This post is appropriate for tumultuous times like the ones we are in now. People schooled in #Economics are well aware of the way a #FreeMarket is supposed to automatically make sure the people who need goods & services the most during a shortage in the #SupplySide will get them because they are willing to pay more because their needs are higher.
I had a minor epiphany today that saw that as the #Fallacy that it is. It always rang hollow for me, but when I learned it I was part of the culture that wants to believe it. (side note: Now, I sincerely believe that #Capitalism is mere #Secular #Feudalism, although the #ProsperityGospel types and other #Caste based #Theologies seem to make it into "old-school" feudalism)
In a rare instance, Iβa non-religious personβam going to quote the #Christian #Bible to help bring home my point. (#ItsNotAllBad)
Luke 21:4 wrote:
For they have put in a little of the money they had no need for. She is very poor and has put in all she had. She has put in what she needed for her own living.
Our current free-market pricing, aka Invisible Hand Of The Market, is the type of magical thinking we expect from theology, so why do we think it's okay for economics; a science? I think it's because it's presented in the form of a false dichotomy in the first place. The offered alternative is fixed pricing. The logical conclusion is people overbuy because of their inexorable human fear of running out and hoarding happens as a result; obviously an inefficient market condition. #Americans had a case of this early in the #COVID19 crisis where we went insane for toilet paper.
Some retail vendors dealt with the potential stock-outage dilemma by limiting the number a person could purchase on a single visit; #Rationing goods. Despite this limitation being easily hacked by nefariously thinking people, it worked in general. All we needed was a nudge that effectively put across the message, "don't be an asshole." It's hard to pull off rationing in a population of cultural capitalists who, "don't like the guvement tellin' me wut ta do."
This next thought experiment is almost impossible to do in theory, but I'm putting it into writing anyway because it points us towards better thinking. Suppose that under normal market conditions we could statistically determine the "regular" pricing for a good or service. That is a feasible activity that is done by many people in many places all the time. Now add to that the idea that we could also know either the true #Income and/or #NetWorth of people at all times. And the final element is to make the market price a linear formula of surge-pricing = regular pricing + (x percent of net-worth or annual income). This has the property of egalitarianism built into the pricing.
In our current system of capitalism, no wealthy person would ever weigh the surge-pricing of goods or services and think, "maybe I should wait." A majority of people in the middle class will be forced to think about it immediately, then others will be forced to overtime. People in poverty don't have the luxury of thinking it over, they have to do without or die. This is also obviously an inefficient market condition, except that people with power never viscerally feel its effects. Wealthy people only care about problems that hurt them personally.
A Woman Whose Husband Had Died Gave All She Had - Jesus looked up and saw rich men putting their money into the money box in the house of God. He saw a poor woman whose husband had died. She put in two very small pieces of money.
Many people whom I listen to, and read from, have eschewed the idea that the #USA can slip into autocracy, but also many I get news content from were warning early on that it definitely canβand isβhappening here.
The "jury" is out and the facts are in. We had a near miss, and it is not over. The woefully, dangerously, well-armed, misguided people who were effectively footsoldiers in this attempt did not see the errors of their ways and recant their thinking. They saw it as a tactic to growing their movement and are planning the next stages.
When comparing #Now to #Then, many experts rely on #Historians for guidance.
That is a convincing argument, but it's one that has hindsight as its aid. Suppose the historian had to decide what the cohesive ideology was as they were evaluating the aggregated news of the time as they first saw it instead of evaluating it many years after it happened.
Well, #MashaGessen has done something similar to that. I felt his words deeply when he said it and talked about what was seen in diaries and journals of the day as #Germany was becoming its worst. Those diaries match our perception of current events.
Compare the following two episodes of the #Throughline #Podcast. The first is an interview with a Historian specializing in inter-war Germany named Timothy Snyder. The second is with a Russian-American journalist, author, translator, and activist named Masha Gessen.
note Timothy's words at the 26:00 time mark
note Masha's words at the 15:00 time mark
Perhaps it's not obvious that I'm not denigrating Timothy's work based on his interview, so I'll specify that I liked what he said. I'm only picking at a little bit of it because Masha's thinking is superior about that point.
It's comparable to a lead section in Jordan Ellenbergβs wonderful book, βHow Not To Be Wrong,β when he wrote about where to armor warplanes based on the bullet holes.
