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kaleberg
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This is a lot like the 1930s. Interest rates were extremely low, maybe 0.8% for Treasury debt, but the stock market was rising. Firms were getting more profitable, and there was a lot of technological restructuring. The indicators didn't even look that bad. In 1936, they declared the depression to be over, but it was far from it. We are in a similar situation, but we did not restructure our economy. We have low interest rates, but no stimulus to actually grow the economy. If you can tolerate risk, it is possible to make good money speculating in symbolic assets like stocks, art work, or expensive real estate. If you can't tolerate risk, you pay to keep your money in the bank. The economy is much weaker than it seems from the numbers. Incomes have not been rising, so there is no point in investing. Instead, the money flows out of the economy and into the symbolic arena.
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I think you're right. I still found it entertaining, but there is no accounting for taste. I did like the API metaphor. That's what almost killed Boeing, thinking they could break up the business into its components with clear API like contracts with their suppliers. In the real world, stuff always leaks through the API. It might work for computer services, as at Amazon, but it doesn't work everywhere.
Toggle Commented Sep 5, 2017 on Links for 09-04-17 at Economist's View
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The gig economy has definitely redefined the labor market, but it is just an extension of the ongoing elimination of employees in exchange for "consultants". I recently read a post on "premium mediocre" at Ribbon Farm, but the most fascinating thing in the whole post was the diagram of the workforce pyramid near the top. The pyramid runs: - orange void of mount doom - too big to fail - crypto bourgeoisie - premium mediocre - APIs - Bernie Precariat | AIs | MAGA Precariat - here be robots It's quite insightful. An API is an application programming interface. The precariats and AIs are those who perform the services contracted for by smart phone apps. It's a good way to describe the dividing line, enforced in part by software implementation, not contract law or evil mustache twirling villains. The crypto bourgeoisie have real jobs with benefits. The author and so many of his friends are in the premium mediocre range without real jobs and, at best, hoping for their share of goodies at Panera, or as the post put it, the best bottle of wine at Olive Garden. The real premium stuff will remain beyond their reach save for a spell of luck, either that or bitcoin. https://www.ribbonfarm.com/2017/08/17/the-premium-mediocre-life-of-maya-millennial/
Toggle Commented Sep 5, 2017 on Links for 09-04-17 at Economist's View
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Yup, it's the Friedrich List playbook. You can download it at gutenberg.org. No nation on this planet has ever industrialized without a towering trade wall to keep out kaiju.
Toggle Commented Sep 5, 2017 on Links for 09-04-17 at Economist's View
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Mazel tov.(x 2)
Toggle Commented Sep 3, 2017 on They Grow Up at Economist's View
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The Vax mainframe had three big counts against it. The Vax was incrementally billed, and Americans especially hate this. Even if commuting by bus is cheaper, owning a car means a low marginal cost of transportation. For a few dollars more one has cheap new options for recreation and shopping. People who had compute intensive projects thought nothing of running things on a PC overnight. They didn't need to budget the appropriate Vax time. The Vax did not provide as pleasant a user experience. There were latency problems which could make word processing, designing and even running a spreadsheet awkward. The system was often crowded and sluggish at times during the day. The Vax did a very poor job with graphics, even if you had a graphics ready terminal. Even at peak performance, the Vax could only drive your terminal so well given UART technology at the time. Vax software was clunkier and harder to learn. If you wanted to produce a paper, you had to learn a formatting language like roff or scribe. If you just wanted to grovel over a few numbers and produce a simple graph or two to get a sense of things, you had to learn a statistics package. Vax software had a steep learning curve. Yes, it often paid off with more power, but it was a burden, especially when you could just do it with a PC. The PC model of buying and having full use and control of one's resources was pervasive in the early 1980s. It was Diesel's dream of providing a prime mover for the working man. It was the small electric motor and Otto cycle engine that fulfilled Diesel's dream. If anything, the diesel engine is associated with centralized power.
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Houston, of course, is basically the safer, inland version of Galveston, the predominant port before Houston built its canal and took over. It would be nice to think of Houston upgrading its zoning and construction laws and spending money on further drainage improvements, but that isn't the Texas way. Still, I expect some changes, and I expect the city to be rebuilt.
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When I was an undergraduate, not at Berkeley, the big rooms were taken by the introductory calculus, physics, organic chemistry and one or two other introductory courses. Computer science seems to reign at Berkeley. Either that or the other departments have deprecated the lecture format.
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Some years back, at Argonne Labs, I saw rather charming presentation on optimization rat holes, that is, the places that one spends one's time on trying to optimize one's code. I mainly remember the first slide which was a diagram showing the various rats in their rat holes. Everyone present nodded in agreement. We had all spent some time underground among the rodents. There is something hypnotic about optimization, even when it is not needed. It's probably why code bases are factored and refactored and then multiplied by prime numbers. Since it is unlikely that the mathematics of multi-sided dice are going to change much, only the first run and perhaps a verification run of an independent implementation are important. Yes, the algorithm to prove the four color theorem can be run in seconds these days, not weeks, but it is unlikely to produce a novel answer.
