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kaleberg
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If you see interest rates as reflecting belief in a nation's future, it would appear that the US gave up on its future in the 1980s.
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The discount rate in this discussion is being used to make decisions about what to do and when to do it. Almost every last number is going to be bogus, and if you are talking about 100 to 200 years out, you need a new metric for the cardinality of the bogosity required. That said, talking about discount rates can be useful, but really only for comparing break even points. In fact, it probably makes some sense to run a variety of scenarios and see what the break even return rates are given the level of uncertainty. Trying to come up with a single number is really overreaching, even if you are often stuck having to make a single decision.
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Disney has the line jumping thing down to a science with long lines for the hoi polloi, shorter lines for those with a few extra bucks and private entrances for the VIPs. Granted, the last time I was at a Disney park, Steve Jobs had rented it for an evening so the NCC attendees could celebrate Apple going public. I got to ride every last roller coaster. Steve Jobs really shared the line jumping joy. Cowen seems to be retelling the old joke about the [famous impressario or theater owner] whose show wasn't doing too well, so he hired a horribly slow ticket booth person who soon had the line running around the block. Needless to say, the line served as its own advertisement for the production which went from the red into the black. As with many jokes, there is some wisdom there, just really not enough to sustain a whole column.
Toggle Commented Feb 20, 2015 on 'The Upside of Waiting in Line' at Economist's View
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That was also the period that the US started its big fail in ship building. The US never really managed the shift from sail and wood to steam and steel. US ship building costs were way too high. The only US built ships were either military or built for the protected US port to US port market. ---- I think 1870 is about right. Most historians place the start of the move to modernity around then with many of them focusing on the 1876 Philadelphia Exhibition with its telephone, Corliss engine and countless new inventions. (It also introduced the idea of having a decorative fireplace in one's living room, a room which soon replaced the parlor.) You could argue for the big changes wrought by the telegraph, steamship, railroad and the industrialization of agriculture that took place before the Civil War, but that system didn't really start clocking until the post-war era. There were too many gaps. The transcontinental railroad was finished in 1869, so that's another point that fits. The Civil War spending in the north, and the removal of southern obstructionists in Congress for the duration, set the stage for the advent of our modern civilization in the US. (e.g. There was no way Dixie was going to stand for a transcontinental railroad or for shipping subsidies, except maybe for cotton.)
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One thing not noted is that the US never got with it in the construction of steam powered, iron hulled merchant ships. Our costs were always much higher than most European and other producers, and we only maintained a ship building business by dint of government subsidies and restrictions on foreign vessels carrying from US port to US port. In contrast, the US was noted for some of the fastest and most cost effective sailing ships, but steam was reserved for the railroads, not for our ship building. Could this have been because of the extreme returns available from building railroads? We had an inland empire full of natural resources just waiting for a transportation solution. We also had extensive internal markets. Alternatively, it could just have been higher US labor costs.
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One of the interesting things about theses series - thank you Anne - is that you see wealth share increasing dramatically even as income share remains more or less the same. As a rentier I've come to appreciate this. After all, I don't pay taxes on increased wealth until I need the money. The downside are the underlying forces involved. Stagnant wages and a vanishing middle class mean a lack of investment opportunities which fuels an asset bubble as the prices of prestige goods, like shares of corporations, rise. I'm not complaining - pecunia non olet and all that - but this can't be healthy for our society in the long run.
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You are right. It was the antitrust driven break up that ended Bell Labs, but it was the antitrust pressures that led companies like Xerox, AT&T, RCA and Kodak to fund prestigious research laboratories, to justify their immense monopoly profits. Yeah, I noticed that about software entering a sort of coma. Still, there has been some progress. For example, Apples new Swift language uses the same type inferencing and compilation strategy as early 1970s MacLisp, and only 40 years later. Granted, I dont think they have the generic/optimized run time control of MacLisp, but they are learning. - K
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I think the real effect we are seeing is that it is so much easier to place a job ad and screen applicants that the number of job posts has soared. You used to have to place an ad in the classified section. That cost money. Now, you can go online and place ads on several job sites for next to nothing. That has to have made a difference. It's the same reason Harvard used to take one out of ten applicants, but now takes one out of sixteen. It's cheaper and easier to apply. You don't have to type out a fresh essay, you can just cut and paste and apply online. Further, Harvard used to charge $25 to apply. That should be $150 nowadays, but the current fee is only $75. If it's cheaper and easier, people will do it more.
