Tuesday, July 31, 2007

An Old Farmer

A Friend, who rents 3000 Acres to his Sons that farm maybe 2000 Acres more, buys a new Combine every year with running two Combines continuously-trading Each every other year. He tells me the current Price for a Combine is $250,000, with the Cost of the Header around $50k. The interesting element is the Trade-in value of the Combine: Implement Dealers subtracting $1200 per hour of Running time (I believe these Rigs can harvest 83 acres per hour). I should remind that the new Rigs require a different Header for Corn, another for Wheat, and a third for Soybeans. Tim Haab insists that U.S. Farm policy should only correct market failures and I could agree, but here We have market failure which is overlooked.

The main element of strife is the multiplicity of Farmers, facing an oligarchy of Implement manufacturers, Financial agents, and formula Dealerships. The multitude of Farmers confront a technologically controlled Market for their Needs; be it Equipment, Seed, Fertilizer, Transportation, or Finance. Farmers have for years called for more Fuel-efficient, smaller, less-Expensive equipment suited to their actual Needs. Check the Market for how closely the incorporated Suppliers have listened to their Demands. Another Farmer Demand is for more durable equipment, but modern Machine operation reminds of the Downtime for the Abrams tank (if you don’t know about this item, think you are lucky with a full Day in the field without Maintenance).

I would, like Tim, enjoy rewriting the 2007 Farm Bill. The difference between Us resides in my concentration on the protection of Farmers from the oligarchical Corporate structure. I would inject Tax Credits for Agricultural Co-Operative Associations which purchase Equipment for joint use by their Membership including all Financial Service Costs as well as Equipment and Labor Costs. Such Associations could utilize the large-scale equipment effectively. They could also provide a united front to reduce oligarchical Pricing from Implement manufacturers, and employ their own Service personnel to work with and on the Equipment. I would also penalize Implement, Fertilizer, and Seed companies, with Withdrawal of their Research Tax Credits, if they could not prove ecological improvement in their Product–less Fuel, fewer bio-hazards, or less Soil erosion. I should also inform Tim that the Program will likely present Consumers with cheaper Food Product. lgl

Monday, July 30, 2007

Yah--And What He Said Too!

I was all set today to comment on Alan Blinder’s column, when I ran across this Post from Tyler Cowen. I have always advocated (like in the last year!) that Financial and Stock assets should get their own special Sales tax, with a regrettable yearly re-flash for the lengthy Holders of such Paper. It is a sound Program, where immediate acquisition costs 2% tax (the loved numeral of my life), and 2% per year afterwards. There stands a gem of genius in this formula: a normal Carry load of 2% would both be an effective rate of tax, and do much to bring nominal asset value in line with real asset value. The yearly repeat of the Tax, while still low, will constitute a legitimate tax on Profits (irregardless of the value of the assets, as the Tax is implicit in the Total value of the asset found in the Market on Tax Day), without major imposition at either Time of Purchase, or Time of Sale. The later will prove to remove the majority of the drag on growth from the Taxation, while curbing excessive Expense and Stock prices.

A Secondary effect will be to realign Executive Pay Packages, as a Provision will be introduced insisting on the immediate payment of the Tax upon Purchase, and an equal payment of all residual Tax upon Sale. Stock Options, and especially Stock Grants, will not seem as attractive where there must be obvious Front money provided by the Recipient upon receipt of the actual Stock. It might even be a significant detraction from these form of Wealth acquisition that Stockholders will recover their ability to control the levels of Pay granted to their own Employees.

This type of Tax could also save rapid increases in Commodity prices which Consumers must pay, as Marginal investment by Hedge funds and equity money must run up a good 2% of Market price of the equity, before such practice becomes Profitable. Sensible Long-Term Investment, on the other hand, gains a minimal tax on the demonstrable Profitability of the Investment. The value of this Tax in all ways depends upon the tax of the total value of the assets, though low. The Rippers and Day-Traders will find themselves in actual need of Operating capital, without ability to enjoin the Market itself to front it. lgl

Sunday, July 29, 2007

No. 829, Haw Haw!

"Stand and deliver!" shouted the highwayman."Your money or your life!" Whereupon one passenger in the coach handed his travelling companion five gold pieces. "What's this?" asked the other.The first explained, "It's the five gold pieces I borrowed from you yesterday."

Some will say that this Joke is so old, Christ heard it as the Resurrection. I thought, probably a very poor one at that, to explore the Economics behind the Joke; it does contain a smidgen of truth within it. The Individual returning the money had the least Opportunity Utility for the employment of the Coins, while the Recipient had the longer possession of the money; i.e., the greater Opportunity to draw a Profit from control of the financial reserves. The Recipient actually held Gold in question in a state without claim, having already earned the value of the Coinage; so that the validity of its Theft would not be questioned by Recovery authorities. The Individual paying back the loan not only developed a high Opportunity Profit–having the immediate ability to terminate Debt without Cost–but achieved this Repayment schedule at minimal effort and Risk.

The Reader will now immediately assume I am also attempting a poor Joke. Some I must admit! There are several elements to be explored, which offers some intelligence about the transaction. The Owner/Recipient of the Coinage was the original Owner of Record of the Gold, purportedly having earned the Value entailed, and who had already assumed a Risk position of Lender, with the expectation of restored Ownership sometime in the future with Repayment of the loan–possibly with Interest. His assumption of the Risk position already established his willingness to gamble with the Money; the potentiality of Theft only heightening the Risk. He had assumed a contractual obligation of Risk-Taker, even though it was undefined.

The Borrower had previously established a diminished capacity to earn the amount in question, through the simple practice of requesting the loan; he had not earned the money, but wanted the Opportunity utility of expenditure of the funds in a manner which would allow Repayment of the debt. Normal Debt theory would imply loss of the Coinage through Theft would eliminate the Borrower’s ability to repay the Debt; nullifying the Conditions of the original Contract. The Lender seemingly did not stipulate the Terms under which the Debt was to be returned with Security precautions, as the Borrower extended the repayment at opportune time. Responsibility, therefore, fell in total measure on the Lender; who had already extended coverage of the Risk. I personally always like to repay my debts in the midst of a Poker game, where there exists a Secondary opportunity to Profit in a manner which is legal. lgl

Saturday, July 28, 2007

Trade Policy Considerations

Mark Thoma presented this NYTimes Opinion in his daily Reading list. It is something which should be read because it deals with a relevant issue in an intelligent manner. What worries me is that it presents the standard conflicted solutions; Ones which will not significantly alter the current state of affairs. It includes the first real Republican admission of the stagnation of American Wages, even though Productivity has expanded greatly. The Curatives offered, though, remain standard pap, unsuited for effective Change. I will state here for the Record that I did not want to espouse the following, as the classification will probably turn All against me.

I will first attack the Peterson Institute’s claim that Trade since WWII has added $1 trillion to the American economy, and is likely to add another $500 billion. My quizzical response is ‘in relationship to what Economy?’ The Answer will be in relation to the American economy of 1945. Here is the rub: It accepts as a Given that the American Performers in 1945 were bound to lose their Market share in the current Economy. It assumes that those Participants would not have expanded their Productive capacity to maintain Market share. It does not assess the inherent added Costs of Advertising, Marketing, and Distribution in a multiplex Product provision Market. It accepts as conclusive that American labor would have lost their Negotiation position in the current Economy anyway; i.e., that foreign Products would have flowed in to replace restriction of American Production. It contends that the current American Export levels would have disappeared entirely, if the American Import Trade had not grown. It believes that the outflow of American Capital and Technology would have occurred without restriction anyway. The basic thesis of the Peterson Growth theory is that the American economy would not have altered at all, in the face of an expanding Market and Production base, and the innovation of the American economy would not have come about without foreign intervention.

Any American economic response to the above-mentioned forces would have detracted from the Trillion Dollar gain from Trade. Proponents of Trade always mention Displaced Workers, but never put a numeral Cost to their forced extrusion from Production, or put a Cost reduction into their evaluation of Trade gain from this extraction. I would like to see an economic study which accounted the total lost Production from Trade since 1945. I would also like to witness a economic Study on the effectiveness of Advertising in a Product Market with an excess of ten Product variations; are Marketing efforts more costly and less effective? There is an economic Study needed to evaluate the added Cost of Capital equipment duplication in overall Product Price structure. Readers get some idea of the real issues involved, and Protests of Free Traders aside, an understanding of the arena where any Solutions must operate. lgl

Friday, July 27, 2007

A Pesky Idea

The Tax Foundation posted a Piece which again started my Mind wandering in strange places. William Randolph suggested in a Working Paper for the CBO that 70% of the burden of Corporate taxes fell on Workers, and 30% fell on Stockholders. The Tax Foundation found that a Cut in Corporate Taxes would benefit low-Income Households more than would a Cut in Income Taxes. I believe innately in the construct of their analysis, but doubt the economic value of their Solution. This led me to consider a Counter-Solution to the exhibit fact.

My flexible Reasoning said the Solution lay in Transparency. It is quite easy to require with little Accounting effort that Corporations visually list the Dollar Cost going to Corporate taxes of the Cost of their Products, reduction of Wage levels to Employees, and reduction of Dividends to Stockholders to pay for Corporate taxes. Consumers suddenly find the Government Cost of their acquisition of Consumer Products, Employees suddenly understand how much the damned Government costs them personally, and Stockholders can curse the Government.

