We all have monsters under our beds, don't we? One of mine is a furry little critter; furry because it's base, little because it's base, and a critter because it's base. It's otherwise known as the American economic structure. Humans generally either seek to maximize pleasure (the Darwinist approach) or minimize pain (the McElhone approach; you likely haven't heard of him, but that's OK). The maximizing capitalists control how our economy is structured, what goods and services we, as a group, produce. They decide, through the allocation of capital, what it is that we do. There is in economics a substudy, known as Input-Output Analysis. This consists of some fairly hairy linear programming, but also the resulting matrix, which is pretty simple and shows what industries produce what using what resources. Here's the WikiPedia article.
It's been way too long since I was a practicing economist, so I don't have to hand decadal copies (1950 - 2010, although 2010 isn't likely calculated by anyone yet) to bolster my belief that there's a furry little critter under my bed. The furry little critter looks like a robust producing economy in 1950, but merely a cotton candy cone in 2010.
How do we measure the decline of a society? How do we define decline, in the first instance? My furry little critter's most salient attribute is triviality. The capitalists have reduced us to producing mostly trivial shit most of which is just virtual shit at that, while we import ever more of the necessaries. I had considered this for some time, and I explicitly never expected to see foreign refrigerators and washing machines; too expensive to ship. Yet, Samsung is flogging them to beat the band. That's just plain wrong.
What has motivated this epistle is, naturally enough, a story in today's Times. It recounts the birth and youth of Twitter and its founder. Here, with all the sarcasm it deserves, is the money quote: "The founders likened Twitter to ice cream: not that useful, but 'a fun thing for family and friends when they are not in the same place,' Mr. Williams says." So, what the US economy is about is a bunch of twits. Oh my.
I'd say that it's high time that capitalists be brought to heel. They've done so much damage. We make military weapons of mass destruction, financial weapons of mass destruction, and silly software. No wonder the world laughs at our bitching and moaning that life's not fair. And Christine O'Donnell is just like us, and wants to be a Senator. No child left behind?
31 October 2010
26 October 2010
Promise Not to Tell?
The subject of today's epistle: vocabulary. We deal with synchronicity, serendipity, coincidence, karma. Any one will do to describe my meeting with the NY Times (dead tree edition). I don't make a point of reading the obit pages, they just come around on the guitar eventually. If there's someone I've heard of (increasingly true as one ages), or someone who'd worked in some field that is of interest, I'll pay attention.
Today, there is a cartoon in the middle of the obit page, so it's hard to walk on by. (The one on the page, isn't on the on-line page, but is the second slide in the linked slide show.) It's a New Yorker cartoon, and quintessentially so. Which drew me in, and what I found explicates the vocabulary.
I'm glad I read the piece. Mr. Cullum explains how it was that he became a cartoonist, although not a full-time professional one from the way I read it. No matter; he clearly got The New Yorker, and vice versa. He was a pilot by profession, having flown during Vietnam. Ummm. Do you sense something coming?
There's been minor kerfuffles the last few days: WikiLeaks outing our stupidity, and Karzai himself doing so with the admission that he's on Iran's payroll. Secrets are only secrets from the population who might object to decisions by the powerful, if only they knew what the people on the ground have long known. We aren't keeping secrets from the enemy, only from ourselves.
The quote that matters:
In 1966 he was sent to Vietnam, where he flew 200 missions, most in support of ground-troop operations, but at one point he flew secret bombing runs over the Ho Chi Minh Trail in Laos. "Who these were secret from I'm still not sure," Mr. Cullum told Holy Cross magazine in 2006. "The North Vietnamese certainly knew it wasn't the Swiss bombing them."
Obama might consider this.
Today, there is a cartoon in the middle of the obit page, so it's hard to walk on by. (The one on the page, isn't on the on-line page, but is the second slide in the linked slide show.) It's a New Yorker cartoon, and quintessentially so. Which drew me in, and what I found explicates the vocabulary.
I'm glad I read the piece. Mr. Cullum explains how it was that he became a cartoonist, although not a full-time professional one from the way I read it. No matter; he clearly got The New Yorker, and vice versa. He was a pilot by profession, having flown during Vietnam. Ummm. Do you sense something coming?
