Thursday, May 31, 2007

Small Business Tax Cut

The lack of resources at the Small Business Administration, combined with the 0.6% growth rate for the First Quarter, contains an element of Risk. The greatest loss cited of the lack of personnel was Small Business inability to attain Federal Contracts. The Administrative Transmitter is not there, or not trained for the Job. The large Corporations getting the Federal Contracts gain little Profit from Contract fulfillment, which constitutes only a minute fraction of their Turnover. Loss of an avenue to these Federal Contracts for Small Business, in the light of a shrinking network for their Goods and Services from the Private Sector, means they are pushed closer to a Shutdown of Production; all within the context of reduced Credit sourcing, and then only at higher Interest rates.

Most Economists realize that the real Employment levels reside in the small Business industry. Large Corporate structure is excellent venue for Capital for economic growth, but a poor engine for Employment generation. Cutbacks in the SBA Budget rendered Government Spending relatively helpless to aid Small Business to maintain Employment levels through the mechanism of Federal Contract awards. I will tell you the Reader, contrary perhaps to some Economists, that another Round of heavy Layoffs is not what this Economy needs at the moment. The Housing market stays down, though All proclaim a Light at the end of the Tunnel; this meaning that the Construction sector remains threatened. Retail Consumption heralded as up by Economists, remains dark and dank fueled by massive increase in Credit Card debt. American Households are strapped for Cash, and this is not the time for any major loss of Jobs.

I hold a position directly opposed to the Bush Tax Cuts, and to Tax Cuts in general; fundamentally believing properly-set Tax rates without any Exceptions of any kind would serve better as a growth generator, than any specific in nature reductions of Tax. This, though, is a long-run goal, with implementation following a complete removal of all such Tax depletions. This is not the time to allow the Economy to falter, simply because the Congress will not labor to rationalize the Tax structure. Therefore, I would advocate a Tax Rebate for Small Businesses (less than 500 employees) of $500 per employee for each Employee employed throughout 2007. This fulfills two criteria: they will already have had to be employed since January 1st, and they must be retained in Employment for the rest of the Year. lgl

An Adjusted Election Law

Jonathan Chiat points some of the points of interest of the American Enterprise Institute (AEI). He may possess some doubts about streamlining for a Free Market system. It stands as a entertaining Read, there being little humor in Today’s World. I especially enjoyed his presentation of the AEI’s claim of mistreatment of white collar criminals–America’s Abu whatever. The desirable inequality also brings a suggestion of mirth.

The Good Feeling stops upon the contemplation of an alteration in academic and literary definition may be occurring. Is this a Mark of changed Environment or Educational Practice? Conservatives used to hide transgressions of Democratic Spirit, enjoining a refusal to discuss violations of egalitarian conduct among their own. Now it appears they are attempting a academic justification for their miscreant behavior, granting it some form of legalistic gentility. Is it only an Example of the Prostitution of profession even the best of Us may be enticed into if the Price is especially generous?

The later Event is not as disturbing as the final possibility: Presenters actually believe in this basic inequality. This last bothers me the most! One must ask if Technical Education has displaced the defusion of Ethics. Are the models of all academia beginning to replace consideration of principled Results? How long can a Society hold cohesion as a great Entity, if We are back to considering less skilled humanity as cattle? Congress passes legislation to benefit Business, which is a hidden discrimination against a Consuming Public. Courts suppress Nuisance Suits against major industries, brought by common Citizens, because it contains potential Profits-loss to Business while requiring high-priced legal Representation for Business. Communities even claim the ability to nullify Property Rights for the Private Sector by Public Condemnation. I think myself that there should be a new Election Law, which sets a Minima and Maxima of Price in the purchase of Votes–to establish a level Playing Field. Hell, this Practice might even be extended to Congress and the Oval Office itself. lgl

Wednesday, May 30, 2007

Special Comment

A Comment I received from a Reader basically disagreed with my positon on Corn Ethanol. It was a very intelligent assessment, and I think I finally have it posted to the previous Post Comment section. I am going to repeat it here, and then offer further terms.

Corn farmers could switch to growing grasses for ethanol, but the probability is that they won't -- at least not without yet more subsidies. A recent study from Iowa State University's Center for Agricultural and Rural Development (CARD) modelled future ethanol production and concluded the following:"A key and possibly counterintuitive insight is that there is no ethanol price that makes it worthwhile to grow switchgrass because any ethanol price that allows ethanol plants to pay more for switchgrass also allows them to pay more for corn. So long as farms are responding to net returns in a rational manner and so long as ethanol plants are paying their breakeven price for raw material, farmers will plant corn as an energy crop. Switchgrass in the Corn Belt will make economic sense only if it receives an additional subsidy that is not provided for corn-based ethanol."

Not surprisingly, there is now at least one bill before the U.S. Congress proposing new, additional incentives to encourage farmers to produce feedstock crops other than corn. The bill, co-sponsored by two mid-west Senators, John Thune (R-SD) and Ben Nelson (D-NE), (see Press Release) would pay producers a "cost share" for planting energy-dedicated crops and a per-acre rental payment. Once the biorefinery is operational, the rental payment would end and the producer would receive a matching payment up to $45 for each ton of biomass delivered to the biorefinery for up to two years. That would, presumably, be on top of the $0.51/gallon that the blender would receive for mixing the ethanol with gasoline.
Ronald Steenblik
Research Director
Global Subsidies Initiative
The Comment by Mr. Steenblik contains the resolution to the problem of dedication to Corn in such Production of ethanol. The Thune/Nelson bill would pay for biomass by the ton, not by the current method of by the bushel. The total Cost of Tillage, Fertilizer, harvesting, and Delivery to ethanol plant production cannot be accounted by a Mean Price based upon tonnage of biomass. Turning to a principle of turning the Corn crop into Silage cannot permanently provide higher biomass tonnage rates over Gamma grasses, because of the totally disparite amounts of Fertilizer which must be used on the fields (even at current Fertilizer pricing, approx. some $450 per acre). The gist of my Argument remains unchallenged, though the attempt was extremely well-Thought, as Corn will fail as a biomass for ethanol just as soon as Planting Costs replacement is abandoned.

It truly remains at Issue which biomass source need be used for the most efficient ethanol production. It must be native to North American clime, easily tillable, cheaply maintained, and of worthwhile Price to interest American farmers. Corn fails the criterea in the long-run due to Soil Maintenance Costs. Switchgrass may not be the Answer, but let Us abandon a crippled Crop, and One which is necessary to alternate use in domestic Food Production. lgl

Another Look at Social Security

I like this Post of Cactus at Angry Bear, which highlights the varied use of Sleight of Hand in Government Accounting practice. Readers need use a degree of Kentucky Windage whenever they read the Liberal and Conservative versions of Government Spending. An intense review of the U.S. Today article notes my immediate impressions.

1) It states that the loss of $11,434 Dollars per Household is likely true, but that Payment of the Expense will occur over a 40-year Period–establishing an Average Household Payment of some $285 per year. Now, this Payment is front-end loaded, and I will use a Factor of 3 though any Economist will tell you would stand far closer to 2, so the yearly Household Payment would be somewhere around $858.

2) Aggregation of liabilities of $59.1 trillion seems an immense Debt, but amortized over a 40 year Period, $59.1/40, equal $1.4775 trillion per year–a horrid Debt load unadjusted. This, though, becomes a back-loaded Payment schedule, only reaching highest Payment levels some halfway in the 40-year Payments Interval. The health of the Retirees at Age of Retirement the Best which can be found in the Interval, and deteriorates slowly to the mid-way Point. I will utilize an adjustment of 0.6 until the Halfway point, though Economists would probably say I should use 0.8 for the First Decade, 0.9 for the Second Decade, 2.5 for the Third Decade, and 0.7 for the Last Decade. Here We have my Estimate of $886.5 billion for the first Twenty years in yearly Payments. Economists would say $1.182 trillion for the First Decade, $1.32975 trillion for the Second Decade, $3.39825 trillion for the Third Decade, and $1.03425 trillion for the Last Decade. Terrible Bill is it not!

3) Here is the fundament Error in the analysis. First, the above Math is nonsense. There is no liability as long as Social Security receipts exceed Payments, which I now estimate will contain the Expenses until 2014. Second, the greatest majority of liabilities have already been assumed and paid for by the Baby Boomers; the real area of contention here resides in whether Our Successors will repay the Money devoted for this purpose to Us. Baby Boomers paid for the real Cost of Our Parents and Grandparents, and for Ourselves; and allowed repetitive Administrations to spend Our accrued Savings for our Old Age. Current Politicians and Taxpayers would rather not repay this Sum. Third, Social Security Payments will stabilize without yearly increases sometime in the late 20Teens. This being do to the reduction of Elderly population, and stay there due to a overall declining population.

Many Elements could help Us to reach that Point of stabilized Liability levels. We could actually do something about the Health Care industry to cut Costs; a factor which possibly would reduce Medicare Costs by 50%. We could raise the Social Security contribution by 1.5%, split evenly between Employees and Employers, and raise total Contributions by about 8%. We might ask current Administrations to raise overall Taxes sufficiently to redeem the Notes held by the Social Security over the next 30 years–something called within the Lifetime of the Baby Boomers. Finally, We should not worry, as cancelling some of Our wars could leave sufficient revenues to do all of the above things. lgl

Tuesday, May 29, 2007

Corn Ethanol--Nah!