A magnificent Plan emerges with this simple devise: Consumers attain the right to Vote through the allocation of their Consumption Dollars, Employees can protest an overgenerous Tax assessment on themselves with a Wage negotiation instrument, and Stockholders can curse the Government as they potentially pay their correct Impost as defined by the original Intent of the Corporate Tax. Understand that this form of Taxation desires a Charge upon successful (and only successful) achievement of Business endeavor. It is an outrageous, but not unethical, demand that the Successful in Society pay an additional Impost simply because they enjoy the amenities of a Culture. lgl

Brooks' Crystal Ball

Greg Mankiw thoughtfully presented Us with a major Quotation from David Brooks’ column. The Devil is making me to do it, but I feel I must comment on Brooks on a Point by Point basis. David's first Point is that real average wages rose by 2% in 2006; indeed it did, but what does this say about the disappearance of medium-Wage jobs with the decline of Labor Participation rates? The bottom fifth of Income Earners did indeed find their earnings increasing by 80% between 1991 and 2005; might he have forgot what this increase level was in 2001? He mentioned about a 20% increase in the three middle segments; yet he does not mention the increase for these groups for the interval of 1991-2001, or the potential decrease for the interval 2001-2005. He contends that Income volatility is probably not trending upward; still he fails to detail the direction of that Income volatility–are Incomes going up or going down?

Brooks makes the contention that Education finds greater Compensation these Days, and that a major element of increasing inequality is performance pay. The first can be easily subtracted by finding the number of Speciality Graduates finding Employment in their chosen field, a rising curve would justify Brooks’ thesis, a dropping curve would nullify the claim. The impact of performance pay can be examined by creating a graph of Percentage increase of Wages per year of Seniority in position for 1980 and 2005. The Year 1980 is used because it can be seen as the last year before Reagan conservatism, and 2005 can be seen as the Year of prime Bush conservatism. I have not done such a Study, but imagine there was a much greater spread of performance pay across a wider segment of more equally-paid labor in 1980.

Brooks’ Sixth contention states that higher Income Employees work more hours and longer. I might state that Those engaged in hard physical labor require greater length Rest periods. I could a number of other things, but it might suffice to say I drank Coffee with a Friend for Two hours, when he was hard at Work because he was "On Call". I once had association with a major national Corporation, but quit because of the lengthy Conferences; which had a tendency to resemble Hour-long Coffee breaks conducted sometimes four times a Day.

I am getting tired of Trivial Pursuit, so I will simply state I have known a number of major CEOs, both socially and in Operating mode, and cannot see the great talent unmatched by literally thousands of wannabees. I cannot see the great boost to American Household Income coming from Globalization, especially if We had the Labor Participation rates consistent with the Clinton administration’s later years. Finally, Brooks claims that the Deficit is down to 1.5% of GDP, a historic low. I simply wonder what Percentage of GDP the Deficit would represent, if the Stock and Financial Markets were subtracted; might it not be around 12% of GDP? A reasonably strong Recession could wipe out half of the nominal assets of these Markets. lgl

Thursday, July 26, 2007

The Shakey Stock Market

This AP article establishes the impact of Hedge Fund speculation on the Oil Pricing system. Light, Sweet Crude is up $1.03 per barrel, though Refining capacity has increased, and Crude Oil importation has remained relatively Constant. The 1.4 million barrel Crude Oil decline at Cushing means relatively nothing; with no Change in importation levels, replacement Crude is already in the Delivery pipeline to Cushing. Where is the reduction coming from? Higher production of Gasoline (up 800,000 barrels) and Distillates refining on Schedule (1.5 million barrels rather than the expected 730,000 barrels). Yet Heating Oil, Gasoline, and Natural Gas futures are all up; it seems Consumers are expected to pay for peak Refining performance.

The Dow Jones Industrials dropped 1.77% in morning trading, S&P 500 lost 2.09%, and the Nasdaq Composite Index went down 1.88%. The Russell 2000 Index lost 2.61%. What is behind this major loss of Stockholder Confidence? Pundits are blaming the dropping Housing Market, and the dropping Durable Goods production when excluding Big-Ticket transportation sales. This Answer is too simple.

The Riddle is solved by the mixed Profits Reports being handed out. The Companies which are showing Profits are exactly Those who have begun to modify their Executive Compensation packages. Those who have not started to modify these Packages are not showing Profit ranges now at current Stock levels, and are intent on saturating the Market with new Stock Grants and Options. The real Problem with this Picture is that Those companies showing a relative sane Profits scene plan aggressive Acquisition growth programs; by virtue of Stock awards. Future Profits seem threatened by Corporate leadership’s greed and Power hunger. lgl


Edward Lopez discusses the new Policy for Submissions at Economic Inquiry under the editorship R. Preston McAfee; or at least, lets McAfee announce himself. The real germ of his presentation comes in this Quote:

Journal time to publication lags have become embarrassing. Many authors have 5 year submission-to-print stories. More insidious, in my view, is the gradual morphing of the referees from evaluators to anonymous co-authors. Referees request increasingly extensive rev! isions. Usually these represent improvements, but the process takes a lot of time and effort, and the end result is often worse owing to its committee-design. Authors, knowing referees will make them rewrite the paper, are sometimes sloppy with the submission. This feedback loop - submitting a sloppy paper since referees will require rewriting combined with a need to fix all the sloppiness - has led to our current misery. Moreover, the expectation that referees will rewrite papers, combined with sloppy submissions, makes refereeing extraordinarily unpleasant. We - the efficiency-obsessed academic discipline - have the least efficient publication process.

Dani Rodrik cites a Paper by Glenn Ellison expressing the decreasing Submissions to academic Journals, Rodrik himself being an editor of The Review of Economics and Statistics. It is fair indication that the Journal reviewing process has become too difficult, defeating the desires of Authors with limited Time. It is made even worse by the fact that Journal referees co-opt in the limited Time allowance. This is one real Side of the Problem.

The other Side of the Problem lay in the fact that Journals have a decreased Readership, due to the relevance that almost any Kind of data is more accessible online. The element of trouble existent with the online access to Information is the lack of Vetting of the information. Citation of Online source suffers from this lack, but Journals are being reduced to the sole preoccupation of Research for documentation of Papers. The McAfee Proposition brings a potential hazard to this usage, as the search for Journal Fill may become an element of the Vetting process. Wikipedia and other such Websites attempt to introduce some form of Vetting process; the major detriment to effective use of these Sites being the refusal of Academia to endorse material there.
My idea is for Journals to affiliate with Wikipedia, and other such Sites, and design a Box and Icon format to encase any Information that a respectable academic Journal has responsibly vetted. This would grant these Sites potential for being cited in academic Papers. This remains a far distance from what I had planned to write in this Post, but I will simply author another Post Today, if I have the Time; this is the functional utility of the Online process. lgl

Wednesday, July 25, 2007

Anger at Household Chores

Dani Rodrik bemoans the fact that Teaching requires preparation, especially when dealing with Those who have almost as much Education as yourself; it makes One stretch and apply thyself. Some time ago, I was asked what Graduate course I could be enticed to teach by a Department Head; who wanted me for a Stringer fill-in. I thought about it for a while without Research, and replied that I would like to try a Course on the history of the World War economies. The idea fell through, and thankfully so, as I researched the materials available at the time; and decided I did not want to write a Textbook on the Subject. Today I might enjoy teaching the Economics of American Ranching, but then again; I would not want to write a Textbook on the Subject. People mistake the degree of Ease in the practice of Teaching

Tyler Cowen tells Us that Unions are Outsourcing their Picket lines; it seems it is not just Teachers who tire of the responsibilities of their profession. Carpenters, of course, are not granted cheap labor Teaching Assistants to do the mundane collation efforts. It might be my own downfall that I do not possess an underpaid Researcher to get me a Reading list for my off-target Background asides. Young Economists will tell One it is cheaper to hire Someone to mow your lawn, rather than take the time off from Work to do it yourself. Economists, like the Carpenters who do not admit they are employed on another Job site, forget to mention the supplemental Income they receive from Articles, Consultations, and other Secondary employment. Hint: Teaching Assistants often take the summer off as well (to take Internships).

Daniel K. Benjamin turns his angst at routine labor Intellectual, but does so in a realistic Economic presentation. I must give note to Craig Newmark for the link. Benjamin’s main contention is that Private industry best allocates the recycling function, because it will be determined by the Profits inherent in the Recycling. Compelled Recycling, going back to those young Economists, truly does misdirect some high-Wage labor into rote recycling effort; the individuality of the Household, and the Cost of purchase of replacement labor, will insist on a waste wastage of skilled Labor. lgl

Tuesday, July 24, 2007

Fixed Fee Health Care

Wisconsin Senate tries a Big Brother approach to Health Care, and the WSJ issues a sharp Critique of the issued legislation. No one seems actually serious about the passage of the legislation, it assumed to be readily defeated in its present form. The Intent of the Sponsors being only the start of a political debate for Campaign season, Opponents intent only on establishing their Health Care positions early. This is practically issuing a Challenge to Me, as I can say something stupid about almost anything. So I will present my version of an effective Health Care law.