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Silicon Valley didn't take us into space. The US government took us into space and span off Silicon Valley as a side product. Silicon Valley isn't going to solve our energy problems. The US government is going to solve our energy problems, and Silicon Valley is going to make a nice profit out of the deal. Silicon Valley isn't going to solve the problem of high telecommunications costs. The US government is going to have to do it, and there might be a few shifts in profit centers in Silicon Valley as a result. Silicon Valley was a creation and client of the US government from day one. Even Xerox PARC was created as a result of government antitrust actions, just like Bell Labs. As someone who has been following the technology since the 1960s, I recognize that we are still just mining the ideas and devices that were developed way back then. Smartphones, tablets, lightweight laptops, the internet, social networking and the like were all basically designed and even prototyped by the 1970s. Silicon Valley hasn't really produced a new idea since then. Unlike some, I'm rather unimpressed with modern social networking. In the old days, we used to copy articles we meant to read and record shows that we meant to watch so we could pretend to be well read and up to date. Now people "communicate" on Facebook and the like so they can pretend they have a social life. Maybe its an antidote to life in the suburbs. For most people I know it's just marketing. All told, I think Noah Smith is being rather credulous.
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Most people will pay more to live in an area with higher taxation. I ran the numbers a while back, and based on real estate prices, the rule of thumb is that people will pay an extra $10,000 to buy a home in an area with a 1% higher tax rate. Within a given region, the real estate agent code phrase indicating higher tax rates is "good schools", and, indeed, people will eagerly pay more for real estate in areas with higher taxes, if they feel they are getting something for their money such as good schools, lower crime rates, public transportation, good roads, medical insurance coverage, or the like.
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It was a good rant though. Software is awful. I love it, but I can't say enough bad things about it.
Toggle Commented Aug 15, 2014 on Links for 8-14-14 at Economist's View
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You are probably right. The three laws of accounting were the precursors to the three laws of thermodynamics: 1) The books have to balance. (Conservation of energy) 2) All the books have to balance. (No isolated systems) 3) The books aren't going to balance themselves. (Entropy increases and so do accounting fees) Accounting tries to capture the state of dynamic process at an instant. It isn't concerned with equilibrium. There are all sorts of identities enforced in the description produced since not everything can be directly measured.
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But raising the minimum wage can and often does have a positive impact as they are almost always spent, not saved. This means that they raise the effective demand level. Raising a CEO salary has a negative impact as the CEO is probably just going to be saved, not spent. This means little or no increase in the effective demand level.
Toggle Commented Aug 15, 2014 on Links for 8-14-14 at Economist's View
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'Any sufficiently advanced magic is indistinguishable from technology.' One of the writers for Doctor Who - possibly Ben Aaronovitch as this was from one of the Battlefield episodes with the seventh Doctor.
Toggle Commented Aug 15, 2014 on Links for 8-14-14 at Economist's View
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Maybe they should stop relying on private companies for building their software and develop the capability in house. If nothing else, the civil service system would get some continuity in the maintenance and development staff so there would be some institutional learning. The current system nearly prohibits that.
Toggle Commented Aug 15, 2014 on Links for 8-14-14 at Economist's View
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I've been involved in enough private sector software development projects to know that they have a pretty crummy on time, on the money success rate. They just don't get dragged out in public and shamed for it. This is just the way engineering projects are. They are always harder than one expects, even when one expects them to be hard. The old joke is that there is a surefire way to improve one's ability to estimate costs and time on projects: multiply your first estimate by one's age.