Military officers had gathered and studied bullet holes in the aircraft that returned from missions. One early thought was that the planes should have more armor where they had been hit the mostβ fuselage, fuel system, the rest of the planeβ but not on the engines, which had the smallest number of bullet holes per square foot.
Abraham Wald, a leading mathematician, disagreed. Working with the SRG (Statistics Research Group) in Manhattan, he asked an odd question: Where were the missing bullet holesβ the ones that would be all over the engine if bullets were equally distributed?
They were on the missing planes, the ones that had been shot down. So the vulnerable place wasnβt where all the bullet holes were on the returning planes. It was where the bullet holes were on the planes that didnβt return.
Restricting your measurements to a final sample, excluding part of the sample that didnβt survive, creates what statisticians call βsurvivor bias.β It can cause you to come to conclusions that are entirely wrong.
The commonality is using incomplete evidence and hindsight to determine truth/reality. Masha added more evidence.
Because of that recent #PlowedBoiz & #QerNon attack on #Democracy in the #USA, a prolific amount of retrospect was undertaken by content creators of all kinds. Many seem to reflect on the claim, "This isn't us," and have discovered, "Actually it is us, and it's us often."
As we reimagine an economy of the future, economist and "Angrynomics" author Mark Blyth shares ideas for a "citizens' wealth fund." And, with COVID-19 cases spiking, reopenings are being reconsidered, including at Disney theme parks.
I'm extremely fond of the hosts Kai Ryssdal & Molly Wood as well as the content of the show even though I'm about to criticize a moment of Wednesday's show below. Their work is great, their humanity is exemplary.
Something triggered a visceral & bad feeling when I heard the quote of the venerated Adam Smith
Adam Smith wrote:
"Consumption is the sole end and purpose of all production."
Here's the gist of the content of the show before the quote:
audience question about the work-from-home market ...
high pay workers moving to low-cost locations ...
Apple can not/should not pay American level wages in China ...
can't have the same labor wage across the globe ...
why not?
WORMHOLE ...
some distracting banter ...
audience question Can has Economy not based on Consumerism? ...
Kai says no, then quotes Adam Smith...
Molly and I simultaneously have our brains go into skeptic mode and Molly's went too fast ...
There is a lot to unpack, and I'm going to come back to why I reacted to the spurious idea inside the quote later.
If Silicon Valley people move to rural places with big money flowing to them because teleworking, some of the excess money will drop on the scene, it's going to splash off onto the people that live there. Like Yacht's are disgusting opulence, but the people who built them got paid. You won't have a lot of friends in town if you tip small but they find out you are earning 1,000x the local wages. If you ask the local builders to make an ice-ring addition on your 2,000 square-foot home, you will be charged more than if the town commissioned the job for public use.
Molly, if you are reading this, write labor is not an invasive species on the chalkboard 100 times. the population of high paid people is small and if they do diaspora it's not going to change much. The place they leave will feel it more than the place they go to.
Geography dependant wages have a plethora of reasons behind them. For one, Silicon Valley with all their secrets and espionage wouldn't be able to secure their ideas if people could work from everywhere; e.g. the CIA will not move their headquarters to China. Also, the biggest players need the best people to stay ahead of the competitors, so the talent moves to where the geography pulls it to (depending a lot on the economic and moral value system of the talented). In the type of labor that requires the production of goods, or the performance of in-person services (think factories, mechanics, carpenters, lawyers, doctors, and so on), the topography of wages across the Earths surface will be dependant on supply and demand of the thing adjusted for the population density and some other factors. Land is a scarce resource and that's why in cities you have to manufacture land by creating taller buildings. Too many people want the same land, so you take the footprint of the land and multiply it by the number of floors you set on top of it to try making the footprint cheaper per square unit. This base cost of doing business raises the ask for all goods and services and has to be higher as a consequence where the population density is higher. Density decides the price of the wages, not the wages deciding the price of the land. The more economic engines a location has to attract people the higher the density gets. If your product can be delivered from afar, the owners of the company get a bigger share of the selling price, this is because they can absolutely underpay but relatively overpay a worker in Flint to build an item they sell in NYC for full price; build in low density, sell in high density. The ability to move to where things are produced to a location where people are more disadvantaged and/or the cost of living is lower can only lower the wages, never raise them. Where it moved away from becomes more desperate so asks for less to do something. When the production moves again is when the new place becomes skilled and has enough money and power to ask for more. The wages will not go up till industrialists without morals run out of downtrodden people on the Earth; better pack a lunch.