Colin A. Carter and Henry I. Miller provide a good article in the Christian Science Monitor, the link thanks to Tim Haab. They mention that a Bush Mission Goal of ethanol replacing 15% of domestic fuel usage would require the entire American Corn Crop, if the ethanol was dependent on Corn; the rationale behind the current Subsidies presently awarded. They don’t really come out and state it is Insanity to place Our Food Production in direct competition with Our desired Fuel Production; but it is a Statement which I will render. A further Slaughter of domestic Meat herds will only impel a Protein shortage in the American Diet. This will occur rapidly if Feed Lots do not get their own Round of Government Subsidies, because as the Situation now dictates if left to its own resolution, We will find a potential 34% Protein shortage within 3 years.

Ethanol Production cannot be Self-Sustaining if Production requires a greater draft of minerals from the ground, than can be replaced naturally. Corn production is better than Cotton in terms of Soil depletion, but in no way can it be considered Self-Sustaining. Ethanol Production can only be Self-Sustaining if it is based upon Nitrogen-fixating plants–best possibility being Gamma grasses. They have the additional benefit of harvesting frequency of a potential 3-4 times a year. They also enjoy the capacity of great bulk, but a bulk which can be ground and powdered after fermentation, and re-mixed with ethanol to furnish Carbon substance to ignite. All Government Subsidies for ethanol should be routed to this area.

American Farmers will not feel slighted by this redirection, basically because almost All such Farmers can easily switch to Gamma grasses production–a production which is actually much cheaper than Corn production, and faces far less threat from adverse weather. It is also a Self-Sustaining production with only limited Needs for Fertilizer, and composed of Mineral elements which requires little Fuel itself for production and distribution. Little Water, little Fertilizer, lower Tillage Costs, and greater bulk actually delivered to a potential Fuel source. Actual ethanol production would require larger fermentation tanks, and grinding facilities; but actual production of usable Fuel could be maximized. lgl

The Conservative Mind

Edward Hugh outlines a situation where Unemployment is falling, but Wages are not gaining. Household Income in Japan fell 0.4% year or year in April. Standard neoclassical theory fails again as the expectation of Wages should rise in the face of a shrinking Labor Force (Japan an excellent Test case because of the limited immigration). One of the functional Testing errors in modern Economic modeling comes in the form that only individual laborer Work hours are recorded, when there should actually be kept a record of Household Labor hours, this to have a true account of the factor of the Ageing population. Economists may catch up to that fact sometime in the near future. Such data will gain in notoriety as the Ageing trend continues, especially if I am right in my estimation that Immigration to the United States will shortly decline both in Numbers and Percentages as native economies improve.

Edward L. Glaeser touts the new Immigration Bill, saying that it provides for Border control, and register the current illegal Residents. Mark Thoma, though, criticizes the $5,000 fee for this Registration, which will defeat the actual enrollment of illegal immigrants in the program. Mark also states the United States cannot effectively improve on World Poverty by absorbing the World Poor, an innate Truism. My trouble with the Bill lay in the real lack of Need in improving Border security, as it is a natural economic flow which will dissipate as it will; and will not be stemmed by artificial barriers which are not economic. Only expanded Native economies and a shortage in American Jobs will bring illegal immigration to an end.

The $5,000 fee for Registration is nothing but a sad, and sick, attempt by Conservatives to generate Government revenues without touching the Bush Tax Cuts, which are popular among all Taxpayers. Registration will devolve into Illegals being captured in Raids, signing a promissary Note to pay the fee, then being released; the famous old ‘The Check is in the Mail’. Real Revenue will not be discovered. The only Result will be a diminishment of Job skills among illegal immigrants, as they rapidly have to find alternative Work and Residence. It is exactly the type of endeavor designed by Business personnel, who traditionally ignore the real advantages of Government in guarantee of Safety for their Contractual obligations. It is totally in line with the previously passed Bankruptcy Law, which hasn’t marginally increased Credit Card recoveries of Debt. lgl

Monday, May 28, 2007

I get mean when Bored

The Reader may be able to tell my level of boredom, considering the fact that I am pursuing this CBO monograph on Memorial Day. It is structural gibberish to proclaim any mastery over this Paper, but I can state I possess some doubt as to the use and choice of data assignment of elasticities. The Whole presupposes Marginal propensities exist in the first place, can be assigned definite data reference, and that these Percentage cores do not vary under the magnitude of the Tax Cuts. They follow this with sole reference to 2002 Income Returns, expressing effects coming from a rebounding economy. Early Training on Bell Curve behavior endured by myself leads me to wonder at this type of Study.

Marginal propensities enjoy a Stretching capacity which I have previously attempted to make Economists aware. They possess far greater power and magnitude with greater degree of economic resource underemployment, much less power and size under conditions of Full Employment; technically, they zero out. Marginal Tax Cuts thereby enjoy much impact under a contracting economy, but much less or no effect under a expanding economy. It is theoretical that Tax Cuts generate a negative effect under a Resource-driven Inflation of a Full Employment economy. Tax Cuts are not a Solution for Everything.

Fed containment of Inflation through Monetary controls equally holds a Marginal propensity of control. It also zeros out as Inflationary pressures build. The only real Curative of Inflation is higher Taxes. My Estimate of the situation, deeply at odds with conventional Economic Thought, suggests that the Bush Tax Cuts should have been eliminated by Tax Year 2006, and that excess Investment capacity cancels any effort made by the Fed to control Inflation. I would personally advocate immediate cancellation of all of the Bush Tax Cuts to forestall Inflation, and raise the general Government revenues. lgl


Mark Thoma posts on the division between the neoclassical mafia and the Heterodox by access to a Christopher Hayes article in The Nation. He also provide access to this David Warsh article, which should also be read. Many would claim this division has origin within that which is the birth of the Economic profession, Adam Smith and his The Wealth of Nations. Others would trace the division to the Works of the Classics. I would trace the division to the work of Paul Samuelson, he of the Averaged Rational Mentality of the Economic Participant. Math models have presented immense value to Economics, but left Us with a residue of rigidity which punishes stray Thought deviating from the Mean.

Behavioral Economists try to bring Peace to the Profession, by explanatory Excuse that Variations from the Mean are necessary to composite Dr. Samuelson’s Averages in the first place. They do a good Job most often, to the point they are beginning to be disliked by both Neoclassical and Heterodox alike. George Akerlof found himself far more accurate than he even imagined, but a great deal of the ‘asymmetric information’ existed more in the training and labors of his fellow Economists, than in the Market structure which he examined. The heart of the matter resides in Economic Participation pattern reminiscent of the pattern of a Shotgun blast, with the Rationality of the Participant ranging from absolute None to genius levels of acumen. Any statistical Averaging varies by the deviant impulses of the Participant Mind, coupled by the occasional aspect of the Participation rate. The Behavioral Economists exert effort to explain this Conceptualism, but are defeated by the dedication to Consensus–both within and outside the Economic profession.

The occasional Reader of Economics should first recognize the ‘Tempest in a Teapot’ nature of the Conflict between Neoclassical and Heterodox. None of the economic models work precisely, no matter which Side has produced them; the Vision of the esteemed Dr. Paul Samuelson when he started his truly great effort. It reminds of the Communists (themselves self-considered Economists) who developed a Language understood only by themselves, without real definition of any ideology which worked; avoiding the real problem of accurate resolution of their difficulties by venue of going Political–a seeming traditional route for failed Economic values. Students must not be too Concerned, Academics in total has been a human frailty of trying to force an artificial structure unto Nature. lgl

Sunday, May 27, 2007

The Oil Gods

Don Boudreaux believes elementally in the neoclassical image of the Margin. I have some problem with this view when considering Worldwide distribution and use of common Products and Services. The World market is a compilation of geographic markets, all dispersed not only by area, but all by degree of Capital Investment in the provisions of the Product. All current areas receive adequate supply of Oil, but under vastly different degree of infrastructure; how can All endure the same Operating Costs posture, it is a known fact that relatively All adopt a similar Pricing policy based upon a mythical World Oil price, unless directly constrained by law. There remains the additional Factor that Distribution networks are allocated by the major Oil companies, where Each assumes their own network will have a semi-monopolistic position; this purportedly dictated by the high Investment Costs of introducing Distribution networks.

I have set myself for a long, and boring, discussion of arbitrage which I have heard before; though one which leaves much dissatisfaction. The basic discomfort comes in the innate willingness to introduce Price increases with increased Price of Supply, but one where Prices are not again lowered until all Operating Costs are worked through; and in the case of the Oil industry, subject to periodic Oil and Fuel Scares at uniform Intervals with rapidly jumping Prices. Oil companies seem to absorb all the Profits of previous cheaper Production, satisfy themselves of full Profits on the higher-Cost Production, then magically are confronted with another Oil/Fuel Scare after Production Supply Contracts have been finalized.

All that glitters may not be Monopoly, but it could well be a synthetic Collusion; especially when such Collusion results in multi-Billion Dollars of Windfall Profits. I still favor a Government program which would build with the latest technological Expertise both Oil refineries and Pipelines, then sell the facilities at Market pricing. This not only guarantees sufficient Refining capacity for the domestic market, it provides adequate resources of Refining Plant to meet National Security Needs; all within the spectrum of superior utilization of Military Bases and Reserves under greater Security for the Oil industry. It is not something to Expect under an Oil-God Bush, but could certainly benefit any Administration with a different set of Priorities. lgl

Impact of Usury

Mark Thoma gives Us a Picture of Traditional views of Usury(spent some time pursuing the links). Usury law exists in the United States only at the State level, while Federal law restricts the application of State Usury laws across a wide spectrum of Lending. This complicates both Understanding and Practice beyond belief, and functionally, Usury law is most noted for Violations of both the Intent and Penalty provisions of the law because of lack of enforcement power. It devolves into the general Trend that Usury law can only be enforced by State agency, and this effort is generally defeated by the generosity of Lenders in provision of Political campaign contributions. There is generally a total lack of Interest in enforcement of Usury laws, until Political campaign season, and then Most generally does not reach Public Notice.