I will first give it a fancy title: the Fixed Fee Health Care law. The basic underpinning of this Act or Law asserts Government activity should not underwrite any Occupation or industry. Any Government payment system is obviously a Welfare system for the Employees of the industry. The first thing to be categorically stated under such circumstance is that Wage rates should be set by the Payer, not the Payee. Here goes with my Fixed Fee Health Care:

1) Doctors, Dentists, Clinics, and Hospitals are limited to a set Fee per Visit or Day.
2) Doctors’ Fee will equal a per-Patient level where 12-14 Patients per Day, or 65 Patients per Week, will gain them a yearly Income equivalent to the Average for a tenured University Ph.D Professor ( utilized solely because of relative equivalence of Academic study).
3) All Government payment for Medical equipment, Drugs, or supplies will be made on the basis of Production Cost plus 12%, largesse of Profits will be totally dependent upon level of provision of effective care to Patients.
4) Here is where I stick in the knife: No American Citizen (this term is literal, with application to the Immigrant problem in this Country) can be charged a higher Price for any medical treatment, Drug, or medical equipment above the Prices paid by the Government Health Care system.
5) Cost of the Fixed Fee Health Care system will be paid by a Carbon Tax adjusted from the Charge of $1 per gallon Carbon tax on diesel fuel emissions; all Carbon taxes based on a Dollar Cost per constant level of Carbon emission.

My Package may seem as fanciful as the Wisconsin Senate Daydreaming, but it at least has a capability of being implemented. It insists on actual effort output by Health Care personnel, the Health Care sector can be brought inline with other professional services by carefully crafted Clinic and Hospital charges per Patient, and presents a method of Payment for Health Care. Business Profits will be maintained, but Government involvement will insist on limitation of those Profit levels. It is somewhat rationale and sensible, I amaze myself sometimes, but needs to be passed into law with relatively little revision; else We are back where We started. lgl

Monday, July 23, 2007

The Carbon Problem

Tim Haab believes that higher Energy prices are beginning to bring Change. Multiple plans are currently being studied to devise methods to simply reduce the Costs of Commuting. There could be more radical Change, though, to greater benefit for All. I believe in a Pigou form of taxation coupled with Incentive: A law charging every Business enterprise a certain Daily price for each Parking space they provide for both Customers and Employees, plus cheap Interest Government loans for establishment of a Company Busing Service. Employees will be told to take the Company Bus, as Parking is unavailable; automatically making the Bus service sustainable and Profitable in Ticket sales. You will see Walmart advertising Pickup, Shopping, and Home Delivery service for about 3% of Checkout totals to a maximum. Smaller Venders will enter into Cooperative Bus service, when Cities must charge by law equivalent Space property tax rates for Parking by venue of Parking Permits or Meters. Do Car Owners imagine We are in a Stalinist era?

I recently received a Comment on one of my Posts, directing me to a site believing that what is necessary is a revenue-neutral Carbon tax. I would first like to state that it is impossible to create a revenue-neutral Carbon tax; the use of Carbon-burning fuels is too extensive to obtain any degree of neutrality, no matter how you try to shade it, it will be a Tax imposition which will cost Taxpayers. I would favor directed tax payment to achieve stabilization of Our Welfare system, a genuine benefit, rather a Sleight-of-Hand treatment which will allow Business to slide their Expenses off on Consumers, while giving incentive to Politicians to increase their Spending. The only sure Protection is to devote the tax revenues to some Program where Beneficiaries will be up in Arms if Politicians think to touch it.

The more complex a Carbon tax system becomes, the greater the long-term chicanery which will be devised to divert it’s purpose. Cap-n-Trade fails any Test for real achievement, as the goal of Business will be to Profit by it; causing it to be too expensive for Consumers. I could outline how Cap-n-Trade practice could conceivably increase Carbon fuel usage, due to the liberal issuance of Permits; Everyone and their Dog will want them as they can be Sold. Business claims of Need will be universally excessive, so as to get a probable double of their actual Needs; excessive Carbon license given free rein by purchase of cheap Carbon permits on the open market. I think sometimes that the modern world has lost Sight of Community Interest. lgl

My Position on Trade

I rarely agree totally with Greg Mankiw, as he is slightly too rigidly Conservative for me, but not so with this Post. I expect, though, that We reached the same conclusions from different directions; he being very much a Free Trader, while I am very much the Protectionist. Greg believes the Worker who loses his Job from Globalization should have no more protection than they who lose their Jobs from other considerations. Of course, I don’t think these Workers should lose their Jobs in the first place, whether it is due to Globalization or not.

The real dissident element for me in Globalization lay in the deliberate export of American Capital and Expertise, solely for establishment of foreign production to substitute for American labor; simply because foreign labor can be attained at cheaper Price. It becomes even more of a derogatory regime when comparison of the levels of Losses against the realizable Gains in Profitability of foreign production over American production. I believe We lose about $7 bn of American economic performance for every $1 bn of Profitable Gain in using foreign labor. The root of this distortion resides in the absence of an intelligent American Tariff structure. I can truly advise that it is time for a change in Trade policy.

Popular sentiment may recognize the Problem, but as usual, the Popular reaction operates in the wrong manner; calling for higher Corporate and Business taxes, and Caps on Executive salaries. I believe People have a natural aversion to Economic models, and so persist in misinterpretation of them. Tariffs are not an enemy to Households: I estimate that a intelligent Tariff system would increase Household Expenditures an average 6%, but increase Household Income about 17%; this effect gained with a reduction in Oil prices, and removal of about 75% of the Inflationary pressure in the Economy if the Government can reach a balanced Budget. An intelligent Tariff system would quadruple the likelihood of balancing the Budget, through increased Employment Income, higher domestic Capital Profits, and switch to Materials importation. lgl

Sunday, July 22, 2007


This Petraeus article explains exactly what is wrong with Our current posture in Iraq. Our concentration centers on the creation of elite Iraqi military and Police Forces, only accomplishable with great length of Training and high quality of Recruit. Iraq doesn’t have the time to train the Recruits, who do not exhibit the quality necessary; a real factor when talented Personnel are specifically targeted by the Insurgents. The Raid on Najaf clarifies the real Problem: Insurgents can simply import the Weaponry, and recruit religious fanatics–no matter the level of their military skills; they only have to Shoot or Blow Up the surrounding countryside. Foreign Fighters alone currently exceed the Force levels being trained by Americans. The Incentive for Foreign Fighters and native Insurgent recruits comes from the Presence on Iraqi soil of the American military. Occupations never succeed if Insurgents possess access to Weaponry at cheap price–the hidden Reality no one explains. Insurgents need only a Goal, and the Weapon to advance that Goal.

Eric Falkenstein feels the same way about Harry Potter, as I do about Iraq and Afghanistan. Both lack theme and plot, Each nothing more than attempt to achieve without Violence. The casting of Magic Spells might help Harry, but it is unlikely to aid GW or his Crew. There is little Effect calling for Peace, when young kids are equipped with assault rifles and bombs. Ask the average Iraqi kid whether he would rather have a Magic Wand or a modern assault rifle? Do not feel too bad; the old Magic of having a religious leader cast a Spell of Peace is not very effective anymore either. Don’t you wish this were a Movie; Producers always insisting on a happy Ending?

David Smith presents a good Post on the economy of Britain, but his critique of the British economy has equal impact on Iraq and Afghanistan–which is the lack of Apprenticeships for the Young. Real Assistance to especially Iraq is not the fancy construction of infrastructure by Contractors from the Skilled World, but the development of a Community College style Apprentice system, where Students are given not only a practical education; they will be given some degree of Safety and adequate Diet. Youth is never distracted from violent Ends except for one thing: the chance for personal advancement. Here lies the only venue for bringing Peace to Iraq and Afghanistan. lgl

Saturday, July 21, 2007

Carbon Policy

The Demand for Gasoline is up, but the threat is gone; a threat many Economists realize did not actually appear. It is not for lack of trying by the Oil-Speculating Hedge Funds, who tried to create Spikes in the Market. The psycho-terrorism of "No Gas" played poorly in the Heartland; the Day when Nebr. led the Nation in Gas Price, an elderly friend still drove 60 miles to a favorite restaurant–as he had not been there for a while. Consumers seem to negate Gas fears with the proper allocation of Household budget; the Market primed Consumers to expect Gas would rise to $4/gallon. Consumers planned for it, Gas rose and dropped in Price, and Soccer Moms grabbed the extra Mad Money.

The Gas situation highlights that Markets are set far more by Expectations, than by the realities of Supply and Demand. Once the fear of high Cost is lost, so is the Propellent for high Price. Even more relevant is the fact that Consumers become jaded, so that future attempts at Scare Pricing have much less effect. This Process is not simply emotional; Household are forced to think through a budget allocation formula of what will be cut first, and Wholesalers and Retailers will develop Inventory strategies to handle Short-term shortages. The Speculator has a hard road to travel, where Users develop immunity systems against Scare tactics.

