct the fiscal situation in Greece. We did not enter (or) elaborate on scenarios of bailouts and things like that," Altafaj said.

The Commission was pleased to see the Greek government was determined to do what was necessary to reach the 4 percent target, he added.

(Reporting by Jan Strupczewski, editing by Dale Hudson)

Greece must make more cuts, not clear how much: EU

Hot News: Off the Charts: Banks Out of the Woods? Maybe Not

[Via http://djonbri.wordpress.com]

McDonnell saves $80,000 on transition

2010-03-01T20:41:00.000+02:00

Sure, the number is far too small to be anything but a symbol, but symbols matter, and this one shows an Administration that is very serious about our predicament (Richmond Times-Dispatch via Weekly Standard):

The grungy office space, used supplies and limited freshening of the official gubernatorial quarters paid off.

Gov. Bob McDonnell’s transition team has saved at least double its $40,000 goal during the switch from campaigning to governing.

Early estimates indicate McDonnell conserved about $80,000 of a $353,600 transition budget.

That’s a savings of over 20%, by the way. Attorney General Cuccinelli save $40,000 himself, as did Lieutenant-Governor Bolling (although that was largely due to the fact that the would-be transition office wound down quickly due to his re-election).

Here’s how important the symbolism can be: when yours truly began the transition from Jersey-born Yankee to, um, regional refugee (yeah, that works), it was just after Doug Wilder had taken office. I heard complaints about Wilder’s transition and inauguration spending for months afterward, even as he heroically stared down his own party on spending and refused to raise taxes.

By contrast, McDonnell has shown voters he’s serious about cutting spending, including his own when necessary. That will go a long way to winnning support for getting us through this budget cycles without a tax increase.

Cross-posted to RWL

[Via http://virginiavirtucon.wordpress.com]

Why expiration dates probably aren't good for business

2010-03-01T12:48:00.000+02:00

Noah asks a provocative question: What if business came with expiration dates?

Nobody wins forever. It just doesn’t happen.

What we see in reality are millions of corpses of businesses and ideas that have made their impact (or not) and then petered out into oblivion without leaving much more than a memory. Some of them get bought and swallowed by a bigger company, others have their ideas copied and commodotized and many just don’t have the business or financial chops to make it all work for more than a few years.

So what if instead of worrying about all that you just decided at the beginning you were going to end it all six years in?

I love questions like this, and Noah is great at asking them. He suggests that such an arrangement may solve the problems that arise when management sacrifices the long-term interests of the company for the short-term, making decisions that optimize their current job security but may create problems for the firm down the road:

Company management doesn’t know how long the company will last, so they optimize for the now (they also don’t know how long their jobs will last, but I’ll get to that in a minute). It may be overly hopeful, but as long as one choose a reasonable time-frame (5-10 years) I wonder if you couldn’t lift the decision-making out of the immediate.

It is an interesting idea, but I think that what Noah is mostly interested in here is a shift in how employment is structured (i.e. knowing up front when one’s job will terminate), rather than how businesses as a whole are set up. (If the business will shutter its doors in 10 years what precisely are the long-term interests of the firm?) Additionally, he focuses more on the employment issue towards the end of the post. In either case, I think that on the whole the uncertainty that exists in terms of business and employment termination is superior to expiration dates. Here’s why: If businesses were set up at the outset with a planned time frame at the end of which the business would wind down it would likely play havoc with their ability to compete in the marketplace. Additionally, the beneficial economic conditions that obtain through competition would be warped. Why? Because businesses would not have to operate in the shadow of the future.

The shadow of the future is a concept that comes from game theory and relates to how actors’ incentives and behaviors change depending on whether they are playing a game that ends after only one round or if it will go on indefinitely. In a single-round prisoner’s dilemma, each actor knows that they will not have to interact with the other after they make their decision to either stay quite or rat their partner out. Since they’ll never interact again, their preferred choice will be to rat the other out in the hopes that they receive a mild sentence or get to go free. In an iterated prisoner’s dilemma, the same choices will obtain unless the players are unaware of when the game will end. The fancy term for this is backwards induction, but basically the idea is that if players know when the game will end it will create the same incentives as if the game was only one round. However, if the game is repeated indefinitely, if players must operate within the shadow of the future, then cooperative behavior is more likely to evolve.

Businesses

In a market, we do not want businesses cooperating too closely. Partnerships, licensing deals, sure. But we abhor collusion. Why? Because it distorts the very market dynamics that are supposed to give rise to all the benefits of a market economy. Open competition by individual businesses will lead to better products for lower prices. Collusion amongst businesses or the formation of monopolies works against this. And while collusion is to be feared, so to should any development that threatens the existence of competitive pressures on businesses. If dominant businesses in a market are known ahead of time to be set to expire after, say 6 years other businesses that have not set an expiration date will feel little pressure to improve their product or service. Why? Because they realize that in a few years consumers will not have the superior products or services to turn to. This being the case, the businesses that will survive the expiration of the dominant businesses will have no incentive to bring their performance up to the level of the best businesses. When businesses are unsure as to the viability of their competitors they must assume continued competition and therefore better manage their firms in order to compete and survive. Artificial expiration, particular that which is decided up front, would likely decimate the competition mechanism.

Employees

But what about employees? Would management and other employees make better decisions, decisions geared towards the long-term interests of a firm, if they knew ahead of time when their tenure would come to an end? This argument has been floating around for some time, particularly with regards to GM’s in professional sports. While GM’s are given long-term contracts, they can be fired at any time. Towards the end of their contracts the amount of money due to them decreases and therefore the amount of money the team would have to eat if they fired the GM also decreases. This can create perverse incentives to create short-term success at the expense of long-term competitiveness. Think of a baseball team where a GM is on the hot seat. If they don’t produce a playoff team the following year they will likely be fired. One option is to empty the farm system in order to trade for older, proven players. By bringing in proven talent, the GM increases the chances that the team will perform better in the short-term, securing their job and possibly another contract. But by emptying the farm system the GM risks crippling the team in the long-term. They will have less low-cost talent to deploy while having taken on large, guaranteed contracts which will reduce the team’s ability to build competitive teams in the future.

So what if management doesn’t have the uncertainly of a new contract hanging over their head? Would they then shift to making decisions that are in the long-term interests of their companies (this assumes the firm has no expiration date)? I am not so sure. Since no new contract is possible, employees in this scenario would likely be motivated by reputation. Their legacy becomes more important than short-term financial incentives. But the problem with the long-term is that, well, it’s long-term. It could be 15-20 years or more down the road. The farther away we get from decisions the harder it becomes to connect future results with previous policies. Whether or not the long-term fortunes of the company will be associated with the legacy of a former employee becomes less of a clear-cut issue. So while expiration dates for management may not increase incentives for selfish short-term behavior, it may not decrease them either. Incentivizing long-term decision-making requires creating the shadow of the future for employees, even after they’ve left the firm. Stock options that are valued and redeemed years after management has left is one potential (but not unproblematic) mechanism.

All of this is not to say that the answer to Noah’s question is that it’s a bad idea. However, I think that, on balance, there must be a prominent role for the shadow of the future in order to prevent the market from being distorted.

[Via http://billpetti.com]

The power of self-fulfilling stories in financial markets

2010-02-26T20:56:00.000+02:00

Soros, the new Citizen Kane? (Credits: mindfully.org)

On December 2009, the euro traded at $1.51. Today, it trades at $1.35. What can explain this 11% downfall in little bit more than 2 months? An avid reader of the Wall Street Journal or the Financial Times will eloquently explain that it just reflects the faster recovery of the US economy out of the crisis vs. Europe, amplified by fears that Greece may default on its sovereign debt. End of story? Not so fast. A closer look will reveal the perfect case study for the power of self-fulfilling stories in financial markets.

Deeply ingrained in our collective subconscious is the fear that we are getting manipulated by higher forces. Not so long ago, people questioned the power of mass media and how Rupert Murdoch or Silvio Berlusconi could bend reality with their editorial lines rather than reporting it. I will argue that hedge fund managers and other leading investment bankers have become the new Citizen Kane, shaping reality with powerful storytelling. Financial markets have slowly but surely built a very advanced language that now allow them to communicate and broadcast complex stories. Puts, call, credit-default swaps and other derivatives constitute the building blocks of their vocabulary. Traders have become the journalists that put those words together, following the editorial line dictated by their fund manager. The assets under management, the equivalent of circulation, provide more or less clout to the fund editorial line.

Smart investors like Jim Rogers or George Soros know how to leverage stories to sway the market in a given direction. Of course, they cannot build a story from scratch; they need facts the same way journalists do. However, people overestimate the power of facts and underestimate the craft behind story telling. Soros and co. do not need good stories; they need story that sticks in the market players’ mind and then self-fulfills. This reminds me of a book “Made to Stick” where Cheap and Dan Heath laid down the six attributes that makes an idea stick. Let’s use the shorting of Euro as an example to illustrate them. Simplicity: Soros stripped the idea to the core when he publicly warned that if the European Union does not fix its finances “the euro may fall apart.” Unexpectedness: this story shatters the Euro dominance over the dollar slowly built across recent years. Concreteness: avoid complex math, Greece will default on its debt. Credibility: Soros is credited with predicting the British Pound collapse in 1992 – leading to a $1bn profit according to certain traders. Emotional: emphasize the drama, “even if [the Euro] handles the current crisis, what about the next one?” (Soros in an article he wrote for the Financial Times on February 22nd). Stories: while Soros could have just “written” this story through financial operations using derivatives and let the advanced financial community pick it up and amplify it, he knew he also needed to translate his financial story in plain words and thus reach mainstream investors. What a better way to do so than an op-ed in the Financial Times entitled “The euro will face bigger tests than Greece.”

How powerful are those stories? Judge by yourself. On February 8th, a couple of hedge fund managers got together in a Manhattan private townhouse for an “idea dinner.” According to the Wall Street Journal, during this dinner, one manager shared his story on how Greece will default and create a domino effect. By the week of the dinner, the bets against the fall of the euro had risen to a record 60,000 future contracts – highest since 1999. Three days after the dinner, a new wave of selling pushed the euro below $1.36. While we can argue about causality or correlation, coincidence is to be ruled out. It is also said that the fate of Lehman Brothers was sealed during one of those small gatherings.

Where does that leave us? Hedge funds are thriving in very chaotic environments. In the short-term, we can thus expect one or two financial crisis resembling the one we just faced – maybe this time it will involve sovereign debt or even credit card debt. Yet, we all know that in chaotic kingdoms, kings do not last long. So, I would not be surprised if those funds did not survive those coming crises. One or two major failures like LTCM would trigger a massive withdrawal of the assets under management. This will then mark the end of the financial story-tellers like the decrease in circulation announced the slow decline of the printing press.

[Via http://vitaminsforfutures.com]

In The Papers: Open Source Economics

2010-02-26T12:00:00.000+02:00

The economics of open source software is a topic of interest to me. Without a sound understanding of economics, you might be tempted to believe that collaborative software in which you give away the end product for free simply cannot exist in a market-based society as such, and must instead be a proto-socialist endeavor. Eric S. Raymond wrote a very powerful book, drawing on Hayekian themes, to counter this notion, and there is a basic explanation of how it can be in the self-interest of developers to contribute to open-source software (here’s the trick: think about the services, not the software).

Michael Schwarz and Yuri Takhteyev take a slightly different tack in Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem.

Abstract:

We argue that the intrinsic inefficiency of proprietary software has historically created a space for alternative institutions that provide software as a public good. We discuss several sources of such inefficiency, focusing on one that has not been described in the literature: the underinvestment due to fear of holdup. An inefficient holdup occurs when a user of software must make complementary investments, when the return on such investments depends on future cooperation of the software vendor, and when contracting about a future relationship with the software vendor is not feasible. We also consider how the nature of the production function of software makes software cheaper to develop when the code is open to the end users. Our framework explains why open source dominates certain sectors of the software industry (e.g., the top ten programming languages all have an open source implementation), while being almost none existent in some other sectors (none of the top ten computer games are open source). We then use our discussion of efficiency to examine the history of institutions for provision of public software from the early collaborative projects of the 1950s to the modern “open source” software institutions. We look at how such institutions have created a sustainable coalition for provision of software as a public good by organizing diverse individual incentives, both altruistic and profit-seeking, providing open source products of tremendous commercial importance, which have come to dominate certain segments of the software industry.

One of the things that the authors point out is that “open source software” is a lot broader than we might imagine. To the average person who has heard of the term, that person thinks Linux. What they don’t usually think is Apache, the server of choice for more than half of the internet. They don’t think BIND or one of the thousands of other vital tools for big corporations, even those big corporations which are not themselves open-source organizations (like Yahoo!, who support open source development, but don’t release many such tools). Another point the authors bring up is that “employees of just five companies (Red Hat, IBM, Novell, Intel and Oracle) jointly contributed 32% of the changes for a recent release of the Linux kernel” (3). The players have changed over the past five decades, and so have their motives, so a simple understanding of current motives (like I alluded to above) doesn’t do enough. As they point out, even IBM has changed—they were a big open source company in the 1950s and 1960s, but for a different reason.

The authors’ theory is that “proprietary software causes underinvestment in complementary products and technologies due to the fear of hold up.” They use this to explain “why open source software dominates some sectors of the industry, while playing [a] negligible role in others” (3).

What they mean by a “hold up” scenario is as follows: when you purchase a piece of software from Company X, you may buy it for your own use, or for furthering your business. In scenarios in which people buy business software, there is the fear that the company may be forced to lock in to Company X, and cannot go to a competitor. At that point, Company X basically has a monopoly, in the sense that the cost of switching to Company Y’s software offerings is just too high. Your company has, by that point, built a lot of processes and maybe some additional software around Company X’s offerings, and to switch it all over to what Company Y has would simply be too expensive to consider. But the business needs of your company will likely change over time, and so you need Company X to remain responsive to you. Unfortunately, “the exact nature and cost of such future modifications often cannot be foreseen ex ante. Their price and quality must therefore be negotiated ex post” (5). If you are concerned that Company X will screw you over later, once you need changes and are locked in, you either will not be as willing to pay as much for the product (or your own alterations), or you simply will forego the product. In either event, there is a net loss, as the product and your modifications would allow you to provide services to your customers more easily, but it would not be worth the anticipated hold-up price. Instead, you have in-house developers write software—vertical integration, as it’s called in economics.

There are a few other justifications for considering software purchases a potential hold-up problem, and the authors give some examples of these. After that, they provide their explanation of how to get around this problem: make the source code of software available to end users. By doing that, you ensure that even if you change the way in which things work, your end users will still be able to make any modifications they require. Maybe they want Module 49 to do something totally different—they could build their own custom version of the code and have that happen. This also ensures that Company X will not exploit the company’s relationship with your firm later on.

So, given this, why is it that binary packages are the default for pretty much all software? Because there are considerations that outweigh the problems listed above. There is a free-rider problem here: file sharing. If I get the source code to a game, I can distribute it to others more easily and allow them to obtain the software without charging for it. I can do the same with binary software, but there are some protections there which make it a bit harder—licensing provisions, etc. When, then, should we see binary packages versus open source? The authors “would especially expect this to be the case for software that does not require large complementary investments, is unlikely to need modifications, and is offered to users that have no capacity to modify software even when the source code is offered to them. Computer games offer a quintessential example of such software: they are typically used for a limited period of time, rarely require substantial game-specific complementary investments, offer limited opportunities for useful modifications, and are mostly offered to consumers with no programming skills” (9). In contrast, web servers, database servers, and the like require significant complementary investments, and as a result, are more likely to see this solution to the hold-up problem.

The rest of the article is an interesting discussion of various solutions over the past 50 years, from IBM’s SHARE association (a number of IBM clients providing source code for various applications for each other) to ARPANET, and AT&T (and BSD) to Netscape and GNU. It’s an entertaining history of some of the economic motives behind business and legal decisions, and worth a read.

[Via http://36chambers.wordpress.com]

Japan in India

2010-02-26T04:51:00.000+02:00

Japan in India

Amongst the several national themes that kept our minds busy, “Japan in India” is one that appeared consistently throughout legs 1 and 2, and would at times surface when we least expected it. Aside from the routine Honda car showroom, Sony outlets, and Yamaha motorcycles parked outside nearly every dhaba/tea vendor we visited, the presence of Japanese companies and culture in India is palpable.

During our visit to Ludhiana (India’s manufacturing hub) in Leg 1, we were fortunate to have visited the factory of Rajnish International, which specializes in the manufacturing and export of diesel fuel injection spares and other components for the auto industry. While Rajnish takes pride in having developed the vast majority of its production technology in-house, we were shown one Fanuc machine that performs an aspect of the steel cutting process that is too intricate for the domestic technology.

in-house technology at Rajnish Int'l

Fast forward to our trip to Kolkata, where we visited the manufacturing facility of formal menswear brand, Success, and learned that all of their polyester is imported from Teijin Fibers. The Japanese textile manufacturer’s product is described as superior to its cheaper Chinese counterparts in fabric quality and dye (particularly black), and this gives Teijin its edge. In Aizawl, we spotted DVD’s of Japanese soap operas being sold on the street (although Korean dramas were more popular) and L&T-Komatsu construction equipment at work on the road from the airport to the hotel. In Bodhgaya, we visited Japanese shrines and encountered several hotels and restaurants with signs catered to the hoards of Japanese tourists. Even at home in Mumbai, TATA Hitachi machinery can often be seen at construction sites and the annoyingly catchy tune of TATA DoCoMo ads has us reaching for our remotes during commercial breaks.

Japanese sign in Bodhgaya

Komatsu building Mizoram

Aside from private ventures, projects are being undertaken on a government-level to strengthen economic ties: the USD 90 billion Delhi-Mumbai Industrial Corridor being in the spotlight. In September 2009, the Indian Union Cabinet approved an INR 17,700 crore (USD 3.7 billion) conditional loan from Japan to help build the western arm of the corridor. The condition is simple: give the biggest contracts to Japanese companies. As mint points out, the conditions officially state that 1/3 of the total contracts must go to Japanese firms. However, if India uses Japanese equipment to build a part of the corridor, chances are high that it will have to use Japanese equipment to build the whole thing.

Map of the DMIC, source: delhimumbaiindustrialcorridor.com

In Delhi, we were lucky to meet with Amitabh Kant, Principal Secretary & Special Commissioner, Industries (Government of Kerala) and CEO of the DMIC. He articulated that the project will be managed by an entity resembling a private company, which will effectively streamline the entire investment process for Japanese companies looking to be a part of the project. This is comforting when picturing a scenario where Japanese delegates and their interpreters have to struggle with local agencies for land acquisition rights or a consistent supply of power and water.

The DMIC will certainly serve as a cornerstone of the economic relationship between the two countries, as mint anticipates it will attract new investments of ~USD 50 billion and create jobs along the corridor for several years. While it took slightly longer to hit news pages in Japan, the project finally received coverage in the Nikkei this month and is gradually gathering excitement in the Far East.

Yukio Hatoyama with Manmohan Singh in Dec. 2009, source: thehindu.com

As Japan copes with soon becoming the world’s number 3 economy, the need to maintain a close economic relationship with India will only get stronger. Demographically, India is the dream partner for a graying Japan who has slowly but surely been running out of gas. On the flip side, Japan has the organizational and technical expertise to create the infrastructural foundation that India needs to reach the next stage of its development. The hope is that more private ventures and projects like the DMIC are implemented and that politics do not get in the way of what can evolve into one of the world’s most powerful and lucrative economic partnerships.

[Via http://theindialog.wordpress.com]

Why are climate sceptics so angry?

2010-02-24T20:56:00.000+02:00

I have noticed a surprising number of climate sceptics on things like facebook and Yahoo Answers. Now, the surprise is not that some exist, but that so many are vehemently opposed to any suggestion that there is even the slightest possibility that we are altering the climate. Most don’t even admit that there is any climate alteration in the first place – a flurry of snow anywhere on the globe is, to them, enough to show that Global Warming is a fantasy.

Now, from the general tone, language and references of these violent sceptics it is apparent that most come from the US of A and nearly all of those talk about misinformation and manipulation by liberals and left-wingers in an attempt to take over government & business. They seem to think there is a massive, organised conspiracy to falsify scientific data and rob them of all that is rightly theirs; and since most scientists are long-haired commy weirdos, they are in on it too.

I don’t know if it is fair, but the mental image I get from their posts is of big, burly men in plaid shirts, carrying large knobbly guns and spitting torrents of tobacco. I often hear banjo music too. ooof – shivers down the spine!

Perhaps is has something to do with the capitalist, consumer philosophy that current economic wisdom is based on. This has been pioneered by the US over the last 100 years or so and exported to much of the world with an almost religious zeal. It seems to represent, for some people, the essence of being American and the American Dream.

To accept the ‘green’ message is to accept that classical consumer capitalism is wrong: you cannot live a truly sustainable lifestyle in a system that demands constant expansion and therefore an ever-increasing drain on resources. It is like pyramid selling, which is well documented as making a few people very wealthy before collapsing. So for those people that feel the current economic situation is a core part of their American identity, telling them to plant a few veg in their yard is tantamount to treason or heresy

the Guardianhttp://www.guardian.co.uk/environment/cif-green/2009/mar/09/denial-climate-change-psychologyhas a good article about the psychology of climate denial and why it is still so prevalent, although it doesn’t go into the whole sister-marrying banjo thing.

[Via http://spookymanuka.wordpress.com]

The Campaign for State-owned Banks

2010-02-24T12:53:00.000+02:00

This is a campaign whose time has not quite come — but it’s getting here. The article is titled, “Solution to the Credit Crisis? The Campaign for State-owned Banks,” by Ellen Brown. Her self-description follows:

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com, www.ellenbrown.com, and www.public-banking.com.

For the article itself, go to http://www.globalresearch.ca/index.php?context=va&aid=17732

[Via http://thehistoricalcontext.wordpress.com]

Global Sovereign Credit Default Pricing as of February 22, 2010

2010-02-24T04:25:00.000+02:00

Below is a list of global sovereign CDS pricing as of Monday, February 22, 2010. All this talk about sovereign credit weakness, sovereign defaults, and downgrades begs the question, if this list is supposedly bad, what do you call the list of major banks when their spreads blew out 3-4 fold over these at the end of 2008? 95% of those large banks that were too big to fail (or to large to succeed) ultimately have and will.

The better question over the next year or so will be which of these countries will be too small to save?

Global Sovereign Credit Default Prices as of 2/22/10 (1 of 4)

Global Sovereign Credit Default Prices as of 2/22/10 (2 of 4)

Global Sovereign Credit Default Prices as of 2/22/10 (3 of 4)

Global Sovereign Credit Default Prices as of 2/22/10 (4 of 4)

Below is a most recent view on Greece’s CDS prices in chart form. Is the worst behind them?

Greece Credit Default Price Chart as of 2/22/10

And if this list of issuers represents the safest havens in the world, well then the new normal just got a whole lot more volatile. I suppose the bond vigilantes can’t do much with tons of cash still on the sidelines in a deleveraging world.

[Via http://greenewable.wordpress.com]

On the Limitations of Science

2010-02-22T20:54:00.000+02:00

I just finished reading a fabulous piece in The New Yorker on “How Paul Krugman found politics.” One section in particular caught my attention, as it touches on the limitations of the scientific method, an issue I have been discussing in relation to the God question.

When Krugman began to develop his theory of new economic geography in a 1991 paper, many economists found it “deeply disturbing and troubling” due to its acceptance of seemingly arbitrary factors like history and accident in understanding international trade. Economists like rationality because it produces neat, mathematical models that are often — not always! — a powerful analytical tool in describing market behavior. (For more on this, see my forthcoming review of Justin Fox’s “The Myth of the Rational Market.”)

Krugman’s analysis, as summarized in the article, may appear anything but exotic:

Once an industry started up in one place, for whatever reason (the carpet industry in Dalton appears to have its origin in a local teen-ager who in 1895 made a tufted bedspread as a wedding present), local workers became trained in its methods, skilled workers from elsewhere moved there, and related businesses sprang up close by. Then, as more skilled labor became available, the industry could grow and benefit from economies of scale. Soon, as long as it didn’t cost too much to transport the industry’s products, the advantages of the place would be such that it would be impractical for someone to open up a similar business anywhere else.

Seems obvious, doesn’t it? Yet for years mainstream economists disregarded the idea, which did not fit into existing models: it was too “arbitrary.”

The article goes on to cite a related example in which sixteenth century cartographers neglected to include features of interior Africa due to rising standards as to what constituted knowledge:

Sixteenth-century maps of Africa were misleading in all kinds of ways, but they contained quite a bit of information about the continent’s interior—the River Niger, Timbuktu. Two centuries later, mapmaking had become much more accurate, but the interior of Africa had become a blank. As standards for what counted as a mappable fact rose, knowledge that didn’t meet those standards—secondhand travellers’ reports, guesses hazarded without compasses or sextants—was discarded and lost. Eventually, the higher standards paid off—by the nineteenth century the maps were filled in again—but for a while the sharpening of technique caused loss as well as gain.

Now, at one level, there is nothing extraordinary about the advance of economic and cartographical knowledge I have just described. No one is accepting anything on faith, and both Krugman and nineteenth century cartographers were eventually able to bring commonsensical notions in line with the scientific method’s more rigorous demands. It is, moreover, obviously an imperative of the scientific method to replace existing models with newer and more sophisticated ones — precisely what has happened in the cases of mapping interior Africa and describing international trade.

On another level, these examples point toward the limitations of the scientific method. At any given time, there will be phenomena – often understood through commonsense, “secondhand travellers’ reports,” or “guesses hazarded without compasses or sextants” — that existing models have not yet caught up with. The tendency for those laboring under the yoke of Enlightenment rationalism — or, for that matter, existing academic orthodoxies — will be to simply dismiss such phenomena as unreal. The most virulent attacks will be reserved for phenomena that present the greatest challenge to existing models: particularly, anything possessing the “arbitrary” characteristics associated with history, culture, geography, and religion.