Throughout human economic concourse, there has been multiple attempts to define Usury based upon some ideological rule; Usury disliked because it is perceived as robbing the Borrower of some degree of Profit from their labor, a sort of Armed Robbery by Contract pen. Usury does exist, do not get me Wrong, because it is a form of Indentured Servitude. Interest, though, serves the very real functional economic purpose of proper diversion of Resources to maximize Production, and cannot be eradicated without a loss of fundamental economic knowledge and supervision of economic enterprise. This function becomes ever more vital as the complexity of economic integration grows. Money stands a the denomination of value within an Economy, and Interest clarifies the correct distribution of those Funds (defines where Money should go, and in what amounts, through establishment of the Value of alternate Use). A complex economy cannot exist without Money, and a sophisticated economy cannot exist without Interest.

Usury is not technically Money or Interest. It is a diminishment of the Profits of labor of the Borrower, by venue of excess Charges placed on Loans by the Lender; an effective instrument to lower the Wage of the Borrower to the advantage of the Lender. It is exactly here that We enter into the realm of Involuntary Servitude. Current American law defines Variations of the exact position where Usury applies, because of the nature of the loan extended. This is a basic avoidance of the definition of the magnitude of Usury, for the express purpose of evasion of the edict of Usury law; rather than any intrinsic Variation of Value. It can be said that the basic practice of Lending leaves Borrowers legally incoherent, while Lenders maintain the economic advantage of unity and legal representation. Usury does exist, but legal enforcement against usurious practice must face a lack of legal representation and designed lack of interest in enforcement procedures by standard law enforcement agents. lgl

Saturday, May 26, 2007

The New Business Model

I read this Post today, and asked how a worthy Economist could be so wrong. Going Green is not costly, or Time-consuming. Maybe Phil should read this article by James Lardner; Why has Business decided to go Green in such a unified and rapid a Movement? The reason is very simple: Green is the new technological horizon. The growth potentials of IT are reaching a natural Sundown, continuously regenerating but without sweeping growth opportunities. Going Green has multiplex avenues for technological engineering at good Sale pricing.

Let Us be kind to Phil Miller, and suggest he is only leading the vanguard of the Business missionary effort to get the Government to fund the new technology, for even higher Profit ratios. Green, though, is not extremely Costly, or does it even contain extreme amounts of technical difficulty. Most efforts to go Green resolve to an Expenditure of no more than an average 11% of the total Capitalization Cost of Production (We are talking about technically Doable initiatives, which do not have falsified Readout data as Propaganda). Rising Fuel Costs with Standard rate of Energy usage increase would eat up the added Cost within about 2.3 years average operation of the new Capital equipment anyway. Business is simply trying to get American Taxpayers to fund the Changeover to more efficient operation (my use of 2.3 years is debatable, but even Conservative economists, if honest, would say the equalization of Costs by the two means of operation could not exceed 9.4 years of operation).

What Readers need to understand equates to the Statement that old technological methods of Production have become too expensive to maintain, in the face of rising Fuel Costs. Business wants Consumers to pay for the Changeover, and they want a Guarantee of this payment by Government subsidy. Here is where I separate from the ranks of Economists. I would approve of a Government guarantee of Profits of a range of 6-8% of Operational Costs; Business would desire a Government subsidy program with guarantee of a 16-20% Profit on Operational Costs. This I find to be highly excessive, with potential to reduce Consumer Standard of Living ratios by about 15%. I find this sentiment outrageous considering that Business has a functional Profit picture coming from normal operations and Capitalization with no Guarantee. lgl

Friday, May 25, 2007

Real Pay Packages

This NYTimes article ranks high on a list of Proponent propaganda. High Compensation for Chief Executives cannot be the factotum of the Top man, or can it be his irreplaceable character. There are Ten Thousand Executives capable of the same physical processes enjoyed by any of the top Executives, with a likely 300 of Same for every CEO, capable of acquiring all the necessary additional diplomatic skills associated with being a Chief Executive. High Pay for CEOs comes not from any rarity of talent, or even performance. The basic criteria must reside within the context of personal associations; and the more likely ability to affect the Pay Packages of Those dedicated to setting CEO Pay levels.

This latest article highlights that We may be about to enter a new era in Insurance Underwriting. The Long Term Care insurance boondoggle joins the extreme Cherry-Picking of Health Insurance, and exorbitant Property insurance premiums in the long list of Insurance Companies’ semi-fraudulent practice. The dilemma is simple: There are far too many People resident in Harm’s Way, by geography, Age, or concentration, with the Corrective Costs far too High for any Injury. I am awaiting Life Insurance policies which preclude Payment, if the Cause of Death was Cancer, Stroke, Heart Attack, Accident, or Old Age. The Reader can see the difficulty. Insured like to feel protected from misfortune, but Insurance companies simply want assurance of a 14% Profit on total aggregate Premiums. Government action is not likely to help either.

I would specifically like to witness an enjoined (legal sanctioned) method of selling Insurance; the list could be expanded to include Stocks, Bonds, even Pay Packages for CEOs, etc. It is like unto the guaranteed Resale value offered by expensive Models of Cars. The law would state that all forms of Purchase by timed payments would have established Equity appreciating by number of Time payment periods, and Subscribers are guaranteed at least this rate of Return, if the terms of the Contract are exercised. Now Someone will ask how you set Pay Packages for CEOs by this method: simply Contract CEOs to provide a set numerical amount of Profits for the Company for every set-amount of Salary and Bonus over base Entry level pay for Executives. Many would exclaim that Executives would not work for Pay Packages where they would be working for base Entry-level Salaries over half the Time; I could only reply "Why? Stockholders have to work under such a Payment structure." lgl

No Sense of Humor?

Chris Dillow often fascinates when he writes in the area of personal response. This time he considers the rationale of why he is paid to Work, when he has already shown his willingness to blog for nothing. He comes up with variety of reasons, one being to entice him to concentrate on efforts where his Employer would enjoy his participation. I understand his belief in the disutility of Employment. I concur in this belief in the injustice of Employment, and as such, avoid it. There are hazards from this Conduct, though, as I often face; but the End-Result still pleases (the worst Work in the World must be that of Judge, with commitment to listening to lawyers for protracted Periods).

This Joke of the Day has appeal because it identifies the quantity of Operating Costs within any Production. A genuine section of nonmilitary types, especially of the Economist queue, would believe this Joke to be ludicrous. They have not yet grasped the Military Mentality. Military doctrine so often dictates sending untrained Personnel to dangerous locations, so the Military does not have to risk loss of Personnel who have been trained to handle such Risk situations. Economists cannot understand that the Joke is on them, and based upon their own defined principles. I am currently advocating another Insurance trend, and call for Soldiers with Combat Tours already served but with scheduled future Combat Tours, to be able to cash in their vested equity of their Insurance; to be spent before the condition of ‘Loss of Life’.

Tyler Cowen and the NYTimes find Historic cemeteries searching for patronage, both of the Living and Dead. I am not sure, but I think it may be kind of like the Save a Child program where a Contributor will get a picture of a nice tombstone, and possible description of the Deceased, for a monthly contribution. They also seem willing to give Contributors a good meal; I will not even made a rude, disgusting Joke as to the quality of the Meat. By the way, I have already bought a tombstone for myself, but am afraid to go to that cemetery now; totally afraid Someone has already inscribed a Date of Demise. lgl

Thursday, May 24, 2007

Politics as We Know It

Arnold Kling again offers a small Post with a mighty wealth of Links to good articles. Be sure to read the link to Robin Hanson, as well as Arnold’s own article on Trust Cues. Before you start, though, you might be fortified with the knowledge that the American Public has been conditioned to think politically and economically in terms of Conflict politics. This a basic program of ‘Either/Or’; One which is a basic interplay of two competitive forces, rather than One with a interplay of multiplex elements. This introduces Conceptualism of fraternal organizations into the Polity, which has implications far beyond Friendship Clubs.

The Gestalt here becomes a Concept of ‘Winner and Loser’. A plane of multiple solutions with varying degrees of success finds little play in American politics, something which is elemental in explanation of the French, German, and Scandinavian models. The allegiance to one of the Conflict models of American politics will alter any and every Initiative, solely to maintain the adherence of the greater polity, and therefore, any truly original Initiative will be vented to eliminate true originality. There is greater Consensus generated by this Process, but much less contemplation of good modifications of political structure; due to the disinclination of Conflict factors to initiate Change. lgl

Where's the Beef (Competition?)