This Fall is the time to introduce a Gas tax, before the Winter prior to National Elections within the decreasing Energy demands of the Season. The next congenial time will be the Spring of 2009, as political fawning for Voters will rule 2008. A Cap-n-Trade Carbon policy could never be worked out over the next Two years, but an effective Carbon tax policy could be worked out by September; this having the immense benefit of eating up the Deficit, or stabilizing the Social Security/Medicare-Medicaid system. I personally favor stabilizing the Welfare system, because availability of Funding will simply entice Congress to expand their Spending plans; no Tax revenue gain in the face of higher Spending. It does not modify the fact that Now is the time to begin a Carbon retardation program. lgl

Friday, July 20, 2007

The Motivation of Terrorism

Tim Harford points out that Educational level shows little moderation of Terrorist sentiment. I believe he, and most other Examiners, miss the essential Point: Almost all Terrorist propaganda and espousal originates from the Educated Classes. They are necessary to define Rallying points for the masses, they are again necessary for the design of effective Terrorist targets, and again necessary for the proper functioning of Terrorists operations. The 9/11 Terrorists had to know and comprehend Piloting of aircraft, Air traffic codes in English, and Air traffic schedules. Knowledge of Navigation technique was necessary to find and hit the Targets of 9/11. These are all Skill levels rarely introduced at High Schools.

One might ask what is the impulse behind Collegiate drift towards Terrorism. Citation of multiple causation will undoubtedly miss the Issue structure, though it will be a recounting of elements of the overall problem. There is a basic alienation with the general society, whether this be a crushed Love affair, lack of Job opportunity in their field, anger at the lack of respect for their achievements, or simple inability to maintain the same Living Standard as the Households from which they sprang. Envy of the attainments of Others forms the base foundation on which they lay their personal anger at Society. The major difference between themselves and the masses resides in their possession of the scientific methods to attempt punishment of Society for imagined Wrongs.

John Quigley and David Gordon show that the behavior of leadership does scarcely better than the Educated Terrorist. Decisions taken towards violence action most often is based on false tenets to energize the Populace, while the impulse to warfare comes from personal advantage in national politics. Truman invaded Korea so that Stalin bastard wouldn’t win another Country, even though he knew the C.I.A. had been conducting cross-border Raids into North Korea since 1947. The Gulf of Tonkin Incident was manufactured by the Johnson administration, none of the Navy personnel on Station actually witnessing any torpedoes; the rationale being that increased War spending would cancel opposition to passage of Johnson’s social legislation. The Invasion of Kuwait impelled Bush most because of his Oil political support, who feared Saddam’s refusal to abide by the maintenance system of World Oil pricing. Clinton’s incursion into the Yugoslavian disintegration had more to do with forestalling the Movement at home to cancel American commitment to NATO, than it did with the practice of ethnic cleansing. The younger Bush needed to have something to attack after 9/11, else look ineffective; the Administration perceiving Afghanistan and Iraq as easy Targets. American Politics must be considered the most dangerous Terrorist of them all, due to the Educated immorality of its Practitioners. lgl

Thursday, July 19, 2007

Hot Air Generators--And No, not me!

Knowledge Problem started me thinking about older technology with this Post. Most Readers will not understand the Cost dynamic here, which is not simple transfer of Electrical usage to non-Peak hours. It is much cheaper to refrigerate a smaller, confined area much lower in Temperature, than it is to cool a much larger area to a much higher Temperature but below Surface temperatures. The Water utilized in Cooling can be confined to a much smaller area, and refrigerated to Ice at cheaper Price than an entire Building–whether in terms of BTUs, or electric bills. The most Optimum such system depends totally on the Water distribution schematic through the building in question; I think the Best would be Misters at floor level along the walls, with Evaporation Collectors at ceiling level; trough water would be pumped to the refrigerators.

The entire discussion turned my Thoughts to the issue of Waste Heat. I belong to that persuasion who believe Urban centers are Heat Engines, with such intensity that Weather patterns are being corrupted by the Excess Heat. Here lay the two Worst problems facing Us today: more increasingly expensive Energy resources, and vast growth in Waste Heat. The Later could be a vast resource in the production of Energy itself, if its potential could be turned to kinetic energy.

Here is where I turn into Crank Inventor: My first Thought is anchored Hot Air balloons with wide bottom opening, and multiplex escape Vents along the upper One-Third of the balloon, all singular direction Vanes in the Vents tied to a electric generator; power sent to the ground through the anchor lines. Does this sound Stupid? It may well be, but a large number of Engineering problems should be worked through: What would be the BTU power available in the Updraft conditions common to Urban areas? Could the bottom balloon hole have sufficient wing capability to provide stability? Could mechanical resistence be eliminated from the Vane venting system to provide effective motive power for electrical generation? Could ground Transformers concentrate any power generated to sufficient degree as to profitably sell such generated Power? What materials could such balloons be constructed from, so as to provide buoyancy with durability at cheap Cost; it being silly to build said systems if the construction uses more energy than can be generated by the system? And People wonder why responsible Adults consider me childish and senile. lgl

Wednesday, July 18, 2007

The dirty little Secret

David Leonhardt writes a good article defining the difference between nominal and real Stock pricing. He didn’t mention that the Dollars used to purchase Stock in 2000 would have keep up with the Inflation rate only if they were priced some 15% higher than they than they are Today; whereas Savings Accounts have relatively kept up with the Inflation rate. There is also another deadly little Secret which he did not detail: Stock Prices would have exceeded the real and nominal Inflation rates with an increased Profit ratio, if the base total amount of Stock had remained at a constant level.

Corporate CEOs and other Executives have gotten Rich absorbing Corporate Profits through Stock Grants and Stock Options, while expanding their Power base by acquisitions by venue of Stock Trades of newly-issued Stock. Corporate leadership may make a high Profit for the Corporation they manage, but they most often take it for their own; and even insist on taking such Profits when the Corporations must absorb an overall Loss. This Corporate leadership even makes it much worse for Stockholders, by the practice of ‘Buying Back’ Corporate Stock to maintain Stock Prices; though the Stock should not have been issued in the first place, and this same leadership exercise their Stock Options and Grants to sell their Stock at the maintained Stock Prices. It would be cheaper for Stockholders to simply change the Rules of Employment, and tell Executives that they would double their Salary every year that they worked for the Corporation (Most would doubt this assertion, but try running an Economic model comparing this Thesis against total exercised Benefits granted to Corporate Officers of the top 400 Companies; remember to start from their initial First Year salary).

Study of the greater Problem of Stock Issuance without Cause will likely find that Corporate leadership remains a little ahead in absorption of Profits, than the actual gain in Corporate Profits themselves. Modern Corporate leadership shows expertise in issuing Stock to bilk Stockholders of the normal Share of the Profits based upon their Stockholdings. Any lapse at the end of the Year is covered by a refusal to distribute Profits under the myth of an Investment Fund for future expansion. Corporate leadership has intrinsic aid in selling the excess Stock through Tax laws granting Tax exemptions only through Investment; Participants never realizing that the Tax is still in place, but going to Corporate leadership, not Payment for Government Services. How is this Tax derived? It is the exact differential between the real and nominal value of Stock. I estimate that this equates to about a 22% Tax on such Income, regulated by Corporate policies to buy back Stock so as not to become obviously excessive. lgl

Tuesday, July 17, 2007

Economic View of China

Brad DeLong paints a glorious picture of Deng Xiaoping, which comes from examining the Chinese system through the rosy glasses of Western Economics. It would not pain me so much if the Deng system was not simply a reversion to the pre-Communist Mandarin system. The Communist hierarchy was replaced by a bureaucratic hierarchy with much higher levels of Corruption. The Agricultural increase so praised by DeLong and Cowen was the result of the Communist system of Education; which integrated the modern Concepts of Fertilization; the later bearing fruit only after Peasants were given a Percentage of the Profits. The average Chinese Peasant today knows more about Japanese Agricultural practice, than do most Western Agriculturalists. This later education most impelled the Agricultural advancement, but also the realization of the rural Youth that Urbanization was their best chance for advancement; resident agricultural land being overpopulated, and lacking in Transportation facilities.

The Deng system made an extreme mistake, which continues to this Day, in its concentration on foreign Trade; rather than on the development of internal Markets. They insisted that the Soviet-style industries provision internal Chinese consumption, and that the new Capitalization be devoted to expensive Goods provision for high-Standard of Living countries. The new Rich in China, mainly associated with Party bureaucrats or their Children, already demand Western Goods at excessive rate unsupported by Energy availability; while the Standard of Living of Workers are chained to the supply of Government industries and limited Western Goods.

Western Economists miss one important element in Chinese Standard of Living evaluations: the fact they include the massive Savings rate of Chinese Workers. They ignore that Chinese leadership functionally forbids both a high level of Consumption, and alternative methods of Savings and Investment. Chinese Banks limit Loans to Party bureaucracy and its clients, and these loans lack collateral and effective Repayment schedules. Subtraction of Worker Savings from the equation (not far-fetched, as major Withdrawals seem unlikely) leaves Workers dependent upon their current Wages; Retirement system, Health Care, and increased Consumption remain distant goals. A Recession in the Developed Nations causing a cutback in Imports, will leave China in the same situation as the Mao Era.

