Rejuvenation of Unions

Richard B. Freeman finds Workers want far more representation than they currently have. A great increase in desire for unionization of their Workplace, and even greater desire for Worker representation with Management to discuss Employment issues. English-Speaking nations have shown declining Unionization and declining Worker representation since the 1980s, but the Freeman study finds this to be more the wish of Management, than the hope of Labor. He finds a majority of nonunion Labor for the first time want union representation in the mid-2000s.

Labor attitude change seems most attributable to Job Insecurity to this Author. The Fanfare of the later years of the last century proclaimed the ability of individual Workers to negotiate better Wages, Benefits, and Work Conditions than could Unions. On-the-ground Labor, though, found great difficulty in fair negotiation unless they possessed high-degree marketable Skills; even here there was considerable impediment without a shortage of those marketable Skills. Management hid, whether deliberately or inadvertently, any degradation of Employee position by usage of Offshoring and Downsizing. Both of these Trends are trickling to an effective stop (will I ever here about this one), at least as venue to hide Employment degradation. Labor feels more Insecure, Management is trying to cancel both Health and Retirement benefits, and has been increasingly restrictive of Wage Increases.

A Recession could be the impetus for a massive Unionization movement from Labor. I have never been a great Fan of Unions (I cannot see Conflict developing between two groups, Union and Management, both of whom hold MBAs), and do not perceive ordinary Workers with the economic acumen to understand when to Push, and when to hold Fast. Management, though, must be considered the faulty Party leading to Unionization. They refuse to assume responsibility for Worker health, Wealth, and Safety; the primary drive of Labor to work in the first place. Insufficient provision of the foregoing propels alternate systems of Protection. Management has always felt a responsibility to Stockholders (though it later years, this has been diverted to enrichment of Themselves), but must accept responsibility for their Employees; failure to undertake this effort will bring only extended greater troubles. lgl

Economic Movement

Here is the Real GDP Forecast of the National Association of Business Economics. The NABE sees a growth rate of 2.8% in 2007, and 3.1% in 2008. Can I believe this? Afraid not. My Instincts (thoroughly non-scientific and uneconomic) impel me to suggest a slightly less than a 2% growth rate for 2007, and a breakeven hold for 2008. Does this mean I think Hard Times are coming? No, my belief may be termed that negative externalities will drag down the growth rate in both years, and composite impacts will limit GDP growth thereafter. The negative externalities will consist of sustained Oil prices, Homeland Security will seriously begin to curtail cheap labor, the Housing Market will continue its decline (until the adverse impact of Inflation because of the Mortgage Tax Credit is neutralized), and the decline of Federal Defense Spending will cut the immediate growth rate. The composite impacts will be the longer provision period to get Oil necessitating larger and more expensive Stockpiles, the lack of replacement of Baby Boomers in the Employment rolls alongside reductions in Immigration, and the increasing Cost of materials.

Here is a Paper which could make a real contribution to Educators, if the thesis is found to be sound. I believe it is! One of the greatest Problems of the future Economies of the World will be to get the correct Workers in the right Positions. We face Worldwide curtailment of Labor resources in the years ahead, and suffer from excessive Educational Costs now; this amid an technological environment requiring ever-increasing Skill levels. We cannot afford misallocation of Labor forces in this Scenario. Most Educators deny the value of Job Counseling at the levels of Junior High, but I have always thought highly of the Japanese Educational system with its high degree of pre-destination. I only know We must start to centrally coordinate a Skills-oriented Job placement system, and provide the opportunity for Students to achieve such Goals.

Alex Tabarrock points to an Abstract of a Article by Russo, Carlson, and Meloy which defines how people can be induced to choose an inferior product over superior products. This first highlights the need for Government agency to supervise ‘Truth in Advertising’. The Issue must be expanded though, as We face higher Production Costs and expanded Resource reclamation efforts. Here is where inferior production present economic costs to the greater economy. I begin to feel like a Conservative Communist saying there should be a Government agency enabled to buy out inferior production facilities, and further granted a Mandate to exclude specific Product lines from Importation due to Product inferiority. lgl

Health Care Costs Again?

Rick Mattoon (and functionally Bill Testa) support a program of reform of Medicaid which is well Thought out, articulate, and Wrong. I still remember the early 1090s, and the famous battles between the Demand and Supply-Siders. Neither Rick or Bill come straight out and state that Funding should be cut for Medicaid, but this is the implication; along with a smell of Eligibility deprivation. There is even a Hint of reference to Medicare, not just Medicaid. It is the traditional Supply-Side argument of ‘Tax Somebody Else’ and ‘It isn’t Our fault that 80% of the World cannot afford Our Pricing structure.” What We have here is a failure to communicate! (Guess which movie!)

Let Us look at the Solution process, and see whether We can formulate some formal Rules of Orders. The First and harshest Stickler Rule which need be established consists of the Statement that People in need of Health Care must get it; any alternative to this Provision would likely produce Insurrection, if not Revolution, in this Country. Definition of this Rule melds down to the Statement: Eligibility Rules will produce nothing usable in the Health Care discussion, as We are going to provision Everyone equitably if not equally. The leads naturally into the formulation of the Second Rule of the Discussion: The Health Care Crisis consists entirely of Who exactly is going to pay for the Health Care, i.e., Business and Corporation, plus Deep Pockets, would deny all Claims; they wish to shovel all Health Care payment off on the Federal Government, funded by the lower Class workers, though they do not wish to limit themselves from any Government health benefit package available. This might be impractical from any point of view.

The Third Rule is based upon the expectation that Pharmaceutical companies, Medical Providers, Clinics, Hospitals, Rest Homes, Doctors, Nurses, and Medical Researchers all think they should be paid more. Much Lobbying effort have been expended in the last Three decades to disallow any impediment to these Groups setting their own Pay Scales. One must speculate such practice may not be the greatest benefit to this Discussion of Health Care Costs. The Third Rule must state that restrictions must be placed on the Above practice–does this sound a little like Demand argument? The most pertinent restriction I have found is practically Socialist, if not Communist; limiting Business Expenses, not to the total listed Cost, but a Tax Commission-set of Desired Payment levels. This would not limit Businesses paying true Costs or desired Wages, simply from total Expensing of what they paid. It works nicely for excessive Management salaries, excessive Patent and Copyright royalty payments, and excessive Research Costs; and even reduces excessive Profit margins at the primary Business level.

Adoption of the above Three Rules of Discussion could realistically re-pattern the entire Health Care argument. Definition of Coverage will be reduced to the proper allocation of medical resources where needed. The methodology of Health Care Cost containment focuses on the real Inflationary pressures in the health care industry. The question of ‘Who Pays’ devolves to the several lines of taxation which will bring equal Sharing of the Burden by Income access. lgl

Wave of the Future

Louis Uchitelle presents a gloss article in the NYTimes about Job Security. American Economists have avoided examination of Job Insecurity within the Economy. They enjoy the Scenario of a dynamic Economy, and add only those numbers which show a growing Economy. They would not wish to find connection betwixt Job Insecurity and loss of the Savings rate. They do not like to contemplate that the Participation rate in 401(k) programs is dropping, and contributions to such programs is falling; and never would they appreciate Anyone connecting this data to Job Insecurity. They ignore that high-Skill Jobs increasingly acquire high-level Degrees, which are becoming increasingly expensive and longer to attain. They choose to ignore the data which states that lower-Skill Jobs are falling both in terms of Salary levels and Entrance levels. The moderation of Immigration levels have escaped Economists entirely, who avoid like the Plague, any contemplation of a Shrinking, and Ageing, Labor Force. Can the Ivory Towers withstand the Winds of Change?

Some Realistic evaluation of the Economy. First, the Economy will begin to shrink through natural economic forces sometime before 2020; due to the aforementioned Shrinking and Ageing Labor Force, not supplemented by a Immigration who finds more opportunity at native home. Business will enter the realm of Labor Retention at that point, thinking to keep Employees happy, so they will stay in their Jobs longer, and maintain relatively high levels of Productivity. The average Age of Retirement will be 75 by 2020, if Business can induce it. Replacement of Retirement with ‘Working until you Drop’ will require high Wages, short Workweeks, lengthy Vacation times, and full-Route Medical benefits. Times They are Achanging!

One of the great alterations of the future Economy will be utilization of Resources. This World has to dig deeper and farther for the amounts of Resources, facing an ever-increasing Demand for those Resources. Reclamation of Product will become the Watchword of the Day, and much of the future Labor Force must be dedicated to the practice of Reclamation. Much Labor Force participation must be devoted to alternate Energy generation. We are already witnessing the shift to Service industries, and will soon be witness to the shift into Reclamation and Reuse. Longevity of Product life will replace high Sales volumes, and native Production will replace Trade as the important segment of the Economy. All of This will be accomplished inside a Shrinking Economy in numeral terms, but One with a much higher Labor Participation rate.