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I keep thinking of the scene in the movie 'Working Girl' where Melanie Griffith finds her boyfriend naked with another woman, also naked, in a rather obvious sexual position. His first response was "It's not what it looks like."
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One would expect people with less education to be disabled more often. The jobs they can get are more likely to be body jobs, not brain jobs. Stephen Hawking can do physics in a wheelchair. Try cleaning hotel rooms or hauling two by fours without working arms and legs. One would expect states with a higher proportion of brain jobs to have lower disability rates. For every PhD analyzing genetic data there are two or three lab workers feeding the sequencers. There is a definite negative correlation between the percentage of the population with a bachelor's degree and the disability rate per capita. (If you ignore DC.)
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The main problem with this is that the same people would be controlling the availability of the productive capital and operations using that capital. There wouldn't be an adversarial relationship so it would be even easier to enter a state of corrupt crony capitalism than it is now. I'd stick with the multiple agent problem, but raise taxes so that government is a true partner in the performance of every company. That was what Berle & Means proposed back in the 1930s, and it worked fairly well.
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If that two trillion dollars in profits were repatriated, it would show up as higher real estate prices in midtown Manhattan and a higher PE ratio on the stock exchanges. Maybe a few percent of it would show up in paychecks given to real estate and stock brokers. Paying workers is a function of demand, i.e. how much workers are being paid. It has nothing to do with profits held overseas. That money is outside the economy of goods and services whether it is held here or overseas.
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Zero sum logic is ridiculous. The population wouldn't be able to increase if for every new person born someone else had to die as a result. We couldn't have had the agricultural revolution, let alone the industrial revolution.
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Graydon: A lot depends on the economics of Houston and its alternatives. Cities are created and maintained by economic forces. Look at New York City. It faces a similar problem with an increasing potential for flooding. When I was a child, the subway was never closed by floods. Now it is a common problem. Most of the wetlands of Manhattan were drained long ago and the low areas of the city raised repeatedly. Rivers still run beneath the streets and now and then damage an apartment building. Since Sandy, there has been some work on improving infrastructure, though a lot more needs to be done in the face of rising seas. The alternative would be to downsize the city and disperse its economic function. Unlike Houston, New York City's economic function is not about refineries or the locations of resources. It is about connections, amenities, and a work force, so it is highly mobile. When the World Trade Center was destroyed in the heart of the financial district, it took months to rewire all the communications involved. Why was it rebuilt in place? The city is still a terrorist target. I can see Houston not being rebuilt at scale if there were a collapse or massive restructuring of the petroleum and related chemical industries. Look at Detroit. A combination of automation and an improved national transportation network destroyed the economic forces that created it. Detroit had been sited on the Great Lakes for a lower delivered cost of steel. That downsizing could happen to Houston or New York City, but it would require something more powerful than a hurricane.
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Stross tends to be a bit apocalyptic. This is an occupational hazard. He writes science fiction for a living. Back in October, he was predicting imminent famine in England as a result of Brexit. (http://www.antipope.org/charlie/blog-static/2016/10/facts-of-life-and-death.html) He hasn't been proven wrong yet, but I suspect he is overly alarmed. Still, a good famine makes for a more salable novel than a shortage of avocado toast. A Keynesian might even look at a storm like this as a positive thing. It forces government spending whether funded by tax increases or higher debt. It is better than a military attack. Military spending has a lower multiplier than construction spending. Houston, for all its being located in Texas, was built by Texans who realized the vulnerability of Galveston to storm damage and were willing to pony up for a ship canal. I just don't see Houston as lost any more than London was lost after its great fire which happened a year after a visit by the plague. Of course, losing Houston would make for a much better novel.
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It is interesting to consider the alternative universe where the US turned protectionist, even as it de-industrialized and other trends continued. Instead of buying cheap manufactured goods from China, we'd be buying more of them from US factories. Would the prices be higher? Almost certainly, but if we had high tariffs without an outright ban on imports, there would still be a ceiling on domestic prices. Would there be more jobs in manufacturing at higher pay? Perhaps some, but there would still have been price pressure from imports and ongoing automation. In fact, automation would have been even more valuable with a high tariff wall. Higher prices mean more money to pay for production equipment. A factory which, without a tariff wall, would keep making widgets by hand until sales collapsed. With a tariff wall, it could afford to automate and earn even higher profits. A natural experiment, already ongoing, will be to see if China can leverage its manufacturing position to move up the food chain. Will they be making our jet engines in 2047, or will we still be buying them domestically. I don't consider globalization an unmitigated good. When you argue that prices are lower, you are talking about money prices, so you have to consider whether it is easier or harder to make money after globalization. It has always been hard for those with only their time to sell to sell as much time as they wish. In some ways, it is like Chayanov's peasant economy where the economic decision makers have to act under a broad variety of constraints that appear alien to modern economic theory. BTW - Thanks for recommending Chayanov.