I pity China, which already has Rural Movement to the Cities, where the Unemployed increase by an estimated 30 million per year. It is no accident that the new China Rich are moving their Investments into the West and Developed nations. Economists suggest that China is solving their Problems; I would suggest Chinese leadership only delays destruction from these Problems, until they can move their families to the West. lgl

Monday, July 16, 2007

Markets, Trade, and Junk Food

Here is an article which confuses the Concepts of Markets and Trade. The implication residual to the Reader is that if one believes in Markets, one must believe intrinsically in Free Trade. The Converse of this theory states that Free Trade works because Markets work. The inherent truth states absolute Free Markets have never worked without massive levels of Crime, the development of major Shortages of required Product for future Production, and generation of artificial Shortages to manipulate Prices in a fraudulent manner. The only real relationship between Markets and Free Trade consists of the fact that Free Trade is unlikely to work any more effectively than absolutely Free Markets.

There is a Current underfoot across the ocean to tax the Goodies of children. Tim Haab would reduce it to a tax on externalties, or oppose it. Political Calculations implies it is another example of Big Brother deciding for the rest of Us. The real rub in this Situation comes from the fact there exists a sound basis for such a Tax upon Junk Foods. Where? Children can absorb incredible amounts of bad Food habits, and still remain relatively healthy. Adults, on the other hand, face a much greater threat in that bad Diet has extreme consequence in most instances, and the greatest majority of Junk Foods are consumed by Adults. An effective Tax on an externality would be to double the Price of such Foods, and give a 70% Discount to Purchasers under the Age of 18. Would it sell as a Presidential Campaign plank?

Maybe I can gain support for the Above measure from Sustain. Anyone who opposes sewage sludge for irrigation and genetically-altered Foods should oppose Food Products artificially-impacted with Fat and Sugar additives. It might revolve around the quantity of Candy bars their Staff might consume per day. One can only try, at least. I should mention, before Many begin to think of myself as a Food Nut, that I have been Dieting consistently for about Two years: I feel for Tim Haab’s misery, and actually had a Diary Queen blizzard last night. lgl

Sunday, July 15, 2007

New Form for Patents

Do you want to build a better Mousetrap? If you do, you may not want to Patent the design. Such is the Message of this article in the NYTimes. The purported purpose of Patents–Incentive for intellectual development of new ideas–seems to be poorly served by the current functioning of the Patent system. The Costs of filing for a Patent most often exceed any benefit from the Patent itself, and employment of $400/hr lawyers in litigation of Patents could never possibly be Profitable. It becomes a disincentive to both Developers and Business utilizing such Patents to innovate.

We could enter a discussion as how Patents are not actually Property, but grants of monopoly to individual Concerns by Government; but that holds simple evident truth which needs no amplification. We should instead turn Our attention to Patent use as a form of Wage payment for new Innovations. How do you pay the Inventor? This area presents a wealth of alterable conditions, and is conducive to vast opportunities to improve performance of Patents, and the purpose for which they are issued.

My own take on the Issue is to mandate the fee system of a Patent, based upon the value of the Product idea; this specifically ordered to limit potential litigation with ease of determination, and limitation of the value of said Patent violation. Here is my Suggested alterations:

1) Users of a patented idea, Product, or Process for profitable gain must pay a set-Price for said use of the patent product, ranged between $250 to $10,000. The Patent-Holder need only prove its use by Another, with the initial use-Price determined by the Cost of the Research for the Patent idea, and the Productive gain to be made by the Patent use. Both are to be determined by the Patent Issuance Office at the Date of initial award of the Patent.

2) The Patent Office will also determine, at the time of Award of Patent, the numeral amount of usage of the Patent in salable Goods, before the initial Patent-Use payment has to be duplicated once more; this to be determined by the Cost of Development of the Patent, and the Profit of utilization of the Patent in salable Goods. This reduces litigation processes to simple determination if the Patent was used in the sale of Goods, and how often; with Patent royalties dictated by Government sanction uniformly.

3) Government should finally set the duration of the Patent, said Patents being limited only to individual Designers (Business cannot apply for Patents), with Patents to survive only the length of the Designers’ lifetimes. lgl

Saturday, July 14, 2007

How to Set Drug Prices?

Pharmaceutical companies approach ‘Pay for Performance’ programs, and One has to ask Why? The obvious Answer states that the Drug companies are failing to receive the Volume sales for their Drugs which would justify the Research Costs. A major factor must be Insurer resistence to qualifying new Drugs for line payment. The chief impulse behind this can only be the wide range of cheaper Drugs already on the Market to treat the same ailments. The Secondary condition consists of that existent Patient group who must share the Payment load, and are refusing to make the huge jump.

Pay for Performance will degenerate into a sad Joke, as Standards will quickly decline to where Placebo treatments will likely work as well. Insurers should not engage in such Marketing schemes unless Pharmaceutical companies provide Comparison Tests utilizing Equivalent drugs with Patent expired. Here alone will be a Testing system in which Cost performance can be evaluated.

Drugs companies have long become unionized Job Protection organizations for Research personnel; within an industry lavishly funded by indifferent Payer systems. Much of this Research Funding could be better spent, at least from the Patient and Insurer prospective, in superior medical facilities at cheaper Cost. I still am an advocate of specific-royalty Patents issued on the evaluated Need for the Drug; one way to contain the overflowing Research budgets. lgl

Friday, July 13, 2007

Why I am a Trade Protectionist

Don Boudreaux asked Dani Rodrik the same Question which was uttered in and outside of the Continental Congress in the 1780s. The several States were each setting their own Trade restrictions and Tariffs against each other, as well as against the rest of the World. Those that favored a strong central government for the North American States insisted that the colonial States held insufficient size and economic strength to provide for all their basic economic needs, and both Trade restrictions and tariffs against each other distorted and reduced economic growth far beyond Short-term revenue generation. It was one of the three main Problems which the Centralists were determined to change at the Constitutional Convention.

The complexity of Trade between the United States and the rest of the World extends far beyond the American problem cited. The American States of the 1780s held a general level of Educational and Economic development, and could universally benefit from free trade practice between themselves, though they had great need to restrict European incursions into their markets, which were destabilizing developing native industries with undercutting Price schedules of developed industries with established markets; which could maintain a reduced Cost-per-Item Production schedule. Native Capital formation insisted on the need for Tariff fees against European Goods in American markets.

The Poorer nations of the World could accomplish quite stable economies with high economic growth, if they did not have to compete with the established industries of Europe and America. The current system, though, destroys native industries, distorts their economic development into provision of Trade products and resources to Developed nations, and reduces their domestic native capitalization. Offshoring and Outsourcing to poorer nations in pursuit of lower Labor Costs, on the other hand, destroys developed industries in the Developed nations; leading to lowered Employment rates, rising Income Inequality, increased Class distortions based upon wealth, and development of dependence on cheap Goods; something which will not last, as foreign Capital inflates the Labor Wage rates of Poorer nations. This corrupted Trade practice between Rich and Poor nations has little Solution, except for the imposition of intelligent Tariff charges. lgl

Thursday, July 12, 2007

What to Call This

Tim Haab is still looking for ‘low-hanging fruit’ in Carbon emissions, thinking Carbon permits should be low initially, and rising in price as more expensive Carbon containment techniques are adopted. The trouble with this assessment lay in the fact all types of Carbon containment must be introduced conjointly, due the necessity of building effective technological Plant, and it will take a serious jolt to impel rapid adoption of all technologies. I prefer a Purchase of Carbon Permits in Dollar denominations, One where the EPA assesses a Tax based on levels of Carbon emissions paid in Permits; where these level Costs can vary in assessment based upon desired Carbon levels, and Business has to buy, borrow, or receive greater volumes of Carbon Dollar Permits from Sale of their Product. The intrinsic benefit to this system comes in the form that Congress, lobbied by both Business Interests and the EPA, will set and reset the minima and maxima of the Carbon tax assessed. The political interplay will assure the Carbon tax does not get egregious while the Carbon containment efforts do not lose impetus.

Chris Dillow examines the potential economic Costs of lacking friends. A Friend today called my two Posts of yesterday Communist in nature, clearly expressing his failure to read either. My Take on the issuance of Carbon Permits would actually eliminate Government intervention in the arena of Carbon taxation or Permits, reducing Government action to simple issuance of Permits at Taxable price, and the largesse of Permits Business would need to Produce. I have hopes Those who read my Posts reached a higher understanding. Some of Chris’ listings as benefits for Friendship may be doubtful, but it is an overall interesting and informative assessment. One role of Friendship networks of immense economic benefit comes from their great use as a Sounding Board for ideas with Individuals with expertise in the areas called into play when evaluating ideas.

William Polley and Max Sawicky remind me of the Supply and Demand curves themselves, as they help to bolster each other. They outline the positive and negative features of each other’s position. This is a definite Post for want-to-be Economists, though it is written for the value of ordinary educated Readers as well. My major problem with Traditional Economics lies in its dedication to Marginal Readings. Economists can never fix the magnitudes of economic change realistically, this because they believe that minor Changes (Marginal readings) will impact the greater economy. I realize that multiple minor changes must move in a proscribed mode to achieve structural economic vector changes. No minor change, in isolation, will impact the greater economy sufficiently to redirect Market forces. This is true for minor Tax Cuts, minor Price increases in Resources, minor Raises in Wage, or minor Drops in Consumer Demand. Corporate Executives charge what the Market will bear, irrespective of the Profitability of Corporations. Workers will strike or balk when faced with rising Consumer prices, no matter what Productivity rates they have attained. Health Care races ahead in Cost because they as an industry can maintain Monopoly pricing. Everything I have cited has nothing to do with minor changes, and Everything to do with the creation of economic environments. lgl

Wednesday, July 11, 2007

Confusion about the Cap-n-Trade Post

I have noticed some bewilderment amidst the Rank and File. The crux lies in my use of the Concept of a Carbon Dollar. I used the nominative term, but Many mixed the two Dollar types. The Carbon Dollars, denominated like Currency though hopefully differentiated by size and color, would actually be Carbon Permits universally transferable. They would be required to fill your Gas tank, buy your Groceries, pay for Heating fuel or Natural Gas, even to purchase electrical power. They would not negate the necessary use of U.S. Dollars to make your Purchases; but must also be provisioned to make any purchase.