These apparent limitations may, of course, turn out be nothing more than a sign of how much science and its proponents have yet to learn. There may come a day when neuroscientists and evolutionary biologists are able to fully explain religious phenomena, without merely reducing religion to a series of chemical reactions in the brain or an aspect of the survival instinct. (While it is clear that existing models do in fact “explain” religion, those models have yet to account for all of the evidence — namely, religion as a widely experienced existential reality.)

In the meantime, should we dismiss religious experience as “unreal” simply because it does not fit into existing models? Wouldn’t it be wiser to acknowledge the limitations of the models, and the possibility that there may be more in heaven and earth than is dreamt of in natural philosophy?

[Via http://innocentsmithjournal.wordpress.com]

My take on the Stimulus ...

2010-02-22T12:45:00.000+02:00

The Washington Post says:

PRESIDENT OBAMA’S argument with Republicans over the effectiveness of the $862 billion American Recovery and Reinvestment Act — a.k.a., the stimulus bill — is not an easy one for him to win.

With unemployment at 9.7 percent, he has to make the counterfactual case that things would be even worse if he and congressional Democrats had not administered this dose of deficit-financed tax cuts and spending.

It does not help him that joblessness is well above what it was when the act went into effect a year ago — and higher than the administration predicted it would be after a year of stimulus.

Nevertheless, at its core, the president’s argument is correct.

You cannot inject $300 billion — an amount equal to about 2 percent of U.S. gross domestic product — into the economy without stimulating some short-run economic activity that would not have occurred otherwise.

But, the precise number of jobs that this additional demand “saved or created” – is not provable.

Nor is it simple to disentangle the Recovery Act’s impact from the trillions of dollars worth of support from other sources, mostly the Federal Reserve.

But it’s churlish to assert flatlythat “not one net job” has been created. The country is better off because of the bill.

http://www.washingtonpost.com/wp-dyn/content/article/2010/02/18/AR2010021804662.html

* * * * *

Ken’s Take:

No surprise, I wasn’t a big fan of the bailouts or the fiscal stimulus program. And, suffice it to say, empirical evidence hasn’t given me any reason to jump on the wagon now.

Here’s are the key points that framesmy thinking:

Christine Romer – chair of the President’s Council of Economic Advisers — made her academic reputation on research that convincingly proved that fiscal stimulus doesn’t work. Her recent conversion makes me a tad suspicious, to say the least.
Adding almost $1 trillion to the national debt — the price tag of the stimulus when all the dust settles — is simply a transfer of resouces out of the private sector (eventually) to the public sector (now). In other words, there will be a subsequent depressing effect on the economy.
A big chunk of the stimulus money (around $120 billion) went to extending unemployment benefits, food stamps, etc. On one hand, I’m ok with helping folks in tough times. On the other hand, is it any surprise that the BLS reports record numbers of unemployed people who have stopped looking for work. It’s called moral hazard, and economists have written about it for decades.
About 1/3 of the stimulus was “tax relief for 95% of workers”. That’s true (I guess), but what was it? Obama’s $400 rebate checks. First, evidence seems to suggest that many folks used the money to pay off bills – that’s certainly not stimulative. And, I don’t understand why taxpayers (like me) should be paying off somebody else’s overextended credit card balance. Even if you look at the tax rebate as a stimulant, how much stimulating can a person do with an extra buck-a-day in their wallet?
Another chunk of the stimulus actually went towards jobs. As near as I can tell, about 3/4 of that (around $150 billion) went to preserving the jobs of government workers in states and locales that were spending way beyond their means. Again, why should folks from fiscally responsibile places bail out some irresponsible local governments, fund marginal teachers hanging on (maybe they should be fired), and preserve bloated government bureaucracies? I don’t get it.
Now, we’re down to the spending on things like roads and bridges and turtle crossings and fast trains between Disneyland and the Mirage (about $50 billion in total). Even if those are all good things , the administrtion’s numbers say that the bill is over $100,000 for each associated job. Give me a break.
Finally, they said: “Give us $787 billion and we’ll keep unemployemnt uner 8%”. They didn’t do it. Period. Don’t give me “jobs saved or created” — they set the metric and failed to achieve it.

That’s my POV …

[Via http://kenhoma.wordpress.com]

Obama Plan to Cap Health Insurance Premiums Is Foolish

2010-02-22T04:47:00.000+02:00

President Obama is set to propose limits and rollbacks on health insurance premium increases this week. This is stupid policy for a lot of reasons. For starters, insurers have to pass along increases in what they pay in claims. The way to reduce those claims isn’t to cap premiums but to encourage more efficiencies in the healthcare system.

I get it that people are pissed off about paying more in premiums. But insurance companies are in business and have to make a profit. Their profits aren’t obscene — they operate on slim margins as it is.

Capping the limits will lead to consequences that Obama and his economically-retarded advisors won’t want. Insurers will have to use even more scrutiny in paying (make that denying) claims. They’ll also have to be more cautious about risks they assume, meaning they’ll tighten underwriting so that it’s more difficult to get coverage unless you’re in perfect health. Or even, where states allow them, adjust benefits accordingly — which means decreases in the amount of coverage and increased liabilities to the insured.

Judge these things by the results, not the intentions. Just as when state officials try to cap the price of any good or service, the result isn’t good for consumers — it invariably leads to a shortage. In this case, it will be a shortage of claims payments, benefits, or even available coverage for people with “routine” maladies for which underwriting otherwise wouldn’t be problematic. That’s no way to get more people covered in this country.

It’s time for the Democrats to get over their bizarre obsession with trying to micromanage our healthcare system and our health insurance sector. When are they going to do something meaningful to create an environment in which people actually want to grow their businesses and expand our economy?

[Via http://lucky13global.wordpress.com]

Threading the Needle of Financial Regulatory Reform

2010-02-19T20:39:00.000+02:00

The evolution of the financial crisis in the last 2 years is congealing consensus around both a more efficient regulatory structure and the corresponding institutional structure to overhaul government regulations and institutions pertaining to the financial markets. The ongoing debate is healthy and collegial and has matured from the status quo mindset of the ‘90s of an outright rejection of the need for any reforms to the acceptance of at least having to reform the Government Sponsored Enterprises (GSEs) during the Bush years.

The agony of economic reality, not merely in the last couple of years but for the foreseeable future if nothing is done, has opened up the economic establishment from the academics in Boston to the policymakers in Washington to reforming the Washington Consensus itself, unlike the necessary but not sufficient transparency reforms the International Monetary Fund (IMF) went through after the Asian Crisis about a decade ago. Then it was the IMF’s fault and the United States was perfect. Now, the United States must change, if not for the IMF, for its own sake because the health of the republic is at risk.

Senators Dodd and Shelby deserve kudos for their extraordinary sensibility, along with their colleagues on the Senate Committee on Banking, Housing and Urban Affairs for taking their sworn obligation to oversee the Fed (and its relationship with the Treasury) seriously. And so do representatives Barney Frank and Ron Paul. The Congress has acted to making financial regulatory reform happen by getting the ball rolling in the right direction in spite of the usual interest group politics in Washington to dilute any and all serious change for the better. There is room for sensible compromise among all the stakeholders, including the interest groups, but the moment to get it all done right is now, not gradually over time.

Representative Paul is correct in that the Fed is not necessary as a separate institution. It had not come into being until 1913 but the country grew rapidly as an industrial power without it, with the Fed’s star rising because of the two world wars after its founding by President Wilson and the Congress. What is indispensable is sound money and the lessons in the nearly 100 years since the Fed’s founding can ensure that that is feasible without the Fed. It can be done by the Treasury using an explicit numerical inflation targeting range written into law and changeable with the explicit consent of the Congress when circumstances warrant, but within reason.

The financial markets have also evolved considerably since the Great Crash of 1929. It is the government that needs to do the catching up. The alphabet soup of government agencies overseeing the rapidly expanding activities of U.S financial markets since FDR can all be streamlined and consolidated under the Treasury to both enforce regulations and do data collection and analysis that monetary policy needs to do its job more thoroughly. There is no reason why any financial instrument must be traded outside of exchanges in the markets and no reason why private financial institutions should not countercyclically save for a rainy day with the government in lieu of Basel. Both these legislative changes will greatly enhance the transparency of the financial markets.

The world of Obama and his Facebook presidency is technologically a far cry from the fireside chats of FDR. Since the advent of plastic, more Americans today do not need hard cash either in their wallets or jingling in their pockets. It is time for the United States to move to a more robust electronic currency and payments system to more effectively complement the financial surveillance function of the Treasury.

The consolidation of financial regulatory policy and all macroeconomic policy instruments by adding monetary policy to the current responsibilities of the Treasury for budgets, taxes and trade will enable more transparent economic policymaking and make it more accountable and time consistent through the constitutional checks and balances of the separation of powers, besides ensuring strategic coherence (which is now the job of the National Economic Council in the White House). Economic forecasts made for the purposes of monetary policy could then be made available to the public in real time for them to be debated and vetted by policymakers, academics, press and the people in a manner no different from how the Congress currently makes legislation or the Executive branch formulates and implements policies.

It may seem on the surface that such a massive consolidation of government institutions and functions can be very disruptive. The reality is that it changes none of the current routine bureaucratic operations of any of the government agencies involved. The council of regulators being considered by the Senate to be led by the Secretary of the Treasury would be a good start to begin that consolidation at the level of the decision makers to change bureaucratic processes to conform to the new legislation, without either the need to move personnel or remake facilities. The consolidation process must be subject to a timeline presented by the council to the Congress and preferably completed by December 2013, the 100th anniversary of the Federal Reserve.

The essence of reform is the legislation and the presidential stroke of a pen.

[Via http://ctamirisa.wordpress.com]

A cart-wheel for every donation? Maybe...

2010-02-19T12:41:00.000+02:00

It’s not pretty. That’s for certain. But to celebrate MyWHaT’s first Pay Pal donation a cart-wheel along 8th St. was in order–yeh!!! The form should improve with every new donation.

The editor doing a very humble cart-wheel along 8th St. (Thanks A&J)

Thank you everyone for your support. It has been great!

A big question in the beginning was: “Would anyone read it?“.

In 2 months, MyWHaT has generated more than enough energy to keep it moving forward–mostly through the use of magic… but the over 6000 views, almost 200 comments and many new friends has been a key component.

It’s approaching a time when the scale of the BLOG will either need to scale down or generate some revenue for the combination of daily posting, researching and general mischief. A plan is developing that should be ready by March, but in the meantime gestures of support— comments, offers of lunch and donations through Pay Pal are really appreciated.

I will continue to do to attempt cart-wheels in appreciation (just off film).

“In creating, the only hard thing’s to begin; A grass-blade’s no easier to make than an oak.” -James Russell Lowell

Pay Pal

One question I have: Do you read MyWHaT daily, occasionally, or wait for a weekly round-up?

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If you see something you like, please subscribe to this BLOG’s feed and also pass this link on to a friend.

[Via http://mywheelsareturning.com]

Ron Paul vs. The Fed: The First Small Victory

2010-02-19T04:43:00.000+02:00

In the gargantuan arm wrestling contest that has been going on between Ron Paul and the Fed, it looks like the Congressman, and with him the public, has had its hand to within a millimeter of the hot coals of inflation, with the Fed ready to cry victory. But suddenly we notice that hand has raised up and rebounded, albeit not by much. But it is the first victory for Ron Paul and the public of savers in America in a very long time.

For that victory consists in the Fed having had to raise the discount rate for the first time in three years, and by doing so, they are showing that they can no longer play the “milk the savers for all they are worth” game the Fed and the big banks have been playing for the last few years. They finally realize that it is the disposable incomes of the retired generation that create so much of the discretionary spending that kept the economy humming, and now the Fed has cut the rates to the absurd under 1% level, they now perceive that they have, in one sense, gained a Pyrrhic Victory, because in cutting rates that low, they have cut the throats of the retired savers by massacring their interest incomes, and those savers were one of the key engines of the economy. They also know that the anger of those savers is one of the key elements of the Ron Paul swathe of the Tea Party Movement, and they dread an election where anti-inflationists and transparencyists would be swept into office en masse, as will occur next November.

But Ron Paul’s constant hammering away at the Fed, and the rising voices of support, like Senators DeMint and Bunning, have finally brought such pressure to bear on the Fed that they have been forced to take a move, however minuscule, that is counter-inflationary in order to calm the roiled waters of the markets.

Just as the Fed was about to slam Dr. Paul’s hand onto the coals and give him and his supporters a good singeing, the doctor and his supporters have started to pull the fat out of the fire.

One small step backward for the Fed, one giant leap forward for Ron Paul and the savers of America.

The struggle continues.

Hoooooooooooooooooooooooowwwwwwwwwww! — Silverwolf

[Via http://lobobreed.wordpress.com]

Modern, Postmodern, or Amodern?

2010-02-17T20:50:00.000+02:00

A few points of clarification might be in order for those wondering what the fuss is all about in the contrast between the modern and the postmodern (and the amodern, which is really what we ought to be about).

The modern world view takes its perspective from the foundational works of the European Enlightenment and the Scientific Revolution. One of its characteristic features is often referred to as the Cartesian duality, or subject-object split, in which we (the subjects) enter the previously-existing objective world as blank slates who deal with reality by adapting to the facts of existence (which are God-given in the full Christian version). Many Marxists, feminists, and postmodernists see modernism as a bastion of white males in positions of political and economic superiority oblivious to the way their ideas were shaped by their times, and happy to take full advantage of their positions for their own gain.

Postmodernism takes a variety of forms and has not yet really jelled into any kind of uniform perspective; in fact, it might not ever do so, as one of its few recurrent themes has to do with the fragmentation of thinking and it local dependence on the particular power relations of different times and places. That said, a wide variety of writers trace out the way we are caught up in the play of the language games that inevitably follow from the mutual implication of subject and object. Subject and object each imply the other in the way language focuses attention selectively and filters out 99% of incoming stimuli. Concepts originate in metaphors that take their meaning from the surrounding social and historical context, and so perception and cognition are constrained by the linguistic or theoretical paradigms dominating the thoughts and behaviors of various communities. We cannot help but find ourselves drawn up into the flow of discourses that always already embody the subject-object unities representing in speaking and writing.

When we choose discourse over violence, we do so on the basis of a desire for meaning (Ricoeur, 1974), of an inescapable attraction to the beautiful (Gadamer, 1989, 1998), of a care that characterizes the human mode of being (Heidegger, 1962), of a considerateness for the human vulnerability of others and ourselves (Habermas, 1995), of an enthrallment with the fecund abundance of sexual difference (Irigaray, 1984), of the joy we experience in recognizing ourselves in each other and the universal (Hegel, 2003), of the irresistible allure of things (Harman, 2005), or of the unavoidable metaphysical necessity that propositions must take particular forms (Derrida, 1978).

All violence is ultimately the violence of the premature conclusion (Ricoeur, 1974), in which discourse is cut off by the imposition of one particularity as representative of a potentially infinite whole. This reductionism is an unjustified reduction of a universal that precludes efforts aimed at determining how well what is said might work to represent the whole transparently. Of course, all reductions of abstract ideals to particular expressions in words, numbers, or other signs are, by definition, of a limited length, and so inevitably pose the potential for being nonsensical, biased, prejudiced, and meaningless. Measures experimentally justifying reductions as meaningfully and usefully transparent are created, maintained, and reinvented via a balance of powers. In science, powers are balanced by the interrelations of theories, instruments, and data; in democracy, by the interrelations of the judicial, legislative, and executive branches of government. Just as science is continuously open to the improvements that might be effected by means of new theories, instrumentation, or data, so, too, are democratic governments continuously reshaped by new court decisions, laws, and executive orders.

An essential idea here is that all thinking takes place in signs; this is not an idea that was invented or that is owned by postmodernists. C. S. Pierce developed the implications of semiotics in his version of pragmatism, and the letters exchanged by William James and Helen Keller explored the world projected by the interrelations of signs at length. The focus on signs, signification, and the play of signifiers does not make efforts at thinking futile or invalidate the search for truth. Things come into language by asserting their independent real existence, and by being appropriated in terms of relations with things already represented in the language. For instance, trees in the forest did not arrive on the scene hallmarked “white pine,” “pin oak,” etc. Rather, names for things emerge via the metaphoric process, which frames new experiences in terms of old, and which leads to a kind of conceptual speciation event that distinguishes cultural, historical, and ecological periods from each other.

Modernists interpret the cultural relativism that emerges here as reducing all value systems to a false equality and an “anything goes” lack of standards. Unfortunately, the rejection of relativism usually entails the adoption of some form of political or religious fundamentalism in efforts aimed at restoring bellweather moral reference points. One of the primary characteristics of the current state of global crisis is our suspension in this unsustainable tension between equally dysfunctional alternatives of completely relaxed or completely rigid guides to behavior.

But the choice between fundamentalism and relativism is a false dichotomy. Science, democracy, and capitalism have succeeded as well as they have not in spite of, but because of, the social, historic, linguistic, and metaphoric factors that influence and constitute the construction of objective meaning. As Latour (1990, 1993) puts it, we have never actually been modern, so the point is not to be postmodern, but amodern. We need to appropriate new, more workable conceptual reductions from the positive results produced by the deconstruction of the history of metaphysics. Though many postmodernists see deconstruction as an end in itself, and though many modernists see reductionism as a necessary exercise of power, there are other viable ways of proceeding that remain to be explored.

The amodern path informs the trajectory of my own work, from the focus on the creation of meaning in language to meaningful measurement (Fisher, 2003a, 2003b, 2004, 2010b), and from there to the use of measurement and metrological networks in bringing human, social, and natural capital to life as part of the completion of the capitalist and democratic projects (Fisher, 2000, 2002, 2005, 2009, 2010a). Though this project will also ultimately amount to nothing more than another failed experiment, perhaps sooner than later, it has its openness to continued questioning and ongoing dialogue in its favor.

References

Derrida, J. (1978). Structure, sign and play in the discourse of the human sciences. In Writing and difference (pp. 278-93). Chicago: University of Chicago Press.

Fisher, W. P., Jr. (2000). Objectivity in psychosocial measurement: What, why, how. Journal of Outcome Measurement, 4(2), 527-563 [http://www.livingcapitalmetrics.com/images/WP_Fisher_Jr_2000.pdf].

Fisher, W. P., Jr. (2003a, December). Mathematics, measurement, metaphor, metaphysics: Part I. Implications for method in postmodern science. Theory & Psychology, 13(6), 753-90.

Fisher, W. P., Jr. (2003b, December). Mathematics, measurement, metaphor, metaphysics: Part II. Accounting for Galileo’s “fateful omission.” Theory & Psychology, 13(6), 791-828.

Fisher, W. P., Jr. (2004, October). Meaning and method in the social sciences. Human Studies: A Journal for Philosophy and the Social Sciences, 27(4), 429-54.

Fisher, W. P., Jr. (2005). Daredevil barnstorming to the tipping point: New aspirations for the human sciences. Journal of Applied Measurement, 6(3), 173-9 [http://www.livingcapitalmetrics.com/images/FisherJAM05.pdf].

Fisher, W. P., Jr. (2009, November). Invariance and traceability for measures of human, social, and natural capital: Theory and application. Measurement (Elsevier), 42(9), 1278-1287.

Fisher, W. P., Jr. (2010a). Bringing human, social, and natural capital to life: Practical consequences and opportunities. Journal of Applied Measurement, 11, in press.

Fisher, W. P., Jr. (2010b). Reducible or irreducible? Mathematical reasoning and the ontological method. Journal of Applied Measurement, 11(1), 38-59.

Gadamer, H.-G. (1989). Truth and method (J. Weinsheimer & D. G. Marshall, Trans.) (Rev. ed.). New York: Crossroad (Original work published 1960).

Gadamer, H.-G. (1998). Praise of theory: Speeches and essays ( Foreword by Joel Weinsheimer, Ed.) (C. Dawson, Trans.). New Haven, Connecticut: Yale University Press.

Habermas, J. (1995). Moral consciousness and communicative action. Cambridge, Massachusetts: MIT Press.

Harman, G. (2005). Guerrilla metaphysics: Phenomenology and the carpentry of things. Chicago: Open Court.

Hegel, G. W. F. (2003). Phenomenology of mind (J. B. Baillie, Trans.). New York: Dover (Original work published 1931).

Heidegger, M. (1962). Being and time (J. Macquarrie & E. Robinson, Trans.). New York: Harper & Row (Original work published 1927).

Irigaray, L. (1984). An ethics of sexual difference (C. Burke & G. C. Gill, Trans.). Ithaca, New York: Cornell University Press.

Latour, B. (1990). Postmodern? no, simply amodern: Steps towards an anthropology of science. Studies in History and Philosophy of Science, 21(1), 145-71.

Latour, B. (1993). We have never been modern. Cambridge, Massachusetts: Harvard University Press.

Ricoeur, P. (1974). Violence and language. In D. Stewart & J. Bien (Eds.), Political and social essays by Paul Ricoeur (pp. 88-101). Athens, Ohio: Ohio University Press.

[Via http://livingcapitalmetrics.wordpress.com]

Mankiw on Hypocrisy

2010-02-17T12:50:00.000+02:00

Greg Mankiw defends Republican congressman who opposed the stimulus but are bragging back home about directing stimulus money to their districts. He points out that it is not logically inconsistent to both oppose government spending as a means to fight a recession, and to also direct such spending it to their constituents in the event that there is inevitably going to be stimulus.

I won’t disagree with the claim that the position is logical; once there’s definitely going to be a pie, it’s not wrong to fight for your share, and that’s important to point out. Furthermore, Mankiw admits, as will I, that he’s not familiar with the details of these supposed congressional hypocrites. I’ll go a step further though, and say that the details matter here, and without them you can’t really defend the congressmen.

For instance, when celebrating the greatness of a local stimulus project, a congressman owes the local constituents a disclaimer that if he could have things his way, he would rather this project not exist. Also, if he’s going to praise all the jobs created by it, he should probably point out that he believes the project on net is going to destroy jobs. If that’s logically consistent enough to please their constituents, then great. But to omit those points is to imply more support for the project than is accurate. Did the congressmen make those disclaimers?

Another problem I have with his defense is this metaphor of his:

Many Democratic congressmen opposed the Bush tax cuts… But once these tax cuts were passed, I bet these congressmen paid lower taxes. I bet they did not offer to hand the Treasury the extra taxes they would have owed at the previous tax rates. Would it make sense for the GOP to suggest that these Democrats were disingenuous or hypocritical? I don’t think so.

A more apt metaphor would be if Democratic congressmen who opposed the Bush tax cuts then went to their home towns and made stump speeches bragging about the jobs those tax cuts were going to create. Would it make sense for the GOP to suggest that these Democrats were disingenuous or hypocritical? I think Mankiw would agree that it would.

[Via http://modeledbehavior.com]

Metrosexual Prof

2010-02-17T04:30:00.000+02:00

I usually don’t blog about profs unless I’m complaining, but Metrosexual Prof (MProf for short) is just too amusing not to write about. The first time I met him, I figured he was either a)your stereotypical gay, b) metrosexual, c)high. I went with metrosexual because it seemed to fit best. I’ve since discovered that he’s not any of the above, but the name just has a certain ring to it.

The first thing we, as a class, noticed about MProf is his ADDness….he’s literally all over the place. He’ll be saying something, then cut off to have another conversation before returning to the original point, and if you ask a question, you really just want to be like “focus, prof, focus” because he’ll interrupt you and get distracted and go off on all kinds of tangents. It’d be annoying if it weren’t so amusing.

The second thing we noticed was his complete addiction to Diet Coke. Our class is 1 hour 15 minutes long. He drinks two cans of Diet Coke every single class, without fail. The one day he forgot his backup can, he had to leave the class to go buy a Diet Pepsi, and then had to keep going back to how “some people would see Coke and Pepsi as substitutes, but those people would be wrong….” Then today he was a little late for class because he just flew in from Florida, and he was going through his bag muttering “oh no, oh no, oh no,” and we’re just like “you forgot your Diet Coke, didn’t you?” He did, and he was freaking out. His addiction is really quite amusing.

The most amazing thing about MProf is that even with his ADDness and general out-there attitude, I actually learn in that class, unlike some of my classes where the profs are really well qualified and really well focused, etc, etc. I guess the fact that he makes it fun makes it way easier to pay attention and learn. Yay for MProf!

[Via http://mojraj.wordpress.com]

Clueless...

2010-02-15T20:47:00.000+02:00

That’s how I would describe Obama’s presidency so far. Obama’s most recent bout of cluelessness is his plan for a high speed rail. I’ve written about this in recent posts, and I have yet to see any concrete evidence that this makes any sort of economic sense. The most recent editorial in The Wall Street Journal continues to highlight how asinine this proposal is. All it will do is increase the budget deficit and create further spending obligations for all levels of government to subsidize a rail system that likely will not pay its own way. We don’t need more useless spending. We need less, especially less of the kind that creates recurring burdens on our budgets for the foreseeable future. Obama just doesn’t get it…

High-Speed Spending

This train is going to Disney World no matter what it costs.

Next to national health care, no liberal dream has lingered longer in the nation’s public policy than high-speed rail. No surprise that it hit the ground in President Obama’s State of the Union speech.

Like health care, the justifications shift with the political winds. High-speed rail’s current rationale, needless to say, is jobs. Unlike real jobs created by the private sector, taxpayers get to pay for those in high-speed rail. Let’s look at the Orlando-to-Tampa proposal.

Start with the number Mr. Obama attached to an Orlando-Tampa high-speed railway: $1.25 billion. That’s a lot but cannot possibly be the bottom line. With rail, it never is. Florida voters know it too.