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That's an excellent analysis of why everyone studying economics has to learn some programming. Python is a good choice. If nothing else, it is implemented everywhere and works fairly well. I like it because it uses indentation for nesting structure; Python turns a virtue into a necessity. It also has an excellent library. For example, there is a package that automatically searches Stack Exchange for useful code fragments. (https://github.com/drathier/stack-overflow-import) I think it's real. Ars Technica recently had an article by a guy who worked as tech support for a group of oceanographers circling the Antarctic. One of the big hangups was getting the winch software to work right. A winch is a big motor with a spool of rope or wire for raising, lowering or schlepping things, and winches have software that need updates and all the usual care and feeding that software requires. Learning to program as part of studying economics should provide valuable insight into the future of our economy, assuming it has one.
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Steindel: San Francisco itself really doesn't handle much cargo these days. I forget where it moved, Emeryville, maybe Richmond, on the Oakland side of the bay. One wonders how often this kind of disaster has such long term political effects. How many empires have been destroyed by contingent events, perhaps made more probable by long term trends? Reading "Climate, Geography, and the Evolution of Economic and Political Systems", recommended on this very blog, one can see how a high probability of disaster can alter the politics of nations.
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I did my jury duty up at Webster's old courthouse in Massachusetts, not far from the New Hampshire border. One of the judges welcomed us jurors and told us a few tales. They had kept the old pot bellied stove and some other antiques about to provide a bit of atmosphere. Luckily, there were no cases of the Devil vs. X that day.
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The pencil was invented because the government needed people who could read and write so it could do central planning. If you believe the online stories of how the pencil was invented, it was during the big centralization push in European kingdoms in the late 15th and early 16th centuries which created a greater need for literacy and fertile ground for more advanced writing implements. The Tudor government cracked down on the power of various nobles and the organized church. By the 17th century, upper class children were playing with alphabet blocks because reading and writing were considered essential upper class skills. School systems were restructured, usually making them more secular, to better serve the centralized planning of the state. As the secular authorities grew in strength, they encouraged reading and writing, and the class boundary of literacy moved down providing a larger pool of literate state employees. Writing wasn't just for the rich and powerful, it was becoming a middle class skill, and writing tools had to get cheaper and more convenient for them. Centralization and central planning drove the development of the pencil. The graphite in that mine in Cumbria would have stayed underground without a government created market for graphite as a writing material.
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Rick McGahey: You're right. I shouldn't have let EMJR off so lightly. It's just that this kind of thing shows up so often I get tired of being outraged. Let me get through the weekend and recharge a bit. - Kaleberg
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EJMR might not reflect official policy, but it provides a good sample of economists and those concerned with economics making what they consider rational decisions about economics and economists. It isn't pretty, but it isn't unexpected by anyone who has been paying attention. There is a basic human impulse to value work done by someone like yourself more highly than than the same work done by someone unlike yourself. Sometimes it is possible to indulge in this attitude. At other times it is not, and that often leads to resentment and sometimes genocide. EJMR is about providing an outlet to indulge in this basic human impulse, and like many basic human impulses, it isn't always pretty when indulged.
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Ronald Reagan was a disaster for most Americans. The upward redistribution first hurt the poor, but it has moved up and wiped out much of our middle class. When you are making $100K a year, you don't think much about the guy making $20K getting stuck at $20K or dropped to $15K. When you are making $400K a year, you don't think much about the guy making $50K getting stuck at $50K or dropped to $30K. The thing is that every year those numbers move up. If you look at the numbers, first Reagan and his policies hurt the poor, then the working class, then the middle class. The upper middle class is still doing well, but the Republicans have them in their sights. It's just a matter of time. One of the things about the 1930s was that the collapse hit everyone from the day laborer to the investment banker and business owner. This piecemeal disassembly of American prosperity has been more effective and harder to fight as it is always possible to argue that one is above the magic line of destruction.
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If you live outside a major city, Verizon is likely your best bet for decent coverage. I live in a town near a national park, and, for years, Verizon has provided the best, most comprehensive service. AT&T was second choice with major gaps and weaknesses in their coverage. The others were terrible with minimal coverage and then only in town. I'm sure the cost providing coverage in places like mine is borne by system users in major cities who never get more than a few hundred feet from an antenna. Again, the cities subsidize the countryside. At least there is a nice national park to visit, though a lot of folks might prefer a few bucks off their cell phone bill.
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