I suggested a Carbon tax by Sale of these Carbon Permits at a rate which I thought would be equitable: $.12 per Carbon dollar Permit. I did not explain my Thought that this should be the Price up to a Household Head limit, after which I would propose further Carbon Permit Sales but at a Price of $.34 per Carbon dollar Permit. These Permits will not equate with the U.S. Dollar Cost of the Purchase, but only with the estimated per-item Carbon emission Cost of the Product. Carbon Emission Costs suddenly run through the entire Production change when Business is forbidden to purchase these Carbon Permits. Every Producer, Wholesaler, Transporter, and Retail will add the significant Carbon tax per-item necessary for their continuance in business, as they cannot continue to function without ability to pay for their own Carbon emissions.

Answerable Questions:
1) Retailers will assign a Carbon Cost to each item at the Check-Out lane, and will insist on payment of the subTotal in Carbon dollar Permits. There will not be great Math involved, and Business will be ordered to Round Down to the lowest Dollar; and they will thereby be generous in assignment of per-item Carbon emission Costs.
2) The rationale behind the Carbon dollar-denominated Permits consists of use of Consumer Preference to determine in real terms how they truly favor Carbon distribution by introducing Market scarcity through expensive Carbon Permits. They will buy exactly those Products and Services which maximizes their own Carbon budget.
3) The current structural Debate on Cap-n-Trade favors Business selling unused Carbon emission Credits for Profit, which does not restrict their own Production schedules in any way, fails to provide directed Incentive to reduce Carbon emissions--only to find a Supplier of cheap Emission permits, and delivers a Tax to the Consumer which is hidden; it will be higher than my formula as Business passes on the Cost of the Carbon emission permits. The Consumer will be paying the tax on Carbon emissions anyway, and will not possess any Say on what directions that Production should take. Be sure to transmit further Psychic waves if there are still unanswered Questions. lgl

A further Answer:
4) The enabling Act should undoubtedly require Banks, Credit Cards, and all Other Expense Expenditure Accounts to hold and list Carbon Dollar-denominated Permits. The easiest way to achieve This may be to entail these forums to be Permit-Selling agents, granting them 2 Cents commission on every Carbon Dollar Permit sold. lgl


John Whitehead clarifies the state of the Carbon Emissions debate in Congress, identifying the fact the current trend is more Loophole than Cage in the Cap-n-Trade legislation. A Carbon Tax remains the most effective means to reduce Carbon emissions, because a Tax is an immediate action which must be paid on-site, while Cap-n-Trade always stands on future Targets (which can always be extended with political pressure) and Permits (which can be conveniently increased with political pressure). John also provides this link about Safety Values and compliance Costs.

What angers me no end consists of the confusing garbage put forth throughout the Carbon Emissions argument. Today, and Exercise partner repeated a Claim heard on TV that Cattle were the third worst Emitters of Carbon emissions. I never witnessed the TV discussion, but likely the Order proposed was Industry, Vehicles, and Cattle. No One ever evaluates Household Residence emissions, Restaurant emissions, or even human Open-Air walking. The second element holding precedence states that Volume of Carbon emissions is important; One Morning Rush Hour across the Country probably produces three times the amount in total monthly Carbon Emissions of Cattle in this Country. The last thing to be mentioned is Cattle consume surface Carbon, and emit surface Carbon; my favorite Meat animal, and most Profitable to myself, can only truly be vilified as a Carbon de-Sequestration Agent.

Now it is time for One of my crackpot ideas: The current Trend is for Carbon permits, so how do We make them as effective as actual Carbon taxation? The idea is to go straight to the Source, and tie the Whole to Consumer preference. How can this be done? The simplest way is to only sell Carbon permits to Heads of Households. How would it work? Set a limit on how many Carbon Permit dollars could be purchased per month, with a new Currency issued in Dollar denominations. Businesses would be prohibited from purchase of these Carbon Dollars, but must receive them by Sale of Goods and Services to Consumers–the Price of these Goods set in both regular Dollars plus Carbon Dollars; I would suggest an effective Price would be $.12 per Carbon dollars sold by the Government. Business must pay for their Carbon emissions in Carbon dollars or curtail Production, with the only avenue for their acquisition coming from Consumer Sales. Consumer preference would set the Buying patterns of Consumers, who would be constrained not only by the Price of the Good, but also by their own limited supply of purchasable Carbon dollars. This remains the only effective Cap-n-Trade system, and even here, there would be intense political pressure to increase the monthly purchasable Carbon dollar allowance per Household. lgl

Tuesday, July 10, 2007

We are beginning to Reap of the Whirlwind, as Construction Costs start to accelerate faster than normal Inflation. The major drive to Offshore production to avoid American Labor Costs has led to super-Drafts of Construction materials throughout the World; inciting high Construction Costs domestically, which will drive up Utility Costs in doing Business in the United States, and coincidently, suppressing Consumer Demand for exactly those Products which American business wished to specialize within, simply because of their high Energy use.

It matters little whether it is Passenger Jets, the Information Highway, or Kitchen aids; American business committed to Energy-intensive Goods where Consumers will disappear if (actually when) high Energy pricing drive them from the Market. I will make the Prediction that Air-traffic miles will be cut in half inside a Decade; due to high Energy charges reflected in Ticket pricing, and the generally poor Service–which is a intense Labor activity. Electrical Bills will soon be in direct competition with Heating, Food, and Mortgage, and will lose out rapidly; Appliances will be left to vegetate, and will not be repurchased. Phone Service, while increasingly Wireless, will decline as Charges rise; people will start to throw away their Cell-phones.

Business will also alter drastically, as IT loses force; this due the Wealth of available (but without Royalty) Information on the Internet. Advanced Streaming holds less value for the majority of Business activity, and Consultants will find little employment with higher Wage demands. The Traditional Business formats will be rediscovered, and serving the local Markets will carry much greater appeal as Transportation Costs eat up the real value of Outsourcing. Our World will change, not because of real Shortages, but because of unrealistic Pricing of Goods and Services. We could be entering an new Age of Micro-production. lgl

(I will exceedingly grateful when my Blog Server fixes the Title input)
I read this, this, and finally this, and I begin to wonder if the human race can solve its Problems by new technologies. The last Post makes me think of developing a strategy based upon old ways altered to generate future fuel needs. But where do We start?

The first idea is to demand the Science community find a easily raisable Biomass, other than Food crops, utilizable in the production of Biofuels. The second issue insists on utilization of all potential arable land for the growth of this Biomass; my Option is to tell Homeowners they must achieve some recognizably attainable Biomass provision by Poundage, or face a tripling of their Electrical rates–this as Incentive to get with the Program, and turn Lawns into Biomass production centers. The next idea is to utilize the Waste Heat in Electrical generation in the distillation of biofuel. Steam heated to generate electrical power is still hot enough for the Distillation of most biofuels. I have always had a things against Lawns, ever since I was compelled to mow too many of them.

The Catchword for the Future will be integrated systems, which forestall anything from going to waste. I even suggest the biomass left after biofuel production should be Composted, and redeposited on the Homeowners’ land, making a relative effective Fertilizer. A similar Process to the Above can be conducted on Sewage effluent–including the Composting and deposit upon agricultural land; the biofuel production process acting as an biological sterilization process as well. Garbage can be separated into Metals, Inorganic, and Organic materials. The Metals should be sent to Smelters for Reuse, Inorganic materials should be utilized in Road construction, and Organic materials should be used as base for Plastics formation.

Does this Program seem too Visionary? It is not! It also has many other benefits than ecological. The entire Process focuses easily achievable Production processes within the local community, providing a high degree of Employment. Homeowners will quickly learn to Rent their Lawns to Biomass Farmers (very probably a cheap Inverse Rent), and Homeowners with insufficient Lawn area or poor ground for agriculture will rapidly learn to buy cheap biomass from these Farmers; the entire Process financially Underwriting the development of the Biomass Farming industry. Electrical companies can defray Fuel and Production Costs by selling biofuel, which will aid both Electricity Suppliers and Consumers. Plastic manufacturers will find a cheap Base source, cutting their Production Costs, while enhancing the picture of local Employment; as will the staffing of all of the biomass Production. It all utilizes existent technology, it relies upon surface Carbon so no greater mass of Carbon is emitted into the ecology, and generates increased economic activity in local areas. lgl

Monday, July 09, 2007

General William Odom portrays the real damage inflicted upon the U.S. Military by the Bush position. The psychological profile of all returning Service personnel, including from Afghanistan, is quite bad for the Military as a Whole. German medical records from WWII are Past records of the dangers of continuous combat. I had to utilize a Nebraska Farm boy adage, but returning Servicemen are ‘Wind-broke’ horses; they have been overworked to the place where they are psychologically empty. I will try to give you some sense of what I mean.