A Kid once asked me if I actually believed the Above. I replied simply, "Do you want to live?" Economists have a tendency to believe that the Status Quo is permanent, a fallacy enjoyed by Many throughout the human race. Capitalism will survive, if it can recognize the real Needs of the human condition. Resources may not even grow scarcer, but they will become more expensive to obtain. Massive transportation of Goods requires too much Fuel, even if it can still be obtained; simply because of the Cost of that Fuel. Short Product Life will impel major economic Costs because of Reclamation; suddenly, Production for the Common Man will be searching for high Quality. There will still be an arena for Profits, though the Margin per Item will be less, so Business will require horizontal spread of Production to supply a wide range of superior Products to a shrinking Consumer market. The Bush Presidency will probably be last of the Robber Barons seeking ‘Get Rich Quick’ Profits, at the expense of long-term viable economic integration. lgl

Debt Recovery

Felix Salmon tries a defense of Vulture Funds. The major distress of distressed-debt comes in the practice of buying up the debt. Should the Courts allow transfer of Creditor rights through purchase, after the Debt has already been abrogated by the Debtor? Felix does point out that it is a two-sided argument: the side of the Vulture stating they are Specialists of Debt reclamation, and it is a Risk-venture where they are best able to eliminate the Debt outstanding in the most amiable method to both Creditor and Debtor; while the Opponents of Vulture Funds claim this transfer of Debt obligations impose adverse impact future obligations upon the Debtor. Felix provides a very long Post, but it is worth the time to Read.

The real Solution to the Issue is clear legal establishment of the role of Vulture Funds in the eyes of the Court–something which will likely require legislative action or multinational Treaty. Two separate Venues could be adopted: 1) a disallowance of any transfer of Creditor rights, stating that extension of Debt carries the responsibility of it’s legal recovery which cannot be transferred; and 2) legal establishment of the principle that Debt recovery can only be attained through the agency of Vulture Funds, i.e., Creditors must sell their Debt to acceptant Distressed-Debt recovery agents, who are to be acknowledged and bonded to adhere to Treaty-established Standards of Conduct. The Former, for a variety of reasons too difficult to explain here, actually works out to be practically unworkable because the process of Debt-recovery in long, complex, and expensive from the point of view of litigation. The Later is very workable, actually easy to work into Trade Agreements, and brings a sound rationality to the practice of Debt recovery.

The assumption of Debt has always presented real problems of legal enforcement. The principle is simple: Creditors who extend funds to Debtors hold the unilateral right to be repaid those funds under the agreed terms of the Debt. This principle is supposed to be sacrosanct, and be a fundamental Property Right. The Courts are bound to perceive Debt abrogation as a Debtor violation of sound Business practice, and while not necessarily a felony, certainly a misdemeanor.
The Courts face real challenge in Debt abrogation Cases, therefore, because of subsidiary evidence that the Debtor could not have repaid the Debt in any case, and both Creditor and Debtor were under a misapprehension that Debt obligation fulfillment could be obtained. Specialized Debt Recovery Agents would be a great relief to the Courts, as would a formalized program of Debt Recovery. lgl

Source of Inflation

Both Mish and Caroline Baum make for an entertaining Read, but they tend to express somewhat of a skewed perception of the orientation of Inflation to the Money Supply. What is the chief element of Inflation? The Answer remains the presence of too many Dollars in pursuit of contested purchase of Goods and Services. This answer may seem somewhat convoluted, but it actually best expresses the Process. How?

Money Supply, in and of itself, is neither Victim or Victimizer in the Inflationary equation. It’s only contact with Inflation relates to placing Dollars on site of the transaction of purchase, which it really does not do. The Money Supply may place Dollars in the hands of qualified Borrowers, but does not allocate those Funds further, or make the Purchase decisions at the point of transaction. There may be some credence to the Suggestion that there may have been some misjudgements in the choice of qualified Borrowers, but when run through a Series of incomprehensible Models, is found to constitute a minor factor in the Inflation rate (explained simply: maybe 15% of the loans should not have been granted, equated in Inflation factorization as less than One-Quarter of Inflation pressure).

What does produce the Inflation then?

I do not qualify the Answer in the slightest: The real Cause of Inflation is Government Deficit Spending. Government Spending does not incite Inflation, simply because Taxes erode the Demand for Goods and Services. Government deficit spending leaves the Resource-Demanding Private Sector Money Supply unaffected, while introducing new Resource Demand, and a special Demand at that: one which always insists on first Priority through the unchecked provision of highest Price. We could here talk about a lot of other Junk, but a basic Statement says that the base equilibrium Resource price will always equal the Overtime Cost of Resource supply, if Government deficit spending consumes more than 8% of the Market share of Product (unlike Cactus, I don’t use spreadsheets and my notes are more in my head than even in minimal order; so you will have to check this information yourself). The issuance of Treasuries is exactly equivalent to printing Money, solely because it funds deficit spending. (By the way, this differs from exorbitant lending practice, as even this must meet basic repayment schedules, which Government deficit spending does not even consider). lgl

New Agendas

James K. Galbraith presents a thorough approach for a new progressive economic policy. He makes several salient points: the pressures for Free Trade come mainly from Protectionists who want guarantees of Patents and Copyrights; forcing the Chinese renminbi to revalue will increase American Consumer Costs without bringing low-Skill jobs back to this country; that Social Security is better financed than ever; and that Health Care Costs are the major danger needed to be resolved. Galbraith held me through this list, but We begin to diverge on Issues of the importance of Climate change, the importance of the Debt levels, and the real effects of proper Taxation.

Here is my proscription for a Democratic agenda (or Republican) for the new Presidency:

1) Alter Patent and Copyright law. Royalties should be limited to a Percentage of Production Costs, hopefully not to exceed 12% of Production Costs. Patent life should be extended to infinite duration, and Copyright life should not extend beyond the lifetimes of it’s Authors–Copyrights forbidden to be held by Business, Corporation, or Partnership. Amendment of current law would bring natural decrease to Health Care Costs, and remove most pressures for protectionist measures in Trade Agreements.

2) Higher Taxation does not reduce Investment in a developed Economy, nor is low taxation essential for Capital aggregation (a function of the modern Banking system). Higher Taxation actually impels greater Investments, as Business and Individuals recognize they must have more Capital working for them to maintain previous after-Tax Income. The greatest deflationary pressure that can be exercised by Anyone–Government, Business, or Individual–is the Paying-Down of outstanding Debt. Many Economists claim that devaluation of the Dollar will lead to greater Trade Advantage–Bull. Devaluation of the Dollar lessens Wages, lessens Business Profits, and raises Consumer Expenses; while hardly more Trade Product will be sold solely due to the increasingly worthless Dollar. American Trade Products needed by foreign economies will continue to be purchased to the degree they are superior, even under conditions of an advancing Dollar.

3) A Works Projects Administration should be reactivated like unto the days of FDR. There will be a distinct difference this time around. Labor will be paid at Minimum Wage levels to Those hired: Those without a Job, including Those drawing Unemployment Insurance without loss of these payments. The WPA will build nothing but that which will later be resold to the Private Sector. Focus of Projects will be on Wind Farms, other forms of Energy Production Plants, Harbor facilities, and reclamation of inner-City slums. The End of all Projects will be a viable Capital asset to be sold to the Private Sector, who will not currently build such Capital, because of the high Capitalization and long-term building schedules.
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I could go on and one, but the Reader can get the general drift. lgl

Speaking Metaphorically

I like this article because it proclaims I use nothing but metaphors, such asserted to be nothing but a form of modeling in the first place. Here is how I see it: We are in a Climate Warming pattern, and human expulsion of Greenhouse gases are simply making the process arrive faster; or We are in a stasis Climate pattern adversely affected by Greenhouse gases; or We are in a Climate Cooling pattern which is being inhibited by human emission of Greenhouse gases. How is that for metaphors?

Now I will turn to where I may not be as normal as the common run of Metaphorists. One of my great Doubts comes from the constituent properties of the Carbon deposits We are drawing upon in the first place. There had to be an essentially large amount of Carbon on the surface of the planet in the first place, in order to achieve the heavy concentration of basic Fern growth to make these Carbon deposits. It is known such Carbon deposits could not have developed underwater, though the basic Plant life needed a heavy concentration of water to their Root systems; therefore, there had to be land mass with a heavy average level of rainfall. There is speculation that it might have been an average 20 degrees hotter in Fahrenheit temperature, with a possible 150 inches more rain per year over current dispersions. There is the speculation that Carbon sequestration occurs slowly over Centuries; but contretemps, Carbon dispersal of the magnitude necessary for the levels of carbon sequestration would have required heavy emitters–most likely increased volcanic activity. Current industrial activity seems not to equal current emissions of Carbon gases from Oxidation of food by animals, and the continued volcanic activity.

Further speculation might suggest that, due to greater volcanic activity and greater Core heat of the planet, the upthrust of land mass was greater in the Past; but One has to ask if what was not flooded in the Past could be flooded in the present day because of the lack of upthrust of land mass. Mankind does hold a terrible Record where Plant life is destroyed far faster than it is replaced, for purposes of Carbon sequestration. One could inquire if raising Carbon dioxide levels could raise Climate temperatures to the levels of the Fern Age; but more importantly, how predictably long it would take to reach these levels. One must also ask if these rising Carbon dioxide levels would not diminish human habitation, while concurrently rapidly raising the Carbon sequestration levels of Plant life. If I am basically wrong in asking these Questions, I promise to stand on the Empire State Building Observation platform as it sinks into the Ocean. lgl

Practical Solutions

This is a practical article dealing with technical possibilities for dealing with climate change. Reducing the amount of Sunlight hitting the Earth stands as much more simple than Angel or Crutzen would even claim, It would only require large glass bombs carried aloft, gently propelled towards the Sun, then exploded; the glass fragments as good a deflector as Angel’s discs or Crutzen’s sulfur. The major Problem with this form of atmospheric control lies in its irreversibility; anything shot out there cannot be easily removed, if somehow We misjudged the beneficial effects. Latham and Salter utilize the idea of effectively increasing by artificial means the Cloud cover over the Earth; a sound idea which can be reversed if effects are different than desired, but one has to worry about the Concept of storm surge; additional water vapor levels will increase the Wind power of hurricanes and resultant storm surges.

