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Randall Munroe got it right: https://xkcd.com/239/
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China really hasn't been surprising for decades now. Ever since Mao ended the cultural revolution they've been fairly predictable, even if one doesn't speak a word of Mandarin. They are an authoritarian state executing a textbook nationalist development strategy, think Bismark. If you've read the textbook, and it is available in English, China has encouraged outside investment, but wants the gains to accrue to Chinese organizations. That includes technology capture. Probably because nationalist economics is out of favor in the west, many westerners find the rather obvious Chinese strategy to be inscrutable. Initial investments are welcome, and some profits are available, but at some point foreigners will be required to turn over technology and find local partners who will then take over the business and the profits. The alternative is to get frozen out immediately while the Chinese figure out how to work around you, stealing your IP or obviating it. For example, Kenmore Air, a Seattle area aircraft maintenance company, recently signed a contract to refurbish aircraft, mainly water landing Otters, for the Chinese. I think over a hundred planes were involved. No one makes Otters anymore, but they are great planes and used all over the place where water landings are needed. The Chinese are clearly planning to learn how to build and maintain the craft. In three years or so we'll see the Chinese selling refurbished Otters. In a few more years they'll be selling new ones as the Chinese build up their aviation industry. This is Kenmore's one and only chance to make few bucks before the Chinese effectively drive them out of the business. Apple is playing against this strategy as well. They got some initial profits. Now they have to make some payments and find some partners. Once they start making real money, they'll have to make more payments and do more technology transfer to their partners. Apple will make some profits, but they will mainly be building Chinese competitors and find themselves frozen out in five to ten years. If political relations sour, I bet the Chinese government would give a go ahead for exporting iPhone clones with ripped off IP, initially to the third world. China understands the west's silly fascination with the sheer size of their market better than the US understands the east's practical fascination with the sheer wealth of the US market. Does anyone else remember the shirt tail theory? This was the idea that convincing every man in China to add an inch to his shirt tail would lead to a fortune in increased cotton sales. It was an attractive theory, but a silly one. It assumes that the Chinese cannot make their own shirt tails.
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I started investing in the mid-70s. By the mid-80s I realized that it didn't make sense to buy or sell frequently. The stuff I bought and left alone might go up and down, but eventually the overall portfolio value would go up. It wasn't worth selling losers since it was impossible to tell which companies were actually losers. I realized that I might as well let stuff ride. I've bought more shares now and then, but only sold now and then, usually when the company is sold or goes private. Once I sold some shares to pay the down payment on a condo. Despite this, someone keeps increasing my purchasing capacity. It's been totally weird.
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He misses an important point of anti-trust enforcement. It isn't just about the government winning its case, it's about the deterrent effect of that possibility. AT&T, IBM, Kodak, Xerox and other companies like that had monopolies, but were deterred for years by the government threat of litigation. If nothing else, actual litigation could be extremely expensive. AT&T, for example, always carefully skirted the edge of the anti-trust minefield. They played up their public service and accepted regulation in exchange for hefty profits. They were a widows and orphans stock, even arguing that their profits served the public. They ran Bell Labs. Despite this, they were generally reviled. It wasn't just "we don't care, we don't have to". When the movie "The President's Analyst" needed a villain, there was AT&T. AT&T was eventually broken up into components, but that was a result of technological change. Moving to digital switching made it possible to break up the system and sell long distance service separately. IBM explicitly gave up its monopoly to Microsoft. When they threw the bouquet, Bill Gates jumped higher than his competitors and caught it. Thompson argues the irrelevance of anti-trust regulation, but he misses the point. Google could have leveraged its search engine and other products even more than it does. It could have used them more effectively to move into other areas. It hasn't because it knows that it could run into litigation. Google would rather spend money on self driving cars than reviving the white shoe legal business. He is correct that technologies change and powerful monopolies evaporate, but this is arguing that in the long run we are all dead. Antitrust action, even if only tangential, is about dealing with the stormy waters now.
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Timothy B. Lee shows a remarkable lack of imagination. He focuses on food and manufactured goods. He ignores a huge number of lifestyle improvements that the wealthy can afford that the less well off cannot, but could with the redirected expenditure of resources. For example, longer vacations and improved recreational opportunities, improved, more affordable child and elder care, cleaner air and water, better transportation options to compensate for the high cost of a short commute, lower summer temperatures, better access to medical care, income security and so on. Granted, most of those improvements are unthinkable in the current political climate, but that is a function of our prevailing ideology. Ideology can be pernicious.
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Exactly. I also think that free trade has lost its luster since our elite has learned that it cannot simply buy China as it has bought many smaller nations.