John Whitehead notes a Retreat from the provision of Prime Cuts of Beef, while he previously provides access to an NYTimes article about biofuels and how they might raise Pump prices. The drive to ethanol seems to be destroying the Meat market, and causing Refineries to downsize their capacity in the face of Rising Prices–Right! A 60% Rise in the price of Corn will have an impact on Feed Costs of Beef, but not over about $1.60 per lb. at the Counter dressed; Restauranteurs are venting their Operating Costs forward, and blaming it on Beef prices. The Threat from ethanol cannot be impacting the decision to develop Refining capacity, not with a daily Shortfall of 2 million barrels, combined with functional inability of biofuels to assume more than 26% of the necessary fuel complement because of lack of Acreage. Biofuels, at Most, might substitute for Refined Imports. Refiner Management who fears for loss of Profitability to biofuels need be replaced, especially as distillation Costs for biofuels is competitive with Refining Costs.

Japan might think of entering into Refinery construction in the United States, as it seems that their Export picture may be tied to American capacity to attain cheap Gas. They are more likely to gain the necessary Operating and Building Permits than Americans for Refinery construction on American soil, given the Bush commitment to selling American assets. Any Opposition to such a Program could be circumvented by Mexican willingness to allow such Construction across the border, if Output was devoted solely to American Sale. The Japanese could also consider major Investment in American Beef Feeding operations, if they ran the Numbers on potential Costs and Profits. The Japanese are past Masters of assuming competitive advantage, and both the American Refining industry and American Beef industry suffers from monopolistic pricing resulting from lack of competition. lgl

Wednesday, May 23, 2007

The Mortgage Trap

Felix Salmon is generally reasonable in his analysis, but he comes down hard on Tanta at Calculated Risk. Tanta did a successful effort of compilation of data, and Felix criticizes this as bullshit; saying that there is aggregation of Capital in the interim of 10 years as in the Example higher than could be achieved through Treasury Notes. He states that assuming the mortgage is still a good deal. I think this might be too simplistic.

People like to champion mortgage aggregation as a Means to derive Capital accumulation for Low-Income Earners. Is it such a good Deal? There are massive external Costs associated with the assumption of Property. Low-Income Housing requires an actual Mortgage financing of approximately 161% to pay the Taxes on the Property for a Ten-Year mortgage, over and above the Cost of the Dwelling (Local and State Property Tax rates are not nice to the majority of the Poor). A further item lies in the fact the Property is for Low-Income Housing in the first place, requiring about 1.7% of the Housing Cost per year as Upkeep, else Resale value will not be maintained consistent with market growth. Heating Costs of individual Homes vary drastically over geographic area, and in initial quality of Insulation, but it can be contemplated to cost about 21-23% greater Funding than Rental formats. What I am trying to say is that the Capital involvement and Threat here stands far higher than the face value of the Mortgage; levels which will definitely not provide as high a Return as equivalent devotion of funds to Treasuries.

Re-finance and Modified mortgages absorb far too much of the Tax Cost, and Re-Modeling Cost, of Low-Income Housing. Rising Heating Costs too often dictate Re-finance because mortgage payments cannot be deducted from Income under circumstances of rising Household Expenses. Repayment of re-financed mortgages almost certainly wipes out established Equity in Property over previous Payment periods. A nullification of mortgage payment equity can often generate a eventual Default with no Equity for the entire Period, where actual Payments had equaled anywhere from 115-150% of appropriate Rental payments for adequate Housing. Unethical Lenders offering Special deals which they know will not last, are not a Godsend to Low-Income Households. lgl

Immigration and Inflation

George Borjas relates the history of immigration from Puerto Rico to the current immigration issues. He makes the important point that the Costs of immigration are high, and that reducing the labor population of Mexico will not necessarily equalize Living Standards there by raising Wages (think immigration consists of superfluous labor elements where Supply Costs set the Wage levels; a known characteristic which forestalls equalization of Wages in geographic areas of this Country). George does not mention the relevant fact that the Costs of immigration affect the intended Desire for Guest workers to return home after completing their Jobs; this factor easily established that such Costs are tied to the Country of Origin. What I mean is that while it might actually cost $130k to immigrate to this Country from Mexico (Borjas estimates seeming too high to me), immigration back to Mexico may be as high as $700k. Economists should study George Borjas’ Work carefully, as it says a lot more than a lot of them realize.

Jeffrey Lacker has the right idea about Inflation, but has a language in it’s definition which is hard to follow. I will try to use the phrasing of the Common Man on the Street, and will probably be as equally undecipherable. The relationship between Output and Inflation is tenuous; it exists and has real impact, but in reality, only in Third Generation progression (meaning a Mood swing only after an intervening Production cycle which had already been scheduled). There is also an immediate impact, though, propelling Inflation. Economists call this Inflation Expectations; and Economists have more ways of explaining it, than Madonna can sing ‘Like a Virgin’ and not mean it. I mention this because most Economists treat Inflation Expectations as only a Talking Point.

The real propellent of Inflation Expectations lies in a group of factors–lower Wage Costs, higher Sales than expected, faster Production than expected, etc., whose Bottom Line said that Profits of Production were higher than expected. Normal Business Managers think they might as well increase Production Schedules, as there is a Temporary window where they can coup enhanced Profits from improved Production Costs. This is a Second Generation Effect, and One that artificially skews Wage and Resource Price levels higher in the next Production cycle. Business Managers find higher Production Costs appearing in the Second Generation of Production, and instead of cutting back the Production schedule because of salvageable Hopes, simply passing along the Costs in higher Prices while cutting back the Production schedules of Third Generation production; the end-result bringing higher Product Prices with more limited Product in the Third Generation production. The End-Result is higher Product Pricing in the Third Generation with sustained Consumer Demand, due to the constriction of Production. lgl

Tuesday, May 22, 2007

Health Care Reality

Jeff Cornwall presents the NFIB survey of Business Owners over the question of Health Care. The greatest majority of Business Owners identify Cost is the most important problem with the Health Care issue, and think that increasing Consumer Sensitivity to Health Care Costs can be a Cost-Saving measure. They believe in individualized premiums but not denial of Coverage. A majority of Employers still think they should have some involvement in provision of Health insurance, but that it should be voluntary. Again, a majority of Business Owners think that Government subsidies should be kept out of the system.

There are several Errors in this stance, Some where Business are actually shorting themselves. The most drastic comes in their demand for voluntary participation. A Government Mandate dictating provision of Health Care coverage alters the Schematic, insuring that Competition must face the same profile as themselves, if Employees insist on Health Care coverage. Tax and Accounting practice grants minimization of Tax charges based upon a maximization of potential Profit declaration areas. Consumer Sensitivity to Health Costs will lead to a under-utilization of Health services, which will eventually generate worse Health Care outcomes for Employees, and simply place your premiums on the wrong side of Cost-Averaged premiums. Individualized premiums generate excess Item Costs, eventually creating a lop-sided Bell curve of Averaged-Costs premiums slanted to higher premium Cost overall. A Universal system of Health Care coverage would have to a Government program, to insure that even the unemployed are covered; this of actual benefit to Business Owners, creating the condition that they only have to subsidize the health care of their Employees alone, and not their families as well.

The optimum Health Care system would be a Universal Health Care program with optional ability to engage Private Medical Care. I like a Universal system where all Health Care is paid by the Government, but only at Costs equivalent to levels consistent with Employee provision–Medical Providers are all considered to be Employees gaining a certain level of Wage, with Medical Testing, Services, and Hospitalizations likewise limited by Universal Price rates. Insurance Providers cannot extend amounts greater than Government provision, while Consumers can provide a Consumer-set Gratuity for performed medical service to a preferred Medical Service Provider.

Here is the real Meat of the Proposal: The Government will tax Everyone the first 8% of all Tax receipts, no matter the Tax source, for payment of all Health Care Costs. Health Insurers will become nonentity Participants; I would suggest they switch to Property Insurance, potentially reducing these high Costs. Employers would be limited to potential provision of a Gratuities Fund for Employees to pay preferred Health Care Providers. Universal Health Care would become fact, Medical Providers would get a Living Wage if they maintained a minimum Patient load, Patients could choose their Medical Providers and give them a Gratuity if they thought well of the Providers’ provision of services. We would only then have to work on Patent and Copyright extensions to limit Rent-Seeking in Royalties in the medical industry. lgl

Real State of the Economy

Cactus at Angry Bear gives Us an excellent Post consisting of statistical analysis of the growth of Real Median Income through Presidential Administrations over the last fifty years. The first striking element I noticed immediately was that Real Median Income did not suggestively change over the interim; there being only approx. $7-8k of change for the entire Period. This seemed strange considering the vast expansion of the U.S. Economy over the Time, but then One has to consider the vast increase in the number of Households over the same epoch. This leads to several other ruminations.

The first Thought contemplated by me was that Carter preceded over the Period of greatest creation of Households, dragging down his numbers more than economic considerations, and Reagan reigned in a time where the Household Creation of the Baby Boomers had been fulfilled. I had another Thought that the JFK/LBJ era probably had the least Household creation dragging down the real Median Income growth, seconded by the Reagan Period. The Clinton years are fundamentally indicative of economic growth because there was essential Household creation in the Period, but growth of Real Median Income was still Second in the rankings, hard evidence that the ‘tough Love’ of increased Tax rates were necessary for that economic growth. The real glaring element comes in the negative growth of the GWB era; Housing growth has been massive, and Taxation has been extremely low, but actual Household creation has been lower unlike the other negative growth Periods of Nixon/Ford, Carter, and HWB.