Carbon sequestration approaches seem like a far more viable option to myself. Ian Jones proposes the feeding of fertilizer to plankton to get them to absorb carbon dioxide. The trouble here lies in his leaving it there. I have previously suggested plankton tanks in the Ocean, to raise the Carbon base for the production of fuel. The real problem of climate change devolves down to the conversion of Carbon deposits in the ground to gaseous Carbon products in the atmosphere through the production of energy. Whatever method adopted must either redeposit that Carbon into the ground, or replace mined Carbon deposits with Carbon products drawn from the atmosphere itself. Klaus Lackner’s artificial trees sequester carbon dioxide, but does not provide practical solution to returning the Carbon deposits to the ground; I don’t imagine he really contemplates the amounts of Carbon to be sequestered, which must eventually attain a rate equivalent to the poundage currently burned as fuel.

Practical solutions must be found to counteract the Carbon emissions currently being released. Artificial plankton growth is a viable solution, if the end-product can replace Carbon deposits as fuel source, or if We simultaneously quadruple the level of animal Ocean life; the later being one method to increase the Carbon poundage concentration. Could Fish farms in the Oceans actually handle the Carbon sequestration problem, as well as immensely increasing the supply of human food coming from the Oceans? Fishermen remember the stories of great yields from the North Banks with nostalgia; maybe the Environmentalists should do so as well. We must also begin to think of growing our fuel, as well as our food. We currently rely on the Past to supply Us with Our energy, but We have to find another way. lgl

My Own Estimates

Because of the Political climate in the Capital and the Country, I here do state all data is of my own device unless otherwise indicated, and I bear total responsibility for all Statements.

Minzie Chinn presents this excellent article on real War Costs and DoD Spending. What are the worst problems with the current matrix of Defense Spending? There is still high attrition in Junior Officers and NCO cadres, and few funds being devoted to expansion and Training of Replacements. Human material can get worn out as well as weaponry and Transport. Few in the Build-Up will have the Time in Service equivalent to the sustainable responsibility of their Rank; this fact will cause greater Casualties, and even less competent treatment of those Casualties. Translating this material to military economics; the Casualty rate will likely be 9% higher, Mission accomplishment levels some 14% less, Equipment losses (both to enemy action and maintenance failures) will be 7-8% higher, and ammunition expenditure some 21% greater. Youth and inexperience can be hazardous on the battleground (American-induced Iraqi casualties will likely increase by 20-30%). You will likely not find this in the Bush Budget, which I have not read.

Minzie Chinn states the FY2009 projected Budget at $50 bn for Iraq and Afghanistan is consistent with American Withdrawal. The $50 billion equates basically only for Transport to clear the Countries involved of Troops and Weapons of American manufacture. American support of Iraqi and Afghani military and Police forces, in the absence of American Air Power, will require Two years of rigorous Training with in excess of $10 billion of effective weaponry and material. Civil Unrest and Violent Incidents are increasing in Iraq, and Taliban military forces are rearmed and trained in Afghanistan. Marked Improvement in Iraqi and Afghani military and Polices forces must be achieved within the Short-term for such to match the Sect militias and Taliban. Current American Training practice will not provision these forces sufficiently to replace American Troops within the remaining term of George W. Bush.

Real assessments indicate that Insurgent Incidents must decrease by at least 80% through this Year in order for Iraq to avoid Civil War. The Taliban will mount a new Offensive, and it will require at least one Division of American troops to suppress it. Al Quada, the Taliban, and the Sect militias will all use neighborhood assassinations to maintain turmoil in these societies, and as source for funding, weapons storage, and Information-gathering. Native support of American and Government policy carries a Sentence of Death inside their native communities. Pakistan cannot control the Hill tribes, who continue to support the al Quada and the Taliban. The military situation in both Iraq and Afghanistan requires a military offensive in each country, mainly manned by a American troops force of 100,000 in Iraq, 30,000 in Afghanistan. The Former would cost approx. $230 bn before it realized its Objectives, while the later would require about $60 bn before it accomplished its Objectives. Neither could be concluded within the framework of the Bush Presidency. The proposed Troop surge will only provide more American Targets on site. It is really time to discuss Withdrawal. lgl

Deep-End Thoughts

Some Readers might be a little confused by this Post of PGL. There should be no confusion of this Issue. Now that the Rich have received as much in Tax Cuts as they can reasonably argue for or expect, they want to eliminate the Tax Cuts they granted to the Poor, initially introduced to get the Poor’s support for the Bush Tax Cuts in the first place. A good Rule of Thumb to utilize in consideration of Tax measures stand as Congressional salaries will always be maintained at the level most wanted by lobbyists to be reduced. This Rule applies not only for Representative and Senatorial salaries, but for Congressional Aides, Committee legal representation, and Consultants also align in the desired area of Tax rate suppression. Those whose Incomes are less than this financial boundary likely face a harsher real rate of Taxation, while Those above this level must pay exorbitant political campaign contributions to maintain low Tax rates for themselves.

The previous paragraph made some sense, at least as much as this Author normally achieves. He was considering the problem with most Wind systems, the inordinate cost of producing massive Wind generators. I said to myself this is a huge waste of Capital assets, harking back to the days of Clipper ships which were efficient and fast; I even contemplated whether a fleet of Clipper ships today could compete against the heavy carriers, but dismissed the thought because of labor Costs. My mind started to drift lazily away, as it does more and more often as I age, then I had a sudden Thought. I immediately start a quest for talented personnel to question about my sudden inspiration, stopping with the idea that all I needed do was put it out live on my Blog.

Here is the Idea:
What is necessary for an electrical Generator? Just a revolving Shaft covered with static binders, surrounded by stationary static binders; the interaction of the binders providing an electrical discharge collectable by power line. Idea: why does the Shaft have to rotate? Why can’t it be pulled forward and backwards through the cylinder? A normal Tie rope stretches and retracts as it bears alternating weight–like a Wind sail. What is Cable but a twisted metal rope, and couldn’t such twisted metal rope be coated with static energy-generating binder? How much stretch play would it take to generate electricity by a stretch-binder cable through a covering cylinder binder also serving as a power cord of discharge? Poor mathematician here, but it would depend on the clamp pressure of the cylinder cover, the grit of binder utilized, the total stretch which could be achieved per foot of cable at what constraint of cylinder–need a competent Engineer. Could such a Generator rope be plugged in while maintaining ability to be coiled and utilized in longer or shorter durations? Could such a Generator line be developed at a industry Standard capable of operation in a variety of Wind forces? Could it ever attain a Energy generation capacity equivalent to levels which drove old Sailing ships around the Globe? Could a short Sail and Boom on a free-wheeling base produce sufficient electricity to power most of the electrical needs of a home? Do I sound crazy? lgl

Modern Business Practice

This Piece by Cactus caught my eye today. The obvious answer to his query is to go traditional, which no Net exchange can match. I, owning a Video store, would go with an entire line of Puzzle Books on one side, and Newspapers and Magazines on the other side. There is an incredible wealth of the traditional Book form of Puzzles of varying complexity, and a lack of Newspaper Reading rooms where One can access World Papers; put in a Coffee-Maker, and you have an area to fascinate the kids, let the Intellectual catch up on World events, and allows you peace to choose your owned desired videos. All have potential to sell high-end Profit products with the introduction of the Coffee-Maker, alongside low Entrance-level Costs. Of course, I have never attempted Retail myself.

Mish and the Attorney General of Mississippi get it right and get it wrong. The approach may be right, but the venue may be wrong. An arbitrary demand by the State that a Company should issue Insurance of all types if they want to issue any Insurance in the State may be wrong, as Mish highlights. The State of Mississippi, though, must have some redress from reckless abandonment of Property Underwriting in the State. The key lies in following the Money, as they say in law enforcement. Mississippi and other Gulf States should instead pass legislation which stipulates all Insurance premiums should be highly taxed as Income, when and if at least 80% of said premiums are not paid out as Claims within the State. Insurers, confronted by an not unreasonable high tax rate, will find that high-Risk underwriting is necessary to avoid taxation.

