Sunday, October 28, 2007


I will be off-line until at least Thursday, as I am involved in another Residence change. It is not my Wish, but the desire of Time-Warner, who I utilize for access. It is still better than the pre-Argument date of 11/06. lgl

Wealth Transition

Tyler Cowen presents a powerful argument describing the renewed Government use of Private Contractors for military purposes. Tyler cites the greater experience of employees of Private Contractors, though he does not mention that Private Contractors procure the proper weaponry for the military situation; military organizations, in contrast, restricted to a hidebound weapons complement which in the final analysis must be assigned by Congress. This later Event questionable in the Decision process, as it is deeply affected by lobbyist efforts of both a Rent-seeking industry and a positional leadership of the military. I am a personal advocate of Private Contractors for a much different reason, though; believing the political process could benefit by treating Private Contractor labor availability as a source material to judge the Value of any incursion; Private Contractors quickly adjusting in Price and Employment Recruitment based on the dangers involved, and Employee estimates of the degree of success to be expected. Private Contractor Employees are not young kids with basic optimistic attitude, and they avoid what they consider to be poor career choices, unless the Pay is extremely high. Congress, if it wants Hearings, should sharply question the Employees who cover the ground, not the PR segment of the industry.

Paul Lim takes a studied view of the impact of Inflation, and notes the unrest of many Economists and Fund managers on the question of Inflation. Core Inflation Readings are basically skewed through multi-year usage of the practice, itself skewed by the Price advantage of economies of scale in the production of Core Products. Only adjustment to account the percentage volume of the volatile Products in the economy can give proper prospective; translated in Reader-available terms: Two-Thirds of the economy is enduring 3% Inflation, One-Third of the economy suffers from a 6-9% Inflation rate. The Scenario sounds even worse, understanding than the lower half of all Incomes spend almost twice the percentage of their Income in the more Inflationary segment of the economy than do the upper half of all Incomes, and almost all Utilities base their rates on the Inflationary segment of the economy. The final horror resides in the fact that lower Income Wages must rely on foreign Inflation to provide a Wage increase, while the upper half of Incomes make a great share of their Income in Purchase practices which suppress foreign Inflation.

All Parents and Grandparents should read this article, simply to get a handle on the scope of future Wealth transference to Children. One elderly friend of mine, who is quite well off (a banker back in the Days when it paid to be a banker), took the careful route–setting up Trust funds for his children, and limiting their access to the fund until they were in their own Fifties; indeed, I think one of the prime reasons he is still Living lies in the fact that his children have all reached their own Fifties. I hope the Incentive propels him another half-Century. The real Problem consists for all Parents etc. lies in the fact none of the children have developed the expertise their Parents acquired over a half-Century of hard work to make the fortunes initially. I am doing my heirs a favor by leaving them basically little. lgl

Saturday, October 27, 2007

Corporate Three-Card Monte

This article tends to worry me somewhat, as it should worry any historian of the 1923 German Panic. Traders and Investors seem desperate to cover their positions, and willing to create false Intel rumors in order to generate the Run-ups. Market Insiders are transferring Risk from themselves to the small Investors operating through Investment Funds. They are doing this not only to protect themselves, but to pressure the Fed to effectively increase the Money Supply through lower discount rates. The Fed should make a clear Statement that rates will remain at their current level until the current Market losses are accounted. The Question remains if Bernanke and the Fed Board have the experience to understand this high Inflation impetus.

I read this Post after I had read and written the previous paragraph. I feel more comfortable knowing that Others understand the basic Problem. There are major Losses all over the financial world and Markets, and Market forces are trying to transfer these Losses elsewhere, saving their positions at the expense of uninformed small Investors; most of Whom are elements of Labor who expect their Hedge and Fund managers to protect their interests, rather than the Fund managers own personal interests. The Trouble resides in the fact that the poor performance will be shunted from the actual commission of the poor performance, to Those who trust the poor performers; a practice sure to initiate heavy inflationary pressure.