A primary impulse in Troops is the sense they will achieve some type of victory–in a military or other Social achievement. The greatest danger to morale must be a Return to an area of operations after a Leave or Absence, only to find that nothing has changed; or it being worse in an assigned Tour of duration. If things have worsened in a military sense, then the returned Serviceman feeds a State of defeatism within his own mind; generally reinforced by the commentary of the other Servicemen in his Unit. Prospect of lengthy duration of exposure to danger leads these Servicemen to abandon any Mission Goals or Rules of Engagement which inflicts a greater risk on the Unit. This is a relevant fact, no matter how compelling the Mission Statement may be as a National Priority.

Military leadership can only worsen this Situation when they try to exhort greater Risk-bearing from the Service personnel; said individuals, already feeling victimized by the process of their Return, focus on the insensitivity of such leadership with a belief that Command will use them until they are killed. The Problem extends beyond the immediate Concerns of the Area of Operations, because Service personnel who have abandoned belief in Command leadership because of the intrinsic danger, will never again exhibit belief in that leadership. The End-Result will be the necessity to raise a completely new Military force absent the disruptive elements that these Veterans have become. The U.S. Military had similar experience during the mid and later 1970s, where ‘sour’ Personnel had to be weeded from the Main Force. lgl

Sunday, July 08, 2007

I was mulling over this article from William Holstein in the NYTimes, and began to ask myself questions about Globalization. Can the Global economy remain in a durative Recession, given current Population levels and technological levels of advance (layered and decentralized)? The sheer maintenance of economic functions will generate Demand in multiplex Sectors, with the causation of overall Profits stability. Does this mean that Corporations will eliminate Risk simply through global spread into decentralized economies? Readers must understand the Above insists on qualified Corporate leadership without mismanagement, or major failure in technological research capacities.

What effect does this hold for the decentralized economies thereby governed and controlled by these Corporations? Corporate leadership will hold to the success matrix of Globalization, and abandon decentralized economies to meet their own fate endured by internal shortage factors. Basic stabilizers will be left in abeyance, as globalized Corporations will maximize their Profits elsewhere, leaving native economies to struggle alone. The later will suffer as they find a shortage of developmental funding due to this Corporate withdrawal from local Support elements.

This sounds like so much gobblygook to most Readers without a Case in Point: Corporations will desire the lowest Production Costs and most uniform Profit/Product unit they can achieve; both of which rely heavily on the introduction of common levels of Wages and Benefits to Labor through all native economies. The Push, though, for the lowest Production Costs will insist on continual transfer of Production facilities to the lowest Wage native economies with least Labor benefits. Consistent and continual transfer to the least-Labor Cost economies will generate Recessive conditions in the affluent economies which insist on high Labor Costs; most noted, not by loss of nominal Wages, but by loss of Currency value and lowering Labor Participation rates. Does this remind One of any native economy? lgl

Saturday, July 07, 2007

Michael Moore gave Us the movie ‘Sicko’, and the Internet brings the Charges against it. I first must say I have not seen the movie, and have no intention of doing so; I am into Action flicks, and do not even trace the economic significance inside the Plots–like Bryan Coplan sometimes does. Here I suppose you think I will present some advocacy or denial for a Single-Payer Health Care system. You would be wrong, the gist of this Argument traveling further afield.

I refer you to this article in the NYTimes. Here resides some indication of the substance of my argument. Jodi Rell, Governor of Connecticut, vetoed a State bill to allow the Comptroller of the State to change Accounting rules utilized on State Budgets. The desire behind the Bill was relatively common to American society: Deny disliked Results by changing the Rules. I don’t want to insinuate any criminality, but the Bush administration and the Corporate World in general has long been acquiring a smell similar to dead fish. It seems like every Reportage Date tends to be matched with a brand-new economic model.

Somewhere inside this information lies my Subject; but I am not positive, as I also have a tendency to alter the Rules of Engagement. Confusion seems to be popular amidst the Math elites; at least Those who are employed to produce glowing Reports. I could refer to the current Employment numbers, but would rather pursue any numbers on a decrease or increase in the Employment Participation rate. The current Standard, I believe, is that if One passes beyond the proscribed Number of Weeks of Employment Insurance; One has ceased Employment Participation–whether Voluntary or not. I actually have not researched these Participation rate numbers for a long time, and really wonder if the Trend expressed earlier in the Bush administrations have remained consistent. Maybe I should look, but like all things believed depressing in nature; I will await some esteemed Economist to take notice. Back to whatever purpose this Post has: Numbers do not lie, unless you rework the models! lgl
Michael Rose makes a very compelling argument about the British involvement in the American colonies, and current U.S. engagement in Iraq. I agree with Rose that the United States should exit Iraq under whatever Means necessary; basically because the current Iraqi Government will fall, this due to the level of Corruption evident–exactly like another debacle for America–South Vietnam. Outside and beyond this Statement, it is not so easy to agree with Rose; the trouble arising from the nature of Islamic fundamentalism, which holds Goals which extend further than national boundaries. It is these Goals which We must irreversibly defeat, but they cannot be defeated by military activity alone.

The Social defeat of these Goals require We ensure Islamic Fundamentalists cannot carry on Terrorist activities outside Islamic countries, itself a most difficult Course. This must start with the economic goal of achieving independence from Middle Eastern Oil; which remains not only a dependence of the West on Islamic society, but finances the Terrorists. It is obvious any such Policy, economic or social, stands as establishment of a Containment of Islamic society; something which is the antithesis of Western culture and economics. Here lies the basic Rub, a terrible friction which quickly leads to a Sore spot.

The real Problem consists of reconciliation of Western ideals of Individual freedom and adequate protection from institutional attack (and Islamic fundamentalism is very much an institutional framework). A Law of Exile should be passed, which states any Individual found conducting Terrorist activity or funding Terrorist organizations will be immediately exiled to the Country of the Individual’s choice; upon Court establishment such Conduct had been conducted--no matter the degree or conscious guilt. This law could be facilitated by another Law stating that no Transfer of Funds can be made into or out of this Country, except by a registered Charity or Business; said Organization to lose their license to transfer Funds, if any Funds eventually leak to Terrorist organizations. A third Law would forbid any Employment where said Employee had not been investigated and found Innocent of any involvement with a Terrorist organization; said Investigation the financial responsibility of the Employer; the later automatically fined $100,000 per Employee, who has been found to be engaged in past, present, or future Terrorist activity including Fund-raising. lgl

Friday, July 06, 2007

Wide Shot Pattern

Mike Shedlock has a Post up which examines three Issues quite well. The Ohio Attorney General has filed suit against Credit-rating agencies, who contend that they do not have to use due care in issuance of what they term Opinions. Question: If their contention is upheld, will they not be required to register as Advertising Agents? The Mortgage-bundling business is bad, and they are trying to kill the Messenger again–this time Implode-o-Meter; which only accounts the evaluations of the Crisis-Conscious, truly reminiscent of suppression of Free Speech. Alaska wants to swing back to the 1920s, and advocate Speculation Investment by borrowing. I hate to be a Spoil-Sport, but the SEC would have had to step in on this one if Bart Stedman had not proven sufficient bulwark.

Mises.org seems to have chosen today to start a crusade against Regulation. This Post by De Coster serves as a prime example, with implication that New York would regain its financial position if another Board was established to get rid of the ‘regulatory nets’ which have ensnared businesses. I must first make the Statement that few New Yorkers feel any real sense of false imprisonment from current practice, and second; any deregulation will lead to greater endangerment to Investors, followed by later condemnation of businesses after these real Dangers are actualized.

One very real Error of the Contributors of Mises.org comes in the intent of their overall message, which is the widespread redirection of the flow of Profits from the general economy into Profit-making venues for the Money managers. Such activities have always attempted to introduce another Profits Draft mechanism between Business Profits and Investors. Over-manipulation of Production Profits drains real financial equity from both Production and Investment, destabilizing both Production Schedules and the Value of Money (a modern version of Debasing Coinage through implementation of artificial Drafts). An old Hunter would call it too much Powder, and way too light on Shot. lgl

Thursday, July 05, 2007

The Fall Guy

Greg Mankiw brings to the fore a relevant Question often used in Politics, and sometimes even in Economics. How to choose a Fall Guy? The problem arises whenever there has been a legal or moral discrepancy by some element of the Established Order. Scooter Libby in Plamegate, Milton Friedman in Chile. The Choice of Individual to take the Fall has some major Subject points: The Individual chosen must be very personable, highly likable with many friends, if One intends to minimize the damage; the Individual must be able to evoke sympathy. The Individual also must not be at the direct center of the debacle, and be able to maintain he had very little knowledge of the Incident though he had heard some non-exculpatory evidence of Hearsay. The whole directional effort must be directed to the Thought of the Public that he was the poor little guy who got caught among the major Players.