Jim Hamilton has a very interesting article on Saudi practice in Oil provision. He suggests that Ghawar may be in decline, or it could be because the Saudis enjoy the power attained from maintaining a variable production capacity of 2-3 million bpd over and above normal supply. Both are highly relevant considerations, but I would like to advance other potential rationales. The Saudi know that they will have to blend their Output because of the high sulfur content in the Manaifa field, which this Author understands will become their mainstay field, with Ghawar, Haradh, and Khurais fields all cycling Water. A second rationale for Saudi curtailment of production may be financial; the Saudis believing that Buying In the World economy is not Profitable, if the Markets are overpriced Oil held underground will appreciate in value with the increase in Demand, while above-ground Capital will depreciate in value (both in the Oil fields if pumped, and in the greater economy where the Saudi will have to invest their Oil revenues). The Saudi simply do not feel like pumping heavily, and their even Pumping schedule maximizes their total Investment capacity. lgl

Utilities

This author can state positively that he knows very damned little about the Power industry. What he does know comes from articles like this one. It might be necessary to review what I do know. The initial element consists of the high Capitalization Costs of building Utilities. So high, in fact, that the normal Rent-Seeking activities of the Business world might demand a usurious Profits margin for Utilities. Such an argument can be extended to almost All of Corporate operations any more, but is especially relevant with Utilities, due to the concentration of Capital assets. The trouble comes in that the heavy Rent-Seeking in the Power industry drafts its Income from a general Populace, who lack Rent-Seeking avenues of their own. The end result brings sharp distress to the general population, while recapitalization venues are themselves sharply limited; sufficient Power generation capacity is exactly that, with no need of major expansion. The total effect is magnified by the fact that Power generation Capital has a long life-expectancy.

The Above scenario held the rationale for traditional Rate-controls in the Power industry from the Start. The sudden high Charges after Rate-controls are removed suggest there was real foundation for the Rate-controls in the first place. Another suggestive element comes in the fact that Power outages and shortages did not appear until after Rent-controls were abandoned. Utilities previously had used a lineal monopoly under Government regulation to maintain usable Power at reasonable Rates. The Power industry broke up these lineal monopolies after Power deregulation, each separate segment demanding it’s own high Profit margins. Power suddenly became too expensive for its normal Consumers.

We must ask Ourselves if the current state of affairs is normal? We do know that Utility company shareholders enjoyed a vast Windfall with deregulation, which they did not reinvest in the Power industry. We do know that segmentation of the Power industry currently demands 12-14% Profit margins not only on Product utilized, but also upon 12-14% Profit margins; the segmented levels often extending to 5-6 levels of Business interaction. Do We get some sense of artificial structuring for Rent-Seeking in these endeavors?

There are several methods to limit such devotion to Rent-Seeking and Profit margins. One is to pressure Utilities to buy their own Resource development. Another is to insist on Utilities using only State-Issued Bonds for development Capital, with the States maintaining supervisory control over Bond floatation. A third method consists on the passage of law which restrains Profit margins to 12-14% of Total Costs overall. A fourth method brings a State Supervisory Committee to pass on Utility Pay Packages and Stockholder Dividends, when and where there is any Utility debt still outstanding. It is not impossible to constrain Utility charges; one simply has to arrive at effective Solutions. lgl

Disadvantages of Trade

This is a perfect Case of Noncompliance where the Government entities involved introduced a sympathetic alleged criminal, who would gain the allegiance of the common Citizenry; leading to a minor Sentence, and on forward, general inconsequential penalties for such types of criminal behavior. It is indicative of Russian judicial procedure that they would instigate this type of ‘Show Trial’ to meet the demands of Western economies, while smiling at their own citizens, acknowledging that such criminal activity would be met with light Sentences if caught; Everyone cognizant little law enforcement resources would be devoted to curtailment of such activities.

Here stands a perfect study in the art of implementation of Trade Agreements. Different cultural traditions inhibit common policy, especially when and where One Side enjoys great Profitability, while other Participants face real economic costs. It holds the basic flaw inherent in all such Trade Agreements, which is a defeat of inherent Trade Advantages, without sufficient restitution of magnitude to make up for the loss. Bilateral Trade Agreements make some sense, when there is genuine bilateral negotiations of the terms of the Agreement. Multinational Trade Agreements can never make sense because there can never be a determinant evaluation of Gain and Loss; something accomplishable only with real estimation of magnitude of Trade and it’s Pricing.

The current Economic dedication to multilateral Trade Agreements has always brought my doubts, and so has Economic belief that Trade itself brought promise of economic prosperity. Both beliefs have suffered much actual statistical discredit since the end of WWII, but One cannot get Economists to evaluate such Evidence. The high volume of American Trade has actually lowered the real American Standard of Living, vastly increased the disparity between American Incomes, lowered the quality of available Products in the American Markets, and suppressed American Savings rates. Every Economist would likely contest one or more of the above claims, but hardly Anyone will discredit them all; and the Problem exists that they are all factual and destructive to the American economy. lgl

Individual Rights

Arnold Kling led me to an essay by Edward Fraser. Later Arnold led me on a trail to this piece by Tyler Cowen and others–follow the link. The whole causes me some discomfort, because the ideological outlook of All, both the esteemed Authors and Critiques, do not reflect my own personal beliefs on the question of personal liberties. I would leave it at that, but for the fact my Readership should have some knowledge of my own beliefs. So I decided to set myself up as a Target for the Egg-throwers.

I am afraid I possess a rather archaic, Hobbsian belief in individual rights. An Individual, in the State of Nature, has need of no rights, or is he guaranteed any rights–not even those rights We deem fundamental–like the Safety guarantee of life, protection of property, or freedom from assault. It is precisely to obtain these stipulated features that the Individual enters into society, but they are not features innate to the Individual; they are granted by the society which issues them. Society has the responsibility, though, to extend and maintain these rights; failure to provide this extension, removes the duty from the Individual to give loyalty to the society. Herein lies both the establishment of patriotism and revolution, by this fulfilled extension, or lack of such extension.

Further study of this extension process asserts there must be an equality of such extension, lest there be a causation of revolution. This equality must cover all of the relevant arena of society; i.e., travel from initial base Safeties to the realm of personal interests, personal tastes, and personal beliefs, all in order to avoid causation of revolution. Hayek placed a reliance upon Tradition, but Tradition stands only because it survived predatory counter-beliefs up to a specific period of time. Study of Tradition through the course of History highlights that Tradition has always failed in the face of stronger personal beliefs which provided Change–becoming a new Tradition. This fact establishes that Tradition must not be allowed to strangle personal beliefs, in order to avoid the extreme Change of revolution. Individual beliefs and Individual practices, whether enjoyed or detested by any segment of society, must not be constrained; much as perhaps even the Majority of society would desire suppression, individual Self-Expression must be granted. lgl

Health Care and Being Lazy

Robert H. Frank advocates the Single-Payer venue for Health Care. He basically covers all the Issues involved: achieving universal coverage, cutting down on administrative costs, ending Private Insurer evasion of unhealthy people, and would actually cost less. He misses only on a statement that a Single-Payer system would bring nationwide Pricing for health care, a methodology to fund health care capitalization in distressed areas, and curtail Charges equal to ‘What the Market will bear’ in wealthier sections of the nation. A Single-Payer system would insist on uniform standards for use of generic Drugs instead of patented Drugs; a innate Savings estimated by myself to exceed over 20% of the current Drug Cost. Readers should understand that foreign countries have shown that Health Care can be much less costly, yet still be universal in Coverage.

This article discusses the impact of allowing Generic production of Drugs from living tissue without conducting all the trials and Lab tests of the original Patent-Holder. The Bill currently proposed in Congress would allow the FDA to determine and establish what experimentation must be done by the Generic Provider. What is the real danger here, and how do We avert such danger? The answer remains easy to implement: Simply change Patent law to insist on publication of all relevant data on production of any Product at the end of the Patent life, or the Patent beneficiary will be liable to remit all funds derived through the life of the Patent when and if convicted of violation of the Freedom of Information Act. Once again, immense Savings in Health Care Cost derives from a simple, enforceable Regulation of basic Business format structure.
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Personal Comment:

I personally value Feedback on my blog, when I receive any. It tells you if you have lost your audience, or asks you to explore an idea in greater depth. It is why the Blog format is such a vital and vibrant form of Communication. That said, the Reader request I have received desiring myself to chose the 25 most relevant Posts I have made in my estimation, with links to those Posts, I believe will be long in coming. Mayhaps I will feel more historical once I have arrived at 1000 Posts, but I would not advise holding your breath. The Readers’ choice of most moving Posts will always be the most paramount in any case. lgl

Painting Oneself into a Corner

This Post is an example of Economic theory painting itself into a corner. Kosfeld, Huck, and Dillow fail to consider the Countercyclicals. Suppression of burglary and/or limitation of Sentence stringency have exterior factors. Nonsuppression of burglary, likewise for intermediate Sentences, leave more criminals on the streets which Police must supervise. Continual investigations of burglaries absorb great amounts of Police labor; labor which is diverted from more convoluted and potentially more violent crime, which take a huge number of Police man-hours to track. Nonsuppression of burglary, therefore will naturally increase other acts of Crime in other areas. A natural economic resolution of Police enforcement has already been established, with Police labor devoted to each area of Crime as to maximize Crime prevention; criminal Sentencing equally economically suiting both the interests of Crime prevention and retribution for Civic violation. Why do Economists always think they can regulate better than natural market forces?