High-speed rail has a long history in Florida dating to 1982 when the governor established a development committee. Florida has since nixed high-speed rail three times because of costs. In 2004, voters repealed a 2000 ballot initiative requiring the state to build a high-speed rail system because they didn’t want to foot the bill.

You would think this nearly 30-year history of rejection would send a signal to the train lobby, but with the Obama revival, it’s back. The Florida Department of Transportation estimates the Tampa-Orlando project will cost $3.5 billion. But according to a 2009 GAO report, new high-speed rail projects in France, Spain and Japan average $51 million per mile. You read that right—$51 million per mile. That would put the cost of the Tampa-Orlando line at $4.28 billion. Which means the state will be on the hook for $3 billion.

The president of Florida Transportation Builders Association Bob Burleson has said the state legislature doesn’t have much appetite for building and maintaining a high-speed rail system just now, as it already has cut funding for transportation projects this year.

The private sector doesn’t want to invest because of uncertainty about costs and ridership. The state projects ridership at between 1.9 and three million a year, but as the GAO dryly notes, “a systematic problem and incentive to be optimistic may exist” in forecasts of profitability based on ridership and costs.

Internationally, only two high-speed railways have managed to pay off their capital costs with ticket revenue, and Europe and Japan are better suited for intercity high-speed rail than the 84-mile stretch between Tampa and Orlando. The Congressional Research Service doesn’t even list the Tampa-Orlando line as one of the top 12 city-pairs for potential ridership. High-speed rail in Florida hasn’t left the station because its economics make no investment sense for companies or taxpayers.

Vice President Joe Biden says the Orlando-Tampa $1.25 billion is merely “seed money” and that “more funding is going to come in the future as progress is made.” Sounds to us like this project is on track to be too big to fail.

Printed in The Wall Street Journal, page A12

[Via http://ml106.wordpress.com]

Measuring Poverty (5): The Mystery of the Feminization of Poverty

2010-02-15T12:46:00.000+02:00

Regular readers of this blog know that we strongly believe in the importance of accurate data and numbers on human rights violations. This is perhaps even more the case for the rights violation that is called ”poverty”: one can assume that, to some extent, poverty can be tackled more efficiently with adequate government policy, compared to other types of rights violations which perhaps are relatively more dependent on cultural and religious factors that are resistent to government intervention. (Which doesn’t mean poverty can’t have cultural causes, or that the cultural causes of other types of rights violations have to be accepted fatalistically). And adequate government policy depends on good statistics.

Regular readers also know that we believe that the importance of human rights statistics is matched by their lack of quality. One example of this is the often quoted but baseless claim that 70% of the world’s poor are women. This is a number that seems to have come from nowhere yet it has taken on a life of its own. The reason is probably that it has some intuitive appeal. Theoretically, the claim that being female places someone at a greater risk of being poor is convincing. Gender discrimination – which is a deceptively neutral term meaning discrimination of one gender only - is a widespread problem and it’s highly probable that women who suffer discrimination are more likely to be poor and to remain poor. They

receive less education
receive lower wages
cannot freely choose their jobs in some countries
have less inheritance rights than men in some countries
perform the bulk of the household tasks making it relatively hard to accumulate income
often are responsible for the household income (men are often culturally allowed to escape into leisure and get away from the burdens of poverty)
suffer disproportionately from some types of violence
and face very specific health risks related to procreation.

All these problems faced by women who suffer discrimination make it more likely that they are relatively more burdened by poverty, compared to men who usually don’t suffer these types of discrimination.

Moreover, when young women begin to enjoy better education and employment we often see that the discriminatory features of the family structures and patriarchal systems in which they live make fresh appeals to their newly found human capital. As a result, their improved capabilities only serve to push them more into poverty. Poverty, after all, isn’t merely a question of sufficient income and capabilities, but is also determined by the availability of choice, opportunities and leisure.

So it’s obvious that men and women are poor for different reasons, and that some of the reasons that make women poor make them relatively more poor compared to men.

This is the intuitive case, but it appears that it’s very difficult to back this up with hard numbers. The “70%” claim is unlikely to be correct, but if we agree that discrimination skews the distribution, then how much? And how much of it is compnesated by factors that skew the distribution towards male poverty (e.g. male participation in wars). The problem is that poverty data are usually available only for households in aggregate and aren’t broken down by individuals, sex, age etc. So it’s currently impossible to say: “this household is poor, and the female parent/child is more poor than the male parent/child”. In addition, even in households that aren’t poor according to standard measures, the women inside these households may well be poor. Women is non-poor households may be unable to access the household’s income or wealth because of discrimination.

Given the problems of the current poverty measurement system, I think it’s utopian to expect improvements in the system that will allow us to adequately measure female poverty and test the hypothesis of the feminization of poverty.

[Via http://filipspagnoli.wordpress.com]

Budget must address the huge problem of property booms

2010-02-15T04:11:00.000+02:00

I’m no great shakes when it comes to understanding micro-economics and fiscal stuff. (Macro-economics for that matter too.) But several people have asked me what I’ve thought of the New Zealand government’s recent pre-budget announcement, particularly in relation to tax. So here goes.

I may be a bit strange, but I tend to look at budgets more in terms of fairness to all and what will make the citizenry better able to face the future, not so much in terms of how much better or worse off I will be. My long-term thinking is that the fairer and more sustainable the way our representatives collect and spend tax money, the happier most people will be and therefore the more pleasant and positive-thinking the community I live in will also be. If this happens, I win in the end even if my financial wealth status is down a bit.

Which it will be, in all probability. Being “older” and dependent on superannuation plus releasing money I saved over the years, my tax bracket is so low now (it wasn’t once, mind) that I doubt I’ll get much of a boost from any tax cuts. But it appears I will still be paying extra GST that will be compensated for only in the component of my income that comes from NZ Super.

However, although I do sympathise with people who are really struggling and simply cannot tighten the belts any further, I see the GST rise as being pretty minor in proportion to the general money coursing around the economy these days. I’m more concerned about the fairness of tax rules for those who are comfortably off, and how these may affect the ability of our economy to settle at a more sustainable state than it was in during the last property bubble.

Meaning what? Meaning that for years I, like quite a few others, have been particularly concerned at how the tax loopholes in favour of property investment (over savings or investing in something that actually benefits the country) have skewed our way of life so much that we are now collectively in so much debt. And I’m now equally concerned that the people who indulged in property trading (“climbing the property ladder”) and renting out in order to get fast tax-free capital gains, and use ludicrously unreal depreciation rules to get rich quickly, at the expense of people doing productive work who were/are being priced out of owning a house.

If any of these unfair and unequal uses of tax rules are actually implemented come budget time, to anywhere near a reasonably fair system, then certainly there will be lots of people hurt as a result – both property investors and people forced to rent. And house values will probably drop again.

But I think that that’s something we have to face as part of a move to an ultimately more sustainable and fair system. A one-off hit for a few years. In recent decades (particularly the last), property investors have in the main done very well indeed, thank you very much, at the expense of the rest of us. All tax changes hurt some people and sectors and please others. Until now tax rules have operated to please investors and hurt people trying simply to own a home. It seems this is about to change, and I’m glad of it.

I’ve always been comfortable with GST as a tax mechanism, as it forced tax dodgers to actually contribute to paying for the public goods and services they use. It’s not perfect – GST does constitute a much higher proportion of the disposable income of poorer people than the very rich – but it’s better than PAYE and Company tax mechanisms alone (spoken as someone who until the mid-80s paid PAYE with no ability to dodge it).

GST percentage changes are for most people only marginal changes. But the tax dodges allowed and encouraged through property investment have been having an absolutely huge impact on our economy through the recent property boom, so much so that when the property bubble looked like popping (though it looks like it only deflated a bit), the result was a huge wave of fear and insecurity through the rest of the economy. So if we don’t take action to address this, by changing property tax rules, then I believe it is inevitable that we will soon re-live the recent past, to our greater detriment in the medium-term future.

I would much rather see property prices hold for as long as they can, or even drop quite a bit, and reach a sustainable equilibrium that’s fair to all, than to see everything go back to property boom days. I’ll support any taxes that will make this the number 1 priority – even if it means that some now-well-off property investors take a big hit.

[Via http://imaybewrongbutnz.com]

The Power of Money... it's Your Vote

2010-02-12T20:50:00.000+02:00

In my last post [Democracy is Dead... Capitalism Reigns] I discussed my lack of faith in our political system and its leaders to do the right thing. The world leaders of our most developed nations are far more concerned with issues relating to their economy than about anything else, including the global climate crisis. Many world leaders have accepted that climate change is one of the greatest challenges of our time, and yet they are not willing or able to create significant change in this regard. Many of our world leaders view global climate and environmental issues as separate or ‘external’ to their more pressing economical issues. The truth is that the environment is not an externality, climate change is not separate. Without a healthy, sustainable planet, there will be NO economy.

Alright, so what do we do with this knowledge? We need to understand the power of our vote. And by that I do not mean our vote in our systems of Democratic government – as I’ve said – true democracy is dead. We need to realize the power of our vote in the reigning system of Capitalism. In this system we vote virtually every day, but with a different ballet known as the dollar. We vote every time we exchange capital. Every time that we hand over money or credit, we are voting for that product. We are saying that we want that product, that we support that company, or that we support that industry. We need to think very carefully about how we spend our money. Many of us are simply voting too much, on things that we don’t need or really even want. We are often voting for things that do not even make us feel good about ourselves. This is rampant consumersism, this is capitalism. This is the power of our vote. The system of capitalism is more powerful than our systems of government.

Again, can we do with this knowledge? We need to accept that quick and important changes are needed for our survival. And we need to accept that we are in control.

[Via http://ryanflood.wordpress.com]

Video

2010-02-12T12:53:00.000+02:00

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[Via http://exuxxyvy.wordpress.com]

Foreign debt and Haiti

2010-02-12T04:54:00.000+02:00

From a personal perspective, I have followed the developing country debt debate for many years now. In my Economics degree I majored in Economic Development and International Economics where the “debt problem” formed part of both courses. In those days in the early 1980’s, Susan George and Therese Hayter were loud critics of the way in which developing country debt was unfolding.

On the other side of the political fence, some economists were concerned about developing countries not paying their debt (in Latin America in particular) and what such an outcome this would have on the lenders. Some readers may recall that there was an international “debt crisis” that lasted between 1975-1985 that threatened the very fabric of the emergent global economy.

Cut to the 2ist century and journalist Naomi Klein, very much in the mould of Hayter and George, campaigns from the Left about the perceived injustices that befall developing countries through rich-country policies and actions. Klein is the author of the book “No Logo”, among other critical works of global capitalism. In this latest article in the The Guardian from the UK she writes about Haiti and foreign debt.

Klein writes that while it may seem a positive step forward for the outstanding country debt in Haiti to be written off in the light of the catastrophic recent earthquake, there is more to the issue than simple debt forgiveness. Klein highlights four key reasons as to why it is the West that owes a debt to Haiti: slavery, US occupation, dictatorship, and climate change. The detail is in the article.

The thinking point here is whether Klein’s four points are really valid and realistic. How much is the historical legacy something to be paid for by the generations of today? Such a question is important for many societies, especially where settler societies have impacted upon indigenous populations. And what is the responsibility of rich countries for the negative economic and social impacts of future climate change, a situation unresolved at the Copenhagen Climate Conference only a couple of months ago? And finally, how much responsibility do rich countries have for the economic position of developing countries after so many decades of developing country independence?

The questions may be emotionally charged and extreme, but they are indeed worthy of thought amongst readers of the global development literature. Often, the development literature takes a rather bland look at real-life situations that affect real people. Mostly, this is the context in which the development literature is written. But sometimes it is worth looking at articles with plenty of emotion, lots of conjecture and debate, and some real opinion-making. As such, I will be using selected newspaper reports to highlight some emerging issues that are likely to effect the development “literature” world in the coming years. As such, the opinions and perceived biases remain with the original articles. Thinking about and debating these articles is the purpose of the week’s news stories.

[Via http://tksausaid.wordpress.com]

Commercial Real Estate Development Sees Slow Recovery

2010-02-10T20:50:00.000+02:00

The economic fall-off of the past two years has likely bottomed out, but the fall-out hasn’t been fully felt, and the coming rebound is likely to be slow in taking shape. That was the message delivered by a panel of experts to the 250 attendees of NAIOP New Jersey’s Annual Meeting and Real Estate Forecast .

Locally, Patrick O’Keefe, director of economic research for J.H. Cohn, applauded NAIOP New Jersey’s advocacy in Trenton for its impact on getting measures passed that helped stabilize the industry.

In the larger sense, “a recession technically ends when things stop getting worse but they’re not necessarily getting better,” O’Keefe explained. “GDP grew in the third quarter of 2009, and other indicators are trending upward. But the problem is that we’re still losing jobs.”

How will recovery proceed? “Because it was largely caused by a financial crisis, we expect it to happen slower and take longer than past recessions,” O’Keefe predicted. “For non-residential real estate, 2010 will not be a good year because of the slow job growth. Employment will be the driver for what those in commercial real estate want to do.”

And for New Jersey in particular, he predicted a similar scenario of rising GDP but lagging employment, with non-residential construction lagging throughout the year.

[Via http://pegroup.wordpress.com]

Back to the Drawing Board

2010-02-10T12:35:00.000+02:00

In just about every speech at their 2008 convention, Democrats promised voters that a change in the White House would, in Barack Obama’s formulation, restore “our moral standing” in the world. Replace the unilateralist cowboy at the top with a humbler multilateralist, and the path would finally be cleared to fix vexing international issues such as curbing carbon emissions and dealing with the mullahs in Iran. Like many of the party faithful’s long-nurtured beliefs, this hope has disintegrated on contact with reality.

via Back to the Drawing Board – Reason Magazine.

[Via http://inzax.us]

Perdagangan : Memotret Kegagalan Ekonomi Pasar

2010-02-10T04:23:00.000+02:00

Memotret Kegagalan Ekonomi Pasar

Koran Jakarta, Rabu, 10 Februari 2010

Judul : Transformasi Besar: Asal Usul Politik Ekonomi Zaman Sekarang

Penulis : Karl Polanyi

Penerbit : Pustaka Pelajar

Tahun : I, 2009

Tebal : 363 halaman

Harga : Rp 37.500

Karl Polanyi adalah sejarawan ekonomi modern terkemuka abad ke-20. Beberapa karyanya menyoroti mata rantai perkembangan pemikiran ekonomi modern yang berkembang di Eropa Barat.

Buku Transformasi Besar: Asal Usul Politik Ekonomi Zaman Sekarang (Origins of Our Time: Th e Great Transformation) merupakan adikarya pertama dari Karl Polanyi, dosen sejarah ekonomi di Bennigton College dan University of Columbia, Amerika Serikat.

Buku ini memotret sejarah periode awal transformasi ekonomi di Inggris yang pada akhirnya memengaruhi belahan dunia lain, Eropa Barat, bahkan Asia, yang belakangan juga ikut terseret arus besar ini.

Tesis utama dari buku ini adalah kritik terhadap kapitalisme modern yang menurutnya adalah anomali sejarah.

Polanyi mengkritik ekonomi modern yang menurutnya telah mengubah relasi-relasi sosial dengan mendefi nisikan sistem relasi sosial dengan relasi-relasi yang bersifat ekonomi.

Menurut Polanyi, pada masa sebelum lahirnya kapitalisme, pengaturan-pengaturan ekonomi justru sebaliknya, tertanam dalam hubungan sosial.

Buku ini terbagi dalam tiga bagian. Pertama, Polanyi melakukan tinjauan terhadap realitas perubahan relasirelasi sosial yang terjadi di Inggris dan Eropa Barat.

Kemunculan ide tentang self regulating market (pasar swatata) telah mengubah relasi sosial, pola industri, dan paradigma sosial di kawasan tersebut.

Lewat pemotretan yang cermat, Polanyi mengambil suatu kesimpulan bahwa self regulating market merupakan sebuah utopia. Dalam bagian ini, Polanyi juga menyinggung tentang perimbangan kekuatan antarnegara.

Kedua, Polanyi dengan lugas mengkritik ekonomi pasar dan kegagalan fi lsafat liberal dalam memahami permasalahan perubahan di era itu.

Dengan tegas Polanyi menyatakan liberalisme telah salah dalam membaca sejarah revolusi industri. Basis kegagalan liberalisme adalah sikap bersikukuh untuk menempatkan dan menilai peristiwa-peristiwa serta relasi-relasi sosial melulu dari cara pandang ekonomi.

Di bagian ini, Polanyi memotret sejarah dampak revolusi industri serta dominasi paham utilitarian ortodoks dan pengaruhnya terhadap relasirelasi sosial di Inggris dan Eropa Barat pada saat itu.

Polanyi berpendapat dalam masyarakat kapitalistik (di bawah dominasi paham utilitarian ortodoks), pemerintah tidak lebih sebagai pelayan kapitalisme dan membantu memajukannya lewat produk undang-undang, regulasi, bahkan kekuatan militer.

Pada bagian akhir buku ini, Polanyi membicarakan tentang mekanisme yang mengatur perubahan sosial dan perubahan di tingkat negara pada masa itu (pascaperang dunia I). Polanyi juga mengemukakan munculnya permasalahan masyarakat pasar, yaitu intervensionisme dan mata uang.

Peresensi adalah Fahmi Alatas, Koordinator Komunitas Saung Buku

[Via http://jakarta45.wordpress.com]

On Smart Growth Conference

2010-02-08T20:37:00.000+02:00

This is a re-posting to the blog entry I wrote for Sustainable Seattle about the Smart Growth Conference that just wrapped up on February 6, 2010.

For the original posting please go to:

http://sustainableseattle.blogspot.com/

Smart Growth Conclusions

The Smart Growth Conference ended on Saturday in one of the most inspirational ways with a powerful speech by former King County Executive and current Deputy Secretary of HUD Ron Sims.

In a wide ranging speech from the immediacy of combating Climate Change to the revitalization of our Urban centers, which Mr. Sims defined as any gathering of people with a semblance of central population and industry, Mr. Sims brought a reverential tone to the closing ceremonies. Many in the audience were shouting out agreement, clapping and nodding their heads. Many times the speech would be humorous and laughter would erupt suddenly to disperse as Mr. Sims slammed home a truism.

He spoke of sustainability and livability as two sides to the same argument often pairing the two terms in a quick slur of a phrase repeatedly. The two terms were then tied to the process of social justice and fair treatment. He made the point numerous times that nothing of consequence will change until we realize that we are all in this together and what happens to your neighbor does affect your own happiness. If there is no social justice everywhere there is no social justice anywhere.

Social Justice is an integral part of sustainability and there must not be a wall between the rich and the poor and a wall between the classes. We need to make the aspect of equality reach every section of our sustainable theories and practices. Make equality a means and an end.

The speech was a call to action for the three hundred or so crowd who gathered in the Convention Center Ballroom. It was practical and far reaching. It sent goosebumps at times with a silenced crowd when Mr. Sims talked about the struggles his parents went through and the incredible amount of personal strength it took them to be dehumanized in front of their children. The struggle of civil rights and fair treatment was used as an example of an idea that seems self evident in hindsight, but was unheard of when it began. He challenged us to again challenge the status quo and the expected outcomes.

“Think like a movement,” Mr. Sims said, “Give up your single interests and your silos. Everything is connected whether you are a builder, a planner, a teacher, or an advocate.”

A major theme in the speech was the power of diversity and terminology. “Begin to realize the power of terms. Terms have power.” He wanted us to realize that the actions that take place in the communities we are trying to reach will fail if we do not frame the issues in terms the community will understand. We need to find the terms that are accessible and precise. We need to stop using our acronyms and jargon and connect the meaning back into our talk.

“The United States is the great human experiment. We are the first nation in history to be an economic power, a military power and a social power without a common ancestry. Our diversity of cultures, peoples, and backgrounds is what gives us our strength. Can you communicate with the people who look different than you?”

“Ignorance creates terrorism, disease, and war. We need to break the chains of ignorance.”

“You may have a big house, but if you can’t even talk to your neighbors, you are lonely.”

“Poverty will not keep us apart.”

The listening crowd was paying attention. They were not tapping on Blackberries or checking their Facebook status. They were looking and leaning forward. They stood up when called to and the ovation was genuine, positive and energized. Now the challenge is to keep going.

“In a relay teamwork matters and it doesn’t matter how big a lead you have if the baton doesn’t get passed on. You are the person I hand the baton to. Now, how are you going to win?”

[Via http://endithinks.wordpress.com]

Vote for the Dynamite Prize in Economics

2010-02-08T12:44:00.000+02:00

Those who are not entirely enthusiastic with the dominance of neoclassical economics might enjoy to vote for the “Dynamite Prize in Economics”, to be awarded to the three economists who contributed most to enabling the Gobal Financial Collapse (GFC). In addition, the “Noble Prize for Economics” is going “to be awarded to the three economists who first and most cogently warned of the coming calamity.”

Here an excerpt from the announcement by the organizers, the Real World Economics Review Blog:

It is accepted fact that the economics profession through its teachings, pronouncements and policy recommendations facilitated the GFC. We also know that danger signs became visible long before the event and that some economists (those with their eyes on the real-world) gave public warnings which if acted upon would have averted the human disaster.

With other learned professions entrusted with public confidence, such as medicine and engineering, it is inconceivable that their professional bodies would not at the very least censure members who had successfully persuaded governments and public opinion to ignore elementary safety measures, so causing epidemics and widespread building collapses.

To date, however, the world’s major economics associations have declined to censure the major facilitators of the GFC or even to publicly identify them. This silence, this indifference to causing human suffering, constitutes grave moral failure. It also gives license to economists to continue to indulge in axiom-happy behaviour. Nor has the economics establishment offered recognition to those economists who were not taken in by fads and fashion and whose competence, if listened to, would have prevented the collapse.

These two silences reveal a continuing moral crisis within the economics profession. The Dynamite and Noble Prizes for Economics are being offered as small first steps towards a cure.

[Via http://doingphd.wordpress.com]

A new model in technology innovation: "Search and Development"

2010-02-08T04:12:00.000+02:00

Source: today.ucf.edu

Cleantech is on its way to potentially become the next transformative wave of innovation. As often, anticipating what the future will hold is about understanding how the past unraveled. Indeed, there is much to learn both in terms of investors’ mental models and potential analogies from past waves like the Internet and Biotech.

The emergence of Information technologies marked the triumph of the VC-backed model. The business and mainstream media helped build the myth of the geeky tech entrepreneur and the all-powerful venture capitalist. The lesson we all learned was that an idea could quickly move from concept to a reality – potentially unleashing millions of dollars while doing so. Of course in the process, numerous shaky business plans were funded; people saw value where there was just wind. Yet, tech entrepreneur/VC tandem survived the bubble and still embodies in our subconscious the perfect combination to generate technology innovation.

As a consequence, people still believe that this is the model to go for the next technology innovation. That is why, you see cleantech entrepreneurs and VC striving to walk the cleantech “revolution” along the same path i.e. funding, IPO, etc. However, savvy investors and business pundits raise some valid concerns as to the validity of the analogy. The beauty of the IT revolution was, and still is, that the development costs to reach scale are very limited. On the contrary, most of the cleantech requires longer development lead time and thus funding up to 10 times what was necessary for the proof of concept in the IT world. How many firms can realistically raise 100 million of dollars through the VC world to develop a conclusive prototype? The analogy falls short and begs for another point of reference.

The biotech wave took longer to reach our shores. Decades passed between the first academic discoveries in the 1970s and the arrival on the market of biotech drugs. One of the reasons is that many start-ups with great ideas and sometimes tremendous academic brainpower learned the hard way that developing a drug was a long, risky and thus very expensive process. Despite the lure of blockbuster-like profits, few biotech start-ups made it to the final line on their own like Genentech or Amgen. Contrary to biotech enthusiasts’ predictions, Big Pharma stood strong and barely felt the pressure from the herd of hungry start-ups. Proud of its R&D pipeline that brought so many blockbusters, Big Pharma believed in its capacity to invent its way to growth. Knowing how precious a potential candidate drug out of the research pipeline is, Big Pharma focused on building the most optimal development and sales pipeline to get the maximum return on their research investment. Despite all their efforts, Big Pharma research pipeline soon became too institutionalized: optimal to find incremental gains but less for leap-frogging results. When the pipeline started to dry up, the deep-pocketed Big Pharma realized that it may be time to look at the biotech start-ups as a pool of out-of-the-box innovation rather than a pool of potential competitors. A recent article from Reuters revealed the extent to which Big Pharma evolved from a R&D powerhouse to some kind of Pharma PE/VC firm able to assemble portfolio of candidate drugs through partnerships with start-ups and academic research labs. Some mid-size companies like Shire or Forest Laboratories even brand themselves as “search & development” company. Pfizer, AstraZeneca and others seem to also believe that slashing your research department is also the way to go – Pfizer plans to cut its research budget by $2-3 billions by 2012.

Thus, success in cleantech will rely on the ability of investors and entrepreneurs to leverage the right analogy. Software-based cleantech solutions will still thrive through the usual VC-backed channels. On the other hand, any entrepreneur with a technology requiring hundreds of millions for development should look for partnerships with deep-pocketed industrial groups. As a matter of fact, the limited number of IPOs for hi-tech hardware solutions corroborate this assumption – A123 , Vestas and others being exceptions to the rules. However, industrial groups are sometimes miles away from having the right mental model for a “search and development” approach. Thus, a lot of education will need to happen in those groups to make cleantech a reality faster than it took for biotech. In the future, we should see more established groups embracing an ambivalent model with a R&D department working hand in hand with a VC-type of entity. Actual VC will then play an interesting role of referral – connecting the dots in the long-awaited networked future that Tom Malone painted in his book the Future of Work.