Greg Mankiw provides this good Description of the current raging Tax Debate in Congress. I have long been of advocate of elimination of Tax preferences, while lowering Tax rates. The dissonant element in both the Rangel Bill, and the alternate Republican proposals, lay in their refusal to force the Corporate world to accept the elimination of Tax preferences Cold Turkey. The advantage of this route would cut the greatest Cost of Accounting procedures, stop the Windfall Gains of the major Corporate entities, and engender almost no Tax impact difference to small Corporations–even without any reduction of Tax rates. This relates to the Above paragraphs, where the major Players tie themselves to the small Players to gain Windfall advantage. lgl

Friday, October 26, 2007

The Approach is Everything

David Oppedahl writes a good Piece about the Fed conference on Agricultural R&D, which basically examined the direction of Agricultural R&D, both Past and Future, since WWII. My trouble with the entire Issue lay in the fact that total factor productivity (TFP), while high, has not been sufficiently increased, R&D has been slight in development of natural Fertilizers concerning total devotion of Capital to Fertilization, and R&D has not been devoted to Gene-splicing to develop perennial, Soil-building Crops (I can envision a perennial Corn plant with an attached Misquite root system). Billions are currently being spent, but on short-sighted venues which will become unsustainable after a short Fad Period.

My Mind can expand to the almost grotesque in consideration of avenues which should be explored. We now Spray Herbicide and Insecticide, as well as Cultivate; where it the short-blade grass which forms a lawn mat preventing the growth of Weeds, the congregation of Insects, which happens to be Nitrogen-fixating, transfering Water through it’s root system to the Soil–mat preventing Soil erosion, preventing Winter erosion through Soil cover, and serving as good Fertilizer when plowed into the Soil in Spring? I can understand Seed companies being hesitant in introduction of such types of Grasses, but what is wrong with Government R&D?

I still am trying to interest Someone in the Concept of a Plant form which can be planted in dried Sewage or ground Garbage, which will establish a tight mat of retention of both the Sewage and rainwater, by the growth of deep roots into the underlying desert ground. Impossible? Remember I am a Nebraska Farm kid, who grew up within a Time and history of making Things work, even if One had to get a little inventive. Often R&D has only the limit of lack of imagination by Program managers. lgl

Thursday, October 25, 2007

Irresponsible Leadership

I agree with this U.N. Report, but with serious reservations; the most basic being the assumption that the human race should not impact the ecology. Every Species of animal on this World has had some impact on the ecology, and the rate of extinction of Species is rapid in comparison with post-Ice Age Periods–remember the Dinosaurs, or not! It is true that the human race is outrunning our Food sources, true in the fact that medical advances shortens the life expectancy of the race by increasing the life expectancy of its elements, and true that We burn too much Carbon creating too many Greenhouse gases. Where the Report errs lies in the hysteria underlying it; California fires have produced more Greenhouse gases, than has been saved in improved Carbon use since the passage of Koyoto. Reality states human activity in the United States creates no more Greenhouse gases than would two active volcanos on the North American continent. China, a worse Coal offender, produces no more Greenhouse gases than would three active volcanos in their Country. The Temperatures of the World can be little affected by human action, and Calls for expensive remedial action will be defeated by the World itself. Cooler Air temperatures may allow for larger glacier formations, but also make for more brittle volcanic domes subject to increased rate of breakage; volcanic domes can manage about 48 inches of expansion now, ten Degrees cooler would limit such expansion to maybe only 12-14 inches. Humanity still has not grasped the notion that tinkering with the ecology can be bad, either way One goes.

Risk evaluation firms already seek to minimize the total Cost to Insurers of the California fires, hoping to steady a shaken Market. It is true that much of the Household capital was under-insured, and will not get anything approaching full replacement value. The Costs to the Households, though, will be immense, and Insurers are already establishing a Position to short them of the value Homeowners sought for protection. I do not understand why Market personnel would believe this activity aided the economy, when Insurers will raise Premium rates to pay for legal Costs endured by the attempted Shorts, and the Federal Government stands liable to pay all Shortfalls by venue of Taxation or Borrowing.