One should read the links to Mark Thoma and Arnold Kling before reading the rest of PGL’s Post. What amazes me about both the Climate Crisis and the Social Security Crisis lies in the universal expectation that both will arrive; they will both come, but neither can be expected to be that much of a Problem. Everyone acts like the Health Care Cost issue cannot be resolved, that the federal Tax system will never be altered to fund future solutions, that the overflow of Capital by untaxed Profits cannot be diverted to absorption of the National Debt, and that Productivity and the Return on Venture Capital will always be greater than today. I would not put Money on any of those beliefs.

Ed Prescott and Greg Mankiw still seem ‘To Not Get It”. American labor can integrate the concept of Creative Destruction; they don’t like it much, but they understand it. The rub comes when these Workers ask what replaces the industries lost. Economists always respond with greater Training which they can neither afford or reach due to Jobs Skills limitations. Modern Economists would leave Labor to ‘whither and die’, a real Concept with which American Labor finds some fault. Adequate Economic Policy must devise alternate employment opportunities for all Labor, not just Advanced Jobs Skills. lgl

Budget Plans

Robert Reich generates a truly good Read with this Post, but skirts the primary Issue surrounding the federal budget. This is the fact that federal liabilities are destined to increase drastically in the years ahead, as people of my Age bracket retire–We Baby-Boomers have always been somewhat of a Social problem. The Bush venue of attack on this Problem consists of an attempt to limit the benefits of Social Security participation. This stands as a genuine political no-show. Baby-Boomers are the first Generation who fully-funded Social Security, paying an outrageous Price for Our Parents and Grandparents’ care. Conservatives desire this method basically because in this way, the basic federal Tax system does not need to revamped, so that ridiculous (real) Tax rates can be maintained; the Social Security Fund still financing a great deal of Government Spending.

Those of Democratic persuasion, like Robert Reich, would accept a position of increasing national debt, thereby insuring the ability to pay for the Democratic agenda while freed from the creative destruction of tearing down a popular Republican agenda of low (or avoidable) Taxes. It remains a pleasing format, and gains no irritation from the Electorate. The only trouble with it lies in the eventual downfall of American Credit. Such a platform with reduce the Standard of Living in this Country to the base level of some Third World nation. The American economy and Lifestyle is actually in no danger, because common Americans will not allow such degradation through a definitive course of action; the only Question is ‘How long will it take, and how bad must it get, before Taxpayers and Voters demand some effective leadership?’

It is now time for myself to propose some common actions which can be undertaken to avert future strife in the American Economy. The paramount necessity is a complete revamping of the federal Tax system. I would advise a Tax system with literally not Exemptions, Deductions, Credits, or reductions of any type (i.e., nominal Tax to equal the real Tax). Rather than the dismantlement of the Social Security program, I would advocate the elimination of all 401(k) plans of any type (including Koughs, IRAs, etc.); first, they would not matter if the tax rates were set correctly, and second, there is no limitations in the total amount of Windfall granted with these Plans due to their multiplicity.

The next Move would be against Health Care Providers–limiting the largesse which they can gain from Patents and Royalties, establishing Health Care Zones where health care personnel must be Set-Salary employees of the Zones, and setting a maximum limits to individual Charges (nominal amount) before they are adjudged to be Employees or Contract Facilities of Government agencies with no further Profits or Wages granted; where they must provide Health Care for a proscribed number of Government Patients. I estimate that 50-60% of medical Costs can be eliminated by these practices.

Most Economists, and all Health Care Providers, will violently disagree with the above Program of action, and all Taxpayers will grouch at the Tax system until they realize the advantages in it. All Taxpayers will deduct their Social Security contributions from the overall Tax, and hopefully, all State and Local taxes (nominal limits set yearly). Normal Business Expenses will be deductible, but Tax Credits for Investment will be void; an incredible increase in Employment will occur, as foreign Investment loses appeal because of high Risk and need to produce domestically (this can get to be an involved argument, so I will leave it to another Post). Is this Radical? It is, but to enter the third decade of this Century without distress, it will have to be adopted. lgl

Hot and Cold

Cactus at Angry Bear comes in with a good Post, but states there are some Comment suggestions that Congress may have more to do with it than do Presidents. My advise to Cactus would be to align real Tax rates (yearly Tax Revenues/GDP) with Changes in real GDP per capita. Further areas of investigation is how Total Tax Revenues did vary year to year (what was responsible for the alterations), and how they did affect real GDP per capita. Common Economic Thought states that Tax Revenues reductions should raise real GDP per capita, though I suspicion Tax reductions may not be beneficial in all Cases, or actually in very many cases. Reality states that Government Services must be eventually Paid, and shifting Payment forward may produce some economic generation immediately (on the Principle of making you Money work for you). The trouble resides in the fact that shifting forward Payment causes Interest payments from the Present forward, and raises future Government Liabilities while stripping out future economic incentives. Does the immediate economic gain make up for the future economic loss?

Frederic Sautet may in many ways be my ideological opposite, both in conceptualism and manner of approach to economic activities. This article represents one of those areas where We are joined on the issue. People overdraw human impact upon the environment, and to great measure. Human activity might finally attain some 20% alteration of World environmental Temperament, and even this is doubtful; there are too many natural elements of greater amplitude to inhibit massive human degeneration of the ecological system. My Return to the 1970s as inspiration: I still believe this World is beset with overPopulation. I once stated the Earth was optimally built to house a human population of a billion people, and I have seen no evidence to alter that Estimate. Mayhaps the ecological damage created by People will reduce the total Population–do I sound like a Nazi euthanasia environmentalist?

Dean Baker highlights the real intent of Trade Policy in this quick Post. That intent is to reduce American Wages to Worldwide levels, which would mean a substantial reduction in the American style of life; something never discussed by Devotees of Business Profits uber Alles. The humor behind this for an old Workingman like myself derives from the knowledge that foreign wages will rise far more rapidly than American Wages will fall, and eventual Business Profits will fall due to the added Production Costs coming from overall expensive Wage Labor. An element to relate to earlier portions of this Post, Business taxes will be much higher in the future, both in nominal and real terms of taxation, because of the current Business push to devaluate the Dollar through collection of national debt. Snidley Whiplash foiled again! lgl

Economic Imbalance

Brad Setser is an excellent economist, and this article proves it by presenting a effective summation of the Trade data. Now, that said, it is time for the other Shoe to drop. The reality of the U.S. Trade imbalance: The American economy has become "Monocrop", as agricultural economies used to be described. American industry has abandoned competition in the Labor industries, even of profitable sectors because Business management did not want to resolve the Health and Retirement Benefits issues. This has left about 12 million Workers jobless, and caused Imports to skyrocket. No amount of increased American Exports, based solely on technological products and agricultural production, will cancel the escalating American loss of the American Retail market. We must spread Our Production spectrum.

What happens if We do not spread Our Production?

Education, first of all, is not the Road to Full Employment. A basic tenet states that the higher the level of Specialized Labor, the more Capital must be vested in such Labor to maximize the potential of that Labor. The News is full of success stories–Nerds who hit it big! This is a limited market for Labor, as Wealth concentrates solely in the Royalty recipients and Purchasers farm the skilled labor connected to Patents’ exploitation out to cheaper foreign labor. The sheer amount of Capital necessary to employ all Specialized Labor effectively ranges even greater than the Trade imbalance; the American economy will never keep pace with any increased Volume of Graduates in any area of Specialty. The Push to Education only guarantees Our Unemployed and Underemployed will have a vast number of educational Degrees.

The Devaluation of the Dollar stands as the worst farce. It simply means that American Consumers will not be able to afford the Imports which they are now dependent upon. Economists often doubt my evaluations, but the Dollar could be devalued until the American lifestyle could equal Our Grandparents of the late 1930s, and We would still not have achieved a sustainable Trade balance. (Hint: Foreign economies will not outsource production to the United States, if they can produce equal or better Product at equivalent Price.) The American economy must again learn to support itself, and do so with resumption of domestic production of the greater majority of common Products utilized in the United States.

Economists have ranted against Protectionism since the Great Depression. The fact of the matter can be summed up as: No amount of Trade could possibly have forestalled the Great Depression, because of Worldwide shortage of funded Consumers. The Smoot-Hawley Act was simply a convenient Scapegoat for the disaster of Overcapitalization, Overstocked Warehouses, and lack of a Retail market. I am not suggesting We should adopt such a Protectionist tariff system, but Economics stands as a balancing act, one in which Extremes must be avoided else Sectors will begin to fail. A sensible Policy to limit Import usage and growth stands as long overdue. lgl

How the Predators Get You

Felix Salmon says he feels a little dirty when contemplating Profiteers who are already maneuvering to avoid whatever Emissions regulations which may be adopted. He detests the involvement of Banks in this debacle, based solely on a search for minor Short-term Profits. TXU can even be excused to some greater degree, due to the fact of the high Replacement Cost of replacing Coal-based energy. The Environmental damage engendered, though, stands at astronomical levels. One impediment which might forestall such dangerous initiatives could be the installation of an amendment to the ‘Grandfathering’ principle to only those facilities on the later half of their life expectancy upon Date of Implementation of the Environmental Acts. Grandfather is actually defined as Grandfather–actually old facilities.

