The Wrong Paths

Mike Shedlock (Mish) always presents good material, but it sometimes hard to interpret; this Post a good Case in point. His main theme, I think, consists in the Statement that We are entering a consistent pattern of counterproductive failures, one where the Profitability of Production is being reduced sector by sector. Companies and financial institutions are scrambling to maintain their levels of Rolling Capital. I believe Mish is wrong in his Thought that the Minimum Wage increase will be bad for Employment, because even if there is a Recession–still very much in doubt, Recovery will come easier with a higher Minimum Wage; it does create a more widespread Consumption market. I agree with him that there is definite excess of Shipping Capital, and will personally suggest squeezing Shipping Profits Margins will adversely affect the Employment market; there is a real Problem in replacement of retiring Drivers. Mike’s ideation that Corporate Profits will disappear in the coming Quarters does seem inevitable. No one would go as far as I in this assessment, but the economic theses on which the Bush administration based its economic policy has been flawed; perhaps even to the point of suppressing Inflation to uphold Consumption, as free-wheeling Inflation would have cut over-Consumption, excessive financial debt, and over-Capitalization of successive sectors.

Greg Mankiw finally comes up with a Theorem which I can agree with, and its inherent truth is undisputable. What he fails to clarify is the nature and structure of Cap-n-Trade; this has real importance because Corporations can manipulate the Caps through political lobbying so as to adjust the benefits of Corporate Welfare attained. A Carbon tax is set, understood, and allegiance granted it by Public awareness of the Problem. No one but Corporate Executives understand the real levels of Carbon Credits necessary for Production, and they will manipulate those Numbers for their own Corporate advantage. A second disadvantage of Cap-n-Trade is the incipient delay in it, a Carbon tax could be implemented by the next President election; a Cap-n-Trade system will take years to devise.

Arnold Kling once again points to correct critical academic evaluation of professional arguments. It is well worth a Read in itself. I personally use a different approach of belief that Everyone thinks I am wrong, and if I write long enough, Someone is going to be proved as being a damned Fool. I would personally suggest that Readers follow Arnold’s proscription, as it would quite probably lead to a greater advancement than my own antics. lgl