So now, what if a person is a factory unto themselves who can build in one place and deliver in another place? They are the owner and the labor of their system. If their product/service is unique enough and has value to more people than it can be produced for, they can ask whatever they want to make it wherever they want and deliver it to wherever they want. That type of person/product/service is rare indeed. Most of us and our abilities are commoditized, so if we say we won't do it another person will replace us fairly quickly. Most of also can't leave an area because we are emotionally attached to people places and things in an area and languages, and foods, and so on. We can't move like a factory and that is a disadvantage for labor.
I'm finally circling back to Adam Smith and Kai. When he said it, it sounded like it was right; like truthiness. But it bothered me like to me it felt like a broken clock that is right twice a day and close to right a lot of time in the day depending on how accurate you need the time to be. I also feel like I'm hearing a man tell me that he saw a cart pushing a horse up a street. I think Molly started to do the mathematical thing where you generalize the statement testing for counterexamples by asking questions, like what is "production", like does a mom produce babies.
I think it would be more accurate to say, extending one's life and culture is the sole purpose of all human activity and most human activity is the production of goods and the performance of services. I could be easily taking Adam Smith out of context, but I don't think I'm taking the way Kai used it out of context. Kai just finished reading parts of a nuanced question and called TLDR then quoted Adam Smith. The word "consumerism" which the audience questioner used is nuanced, the ideas of production & consumption stated in the Smith quote are nuanced, but it got whipped out there in a declarative way that was intended to stop discussion on the topic. I know nearly nothing about producing a radio show, time constraints, and so on, so I'm not assembling a posse to right this wrong, yet it compelled this post and the things linking to it.
Is a metal tool with a lifetime guarantee that you have multiple generations using ever consumed? Do I consume art when I look at a painting? Do I produce smiles for the consumption of others? Has nobody ever failed at trying to produce something? Like built something they thought was great but nobody bought/consumed it? You can't consume what has yet to be produced so consuming can't start the production.
How about this instead? Solving problems and making life easier is the sole driving force behind all innovation/invention, and popular inventions have a strong calling, so production must be done to satisfy that demand, and if the invention is difficult to make or scaling it up can lower the cost it will be produced in mass, and if the product doesn't last long it will be consumed repeatedly.
Let's think about food & shelter. We consume food, but we don't really produce it, the Earth produces it and was doing that before us, we just sort out the bad planning of nature in order to have the Earth get more made per square foot (I'm not saying that's healthy for us though.). And we do produce shelter, though we don't really consume it. Sure we use it, but the intention is not to make it deteriorate from us using it so not a consumed good. This one is for Molly, we produce babies, but not to consume them, we do it because we are compelled to.
Regarding the specific thing about consumerism from a listener, think about the parallels between illegal drugs and all other products. Illegal drugs have almost no lasting value, and if they were never introduced into the world, we would all have been better off. They are marketed in a way that people who shouldn't consume them do, and the value they cost the world is greater than the value they give their consumers. Many legal products fit that form. Advertisers, like Steve Jobs hacked brains and forced people to think they needed something they didn't, overcharged for it, and left a lot of environmental degradation in the process of doing that. So very many products would not be consumed if they weren't marketed with psychological hacks, they cost much and they deliver little. They warp culture into something it doesn't need to be and it makes the majority of people worse off for the benefit of the few.
Kai, you should have said, "yes, we could have an economy without consumerism, it just would be a different one than what we have now. I don't know if it would be better or worse, but it would probably be better the way you asked the question."
This is the embedded audio player for the show attached at the bottom of the post.
So why are #Bonds (or specifically #Treasuries), going in the @Stock Picking Discussionyou ask? Because their's very few long-range indicators of what the future will be like. (My personal favorite is population, but that will be another post because it's highly nuanced.)
Sean McHenry & Kai Ryssdal really condense a message and translate it well to normal language so that its obvious why you should care about the #BondMarket and #IntrestRates / #Yeild on a daily or weekly basis.