Jeff Cornwall reveals the greater danger ahead for the American Taxpayer. His basic complaint consists of the failure to push for effective Tax Policy change, when it could have been achieved. It is here that he deviates from Reality. What is the basic thing wrong with the American Tax system? The Answer is that the Deep-Pockets (I use this term as it is anathema to Conservatives) do not pay their Taxes, but pay a much smaller amount in political campaign contributions to get out of paying their taxes. I am not talking Small Business here, but the Mega-Corporations; why, oh why, do Small Businessmen think that Corporate Executives are on their side? There is a direct correlation between a Corporate Executive President and failure to achieve a sound tax system. One should check the financial value of Tax Breaks to Small Business, and the financial value of Tax Breaks to major Corporations, and do so in terms of total tax payments saved. Small Business congratulated themselves on stealing Pennies, while the Corporate structure were raiding your Banks. Has your Average Take-Home Profits increased exponentially due to the Tax Cuts? What has happened to your State and Local taxes, as the federal government shed most of its responsibilities in these areas? Do you owe more Today than ever before, and if so, why? Most Small Businessmen are still working on their first Million, while their revered Corporate Executives are vying to be the first Trillionaire.

Steve Verdon provides some macroeconomic information which can assist Small Business people to understand what is going on. Check also his piece through a link, where he explains John Quiggin’s supposition, and his own reflection on it. The fact exists that the Income Gap grows when there is no effective progression of taxation, and that Small Business would applaud this aspect if they were on the Upside, rather on the Downside where they reside. Small Business lack the aggregate assets necessary to attain such Standing. They should be on the side of the progressive Taxers, their reluctance coming solely from forever being lumped with the Wealthy in progression levels set too low for Small Business to endure. lgl

The Gordian Knot

Anyone concerned with the American Health Care problem need read Arnold Kling, his latest article can be found here. My only complaint with Arnold’s ideas would be the simple incomprehensibility of the methodology for Those who are covered by it. The ideation is good, but the implementation remains too complicated for the average User. High Health Insurance premiums do not inhibit overuse Today, or would maximum limits on lifetime coverage. Most people are concerned with only the Present, and a debilitating Injury in a Year’s time is Mist on the Wind to themselves; they totally incapable of determination what and how much health treatment they will need in the future. People must be presented with a list of Options which they can use.

Dean Baker also provides some insight into the Health Care problem. He states We would be paying only One-Fifth as much for Proscription Drugs with elimination of the Patent monopolies extended to Drug companies. I personally do not understand his belief that foreign doctors are restricted from practice in this Country, considering the number of foreign-born Doctors currently working in this Country. Lowering of American medical standards seems of no benefit, and changing Immigration rules belongs to a more expanded Public arena. It might be of greater advantage to turn his attention to the organization of Clinics and Hospitals.

Tyler Cowen provides this Link on Purchasing Power Parity; by the way, my Choice is Number 8, but I could not explain that one here. The discussion, though, can be related to the Health Care Costs problem. National Political process afflicts almost all of the Economy, and Health Care pricing more than almost any other factor. Institutional Health Care (think AMA and Hospitals) are allowed practical carte blanche to Self-Price Settings. Doctors determine what they think they should be paid, Hospitals and Clinics get to set their own monopoly Pricing without interdiction by governmental regulation. All Health Care Providers follow the lead of the Institutional Price-setters. We will achieve no betterment in Health Care provision Cost, until We break this monopoly. lgl

Modern Business Practice

Nouriel Roubini provides an a link to this FT.com Alphaville article which is a review to a Paper basically consisting of everything you didn’t really want to know about Hedge Funds. Those of you, like myself, who find even the article daunting can just accept my probable wrong interpretation of it all: Hedge Funds need a 20% Profit to pay off as advertized, but can only manage about a 8-9% Return for an assortment of Reasons; the greatest being the shortage of Spread Bets of high yield. The Upshot of it all is the likelihood that Santa will not show up for Christmas this year, especially for Hedge Fund managers. A real trouble arises for all of Us, though, when people start pulling their money out of the Hedge Funds, an aggregate of around $1.3 trillion by Alphaville measurement. Markets will shake like the San Francisco earthquake, unless prudence is used in gradual Withdrawal of funds.

Fortress Investment Group has a subsidiary, GateHouse Media Inc., which is buying up small town newspapers, currently holding in excess of 400 Publications. The basic idea is that the real Advertising dollars come from local businesses, who want saturation of a specific area which the Internet Web browsers cannot provide now or possibly ever with the ease of a small town newspaper. Gatehouse is using conglomeration (effective Surround-Read) to saturate local-Drive distance areas for local businesses. It is an excellent business format, and troubled only by a high Debt ratio because of the purchase pricing of the newspapers.

This NYTimes article explains exactly what is wrong with the American Health Care industry, if One wishes to read the entire, lengthy thing. Xoma Ltd. is the Company reviewed, and one which has never shown an Operating Profit or marketed any Drug, but has burned up $700 million raised by Investors or other pharmaceutical companies. The major Players stay the same, and researchers are laid-off when funds draw down. The Whole is better than a Chain Letter, both because it is legal, and due to the fact that it raises more money; performance not required. Investors simply buy High, and sell Low. This is the purported justification for high Royalty Costs on new Drugs. Can I sell you some land in Florida? It is actually 8 miles from a road, but We are developing plans to put in a Golf Course. lgl

Carbon Emissions

John Quiggin is somewhat favored by myself as a Commentator, mainly due to his pursuit of the practical within the framework of the ideological. He makes the claim in this Post that there is sufficient market flexibility to handle the social costs of CO2 emissions. John thinks that emissions trading will work, and explains his reasoning. My feeling is that the level of emissions are too widespread and large (in terms of tons of Carbon released into the atmosphere) for Carbon spread neutralization. I have probably lost my Readers with that last statement, so I will try to explain.

How many trees growing does it take to neutralize the Carbon emissions of one House furnace on a yearly basis? How about the Carbon emissions of a blast furnace of a Steel Mill? The entire Problem with Carbon comes in the fact that We are releasing tons of Carbons as emissions much faster than We are fixing Carbon by Plant growth. Scientists say We are creating a sort of Blanket around the Earth to retain Heat on the Earth surface, and a Blanket equivalent to an electric blanket set on High with the Control busted. Another way of looking at it is that We need an Air Conditioning unit for the entire Planet. The only Air Conditioner We have so far is the Carbon-Fixation process of Plant growth; again, something which can be damaged by Plant destruction in occupations like timbering for Lumber, landscaping, or forest clearing for agriculture and Housing.

Certain Rules of the Road should be recognized at this Point. Real (physical) Carbon sequestration requires an equal tonnage gain in Plant growth to make up for each ton of Carbon emission. The current rate is unknown, as no one seems to desire publication of such figures, but I estimate that it takes approximately 7.8 years of Plant growth to eliminate the Carbon emissions for one year in this Country. I also estimate We destroy about 6 years of that Plant growth before it reaches the full replacement period. Carbon emissions facilities are organized in that they are constructed to supply a steady rate of production in emissions, while destruction of Plant growth is quite individualized, but can constitute even higher degrees of tonnage of Plant destruction without regulation (note Wetlands and Wildlife legislation). The final result is that We have a massive Problem with Carbon emissions, and one that can be self-perpetuating; one should consider Plant life damage from excessive Carbon emissions.

My Solution will seem simplistic, and I have mentioned it before, but consists of the massive planting of Shrubbery along Roadways and on other Public lands. Shrubs, at least to my way of thinking, present the greatest Carbon fixation capacity available among Plant life, and are probably the most Plant-resistant to excessive Carbon emissions. They can provide a natural ‘Soft Barrier’ element to reduce Traffic fatalities, and can be maintained short enough to provide Visibility. Another desirable characteristic resides in the fact that maintenance of such shrubbery produces massive amounts of Carbon product, which when chipped can provide another source of Carbon fuel, or utilized as Roadway surfacing itself with retained Carbon fixation.

How much of a Solution can such a Program achieve? Remember I have absolutely no hard numbers here, because of lack of scientific evaluation of Potentials. Still, I imagine it would take less than 28 miles of planted Roadways to Carbon fixate equal tonnage of Carbon as is emitted by a modern Steel mill, and probably 3000 planted Roadway miles to Carbon fixate the emissions of a large City. One must equally ask how many miles of Roadway are existent in the current United States, and how many of those miles of Road ditches can accommodate Shrubbery cultivation. The final Statement must be that even a Increase of 5% of Carbon fixation in this Country would reduce Carbon emissions by tens of thousands of tons. lgl

Paying for War

Steven Kyle dislikes paying for a War which he did not want, and tries to find some method to tax Those who most favored it in the first place. His suggestion is to repeal the Bush Tax Cuts for Those who make more than a quarter-million dollars per year, his reasoning being These are most likely to have supported into the War through avenue of being Republican in the vast majority. I specifically dislike this ideation, as I feel the Bush Tax Cuts should be lapsed on all Income levels; Taxpayers managed successfully to pay the Taxes of the Clinton era, and enjoyed some success in their economic endeavors–even after the Tech Bubble burst. It was a Time before the United States owed the entire World, and We had even a relatively stable Trade balance.