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There's a strong echo of Jefferson's attitude in the common trope that Americans living in cities are not real Americans. Real Americans live on farms, out in the country. The US was half urbanized before the 1920 census. That's almost a century ago. We're all still real Americans. The more I've learned about Jefferson over the years, the less I've liked him. The more I've learned about Hamilton over the years, the more I've liked him.
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1) 1825 was definitely different. It was the first financial crisis of the industrial age. Land was no longer the primary means of production. 2) The increase in French & particularly British war spending showed up in US business magazines by 1939. The big change is in the mix of the advertisements, not the articles. 3) Hamilton had a bit part in 'Chlorine Revolution'. He helped found Patterson, NJ, the site of the first full time water chlorination plant.
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Appliances are a good start. I 3D printed a set of stove dials for an old Jenn Air cook top. They were out of print, so to speak, and I couldn't even find a set on eBay or iOffer. I used a micrometer - did you know they're all digial now - and some 3D modeling software. I uploaded the model to Shapeways and in two weeks I had my new stove knobs.
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reason: The planners of the new GERD dam system in the highlands of Ethiopia are talking about 200-300 million people living in the region. So, maybe not Uganda or Tanzania, but possibly in other regions. Alternatively, we could have good old mass starvation and malnutrition leading to epidemics. Technology has done a pretty good job holding Malthusian catastrophe at bay, but like Moore's Law, eventually there will be limits.
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It's not just the US. This is the traditional peasant view of the world. Somehow or another they are out to get us, the pure, proper citizens. They have betrayed us. They are usually fellow citizens, but marked somehow, so they are often the Jews, the kulaks, the Protestants, the Hutu, the Muslims, the women. They are, also, never the ones actually screwing the group. It's the Sufi vizier, not the Sunni sultan. I always figured that Hofstadter was just surprised to find old fashioned peasants in the US, a nation with pretensions to enlightenment.
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The 5-2 diet works pretty well for us. We started it a few years back and lost a fair bit of weight. I mentioned it to my doctor, and it turned out that he has been doing 5-2 for some years as well. Expect to see it in the headlines and other link-bait any day now. The problem is that it is hard to stay sharp for a full day with little or no food. Since I make my living based on magnetic domains, this doesn't matter to me, but someone with an active job, mentally or physically, would have a problem.
Toggle Commented May 8, 2016 on Links for 05-07-16 at Economist's View
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They always say that natural resources make a nation stupid. They are too easy. A farmer, at least, has to learn how to treat the land, what to plant, when to harvest and so on. Saudi Arabia has been in a natural resources bubble since WWII. Aramco was assembled in '44. That's a 70 year bubble. There are no Saudis who remember another way. Worse, they are trapped. The monarchy needs the religious Wahab conservatives and the Wahab need the monarchy. They have no alternative schools of thought save this medieval detente. Their protestant revolution, if they ever have one, is not likely to be soon. Granted, hiring McKinsey tends to make one stupid too. Consultants tend to make their living by guessing what the guy paying them wants to hear and giving it a gloss of research and reason. I'm guessing that this is going to be bloody.
Toggle Commented May 8, 2016 on Links for 05-07-16 at Economist's View
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My father told me the story of some of his cousins who worked with other bidders to fix the auctions of unclaimed and estate properties by the New York City. This was back in the 1930s & 1940s if I understood things correctly. He was never very precise with his chronology. The city would publish the auction notices. A group of insiders, including his cousins, would get together and decide who was going to win which auction and at what price. They would then resell the goods through their usual channels at a profit. These were English auctions, completely open, but generally ignored by the public. After all, not everyone was going to know how to dispose of such varied properties profitably. However, if anyone did interfere with the fixed bidding, the insiders would drive up the price to punish the interloper. They were professionals. They knew the merchandise. They could make sure no one outside their group ever won a bid that could make them money. I'm not sure of how this works nowadays, but it is surprisingly easy to fix auctions if they are regular and repeated and require specialized knowledge. There are countermeasures to make collusion harder, especially when the merchandise might appeal to a wider market. For example, an auction might have a hidden reserve to squelch sales at too low a price. For goods with a narrow market though it is harder to fight the oligopsony.
Toggle Commented May 8, 2016 on Links for 05-07-16 at Economist's View
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No one who has been following pro-business metrics for the last few decades should be slightly surprised. Pro-business policies have been repeatedly demonstrated to be anti-business. Anti-business policies have been repeatedly demonstrated to be pro-business. My slight surprise was that he found a neutral, not negative effect.