The statistical information for the foregoing has not been checked by myself, I relying only on personal knowledge attained by living through the whole Age. It still is worth checking out, because elemental Household creation undoubtedly remains the sole economic factor outside economic growth determining Real Median Income growth. The possible exception here lies in the Immigrant Household Creation data. The negative Income growth shown in the George W. Bush administrations, connected to a slowed rate of Household creation, dictates that economic growth during this Period has been only of Inflation origin, and that economic models have been skewed by refusal to check the data against real Physical Output. Such a condition may be called ‘Hidden Recession’. lgl

Monday, May 21, 2007

Problems of Assimilation

Kevin Grier amuses me with this Post on NAFTA. He worries about the Agreement not being fully implemented by 2009. He mentions that some Mexican Trucks were allowed to drive in the United States in the 1970s, and implied that the practice should have been continued. Mexican Trucks were prohibited in the 1970s more from inability to get through Customs, rather than through Government edict. Some 23% of Mexican Trucks were found to be carrying illegal Substances, approximately 34% of Mexican Trucks were found to have insufficient Braking systems, and about 15% of Mexican Truckers did not even possess Mexican Trucking licenses. Today, some 85,000 Trucks cross at Border Stations daily; Most delivering loads to Customers residing within 175 miles of the Border, because of their reluctance to do business in the English language.

Another interesting datum comes in the fact that over 40 manufacturing plants on American soil, who employed Workers from south of the Border were closed within the first 3 years of NAFTA; this resulting from repeated discovery of illegal Drugs on plant property. One Furniture manufacturer was found to have 600 lbs. Of Cocaine packed into one sofa destined for Chicago. Nine Proprietors of the 40 closed plants enjoyed some 8 years of scenic vacations in Federal prisons. Some 9000 Guest Workers arriving within the previous 12 months, yearly receive some form of American criminal sentence. NAFTA is not as easy to implement as One might imagine.

Greg Mankiw brings forth a hidden externality: extremely biased people happen to be the happiest people in society. I believe this happiness springs from being firm in their convictions (forestalling troubling contradictions), and by presenting a limited-access front where they are not forced to face any contestation of their beliefs. Greg would advocate a program which would introduce troubling contradictions forcefully, designed solely to destroy happiness among Extremists, but probably generating little advancement in assimilation. Greg might access Sociological studies which indicate forced Cooperation does little to promote Consensus, but vastly increases the input of violence. Pigou cannot solve everything, and the Vote is still out on whether Pigou can solve anything. lgl

Sunday, May 20, 2007

Corruption Modes

I was going to write on Intellectual Property today, until I ran across this article. I immediately determined I wanted a greater wealth of information from this Survey than I could ascertain. First and foremost, I wanted a Comparison survey conducted in the United States and western Europe. Was the Survey indications solely concentrated in the Transition Countries? Are the older Generations any happier in the West? The Survey indicated that Corruption was the major problem, was it also considered the major Problem in the West? And if so, did the Survey contain the segregated Questions necessary to determine if the fears of Corruption were real and widespread? Citizens in Transition Countries remain unconvinced of the virtues of free markets; segregated Questions need to included to test this Conviction, and similar study need be conducted in the advanced Economies. The operative condition dictates a use of Segregated Questions to divest the surveyed Answers from popular beliefs, and to have conducted the Survey through both Test and Control economies.

The Readers must understand this was potentially a vital Survey, and seriously mishandled. We do not need to test for popular perceptions, but for actual existence of Corruption, failures of the market system, and a real evaluation of the Living Standards today as compared to pre-Transition era. The Economy and Market express real direction, not popular reaction to the matrix. Economists need to know and understand this real direction, and adjust their models to reflect the real input that is received.

The Survey only outlines a real Popular paranoia in these Transition nations. It does not fixate whether this paranoia extends into the Advanced Economies. It highlights a great fear of Corruption (which to an Economist distorts the natural flow of the Markets); but it does not factually assert it’s real existence or growth, or whether this growth has extended into the Advanced Economies. These are important fundamentals which must be answered satisfactorily for a variety of reasons.

There stands the eternal evaluation of where Government program works better than Market forces. An Example is Universal Health Care: where the United States has lagged behind almost every other advanced nation; with major failures in adequate Health Care, worse Outcomes, and noted for its non-Coverage. Another area has been the Banking de-regulation in the United States, which has led to fraudulent (anywhere else) extension of Credit and usurious rates (again, anywhere else). The United States (but Most other advanced Economies as well) may well practice Intellectual Property usury, vastly over-charging above Production Costs in deep Rent-Seeking; I have long been an Advocate for Patent and Copyright extension of only set levels of Royalties per unit, based upon a Economic consideration of the amount of use. Corruption can exist in many forms and guise, and it is more than a simple consideration of a level Playing field. Major market distortions derive from such manipulations, Governments are only one source of such malefactor performance. lgl

Saturday, May 19, 2007


I enjoy reading Mark Thoma on the Weekends, as he pursues ethereal Questions and their Solutions. This Post deals with the concept that the Goal orientation of social conservatives have changed over a decade of Turbulence. The Question must be asked if their convictions and beliefs changed? Failure of alteration of the basic Concepts on which Conservatives rest will engender no real change of Voting pattern. It is solely a matter of Priorities, and Conservatives have decided George W. Bush has led Us into a Scenario which resembles a Trap more every day. They are rightfully uneasy, especially at Bush usage of ‘Stay the Course’. Historians might be amused to note that Germans heard the same, when the Sixth Army was surrounded at Stalingrad.

The turn of 1900 was wild with Fears of Anarchism, the turn of 2000 again wild with Fear of Terrorism. By the way, the turn of 1800 was wild with Fears of Revolution, and the turn of 1700 was wild with Fear of Peasant Uprisings. Does Anyone notice a pattern? It was always Conservatives wild with Fear, and what they feared also was always fringe elements who were not respectful of Tradition. Another historical item of note was the threat of Peasant Uprisings had passed by 1720, the threat of Revolution has disappeared with the defeat of Napoleon in 1815, the threat of Anarchism disappeared with WWI to reappear briefly in the early 1930s before sinking into the abyss without notice. Study of History might provide some Insight into the pattern.

Radicalism draws life from the hearts of young men. They draw advocacy from young men, few Radicals assume the mantle of Social revolt before they reach their Twenties, and Radicalism find few Converts in Peoples past their Thirties. Few are Those Radicals who think to start to rebel when they are already in their Fifties. Another Note: While there are Radical Groupies among women, there are few Converts among Mothers and Wives. The last Note finds that children of Radicals generally have contempt for Radicalism; having heard the propaganda from Diapers, they realize Others live more comfortably and at peace with themselves, than do the stalwarts of the barricade. Terrorism will suffer a like fate, as children recognize the rhetoric of Radicals to be equivalent to the music of their Parents. lgl

Friday, May 18, 2007

New Rationing Profile

John Whitehead provides a link to this CBO Issue Brief which I think I may have mentioned before, but it is one which should be read. Additional review of it has increased my aversion to the Cap and Trade policy. The problem here is that We want to curtail the heavy Emitters of CO2 without adversely affecting the economy, or introducing any form of regressive tax upon Consumers. Taxation and Cap and Trade both fail the Test of Regressivity and in delivering the restraint necessary without savage impact to the economy.

I think the solution can only be found in Rationing. We are not talking about the old-Style ways of Ration books. We live in the era of Credit Cards and Computers, and Everyone has heard of Pre-Paid Cards. We also know that Households may have multi-vehicles and multi-Commutes, but combinations are common–children ride with Parent, etc. We also know that People utilize forms of fuel other than Gas, like Propane, Heating Oil, and Natural Gas; then We also have to introduce the fuel consumption of Electrical use. Any Rationing system must include all of the forms of Energy usage, and CO2 emissions.

The second element coming into play is the Free Market system under which We attempt to operate. We cannot introduce anything which obstructs the natural operation of Supply and Demand. Translation means We cannot interfere with the Price/Cost mechanism of the Market system; meaning that We have to leave the Pricing and Cost function in the hands of the Producers and Suppliers. Another Translation: We have to leave on-site Charges for the fuel expended.

A federal law is needed setting up a system of Rationing. I would suggest the Goal should be a grant of the equivalent of one gallon of fuel per person per day. Rights of the Children would be held by the Parents. Pre-Paid Cards would be sold at specified locations connected to a central Computer for the Country. These Cards with Credit would have to be presented on-site to obtain the fuel or Service–be it Gas, Community Gas line, electricity, or otherwise. Everyone must pay $0.25 per fuel unit on the basic Grant of one gallon per person per day, $0.50 per gallon for up to double of the basic Grant, $1.00 per gallon for up to a tripling of the basic Grant, and $2.00 per gallon for any over a Tripling of the basic Grant. This basically stipulates the basic Tax for Personal Use, all by purchase of Pre-Paid Cards.

Commercial use would be allocated in like manner, but with consideration of the excessive needs of industry. Commercial Trucking will lead to assignment of Credits, and thereby of selling of excess rights, unless individual Truckers must buy their own Pre-Paid Card allowances, best Estimate is fuel sufficient for 2000 miles per Week, at 6 miles to the gallon; so the basic Grant would be 337 gallons on which they would pay $0.25 per gallon. All usage over this basic Grant would bring a Charge of $1.00 per gallon. Other Commercial users of Energy will be charged in the form of Emission Cards, like the previous Grant Rationing Cards, but with escalating price for increasing levels of emissions. lgl

Thursday, May 17, 2007

The Puzzle Book

Dani Rodrik starts a specific discussion with this Post. What he is trying to say is that Trade allows for a cheaper acquisition of Goods, not necessarily cheaper levels of Prices. Producers and Consumers, though, cannot pass on the possible higher Pricing of all Goods equally, so can potentially acquire losses from Trade due to their inability to charge higher Prices for their own Product or Labor. Free Trade can only raise real Wages if domestic employment is increased, or the greater Productivity is translated into Wage Raises; again dominated by Producer ability to pass on Costs in the form of higher Prices. The rest of his reasons deal with the ability of Economists to formulate their Economic models with the fundamental base assumptions, so that the model Readouts can say practically anything.