Toggle Commented Aug 15, 2014 on Links for 8-14-14 at Economist's View
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Replace doctor with plumber, machine operator, car mechanic, fruit picker, computer programmer, truck driver or whatever. The simple fact is that the people whining about skills shortages are almost always dead set against offering higher wages. They've built their business on $1 a gallon gasoline; they deserve to go under.
Toggle Commented Aug 15, 2014 on Links for 8-14-14 at Economist's View
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The gold standard is not only completely synthetic, but it can be gamed. Even when the gold standard was in effect, what limited money supply was the reserve requirements on fractional reserve banking. Basically, there were a set of fixed ratios that determined how much money various levels of banks could lend based on some base quantity of gold: "With a single $25,000 gold brick in its vaults, the United States Federal Reserve System may extend some $71,000 of credit to its member banks. And upon that credit the member banks may extend further credit of $550,000 with which to facilitate the commerce of the world." Fortune - Jan 1932 - Alaska Juneau - Gold Mine p120 There was no real reason that those ratios couldn't be changed. Of course, modern securitization would allow more creative mechanisms for creating large quantities of money out of small quantities of gold. Consider how subprime mortgage loans were turned into "high quality" securities just rather recently. Replace crappy loan with gold and one could easily slice and dice the claims on the gold into tranches, launder them through crooked ratings agencies, and produce certified high quality securities that could then be used as collateral for yet another round of shenanigans. The old fashioned bucket shop operators would stand in awe.
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There are two things going on here. The laws of accounting are simple. Raising the CEO pay has to reduce something else somewhere. Usually, that is worker pay, though sometimes the company borrows, stops depreciating, or uses some other tactic, but this is rare. Accounting only describes the corporate balance sheet at a synthetic instant. In theory, the compensating decreases entailed by raising CEO pay could drive overall increases in revenue which would, over time, raise worker pay, but this has never been observed on this planet, at least not since the 1970s. In other words, the CEO pay increases have come at the expense of worker pay as has been observed locally. It is possible that the Kepler satellite or one of its successors may discover a planet where this is not the case.
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Actually, Lambert never argues that there is nothing the government can do. He argues that the demand limit is related to labor's share of the economy, and that places limits on employment and capital. If the government raises labor's share by changing labor laws, minimum wages, bargaining rules or changes the tax structure, then that could change labor's share and change the constraint.
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People resent their dependency. The harder they suck the teat, the more they hate mommy.
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Perhaps this is an "if the shoe fits" sort of situation, and Larry Kotlikoff recognizes his own shoe size.
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Basically, capitalism has failed. The only thing keeping it going in through the 1970s was fear of the Soviet Union.
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The problem is that pro-business policies result in weak economies. They suck money from labor and give it to capital. They can't respond to emergencies that affect large numbers of people; they can only help selected wealthy individuals and industries. Louis Pasteur said something about luck favoring the prepared mind. In this case, anti-business policies are much better for dealing with economic problems and kindling growth. This is related to the reason wealthier individuals prefer pro-business policies, but states that prefer anti-business policies are wealthier. It's a package. There are all sorts of economic shocks, but government response and policy determine their impact. European historians have been studying this for maybe 100 years now. During a stable century, a plague or famine will be shrugged off, but during an unstable century, it would be catastrophic. (Compare the effects of the plagues in the 14th and 17th centuries in Europe. There was quite a difference.) I'm glad to see more and more "serious" economists and opinion makers are finally waking up to these contradictions in conventional wisdom. Historians have always had to deal with the facts. It's nice to see economists being forced to face reality as well.
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That New York Times article "Hold the Phone: A Big-Data Conundrum" was hilarious. The author measures the speed of his iPhone by seeing how many search hits it can find for "iphone slow". I presume he measures the speed of his car by doing a search for his license number and "too fast".
Toggle Commented Jul 27, 2014 on Links for 7-27-14 at Economist's View
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