I truly liked this Post from Free Exchange. It clearly outlines the limits of corporate responsibility, and because of that limitation, the rationale for limiting Corporate involvement in Politics. Others will say that Corporate involvement is no more than other Special Interests issues, and should be allowed. The trouble with this assessment revolves around the fact that it stands within corporate activity under the process of maximizing Shareholder value to actually buy legislative votes through whatever Means are available; corporations easily possessing the liquidity to fund this Process. lgl

Wednesday, October 24, 2007

How It Is

Sometimes Economists fail to make quick assessments of current events, but the California fires and the Georgia drought will bring a major shift in Population centers within the Country; this being a prolonged rather than immediate impact. One cannot be certain of any popular reaction, though it would seem at least 14% of the Displaced Homeowners will resettle elsewhere, and the movement will be towards more environmental-friendly locales. Another hurricane or two, and We may not have a Home Sale crisis. New Orleans may even finally be rebuilt!

Tyler Cowen, and Arnold Kling from which I got the Pointer, fail to observe one aspect of the rapid rise in College tuition, and one which I feel is the relevant issue: this being the saturation levels for college graduate level employment. Colleges, even Harvard, understand the structural equation which states that larger Graduating classes generate higher levels of Unemployment among Graduates; restriction of Class size propels a Prestige of real economic value–much higher Average Income levels for Graduates. Here resides the real incentive propelling Tuition increases, heightened Consumer desire coupled with limited Class size. Institutions of Higher Learning, even Those which are principally Publicly funded, have learned that high-Cost Tuition rates provide a restriction to qualified Students far more effectively than even Grade assignments; under economic constraints of education for higher average Income.

Arnold’s idea of utilizing the same construct on health care will fail, as some level of health care must be available to All, and accreditation rules could only apply to the front-end, cheapest level of medical provision. The idea which must be brought across to Americans remains that only Primary Care can be publicly subsidized. Extreme Expense health care must be Privately-funded, or not provided. Americans must grasp that We can provide each other with basic health care, and grant a comfortable death; what We cannot provide is health care levels per Patient equal in Cost to the average Life earnings of an American, for each and every American. We cannot afford for Anyone, actually, except Those foolish enough to expend their own funds. There are Those who keep a 60-year-old Car in prime working condition, and there will be Those who want to keep an 80-year-old human body in perfect working order; but this is not a goal to be underwritten by Government. lgl

Tuesday, October 23, 2007

Work, Work, Work!

Some of my Readership may think this article is a type of Joke, but it may well be one of the most serious elements in Today’s Paper. It is my Estimate that the Economy will need almost 45% of the Retired population to fill necessary economy positions by 2015 in order for the Economy to function at full employment. Almost 75% of this working Retired population will need the added Income by that time, and the exploitation of their Skills could increase Productivity by an excess over 20%. I am currently exploring the Concept of a Retiree outreach program where Retirees would work 25 hrs/Week, where Retirees would draw Minimum Wage, but would be covered by the Employers under their Medical Health coverage; total Wage Cost to Employers hopefully kept below $15/hour.

I tend to disagree with the Energy Experts cited in this article, especially on their call to move against the use of wood and dung for Heating and Cooking. Both fuels classify as Deposit trash, and their usage as fuel eliminates an adverse ecological buildup, while it is the consumption of surface carbon; while any switch to another Energy source is basically burning additional subsurface Carbon deposits. The odorous burning of such fuels destroys incentive to consume more than what is necessary, and the pollutants emitted are natural and easily biodegradable. Their dedication to rapid sequestration of Carbon is laudable, though I believe this sequestration must be tied to an alternative fuel source itself, so that the Economy makes a major shift to reliance on surface Carbon for fuel.