[Via http://vitaminsforfutures.com]

A disgusting display of bureaucratic force from the Chicago Department of Public Health

2010-02-05T20:17:00.000+02:00

Lynne Kiesling

This is so vile, so disgusting that I am literally nauseated at my desk as I write. One of the ways that independent chefs, caterers and confectioners economize on their substantial fixed costs is by sharing kitchens. In Chicago, the business license treatment of such kitchens from the Chicago Department of Public Health has been uncertain: does the kitchen owner have to be the one with the license, or does each user of the kitchen have to have a separate license?

Last night, due to a paperwork miscommunication and Kafkaesque bureaucratic process of trying to sort this out, the Chicago Department of Public Health destroyed organic fruit purées that Flora Lazar of Flora’s Confections prepared over the summer and preserved to use in her much-touted and anticipated Valentine’s Day confections. These officials tore open the bags and bleached the food so that it could not be put to any use. I’m going to quote Chicago Tribune reporter Monica Eng here at length, because she was there, and her post illustrates exactly how senseless and appalling this destructive CDPH behavior is, but there is more at her post, so please do go read more there.

In a sad struggle that unfolded in a West Town kitchen Thursday night, Department of Health inspectors seized, slashed open and poured bleach over thousands of dollars of local peaches, pears, raspberry and plum purees owned by pastry chef Flora Lazar. She’d purchased the fruit from Green City Market farmers last summer and had planned to use it to make local fruit gelees for her business, Flora Confections.

More than $1,000 of food owned by the Sunday Dinner Club caterers was also destroyed by health department inspectors.

Inspectors cited no health problems with any of the food. They even encouraged Lazar’s son to eat the confiscated granola bars from Sunday Dinner Club. They only said the food was prepared by chefs who didn’t have the proper business licenses to prepare and sell it. …

The destruction of organic artisanal granola bars and local fruit from Klug Farm and Hillside Orchards is heartbreaking to any local food advocate. But for Flora Lazar, this setback, the week before Valentine’s Day is devastating.

“This puts me out of business for six months,” a despondent Lazar said. “I have done everything by the rules. Instead of making the food at home, which I could easily do, I sought out and rented space in a licensed kitchen. When they finally said we could apply for a separate license, I did that. I paid my $600 and invited the inspectors here today.”

If Lazar had been less transparent and left her cooler in her car during the inspection, she would probably be cooking today. Inspectors were mostly destroying food that had been prepared before their arrival. But she estimates that her honesty and attempt play by the rules just cost her $6,000 in revenue. She says the fruit purees, harvested at the peak of Midwest ripeness, are “irreplaceable.” …

But until recently the city had no clear policy regarding shared use kitchens, says Kitchen Chicago owner Alexis Levering. When she secured her latest space she said she confirmed with the Department of Licensing that it was zoned for shared use. The department further assured her that as the licenseholder, she would be responsible for any food safety issues associated with her clients, she says.

Later, though, Licensing said her clients would all need to apply for their own licenses, and with each application they’d need to get a new health inspection, giving the little niche kitchen exponentially more inspections than the busiest restaurants in Chicago.

But when Kitchen Chicago users went to the department, they were told again that they couldn’t apply for the license because it was at the same address as Levering’s license. The confusion continued for months until recently, Levering said, a department representative told her that now he would make sure that renters could apply for the licenses. He further told her, however, that any violations committed by one chef would mean a ticket for every cook who rents space in the facility, meaning possibly thousands of dollars reaped by the city for a minor infraction by one cook the others might have never met.

“That’s like giving everyone in the car their own ticket when a driver is stopped by the police,” she said.

This week, it seemed as if the kitchen was finally making progress with the department and, indeed, two of the businesses, Sunday Dinner Club and Flora Confections, had their license applications accepted, paid their fees and were told the inspectors would come Thursday.

The inspectors arrived at 9:30 a.m. and didn’t leave until nearly 5 p.m., when their final act was to destroy hundreds of pounds of local, organic, often unopened cheese, cassoulets, granola bars, frozen fruit purees, baking ingredients and more with a gallon of bleach.

Officials never said that the food posed a health risk. At best it was a victim of paper work confusion among city bureaucrats who couldn’t agree on a policy. But since no one at the city will comment on the situation, part of the story remains unclear.

Francis Guichard who is the CDPH food protection director called this morning to say that her inspectors could not allow the food to move from the building because they could not ensure where it was going. Licensing has still not commented on the issue.

At one point, one of the cooks suggested that the unopened food at least go to the Greater Chicago Food Depository rather than being destroyed. That request was denied. Watching the destruction of all of this perfectly edible food, you’d never know we live in a state where one out of 10 households doesn’t have enough food to eat.

The Health Department inspectors are expected back at the kitchen today to destroy the rest of the food they deem unlicensed.

These so-called “protectors of public health” destroy the inputs into an entrepreneur’s business in her busiest season, despite acknowledging that the destroyed food poses no health risk. These so-called “protectors of public health” destroy perfectly healthy food instead of even giving to hungry, needy people. On what grounds can these so-called protectors of public health have any legitimate claim to be doing valuable work on behalf of the people of Chicago? And I pay how many thousands of dollars in taxes every year to support this kind of wasteful, counter-productive, aggressive, megalomaniacal activity?

If these City of Chicago employees are indicative (and I think they are) of the attitude of city government toward entrepreneurship and toward the value of meaningless bureaucratic gestures that keep income out of the pockets of entrepreneurs and food out of the mouths of people, then I am truly ashamed and embarrassed to call this my home. It adds insult to injury that I pay such high taxes for the privilege of living in such a despotic city. Yes, I mean despotic; we Chicagoans know that there are many dimensions in which such a word is not hyperbole.

I also sympathize with the first commenter on Monica’s post:

And the Government still doesn’t think the Revolution is coming?

[Via http://knowledgeproblem.com]

Brave new world of the perma-temps

2010-02-05T12:33:00.000+02:00

Imagine a world in which our labor is completely fluid and mobile. We move from job to job, working for one employer and then another, or perhaps simultaneously for multiple employers. In this world we are, most of us, permanently temporary employees, or “perma-temps,” in the term used recently by Business Week.

According to BW, we now live in the “era of the disposable worker.” This is not a brand new development; the trend towards permanently temporary workers has been underway for decades. What is new is that it encompasses virtually all kinds of worker; it is no longer limited to low-wage part timers. The ferocity of the current recession has made even the most secure and privileged among us aware that we’re disposable.

Take Matthew Bradford, laid off last year by his law firm. “I never would have thought this would have happened. I thought, ‘Hey, I’ve got a law degree and an MBA. I’m not going to be out of work.’ It’s just not the case anymore.”

So it comes down to this for increasing numbers of us: in order to make a living–that is, to live–we sell our capacity for labor to one or more employers, who stop buying it when they don’t need or can’t afford it anymore. At that point this capacity, like any other commodity, rots or depreciates until it finds another buyer.

The most acute observers of this trend may be those who make their money from it. The CEO of Kelly Services, a leading temp agency, says simply: “We’re all temps now.” Maynard Webb, the CEO of LiveOps, another large temp agency, is a former executive of eBay. “We want to do for the world of work what eBay did for commerce,” he says. “You have access to the talent you need. And when the need is gone, the talent goes away.”

It would be a mistake to describe Mr. Webb’s statement as callous. It is our economic system that’s callous; Mr. Webb is merely telling it like it is, and we appreciate his clarifying the true nature of our labor in this system. The recession and people like Mr. Webb have done more to reveal the increasingly disposable quality of our work, and of ourselves, than a roomful of economists.

[Via http://owningdemocracy.org]

United States Economy

2010-02-05T04:48:00.000+02:00

I’ve been paying a lot of attention to Obama’s reaction to our current econmic state lately (I always so, but more so lately) and I find those who are against him to be quite interesting. Furthermore, I have paid a lot of attention to his budget plan and I have researched quite a bit about it. I’ve always been a person who pays more than usual attention to politics and the economy. But, a big reason that I’m so interested in this budget is that I will be graduating from college in two years, and am interested in what the economic climate will be.

Keynesian Economists, and those that support it, believe that a mixed economy is ideal. A mixed economy means mostly a private sector, with government having a pretty big role and a public sector. Classical economists believe that supply creates its own demand, but this is simply not always true, especially in bad economic times. Take a look at our economy right now– Unemployment is high, which leads to less demand. Therefore, our economy has lost potential output. So what do we do to fix this you ask? Well, we create government policies to increase demand and therefore lower unemployment and inflation. This idea made perfect sense to me when I took my first Economics class. What do classical economists want to do? Nothing. Let the markets fix themselves!

I don’t see the logic in this. Our economy is the worst it has been since the depression and they want to do nothing. They don’t want to raise taxes, yet we have the largest deficit ever, mostly created by Republicans. So, tell me, how can we have tax cuts AND solve the deficit problem? They often say in a bad economy, you can’t raise taxes. Then how do YOU propose we fix the problem? If we can’t raise taxes and get rid of the tax cuts on the rich, then what do we DO? If we don’t try to create more jobs, then what do we do? Sit there and wait for the government to fix itself while you enjoy your comfy rich tax cuts and watch everyone else suffer? I’m not saying the government do everything for us, but our economy needs HELP. Millions out of jobs NEED HELP.

Now, let’s discuss what the President has proposed for his budget, that I hope gets approved by Congress.

First and foremost, we cannot blame the huge deficit on Obama. He inherited a huge deficit thanks to two wars with no increase in taxes, tax cuts, and a prescription plan among several things. Has he increased the deficit since being in office? You bet. But he is also dealing with trying to stimulate a bad economy. We have a high unemployment rate, which means more people are getting unemployment benefits. So, we cannot ignore the situation he is in and what he came in to.

Second, I will still continue to see an increase in my paychecks. It isn’t much, but it still helps. This was part of the Stimulus that certain people hate. While we’re on that topic, take a look at this: http://www.recovery.gov/ . You can track exactly where the money has gone. In California alone, it has created 71,015 jobs. In my city alone, 23. That is 71,000 people who didn’t have jobs before. Now, most of those jobs are NOT contract jobs like some want you to believe. Most of them are through grants. Now, with those jobs created, the unemployment benefits handed out go down. This leads to an increase in available money. Also, with those jobs, 71, 015 now have more money to spend as a consumer. What part of this doesn’t make sense?

Obama’s budget would reduce the deficit by 1.2 trillion in the next ten years.

You can’t ignore this chart. Will the problem get worse before it gets better? Absolutely. The chart doesn’t hide that. He will let certain tax cuts expire, create more jobs, freeze economic spending, and impose a bank tax. Tell me, which part of this is bad? Just because it’s a liberal idea, doesn’t mean you should shoot it down right away. I love the following statement from Fareed Zakaria, an author and foreign affairs analyst:

Because we have a political structure in Washington today, that if one side proposes any solution to these problems, the other side does not ask itself: How can we have a compromise that solves this problem?

Instead they think: How can we demagogue this issue to fundraise, to win votes, to scare people, to polarize the political climate and gain advantage from it? It’s almost that the entire strategy now is how can we take any proposal that anyone makes and turn it into a fundraising opportunity for our extreme wing.

And if you do that, you’re never going to actually solve the problems of the country because every proposal can be demagogued.

[Via http://jetika316.wordpress.com]

Announcement

2010-02-03T20:46:00.000+02:00

After some soul-searching and research, I’ve decided that the time has come to take my game to the next level. My strategy thus far has been an attempt to drive a bottom-up understanding of a new economic theory that might eventually drag economists along, kicking and screaming. It’s impossible to say whether I’m having any effect but, if I am, it may take a thousand years to achieve the desired results. What’s really needed is an intravenous injection of this theory into the body of economics.

I’ve begun working on a white paper which I plan to submit for pulication in one of the many academic economics journals. The vast majority of articles published in such journals are written by Phd economists, but I’ve been encouraged to submit such a paper and, upon examining some of these journals on-line (the ones that allow the user to view a free sample), I’ve concluded that it’s worth a shot at finding one that will consider a submission from “an independent researcher.”

It’s going to take a bit of work – not a simple “copy and paste” of a condensed version of the book. It needs to be presented in a much more scholarly format. I’m letting you know this, faithful readers, because it means that I won’t be able to post or reply to comments on this blog at the same rate as in the past, for a little while at least. I’ll still post commentary on major economic developments, perhaps once a week or so, and will still read all of the comments, but may not have enough time to reply as much as I’d like.

I’ll keep you posted on my progress. My understanding is that many of these journals do not accept simultaneous submissions, which means that instead of “shot-gunning” copies to all of them at once, hoping to score a hit with one of them, I may have to submit to them one at a time, awaiting acceptance or rejection before moving on to the next.

Even if this effort is ultimately a failure and no one agrees to publish, it may not be in vain, since someone at each journal must read the paper in order to pass judgment. Like planting seeds behind a fence, just because you can’t see what happens next doesn’t mean that it hasn’t borne fruit.

Beyond this white paper effort, I’m also contemplating a 2nd edition of Five Short Blasts or, perhaps, a new book altogether. I’d like to keep this theory out there, available in a book that’s fresh and relevant with up-to-date data.

Again, I’ll keep you posted. Wish me luck.

[Via http://petemurphy.wordpress.com]

Jaguar proposes a luxury turbine hybrid vehicle

2010-02-03T12:49:00.000+02:00

Lynne Kiesling

Yes, you saw that correctly, a turbine. According to Wired:

Jaguar Land Rover is working on the car with British gas turbine manufacturer Bladon Jets and electric motor manufacturer SR Drives. The Technology Strategy Board, which funds business development in the U.K., is underwriting the first serious attempt at a turbine car since Volvo built the Hybrid Environmental Concept in 1993. The goal, according to Bladon, is the “world’s first commercially viable – and environmentally friendly – gas turbine generator designed specifically for automotive applications.”

… But the Jag — like the Volvo — would use a miniature gas turbine only to generate juice for the electric motor. Bladon says its axial flow turbines are small, lightweight and run on anything from natural gas to biofuel. That, it says, makes them a great alternative to the conventional engines used in range-extended hybrids like the Chevrolet Volt.

That’s pretty cool! Previous turbine vehicles didn’t make it because they were noisy, so it will be interesting to see if this venture fares any better.

And I love that one of the commenters on the post told one of my favorite jokes:

Q: Why is it the British don’t make computers?

A: Because they haven’t found a way to make them leak oil yet.

When I was a kid my dad had a 1967 Jaguar XKE (burgundy, with black leather seats). I think it spent more time in the shop than on the road, but it was a gorgeous car.

[Via http://knowledgeproblem.com]

Gloomy Economics - Pt II

2010-02-03T04:48:00.000+02:00

For the purposes of this discussion, lets us (somewhat arbitrarily) date the beginning of the US modern economic history to the inaugruation of Franklin Roosevelt as President in 1933. Not that the nineteenth century battles over the Free Coinage of Silver or the First and Second Bank of the United States aren’t important – but by the early 1930s these issues had pretty much been settled.

In 1933 the Federal Budget of the United States was approximately $4.6 billion, with revenue of just under $2 billion – leaving a (then considered terrible) deficit of $2.6 billion. Of the Federal budget, Defense constituted $1.4 billion – of which more than half ($700 million) was spent on Veterans – mainly pensions and benefits to veterans of the First World War. Of the remaining $600 or billion in current defense spending, the greatest share went to the Navy.

The US Army, by way of contrast, was a relatively tiny force. With approximately 200,000 men (and they were almost all men) in uniform in 1933, the US Army ranked considerably below Greece or Czechoslovakia in military firepower. But of course, in 1933, the USA really didn’t need much in the way of a large standing army. The navy (plus two conveniently wide oceans) would keep any potential aggressors at bay. And the US was sufficiently large, and well supplied with natural resources, to have much to fear from a maritime embargo.

The first two four years of Roosevelt’s Presidency were marked mainly by an attempt to prevent the total social collapse of the US as a nation. When we worry about unemployment today (around 10%) we need to keep in mind the 30% of the Great Depression. And while we pity homeowners stuck with underwater mortgages, we’re still a lot better off than the savers who lost everything when their banks failed in those pre-FDIC days.

One little-known episode of the Great Depression was the Bonus March of 1932. Some 17,000 Veterans of WWI, along with their families, marched on Washington and demanded that certificates entitling them to a cash payment be paid early (the certificates had a maturity date of 1945.) President Hoover ended up ordering the Army to remove the marchers – which they promptly did, resorting to bayonets, tanks, and a primitive teargas containing arsenic. The oepration was commanded by then Army Chief of Staff Douglas MacArthur. His deputy was (later President) Dwight Eisenhower, and the cavalry charge that rousted the bonus marchers was led by George Patton. (See, I told you how small and clubby the pre-war Army was..) Reading about these events, from the benefit of almost eighty years of hindsight, one can only wonder what Fox News would make of such events.

[Via http://fahrenheit98.wordpress.com]

James Clyburn: Idiot.

2010-02-01T20:51:00.000+02:00

Rep. James Clyburn wants to invest and spend more to get people back to work while controlling the deficit. It doesn’t work that way, dumbass! Cutting spending gets your deficits down, since taxing people not making money doesn’t work. And of course, he uses the normal Democrat spending cri de couer of health care and eduction.

New flash, Jimmie: we already spend loads on education, and it gets sucked into the abyss of administrative and union perk costs. Homeschoolers average $500/year and still test better than most charter schools. Money doesn’t fix problems; common sense does. Cut the fat!

Let’s start with Congress!

[Via http://scottrhymer.wordpress.com]

Bloom of Doom III: Cities Going Bankrupt

2010-02-01T12:43:00.000+02:00

“Pennsylvania Capital Ponders Bankruptcy” we read in Mish Shedlock’s commendable blog “MISH’S Global Economic Trend Analysis“. Now, if that doesn’t shed a whole new light on the word “capital“!

There’s two approaches, haven’t we learned in the not so distant past: there are institutions that are “too big to fail“, then there are even those that are “too big to bail“. Then there are those that are “too small – you wail“.

And now there are municipalities. As is good custom with public institutions they spend future tax money to pay for today’s and often yesterdays amenities. Haven’t most religions down the ages taught us what sin is? You indulge now only to be sorrow ever after?

Could they not count two and two together and see there’s some truth in that, even for the staunchest agnostic? But I doubt they are even atheists. The mayor probably teaches at Sunday school and preaches against indulgence. Maybe it’s the strict separation of church and state that forces his hand to sin against his own private principles? Maybe it’s the fact that churches are about the only institutions in the US that thrive regardless of recession, that they are strictly privately financed whereas some churches in Europe are ailing?

Now forgive me (in the here-and-now) but couldn’t a city foresee this? That when you spend more than you could ever in the far foreseeable future earn, you eventually are insolvent? That, the worse it gets, the less new credit you will be able to roll over?

Why then isit so difficult to understand that this applies at every level and in every circumstance? Is it so inconceivable that when a state bails out a corporation (big or small, hardships acknowledged) he has to get that money equally from somewhere and that in the long run there must inevitably come a point where (if you can still afford to pay him or her) a comptroller comes to the conclusion, that bankruptcy is the better of two options? Now, if you were a CEO at a big company (although, contrary to received wisdom, size doesn’t matter here)do you keep spending until your comptroller eventually tells you that you spent beyond the point of no return? Is it conceivable that you had advanced to the top position in that company, outflanking old rival John-the-comptroller to take the helm if you’d still need tutoring on such basic truths? When I come to think of it: what kind of comptroller or CIO is that who comes telling you you’re effectively bankrupt after it can’t be avoided anymore? Isn’t the CEO (read mayor) meant to be capable to abstain from financial recklessness even if the CIO didn’t tell him in time or ever at all? And isn’t a CIO (read comptroller) meant to discount all current and future revenue and expenditure to the current moment and, if he knows his double-ledgers, immediately and at all times to be aware if there was a shortfall now or in the foreseeable future?

Would you as a shareholder vote such oafs into office and trust them with your nest-egg? Why, citizen union member, citizen civil servant, citizen Sunday school teacher, citizen factionist, charitable citizen, selfish citizen, altruistic citizen, why citizen voter do you vote against your best interest when it comes to public office, time and time again? It’s your life and your money but it’s your children’s destitution …

Consider: if those “public” services are now curtailed, civil servants furloughed etc. – wouldn’t you wish all those services had been in private hands from the beginning? If a private, say, garbage collector or a “public” swimming pool couldn’t meet its obligations, then you, the citizen can walk away and hire the services of another, but in any case, even if there’s a short while when you can’t avail yourself of that service until some competitor, some new entrepreneur takes over, you are at least not saddled with the incumbent provider’s debt! Imagine: public inances have a “funny way” of (dys)functioning: they’re the only services, you the citizens pay more for when they deteriorate and then even pay long after they were discontinued. This isn’t a bad dream, it’s reality, but still you need to wake up! Now!

[Via http://crisismaven.wordpress.com]

U.S. Defense Contractors Go Offshore to Avoid Payroll Taxes

2010-02-01T04:49:00.000+02:00

The story comes from AllGov.com.

Setting up foreign subsidiaries allows American defense contractors not only to utilize cheaper labor and more favorable regulations, but also avoid paying taxes that fund key government safety net programs. This conclusion was reached by the Government Accountability Office (GAO), which examined 29 defense contractors and their reliance on offshore companies for their work overseas from 2003 to 2008.

If I’m reading the article correctly, the practice has been illegal since certain tax loopholes were closed in 2008.

But legal or not, surely I’m not the only one bothered by this practice. These are defense contractors. Not only did they avoid hiring American workers, they found a clever way to avoid paying taxes that fund programs to help American citizens. And it was all legal. How much sense does this make?

More info from David Isenberg at the Huffington Post.

Considering the sheer amount of money that the Pentagon spends on contractors for support, approximately $396 billion on contracts for products and services in fiscal year 2008 according to the GAO, the money not spent on payroll taxes can amount to quite a lot.

H/T: Bruce Prescott

[Via http://dunningrb.wordpress.com]

Comparing the financial crisis mechanisms of Fisher, Minsky and Woodford

2010-01-29T20:55:00.000+02:00

1. Introduction

Given the current economic climate of financial instability, it is important to draw inspiration from many texts over the century in order to understand and learn (if not rectify) from the situation. Irving Fisher’s work on the Great Depression in the USA in 1929-1933 will allow us to see a basic overview of the areas in the economy which are most fragile. This work was extended by Hyman Minsky and close parallels can be drawn in their work. However, asking whether money supply even has a role within the economy, let alone the crisis, is a vital one; one which Michael Woodford addresses in a contentious piece of work. Therefore, this essay will look at the similarities between Irving Fisher’s financial crisis mechanism in ‘The Debt-Deflation Theory of Great Depressions’ and Hyman Minsky’s ‘Financial Instability Hypothesis’. It will then discuss the differences of these models to that of Woodford’s (/Wicksell’s) pure-credit economy in ‘Interest and Prices’.

2. Irving Fisher’s Debt Deflation

Irving Fisher’s work entitled ‘The Debt-Deflation Theory of Great Depressions’ was published in the first edition of Econometrica – four years after he famously stated that “stock prices have reached what looks like a permanently high plateau”[1] on he eve of the 1929 crash. Given that he was famous for being a mathematical economist, this article in Econometrica had no ground-breaking mathematics in it whatsoever (infact it had no evidence at all). Instead, it was a paper constructed purely around a theory. At the start of the article he explains his “cycle theory”[2] whereby an “economic system contains innumerable variables – quantities of “goods”…the prices of these goods, and their values”[3] and that “only in imagination can all of these variables…be kept in equilibrium”[4]. As economic theory highlights both equilibrium and disequilibrium, Fisher tells us that “[t]he former is economic statics; the latter, economic dynamics. So called cycle theory is merely one part of the study of economic disequilibrium”[5].

Given this framework, and the absurdity of the assumption of perfect equilibrium, Fisher highlights three important variables which are often in disequilibrium: 1. capital items, such as homes, factories etc; 2. income items, such as real income, shares traded and; 3. price items, such as prices of securities, commodities, interest[6] but concedes that disequilibrium in these markets would not bring about large economic change unlike over-indebtedness and deflation. Fisher thought that the over-investment and over-speculation (as specified in the above three points) would always have an effect on the economy but they would have far less of an impact on the economy as a whole if “it was not conducted with borrowed money”[7]. From here he postulates that without debt and deflation, “other disturbances are powerless to bring on crises comparable in severity to those of 1837, 1873 or 1929-33”[8].

Fisher subsequently produced his economic mechanism whereby over-indebtedness and deflation could result in an economic crisis[9]:

Start: Assumption of initial over-indebtedness due to speculation of future profits and/or due to low interest rates would increase the incentive to borrow and then speculate

Debt liquidation
Contraction of deposit currency as bank loans are paid off which will decrease the velocity of money. This will lead to distress selling as over-indebtedness has set in.
Distress selling leads to deflation (the money supply is decreased due to paying off loans). The paradoxical situation arises where the more people try to pay off their debts, the more the debt grows (because the real value of money has increased)
An increase in bankruptcies due to a decrease in the net worth of businesses
Decrease in profits
Decrease in output, trade and employment
Pessimism runs through the economy
So hoarding increases and so the velocity of money decreases further.
Complicated changes in nominal (money) and real (commodity) interest rates

Given the assumption that it is the expansion and availability of credit fuelled by the temptation of large future profits and low interest rates, Fisher highlights two possible policy implications[10]: 1. the “natural” way out of depression and; 2. reflating the price level. The “natural” way occurs when bankruptcy is fully found throughout the economy thus creating a slower rate of indebtedness. When at this low, a recovery boom period would occur, improving the wellbeing of the economy. However, this “natural” way out of a depression is “via needless and cruel bankruptcy, unemployment and starvation”[11]. The other method of reflating the price level is key to his argument. Controlling the price level, as the Federal Reserve started (but did not continue) under Roosevelt in 1932, via ‘open market purchases’ led to higher prices and businesses making profit[12]. He also mentions that deficit spending could help reflate these prices[13]. The attention to monetary policy is key – an expansion in the money supply will lead to an increase in the velocity of money and so would halt many of the subsequent maladies found in the above model.

