Dear Dear Leader:
It's not about how kissy face you are with Vlad the Impaler, or other dictators; it's about doing what's best for the USofA. Sucking up to Vlad may get you your Trump Tower Moscow, but that's not in the USofA best interest. And, what's this about the SS blocking subpoenas for Jared?? So, I guess you've decided that The Family is above the Law?
18 July 2018
16 July 2018
Thought For The Day - 16 July 2018
Well, given the events of today, now would be the right time to apply to the Small Business Administration for a fat loan for my start up, The White Boy Brown Shirt and Jackboot Co. Ya think?
09 July 2018
Quant's Hubris - part the second
"Regular reader, by now, knows one of the mantras: "the bane of the capitalist is capital". Meaning, of course, that using capital to get rich by substituting machines (hardware and/or software) for people reaches a tipping point. Not just the wall of diminishing returns, but the abyss of unremitting sunk cost. That's just a fancy way of saying that automation methods become more expensive, as unit cost."
Thus begins Part the First (not then known to be yet another serial) of the capitalist's dilemma. Capital, the real physical kind at least, makes its value-add either (or both) by replacing labor while keeping output static, or by increasing output with the same labor. The problem for the capitalist is that as automation (not to mention robotics) moves ahead, labor is gradually (or instantly) removed, thus removing yet more folks from earning and no further benefit from labor substitution. The only way for the capitalist to win when the labor component reaches that tipping point, is to push more output with all those magnificent machines. But can that be done as labor continues to be ejected? Fewer folks earning, whatever happens to GDP, inevitably leads to diminishing demand. Macro, anyway. The reason there's a fraction of the coal miners today vis-a-vis 1940 is not the EPA or other effete bureaucrats, but massive changes in how coal is mined. More machines, less underground extraction (aka, hill topping), poof! There went the jobs. The Kenyan President had nothing to do with it.
Quite the same thing has happened in general manufacturing. First, New England manufacturers departed for the labor antagonistic South. Still aiming to sell to the remaining higher wage North, of course. Thence to Mexico and Central America and Caribbean. And thence to Asia, China as poster child.
There's been a paper making the rounds of the innterTubes for a while now, and makes another appearance today. The in-your-face number is $8.46 as the China specific value-add to an iPhone7. Naturally, one can go find whining that such a number is way too low, but that's not the main point of this missive.
The main point is that amount of direct labor in making an iPhone is teeny, no matter the dollar value. Most of the value in such things is delivered by automated processes; almost no humans touch semi-conductor in production these days. Robots, even. And, of course, China didn't steal American jobs, Steve Jobs and his friends sent them away. And, of course, Apple's source isn't even a Chinese (the big one on the continent), but from that little island called Taiwan.
The authors, without resorting to irony (I would, fur shur), say that Foxconn got about $3,000,000,000 (or may be $4,000,000,000) to make a plant in Wisconsin. Welfare queen. Taxpayers shouldn't pay for sports facilities, either, but that's another show. If you want a rundown, here's one.
So, the next logical question: does capital hang around after such incentives end? Way back in 2012, the Failing New York Times published an extensive piece on corporate extortion. Worth the read.
A more caustic review, and newer, is here.
What's being discovered, but only occasionally acknowledged, is that the farm-to-factory paradigm of the 20th century no longer holds. Back then, factories absorbed displaced farm hands since skill level wasn't an impediment. Today, we've two problems: 1) new jobs are a fraction of those eliminated, and 2) new jobs simply can't be done by those displaced.
The answer, of course, is socialism, wherein the net winners compensate the net losers. GDP grows, demand is maintained, and technology can continue. If technology reaches a point where it serves only to eliminate macro-demand, it's game over. Reducing price through cost reduction of automation is meaningful only to those who remain with income sufficient to afford the new, lower price. As income concentrates, the number of demand units, aka people, diminishes. Jay Leno may have hundreds of old cars, but that doesn't do much for Ford or GM.
Thus begins Part the First (not then known to be yet another serial) of the capitalist's dilemma. Capital, the real physical kind at least, makes its value-add either (or both) by replacing labor while keeping output static, or by increasing output with the same labor. The problem for the capitalist is that as automation (not to mention robotics) moves ahead, labor is gradually (or instantly) removed, thus removing yet more folks from earning and no further benefit from labor substitution. The only way for the capitalist to win when the labor component reaches that tipping point, is to push more output with all those magnificent machines. But can that be done as labor continues to be ejected? Fewer folks earning, whatever happens to GDP, inevitably leads to diminishing demand. Macro, anyway. The reason there's a fraction of the coal miners today vis-a-vis 1940 is not the EPA or other effete bureaucrats, but massive changes in how coal is mined. More machines, less underground extraction (aka, hill topping), poof! There went the jobs. The Kenyan President had nothing to do with it.