The Fall Guy must always maintain the fiction that he was not really in the Loop, and all he really knew was Rumor. Outright denial of all Charges, no matter how ridiculous in appearance, must be constantly given; it has absolutely no effect in the initial Trial or Indictment, but will always lessen Sentence or Punishment when People begin to discuss such impositions. The major Players must always distance themselves from the Fall Guy, creating the impression that the Fall Guy has been dumped; this later presenting the impression that Public outrage at the mistreatment of the Fall Guy forced the Major Players to intervene on his behalf. The total final Image desired is that the Major Players cannot be reached, the Fall Guy had the entirety of the blame dumped on him unfairly because he had very little control over the disruptive action, and People should feel sorry for the Fall Guy who got ground up and spit out.

Readers must understand that Fall Guys are expedient. No Organization will ever work with 100% efficiency, whether We are talking about illegality or any other form of structured planning. Public reaction provides the sole Pressure to generate high efficiency in Organizations, and it is natural for Organizational leadership to direct efforts to minimize Public reaction. Outrages against the Public Order increase with poor leadership expertise, as does efforts to minimize Public reaction. Who outed Plame? It was probably the brainchild of Karl Rove, but undoubtedly signed off on by GW Bush and Dick Cheney before the Outing; Scooter Libby lacked any power to subvert this authority, though he knew of the Outing in advance. Responsible Adults must accept what they cannot change, but do not be misled by the deviancies of Power lest you are confronted by worse Injury in the future. Should Libby have his Sentence commuted–Yes; should he be Pardoned, only under Threat of Impeachment for the President, who must stand equally responsible for the illegalities of his subordinates. lgl

Wednesday, July 04, 2007

New Ways

July 4th celebrates the concept of Independence, and is perhaps the Day for this article. It basically discusses the value of the blogosphere to the profession of Economics. Fact states that blogs expose more individuals to Economics than does the University system; a access Road increasingly blocked by incremental Costs, my home State recently increasing Tuition fees by 18% in one year. Such a route to Knowledge as Blogs, and in like way Wikipedia, comes in the lack of opportunity benefit; it might get One qualified for Custodial Work, if one applies himself. This separation of knowledge and gain propels another tradition cherished by this Day–namely, the Spirit of Rebellion.

The Confrontation between Knowledge and Opportunity will one day create another form, like the GED which is granted to Those who did not complete High School. This will take the form of another online system, One where established Academe present a detailed Listing of Tests which Anyone can take on any Subject, for a relatively cheap Fee, all around a sustained effort to get Personnel Departments to review such Test results. It will be a integrated system like unto Commissioning Officers from the Ranks. It basically will be a manner of circumventing the Academic system, but must enjoy a high degree of difficulty to be accepted by the Hiring community.

Will such a online Opportunity be a real avenue to success? Hardly! The greatest Success in the use of the system will undoubtedly be shown by College graduates who wish to ‘Test Out" in another field of expertise to land a Job. It will be a short form Advanced Study aid, without the need to attend Classes. It will also become a cheap methodology for Personnel testing of the capabilities of Applicants; who will be granted Booklet materials for Study, and Personnel Departments reviewing the Test Scores of the Online Tests upon a certain Date. The Whole of the program would not substantially grant greater opportunity, but would rapidly facilitate Job mobility. If I had only come up with this idea when I was Twenty, but then, there were no Personal Computers. lgl

Tuesday, July 03, 2007

New Finance Measures

Don Boudreaux often takes an extreme position on various economic proposals, but couples his views with a very logical, sensible construct which demands evaluation. He has done so again with this Letter. Don is correct in his assessment that giving an Oil tax to the Government to spend stands as a very expensive externality. The Tax revenues raised would be quickly spent by Vote-hungry legislators, and to functionally no one’s actual economic value. One should not couple Politics and Economics, as both face great liability with rare gain.

Tim Worstall presents the real Problem of ‘Pay-as-you-go’ funding of Pensions, which can be extended to Health Care. We need to achieve a reducing Population, or face an ever-escalating Cost of either. He suggests raising the retirement level to keep people working through extension of Worklife. This has decreasing marginal returns, and effectively increases the total Health Care Cost dramatically–run a Study and prove that to yourselves. Increasing Taxation for Pensions or Health Care or delaying benefits function very unreliably in an economic sense, as externalities will absorb residual benefits from either Plan. A more reliable economic model need to be adopted.

The common sense approach dictates both adoption of a Gas Tax, and directing increased Revenues to both Pensions and Health Care; this would tie Pensions and Health Care into a integral connection with the economy. The greatest practicality exists for applying the Gas Tax to the other main economic problem, provisioning each with a partial Solution. A Dollar per gallon tax on Fuel, with like Charge per ton of Coal appears sound with devotion to Pension and Health Care funding; but there need be added restriction, to wit, all Funds need be directed to private investment for the future, absolutely no Treasuries to be purchased with the Revenues. The ideal situation is the creation of a Social Security bank, which cannot extend Loans to Anyone other than fellow Banks; the Fed restricted from lending to member banks until all Social Security bank revenues have been absorbed. The entire Issue of Interest rate levels enter the Picture at this point, with Monetarist Protests on loss of Interest rate manipulation; but a mandated 4.25% extension rate would stabilize Interest rates, and the Fed has shown little ability to control the level of Investment through Interest rate changes. lgl

Monday, July 02, 2007

The New Ism

Mark Thoma gives links to the William Easterly article against Developmentalism found in Foreign Policy Magazine. Dani Rodrik wonders what Easterly is really trying to express, finding much common ground with Bill, but quizzical about the Easterly presumed monotheism of the overall doctrine. The seed of the Easterly argument must be a criticism of the ‘Top-down’ approach to Developmental aid.

The evils I find in Development doctrine are all of the ‘Top-down’ direction, but probably not what Easterly might consider to be the greatest evils. The absolute worst approach to Development consists of the destruction of Native industries, before they can be replaced by sustainable labor in the World economy. This destruction of Native industries creates an immediate dependence of Native labor on the World economy; one where they are not temperamentally or educationally suited to maintain position. Native economies endure the further corruption of increasing dependence on increased Energy needs to supply the Advanced World commercial and consumer products, in a World where Energy becomes an ever more expensive commodity in its own right. Development doctrine cultivates extremely Developed World tastes in a very undeveloped World.

A secondary consideration of Development doctrine remains Private Enterprise ideology. The Gambit extends from Microfinance to development of huge labor force businesses. The ideology always insists on Private Enterprise which has limited economic resources to counteract any depression of Sales, then insists that this new Business service Developed World Products; intimately tying these Business concerns to Developed World economies; these businesses destined for Scrap with any significant downturn of the developed economies. Many Economists would contest my position, but how many of the new industries of the Third World are set up to provision Product for their own native economies–it is all for Export; levels of Product with the most rapid Shift pattern under Recessive conditions.

The worst aspect of Development doctrine may realistically be the artificial injection of Power into the Native hierarchical structure. Those who control the flow of Funds and Products from the Developed World, controls a dependent people. Traditional choice of leadership, and traditional replacement of leadership in Native society becomes unhinged; Native Power brokers utilizing the overwhelming power of foreign Product access to enhance and protect their domination of native society. American Politicians have traditionally shown ineptitude in backing Native leadership, and there is little indication that American Economists or Corporate leadership will have a better Track record. lgl

Sunday, July 01, 2007

The Basic Trade Issue

I am quite sure that John Nye, Tyler Cowen, and Dani Rodrik would all disagree with my assessment, but Nye makes my Case that Tariffs can be very beneficial. It remains hard to convince Anyone that economic development in Britain or the World in the later half of the Nineteenth century could have been more rapid, as the existent infrastructure was being pushed to its limits, though infrastructure construction was in itself massive during the Period. The Tariffs in place realistically paid for that construction. Examination of the Period without resort to hard Numbers suggests that all the basic economies, Developed and Undeveloped, were basically overheated; a good Case can be made for vast Resource wastage from extreme Resource-extraction and Production methods utilized to meet high and immediate Demand. The Tariffs served as a Governor on overheated economies, and drained excess Profits which could not achieve sustainable Investment.

Study of the tax impact of Tariffs might present some Insight into the theory of Tariffs. Let Us first answer the question of Who. Tariffs taxed exactly those industries who were trying to rapidly expand the market for their Products. These Producers wanted this expanded market to quickly pay off their mortgage debt for Production facilities, so they could expand their capitalization. Their choice of foreign markets not only included far greater Consumers, but a lack of taxation; imposts upon themselves, their Workers, and their Consumers. A basic drive behind their desire for foreign markets was attempts to escape the heavy taxation. Importing nations, however, found a vital loss of Tax revenues coming from their Citizens’ purchase of foreign Goods, and took immediate Steps to reintroduce this Tax revenue by venue of Tariffs. Study of the Graph provided by Dani Rodrik highlights the first attempts at this Tax revenue replacement were too high, but both Britain and France reduced their Tariffs until domestic and foreign tax revenues relatively equalized.

I think We have established the basic Who, How, and Why in the previous paragraph, as well as the basic How Much. The only Question remaining consists of asking whether Developed nations pass a boundary, past which Tariffs become counterproductive. Modern Economists might universally agree that Tariffs are an obsolete form of Taxation, and need be discarded on the trash heap of outdated technological forms; I do not! Developed economies still have the same problems of overheated production, excess Profits without adequate Investment potential, and Tax base erosion from increased Importation. The Problems increase in Number, Kind, and Cost as nations develop, and Tariffs have an established history of effectively dealing with the basic structure of these Problems. lgl