While Fisher is very modest in his style of writing and clearly states that this paper is the first step towards more research in this area, there are, however, still problems with his theory. First of all he starts with the assumption of over-indebtedness and gives us a clue as to how this may begin (low interest rates, speculation of future profits) but he does not go into great detail. There are different types of indebtedness for different demographics and to simply put them altogether and label it ‘over-indebtedness’ is not necessarily pragmatic. Also, underpinning his theory is the idea of decreasing price levels but the link between deflation and depression is much debated. For example, in a study trying to find an empirical link, Atkeson and Kehoe[14] find that there is no (or in some cases extremely weak) correlation between deflation and depression. If we define a ‘depression’ as a negative increase in GDP then looking at the USA and the UK over a 45 year period, we find that it is inflation (due to exogenous shocks e.g. oil shock) which leads to negative GDP growth:

Figure 1: UK and USA Inflation and GDP Growth Rates[15]

It is interesting to note that the recent “”deflationary boom” in China”[16] has led economists to reconsider whether deflation is actually bad for the economy:

Figure 2: China – Inflation and GDP Growth 1961-2007[17]

3. Hyman Minsky’s Financial Instability Hypothesis

Minsky drew inspiration from Keynes, Fisher and Kalecki in his analysis of financial instability. There are clear parallels to the work of Fisher – speculation, investment and debt. Minsky’s work is highly influential as it uses Fisher’s unregulated credit expansion which can cause the collapse of the financial system and offers another route out of the ultimatum of “Keynesian fiscal stabilisation or monetarist faith in the natural equilibrium of market economies”[18]. He also revolutionized macroeconomics by taking a “balance sheet approach to the relationship between the financial markets and business”[19]. For Minsky, both fiscal and monetary policy are ineffective, “not only because of the “trade off” between inflation and unemployment…but more significantly because of a strong tendency for an expansion to become an inflationary expansion which, in turn, leads to an incipient financial crisis”[20]. He also feels that the economic theory was not sufficient to predict or explain financial crises and instability as it “offers an explanation of serious business cycles…[and]…stagflation that goes beyond the money supply, the fiscal posture of the government or trade union misbehaviour”[21].

However, to appreciate this model, we must understand the Kalecki roots which forms its foundation. The essay will then look at the model showing the similarity with Keynes and Fisher.

Starting with Π = I and assume that workers spend all they earn on consumption and profit receivers do not consume then;

And that the causation runs from I → Π

Then:

Π* = (1/1-C)(I+DF-BPDF-SW)

Where Π is profit, I is investment, C is consumption, DF is government deficit, BPDF is the balance of payments deficit and SW is the saving by workers.

This shows that profits are determined by social, political, psychological and economic variables via their affect on I, C, DF, BPDF and SW as opposed to just technology (which is assumed the case in the neo-classical framework).

This view of profits as a cash flow “naturally leads to an analysis of the different roles played by profits in a capitalist economy”[22]. For Minsky, profits are the key to a capitalist economy; they determine present and future investment as well as validating past investment decisions. Fluctuating investment could lead to a financial crisis whereby at sufficiently low levels investment, output, employment and thus profits, certain financial commitments cannot be paid through the usual sources. But why would investment fluctuate?

Minsky offered three different types of financing which would all yield different returns. Toporowski offers a concise description of these financing structures[23]:

“commitments to make future payments covered by a certain income stream are ‘hedge’ financing; commitments to make future payments which may or may not be covered by future income are ‘speculative’ financing structures; while commitments to make future payments which can only be covered by issuing new liabilities, such as borrowing, are ‘Ponzi’ financing structures.”

In a period of tranquility where the economy is close to full employment, Minsky suggests that the insurance of holding money would fall. This would increase the price of capital assets and so a shift to higher risk (but potentially higher reward) speculative or even Ponzi financing. This would increase the finance needed “by the increased investment demand that follows a rise in the price of capital assets”[24]. As an economy moves towards the riskier speculative and Ponzi financing structure, the economy becomes more sensitive to interest rate changes. As a result, Minsky’s transmission mechanism is as follows:

An increase in investment demand will lead to an increase in profits which, in turn, will increase the price of capital assets.
This increase in profits and price of capital assets will lead to an increase overall, of investment → BOOM
The central bank will intervene in order to control inflation
Due to inelastic demand and supply for investment leads to a rapid increase in short-run interest rates.
This increase in interest rate will increase the price of supply of investment.
The increase in short-run interest rate will also lead to an increase in the long-run interest rate which will decrease the present value of profits.
A decrease in investment (from 5) will decrease profits
Decrease in profits leads to a fall in the price of capital assets which leads to a further decrease in investment.
With a fall in profits comes an inability to fulfill financial commitments → INDEBTEDNESS
This indebtedness will lead to portfolios having an increasing speculative and Ponzi financing structure flavour.
FINANCIAL CRISIS

With this view of the transmission mechanism towards a financial crisis, Minsky’s main policy recommendations are to have a large government and a big bank. This large government can offset a decrease in investment with an increase in government deficit and the large swings in profits can be dampened and the big bank can act as a lender of last resort. These policy implications are, what Minsky argues to be, the reason as to why the USA has not fallen into the debt-deflation trap. Therefore, this explains why figure 1 has not strictly followed the Fisher framework. Also a cut in interest rates would improve the firm’s financial position and eases the cash flow problem which could create an increase in investment.

The similarities with Fisher (and indeed Keynes) can be seen in this model. First of all there is a clear distinction between current trade and future obligations à la Fisher’s dual price system. Another area is that the Financial Instability Hypothesis is an alternative to the neo-classical view that “the technical marginal productivity of capital generates profits”[25] which can draw parallels with Fisher’s work on this topic. On can also see how a decrease in profits will lead to a decrease in output/employment (Fisher) or investment (Minsky) and then how debt can drive risky behaviour and lead to a financial crisis.

Minsky’s analysis can be used with reference to the East Asian crisis (which many authors have discussed[26]) where “as profits grew, expectations of further profits expanded, which led to further flows of funds, in a speculative, endogenous development of expectations, confirming Minsky’s perspective. As debt was extended and speculative investment expanded, financial fragility in the Asian countries increased”[27].

However, there are limitations to Minsky’s theory. It does not take into account the self-financing investment – why does investment have to come from credit? Also, the basis of this model comes from Kalecki’s profit model; this is based on national income identities which are not necessarily realistic. Another issue is the principal agent problem which could lead to crises as opposed to this model. As Barnes points out, “while the FIH is underpinned by a microeconomic model of the financial management of a business, it does not recognize the differences between the company’s interests and those of its owners, the conflicts caused, the likelihood of informational asymmetry and its implications for accounting information”[28].

Woodford-Wicksell Theory of ‘Pure-Credit’

Woodford takes a very different theory of the economy where he models it without explicitly having the volume of money. It has a distinct Wicksellian flavour in so much as a pure-credit and a cashless economy could be considered the same thing[29]. His theory is “to develop a framework for monetary policy analysis that is firmly based on dynamic, optimising, general equilibrium analysis in a stochastic context while departing from real-business cycle assumptions by replacing the latter’s presumption of full price flexibility with an optimising form of nominal price stickiness”[30]. In Woodford’s analysis, “money does not matter since it is not integrated within the monetary framework that should be used by policymakers”[31]. As his model assumes no transaction frictions, the cashless economy can be considered as people have no demand for money as there is no risk for money to hedge. As will be highlighted when the model is formally shown, Woodford’s theory is based on microeconomic foundations. One advantage of such a model is to try to make it “immune to the Lucas critique”[32].

The agents within his economy are: 1. a representative household (which is a price take and seeks to optimise his intertemporal utility function); 2. firms (price makers in a monopolistic setting, has Calvo pricing (supply and demand are both functions of price which is a general equilibrium feature), assumes to maximise profits and produces a single good with only labour); 3. central bank (fixes the level of the nominal interest rate on its liabilities in response of both the inflation rate and the output gap[33]) and; 4. the government (decides fiscal policy and can issue government bonds). Other assumptions include two frictionless markets and the financial market is perfectly complete.

There are three sections to his analysis has an IS-AS-MP[34] framework:

IS: links the expected output gap and the short run nominal interest rate to aggregate demand.

AS: links the rate of inflation to the gap between aggregate demand and the long run aggregate supply. This uses rational expectations which augments the old Phillips Curve.

MP: The monetary policy here is based on Taylor’s Rule where nominal interest rate is equal to the sum of the natural rate of interest (time varying real rate which would be obtained if the prices were fully flexible) and the inflation target. As a result, the actual inflation rate depends on the actual output gap and the expected value of the inflation rate in the next period. This would make sense because a positive output gap would lead to higher inflation because production costs would increase e.g. labour costs.

In this framework, money supply does not affect the economy, but interest rates do. This pure-credit economy arises because there is no money supply and so credit is automatically created to allow payments and transactions. In Fisher and Minsky it was the money supply which links with profit/debt and crises but as there is no money supply in Woodford’s economy, there would be no crisis. As there is no uncertainty in this model, there is no risk and so there is no need to hold money and the economy would reach equilibrium via the only transmission mechanism, interest rates. Both Fisher and Minsky saw the economy being in a permanent state of disequilibrium but it has mechanisms whereby it can stabilise itself. However, under the general equilibrium theory of Woodford, the economy can achieve equilibrium very readily.

This is by no means a theory which has not been criticised. Eagle tells us of four areas of contention with this model: “(1) Woodford’s assumption that his solution is bounded is inappropriate. (2) Any finite version of Woodford’s model is incomplete. (3) Woodford’s central bank does not control nominal interest rates. (4) Woodford argument that interest rates determine prices and that prices affect the interest rate is circular and hence invalid”[35]. However, it can be argued that this is not a one-size-fits-all theory. It has been stressed that the ““precise content of an optimal policy rule” will depend upon details of the adopted model of the transmission mechanism and thus are likely to be different for different economies”[36].

Conclusion

In reading Fisher and Minsky, one can draw distinct parallels. There is a clear distinction between current trade and future obligations as seen in Fisher’s dual price system. Both theories are alternatives to the neo-classical view that “the technical marginal productivity of capital generates profits”[37]. Also the expansion of credit availability will lead to over-speculation due to financial commitments needing to be paid and thus highlights the fragility of the system. Both would offer intervention; Fisher would get the central bank to increase money supply while Minsky would prefer to let the large government intervene through fiscal policy spending in productive technologies. The contrast with Woodford, therefore, could not be any greater. For Woodford, the supply of money does not affect the economy and so there would never be a crisis (except from an exogenous stochastic shock). As a result, the mechanism whereby general equilibrium is reached is via the interest rate which the central bank can regulate. For me, Minsky’s analysis seems to have a lot of weight and his recommendation of having a big government and central bank (the latter as a last resort) will always be able to rectify a financial crisis. However, this is not necessarily the best option given the political arena economics operates in – using tax revenue to bail out banks is not popular. However I feel this is the only way to work – how does one tell a money lending institution to not lend to an individual/enterprise etc purely because it feels it is too risky?

[1] Toporowski, J. – ‘Theories of Financial Disturbance’ – Edward Elgar Publishing 2005 p75

[2] Fisher, I. – ‘The Debt-Deflation Theory of Great Depressions’ – Econometrica Vol. 1 No. 4 1933 p337

[3] ibid

[4] ibid

[5] ibid

[6] ibid p340

[7] Ibid p341

[8] ibid

[9] ibid p341-342

[10] ibid p346

[11] ibid p346

[12] ibid p347

[13] Toporowski, J. – ‘Theories of Financial Disturbance’ – Edward Elgar Publishing 2005 p77

[14] Atkeson, A. and Kehoe, P. – ‘Deflation and Depression: Is There an Empirical Link?’ Federal Reserve Bank of Minneapolis Research Department Staff Report 331

[15] Data from the ESDS website – World Bank World Development Index statistics

[16] Salerno, J. – ‘Deflation and Depression: Where’s the Link?’ – Ludwig von Mises Institution website

[17] Data from the ESDS website – World Bank World Development Index statistics

[18] Toporowski, J. – ‘Theories of Financial Disturbance’ – Edward Elgar Publishing 2005 p149

[19] ibid p143

[20] Minsky, H.P. – ‘The Financial Instability Hypothsis: A Restatement’ – Thames Papers in Political Economy p1

[21] ibid p2

[22] ibid p13

[23] Toporowski, J. – ‘Theories of Financial Disturbance’ – Edward Elgar Publishing 2005 p144

[24] Minsky, H.P. – ‘The Financial Instability Hypothsis: A Restatement’ – Thames Papers in Political Economy p16

[25] ibid p12

[26] See Wolfson, M. – ‘Minsky’s Theory of Financial Crises in a Global Context’ – JOURNAL OF ECONOMIC ISSUES Vol. XXXVI No. 2 June 2002 and Kregal, J. A. – ‘Yes, “It” Did Happen Again- A Minsky Crisis Happened in Asia’

[27] Wolfson, M. – ‘Minsky’s Theory of Financial Crises in a Global Context’ – JOURNAL OF ECONOMIC ISSUES Vol. XXXVI No. 2 June 2002 p396

[28] Barnes, P. – ‘Minsky’s financial instability hypothesis, information asymmetry and accounting information: the UK financial crises of 1866 and 1987’ – SAGE Publications Vol 12(1): 29–53 p29

[29] This debate over the differences between Wicksell and Woodford is too long for this essay but is nonetheless very interesting.

[30] McCallum, B. – ‘Michael Woodford’s Interest and Prices: A Review Article’ – Carnegie Mellon University and National Bureau of Economic Analysis 2005 p2

[31] Barbaroux, N. – ‘Wicksell and Woodford: a Cashless Economy or Moneyless Economy?’ 2007 p9

[32] McCallum, B. – ‘Michael Woodford’s Interest and Prices: A Review Article’ – Carnegie Mellon University and National Bureau of Economic Analysis 2005 p2

[33] Barbaroux, N. – ‘Wicksell and Woodford: a Cashless Economy or Moneyless Economy?’ 2007 p11

[34] ibid p13

[35] Eagle, D. – ‘Multiple Critiques of Woodford’s Model of a Cashless Economy’ – Eastern Washington University 2005 abstract

[36] McCallum, B. – ‘Michael Woodford’s Interest and Prices: A Review Article’ – Carnegie Mellon University and National Bureau of Economic Analysis 2005 p25

[37] Minsky, H.P. – ‘The Financial Instability Hypothsis: A Restatement’ – Thames Papers in Political Economy p12

[Via http://commenttoday.wordpress.com]

When spite is also expensive

2010-01-29T12:38:00.000+02:00

Responding the news that the gay marriage ban costs Australia $700 million (a year, I guess), a twitter user asks:

Oh this is a tough one… Does the government hate gays more than they love money??

The answer, of course, is “yes”. Yes, the government “hates” gays more than they love money.

Or, more precisely – they love bigot votes more than they fear losing greedy votes, which they secure in other ways.

It’s a pity, really, because there are actually more non-bigot votes out there, if anyone other than the Greens would care to represent them.

[Via http://anonymouslefty.wordpress.com]

Henry David Thoreau--Walden Pond and On Civil Disobedience--Videos

2010-01-29T04:34:00.000+02:00

Thoreau & Walden Pond

Iconoclastic Individualism – Henry David Thoreau (part 1)

Iconoclastic Individualism – Henry David Thoreau (part 2)

Iconoclastic Individualism – Henry David Thoreau (part 3)

Thoreau on Civil disobedience

Background Articles and Videos Related Posts On Pronk Palisades Philip Bobbitt–Terror and Consent–Videos Patrick J. Buchanan–Churchill, Hitler, and The Unnecessary War–Videos Jonah Goldberg–Liberal Fascism–Videos George Lakoff–Videos Andrew C. McCarthy–Willful Blindness–Videos Peter Robinson–Conversations With Authors–Videos Amity Shlaes–The Forgotten Man–Videos Thomas Sowell and Conflict of Visions–Videos Thomas Sowell On The Housing Boom and Bust–Videos Marc Thiessen’s Courting Disaster–A Clear and Present Danger To The American People–President Barack Obama!

[Via http://raymondpronk.wordpress.com]

What Is "Old" Is "New" (Or "Sioux")

2010-01-27T20:16:00.000+02:00

The BBC, providing free advertising “reporting” on a “report” which “investigated” whether it is even possible to battle “climate change,” composed by a group calling itself The New Economics Foundation (a name which, presumably, is not meant to evoke recollections of Lenin’s “New Economic Policy”):

…None of the existing models or policies could “square the circle” of economic growth with climate safety…

…In the report, Growth Isn’t Possible, the authors looked at the main models for climate change and energy use in the global economy…

And the “report” came to the conclusion that economic growth is — as if its title didn’t give it away? — out of the question if we are simultaneously serious about arresting “climate change.” Still, all is not hopeless. There is perhaps one way forward:

…The report concluded an economy that respected environmental thresholds, which include biodiversity and the finite availability of natural resources, would be better placed to deliver human well-being in the long run…

The BBC did not share with us any historical example from the NEF “report” of a “better placed” economy which had. Despite that unfortunate oversight, this blog immediately thought of one possibility. And in the absence of any others, it could well serve as something of a model — although, it is of course also arguable as to whether it really did indeed “deliver” widespread economic “well-being in the long run”:

But assuming for the sake of argument that the Sioux managed it, and despite what that NEF “report” calls for, precisely how 7 billion people will subsist almost entirely off hunting — especially when hunting is increasingly judged beyond the moral pale — is difficult readily to envisage.

And especially when, as USA Today tells us:

Among 21 social and economic issues, global warming ranks last as a top priority to Americans, who view it as increasingly less urgent, according to a survey released Monday by the Pew Research Center for People & the Press…

For if we can but only rarely in life assert “the politics is settled,” the above certainly looks as if “the politics” preclude any effort anytime soon to implement a global return to hunting and gathering.

[Via http://atlanticcrossings.wordpress.com]

A good news story

2010-01-27T12:44:00.000+02:00

Thought that I would add some good news to this blog for a change today – because we all like to hear that.

A Guardian article has highlighted how 39% of CEOs will be looking to increase their workforce in 2010, according to a PwC survey. Just a word of caution though in this happy tale – 25% planned yet more job cuts – but on the plus side this is down from nearly 50% last year. However, there is still expected to be no early end to high unemployment – CEOs adding jobs are often expanding their workforces by 5% or less.

Still, things are looking a lot better than 12 months ago. Overall, 81% of CEOs worldwide are confident about revenue prospects for the next 12 months, up from 64% a year ago.

Companies that have weathered the downturn in reasonable shape are now looking for opportunities to move ahead of rivals, as evidenced by Kraft Foods Inc’s acquisition of British chocolate maker Cadbury Plc.

So what does this mean for companies in terms of their IT development? Well basically there is a big window of opportunity over the next 12 to 18 months, and there are big bargains to be had by getting in early. Now is the time to look at new and emerging technologies – things like the Cloud and Silverlight – and ensure that you are ahead of the curve as things start to pick up. Seems like in 2010 there is all to play for

[Via http://businessbytes.wordpress.com]

What is fractional-reserve banking?

2010-01-27T04:48:00.000+02:00

Banks create money by practising fractional-reserve banking in which banks keep only a fraction of their deposits in required reserve (normally 10% of the deposits) and lend out the remainder, while maintaining the simultaneous obligation to redeem all these deposits upon demand. Example, for every amount of deposit, the bank will loan out 90% of the deposit as excess reserve and keeping the remaining 10% as required reserve. This process is called multiple deposit creation or chequebook money. Each of the process of money multiplier ended when all excess reserve have been absorbed into required reserve.

Fractional reserve banking benefits the economy by providing regulators with powerful tools for manipulating the money supply and interest rates, which many see as essential to a healthy economy. It also can help the government to finance its debt.

[Via http://oystercove.wordpress.com]

Ron Paul: Legalize Competing Currencies

2010-01-25T20:46:00.000+02:00

By Ron Paul,

Much has been made recently about the supposed economic recovery. A few blips in a few statistics and many believe our troubles are all over. Of course, they have to redefine recovery as “jobless” to account for the lack of improvement on Main Street. But the banks have money, Wall Street is chugging along, and the administration would like to get on with other agendae.

They have even set up a commission to investigate the crisis as if it were all in the past.

The truth is that Americans are still losing jobs, the Fed is still inflating, and more regulations are in the works that will prevent jobs and productivity from coming back. We are on this trajectory for the long haul. The claim has been made many times that this administration has only had a year to clean up the mess of the last administration. I wish they would at least get started! Instead of reversing course, they are maintaining Bush’s policies full speed ahead. They are even keeping the Bush-appointee in charge of the Federal Reserve! They are not even making token efforts at change in economic policy. And for all the talk of transparency, we hear that some powerful senators will do all they can to block a simple audit of the powerful and secretive Federal Reserve.

We have been on a disastrous course for a long time. The money supply has doubled in the last year, our debt is unsustainable, the value of the dollar is going to continue its drop, and those Americans who understand where we are headed feel helpless and held hostage by foolish policy makers in Washington. When the bills finally come due and the dollar stops working we are in for some real social, economic and political chaos. That is, unless we take some major steps now to allow for a peaceful transition in the future. These steps are laid out in my legislation to legalize competing currencies.

First of all, no one should be compelled by law to operate in Federal Reserve notes if they prefer an alternative. We should repeal legal tender laws and allow Americans to conduct transactions in constitutional money. Only gold and silver can constitutionally be legal tender, not paper money. Instead, it is illegal to conduct business using gold and silver instead of Federal Reserve notes. Simply legalizing the Constitution should be a no-brainer to anyone who took an oath of office. Consequently, private mints should be allowed to mint gold and silver coins. They would be subject to fraud and counterfeit laws, of course, and people would be free to use their coins or stay with Federal Reserve notes, as they see fit. Finally, we should abolish taxes on gold and silver, which puts precious metals at a competitive disadvantage to paper money.

The Federal Reserve is a government-sanctioned banking cartel that has held far too much power for far too long and is in the end stages of running the dollar into the ground, and our economy along with it. The very least Congress can do, if they are not willing to abolish the Fed, and perhaps not even conduct a serious audit of it, is to allow citizens the freedom to defend themselves from being completely wiped out by their monopoly power.

Legalize Competing Currencies originally appeared in Ron Paul’s Texas Straight Talk on 25/01/2010.

[Via http://freethemarketman.wordpress.com]

Banking, shadow banking, money

2010-01-25T12:53:00.000+02:00

Whatever you think about the Bank of England’s behaviour over the crisis, the quality of its publications and speeches has been exemplary. The Financial Stability Report and Inflation Report are essential reading, while the speeches tend to highlight important and often complex issues better than I have read elsewhere.

For those of you who like to see the Financial Crisis in Manichean terms*, such publications are bad news: they show you so much about the systemic fragilities that the soaring language of good, evil, injustice and so forth can seem somewhat silly afterwards. For example, ‘The Role of Macro Prudential Policy’ has a wonderfully succinct taxonomy of the ways that rational economic activity can sum up to systemic fragility; how we can all be doing our jobs correctly as we see things, and yet the whole caboodle** can be tottering on the edge of disaster. Finding a single bunch of CEOs who between them crashed the car is futile.

Paul Tucker, who is particularly responsible for Financial Stability, has made some ‘remarks’ on shadow banking, an essential component of this crisis. As a relative novice to banking, I have been puzzling over how it works, and found his speech useful – because it highlighted the very blurred lines between something acting like a bank and something that IS a bank.

Consider a primitive economy. Larry the Lord has £10 worth of Land. Peter the Peasant has £10 worth of Corn. Barry the Banker has £10 of gold. Now imagine Larry wants to dig a well, and needs £5 of corn. Now, if a land-corn market does not exist, he has a problem. If neither Larry nor Peter trust each other enough, and absent some sort of financial system, no well is dug, economic activity is lower. Shame – because Larry is a useful entrepreneur, and rich enough, but just not liquid enough.

Stage 1: banking solves the problem

But Barry is a banker. He offers to lend £5 of gold to Larry on security of half his land. Larry then buys off Peter his £5 of corn. Peter deposits the £5 back with Barry

- Larry’s balance sheet is then: £10 land; £5 corn, £5 owed to Barry.

- Peter’s is: £5 corn; £5 of ‘M’, which signifies a deposit with Barry.

- Barry’s is: £10 gold, £5 owed by Larry; £5 owed to Peter in the form of deposits.

Because this is a static example, everyone is as rich as before – they are each worth £10. But because deposits with Barry are counted as money, there is now more liquidity – another £5. If Peter wanted to buy something for £1, he could say to the seller “transfer £1 from my name to yours with Barry” – issue a cheque. This has huge advantages over having to haul the gold over to the right person – particularly if they inhabit an economy with zillions of economic transactions to carry out, and not much gold.

Stage 2: shadow banking takes over?

OK. Now take this position as a starting point. Imagine, too, that Barry is now as exposed to Larry as he feels comfortable with. But Larry wants another £5 loan against the rest of his land, having decided to make the well deeper. In comes Danny the dealer. He promises to get the money for him. He issues a bond, which promises to repay £5 in a few years’ time. Peter buys the bond, by which we mean, transfers his deposit at Barry’s bank over to Danny. Danny then offers to lend this to Larry, who buys more corn off Peter, by transferring that deposit to Peter.

Now what do we have?

- Larry: £10 of land, £5 owed to Danny, £5 owed to Barry, £10 of corn

- Peter: £5 in terms of a bond, £5 deposit at Barry Bank

- Barry: £10 gold, £5 owed by Larry, £5 deposit owed to Peter

- Danny: £5 bond owed to Peter, £5 loan owed by Larry.

The money in the system has NOT gone up. In those strict terms, we are not more liquid. Money at Barry has not gone up, and gold has not been created. But like in the first stage, the resources have been transferred to Larry to get started on some economically useful activity.