There's been minor kerfuffles the last few days: WikiLeaks outing our stupidity, and Karzai himself doing so with the admission that he's on Iran's payroll. Secrets are only secrets from the population who might object to decisions by the powerful, if only they knew what the people on the ground have long known. We aren't keeping secrets from the enemy, only from ourselves.
The quote that matters:
In 1966 he was sent to Vietnam, where he flew 200 missions, most in support of ground-troop operations, but at one point he flew secret bombing runs over the Ho Chi Minh Trail in Laos. "Who these were secret from I'm still not sure," Mr. Cullum told Holy Cross magazine in 2006. "The North Vietnamese certainly knew it wasn't the Swiss bombing them."
Obama might consider this.
25 October 2010
One for You, Three for Me. Two for Me, One for You.
There's been more noise these days about a Right Wingnut takeover in Congress, and what that might mean. Some have gone so far as to hope that they get both houses; the theory being that Obama will finally get the balls to put the blame where it belongs. Good luck with that.
Then, there's the pleasant cognitive dissonance about unemployment, employment, and retirement; spurred on, no doubt, by the mess in France. The bottom line (so to speak) is that, once again, it's the Distribution, Stupid. On the one hand, the Right Wingnuts destroyed defined benefit retirement plans, forcing folks into becoming investment experts for their 401(k)s. We can see how well that worked out. It's the old divide and conquer ploy. In this case, individuals are not only alone in solo lifeboats, they don't have the necessary information. With professional investment directors managing the large funds, it's much easier to level out the ups and downs and still meet the needs of the plans. Well, if the directors are not corrupt.
Pressure to raise the retirement age is presented as the panacea to Social Security (and Medicare, although not spoken) difficulties. But what happens when all those 60 somethings have to keep working? Where will the jobs be? Unless the Feds make it illegal to fire a 60 something, and give absolute preference to 60 somethings in hiring, we'll just see them (us) dying off at an earlier age, increasingly. Which, of course, is the whole point. No income, no healthcare; just die.
The problem with that, which the Right Wingnuts haven't the brains to figure out, is that the non-financial part of the US economy is increasingly healthcare. It's kind of hard to outsource hospitals and nursing homes. Not so easy to outsource doctoring, although it's been tried (diagnostics and the like shipped to India). By punishing the general population, the short term profitability blooms, but the medium to long term contracts.
Which brings me around the main point, once again: It's the Distribution of income which determines the health of an economy. What follows is a model. A model, in the scientific/engineering sense (not the luscious babe one), simply removes the extraneous noise from the real world situation, and asks "what happens next?". Einstein's relativity was a model, which he referred to as a thought experiment. Much the same.
In our model, we'll state that the population is 1,000 humans, that the only commodity produced and consumed is bread, and that there are some number of companies employing the 1,000 humans. I'll call this place Little World. At the outset, the humans produce 1,000 loaves a day, and earn enough to buy 1,000; one per human. Equality reigns. The companies earn enough in the process to remain in business, but each is small enough to be unable to affect the price of bread or the wages paid to workers. Equality reigns.
Now, let's disturb the model by asserting that the companies collude and reduce wages to the 1,000 humans by 10%. What's likely to happen? We'll assume, for the moment, that a Police State exists such that conformance is mandatory (think, "Robo Cop"). Unless the companies reduce the price of bread, they'll only sell 900 loaves; there isn't sufficient money in the economy to buy the 1,000 loaves previously. Who goes without? We'll assert some random number of 100, and that once in the No Bread group, one remains there. Let's assert that one can only survive a week in the No Bread group, so at the end of one week, we're down to 900 humans.
Can the 900 humans make 1,000 loaves? Possibly, but there's no demand for the extra 100, since there's no extra cash; thus the companies have no incentive to make the extra 100. They could then reduce the price, but there's no need for the extra 100, since there aren't any additional consumers (bread, in the model, has no bling factor, no conspicuous consumption vector).
The companies have now permanently reduced both the population and their business.
Let's look at what happens in our Real World with respect to enforced wage reductions and tax giveaways to corporations, from the perspective of our Little World. Well, we've already seen that enforced wage reductions merely lead to contraction of both population and profits for the companies; rather than selling 1,000 loaves, they now sell 900. What happens if the Police State, after the time that population has reduced to 900, agrees to reduce the companies' taxes by 10% (taxes pay for roads to and from the bread factories and homes, and a squad of Robo Cops; you thought I'd forget, eh?)? Is there any incentive for the companies to either reduce price of bread or hire more humans? Well, no. There are only 900 humans, and they're not totally stupid; they'll not breed until they're convinced that there will be enough bread for another 100 (just to pick a number at random).