Quite the same thing has happened in general manufacturing. First, New England manufacturers departed for the labor antagonistic South. Still aiming to sell to the remaining higher wage North, of course. Thence to Mexico and Central America and Caribbean. And thence to Asia, China as poster child.
There's been a paper making the rounds of the innterTubes for a while now, and makes another appearance today. The in-your-face number is $8.46 as the China specific value-add to an iPhone7. Naturally, one can go find whining that such a number is way too low, but that's not the main point of this missive.
The main point is that amount of direct labor in making an iPhone is teeny, no matter the dollar value. Most of the value in such things is delivered by automated processes; almost no humans touch semi-conductor in production these days. Robots, even. And, of course, China didn't steal American jobs, Steve Jobs and his friends sent them away. And, of course, Apple's source isn't even a Chinese (the big one on the continent), but from that little island called Taiwan.
The authors, without resorting to irony (I would, fur shur), say that Foxconn got about $3,000,000,000 (or may be $4,000,000,000) to make a plant in Wisconsin. Welfare queen. Taxpayers shouldn't pay for sports facilities, either, but that's another show. If you want a rundown, here's one.
To land the massive Foxconn factory, Gov. Scott Walker has committed the state to paying more than eight times as much per job as Wisconsin will provide under similar job creation deals struck last year, a Milwaukee Journal Sentinel analysis has found.
So, the next logical question: does capital hang around after such incentives end? Way back in 2012, the Failing New York Times published an extensive piece on corporate extortion. Worth the read.
A more caustic review, and newer, is here.
What's being discovered, but only occasionally acknowledged, is that the farm-to-factory paradigm of the 20th century no longer holds. Back then, factories absorbed displaced farm hands since skill level wasn't an impediment. Today, we've two problems: 1) new jobs are a fraction of those eliminated, and 2) new jobs simply can't be done by those displaced.
The answer, of course, is socialism, wherein the net winners compensate the net losers. GDP grows, demand is maintained, and technology can continue. If technology reaches a point where it serves only to eliminate macro-demand, it's game over. Reducing price through cost reduction of automation is meaningful only to those who remain with income sufficient to afford the new, lower price. As income concentrates, the number of demand units, aka people, diminishes. Jay Leno may have hundreds of old cars, but that doesn't do much for Ford or GM.
02 July 2018
RC and A MoonPie
One of Dr. McElhone's more fun adages went, sort of: "breakfast is an RC Cola and a MoonPie". At the time, I don't think I'd ever seen a MoonPie, New England and all that. Just to confirm, I consulted The Wiki, happily discovering I remembered correctly. The little grey cells aren't all done.
He also had a long held antipathy for pie charts. That's more common these days. Thanks to the folks at MicroSoft we get an R version of a different kind of "pie" chart. Not only is it a really effective way to present data, but look closely. Orange Julius Caesar is gulling you. Again.
There is a custom for eating Moon pies with RC Cola, although the origin of this is unknown.
He also had a long held antipathy for pie charts. That's more common these days. Thanks to the folks at MicroSoft we get an R version of a different kind of "pie" chart. Not only is it a really effective way to present data, but look closely. Orange Julius Caesar is gulling you. Again.
01 July 2018
I Still Hate Neil Irwin - part the eleventh
This time, just go read the piece. As Crooked Hillary said, her votes came from the counties that produces 65% of GDP. In other words, well fed, well educated, healthy folks do better. As pointed out here many times, the pool of white grievance is the result of unfed, uneducated, unhealthy fish belly folks voting in governments which grind them under the boot heel. And, of course, they blame Democrats. Low information voting at its finest.
Just go read the piece. I will note that Virginia, led by the DC suburbs, is throwing off the burden of Dixie. West Virginia, not so much.
Just go read the piece. I will note that Virginia, led by the DC suburbs, is throwing off the burden of Dixie. West Virginia, not so much.
Individual proposals aside, experts haven't formed a consensus on how to make economically moribund places feel more like economically dynamic ones. But it is clearer than ever that this divergence explains much of what ails the United States' economy, and just maybe its politics, too.
27 June 2018
Don't Let the Big Chunks Get Stuck
Over the years there have been commercial zero gravity rides. Whether NASA or otherwise, the name vomit comet applies. I imagine it's quite unsettling. Tender readers will recall the numerous times these missives have pointed out the coming rate inversion (that missive nearly two years ago) will have dire consequences. At one point, I offered up that when it happens it will snap your head off. Blow big chunks. Or something like that.
At long last, the mainstream sees fit to write about it. Took ya long enough, boy.
The Money Quote:
The fact remains, that American capitalists long ago ran out of new ideas how to spend all those trillions of Uncle Sugar Bucks. Risk aversion is just the polite way of saying they're greedy idiots. They've pissed away the additional trillion they got from Orange Julius Caesar on share buybacks, M&A, and dividends. None of which improve productivity, wages, or employment. Fact is, historically, M&A in particular has been a job destruction exercise. MAWA!!