You can see that in many ways these two stages are similar. They both seem to achieve the same things. But the distribution of risks is different; in stage 2, Danny has the risk that Larry digs a stupid well. Peter is still at risk if Larry screws up, but in Stage 1, he is owed by Barry, who has a fat buffer of gold; in my example, Danny has nothing, and might pass over a heap of losses to Peter if Larry screws up.

It is impossible, in the abstract, to say which of these ways of doing things is necessarily less risky. It depends on how much capital each actor has. If Danny set out on his business with £10 of gold, he might be safer, for example. The phrase ‘Shadow’ awakens the suspicions of those determined to see things in terms of good and evil, or sneakiness and honesty. Paul Tucker’s message seems to be that we need to consider all banking-like risk profiles – maturity and liquidity – and not just the formality of whether they are real banks.

On my part, such examples increase my scepticism about the obsession with increasing M4 or M4x or whatever else, that so motivates the pure monetarists. You can increase lending in an economy without touching that particular measure. It is possible over the next few years that economic activity will not track Broad Money so surely, as alternatives to banking come forth. Given how money growth is still disappointing (ht Bond vigilantes), we had better hope so . . .

[Via http://freethinkingeconomist.com]

Helping Haiti : just do it !

2010-01-25T04:48:00.000+02:00

Just a quick post to congratulate my children and their friends for raising $300 for Haiti today. It was simple and fun : baked goodies and lemonade on sale in Kennedy Park down at Coconut Grove, Miami.

The ingredients: eager kids, willing parents and sunshine…plus a table, a couple of chairs, and of course an amazing array of homemade baked cookies, brownies and cakes and water or lemonade.

The recipe : just set up somewhere central where passersby won’t miss you. The kids did all the selling…we parents just sat back and admired their selling skills, arithmetic, marketing know how and economic sense (“let’s sell four cakes on one plate, and then slip in an extra one for free”). To the suggestion that prices should be raised, there was a definite, “no, because nobody will buy if it’s too expensive”. Sales trips further afield were made with banners and loud voices. They learnt a couple of words in Spanish to conquer the hispanic clients passing by. Bill board advertising was adjusted to suit the product offer (when we ran out of brownies). Shift work was neatly put into place when people wanted to take some time out to play.

To begin with, some of us parents had to restrain ourselves from invading their space and being too bossy…but gradually we all sat back and enjoyed some great adult time, only giving words of encouragement and help when needed.

The end result: lots of happy customers, 9 very happy (and a little worn out) kids, and $313 that we will send to Partner’s in Health.

So if you’re wondering how to make a difference, every little helps…just do it !

[Via http://caroslines.wordpress.com]

Clean Elections Commission fights to retain its unconstitutional power

2010-01-22T20:44:00.000+02:00

Passed a dozen years ago by voters responding to its slick name, the Citizens Clean Elections Commission created a publicly funded cash cow for statewide and legislative candidates. Those participating in the process are called “Clean,” creating the inference that traditionally funded candidates are “dirty.” That perception alone creates a compelling reason to engage in the process. The other, even more persuasive argument is that once a participating candidate qualifies by collecting the requisite number of $5 contributions, they get “free money” to fund their campaigns.

Proponents of the venture say it allows people who might otherwise not run for public office to do so. In return for the money, the candidates agree to participate in debates.

In the election arena having a message that resonates with voters should be the determinant of who rises to the top and generates support. Campaigns are not welfare, but in the case of publicly funded “Clean” elections candidates, that is exactly what it becomes. Taxpayers are compelled to finance, to the tune of millions of dollars, candidates with whom they might vehemently disagree.

And the “matching funds” provision actually penalizes traditional candidates who raise funds, by allowing substantial infusions of public money to be added to the campaign coffers of their publicly funded opponents. Recently, three Arizona elected officials filed an amicus brief in opposition to this “trigger provision” in Connecticut’s law.

Yesterday, a federal court judge — erroneously called a superior court judge in the commission’s press release — ruled that the matching funds provision is unconstitutional and will not be available for the 2010 election cycle. The Commission is appealing Judge Roslyn Silver’s ruling to the liberal Ninth Circus Court of Appeals — the most overturned court in the nation. The commission is distressed that a number of candidates have already qualified for the public funding.

The issue of timing is irrelevant, since there is never a time that would be agreeable to the commission.

There is another, even more insidious aspect of the so-called “Clean” Elections Commission. The unelected panel has the ability impose hefty fines and remove duly elected officials from office, and has, to date, done so twice. Arizona stands alone among the 50 states with having to endure such an overreach.

[Via http://seeingredaz.wordpress.com]

Reflections on the Supreme Courts decision

2010-01-22T12:51:00.000+02:00

This morning, I find myself far more concerned about the implications of the Supreme Court’s recent ruling on corporate money in campaign finance than I am about the Massachusetts Senate election. In yet another damaging blow from the Bush administration, Bush appointees have tipped the scales just enough to overturn decades of limits on the money corporations can spend in elections, and now the gloves are off.

The new power of corporations to influence the election of national and local politicians, judges, and other officials is staggering, and extremely dangerous to the environment, consumer health and safety, and any other cause that corporations find inconvenient in their search for profits. The results of the financial industry’s long campaign for deregulation may seem quaint compared to the catastrophes that might arise as a consequence of this decision.

I don’t think it will take too long for the public to recognize the poisonous effect this will have on the political system, but it will take years to correct it. I feel like we’ve entered a whole new era of personal responsibility for consumer choices as the only effective curb on corporate behavior is consumers who choose not to do business with companies behaving unethically. We need to be increasingly aware of who we are in bed with, and what they are doing with the money they give us. We need strong transparency requirements attached to corporate campaign spending, distributed in a manner that supports ethical consumer choice.

More than ever, I feel the weight of the political in every purchase.

[Via http://moresustainableme.wordpress.com]

More Obamanomics Lessons

2010-01-22T04:50:00.000+02:00

By Kevin C. Donnelly

Obama talks, the markets listen. From Market Watch:

The dollar gave up earlier gains in afternoon trading on Thursday in a volatile session marked with conflicting signals from economic data, and stocks dropping as President Obama outlined plans to rein in banks. "Talk from the president of a major overhaul of how banks can operate appears to have scared foreign interest away from the greenback," said analysts at Action Economics.

I have written before about Obama’s horrific plan to handicap financial institutions and drag down the economy. Today, Obama took some time and expanded on his tax raising, job killing scheme and the markets, as expected, responded negatively. It’s a shame those “fat cats” in the White House don’t have a 401(k) like the vast majority of Americans, or maybe they’d have been personally affected by this proposal like so many us have and will be should this idea pass.

Fox News has a bit more of the detail of his plan:

Obama is placing a new emphasis on Wall Street regulations, with a goal of limiting the financial sector to smaller, less interconnected firms.

…

The proposal would seek to limit bank consolidation and ensure that banks, and financial institutions that contain banks, cannot invest in hedge funds or other funds "unrelated to serving customers" for profit.

I have a goal too, to make government less complex, small, and less interconnected to the rights of individuals. Of course that goal makes sense and empowers individuals and embraces the free markets. Therefore, do not expect any liberal to endorse that particular idea.

All financial transactions involve risk and every single corporation has a duty to its owners (the shareholders) to maximize profits. Financial decisions are based on a risk/reward matrix and each individual falls somewhere within this matrix. You are willing to accept a certain level of risk in order to reach a certain level of POTENTIAL profit. This is understood. Now, however, Obama is essentially saying that owner of a corporation and the individuals who are consuming this product (in this case banking products) should not be allowed to make decisions based on their own needs and risk levels. Additionally, the taxes Obama is proposing will be directly passed on to the American consumer, it is simply a lie for the Administration to state otherwise. Furthermore, this will limit the freedom and choices available to consumers. This is socialist, or at perhaps statist, but it runs counter to freedom.

Lastly for tonight, let me just mention that the Associated Press and every other liberal outfit in the land needs to pull their heads out of the sand and recognize that the economic policies that Liberals have imposed on this country are a complete and utter failure. They have damaged our nation and put us into a depression. Further, more, articles such as this one, where initial claims for unemployment increase yet again, are not “unexpected.” This is precisely what I and others have long said would continue to happen as government intervention hampers the ability of the economy to rectify itself through the free market. As I have long said, the economy will recover in spite of, and not because of, the role of government in the marketplace.

[Via http://toourrepublic.com]

All Of That Bribery In Vain!

2010-01-20T20:44:00.000+02:00

Just as the opinions from our two conversations with Massachusetts people this A.M. probably did not include ALL of their opinions on how they voted, the auto industry demise is a lot more complicated than just poor design, sloppy construction, or union problems.

No one can say what portion of the final problem each contributed, but all contributed.

The poor design was solved about a decade ago. The sloppy construction BEGAN to be solved about a decade ago, and many American cars now surpass Mercedes in quality of fit and finish – which may not be saying much because Mercedes has slipped badly for a decade.

The union problem was and is a pervasive problem. Management didn’t address it because it was easier to kick that can down the road, until there was no more road to kick it down. Unions had no incentive to address it because that is not in their DNA (they only want “more”), and now they have been rescued by a political bribery team.

Good fortune abounds for the unions, but not necessarily for their rescuers. The public bribe money going to them, and Nelson and Landrieu has aroused the public ire.

There is a political price to pay, and that price has not been completed. Here is the bad news: Unions, Nelson and Landrieu may have lost their reputations by giving support where it was not needed because the Healthcare bill as it now stands, may fall into something that has such bi-partisan support that their support was never necessary!

Reid bought a 60th vote several times, destroying himself and the Democratic Party in the process for something that may not even be needed! President Obama bought union peace for a Healthcare Bill that may never end up even trying to address taxation of “Cadillac” plans, destroying his reputation and his administration for NOTHING!

Karma!

[Via http://usna1957.wordpress.com]

Foreign Migrants in Taiwan and Japan: A Comparative Analysis

2010-01-20T12:07:00.000+02:00

Abstract:

Taiwan and Japan share the related problems of an aging population and low fertility rate, both of which have contributed to labor shortages in their nations. Although the two countries have been importing workers from abroad to compensate for labor shortfalls, Japanese descendants from South American countries and mainland Chinese have become the dominant alternative labor force in Japan, while in Taiwan migrant laborers largely come from Southeast Asian countries such as Vietnam, Thailand and the Philippines. Do migration trends into Taiwan and Japan have anything in common given the two countries’ differing cultures and sources of migrants? What role do Chinese migrants play in both cases? To answer these questions, this paper examines labor importation in Taiwan and Japan by discussing the immigration policies of the two governments and comparatively analyzing the impact foreign migrants have had on Taiwanese and Japanese society.

http://wp.me/pISTJ-3m

Author: Kenji Kaneko

Asia Journal of Global Studies, Vol 3, No 1 (2009)

For Full Text: http://ajgs.org/index.php/AJGS/article/view/49

Subscribe to this blog, A Sense of Place: http://lbwedes.wordpress.com/about

[Via http://lbwedes.wordpress.com]

Word on the Street

2010-01-20T04:15:00.000+02:00

According to the UN World Tourism Organization, global tourism is set to rebound in 2010 after the economic crisis and swine flu pandemic produced “one of the most difficult years” for the sector. “2010 will be transformational year” for world tourism, UNWTO Secretary General Taleb Rifai told a news conference called to present the organization’s annual World Tourism Barometer yesterday. The report said international tourist arrivals fell by an estimated 4% in 2009, to 880 million, but should recover to grow by 3%-4% in 2010. It said growth in the sector returned in the last quarter of 2009 contributing to better than expected full-year results, led by the Asia-Pacific and Middle East regions.

Reference Source: Agence France-Presse

[Via http://youngragingbull.wordpress.com]

218. A turning tide - from Houston to Copenhagen

2010-01-18T20:50:00.000+02:00

June in Houston. It’s 99F outside as we wait an hour at immigration.

A glossy US arrival video is playing on a giant screen above our booth, but we have to wait an hour and offer all our fingerprints before we’re free to pass.

Welcome to America.

Obama’s America — but has it really changed?

The freeway towards the city looks just the same. A little less traffic perhaps.

Wide blue skies are yawning wide above the endless sprawl beside the road. The downtown towers inch nearer across the final swoop of our 5,000 mile journey to reach The Loop.

In the hotel at last, I flop my bag and body down and switch on the TV. There’s a programme showing all about energy costs, and today’s phone-in prize is (quite remarkably) a free green audit of your home.

And it strikes me that I’ve never heard that stuff in Texas before.

All fresh and showered by sunset, we walk on Main Street to find a place to eat. It’s hotter than July this evening, but after ten hours in an aluminium tube we’re in no mood for air-conditioned civility. Some al fresco nachos, a cold beer and a simple plate of enchiladas are all we seek.

We find them at Cabo on Travis. A perfect terrace to catch the steamy breeze of sundown.

And then unexpectedly, outside the restaurant, I find that change again. A parked Mini, with just the perfect bumper sticker. Actual Size.

* * * * *

The morning is always slow in coming, when you wake six hours before the day.

Finally, the sky lightens and we’re running down the sidewalk. Right on Main Street, left past Cabo and onto Buffalo Bayou’s footpath beyond.

It’s perfect running. If you want to catch America, look above you at the looping freeways. Cast your eyes across the sunrise to a city touching clouds beyond the morning bayou.

We run on to find another bridge. Eventually, I ask a runner. No problem — about a mile ahead, she says. And then, mysteriously,You have to go to war.

Her words puzzle me. Because that’s bloody cryptic, from an American to a Brit. We were there with you in Iraq, you know. Even if we didn’t really want to be. But perhaps she means the running — and if she does, then that’s exactly right. In the morning summer heat, a war is precisely how this feels.

The sun is fully up now. We run east towards a distant skyscraper, and finally beneath it, we find our bridge. Waugh Street.

We laugh our way across the bayou as I look up. I’ve never noticed this tower before, but now the corporate logo screams its tale to anyone from anywhere around the globe. It’s AIG.

It’s three miles back to downtown Houston — towards the searing sun — and amidst my struggle I start to wonder. Can America really change?

It’s early days, here in the energy capital of the world. But there are signs. A little less traffic, a smaller car or two. A feature on energy saving on Texan television. A lonely logo on single skyscraper which symbolises the changing financial climate of this world more strongly than any other image I know.

And suddenly it seems that the tide is turning in this battle, after all.

Copenhagen still lies six months ahead, and a positive outcome may be too much to hope for. But a narrow definition of success or failure at a single conference — however momentous — perhaps that’s not the issue.

The real news this morning is that the world has changed. For now, at least, the economic horizon is painted a different colour.

And on energy and this steamy climate, America will engage.

Related articles:

174. The hidden history of Texas – on Buffalo Bayou, Houston, USA

195. The arc of history – USA election 2008

210. The price of oil: 3 – energy economics and the financial crisis

182. The truth about global warming

110. The hands that built America – Houston skylines

133. Tomorrow – Avril Lavigne and global warming

105. A crisis of energy

193. Through the Gherkin’s glass darkly – nightfall and fear in the City of London

[Via http://roadsofstone.com]

“The Prejudice of Race alone…”

2010-01-18T04:32:00.000+02:00

Capitalism Haiti is no longer the least known poorest nation right off our coast. It is now an attraction of general liberal piety (which in most cases leads to helpful aide, but in some can lead to futile and knowing condescension) and particular conservative ideological fixation. What does an idea need to be considered truly pure? It needs an example of success, a proving ground. The geographical, ecological, and political Lockean “blank slate” unto which can be drawn conclusions about the ideological concepts that are en vogue as a grand explanation for some aspect/s of human activity. What better then a earthquake ravaged (thought style potentially viable) hellscape? With the plethora of aide, charity, and money flooding into Haiti since the aforementioned disaster, conservative American politicians and their economic high capitalist high-priests are using the occasion to highlight their beliefs on the “free” market and poverty alleviation and elimination.

Or rather how the free-market should take the place of poverty alleviation etc. There is no problem of any size or scope, we are told, that cannot nor should not be solved by the more rigorous promotion of western style free-market corporatist/capitalist economics and philosophy. Why help a people who do not have the will to help themselves? The free market, through its greatest manifestation the corporation, should do the work that corrupt and overbearing big brother governments. What better way to help the under motivated masses of the former slave nation. A conservative political action committee with the inane sounding name National Alliance For Liberty and Freedom had this to say about why Haiti is the terrible place to live that it is in a petition they are sending to the White House: “…Further, any donations to Haiti will only serve as a “moral hazard”, in effect underwriting their bad choices. Haiti had some of the highest tax rates in the Western Hemisphere, hampering the natural innovation of its citizens and making it difficult for corporations – today’s engine of prosperity – to operate in that country. Their rules and regulations were among the most onerous as well, preventing true innovation to occur. Without such onerous rules and high taxation, Haiti could have been a thriving commercial center able to better withstand the earthquake and its aftermath.”

An interesting position, as it is largely because of the civil government imposed upon Haiti by its former occupiers the United States and its Military Industrial/Corporate Complex. The implication therein is that the Haitian people are incapable of exerting any effort in regards to their own benefit because they have been stifled by an over bearing liberal government… I wonder if this is the same government that Conservatives have decried as near nonexistent and ineffectual to the point of being essentially non-existent? But we are ignoring the true, coded, meaning of the statement from the PAC quoted above; the not so subtle racist message of why a country populated mostly by blacks should be stricken with such poverty and misfortune. Conservatives and capitalists must play a dangerous and hypocritical game of bait and switch with the critics of its theories and its potential converts to the same. The true racism of the conservative capitalist theories is not just apparent in the ranting of demagogues Like Rush Limbaugh and Pat Robertson (the latter went so far as to suggest a sort of convoluted millenarian view of why Haiti is so trouble; some nonsense involving Devil Worship and a tinge of Imperialist nostalgia mixed with a religious fervor that will not be discussed hear as it deserves its own full treatment in another essay).

The more subtle incipient racism of the Reagan’s and their “welfare queens”, and the Bill Cosby’s and their “dead beat black dads” and baggy trouser wearing ghetto trash, is apparent just beneath the surface of the seemingly well meaning “concern” for the well being of the “inner city” poor who are now joined in absentia by the black Haitian people. For what are Haitians in the minds of most Americans but black, and poor? And this, to many in the conservative capitalist power structure, and the plebian reactionaries who mindlessly follow out of patriotism or ignorance, is an oxymoron of the highest order. So we are truly supposed to believe that the same people who like the columnist Cal Thomas believe that Haiti is “a cursed land by any definition”, believe at the same time that it is the vagaries of the Liberal “tax and spend” system of government that is the cause of all Haiti’s ills? We must remember that Haiti is populated by refugees of the “Dark Continent” another realm that can either be improved by capitalist pragmatism or be condemned as a misfit of geography, markets, and society.

When a society fails in its capitalist pursuits it is blamed upon a liberal bureaucracy and/or a “thug” culture that is seemingly a natural state of affairs in countries that lack that certain… Caucasian je ne sais qua. South Africa… better left to the whites. Ditto Zimbabwe and the former colonial centers in Africa and to a lesser degree the Indian Sub Continent. When the capitalist system succeeds it is because of the “bright minds” who lifted themselves out of squalor and deprivation (overcoming their natural place in the world?) in order to BECOME an exemplar of the sanctified corporate class. Why is it that when a disadvantage person of color succeeds he does so in spite of the poverty and the culture into which he is born, but the Caucasian does so by learning from the very same? We must therefore wonder whether the conservative capitalists have not already condemned Haiti and its people to their condition and use their seemingly well meaning suggestions and solutions as something of a mask with which to hide the true face of their greed and condescension?

For what are we to believe when the all giving corporate market system that is seemingly designed to save and better lives is described by Milton Friedman, one of the premier minds of the conservative/corporatist philosophical system, thusly: “When I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system,” I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously–preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting [sic] puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”

A free society undermined by the false idea that corporations should have any social conscience? But what is this blasphemy? Had we not been told by the heirs of Friedman that the market was the true source of human compassion and betterment in a world otherwise beset by “socialistic” liberal milquetoasts? We must realize one unpleasant, but essential, fact: conservative capitalist thinkers do not want Haiti to succeed as a nation, they do not want any “third world nation” to succeed without first their having established a well ordered aristocracy that can control the passions of the “natives” in a “free” market. In the eyes of the these capitalists those who were not born into a world that “nurtures” their urge to acquire and succeed in the ways the see as civilized and proper are doomed to a unfortunate, though deserved, slavery that will never end and indeed should never end. The Republicans, Capitalists, and Fundamentalists of the world sneer at the words of Haitian Revolutionary Toussaint L’Overture: “I was born a slave, but nature gave me a soul of a free man….” The only freemen in a capitalist system are those who learn quickly how to enslave others, and then blame that state of servitude upon the one lying in chains.

[Via http://lennemi.wordpress.com]

The Grecians and the Hyperboreans

2010-01-15T20:11:00.000+02:00

The united city-states of Greece is in trouble. And their hyperborean cousins to the north don’t want to help them. Germania has just asked Athenia to mind its finances. The Economic and Monetary Union (EMU) must be commended for imposing fiscal discipline on modern European civilization, the Platonic civilizational evidence about Europe’s Germanic antiquity being of uncertain nature.

Greece has violated the Maastricht fiscal criterion for the ratio of deficit to GDP and national debt to GDP. Greece is being asked to bring its annual deficit to GDP ratio back to under the 3% threshold from more than 4 times that limit and to bring its exploding national debt to GDP ratio back to under the Maastricht 60% limit from more than double that. Finally, the European Central Bank (ECB) in Frankfurt, the successor of the post-Nazi Bundesbank, ever hawkish about inflation, thought it was time to crack down. Still, there is something troubling about asking Greece to bring its debt into order for more than one reason.

For the EMU countries, who are already members, violating their own rules seems to be acceptable to the egregious extent that Greece has done, even as several eastern European countries have been waiting in line patiently to get into the EMU through the ups and downs of the European business cycle. Their de facto euroization has not convinced the European Commission (EC) in Brussels yet of their admittance into the EMU.

The sustainability of the EMU, a common currency area, is under stress. And this is a test for the EU to see if it can deal with the crisis, the first the euro is facing since its inception in 2001 as a common currency. In the United States, a single country, states with many electoral votes have the power to direct tax receipts at the federal level if their economies are not doing well. The EMU, however, as yet does not have that ability. Brussels has a highly inadequate supra-national fiscal structure which does not permit the EU to contribute to a common European fiscal pot and then to redistribute to countries that are in need of fiscal intervention without having to raise their debt level above the Maastricht limits. Without such supra-national fiscal policy the union could be under risk of dissolution.

ECB’s admonition of Greece to restructure its government expenditures is as necessary as it is for countries within the Maastricht limits in the EMU or in the EU-at-large to find ways to come to the aid of those that are faltering. At the same time it is important for countries which could falter to take corrective action in the run up to the potential violation of the treaties governing the union so as not to free ride on the fiscal welfare provisions of the union, should they be set up.

If the EU cannot figure out a way to save Greece, the quiet civil war could go on in Europe.

[Via http://ctamirisa.wordpress.com]

Two illustrations of a bust economy

2010-01-15T12:20:00.000+02:00

Credit card use for paying mortgages/rents and basic household bills is increasing, as is the cost of living beyond retirement age.

Here are two separate stories of gloom received today that are perhaps uncomfortably related:

House of Cards

More than one million householders used credit cards to pay their mortgage or rent in the last 12 months. A Shelter survey reveals the highest proportion of those who pay their rent or mortgage through credit card were from working class professions (8% of those in the C2DE social grouping), but the poll also showed that middle/upper class (ABC1 category) are also falling victim, with 4% of respondents saying they use credit cards in this way.

Although being a credit card tart is still possible for some of us, opportunities to increase or transfer balances are narrowing and availability of mortgage products remains tight. The buck is about to stop – and people’s homes will ultimately be at risk.

How much in old money?

The average retired household needs to find up to £429 extra a year to maintain the standard of living they enjoyed 12 months ago. MGM Advantage estimates the cost of living for the average home has risen by £670 or 1.85% over the last year. The annual household expenditure for a home where the main occupant is aged 65 – 74 is now around £23,107, compared to £14,926 for a household where the main occupant is aged 75 and over, and £36,889 for the average home.

Estimated expenditure (£) Commodity or service 65-74 75 and over All households Food & non-alcoholic drinks 3216.18 2233.69 3668.93 Alcoholic drinks, tobacco & narcotics 710.96 307.23 756.97 Clothing & Footwear 849.97 550.97 1696.84 Housing(net), fuel & power 2464.65 2323.80 3936.23 Household goods & services 1877.74 1217.17 2624.04 Health 465.35 301.64 371.61 Transport 2909.13 1414.30 5033.29 Communication 691.23 448.06 1103.94 Recreation& Culture 3701.04 1949.24 4433.14 Education - - 381.02 Restaurant & hotels 1612.86 896.12 2943.84 Miscellaneous goods & services 1603.33 1336.24 2926.45 Other expenditure groups 3004.14 1947.33 7012.27 Total Spent 23,106.58 14,925.78 36,888.58

——————————————–

Help is available!

If you are struggling to make ends meet, contact Community Legal Advice for your debt, housing and employment problems. They can also do a benefit check to see if you are entitled to Tax Credits or local and state benefits. Do it now!

[Via http://russellcavanagh.wordpress.com]

Wall Street Compensation

2010-01-15T04:43:00.000+02:00

The popular zeitgeist seems to be that we need to put a cap on Wall Street bonuses. However, I believe that everyone is missing the point. The real question is why banks are so profitable that they can give out huge bonuses at all. What should a company do with huge profits? Isn’t it more egalitarian in some sense to give it to the employees rather than the shareholders?