I possess a even more simple method to pay for the War, while most taxing Those most in favor of the War in the first place. It is so simple that I amaze myself sometimes at the rationality of my mind. The real method to target Those most supportive of the War, and the administration which advocated it, is to permanently forbid issuance of Special Appropriations for the War; i.e., the Defense Budget must finance any defensive measure or Deployment, from Now until the end of Time. Who profits Most for any American War?–the Military/Industrial Complex. Who has always did the Most for raise political campaign contributions for the current Administration?–the Military/Industrial complex. Who benefits most from Defense Budget Appropriations?–you guessed it–the Military/Industrial complex. Who has the Most to Lose if Defense Budget Appropriations are downsized?–back to the Military/Industrial complex. If all Deployment of Forces Costs must come from the general Defense Budget, who would be most interested in limiting such Deployments?–again, the Military/Industrial complex.

Could it possibly be that an Alliance could be forged between Liberals and the Military/Industrial complex? How could this possibly be? Informing Generals they had the Choice to Make: Fancy new Weapon systems, or feeding Troops in the Field. Could such a simple Statement of Policy actually lead to a reduction of Troops in the Field, and a decision which would be supported by a greater majority of Conservatives in this Country? I hereby declare Advocacy for elimination of all Special Appropriations for all Defense Spending, insisting all such Funding be covered by a yearly general Defense Budget. lgl

Personal Belief

I estimate I must be out of sorts today, or simply tired, but nothing I have read has excited me into commentary. I did entertain the idea of outlining the growth of Employeeless Businesses (think Owner-Operator); I desisted, though, due to the fact I imagine this growth may be a reflection or symptom of real failure in the Job Market. Most Laborers will not integrate the difficulties and responsibilities of business management into their Job life, except and unless other opportunities do not exist. I may be wrong, and there are trillions of rampant entrepreneurs out there ready to confront the business world. The Numbers may also suffer some inflation, in that most Online Entrepreneurs promote several business ventures under separate Company format.

There is major push coming from Those who believe We need to improve Our educational system, in order to generate increasing numbers of such Self-Starters. I have several points at issue with this prevailing agenda. First, I imagine there is a fair saturation geographically with Owner-Operator Service Businesses; they bound to confront increasing competition and difficulties of entrance as the numbers of these businesses expand, bringing sharply lowering Profit margins in this area. Second, Online Consumerism possesses additional risks in excess of the normal risks of traditional Consumerism, establishing a boundary maxima to such activity amongst total Consumerism; although all Consumption is likely to increase. Entrance into Online Merchandising is too low-Cost and easy for such activity to have not reached some degree of saturation of Market, at viable levels of Profit margins. I do not expect there will be much expansion in this arena, or in the overall Prospectus of the Owner-Operator network.

The emphasis on advanced Education seems to be misplaced in my estimation. Increased Numbers of highly-trained Researchers appear unlikely to advance Research efforts more rapidly (experimental trials take the appropriate period of development) which cannot be splintered much further than its current too-rapid course, and excess numbers of Researchers will simply lower their Pay packages without speeding the Work. It is also not a question of devotion of Research funds, as avoidance of Tax is at an all-time High for both Business and Individual Tax-payers.

Certain realities should be understood, when studying future development. Highly-trained Labor has only limited opportunities to exploit their training, and there is only constrained availability to create their own opportunity. Average Students will never grace the higher halls of Academia, or could they ever find Employment in their chosen fields if they could graduate. Concentration upon Advanced Skills Labor using high-tech Production methods will never employ the greater number of Laborers produced by Our lower Educational systems, and will cripple efforts to raise the overall Standard of Living. Current practice increases both domestic and international disparity of Income between Rich and Poor. lgl

Inequality of Income

Tim Worstall started an argument on the direction of Global Equality of Income, which this later Post critiques. I have written on related material over this Issue previously, but think I can add some ideation to my other less clear specifics. Tim sincerely believes that Global Inequality is narrowing, and says such Inequality should be studied by Populations rather than by Countries. I believe he is right in this aspect, but doubt his assurance that Inequality is narrowing. The entire process is troubled by In-Country economic activity–things like the internal Inflation rate, Government regulation and taxation, and Investment pressures.

Chinese labor is indeed drawing greater Pay, but Pay which is equivalently matched by Inflation, and that Pay is only going to that Labor which is concerned with the Export economy. The Chinese labor which work in internal Production industries are being squeezed by the Inflation generated by the Export economy. India matches this aspect of the Export economy; in both Cases, the Labor of the internal Production economies are being suppressed by lowering real Wages due to Export-generated Inflation. The Chinese and Indian labor actually being suppressed make up 75% of the Chinese Labor force, and 85% of the Indian Labor force. Categorization of these Labor forces being better-off is a major over-Statement, as overall Inflation in the two nations can be considered approximately a real 7% per Year.

Limitation of Investment Opportunity, high Consumer Prices–especially on Big-Ticket items, and Government pressure for a high Savings rate (at least in China) actually constrain the increase in Income for these Labor forces. China is particularly bad, considering the poor performance of the Chinese Banking system; where Bankers are corrupt and use acquired Funds to make bad loans (Chinese Bankers treat Deposits like the Federal Government treats the Social Security Trust Fund–no real Intent to repay the Deposits). One cannot claim Chinese or Indian labor is truly better off.

Central and South America serve as a great Counterpoint. Vast numbers of Laborers have been unemployed by the Globalization process south of the American border, Product Purchasers fleeing to the cheapest-Produced Product; irrespective of the Living Standards of Labor, or the hard-won Labor guarantees fought for by Labor over the decades. Globalization simply insists that Labor be left as bereft of Protection as Chinese or Indian labor, else they will be unemployed. I imagine there is some widening Inequality resident in this Practice.

Those who rant against all Trade barriers may willfully ignore such Conditions, but these impact Inequality most forcefully, and to the detriment of native Labor. An old adage was used in the 1920s: What is good for Business, is Good for America. It was not relatively true then–consider the following Great Depression–actually brought on by a lack of funded Consumers; and it again appearing to damage the American and World fabric Lifestyle. lgl

The New Deal

This Discussion by Brad DeLong and Arnold Kling over the Great Depression makes me laugh, not because of anything they present, but simply that the Points have been repetitiously given without much understanding. Readers should consider these facts when evaluating the New Deal:

1) The New Deal lasted over several FDR administrations under circumstances of Political dealing of the order seen today; the Survivor of the New Deal–Harry S. Truman–was not even known on the national stage when most New Deal legislation was passed. The chicanery of Political motivation of the New Deal, if anything, was greater than in Washington Today. Truman was chosen as the last Vice-President solely based upon his Work in the Senate eliminating Pork Barrel from Government War Contracts.

2) Much Legislation was passed in this lengthy era, and all of it loaded with Special Interest deals. No coherent economic policy was ever clearly defined during the New Deal, and most of the unworkable activity was gone by 1950, as one of the Commentators stipulated. The American people found real economic merit in those Programs which they retained.

3) The third element in consideration of the New Deal which has to be considered is the Question: Are the Programs, as initially designed, at fault; or is it later economic policy which has dislocated these Programs? One may ask how One can determine if it is faulty later economic policy which has been at fault. Health Care Costs are exploding, but why does this occur; could it be that Government policy facilitates Rent-Seeking in the Health Care industry? We have developed Labor-Saving equipment, in all aspects of Government activity; why then are Government Labor Costs ever-increasing? Why is there such consternation about Social Security and Medicare; when they purportedly have decades of accumulated Savings; is it not because a lobbied Congress and President prefers expenditure of these Savings, rather than increasing Taxes to pay for other Government services?

4) There is not a single Survivor program from the New Deal still existent which has not fulfilled it Designed or evolving function throughout the interim period since the New Deal. There is not a Survivor program from the New Deal which will not continue to function for the American people, if allowed to function as originally designed; what the Nay-Sayers worry about is the disturbance of later economic policies which will be engendered, unless the original programs are amended or eliminated. lgl

Anger of the Economic Gods

Two Posts caught my eye today; one by PGL at Angry Bear, and the other by Chris Dillow. The first article is a Critique of a Tim Worstall piece, where PBL states that Tim ignores the Leontief Paradox. The piece by Chris Dillow sprays contempt upon the outright Rent-Seeking by Those seeking to get rid of the Inheritance Tax. Before We get started, though, I would advise Readers to check out the links provided by Dillow.

People may not associate the two Pieces, but there is a relationship. Each examines a form of Tax upon Inheritance, and which is more extreme? The Dillow thesis, if I may put words in his mouth which he most certainly object to, would contend that entrpreneurial Profits were too excessive and insufficiently taxed previously, while Beneficiaries would want to maintain such untaxed position. The Factor Price Equalization theorem assumes Wages will equalize under the impact of Free Trade, with the codicil that the markets are perfectly competitive. Can Labor markets ever be perfectly competitive?

It can be hypothesized that, in the face of competition, low-Wage Workers will drag down the Wages of high-Paid competitive labor. Can the Counter-Hypothesis be stated as positively? By the way, here also is rationale for the Leontief Paradox. Low Wages come from traditional societies, where Culture and Social mores place much greater impediment to Wage increases. One of the greatest of Lifetime forms of Taxation comes in refusal to provide Universal Education to the entire Workforce. Inability to integrate modern Labor techniques implant sharp limitations to higher Wages, while often still allowing Labor to do basic Production functions under necessary supervision. Wage Equalization downwards with loss of high-paid labor will be rapid, while Wage Equalization upwards will always be Snail-slow, especially in the face of educational impediments.