I'm a #Skeptic because of my experiences in life. I'm an #Optimist about the nature of our collective #humanity being more #good than #bad. I'm a #Pessimist about the people in power being far more likely to be #sociopathic than the population at large. This new thing the Financial Times is doing, #TheNewAgenda, well, it seems genuine.
They are mumbling or at least saying quietly, "hey #Capitalism, you're we're doing it wrong." They seem to be reporting with a #perspective of #introspect and #reckoning of overdue #liability #accounts of industrial capitalism. Typically, big-capitalism doesn't do introspect, it only does short term plans to beat their competitors to death.
I know it's very easy to put on a false front and get people to think you're doing something good when the #hidden #agenda, the true goal, is bad for most people. I'm going to presume innocence on the #FT here until proven otherwise. The FT was really good before this new "New-Thing" so I'm optimistic about it.
and it gave us a very foreboding message about one of the very real possibilities we are facing worldwide if my countries #Asshole in the #WhiteHouse continues making decisions to profit his ego and his massively wealthy donors bottom-lines.Just this week, that same podcast aired another show along the same lines as the one linked above called, What happens in a recession.
The show paints a grim picture for the future, but it's not a dystopian fantasy, it's a likely outcome.Because I tend to be a contrarian, I looked for a silver lining. This type of an economic downturn, while it's helping the rich, hurting the middle-class, and not affecting the poor, it will be helping the fight against #ClimateChange. We will be doing less of everything that releases carbons into the atmosphere, and less of everything that degrades the earth and sea.
This is soooo #Great! The #Economistβs #Evolutionary path into the forefront of #Government is explored and scrutinized in a delightful way in this episode. As a staunch hater of #Friedman and his almost #Nefarious contributions to #Economic thought, I'm quite pleased to hear a new wave of thinkers are coming to the fore. Binyamin Appelbaum and his book, "The Economists' Hour | False Prophets, Free Markets, and the Fracture of Society", might get me to spend money on a paper book again! It's like Binyamin finally said, "the King has no clothes." Applebaum isn't pulling punches with his content and he's not sparing any former lead politicians from blame.The interview starts at about 5:34
The page that audio comes from is https://slate.com/podcasts/the-gist/2019/09/new-york-times-binyamin-appelbaum-new-book-the-economists-hourThe attached article below is Applebaum's column in the NYT. In the event that I have readers unfamiliar with the school of Economics, don't shy away. All people have the ability to contribute to this school of thought. In general, all economists study the motivation people have for selecting goods and services with their limited resources. All you need to participate is some personal insight and some curiosity in others rationale for their decisions.
Microeconomics focuses on those atomic level decisions like if you pick whole milk over 2% or a red-colored package over a green-colored package.
Macroeconomics focuses on what happens when all of us make decisions simultaneously, and how policy and/or regulatory actions can be enacted to avoid large scale societal problems.
Just listening to this #Podcast from 2016, you know, from before #Trump was unleashed on the world with 5 infinity stones. This story reveals why plenty of #American's could reject #Hillary #Clinton.
So this is what #America's #GOP types have decided they wanted to defend. #Politics are heading to a new low in this world and that's a really low bar. It's like they all read the script for the #Tabooshow and thought, 'Remember the good old days of the Dutch East India company?' #Republican's seem to have no soul.
What's this #taboo reference? After watching #MeetThePress this morning it was pretty obvious that they just want to throw the #racist accusation out over and over again instead of talking about the economy, Iran, or #patriotism.
Woa. #America has been shitty to people for a really long time. Stole back the 40 acres and a mule, AND paid former slave holders for the value of the formerly owned slaves! We were a Trump-style country for a long freaking time.
So true that quality is a better way to live! However, as it's measured, I don't think cheaper inputs to a product or service change the GDP. To avoid double counting they won't measure components made to become part of a final product that a consumer buys; they just measure the price the final product sells at. But, if cheaper inputs lower the final products price they will sell more units and thus raise the total GDP. Is that what you meant?
The theorybiz article has many of the items that I was thinking of, especially the increasing #scarcity. For example, the topsoil in the #USA is being depleted and is a positive in the GDP figures. Increasing the farming quality so that we have no net loss of topsoil should lead to the best possible results in whatever measure is used.
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