So why are banks so profitable? I can see at least three possible reasons. The first is that banks have very large fluctuations in revenue so in up years they reap huge profits but then they lose a lot in down years. However, since the government bails them out when they go down, they have an effective ratchet so that they only make money. The second is that the people on Wall Street are just so much smarter and talented that they just create more wealth. The third reason is that Wall Street banks have an effective monopoly.

So let’s break down these hypotheses. The first one probably has some merit because these banks take highly leveraged positions so that they can make a lot of money. If you borrow and bet big then you’ll win or lose really big. Getting bailed out whenever you lose sure comes in handy as well. I can’t fully buy the second explanation. I’m sure the people on Wall Street are very smart but I doubt that they’re a lot smarter than people in Silicon Valley, big pharma or academia, which are all less profitable (especially academia). A physicist on Wall Street can easily make (at least in the hey days) ten to a hundred times more than a full professor at a prestigious university but there is no way she is ten times smarter. Now some would argue that the professor may lack some personality traits that are necessary for success on the street (or they are unaware that they could be making more money) and that may be partially true but I think there are plenty of aggressive smart quantitative people that are not taking in huge bonuses. While the likes of Warren Buffet and George Soros are simply better than everyone else, their talents are nonalgorithmic and not what the big banks use to make money.

That then brings us to explanation three. There must clearly be barriers to entry and advantages for being big that the banks enjoy. If there were no such advantages then their would be more firms and more people on the street eroding the profitability. Microsoft does so well because it is a monopoly. The big three US car companies only did really well when they were an oligopoly. Google has an effective monopoly (except in China).

So what exactly are these barriers? Well I think one is that the fixed costs of doing business on the street are pretty high so being big gives you a definite edge. Small entities simply can’t compete because they lack the infrastructure, personnel and capital. Now, if the advantage increases as you get larger then you end up with a classic winner-take-all network. The firms that have a slight edge get bigger, which amplifies their advantage and that crowds out the weaker firms. Being big also allows you to make bigger bets. Repealing the Glass-Steagall Act, which separated commercial banking from investment banking, also gave an advantage to banks, because they had access to even more capital to leverage into even bigger bets. There is probably some collusion between the big banks as well to keep other firms out. Hence, it seems to me that if we want to curb Wall Street excesses then reducing bonuses is not the answer at all. That may be the only fair thing taking place on Wall Street. What we really should do is to re-institute Glass-Steagall and eliminate the monopoly power the banks have.

[Via http://sciencehouse.wordpress.com]

Review: Heavy Time, by C. J. Cherryh

2010-01-13T20:36:00.000+02:00

I know, I’m reviewing them in the wrong order, but it’s a reread review and I started out with Hellburner just because that was the book I remember liking the best.

It was not my first reread of Hellburner, either, but this was my first reread of Heavy Time. In retrospect I think that was because when I finished the pair I a) felt them to be very different, and b) while I had enjoyed Heavy Time I had enjoyed Hellburner more. Well, now is the time to admit it – I was wrong!

Hellburner does stand on it’s own. Yes. But – reading both of them is preferable; even recommended. At least by me.

Heavy Time tells three different tales, at least on the surface. It tells how Ben Pollard, Sal Aboujib, Meg Kady and Paul Dekker came to know each other. It tells about how small people are exploited by big corporations. And is sets the stage for the Company Wars suite, in which this is the first book, chronologically; sketching how the push to build the carriers affected corporations and small people both. While the perspective is intensely personal, often claustrophobic, it’s also more issue-oriented than it’s sequel; the politics are obvious there too, but the focus is on the people and what happens to them – that we might not agree, from a value judgement point of view, that sinking money in military tech aimed for use in a war Sol is doomed to lose is sane we still want the ‘program’ to succeed. Because that’s what the protagonists want.

In Heavy Time the we don’t get to see much of the military but they’re part of the “establishment”, and the “establishment” is presented as corrupt; as being backwards; as having the “wrong” ideas about what’s going on out in space – we view life from the eyes of the disenfranchised, the alienated and the outcast, with all what it means.

Maybe this difference between the books was what got to me the first time, and what made me decide I liked the sequel better. Today I’d say they are both good, both worth reading.

I recommend reading them back to back, preceded by a reading of Downbelow Station but prior to Merchanter’s Luck, Rimrunners, Tripoint and Finity’s End.

[Via http://reconsidering.wordpress.com]

Free-rider Businesses

2010-01-13T12:45:00.000+02:00

Over lunch the other day, Noah mentioned this really interesting product that was announced at CES. It’s called Airnergy and it somehow harvests the energy emitted by nearby WiFi signals and converts it into electricity that can be used to power and recharge various devices.

It reminded me of a concept I’ve been toying with for a while–free-rider businesses. Mancur Olson discussed the problem of free-riders and the incentives that produced them in his classic The Logic of Collective Action. Large groups have trouble creating public goods since each individual has an incentive to free ride on the efforts of others (since the good is non-excludable, meaning there isn’t a practical way to prevent specific individuals from benefiting from the public good once it’s produced). In many instances there will be individuals or small groups that have a large enough incentive to create a particular good, thereby creating the opportunity for their work to be exploited by free-riders. My thought was that there are some business that are free-riders, or at least benefit from this practice. Free-rider businesses are those that develop a product or service that relies in some significant way on the physical resources or creative content produced by others without providing compensation to those third parties or having helped create the resource or content themselves. In most cases, the third party resources serve as a critical input (sometimes even the main content) for a firm’s key product or service. The most obvious example of this type of firm is Google.

The core of Google’s business is to mine, analyze, and organize the massive amount of content produced by third parties on the web. In this way they are dependent on others to create a critical input, an input that they don’t pay for (Ed. although, the recent deal with Twitter is an exception to the rule). Media mogul Rupert Murdoch has publicly characterized the practice of news aggregators and, in particular, Google’s use of this content as “theft”. One can easily scan the Internet and stumble on other examples. Certainly the explosion of data and content that the Internet has facilitated creates an environment that is quite conducive for firms of this type.

The Airnergy product, on the other hand, would be an example of a free-riding device that relies on some kind of physical input or infrastructure. Airnergy is leveraging a preexisting infrastructure built and maintained by third parties who, to my knowledge, would not be compensated for the use of their WiFi networks. It’s as if the WiFi networks have become a massive public good that, after being established by a small group of actors that had a greater interest in their existence, can now be leveraged by all sorts of players free of charge. (I am still trying to figure out how this is not illegal.)

Noah and I tried to think if this was a trend unique to this time period or if there were historical analogs. We couldn’t come up with one at the time, but after some reflection I can think of a couple.

One would be the automobile industry. While manufacturers do not leverage some kind of input for their product they do rely on the physical infrastructure that makes car travel possible (i.e. roads, bridges, etc.). However, the difference here is that the physical infrastructure they rely on was established and is maintained by the government, who funds that work through taxation (which automakers must pay).

To be fair, the term has somewhat of a harsh connotation, and I certainly don’t mean it to. I’ve been struggling to come up with a term that more accurately reflects the relationship I’ve been thinking about. These businesses do provide something of value (to consumers, if not to the source of those inputs or the greater society at large). Additionally, these businesses are developing their own unique and innovative offerings that happen to leverage these inputs. For example, no one questions the innovative value of Google’s PageRank or the utility of LinkedIn or Facebook.

As I said, it was an idea I have been toying with and I am obviously still trying to work through the logic. Would be curious to hear others thoughts on this.

[Via http://billpetti.com]

Against Trafficking, of Whatever Flavor

2010-01-13T04:40:00.000+02:00

I winced when I saw this Columbus Dispatch headline – Call to toughen “slavery” law – but the article surprised me. In a good way.

An Ohio legislator, Teresa Fedor, is about to introduce a law that would make human trafficking a stand-alone crime and not just an adjunct to other crimes. She’s supported in this by Mark Lagon, head of the Polaris Project, for whom “trafficking” and “slavery” are apparently not just code words for cracking down on prostitution:

Lagon recommended that Ohio law be changed to make human trafficking a stand-alone crime and to include a broader definition that covers forced labor in addition to coerced sexual activity.

(Source, here and below: Columbus Dispatch)

Now, I’m not a big fan of prostitution. I think it enshrines a type of male privilege that I’d rather see die out: the privilege to avail oneself of a fuckable body at all times. I don’t see that as advancing women’s sexual autonomy. However, I really don’t want to see sex workers be persecuted for making choices that are rational and not, to my mind, immoral.

Nor do I want to see trafficked domestic workers (for instance) completely ignored because there’s nothing sexy about their enslavement. (As if forced prostitution might be sexy??!!?)

Also, I hate hearing that underage girls were arrested whenever a prostitution ring is busted. A thirteen- or fifteen-year-old girl is not mature enough to consent to sex work. She should be treated with kindness and helped to finish her education, not branded a law-breaking tramp.

Lagon said that Ohio needs to increase assistance, such as emergency housing, to trafficking victims, particularly juveniles.

“We don’t have a place to put these prostituted teens when we find them,” Lagon said. Too often, they are viewed as criminals to be locked up rather than victims to be helped, he added.

Of course, not all sex workers are victims. Many choose their work consciously and deliberately. Some enjoy it more than many other folks enjoy flipping burgers or scrubbing other people’s toilets. For of-age sex workers, the victim/criminal dichotomy is not especially helpful. Many of them are neither, and we need to find new language (like, um, worker?) to describe their status. That can’t happen, though, as long as they’re still subject to criminal prosecution.

So even the revised law in Ohio will fall far short of ideal – and that’s assuming 1) it passes 2) with Lagon’s preferred language. But it’s at least a start, in a state that’s usually quicker to judge than to empathize.

[Via http://kittywampus.wordpress.com]

U.S. Loan Effort Is Seen as Adding to Housing Woes

2010-01-11T20:33:00.000+02:00

U.S. Loan Effort Is Seen as Adding to Housing Woes

January 1, 2010 by PETER S. GOODMAN

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

[Via http://feltd.wordpress.com]

True Security

2010-01-11T12:47:00.000+02:00

Personal security.

Home security.

Financial security.

Job security.

Airport security.

National security.

All of these issues are important in today’s world. The papers have been filled lately with lapses in security from the White House Party Crashers to the Christmas Day Bomber; from our banks, to our jobs, to our home loans and our retirement funds. All of these issues have two things in common.

The first is that we should properly research, plan, prepare, execute and evaluate. We should research the pertinent information. We should make plans that are sufficient for our needs. We should do the necessary groundwork to be properly prepared. We should follow through on the execution of the plan. We should evaluate effectiveness and adjust as necessary.

The second is to realize that all of our best efforts can still be undermined.

True security comes from God. Proverbs 21:31 says “ The horse is prepared for the day of battle, but deliverance is of the Lord.” NKJ

I understand this to mean that it is appropriate for us to make all of the necessary preparations, that we are responsible to do what we can, but, that we should realize that ultimately God is our true security. Even as we are reminded by the phrase still on our coins, “In God we trust”. We would do well to remember that.

[Via http://cgirod.wordpress.com]

Econ: The family, women, and the economy [L4.4]

2010-01-11T04:33:00.000+02:00

WHAT IS REPRODUCTION FOR ECONOMISTS?

Most of us associate reproduction with romantic notions like love, commitment, patriotism, fulfillment, or sex. However, economists have a different view of reproduction. Remember, economics is the dismal science – it is known to make exciting ideas dull and dry. For economists, reproduction is the economic reproduction of the human race; it is the creation of new and productive workers and bosses.

Economists view reproduction more than as a biological process. Aside from the 9 month gestation period of most humans, economic reproduction also encompasses the sustenance, care, and training of people so that they can be productive individuals. To become productive, people must pass through the following developmental tasks: physical, cognitive or mental, and psycho-social. Reproduction does not stop with the raising of babies – it continues through adolescence (your mother calling on your cellphone to tell you are past your curfew) and adulthood (your wife preparing your daily baon.)

WHAT ARE THE ECONOMIC IMPACTS OF REPRODUCTION?

Most of the work that goes into reproduction is hidden at home. No money changes hands, no profit is made, and since it has no monetary value, it does not appear in GDP statistics. Most economists tend to ignore reproduction as a private, non-economic matter.

But remember what I told you about economics? Since you were born (actually, as far as back as the intention to bear you), your life has been circumscribed by work. Many of you come from families that support themselves through wage labor, thus, you are born into worker households. And worker households, by default, produce workers. Think of your family as a worker-making factory. You are the product, the would-be worker of the next generation.

You are not only a product, but an investment, and self-respecting households do their best to improve their investments. You are sent to school, given nutritious foods, allowed liberties for your social development, etc. Your parents work for you so that you’ll become better workers for yourself, or as an insurance against old age. Almost all the work that your parents do goes into you. In the past, when economic reality was harsher, families produced more workers or children of little quality (poor education, poor nutrition), but with the rising standards of living, families are now producing less workers of higher quality.

Most of the consumption that occurs in the economy also occurs at home. Indeed, many families sink into debt just to finance consumption (especially last Christmas season.) Little is saved except for higher-income families.

Lastly, aside from you, the most important investment of your family is the place where work occurs – the home. You are all fortunate to live within well-furnished homes that will soon become your property.

WHO DOES MOST OF THE WORK IN THE HOUSEHOLD?

Most of the work done in the household is done by women. Since they are not sold in the market, the work women do are considered as inferior to the paid work done by most men. Women do more unpaid work than men. Their job has less status or recognition. How we value work is sexist, and is influenced by a complex mixture of tradition, religion, media, economic pressures and even violence. Men who work outside the home are exempted from household chores, but women who work outside must “double shift.” Women work harder. Thus, the unequal relations between men and women are perpetuated.

As our standards of living increase, the contribution of women to the household lessens. Household tools make household chores easier. Manufactured goods replace the unpaid labor women do. Higher-income families hire people (gardeners, drivers, yayas, etc.) to do the work for them, with pay. The government also shoulders some the burden with day-care centers and public schools. However, though paid, work traditionally done by wives is valued less and is usually done by women.

Aside from pure discrimination our society imposes on women, women’s career prospects are also limited by domestic responsibilities and by pregnancy. The jobs where women are restricted (caring professions and service industries) are also low-paying. Women are reduced into a dependency with men, especially when their husbands overtake them – poverty rates among single mothers and pensioners are higher than the rest of the population. In our country, to be a single mother carries with it the economic pressure to provide for your children and the social stigma of being promiscuous. In fairness, our country is one of the most gender-friendly countries in Asia; Korean, Chinese, Japanese, Arab and Indian women are worse off (actually to be born a girl in Bangladesh is the worst.)

So, women, take care of yourself and never engage in a relationship where you become dependent or take-advantaged. Men, take care of your wives and your mothers – give them freedom and recognize how much work they do for you. The age of cloistered women are now over – now is the age for genuine equality and recognition of importance.

WHAT IS THE EFFECT OF POPULATION GROWTH ON THE ECONOMY?

Women give birth so it is no doubt that the real power over bearing children resides in the woman, not the man. However, many women are powerless against the sexual predations of their husbands. Uncontrolled sex often brings about pregnancy, and pregnancy has much to do with economics, particularly the labor force.

A high rate of population growth has the advantage of providing more workers for the country. However, the disadvantages often outweigh the advantages. The disadvantages of too high population growth are the following:

Rapid population growth leads to a high rate of unemployment.
Too many people depress resources and puts additional strain on the environment.
Jobless or unemployed people pose economic, social and political problems to their country.

Unemployment usually causes the vicious cycle of idleness and promiscuity, which leads to more children, and so on. Bearing too many children does not only pose great troubles to our country but also to the children themselves: their physical, cognitive and psycho-social development are often stunted by inadequate resources.

HOW CAN WOMEN IMPROVE THE ECONOMY?

Family planning means the limitation or control of the number of children a family will have. There are various methods of family planning from the one-child policy of China to the tax incentives that limit family size in many countries. Family planning methods are not the same as contraceptives or anti-STDs, but many of the methods of family planning (e.g. condoms) belong to one or all. Family planning is also concerned with spacing births. It has been proven that in countries where women are treated more or less equally as men, and where contraceptives are widely available and accessible, there were less unwanted pregnancies, less unemployment, and greater standards of living for all.

The following are some family planning methods:

Abstinence
Rhythm method
Coitus interruptus
Condom use
Diaphragm
Intrauterine devices (IUD)
Birth control pills
Sterilization (ligation and vasectomy)
Counseling
Late marriage
Abortion

Our country has a pro-life Constitution and it bans abortion as a means of family planning. The Roman Catholic Church also has a pro-life policy and further bans all forms of artificial birth control other than those which are preventive in nature.

CONCLUSION

This module discussed about household work. Reproduction is more than mere sex – it includes the continuing nurturing and improvement of human potential. Most of the work that goes into reproduction is done by women. Women are taken advantage by complex social forces and must seek genuine equality to lead better economic lives. Reproduction leads to new workers but too much of it has negative social consequences. Women are integral to the economic health of a country; wise childbearing and childrearing is fundamental to a productive labor force.

RIGHT-PRODUCTION

Reproduce

With the right person,

At the right time,

At the right place,

With the right means,

For the right reason.

WEEKLY ASSIGNMENT (due Friday, 15 January 2010)

Write a life plan, that is, your career and family plans until you reach 65 years old (retirement.) Be detailed with your plans and timetable. Include in your plans the course you intend to pursue in college, the age you want to bear children, the description of the person you want to have a family with, the number of children you want to have (you can include their names), the job you want to have, etc.

Make your work brief and concise. Use only one sheet of yellow pad (back-to-back if need arises.)

And, please, write legibly. You are allowed to computerize your work if your handwriting is too painful to read.

*****

Source:

Stanford, Jim. (2008). Economics for Everyone: A Short Guide to the Economics of Capitalism. London: Pluto Press.

[Via http://socscistudent.wordpress.com]

Will the 21st century revive family businesses?

2010-01-08T20:36:00.000+02:00

Will the 21st century revive family businesses?

Yeomanry making a comeback

Phillip Longman | Friday, 8 January 2010 Mercatornet

For reasons of technology, demography, culture, and efficiency, big is no longer necessarily better. Will the 21st century revive family businesses?

Two years ago in Warsaw, I had the great honor of speaking to this Congress about a global phenomenon that has come to be known as “The Demographic Winter.” A documentary by that title, much of which was filmed at the last World Congress, has done much to further spread knowledge of the reality I was addressing. But for those who are still unfamiliar with the Demographic Winter, I will briefly describe it here before adding some new thoughts on how it will affect, and be affected by, the great global economic downturn that began last year.

Many of us grew up amidst warnings of “the population boom.” And indeed, world population has doubled in my lifetime. Yet today, in nations as diverse as Italy and Iran, Lebanon and China, Canada, and Cuba, the number children born each year is no longer sufficient to replace the population.

The trend at first glance contradicts the notion taught by Darwin and modern biology that all organisms breed up to the limits of their available resources. Indeed, it was precisely among the world’s most peaceful, prosperous and well-fed nations where the phenomenon of sub-replacement fertility began, specifically here in Western Europe.

Yet Darwin could preserve his theory by countering that these slow-breeding segments of human population have simply become maladapted to their changing environment, including a manmade environment that often makes the cost of parenthood seem prohibitive to rational individuals. If we accept this hypothesis, does that imply that humans are on the road to extinction?

It would if fertility rates were falling below replacement rates consistently among all people, but that is not the case. Rather than facing extinction, we are facing a dramatic slowdown, and eventual decline in human population, accompanied by dramatic changes in its composition.

Why is this? Especially where childlessness and one-child families have become the norm, a larger and larger share of future population is produced by an initially narrow, but comparatively fast-growing segment of society. Specifically, in today’s low-birthrate countries, the next generation is overwhelmingly being formed by people who either reject or ignore the economic and social incentives that in modern nations have made large families not only unfashionable, but often prohibitively expensive.

Disproportionately, these people include those who are motivated by religious conviction to “go forth and multiply.” In modern societies, with their pension systems and other means of replacing the functions of the family, there has been little economic incentive to have children, and strong reasons not to. Thus, almost by default, what people have children, and especially those who have more than one or two, tend to be people who have non-economic motives to procreate.

Today, there is a strong correlation around the world between adherence to traditional Christian, Islamic or Judaic religious values and high fertility. The result is an emerging world in which in which the ancient, patriarchal values of these religions are becoming stronger, while secularism suffers demographic decline.

The current world economic crisis will most likely compound the trend, for a variety of reasons. The widespread loss of jobs and retirement savings gives a survival advantage to those who still have abundant human capital upon which to rely, specifically, strong, largely self-sufficient families in tight-knit, high-trust, self-financing communities. Under currently unfolding conditions, the “fittest” are those who invest heavily and successfully in building up strong families and local community support networks.

Many people may try to contend with their financial and economic losses by forming secular communes. History suggests, however, that families and communities bound by common blood and religious faith are more likely to succeed in fostering the necessary sacrifice of individualism and consumerism.

These changes we are living through are very scary, but they also, I think, have the long-term promise of restoring the economic basis of the natural family and renewing society generally. Seeing more specifically how this future might unfold requires dwelling briefly on a few poorly remembered traditions from the past.

In a recent issue of Foreign Policy Magazine, I have published a brief article entitled The Return of Yeomanry. This word “yeomanry” is now obscure in English, and may be impossible to translate into many other languages. But particularly in America during the 18th and 19th century, it stood for a clear ideal of human organization, which was small-scale production centered on a self-sufficient family unit.

One of America’s most prominent founding fathers, Thomas Jefferson, for example, wrote frequently the superior virtue of the country’s then substantial yeomanry, which mostly comprised family farmers who owned their own land and small family business owners.

Jefferson’s vision of America’s future was that widespread family ownership of small scale productive would remain the dominant form of social and economic organization, and that the influence of both Big Business and Big Government would be held in check.

Since then all manner of social philosophers in many different traditions and different generations, have articulated and defended this vision. It was the dream for example, of Pope Leo XIII. It was also the dream Bulgaria’s Alexander Stamboliski and the other leaders of Eastern Europe’s mostly forgotten democratic “Green” movement, who in the aftermath of World War I reconfigured the former Austro-Hungarian Empire by redistributing royal lands and converting tenant farmers into self-sufficient freeholders. (1)

But until recently, real-life yeomen could be and were dismissed–often violently. Joseph Stalin, for example, made short work of Eastern Europe’s land-holding peasant class. During the 20th century, both capitalists and communists, for different reasons, were hostile to the idea of a property owning, prosperous peasantry. Capitalists wanted agriculture to be industrialized, while Communists wanted it collectivized, with both opposed to any possible third way. For both Capitalists and Communists, the future would be one of ever greater division of labor and increasing economies of scale, with the family stripped of nearly all productive function.

Yet today there are signs that the yeoman ideal of small-scale ownership and production, having already out-survived communism, maybe be poised for a big comeback around the world. This is not to predict the end of globalism, if by that we mean simply high levels of interconnectivity. But it is to suggest that for reasons of technology, demography, culture, and efficiency, big is no longer necessarily better and the yeoman has a chance.

We see this most vividly the realm of finance. For decades now, experts have argued that bigger is better in banking. With their economies of scale, larger institutions are more efficient, has gone the reasoning. They can match up lenders and borrowers on a global scale. In places where money was piling up (like China or the United Arab Emirates), banks with worldwide reach could tap into these savings and direct them to borrowers in places where money was scarce (like Stockton, California, or East Cleveland, Ohio). And so large-scale “transactional” banking largely displaced small-scale “relationship” banking, following the “logic of the market.” Looking back, however, we can see that global-scale finance wasn’t really so efficient after all, except in the sense of being very efficient at wasting the world’s capital on over-priced tract houses and worthless insurance. By contrast, small-scale community banks have held up quite well during the crisis, with micro-lenders in the developing world doing the best of all.

We see this also in the realm of agriculture. In the United States, for the first time in generations, the number of farmers is again on the rise. Mostly they are small-scale family farmers producing food for local consumption, using organic, or regenerative techniques.

The trend is driven by two factors. One is rising consumer resistance to, and fear of, the products of industrial agriculture, including genetically modified food, highly processed food, and food laced with pesticides and growth hormones.

The other factor is that industrial agriculture is reaching a tipping point in its productivity. Oil and water, its essential inputs, are becoming increasingly scarce. Meanwhile, the natural fertility of the soil in places that practice industrial agriculture is becoming exhausted. Already, the rate of productivity growth on American and European agriculture has dropped substantially in this decade compared to the 1990s, and still more compared to the 1980s and ‘70s. World food production no longer produces a surplus, and in recent years has fallen below the rate of population growth, even as population growth itself has been slowing dramatically.

I predict that small scale farming in the United States, anyway, will continue to boom, due it comparative advantage in oil and water use and in consumer preference. This will be particularly true once policy makers realize that organic farming can both substantially reduce carbon emissions and go a long way toward solving the nation’s worsening health care crisis. By one credible estimate, if every farm in the United States converted to organic production techniques, the nation’s carbon emissions would fall by 40 percent. (2) Meanwhile, processed foods produced by industrial means using high concentrations of fat and sugar are deeply implicated in the epidemic of obesity that is a major threat to public health and the nation’s solvency.

At the same time, many of the world’s citizens are being thrown back toward some form yeomanry for lack of any attractive alternative. The train stations of coastal China are packed with unemployed young people returning the countryside. To alleviate Africa’s suffering, both the World Bank and the G-8 are prescribing a revival of small-scale farming using organic techniques. With the decline of communism and union power, employers, whether in Tokyo or Detroit, no longer feel compelled to offer lifetime employment with generous benefits to forestall a revolution. So now mass production shrinks along with mass consumption,

Even home production of manufactured items seems around the corner. A technological development to watch is the emergence of so-called “personal fabricators.” These are digitally-driven machines, already used by companies like Nike to produce rapid prototypes. The machines effectively allow you to “print” a three dimensional object, such as, say, a sneaker. As with personal computers, the size and cost of these machines (currently starting at around $18,000) will drop quickly even as their power and potential expands.