Greg Mankiw led me to this list, myself finding it fascinating that there is Now a Feminist Economics. Here I thought it was just People buying, selling, and trading. I do not want to sound too cynical, because the Piece does raise some good points on the structure of the economy. The Feminists score an important point by reference to the Power relationships innate to economic roles, though I would suggest this applies more widely than the position of women in the Workforce. The Quote written by Folbre may introduce some fallacy to their approach, because altruism has always been noted for its rapid half-life; most noted in the arena of Government intervention in the economy. The stance of the Piece may fail as a Critique of Greg Mankiw, because every Author must move through a wealth of material to granulate a Text which is readable; side issues must shine in the Footnotes or bibliography. lgl

Monday, October 22, 2007

A New Religion

Greg Mankiw comes up with an excellent Post on the non-applicable blame being placed on international competitiveness. The first clear Statement to be drawn must state that all economies–domestic and foreign–suffer from the same impact from Taxes. The Second claims the supply of Government services is either cheaper in foreign Countries, or the more likely element, such Revenues are misspent in this Country. I would be the first to assent to the fact of excess Rent-seeking within the provision of American Government services, but I expect that the funds allocation process stands as the major culprit behind both the lack of Government services and the greater inefficiency of the American system.

The American political process generates the mis-allocation of Tax revenues. Medicare was probably the last actually uniform Government Service program; a great Share of American Taxpayers were not even born at the time of its authorization, and Add-On elements and Spread requires a new funding system on which no one will agree. Other Government Services were added in ad-hoc manner with a variety of funding forms, leading to a multiplicity of budget creations without adequate Overview, and completely splintered allocation forms. There has never been a standardized Priority format created for Revenue allocation, or an Evaluation system established to rationally compare elements of Government services for the degree of effectiveness. Those who would actually desire to limit Government excess spending have no vehicle to set parameters for Government spending.

I am unlike Greg in the fact I believe that the American people are under-taxed in the lower brackets by about 4%, and the higher Tax brackets by about 8% of total Income. I do not want Anyone to think I am advocating Tax reduction, but I do want to stipulate this assessment is based upon total Taxes–Federal, State, and Local. A real Overhaul of Government will require introduction of an effective Tax system, though one without change in nominal Tax rates; just elimination of Tax loophole Politics. The whole Argument, though, becomes simply academic without a uniform Government Rating system for the effectiveness of Government expenditures. lgl

Sunday, October 21, 2007

As the World Turns

The Chinese Communist Party Congress closed, and for Those involved in international politics, it is a sign of real Change coming to China. The ideological aims of Hu Jintao has finally defeated the corrupt faction of his predecessor Jiang Zemin, replacing the Defense Minister, the International Trade Minister, the Law Enforcement Minister, and the internal corruption watchdog Minister. The elected Congress and Central Discipline Committee will support Hu’s plans to develop the internal markets of China, instead of reliance on foreign trade to enrich the Party and their Dependents. Hu has a 5-Year mandate which will likely bring real change to the internal Chinese economy, bringing markets to the countryside.

I disagree with this article on expectation of higher prices for Energy, as I previously disagreed with the IMF assessment that the Dollar was still overvalued. The Price of Oil is going to decline as Hedge Funds come to realize there is not the same profitability in Oil Trading with the price at $90/barrel as was there when Oil was $60/barrel; it all being a question of buy-in Costs and Sale Costs when One is in a marginal Profit business. The second element to the Oil question is American driving practices; Retail Fuel outlets are recording a continuing slide in total Fuel Sales, even though the gap between Pump-Price and Oil Price has widened. Even the younger Generation is not taking the SUVs out as often, or driving that far, new Housing is more Energy conservative as the old Heating Oil Housing units are being torn down, and Manufacturing is shipping Oil-intensive Plant Overseas. Alternative Energy Sourcing has been slow in development and use, but reluctantly coming online. It is the basic reason why I feel that the Dollar will gain in value from this point, as Europe and Japan have already integrated their major Gains from Energy conservation, and the rest of the World will be massively impacted by any Energy Cost increases.

