11 January 2017

Thought For The Day - 11 January 2017

Given the "Access Hollywood" material, doesn't the notion of Russian honey traps make perfect sense? Two gigantic dots with a really short line betwixt them. So far, I've not heard or seen any of the dishonest media point out this obvious fact.

10 January 2017

The Real Villian

On and off, the thread of how the Great Recession came to be appears in these endeavors. The lunatic Right has, from the beginning, sought to blame Bill Clinton, long out of office when the boom started, much more so when it collapsed, and the Community Reinvestment Act (1977!). This attempt has always been propaganda, seeking to shift blame from the laissez faire W. banksters to inner city dark folks trying to buy a house. Various studies have been done over the years, and many have been mentioned here. All have put the lie to such narrative. The evil was in the white suburbs, non-bank mortgagers (CountryWide), and private mortgage insurers (MGIC). Doesn't fit the lunatic right's propaganda, of course.

Today, Mark Thoma reviews yet another study, from the Sloan School (that's MIT, by the way; another elite Eastern establishment). The Great Recession wasn't caused by poor folk trying to have a home, but by middle income white folks in white suburbs in sunny climes (Florida, Nevada, California, mostly) looking to flip McMansions that were experiencing rocketing prices. Caused by the demand for securitization instruments demanded by the Giant Pool of Money seeking high return on low risk. "Money for nuthin and the chicks are free."

The comments are replete with lunatic rightwingers bleating loudly. As it ever was.

09 January 2017

It's Always The Arithmetic

A few times, these endeavors have made mention of the fact that average cost is what really matters to the MBA Masters of The World, not the marginal cost of economists. Folks like the putative Labor Secretary Puzder, who prefers robots to people in his production, just assume that machines are better than people. Leaving aside, for the moment, that machines don't take their value add based wages and buy output, capitalization based production does have, at least, one downside: fixed cost.

Here's a note from today's briefing.com:
The two operating units at the Indian Point Energy Center will close in 2020-2021 after powering New York for more than four decades with clean, safe, and reliable electricity. The early and orderly shutdown is part of a settlement under which New York State has agreed to drop legal challenges and support renewal of the operating licenses for Indian Point, located in the Village of Buchanan in northern Westchester County. The shutdown will complete Entergy's exit from its merchant power business because of sustained low wholesale energy prices.

In other words: with energy conservation, and alternative sources, the amortization of nukes might not make sense. There's more evidence of the problem. Don't put those panels on your roof!!
Industry officials say they support their customers' right to generate electricity on their own property, but they say rooftop solar's new popularity is creating a serious cost imbalance. While homeowners with solar panels usually see dramatic reductions in their electric bills, they still rely on the grid for electricity at night and on cloudy days. The utility collects less revenue, even though the infrastructure costs -- from expensive power plants to transmission lines and maintenance crews -- remain the same.

Now, apply the same complaint to healthcare... Reduce demand (by fiat of King Donald of Orange) for capacity already installed, and you'll find the 1% squealing that their healthcare costs have actually gone up.

It's always that damned arithmetic. That a six year old understands. Read the whole Post story, and you'll see that much of the rhetoric is just propaganda, and the tentacles of Koch is documented. And, whatever happened to The Cube?

05 January 2017

Thought For The Day - 5 January 2017

One might not expect to find a missive dripping with rural entitlement and arrogance on the op-ed page of the NYT, but here it is. Comments are closed, but they're quite amusing. Given that NYT readers are, I expect, dominantly urban, but their anger is justified. I sent off a comment on the author's home site, much like many of the comments on the piece. The rural uneducated aren't just stupid, but arrogant in their stupidity. Lord help us.

23 December 2016

A Christmas Homily

For some time, I've struggled to conjure a single sentence to explain the urban/rural or Red/Blue or sentient/moron divide that bedevils this Western World, not just the USofA. Quite out of my norm, I scanned the letters to the editor of a recent NYT; generally I ignore such sections of publications.

But here it is:
Academics are trained to distinguish reality from lies or fantasy, and to respect facts and sound arguments. If that biases academics toward liberalism, then there is a problem with conservatism, not with academia.
-- Andrea Liu/2016

The Donald is of the faith, if you're rich you must be smart. Well, no. You're just greedy.

22 December 2016

Distribution Free Statistics

It's been an occasional theme of these endeavors, even part and parcel of the sub-title of one version, that the US (and, by extension, the global) economy has entered a less-than-zero sum game. In the past (see Gordon's book), the standard response to job destruction by tech change was that more new jobs were created than were busted by the machines. That sequence of events was possible only because the new jobs were no more challenging than the old ones. Displaced farmers were quite savvy enough to stick tires on chassis coming along Mr. Ford's assembly line.