At long last, the mainstream sees fit to write about it. Took ya long enough, boy.
The Money Quote:
If enough investors begin to grow concerned about a recession, they will most likely put more and more money into the safety of long-term government bonds. That buying binge would likely help flatten, or invert, the yield curve.
Then people will write articles about the curve's sending a stronger signal on recession. And that could, in turn, drive even more people to buy into long-term bonds. Rinse. Repeat.
The fact remains, that American capitalists long ago ran out of new ideas how to spend all those trillions of Uncle Sugar Bucks. Risk aversion is just the polite way of saying they're greedy idiots. They've pissed away the additional trillion they got from Orange Julius Caesar on share buybacks, M&A, and dividends. None of which improve productivity, wages, or employment. Fact is, historically, M&A in particular has been a job destruction exercise. MAWA!!
25 June 2018
Splainin Trump
What follows is, so far as I know, new. It is, too, what Dr. McElhone described as intuitively obvious to even the most casual observer. I have expected that one of the mainstream pundits would get around to offering it up real soon. Real soon hasn't happened, so here we go.
What we know so far is that Orange Julius Caesar and his followers are motivated by white paranoia and white grievance. What we don't know is why it works. Certainly the message is 'Make America White Again' before we're no longer the one race majority. This is what appeals to the lower class white folk, whose only solace in their poverty is the certainty that black and brown folk could be treated even more poorly; there is 'an other' identified to be below them on the totem pole of society. But what motivates the Koch cabal? Ain't no black folk coming to take their billions. They don't need such reassurance. What gives with them, and pretenders to their throne?
Well, it seems pretty obvious. Consider how government is run. Citizens pay taxes of various sorts, and government spends such funds on public goods. Now, when income is more or less equal, each citizen pays more or less the same amount into the kitty. A progressive income tax, which we allegedly have, weighs the wealthy more than the poor out of a sense of fairness. No one, or group, has cause to complain. It is shared sacrifice for shared benefit. Prior to the income tax, most Federal revenue was from sin taxes and tariffs, the latter being in effect a national sales tax. Some assert that the income tax (by way of amendment) coinciding with prohibition wasn't a coincidence, rather an offset to revenue source.
Which brings us to now. What we know is that income and wealth continue to concentrate. We need only recall Romney's 47% admission. It turns out that among the 47% are some quite well off citizens. But the effect remains: as income becomes more concentrated, those at the top see little reason to pay taxes for services they expect they'll never need. After all, they've got plenty of money. In order to keep the government running as it has been, requires $X. But with fewer citizens having sufficient income to be subject to the tax, those privileged ones must needs contribute more to meet the $X requirement. And they just don't want to do that. So Orange Julius Caesar lowered their taxes overwhelmingly. In due time, he'll call for raising taxes and cutting benefits on those of the 47% who aren't well off. "The American taxpayer can't afford it!!"
This is the driver for the 'Donor Class' that pushes Orange Julius Caesar and Trumpism: revenge of the privileged class.
What we know so far is that Orange Julius Caesar and his followers are motivated by white paranoia and white grievance. What we don't know is why it works. Certainly the message is 'Make America White Again' before we're no longer the one race majority. This is what appeals to the lower class white folk, whose only solace in their poverty is the certainty that black and brown folk could be treated even more poorly; there is 'an other' identified to be below them on the totem pole of society. But what motivates the Koch cabal? Ain't no black folk coming to take their billions. They don't need such reassurance. What gives with them, and pretenders to their throne?
Well, it seems pretty obvious. Consider how government is run. Citizens pay taxes of various sorts, and government spends such funds on public goods. Now, when income is more or less equal, each citizen pays more or less the same amount into the kitty. A progressive income tax, which we allegedly have, weighs the wealthy more than the poor out of a sense of fairness. No one, or group, has cause to complain. It is shared sacrifice for shared benefit. Prior to the income tax, most Federal revenue was from sin taxes and tariffs, the latter being in effect a national sales tax. Some assert that the income tax (by way of amendment) coinciding with prohibition wasn't a coincidence, rather an offset to revenue source.
Which brings us to now. What we know is that income and wealth continue to concentrate. We need only recall Romney's 47% admission. It turns out that among the 47% are some quite well off citizens. But the effect remains: as income becomes more concentrated, those at the top see little reason to pay taxes for services they expect they'll never need. After all, they've got plenty of money. In order to keep the government running as it has been, requires $X. But with fewer citizens having sufficient income to be subject to the tax, those privileged ones must needs contribute more to meet the $X requirement. And they just don't want to do that. So Orange Julius Caesar lowered their taxes overwhelmingly. In due time, he'll call for raising taxes and cutting benefits on those of the 47% who aren't well off. "The American taxpayer can't afford it!!"
This is the driver for the 'Donor Class' that pushes Orange Julius Caesar and Trumpism: revenge of the privileged class.
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