Dani follows up on his previous Post with this One, which attempts to put his Thoughts on Trade into an Example spectrum. It is a good try, but still peers through a Looking Glass Darkly. Brad DeLong gives a valiant effort to justify Free Trade in this Post and Quote:

It seems perfectly fine to me to give the following shorthand description of trade: Trade on average raises the prices of what you make and sell, and lowers the prices of what you buy and consume. A better description might be: Trade raises your income relative to the prices you pay if you are a net buyer of importables, and lowers your income relative to the prices you pay if you are a net buyer of exportables--but as a country, on average, we are net buyers of importables (that's why we import them) and net sellers of exportables (that's why we export them). But the first shorthand description seems to me to be correct, if incomplete.

The trouble with this explanation falls in the realm of the real Production process. Being a net Buyer of importables does not actually increase you relative Income, unless you are a net seller of exportables; it simply increase the number and quantity you purchase, here engendering a net loss of relative Income. A Producer who is a buyer of exportables will have to increase his sale of Product domestically or as an Exporter; else he will endure a relative loss of Income. Here We have the real crux of the matter: The real physical Product increase of Production must match the growth of Inportables, or there will be a loss of relative Income; quite irrespective as to what it does to the Price ranges of Imports or Exports.

The Above discussion may go far to explain the Economic Puzzles of Kash and Irwin Kellner. They examine the fact that economic growth has slowed since the beginning of 2006. It would be expected that Unemployment should of increased while the rate of Inflation decreased; it didn’t. Unemployment actually fell, and the propellent of Inflation keeps hacking away at real Incomes. Consumer Spending, I concur with Kash, is slowing; but Corporate Profits are maintaining record Highs. How? Kash blames the Fed increasing the Money Supply; but I deem that too easy. I believe Consumers are finding Imports relatively too expensive, are altering their Purchase patterns to Necessity purchasing which employs far more domestic help, and the increased Demand for domestic labor is keeping Unemployment rates down. Increased Demand of Product in the Domestic market, plus rising relative Pricing of Imports, generate the pressure on the rate of Inflation. lgl

Wednesday, May 16, 2007

Inflation and Diversification

I find myself somewhat disengaged today, not enjoying much that is on the Internet. There is this Piece from the NYTimes. The operative Word here may be that Gasoline, Medical Care, and Food are robbing Core Inflation estimates of impact. Remember that We have Housing Construction up slightly–fulfilling previous Contracts, but that the issuance of Permits have slumped. Reliance on Core Inflation data to determine the amount of Inflation in the economy may be a poor Indicator, read this post by Ritholtz. The real essence of this Viewpoint lies in the very real fact conservative Economists have constructed these Models to understate Inflation, mostly to cut the real value of Welfare payments (think Social Security here). The Problem arises here lies in the poor perception of Inflation rates overall, and contention as to the Monetary and Economic policies which should be adopted.

Dani Rodrik comes in with a discerning Post concerning which is the quickest means of development: Specialization or Diversification. This may not seem important to the layperson, but Ricardian Comparative Advantage definition relies on the factor of Specialization. Present data seems to indicate best growth rates in developing nations come from expansion away from monoculture production. My own view estimates development requires the creation of a managerial Middle Class, no matter how it is devised; and a Class committed to the expansion of Individual and Business Profits.

There is absolutely no inhibiting rationale for the establishment of a diversified Trade Advantage model. This could be called Construction of Trade Advantage Specialization, where Trade allows all Participants to diversify (round out) their Productive base, through Trade of their Resources at effective Pricing, exactly like less-developed nations try to share the Capitalization Expertise of the Developed Nations. The Resource Pool created through efficient Trade brings greater overall Capitalization. The only component necessary being a Managerial Class cognizant of the value of such Trade. lgl

Tuesday, May 15, 2007

Go Big Red (It's a Nebraska thing)

Andrew Samwick gives Us an excellent Post for evaluation of the Issue of Carbon Deposits. He ends with a the speculation that people focus too much on how much Carbon is emitted to the atmosphere, with insufficient attention given to the Carbon Sequestration mechanisms of the ecology. I agree! There will be massive Carbon emissions into the atmosphere and water as long as there remains not Energy source capable of absorbing over 50% of the Energy needs of the World economy to replace Carbon energy sources. This entails Our technology must learn to sequester Carbon in the Earth faster than We emit it. How can this be done?

I personally favor Desert reclamation and burial of scrap Carbon products, instead of attempting to recover potential unused Energy. Desert reclamation can be as simple as pumping concentrated Sewage to desert areas, and plowing in the mix. Humans and Animal Feeding plants produce large Carbon deposits, and can substitute for lack of Nutrient mix. This would solve four problems at once: Sewage Treatment, Carbon Sequestration, help reduce rising World Temperature, and desert reclamation. Garbage, with all metals removed, can also be ground and deposited on desert areas with plowing in for the purpose of adding both Nutrient mix and Water retention capacity; this later effort far better than Landfills. The result could be growth of Range and Farmland over a lengthy Period.

I owe this One to Reader Dan and Cactus at Angry Bear. Retail Sales do seem to be in trouble. We need to focus in on the Problem, what caused it, and analyze whether it will continue. This Way may seem Roundabout, but may be the only way to explain it. The Housing/Construction Boom incited a huge level of Immigration (legal and illegal) in pursuit of the high-paying Jobs in the industry (as contretemps Wages in their native lands). This vastly expanded the Retail markets, especially with the easy extension of Consumer Credit non-responsive to the legality of residence of applicants. Here comes the trouble: The Construction Boom has begun to fade, the Work is disappearing, Immigration is starting to drop, alternative Jobs are not existent in sufficient numbers, and Immigrant Credit Cards are maxed out.

Lack of Jobs will make paying down Consumer Debt difficult, for American and Immigrant alike. Extension of additional Credit appears unlikely, in the face of the Fed refusal to lower Interest rates. Reduction of Retail Sales will lead to a further curtailment of Jobs in one of Our most Labor-intensive sectors, and Financial institutions are still increasing the Rolling Credit for Business, rather than forcing them to eat their losses. This later effect is extremely bad as necessary Operating financial structure continues to be drained in high Executive salaries, Benefits, and Stock Options. I fear a Recession may be with Us, and may stay with Us for a while, and current Business practice will simply make the Landing extremely hard for All. lgl

Monday, May 14, 2007

A Defense of Protectionism

Two articles today, the first found here was by Edward Glaeser and dealt with Minimum Wage issues. He correctly states that excessive Minimum Wage rates lead naturally to high levels of Unemployment among the Poor. He attempts to explain Minimum Wage law devolves to impact the Employers of low Wage labor, who often deal on very narrow Profit Margins, and as well; have a Clientele which is less Income fortunate, unable to bear unreasonable increases in Prices for Goods and Services. The Glaeser argument is very effective, plus well written.

The basic Need to rectify the adverse consequences of a Minimum Wage law is to redistribute the impact across all Employers, not leaving it to crush Employers least able to pass on the Tax Impact to Consumers. The Answer lay in the establishment of Regional Labor Pools, where all Employers were taxed on the largesse of the Wages paid in the Operation of their Business (I would suggest a Percentage tax based upon the Progressive Tax rates of the Income Tax system; and systematically redistributed to Minimum Wage Earners on a monthly Time sequence). Economists will state that such a system would be too complicated, too restrictive of economic growth, and eventually devolve into a tax upon highly-Skilled Labor. I would respond that a Percentage system is relatively simple of implementation, will not inhibit economic growth if the Percentage charge remains below 10 percent throughout the range of labor Incomes, and that Labor and Consumers wind up paying all Taxes anyway, one way or another.

Dani Rodrik and Paul Krugman almost make me feel paranoid, compelling me to issue some Statement in defense of Protectionism. Most of evils connected with Protectionism will never occur in any environment of intelligent economic policy in the first place. Modern Economists would like to avoid the pitfalls occasioned by Business being faced with artificial Charges in the Production process. They believe these pitfalls can best be avoided by multi-lateral Trade treaties. Here is where there is a parting of the Ways.

Multi-lateral Trade treaties prevent the negotiation of bi-lateral Trade treaties of Advantage; the later the excellent vehicle to adopt not only Ricardian Comparative Advantage, but also Advantages of Economies of Scale and secured resource Advantage. Poorer nations are best protected by bi-lateral Trade treaties in the security of a stable Market. Rich nations secure Capital investment not only of the Costs of Production facilities, but also the Costs of Marketing and Distribution through a secured Market, by the realm of bi-lateral Trade treaties. Multi-lateral Trade treaties inhibit the advantage of secure Transaction markets, through forcing Market competition within economies poorly situated to engage in advanced Marketing structure; a situation which often actually destroys previous Ricardian Comparative Advantage. A simple Tariff system, without any Treaties at all, can serve equally as well to insure that the domestic economy receives fair payment for their production, and taxes the unwarranted draft of resources internationally by venue of excess production capacity. lgl

Sunday, May 13, 2007

It is all in what you Ask.