So, what happens to the tax "incentive"? It gets pocketed by the companies, of course. They get more, the humans get less.
What happens if the Police State, realizing that its existence depends on a growing community of humans, instead grants bread to the humans? Well, if the 900 humans believe that the increase in bread is real and sustained, they'll demand (in the economic sense of not just wanting, but have the cash to buy) this additional bread. In our Little World, breeding is speedy, so presto-changeo, we now have 1,000 humans consuming 1,000 loaves.
So, putting demand in the hands of humans leads to growth of Little World, while giveaways to companies in Little World leads to contraction. And so it is in our Real World; where breeding is almost as speedy.
The moral of the story: taking from the many and giving to the few leads, inexorably, to destruction of the whole society. Perhaps not in the week of Little World, and that's too bad. Americans are sufficiently stupid that they don't even remember that their mess was caused by Right Wingnuts. Hell, even that Christiane Amanpour, who was supposed to be smarter than Boy George, let McConnell lie about which folks implemented the bank bailouts. For those readers who don't remember either: it was the Right Wingnut Republicans. If acts of stupidity brought retribution immediately, perhaps we could rid ourselves of so many stupid people.
Then, there's the pleasant cognitive dissonance about unemployment, employment, and retirement; spurred on, no doubt, by the mess in France. The bottom line (so to speak) is that, once again, it's the Distribution, Stupid. On the one hand, the Right Wingnuts destroyed defined benefit retirement plans, forcing folks into becoming investment experts for their 401(k)s. We can see how well that worked out. It's the old divide and conquer ploy. In this case, individuals are not only alone in solo lifeboats, they don't have the necessary information. With professional investment directors managing the large funds, it's much easier to level out the ups and downs and still meet the needs of the plans. Well, if the directors are not corrupt.
Pressure to raise the retirement age is presented as the panacea to Social Security (and Medicare, although not spoken) difficulties. But what happens when all those 60 somethings have to keep working? Where will the jobs be? Unless the Feds make it illegal to fire a 60 something, and give absolute preference to 60 somethings in hiring, we'll just see them (us) dying off at an earlier age, increasingly. Which, of course, is the whole point. No income, no healthcare; just die.
The problem with that, which the Right Wingnuts haven't the brains to figure out, is that the non-financial part of the US economy is increasingly healthcare. It's kind of hard to outsource hospitals and nursing homes. Not so easy to outsource doctoring, although it's been tried (diagnostics and the like shipped to India). By punishing the general population, the short term profitability blooms, but the medium to long term contracts.
Which brings me around the main point, once again: It's the Distribution of income which determines the health of an economy. What follows is a model. A model, in the scientific/engineering sense (not the luscious babe one), simply removes the extraneous noise from the real world situation, and asks "what happens next?". Einstein's relativity was a model, which he referred to as a thought experiment. Much the same.
In our model, we'll state that the population is 1,000 humans, that the only commodity produced and consumed is bread, and that there are some number of companies employing the 1,000 humans. I'll call this place Little World. At the outset, the humans produce 1,000 loaves a day, and earn enough to buy 1,000; one per human. Equality reigns. The companies earn enough in the process to remain in business, but each is small enough to be unable to affect the price of bread or the wages paid to workers. Equality reigns.
Now, let's disturb the model by asserting that the companies collude and reduce wages to the 1,000 humans by 10%. What's likely to happen? We'll assume, for the moment, that a Police State exists such that conformance is mandatory (think, "Robo Cop"). Unless the companies reduce the price of bread, they'll only sell 900 loaves; there isn't sufficient money in the economy to buy the 1,000 loaves previously. Who goes without? We'll assert some random number of 100, and that once in the No Bread group, one remains there. Let's assert that one can only survive a week in the No Bread group, so at the end of one week, we're down to 900 humans.
Can the 900 humans make 1,000 loaves? Possibly, but there's no demand for the extra 100, since there's no extra cash; thus the companies have no incentive to make the extra 100. They could then reduce the price, but there's no need for the extra 100, since there aren't any additional consumers (bread, in the model, has no bling factor, no conspicuous consumption vector).