So, today we get some more quotes with data, once again, demonstrating that, this time, it really is different. If the US, and by extension the global, economy is to avoid permanent collapse income has to be disconnected from production. Or, as one of these subtitles says
It's the Distribution, Stupid

Yes, we make more stuff with fewer hands. This is called increasing productivity, and all the data over the last few decades has shown this to be true. Also true: almost none of that increase (i.e., growth) has ended up in the hands of hands. Capital gets almost all of it.
Donald J. Trump told workers like Ms. Johnson that he would bring back their jobs by clamping down on trade, offshoring and immigration. But economists say the bigger threat to their jobs has been something else: automation.

"Over the long haul, clearly automation's been much more important -- it's not even close," said Lawrence Katz, an economics professor at Harvard who studies labor and technological change.

Now you know why corporations and their 1% owners continue to sit on $$$ trillions and chasing Treasuries. Even as tech eliminates more jobs, corporations are running out of ways to eliminate those that remain. So they goad the Fed into raising the interest rate in the hopes that doing so will cause Treasuries' rates, and their incomes. Yet more transfer of wealth from the many to the few.

Happy Christmas.

13 December 2016

A Man of Subsistence, part the second

We return with Eccles, again:
As mass production has to be accompanied by mass consumption; mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery.
-- Marriner Eccles (mid 1930s FDR advisor)

And we ask whether it's possible for the 1800-ish view of the USofA (a nation of yeoman farmers largely unconnected to government, to paraphrase Jefferson) so beloved by the alt-right remains a viable foundation in 2016. Or, to be blunt: can capitalists impose subsistence on the 99% and still have capitalists flourish? Well, in order to do that, the 99% have to be supplied with the three foundations of survival; food, clothing, and shelter. And the capitalists need to be in the business of selling such, not just conducting a continuing FIRE sale. In the mid-1930s, the USofA economy was largely self-sufficient; the Great Depression shuttered much productive capital, but didn't destroy it. Plants which had stopped making automobiles were quickly repurposed to build tanks and jeeps. Thus the WWII re-industrialization was only a matter of will to employ it. In today's economy, local food production is largely for the 1%, but staples are mostly domestic and shipped country wide. Clothing is almost wholly imported. Housing is moving from nail pounders making stick built houses, to site assembly of factory produced modules. In a nutshell, American capital doesn't come near enough to supplying the rudiments of 21st century subsistence; one might reasonably include personal transport as a necessity, for instance, since nearly no American tends his own few acres of bottom land with a mule.

If The Donald does get his way with 35% tariffs (he doesn't have the authority to do so by fiat; so far, anyway), the ones most hurt by that will be the poorly educated white folks in Pennsyltucky who voted for him, since they get most of their stuff from China and the like and not so much from Goldman Sachs. There's a certain irony in that, of course, but lots of others (3 million more or thereabouts who didn't, so far) get hurt too.

The point, of course, is that Eccles' observation, while the alt-right would likely see Marx in it, is merely a re-imagination of global equilibrium. Whatever goes out must be consumed. In an agrarian economy, with a smattering of simple manufacturing, such an economy can be self-sustaining of a 99% subsistence labor force, societies were such for thousands of years; Jefferson's vision put starkly. By 2016, USofA output is increasingly in FIRE and other intangibles. One can't make subsistence with tweets; they aren't very nutritious (particularly The Donald brand). In the early 1900s, Henry Ford rocked the world by raising the wages of his assembly line drones. He did so for the avowed reason that they'd be better able to buy his Model T. Do you imagine Blankfein at Goldman Sachs (once The Donald's pinata, now bromancer) having such an epiphany? Or that the poorly educated white folks could, miracle of miracles, afford his product? I doubt it. But either today's raptor capitalist must, or our economy collapses. Recent reporting of research that today's young-uns are less likely to earn more than their parents then any previous generation should come as no surprise. After all, we live in the culmination of the 1%'s Pac Man-ing of the GDP.

How to (re-)distribute is far less important (except to ideologues, of course) than it get done. While likely not the first to express it, Krugman put it well:
My spending is your income, and your spending is my income, so if both of us try to spend less at the same time, what we end up achieving is mutual impoverishment.

If, after all, Americans can't be supported by what their economy makes (financial services, mostly), and they can't develop the skills needed to make what the economy makes (ditto), then what's the result?

A question of balance. Switzerland and the island countries can make economies largely on shifting moolah twixt Peter and Paul, who of course live elsewhere, since they're teeny little societies. The USofA, not so much.

And we close, again, with Twain:
It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.
-- Mark Twain