Daniel Altman conducted an informal Survey of Economists. His Survey Questions:

a. The tax cuts signed by President George W. Bush.
b. Pent-up demand following the recession, the corporate scandals and the invasion of Iraq.
c. Both (a) and (b) were important.
d. Neither (a) nor (b) was important; it was the regular business cycle.
e. There’s no way to tell now.

Altman reports only about 10% of respondent Economists said that the Bush Tax Cuts were responsible for the economic growth from mid-2003 through 2006. My Answer would have been ‘d’ with qualifications, because it was most definitely not the regular business cycle. A more pertinent set of Questions may have been a help. I will provide him with a Survey list which may provide greater Insight into the Issue at hand:

More Impressive Survey:
a) Was economic growth in this Period fueled by inflated Property values due to the Mortgage Tax credit, which incited Consumers to overspend on nonessentials?
b) Was the Fed Interest rates more impactive on Business rolling Capital, or on Consumer Credit extension without Credit references? Which was the most important for producing the economic growth?
c) Did Corporate leadership cut the fat from their structure, or artificially gut their Operations to maintain Dividend levels while selling their Stock Options and Stock Grants?
d) Were the Bush Tax Cuts effective, or did 80% of the lower Income groups find the level of Taxation simply switched to State and Local levels, and then only after an over-extension of personal Consumption practices? Did this have a major impact upon the economic growth of the Period?
e) Were all of the above a factor in the economic growth in question, or were none of them a factor, or even yet; define your own number of factors involved.

I am sure Daniel Altman should be the One to extend this Questionnaire, as he is a responsible member of the Journalist community. I am equally sure I would receive few answers, if I tried a like Survey. I do believe, though, that my Questionnaire might prove more enlightening if forwarded. lgl

Saturday, May 12, 2007

Troop Morale

Cactus at Angry Bear states that the Military is actually attempting to do something about the Mental Health of Our Troops in the field. What Command is doing consists solely of trying to avoid Public Incidents which reflect badly on them. The actual health of the Troops receive little consideration. I will delve into Hypothetical situation here, while Some in the Military will understand why: The average Soldier in Iraq and Afghanistan is 5-7 years older than Troops in Vietnam; crossing a spectrum of Age consistent with WWII service. The average Soldier in Iraq and Afghan is married with 1-2 children which they still support. They are shot at by the Enemy approximately 9 times per Tour, and respond with Fire about 7 times. They find themselves in the Target Zone of the Enemy (could potentially be hit) about 14-16 per Tour. They are uncomfortable in their Role in Iraq and Afghanistan for which they have received insufficient Training, and are actually under-supplied with basic equipment. Adventure is not High on their personal list of entertainments.

Command utilized the venue of increasing the number of Tours in these areas per Soldier, and lengthened their Tours, in order to calm the Nerves of their Troops. They add to the calming effect by insisting the Troops leave their equipment to Incoming troops upon finishing a Tour, and being refused full equipage before returning Tour. They are most definitely ‘Happy Campers’, and ‘Are WE there yet?’

The only fully-equipped military units in Iraq and Afghanistan are the Medical Units, Command deeply fearing any Public charge of insufficient Medical Care for the Troops; though any returning Wounded find that adequate Medical Care ends when the wheels of the Freedom Bird leaves the Runways of Iraq and Afghanistan. Equipment shortages of Troops going to Iraq and Afghanistan have started to be re-routed to State National Guard units, due to the political clout of State Governors; who are increasingly insistent on re-storage of Fire and Disaster equipment to their States; all This inside a Administration which will not reallocate Weapon Development funds to fulfill the Needs of Troops in the Field under fire.

Politicians are quick to assert American Homefront response has altered drastically since the Vietnam era. Patriotic Americans are admittedly far Warmer and sympathetic to American troops in the field. Command Staff officers, though, have remained as consistently inSensitive as they have been since WWI. Pentagon High Command stands more sympathetic to Corporate Profits inside the Military/Industrial complex, than they are to valid Complaints of Troops under fire. Troops must respond to Orders from a ‘Lame Duck’ Administration more concerned with refusal to admit Strategic mistakes, than Protection of Troops under fire. I personally would have chosen Vietnam, if a Soldier serving in the field had a Choice, over Iraq. Afghanistan would be physically safer, and no more physically rigorous. lgl

Friday, May 11, 2007

Trade Practices

I received a Request for my views on Trade, specifically on Trade Treaties. I thought immediately to shove this Request into the trash can of my back memory, then I decided to give it a poor shot. The first thing any Reader must centralize in their Thoughts about Trade consists of the multiplex rationales for Trade. The primary reason will always be to enhance the economic performance of your own national economy. A second consideration is to help Developing nations in their development through ease of access and easy Trade terms. A third rationale is to aid foreign economies to secure adequate Goods and Services to provide for their Destitute. A fourth evolution is the attempt to raise the educational and skill levels of foreign labor forces in order to generate higher Living Standards, and a more effective Trading partner. Tyler Cowen gives a Commentary on Erik Reinert’s book on Trade practices which examines many Trade practices, and adds Tyler’s hesitations about the scope of Reinert’s theories.

I would like, at this point, to state on Record that I don’t think much of Trade Treaties, especially when they drift out of the realm of bilateralism. No one but direct Participants can fully understand the needs of their own economy, or can Anyone understand the real Advantages of Trade outside their own economy. I am a Romantic at heart, so I know any Trade Agreement which extends beyond the economic advantage of either Trading partner will eventually collapse, no matter the good intentions of the Participants. Trade must benefit all Participants, else it is an exercise in futility, with any economic staging upon that expectation of Trade will be wasted effort. Trade is that Game which does not get played, if it does not Pay.

Multi-lateral Treaties, in this light, appear to be only the investiture of monopoly production structure with legality, allowing each Signatory to encode their own special Trade advantages. The United States currently wants observance of Intellectual Property rights in this context, though Everyone realizes those rights are vastly overstated, and greatly in excess of either Cost or normal Profitability ratios. We also want the right of foreign market saturation with our Products, though the rationale behind this is doubtful, as We cannot compete effectively in either Quality or Price; except for Arms, Aircraft, and Medicine. The United States is trying to concentrate on a monoculture Trade pattern of high-End Profitability Trade Goods; this actually lacking an extensive market without more fundamental development in Our Trading markets. Current Politicians and Economists misread the American economic position, and believe there is translatable benefit in multi-lateral Trade treaties, when We need finely-tuned bilateral Trade treaties.

Bilateral Trade Agreements or simple unitary Tariff alignments invariably serve better than multilateral Trade agreements, if Trading partners are of sufficient economic size and development that there can be efficient domestic service of economic goals. Trade in Products which each of two Economies can produce relatively as well only fosters competition, and the later of consistent destructive nature; involving wastage of Transportation assets and double-Marketing Costs. There must be an real Ricardian Advantage to Trade for there to be a real Profitability to Trade. I could continue this Rant for hours, but the Post is getting long, I am getting bored, and Readers have some idea of my views. lgl

Thursday, May 10, 2007

Trade Debates

Mark Thoma presents Paul Grieco’s response to Dani Rodrik’s criticism of this Paper. Dani Rodrik has a further response to the Grieco issuance.

Here is how I see it: Regional Trade treaties will not bring advantages to American GDP without a diffusion of Capitalization among foreign Import Providers. Economists can talk their numbers, but they are discussing models based upon previous data performance; it does not automatically translate to future Gains from Trade. The element I find most disturbing comes from David Menzie Chinn, who records that American Export Prices are increasing faster than foreign Import Prices (sans Oil).

I have not read the James Galbraith/Jeff Faux debate though I might should. I may not like the appellation of Protectionist more than Anyone else, but realize that the American domestic economy is starting to react to the Trade imbalance in a manner easily translatable into recessionary conditions. lgl

Upgraded Oil Refining

This commentary from William J. Polley started me on the dangerous road of trying to solve the complicated issue of Oil refining. I will first state I am not a Refinery expert by any measure; the closest I come to the area is a brother of my brother-in-law, who has been an electrical technician in the Oil refining industry all of his Work career. Not knowing a thing about what I am talking about has never stopped me before, so why should it now? So here goes!

The major problem with establishment of new Refining capacity consists of the inability to locate the plant capacity. The reason here is in two Parts: Air emissions and Water pollution. New technology is rapidly developing plant structure for the making of biofuels; they finding little trouble in location acquisition, because of their ecological goal of no adverse emissions. Why can’t Oil Refiners adopt this Goal in their own new Constructions? The Answer comes in the policy decision to widen Refining capacity to handle a wide spectrum of fuels: Gasoline, advanced Grades of Gasoline, diesel (two separate types), Furnace fuel, Natural Gas, Propane, Heating Oil, and Fertilizers; presenting such capacity to maximize Refining Profits by directing Production towards the greatest value Product. This presents a degree of Overkill!.

The above decision creates the need to emit Air and Water pollutants as extrusion in the refining process, and also evolves in a giant spread of Refining physical Plant, when providing the added Refining performance with adequate Storage capacity for all fuels. The End-Result brings Us to massive spread of Plant with noxious emissions. Oil Refiners have yet to learn the advantages of Micro-engineering. I could rephrase it as Oil Refiners fail to utilize the Concept of Dedicated Plant engineering.