The companies have now permanently reduced both the population and their business.
Let's look at what happens in our Real World with respect to enforced wage reductions and tax giveaways to corporations, from the perspective of our Little World. Well, we've already seen that enforced wage reductions merely lead to contraction of both population and profits for the companies; rather than selling 1,000 loaves, they now sell 900. What happens if the Police State, after the time that population has reduced to 900, agrees to reduce the companies' taxes by 10% (taxes pay for roads to and from the bread factories and homes, and a squad of Robo Cops; you thought I'd forget, eh?)? Is there any incentive for the companies to either reduce price of bread or hire more humans? Well, no. There are only 900 humans, and they're not totally stupid; they'll not breed until they're convinced that there will be enough bread for another 100 (just to pick a number at random).
So, what happens to the tax "incentive"? It gets pocketed by the companies, of course. They get more, the humans get less.
What happens if the Police State, realizing that its existence depends on a growing community of humans, instead grants bread to the humans? Well, if the 900 humans believe that the increase in bread is real and sustained, they'll demand (in the economic sense of not just wanting, but have the cash to buy) this additional bread. In our Little World, breeding is speedy, so presto-changeo, we now have 1,000 humans consuming 1,000 loaves.
So, putting demand in the hands of humans leads to growth of Little World, while giveaways to companies in Little World leads to contraction. And so it is in our Real World; where breeding is almost as speedy.
The moral of the story: taking from the many and giving to the few leads, inexorably, to destruction of the whole society. Perhaps not in the week of Little World, and that's too bad. Americans are sufficiently stupid that they don't even remember that their mess was caused by Right Wingnuts. Hell, even that Christiane Amanpour, who was supposed to be smarter than Boy George, let McConnell lie about which folks implemented the bank bailouts. For those readers who don't remember either: it was the Right Wingnut Republicans. If acts of stupidity brought retribution immediately, perhaps we could rid ourselves of so many stupid people.
22 October 2010
The Scales of Justice Be Crooked
Reuters has published a very long story demonstrating that it's the distribution. The author quotes all of the usual suspects. I hope this story gets very wide circulation.
This quote: "One bright red flag that policymakers seem to have missed pre-crisis was the disconnect between swiftly rising house prices and stagnant wages for most middle-class workers." is a tad misleading, in my opinion. The red flag wasn't "missed" by accident or stupidity. It was ignored, because to acknowledge it would be to demand action. Georgie Porgie and his minions weren't about to show the populace that the emperor is naked.
This quote: "One bright red flag that policymakers seem to have missed pre-crisis was the disconnect between swiftly rising house prices and stagnant wages for most middle-class workers." is a tad misleading, in my opinion. The red flag wasn't "missed" by accident or stupidity. It was ignored, because to acknowledge it would be to demand action. Georgie Porgie and his minions weren't about to show the populace that the emperor is naked.
I'ma No Lika Dat Pill
For those old enough to remember the 1960's and early 1970's, and were of college age or thereabouts, may recall a poster oft displayed in undergraduate female dorms (and de rigueur in coed dorms). Think of the Uncle Sam Army recruitment poster, with the bearded fellow pointing his pointy finger at you saying, "I want you for the US Army". Well, this other poster (and I just went and let my fingers do the searching, and didn't come with anything, but I swear I'm not hallucinating; don't listen to that bunny!) showed that skinny Paul VI pointing his pointy finger at you saying, "I'ma no lika dat pill!".
Which brings us to recent news, demonstrating, once again The South Shall Rise Again. Well, the middle leg is always rising it seems down there. Stupid people breeding like rabbits. Call me Eliteist, but when I was young and poor, poor folks knew that the only way for their kids to get out of poverty was to have as few as possible. Feed, clothe, and *educate* the bejesus out of those few was the cure. But, stupid people who listen to venal religiosity stay poor and stupid. They buy guns, teach creationism, breed, and stay poor and stupid. I guess they think that Christine O'Donnell is qualified to be a Senator just because she's just as stupid as they are. They wouldn't take their busted up car to an idiot mechanic for fixing, but they'll vote for idiots.