What have I produced here? Great Scott, I may have even presented justifications for the presence of Trade barriers. Could I have meant to do this? The great God, Free Trade, may even become angry. Even worse, the great Devil, Taxation, may be equally as mad; somewhere in there I may have implied that diversification of Tax placement will always breed greater Inequality of Income. One has to stand upon a platform of Equal Pay for Taxation, else the Income levels will flee from each other. The Poor can demand Pay increases to pay for Taxes, and join the Middle Class in demands that the Rich pay their fair share of the Taxes. I may have outraged all of the Economic Gods this day! lgl

Budget Woes

Bloomberg cites the Bush Budget which wants a increase of 4.2% for the next fiscal Year; well, actually only for the Defense Dept. and Homeland Security, every other Agency to get only a 1% increase in Spending–Pentagon and Homeland absorbing their further share. The total Budget is supposed to total some $2.9 trillion. It has the gall to suggest a Budget surplus in 2012 of $61 billion if it is adopted. This is an outright Lie, as it also sponsors renewal of the Bush Tax Cuts. The Estimate for the Budget surplus could only have reached $61 bn if the Bush Tax Cuts were not renewed. Indeed, the proposed Budget advocates $237.3 bn in further Tax Cuts, and stands rigid on leaving the Cost of the Iraq and Afghanistan Wars Off-Budget.

Here is the real rub–can you hear the gear burn? The 12% Defense Budget increase in not for Equipment to fight the Wars we are presently engaged in, or in finding sufficient Manpower to fight the Wars; it is solely for the development of Super Weapons of value only to the Mega-Corporations of the military/industrial complex We cannot put War On-Budget, as such drastic measures would endanger the Profit Margins of the greatest Bush corporate allies. The only good thing about the Bush Budget is that no Democrat or Republican will touch it with a Presidential Election looming; the Bad news states that Congress will only make the Budget worse for American Taxpayers to garner Votes.

The realistic thing is for Congress to pass a law stating that Federal Expenditures cannot exceed the Federal Expenditures of the current Year, and that the President is tasked with proposing what Agencies, Departments, and Budgets are to be shut down, and in what order, to meet that legal necessity. Congress then will be tasked with coming up with their own Shutdown Schedule. Does this sound unbelievable? Regrettably it does–more the Pity! lgl

Alternate Employment Procedures

I criticized the corruptive nature of the Profit margins when engaged in Public Service endeavors. This article in the NYTimes highlights exactly what is wrong about total reliance on markets. The worst Problem may be the Ageing of federal Employees while doubling their supervisory duties. Contractors are being given access to sensitive information which possess salable value, access to private files of Competitors, and access to information about Private citizens–which is also salable. Contractors are also being allowed to supervise and evaluate the competency of other Contractors, often when their own competence is in question; competency ratings are also a salable product. The General Accounting Office is also finding that private Contractors actually cost more than federal employees–average Salaries often in the $200,000 range. Some Economists might claim this is good for the Economy, but is it good for Anyone other than Corporate Executives with their manufactured Pay Packages?

I have previously called for a universal Military Draft; now, I would called for a universal Draft for both Military and Civil Service. The Plan has many benefits: centralized Personnel authority which would allocate Draftees to proper Training courses, a centralized Training organization where every Graduate would be able to understand the demands of Supervision, detailed evaluation of chosen leadership elements who could be continuously studied for performance and promotional Training, and unlimited Employee numbers of high quality who could be induced to remain in Service by Incentive Pay. Such a Program would remove excessive reliance on a Collegiate system extremely overpriced, but still usable as Training facilities with Government negotiation and payment of Student fees for chosen gifted personnel. Labor elements for Government service would be of proper Age, adequately trained, and in sufficient numbers to accomplish the tasks necessary.

Government Costs could be curtailed through uniform Training practices, uniform Pay levels, and limitation of whatever Pension and Health Benefits necessary equivalent to Military standards. Individual Service personnel could be ordered to stay in Barrack facilities until they are married, and Married personnel can be ordered to live within Government-owned Apartment dwellings until they reached a certain Rank; obviating a need for excessive Wage incentives. The Draft would be limited in duration, but a Reserve Period would be entailed where they could be activated for Service in their MOS for a much longer time frame; this form of organization causing the least disruption to the American economy. Pay Scales for Draftees and later Incentive Pay for Those retained will not need to be as costly as is the current system, and Contractors with their excessive Cost structures can be avoided. It is a Win-Win situation for Everyone; Draftees get cheap Training for later life, Government get effective Trained cadres to fulfill their governmental functions, and Taxpayers get the cheapest Labor available in paying for Government services (Draftees can even be subcontracted to State and Local agencies). lgl

Corrupt Tendencies

Dean Baker asks a valid question because Medicare is an important social program, but it loses some relevance as One understands no Congress could possibly survive without periodic Raises of Means-Testing Income levels. Politicians have a tendency to die on the vine, when they think to take back a God-given Right (the consideration entirely in the minds of the Populace; remember the Roman demands for Bread and Games, of the Christians demands for Loaves and Fish). The only sad part about it lay in the fact We have reached that position in parasitic corruption that We can demand unfunded benefit from a corrupt system overburdened by usurious Charges for provision of basic services. It is like the Prices paid for Popcorn at Theaters.

Mark Thoma has written one of the best Posts I have read so far on Markets. It explains that there are potential liabilities to markets, as well as Gains. It also presents a quandary for me, as an entire section of economic authors wrote on Markets in the 1960s which possessed perfect Commentary, and I cannot immediately source any of them. Mark states there is the possibility of perfect Market competition, but Someone had already proved there cannot be, due to the speed of transmission of Information among Participants; what is called a localized monopoly is always formed by the early Entrants into the Market.

Other Authors of unknown origin have already proven (??? can you utilize such a word in the context of a theoretical construct) that Corporate structure do not need to enter into collusion among themselves to set artificial Price structures, only a mutual understanding of the Profit margins the industry desires. Economic Authors have proven even Government regulation will be ignored by the Corporate structure by universal resistence, and that Corporate practice will adopt the cheapest mode of Production, no matter the environmental hazards which might be encountered; a Corporate decision that their legal divisions can fend off any potential financial Penalties which are unprofitable. The privatization of prisons alone heralds the minimization of Training given to Labor cadres; check the average Educational and Training levels of the majority of Labor engaged in Airport security, then multiple by Planes, Trains, and Harbors.
The basic problem with intrinsic Privatization of all elements comes in the form of demanded Profit margins; this Concept bringing entrance into Corruption.

Reliance on Public agency or Government regulation will always be best, whenever Best Practice in economic activity is far more expensive than Lip Service to considerations other than the greatest Profitability. I am like Mark in a belief in Markets, but such belief must be tempered with the knowledge that People working for their own Profit, will always maximize their Profit margins; often to the greatest detriment of their fellow citizens. The second fact which must be understood states a universal Rule about economic Productions: Defined Environmental Spills always cost far more to clean up, than they do to forestall. Relying on the Profit Motive for any form of Economic Protection reminds of hiring a Wolf as a Sheepherder. lgl

Advocacy of Extremist Views

John Quiggin wants to criticize the American Enterprise Institute for it’s Minimum Wage policy, but he actually falls short of the Mark; a short Critique of global warming should take less than a few hours (maybe some externality Costs for the Scotch to suppress Guilt feelings), and $10k would easily put the Consultant fee over the normal $2k per hour for fine-crafted Bull. Be sure to read the Comments section under the Post, as they point out the ramifications of this Project. Those who can manage to attain position on the Invitation-Only list would do well to concentrate on Hurricane data in the Atlantic over its recorded history. I should examine the arena for Invitations-Only lists for the other side; I possessing an excellent article for the impact of the Sahara Desert on the Hurricanes in the Atlantic. Of course, the other side might not be as well-funded.

I spotted this article yesterday, and wondered at it. Paul Krugman truthfully did not examine the collected archives of Economic journals before spouting the commonly-held belief that Classical Economics ruled until 1936–but wait; was he not simply reiterating what Keynes had written in 1936? Lawrence White might be a little light of overwhelming proof of the lack of free market orthodoxy, listing only support of American economists for Minimum Wage legislation for women and children (more a question of humanism rather than economics), and a list of Authors who are hard-put to post claim to fame prior to publication of ‘The General Theory” in 1936. Authenticity of the tenor of the Times must insist on a statistical evaluation of Advocacy of the Time (by the way, I think Krugman is a lousy economic historian too).

Check out this Post by Bryan Caplan, if you want to more fully understand the potential extremism of advocacy, which Bryan provides links; remember his Post is about anarcho-capitalist literature. A minimal state may be a Dream, but practicalities do intrude. The greatest intrusion must always be Authority, the only source to provide limitations on Private reactions to socially condemned groups (hint: do a Search on the activities on the Anarchists in the Spanish Civil War). The minimal state will always require imposition of Authority, as Private individuals overstep their right to censure, or impose sanctions upon the rights of other Private individuals; there must always be a central authority to suggest ‘Enough is Enough’. Civilized Conduct and the rights of the minority impel necessary protections, and there are also natural interventions in the economic models to prevent excesses such as false impoundment of personal property and the prevention of starvation. lgl