What We need in Oil refining are micro-Plants dedicated to production of a specific fuel, whose physical plant does not extend much beyond a City block in area, and does not have any emissions beyond the introduction of fuel and the emission of fuels (whether immediately usable, or for transference to new refining capacity plants). The Oil used as Source in any given Refining plant must have the consistency necessary for efficient operation of refinement capacity. The dedication of technology to one Process will allow for minimal Labor use, but of expertise Skill level and high Wages. The transmission of Source Resource and by-Products will again be specialized equipment requiring minimal labor of high Skill level. We have to leave the Traditional Oil Refining policy of ‘Slop In, Slop Out’ for a more ecologically sound policy of superior Product both In and Out; again requiring a more efficient Engineering format. lgl

Wednesday, May 09, 2007

The Cost of the War

James Joyner provides a good evaluation of the Cost of Iraq and Afghanistan, relating it to previous Wars, then explaining how Bush financed the current War without massive strain on the American economy. The buildup of Federal Debt, though, may be the hidden adverse agent which is not documented adequately. The extensive Round of Federal borrowing has shifted the Debt overseas, providing the Assets necessary to maintain the Trade imbalance. This extension of Trade instruments remains the key component keeping Imports Pricing low. The undervaluation of Imports pushes the Trade imbalance growth. There are Means with which to alter this degrading financial situation, but would place alternate strain on the economy.

The method I favor stands particularly Socialistic in nature, and probably be opposed by most Economists. It would be the elimination of all Business Tax credits and Exemptions, unless 50% of their value was invested in U.S. Treasuries. Such Treasuries would have to be held for at least 3 years past the Tax Year of Tax remission. Current Tax remissions are directed to promote Business investment, but hard Capital investment has shifted overseas as well, to take advantage of lower Production Costs; a circumstance which leaves the domestic economy denuded of Treasury subscription potential. This Mandate would force at least one form of domestic investment to occur. The increased draft of Treasuries would absorb massive amounts of the Debt, lower the Interest rates of the Treasuries, grant Business both an active capitalization with a steady rate of Return, and raise the Cost of Imports in the long-run.

I would discuss another aspect of the War. This is in terms of Killed and Wounded. Iraq and Afghanistan has suffered many fewer KIAs and WIAs solely because of a strategy which functionally isolated U.S. military personnel from on-th-ground interaction with the domestic population. Military troops were confined to safe area bases, or concentrated in Combined Arms formations like Convoys or Unit assaults. The current Surge policy is a new redirected policy of placing U.S. troops in close proximity with the domestic population without immediate Combined Arms support. It will lead to increased levels of Casualties, and a level much higher than the influx of troops from the Surge ( in terms of Killed and Wounded per Thousand). The War is getting more expensive in more ways than financial Cost. lgl

Tuesday, May 08, 2007

The Sins of Presidents

Cactus at Angry Bear has connection link Report by the Democratic Policy Committee. Cactus summarizes the Report well, and should be read. He brings up the issue of whether any President can claim Credit, or get blamed, for any effect on the Economy occurring within their term of office. I feel personally that the President holds full responsibility, but not from any overt action. The pivotal element is the degree of representation a President exhibits for the American people. A President who expresses real intent to defend American interests will indicate prosecution of felonious conduct against the American People, and full investigation of any Misdemeanors, which will curtail the greatest majority of Sniping attacks upon American interests. A President who plays Favorites, or passively overlooks usurious attacks from political allies on the body politic, will create an atmosphere dangerous to American interests.

Cactus’s summation says it all. The 80% increase in Health Care premiums simply reflect the massive Price increases in Health Care allowed by the current President, most of which are simply increases in Profits to the Health Care Providers. College Education Costs and Housing Costs up dramatically; both reflect the increased Profits and Pay demanded by Service Providers, mostly at the Business and Corporate level. The Bush Tax Cuts were weighted to minimize the Tax relief for the Poor, Working, and Middle Classes (soon eaten up by State and Local tax increases), while maximizing the Tax relief of the Wealthy; all at the Cost of a ballooning National Debt. Congressional legislation and Presidential (pre-indicated) inaction allowed the destruction of the Retirement Pension system in this Country. Even Conservative Republicans have come to realize that the Business philosophy involved is not "ruggedly Individualistic’ but "ruggedly Individually destructive".

The worst part of the entire situation lies in the ‘on-th-ground’ damage. Almost any Economist, and most Consumers, would honestly state that Health Care Costs are at a minimum 30% inflated; some like myself might claim inflated Pricing over 70% over actual Cost. It should be understood that the share of GDP consisting of Health Care should have increased no more than 2% due to the Ageing population, from its pre-Medicare share of GDP. Housing, due to its rate of increase over the last 30 years, should not have increased more than 3% per year at most; most definitely not the case we find Today (wouldn’t you like to buy that $70000 House of Yesteryear for $135000). The fact remains that Business malpractice has vastly inflated the Price structure in this Country, and it will take massive remedial action to bring back a realistic Price/Cost structure. The entire debacle finds origin within, and propagated because of, lax Government economic policy which allowed Business management to introduce fraudulent Accounting and Pricing practice. lgl

Monday, May 07, 2007

Corruption Record

I have decided that the Bush era will soon be coming to an end, but that possible evasions of responsibility will start to resound as a new Administration starts to review the Accounting left behind by the present Administration. I have therefore decided to open a new Blog whose content will be entirely that of Commentators, though I reserve the right to edit Comments so as to limit discussion solely to possible transgressions or malfeasance on the part of the current Administration. I am trying to compile a sound Record of the nefarious activities of Our current leadership. Check the Above site, and see if you would wish to contribute. lgl

Run of the Bulls

I agree with Kash about the value of Wind Generation to meet future needs for Electricity. It will become a necessary component in the electrical grid of the new development. What I find disturbing is the lack of definition in the use of Tides to generate electricity. Most Comment found in the area establishes of difficulty of Power translation in Tide use, then drops the entire discussion. I hold that a Hydraulic system connected to Sweep vanes could easily translate such Power, if two hoses lead to two separate cylinders to utilize both Rise and Withdrawal. Hereafter, it would be easy translation to a rotary Generator. Reclamation of Hydraulic fluid through Heat and Strain facilities even remains relatively easy. Overheating in such a system would not be a Problem, with Hose submersion. Tensile strength of Hose lines can easily be met, and outer Covering containment could assure no leakage to the sea. Speed of Turbine spin can be regulated by a bleeder tank system leading to altered angle cylinders. Engineers today are lucky I threw away my Sketch pad.

Dani Rodrik tries to explain that Trade is not a panacea for all economic ills, and specifically will not lead to a vast expansion in GDP. Household Incomes will not bound ahead because of freeing Trade from current restrictions. I have been trying to marshal a theoretical argument to show that an increase of Trade restrictions would not cripple economic growth, but might even propel increase of economic gain; this might take a while, due to lack of hard numbers in the area, though I will eventually reach what I know exists. The real element the Reader should integrate consists of thinking of Trade like it was the Paint job on a Car: too much Trade, like too much harsh weather, will wear through the Paint and start to rust the vehicle; too little Trade, like benign weather, will allow Dirt to accumulate on the vehicle–requiring a Body Wash. As far as Trade is concerned, I think it is Time that Rust Puddy and Primer be applied, and a new Coat of Restrictions should be imposed.

Tim Worstall has a fear that the connection between Productivity increases and Wages has been broken. The mystery Tim finds is not that Corporations do not have to invest due to rising Productivity, but that they are investing Overseas for cheaper Labor. No Productivity growth scales should exist which are not weighted with the degree of Labor Force participation. Transfer of difficult tasks to cheaper Wage foreign labor does not a Productivity Gain make. Readers must understand the current Corporate stance, as amplified by the Bush administration, may not be the best avenue for the American economy; what is good for Corporations have traditionally presented some great difficulty to the general Public. lgl

Sunday, May 06, 2007

Advantages of Trade

Adam Smith’s Lost Legacy on Comparative Advantage could possibly bring on even further confusion about Absolute Advantage, Comparative Advantage, and what I will term Procedural Advantage. Absolute Advantage exists where one Producer has specialized resources for Production which heighten its ability to produce over Trading partners, who cannot acquire Substitute resources of sufficient quality to produce the Product. Comparative Advantage as defined by Ricardo highlights the advantage of Trade, even when one Trading partner can even show superiority of production in all Trading products; if, and this important, there is a Substitutability of Labor, Capital, and Resource between the Trade Products. Why the last qualification concerning Comparative Advantage?

Comparative Advantage exists only under the Relative condition of full production. This means there must be a technical full exploitation of all Productive resources, meaning Comparative Advantage is lessened or lost when there is a drop of the Productive assets employed coming from the practice of Trade. Current American Trade patterns, based upon the absolute least Production Costs, have forced many domestic Producers from the market with massive Layoffs of Semi-Skilled employees; they expected simply to Sit on the Sidelines as their labor is not required. This contraction of Labor Force participation due to Trade must be considered a Comparative Disadvantage, and Losses should be subtracted in the Accounting of the Gains of Comparative Advantage; a practice which current Economics does not do.

Procedural Advantage, as I define it, consists of the regulation of Trade so that the highest Profitability can be attained while in pursuit of full employment of Labor and other Productive resources. One has to remember that Semi-Skilled labor enjoys the same position as the employed Secretary, who provide valid service at Wage levels equal to their Skill level. The full employment of labor, unskilled, semi-skilled, or highly skilled, always produces quality Product (else it would not be paid), while the much greater sum of Wages paid out vastly increases the Consumer Demand in the Market. Economic growth and economic performance is both greater, and more balanced. I think there might be a justification for Tariffs in here somewhere. lgl