Which brings us to recent news, demonstrating, once again The South Shall Rise Again. Well, the middle leg is always rising it seems down there. Stupid people breeding like rabbits. Call me Eliteist, but when I was young and poor, poor folks knew that the only way for their kids to get out of poverty was to have as few as possible. Feed, clothe, and *educate* the bejesus out of those few was the cure. But, stupid people who listen to venal religiosity stay poor and stupid. They buy guns, teach creationism, breed, and stay poor and stupid. I guess they think that Christine O'Donnell is qualified to be a Senator just because she's just as stupid as they are. They wouldn't take their busted up car to an idiot mechanic for fixing, but they'll vote for idiots.
10 October 2010
A Baker's Dozen
The speech Obama should give, but hasn't the brains or balls to.
Good Evening.
The Right Wingnuts, led by John Boehner, have been telling America that all would be well, and full employment will happen overnight, if workers would just accept poverty wages and the US government give ever more tax breaks to business and the already well off. That wouldn't happen, and I have a fable to show why.
Mr. Baker owns, not surprisingly, a bakery. He employs Mr. Jones as a baker. The bakery bakes bread, from 8 am to 8 pm. Between the two bakers, they sell all of the bread they can bake. Mr. Smith arrives at 7:59 pm to get his late night snack bread, and buys the last loaf.
What would happen if the Right Wingnuts get their way, by either forcing the Mr. Jones's to work for less or giving tax breaks to the Mr. Baker's? Would Mr. Baker higher more bakers? No, of course not. There is no demand for more bread than he and Mr. Jones can bake. Any decrease in Mr. Jones's wages enforced by Right Wingnut policies would simply go into Mr. Baker's pocket. The same for tax breaks. Straight to Mr. Jones's bank account. No more bakers are employed, and the ones that are employed earn less.
If, and only if, Mr. Baker finds that he runs out of bread at 6 pm day after day for rather a while will he hire another baker. He will do this at the prevailing wage for bakers, since doing so makes him more money from the additional bread he bakes and sells. The only way for that to happen is if more Americans can afford to buy more bread.
Do not listen to Mr. Boehner. He is full of shit, and seeks only to increase the incomes of the Mr. Baker's at the expense of the Mr. Jones's. It's that simple.
Good Evening.
The Right Wingnuts, led by John Boehner, have been telling America that all would be well, and full employment will happen overnight, if workers would just accept poverty wages and the US government give ever more tax breaks to business and the already well off. That wouldn't happen, and I have a fable to show why.
Mr. Baker owns, not surprisingly, a bakery. He employs Mr. Jones as a baker. The bakery bakes bread, from 8 am to 8 pm. Between the two bakers, they sell all of the bread they can bake. Mr. Smith arrives at 7:59 pm to get his late night snack bread, and buys the last loaf.
What would happen if the Right Wingnuts get their way, by either forcing the Mr. Jones's to work for less or giving tax breaks to the Mr. Baker's? Would Mr. Baker higher more bakers? No, of course not. There is no demand for more bread than he and Mr. Jones can bake. Any decrease in Mr. Jones's wages enforced by Right Wingnut policies would simply go into Mr. Baker's pocket. The same for tax breaks. Straight to Mr. Jones's bank account. No more bakers are employed, and the ones that are employed earn less.
If, and only if, Mr. Baker finds that he runs out of bread at 6 pm day after day for rather a while will he hire another baker. He will do this at the prevailing wage for bakers, since doing so makes him more money from the additional bread he bakes and sells. The only way for that to happen is if more Americans can afford to buy more bread.
Do not listen to Mr. Boehner. He is full of shit, and seeks only to increase the incomes of the Mr. Baker's at the expense of the Mr. Jones's. It's that simple.
07 October 2010
Dee Feat is in Dee Flation, Part 6
There has been continuing discussion of the Great Recession, without much understanding of the fundamental driver. I offer up the answer. Galbraith had the real answer (to all investing decisions): Genius is a rising market. Few, without insider information or a fat margin account (shorting), make money in a falling market. There are those, humble self included, who've concluded that the Great Recession resulted not so much from the banksters evil, but the now widespread availability of retail shorts. Deflation, which is all a falling market is, is self-fulfilling when everybody can drive down prices.
The fact that the market rebounded so fast and high from March 2009, as all that shorted stock was bought back is prima facia evidence.
The fact that the market rebounded so fast and high from March 2009, as all that shorted stock was bought back is prima facia evidence.
Subscribe to:
Posts (Atom)