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I'm with Jane Jacobs and Friedrich List. Globalization is the opposite of local development. Sure, you can always find someone else who will provide what you want, but if you want to have a city or a nation, you need import substitution. All that moving manufacturing to lower wage nations does is delay capital intensive industrial productivity. Even China is working on robots, but they have the sense to want to own the business. Dean Baker is either silly or sarcastic. He argues that if we allow foreign manufacturing workers to eat our manufacturing workers' lunch, then we should allow foreign doctors to eat our local doctors' lunch. Taken literally, he proposes lowering worldwide demand and making everyone poorer. (Replacing a $20 an hour worker with $5 an hour worker means $15 less in global demand.) Taken as sarcastic, he might have a point, but a point in favor of higher tariffs and protecting local industry.
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What self-made gehenna? Trump is a pretty ordinary Republican candidate. He is for the rich and powerful and against everyone else including most of his own constituents. The only differences are that the Republicans have now completely abandoned the evangelicals and the elites are rethinking their stand on free trade. The evangelicals are played out demographically, and China is too big and nationalistic to be bought and owned by OUR elite. As for the supposed Republican bleating, I call briar patch.
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For the past decade or so we have lived with a political elite that has opposed policies preferred by 60-70% of the voters. This includes things like single payer health care, higher tariffs, more infrastructure spending, weakening Wall Street, higher taxes on the rich and so on. Those are all popular positions. It's a common situation. Any candidate who comes out in favor of any of any such popular policies that are not approved of by the political elite is hammered by the press. This election is unusual. Sanders has done surprisingly well given the obstacles. Some of this is because the press hates the Clintons. It is also because Sanders has developed alternative methods of raising money and getting his message out. Trump also has alternative means of getting his message out and his own ability to raise money. Unlike Sanders, the press loves him. Like many entertainers who have gone into politics - e.g. Franken, Reagan - he understands how to hold people's attention. He's a crowd pleaser, and he is backing at least a few popular policies unlike any other Republican running. Trump was the front runner and clear favorite. The whole stop-Trump thing, Trump is scaring Republicans idiocy, struck me as false and forced. The Republican party is about cutting taxes, doing good things for the already rich and powerful and shafting everyone else. If the road's out, use your helicopter. No clean water, build your own water plant. Trump seemed a natural fit. The only thing missing was the evangelical crowd, but anyone watching demographics knows that they have no future. Their kids are growing up and they want to have sex. The irrelevance of the evangelicals should have been the big story. Otherwise, Trump is a pretty vanilla Republican.
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Do any have an invisible hand? (Someone had to say it.)
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To Joan Robinson's credit, she ended her infatuation when she realized just how opaque both economies were. Remember, she was saying good things about North Korea back when it had a growth rate and economic level similar to South Korea's. South Korea pulled away economically and, under pressure from the US, moved to a more democratic form of government. I remember China starting to industrialize during the Great Cultural Revolution. I gather she was looking at it from that angle. I know she visited in the 60s. All those aging state industries China is trying to shut down now, hence a lot of the recent repression, were built during the era of her enthusiasm. I think someone called it the China of coal and steel. There really isn't much of an excuse though, but this kind of thing happens. I remember a lot of Jews in Russia were pro-Stalin because he was willing to include them in society in a way impossible under the tsars and Lenin. The Soviet Union, like revolutionary France, was building a totally new society. That infatuation didn't last all that long, but one can understand it. On the balance though, I'd say good things about Joan Robinson. Most of her economics and recognition of its flaws and political origins are still relevant today.
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Speaking of getting the best deal on Obamacare, if we have a few more rounds of health insurance company mergers we probably will wind up with single payer.
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Davos is like a rolling Congress of Vienna.
Toggle Commented May 4, 2016 on The Davos Lie at Economist's View
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Were these people around in the 1960s, back when Pakistan with its pro-business policies was going to own the subcontinent? It completely ignores the red-state/blue-state paradox. Businesses do better in anti-business states than in pro-business states. There's also the Nixon-Reagan paradox. Our growth rate has not yet recovered from their pro-business policies.
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It's good to see Joan Robinson getting some good press. I recently read her 'Economic Heresies' and one of her introductory economics textbooks and enjoy her skeptical style. She makes very good arguments that make a lot of the field look rather silly and tendentious, especially given the obvious political origins of most theories. It's a pity her work was never really recognized. I gather she went back and forth in her views on China. Let's face it, China has never been particularly transparent. Even now people argue about the death toll of the famine in the 1950s. I'm rather amazed anyone could say anything about the economy in the 1960s, though that is when China got more serious about industrializing. (e.g. no more backyard steel mills)
Toggle Commented May 3, 2016 on The Legacy of Joan Robinson at Economist's View
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