Today, it is already possible to use a 3-D scanner, such as the Z Scanner 700, to create a digital blueprint of, say, a BMW tail light, and then simply print a replica for a cost of a few cents in materials. Maybe few consumers will wind up printing new cars in their garages, but they may well buy cars from small dealers who have printed them locally, with huge savings in the cost of logistics and inventory.

In concept, you can even print a house as demonstrated Behrokh Khoshnevis of the University of Southern California and the Center for Rapid Automated Fabrication Technologies.

A final reason to expect a return of yeomanry involves the global trend of falling birthrates. In the long run, perhaps the greatest shortcoming of both communism and corporate capitalism has been their failure to reconcile the tensions of work and family life. For the majority of the world’s population that no longer lives on farms or relies on home production, children are no longer an economic asset, but an avoidable liability. And so we get fewer and fewer of them, with resulting populating aging and for countries such as Japan and Russia now, absolute population decline.

By a Darwinian process, the future now appears to belong to whatever societies figure out or stumble upon forms of organization that reduce the direct and opportunity costs of parenthood, and widespread yeomanry and home production may be just the system to that winds up doing the trick.

Dr Phillip Longman is a Schwartz Senior Fellow at the New America Foundation. He formerly worked as a senior writer and deputy assistant managing editor at U.S. News & World Report. His best-known book is The Empty Cradle (2004). Republished from the World Congress of Families with permission.

Endnotes

(1) For an excellent account of this movement, see Allan C. Carlson’s Third Ways: How Bulgarian Greens, Swedish Housewives, and Beer-Swilling Englishmen Created Family-Centered Economies — and Why They Disappeared. ISI Book, 2007.

(2) Tim J. LaSalle, et al, Regenerative Organic Farming: A Solution to Global Warming, Rodale Institute, 2008, http://www.rodaleinstitute.org/files/Rodale_Research_Paper-07_30_08.pdf

Full article here

[Via http://steveblizard.wordpress.com]

China is mass killing sharks, birds, and who knows what, just for soup

2010-01-08T12:39:00.000+02:00

Well, with global warming, over hunting, and as I’ve learned Chinese, wildlife doesn’t stand a chance.

Apparently, I’m not the only wildlife conservator up in arms with an old Chinese meal that isn’t only cruel, but dramatically decreasing shark population. It’s called Shark finning to make Shark Fin Soup. Not only are the Chinese satisfied with killing an animal, they like to torture them before killing them. The Chinese catch shark and then cut off the fins, then throw it back in the water. Well, then the shark can’t swim and dies slowly at the bottom.

This meal is killing of many species of shark which is destroying the whole sea ecosystem.The shark population has dropped almost 90% in the last couple of decades due to the Chinese, that’s over 100 million sharks deaths per year. Just because they like soup.

Not all Chinese support this horrible practice, though. The CWCA (the Chinese Wildlife Conservation Association) is fighting against it.

But, wait, I’m not done with the Chinese, not even close.

Again just because they like soup, the Chinese have found killing baby birds as well as mature birds O.K. to make there beloved soup.

Bird Nest Soup is made by Chinese going into caves, and finding bird nests made by a couple species of the Swiflet bird family. The male bird makes a perfect nest over a month on a wall of a cave and then lives in it with his mate. Well, a Chinese person comes around and shoos the birds away and if there’s baby birds, they just dump them on the floor, leaving them to die. And the adult birds don’t have any where to live so they die too.

If you agree with me and the rest of the world, stop going to Chinese restaurants, even if they don’t serve Shark Fin Soup. And, stop buying China made products. This would crush China’s economy and send them into a downward spiral.

STOP BUYING PRODUCT AND FOOD OF CHINA!

[Via http://sirbuffalosushi.wordpress.com]

On Certification Instead of Regulation

2010-01-08T04:40:00.000+02:00

What started as a “Ha, do you libertarians endorse this?” dare by Mike of Rortybomb has turned into a somewhat interesting discussion between him and Megan McArdle about to what extent it’s possible to protect people who are not good at understanding complex financial products (the elderly, or people who just aren’t good at understanding complicated service agreements) from being victimized by banks without in the process hurting the people you’re trying to help. This as the new credit card legislation is going into effect, trying to crack down on banks which raise interest rates quickly if you’re late paying, have hidden fees, or move due dates around (theoretically in an attempt to keep people from paying on time.)

Mike suggests that banks should be required to offer a “plain vanilla option” of products such as credit cards or checking accounts.

And that solution would be mandating financial services to provide Vanilla Option financial products. Boring, low-reward trap-fee products you’d probably have to pay a yearly fee for.

So much of our financial services are predicated on tricks and traps but also have a lot of benefits. You get free checking, but if you overdraft you lose more than you gained. Now with a vanilla option, you could pay more upfront to not take the risk of losing later. This is banking how it used to be, boring. And this is exactly the kind of product that people with weak cognition would want to have available. Someone approaching older age, but before getting there, could opt for the “extra boring” financial services package. People buy renter’s insurance; some might view a yearly-fee on their checking account or credit card as a “trap insurance.”

Megan doesn’t think the idea would be very successful:

It’s not a terrible idea, necessarily, but if it’s an actual option, I doubt it would accomplish much. Banks will find ways to steer you into the more lucrative product–unless, of course, you’re the sort of highly informed, financially disciplined consumer who doesn’t need a vanilla option, and is in fact better off in the current system.

The “plain vanilla” idea is somewhat with an idea I’ve kicked around at times in regards to health care, which is that perhaps one could achieve many of the good effects of regulation (while avoiding its pitfalls) via certification instead. The idea would be to have some sort of certification organ (either governmental or private, but something with sufficient credibility and reach to inspire confidence and get the message out) create some sort of standard guidelines for a product. If it was a health care plan, this would involve very clear and simple parameters for what was covered, copays, percent you pay, max out of pocket, etc. Perhaps there’s even be a standard disclosure form that everyone offering such a certified policy had to offer, which was only one or two pages long, and was formatted in a specific way so that you could easily compare different plans. There would not be a mandated price, or mandated copay, or a mandated max out of pocket — just a very clear disclosure format and coverage structure you had to follow.

Insurance companies could decide to offer a certified plan or not, but if they did, they could list their plans on the certifying agency’s website, brand their advertising with the certification, etc.

Now, the value in this would be that in products which have a reputation for being hideously complicated, and potentially biting you with a nasty surprise at some later date, customers would assign a value to a certification which allowed them to know the product they were buying met certain uniform standards. It might be that they could get non-certified coverage which worked just fine for them, and was cheaper, but part of what you’d be paying for would be the knowledge that you were getting a known quantity. If there was enough demand for this certainty, the prices on certified policies would actually be quite competitive since different companies would vie for the certified policy market. In coordination with this you would, of course, remove all the current regulation on what policies have to cover, as well as allowing interstate insurance purchasing. So you’d have the wild and crazy, totally free market, and you’d have the voluntarily certified market.

It seems to me that, if an institution with sufficient credibility created a set of certifications for complex, important products such as health insurance policies, and really marketed them, there would probably be a pretty decent market for the certified products. (If you were trying to solve the problem of people not being able to afford insurance you could also prove subsidies for those at certain income levels — perhaps making the subsidies only good on certified plans, or perhaps on any.) However, some people would, of course, still get themselves into trouble by getting uncertified plans which unbeknownst to them turned out to be have all sorts of nasty pitfalls. Just as there’s always a market for home study courses which can teach you how to become a millionaire, available on DVD for just ten easy payments of $49.95, it will inevitably be some of the hardest luck characters who are just sure that the policy costing only $129 per month for their entire family will be a great bargain. And unfortunately, if you want to preserve people’s freedom at all, you need to give them the chance to abuse it.

The problem with the idea of applying this kind of certification-as-regulation to products such as credit cards or checking accounts is, I think, that while a fairly large percentage of people in the individual insurance market might consider themselves sufficiently bewildered by insurance policies (and the danger of getting a policy that doesn’t really do a good job of covering you would be so great) very few people think that they aren’t equal to evaluating a credit card or checking account. Nor do they tend to imagine that the danger of selecting a bad one would be great. Sure, it might have nasty results for not paying on time your credit card on time, or for bouncing checks, but no one intends to bounce checks or pay late. You can always tell yourself that you won’t fall into these problems, and the rewards by comparison sound so great and so easily won.

So on credit cards and checking accounts, I tend to think that Megan is right: most people simply wouldn’t select a “plain vanilla” option. If checking accounts and credit cards were widely viewed in our culture as dangerous and tricky, people might opt for certified products. But although a few people might, I think most of the people who end of in the saddest straights would not.

[Via http://the-american-catholic.com]

Social Media Means Deal Flow!!

2010-01-06T20:40:00.000+02:00

(Stephen McKnight) The start of a new year (and decade this time around) is an ideal time to reflect and plan. Looking back, one of the more significant additions to our communication lexicon may just be ”Social Networking.” For the past several years, I have been teaching an economic development marketing course. And each year I call out the importance for economic developers to recognize potential investors (or customers) as not the “corporation” or “industry sector,” but rather as individuals (humans if you will) each motivated by both rational and irrational factors. They can choose locations based on factors such as friends, family and alumni connections just as easily as they may on cost, incentives, infrastructure resources or market statistics. But up until now, economic developers found it difficult to communicate or discuss the more discrete qualities of their location directly with the potential client. They only had the old dusty website or static print advertising to promote their ”Great Quality of Life” tag lines – only to then hope the message hits the target.

I think all economic developers would agree that their business is more personal, relationship driven, network reliant, and value focused than most. And social networking? Well, it is most often a self selecting and responsive, offering economic developers a more managed yet virtual community in which to market. If done correctly, cities, towns or regions can quickly develop a growing list of “friends” or ”members” that represent at the very least, good spokes-persons and in some cases, new investment.

Last year, the International Economic Development Council (IEDC) in partnership with the Development Counselors International, conducted a social media survey of 307 IEDC members. 63 percent indicated that they have been using social media tools for less than one year. More than half rated social media and networking as the most important aspect of their most immediate future marketing plans. So the message for the start of a new year (and decade) - “Don’t hold back on building your virtual social networking skills economic developers!” It is a tool that will evolve quickly in the coming months and, like this whole internet thing, I think it is here to stay.

[Via http://economicarchitecture.gspconsulting.com]

Will Green Investments Be Enough To Make Up For Fossil Fuel Investments?

2010-01-06T12:47:00.000+02:00

Ryan Avent at Free Exchange criticizes University of Chicago economists Gary Becker, Kevin Murphy, and Steven Davis, for arguing in a WSJ op-ed that potential government action is causing uncertainty in the energy sector, which is in turn potentially causing a decrease in investment. Ryan argues that:

“…if American businesses are confident enough in their beliefs about a high carbon price to reduce investment in fossil fuels, then certainly they are also confident enough to increase their investment in alternative energies, are they not? Indeed, this is the entire point of a carbon price, passed or merely expected—that it will shift views about relative costs, thereby using market mechanisms to channel investments into lower emission sectors. In the authors’s view, by contrast, markets are simply dumb: able to see the downside to expected policy changes, but too stupid to go looking for the opportunities created by the shift.”

On the one hand, Free Exchange is right that the Chicago boys are ignoring the increase in alternative energy investment that will likely occur. However, if this increase will be far outweighed by the decrease in investment in fossil fuels, then the admission is not so conspicuous as Ryan has made it out to be.

My guess is that Ryan probably agrees with that, but he also thinks the increase in investments in alternative energies will be significant; at least significant enough that not mentioning it is a serious omission. So the real question is what will the net effect on investment be?

One important determinant is the level uncertainty about the increase in demand for particular alternative energies. The appetite for risk right now is not great, and if alternative energies are highly risky investments relative to fossil fuels, then total investment may drop substantially.

So if the government announced they were going to pass a cap and trade bill in 3 months, for sure, how certain would we be about what alternative energies were good investments? I don’t know. But one thing that would likely cause high uncertainty in estimating this is unreliable government subsidies or other policies that are greatly distorting the market, and the fact that the next “winner” in alternative energy might be whomever the Department of Energy decides. Wind energy, in particular, has been known to have boom and bust cycles based on government policy. Given the degree to which our and other governments have decided they will be picking winners and losers in the alternative energy market thus far, including the $163 billion globally that will be spent on green stimulus, I think it’s likely that marginal alternative energy investments are much riskier than marginal fossil fuel investments.

Of course there are others factors the will contribute to the net investment impact of cap and trade, some of which tilt the scales in favor of positive net investment. But the simple issue of uncertainty that I mentioned shows, I hope, that even if businesses are confident enough in their beliefs that a high carbon price will reduce investment in fossil fuels, it is far from certain that they should be confident enough to increase their investment in alternative energies by a substantial amount.

[Via http://modeledbehavior.com]

Saving the Banks with Saving the Bankers

2010-01-06T04:31:00.000+02:00

The critical question that many Americans are obviously concerned about is the question of what do we do with the banks. And on that, he again was very clear that he recognized the anger that Americans have about the way the banks have taken our taxpayer money and misspent it, but he didn’t give a clear view of what he was going to do.

Is President Obama holding the banks accountable?

So far, it hasn’t happened. I think the more fundamental issues are the following. He says what we need is to get lending restarted. If he had taken the $700 billion that we gave, levered it ten-to-one, created some new institution guaranteed—provide partial guarantees going for, that would have generated $7 trillion of new lending. So, if he hadn’t looked at the past, tried to bail out the banks, bail out the shareholders, bail out the other—the bankers’ retirement fund, we would have easily been able to generate the lending that he says we need.

So the question isn’t just whether we hold them accountable; the question is: what do we get in return for the money that we’re giving them? At the end of his speech, he spent a lot of time talking about the deficit. And yet, if we don’t do things right—and we haven’t been doing them right—the deficit will be much larger. You know, whether you spend money well in the stimulus bill or whether you’re spending money well in the bank recapitalization, it’s important in everything that we do that we get the bang for the buck. And the fact is, the bank recovery bill, the way we’ve been spending the money on the bank recovery, has not been giving bang for the buck. We haven’t gotten anything out.

What we got in terms of preferred shares, relative to what we gave them, a congressional oversight panel calculated, was only sixty-seven cents on the dollar. And the preferred shares that we got have diminished in value since then. So we got cheated, to put it bluntly. What we don’t know is that—whether we will continue to get cheated. And that’s really at the core of much of what we’re talking about. Are we going to continue to get cheated?

Now, why that’s so important is, one way of thinking about this—end of the speech, he starts talking about a need of reforms in Social Security, put it—you know, there’s a deficit in Social Security. Well, a few years ago, when President Bush came to the American people and said there was a hole in Social Security, the size of the hole was $560 billion approximately. That meant that if we spent that amount of money, we would have guaranteed the—put on sound financial basis our Social Security system. We wouldn’t have to talk about all these issues. We would have provided security for retirement for hundreds of millions of Americans over the next seventy-five years. That’s less money than we spent in the bailouts of the banks, for which we have not been able to see any outcome. So it’s that kind of tradeoff that seems to me that we ought to begin to talk about.

the banks that have not been managed very well, we need to not only fire them, we have to change their incentive structure. And it’s not just the level of pay; it’s the form of the pay. Their incentive structures encourage excessive risk taking, shortsighted behavior. And in a way, it’s a vindication of economic theory. They behaved in the irresponsible way that their incentive structures would have led them to behave.

if you get an incentive structure where you say you get huge pay if things go well, but you don’t pay any consequences if things go badly, and you’re going to look at it only in terms of the profits that you make this year, not the losses that you make next year and the year after, then of course you’re going to try to get a gamble, because if you gamble and you win, you walk off with the money; if you lose, somebody else picks up the losses.

So what happened was, the banks gambled. They gambled very big. They had big profits for four years. But in the fifth year, the losses were greater than all the profits that they had in the first four years. But meanwhile, they walk off with the bonuses based on the four-year performance, and then, the fifth year, they don’t—I mean, it was quite remarkable, they didn’t even—they even got big bonuses for the record losses. Then that’s what, of course, has gotten Americans angry, so that the bonuses were described as incentive pay. But that was all a charade.

But the basic thing is, you know, our bankers are—many of them, not all of them—are, you might say, ethically challenged. But even were not they ethically challenged, the fact is they had incentive structures that led them to behave in the way they did.

Americans don’t like to use the word “nationalization.” We do it all the time. We do it every week.

if banks don’t have enough capital so that they can meet the commitments they’ve made to the depositors, at the end of every week the FDIC looks at the balance sheet, and it says, “You don’t have enough capital. You’re not allowed to continue.” And then what they do is they either find some other bank to take it over and fill in the hole, or they take it into government control—it sounds terrible, to take it into government control—and then sell it.

And that’s what other countries have done when they faced this kind of problem—the countries that have done it well. One of the important lessons is this is the kind of thing can be done well, could be done badly. And the countries that have done badly have wound up paying to restructure the bank 20, 30, 40 percent, even 50 percent of GDP. We’re on our way to that kind of debacle. But that shows you how bad things can be, how costly it can be, if you don’t do it well.

Most interesting case is actually AIG, not even a bank, and we poured in $150 billion. Originally, they said they only needed $20 billion. And then, every few hours, every few days, the losses got bigger, another $60 billion. Now, that fact, the fact that we keep getting bad news and have to pour money in, should make us really worried. The question is, why did we bail out AIG? What they said is, the reason we bailed it out is if we didn’t bail it out, there would be consequences somewhere else. They didn’t tell us where.

It would make much more sense if we looked at where the consequences were and deal with the problems as they turn out. Just for instance, some of the, quote, “insurance policy derivatives” were not in the United States. The people that would have problems may be gamblers, may be other institutions abroad. Do American taxpayers want to be bailing out institutions abroad? That’s a question we ought to be debating. There may be pension funds that may be hurt. Well, some of the pension funds may be able to withstand it; other pension funds will need to have assistance. But let’s get the money going to where we think it ought to go, rather than this trickle-down approach that we’ve been using with AIG.

Sweden and Norway did things very well back in the end of the ’80s, beginning of the ’90s.

The UK, has been doing it much better than the United States. Its problems are bigger— we have to realize that—because its banking sector was a more important part of the economy, and one of the banks actually had liabilities greater than the GDP of the UK. So it’s going to be facing a very difficult time. But the fact of the matter is, the way Gordon Brown did it, replacing the heads of the banks—it was real sense of accountability there. Government got control and shares commensurate with the money that it was paying in—it wasn’t a giveaway—and now trying to make sure that they start lending, forward-looking. So it’s clearly—they have a much clearer concept of what is needed.

Why is Obama saving these bankers?

we could all guess about the politics. We know one of the problems about American politics is the role of campaign contributions, and that’s plagued every one of our major problems. Under the Bush administration, we couldn’t deal with a large number problems, like the oil industry, like the pharmaceutical, the healthcare, because of the influence of campaign contributions. One of the problems is that whether it’s because of that or not, it lends an aura of suspicion. The fact that there was so much campaign contributions from the financial sector at least raises the concern.

There is one other legitimate concern, that Wall Street has done a very good job of fear mongering. They say, “If you don’t save us, the whole system will go down.” But, when these banks that I talked about before, when they go down, there’s not even a ripple. The fact is, you change ownership. It happens on airlines all the time. An airline goes bankrupt, a new ownership, financial reorganization—not a big deal. What they’ve succeeded in doing is instilling a sense of fear, so that it’s a kind of paralysis that hangs over what we’re doing. And you could understand a politician. He’s been told if you do one thing, the whole system—the sky is falling, it’s going to fall. That induces political leaders to try to do the smallest incremental step, and that’s what got Japan in trouble.

The question is, are Geithner and Summers willing to take the bold measures that are necessary? Everybody keeps saying we need to take bold measures, inaction is not a possibility. That’s not the issue on the table. Action will be taken. The question is, which action? Is the action pouring more money into the banks without any effect on lending, increasing the deficit, which the President talked about, or the actions which could be taken, starting on new banks, looking forward rather than looking to the past, significant financial restructuring?

Are we going to bail out the shareholders, bail out the bankers, rather than focusing on saving the systemically important parts of these institutions? There are some important parts of these institutions that we’ll have to save. The question is, are you going to go do it like with a bludgeon, throw money at it, or are you going to try to do it more surgically and save the parts that need to be saved? And one of the things that went wrong is when we went—let Lehman Brothers go. It caused this enormous trauma. And that’s increased the fear about—but that’s an example of doing things wrong. We didn’t ask the question. There was a systemically important part of Lehman Brothers.

Which were the commercial paper that was part of the money market funds that were—people were using like banks, like part of our basic payment mechanism. We could have saved that part and let the gambling part of Lehman Brothers, which is not part of the payment mechanism, go down. And because we took this blunt approach, we failed. And what the financial markets are doing are saying, “You have to save everything, if you’re going to save anything.” And that’s just wrong.

Plans to cut the deficit in half.

What we have to remember is we are in for almost like—most likely a long and extended downturn. Now, we will eventually recover. That’s not a question. But in 2011, 2012, will we be in a sharp recovery or in a more slow recovery?

One of the lessons from Japan was that in 1997, when they were in the beginning of their recovery, they increased taxes because they wanted to get rid of their deficit, and the economy sank down back into a downturn.

The way to look at it is the following. Right now, in 2009, 2010, we’re talking about, per year, something like a stimulus bill of $350 billion per year. To cut the deficit in half, with a deficit as we go into—without the stimulus is one-and-a-half trillion dollars, so we’re talking about pulling out $600, $700, $750 billion. That’s the reverse of an expenditure, taking out the stimulus and cutting back expenditures by another $600 billion—we’re talking about a turnaround of a trillion dollars. Do you really believe that by 2010, by 2011, 2012, our economic recovery will be so strong that it can withstand that kind of taking out of expenditure? I don’t think so. And so, if you went ahead and did that, we will go back into a downturn.

effect of war on the economic crisis.

The President did have two things that I really welcome. And several of the suggestions that we made in our book (The Three Trillion Dollar War: The True Cost of the Iraq Conflict), he has adopted. For instance, in the past, under the Bush administration, the war was totally funded by—or almost totally funded by emergency appropriations. It was as if every year was a surprise. And he said he’s going to put that on the books so that we can evaluate it, make sure their money is going in the best possible way.

A second thing in our book that was, very moving was the way we treat our veterans is terrible. And he said, you know, they fought for us; we have to fully fund the Veterans Administration. So those were really important moves in the right direction.

But on the other side, the move into Afghanistan is going to be very expensive. Things are not going very well. Our European—those who—NATO partners are getting disillusioned with the war. The people in Europe, really feel this is a quagmire. And one of the things that we do talk about in our book is that if you keep a residual force in Iraq, it’s going to be very expensive. That’s the experience that Britain has had. They’ve kept a relatively few troops, and the result of that is the savings that they had hoped weren’t materialized. So that goes back to the part that he talked about at the end of his speech: the deficit. If you’re going to be spending all this money in Afghanistan and in Iraq, that deficit is just going to be that much greater.

The fact is that when the economy is weak, as it is, you need to stimulate aggregate demand. If you don’t do that, the economy gets weaker. And what’s good about most of Obama’s plan is that it’s creating assets. So, while the liabilities go up—we’re going to have to borrow—we also are creating assets. If we had spent a few billion dollars under the beginning of the Bush administration on the levees in New Orleans, we would not have had to spend so much money in the cleanup, in dealing with the devastation that it brought. That would have been money that would have had an enormous return. $5 billion would have saved $150 billion. And so, that’s an example where there are certain kinds of investments—investments in technology, investments in people—that the private sector can’t do and the government can do in ways that give us a very high return.

We’re in the tenth anniversary of the mass protests in Seattle, the Battle of Seattle. What about the questions raised in corporate-led globalization?

I think two very important issues. One of them is the model that was behind much of the impetus for that globalization was a model based on free unfettered markets. And we know that model, deregulation, has failed. That was the kind of thinking that led into the problems the United States is in today.

The second point is that while we talk about free and open markets, what the United States has been doing has destroyed a level playing field and will have profound implications for the evolution of globalization going forward.

And for developing countries, it’s having a devastating effect. Just a couple days ago, the other American banks were complaining about the huge subsidies that were given to Citibank. They say, “How can we compete when the government is subsidizing Citibank to that extent?” Now, if you think these other American banks that have gotten massive subsidies are complaining, you can imagine the kind of feelings that people have in developing countries that say, “We can’t afford those mega-subsidies. How can we compete against Washington being able to write a check any time anything goes wrong?”

there are some fundamental problems in the efficiency of our healthcare system. And what we’ve seen is that the private healthcare insurers do not know how to deliver an efficient way.

Joseph Stiglitz talking.

Joseph Stiglitz, winner of the 2001 Nobel Prize in Economics. He is a professor at Columbia University and the former chief economist at the World Bank. He is the co-author of The Three Trillion Dollar War: The True Cost of the Iraq Conflict.

- from democracynow

[Via http://jagadees.wordpress.com]

New Year News

2010-01-04T20:37:00.000+02:00

So here are some interesting things from around the internet on this the first EcoMonday of the new year:

Other Worlds Are Possible: the sixth report from the New Economics Foundation. If you’re looking for something to read that isn’t wholly pessimistic, this is pretty interesting stuff. Note that it’s a PDF download and pretty big.

Law requiring solar energy heaters in new homes – well, I guess if any state was going to do this, Hawaii’s the one to start it.

Chemical regulations that might actually work: the Environmental Defense Fund’s blog discusses the EPA’s new “Chemical Action Plans”.

Peace Teaching: stories from North Kivu, the Congo – by Zawadi Nikuze.

The Obligatory Bicycle-Related Link.

Finally, things to write to your MP about! Here are some private members’ bills you may be interested in.

Establishing a National Ecosystems Council

Prohibiting the Export of Water

Establishing an Oil and Gas Ombudsman

And then there’s The Tartan Day Act – yeah, I don’t know either.

[Via http://moraleconomy.wordpress.com]