Here is a Post where I agree with the basic sentiment of the Viewpoints expressed. A major factor which must be factored into the Equation, is Consumer boredom with the new IT additions. The Kids are becoming bored with the new Toys, which are more Cosmetic than operational. Marketing has to push harder, and Spend more, to get the same Consumer response; the rising Cost of Product is definitely no help in the effort. Retailers are all listing a shift in Consumption to the Staples, an effect which will be far more pronounced in foreign Sales. The basic American advantage comes in the inability of the World to reduce American Exports drastically, as what the World buys from the U.S. remains necessary to their economies. The American disadvantage is that American Consumption Products find little market avenues for expansion; something deeply affected by higher Energy Pricing. lgl

Saturday, October 20, 2007

New Tax Package

Readers need to integrate this article because it describes the basic malaise of the American economy. Economic gains are not widely shared by the Population; the actual distribution of benefits is actually very narrow with probably less than 10 million Americans gaining from the new additions to Wealth. This would not be a Problem, except Product Pricing resets in reflection to the total aggregation of Wealth, whether there has actually been a expanded gain in aggregate Purchasing Power. Translation states that Static Incomes under such a Scenario holds loss of both Income and Purchasing Power. People can go broke simply working as hard as they did before. This brings on a multi-layered crisis where Work Incentives are lost, Living Standards are lost, and Households fail.

One method for handling the Decay in Place process comes in the form of artificial Government decrees–Prices Freezes, Minimum Wage limits, and Welfare assistance. Any Economist will tell of the hazards of such an approach: Price Freezes do not forestall Inflationary pressures, they simply destroy the Incentive of Retail to sell Product, and disturb the gradual Price adjustment process. Minimum Wage limits only affect the lowest spectrum of Labor, doing nothing for the equally affected static, higher-Income Labor, who also lose Purchasing Power without the present power of maintaining the Shelf Wage Scales. Welfare assistance becomes too expensive as the ranks of Enrollees grow under the programs, while such programs themselves propel inflationary Pricing.

The theoretical Problem facing this Country today can be stated as a Need to alter the economic incentives currently impacting different industries in the economy; most industries still hooked to the old economic incentives founded before the new Growth, and the growth industries possessing extremely high incentives based upon the rapid Gains in these industries. I personally feel any alteration in the Incentives granted across the spectrum of the economy can only be affected by sharper impact in real graduated Tax levels; this means that the Rich have to suffer a much deeper bite from the Tax. Higher Tax rates, though, stand as a real economic depressive force–destroying real Incentives to economic effort. I have not found the same retardation in the loss of Tax exemptions and breaks.

My real Proposal would place Income level limits on all Tax deductions, exemptions, Retirement Tax delays, etc. Personal Deductions would only apply if total Income was less than $100,000. Delayed Tax Payments would only apply if total Income was less than $200,000 per year, with half of effective Tax being due for all Incomes over $50,000 per year. Mortgage Tax deductibility will only apply to Housing of Value of less than $400,000. Individual Businesses, Partnerships, and Corporations must pay at least half of the face-value Tax, if their Income exceeds $2 million per year; no matter what concurrent Tax loopholes exist. The Goal of my Tax Package would be to place a higher premium on persistent, steady Income, with much less advantage to rapid expansion practices. lgl

Friday, October 19, 2007

Medical Debate

Tyler Cowen has a successful number of Points on the microfacts of the health care system. Tyler and I are on opposite sides of the fence concerning health care, I being a single-payer advocate; still, Anyone not conversant with these facts should not be discussing health care. I will here supply an alternate list of Talking Points.

1) American health care outcomes admittedly are better than the Numbers would suggest, but that neither American or other national outcomes are terribly great. A great source of outcome gain at all levels would be some nutritional restrictions on Restaurants and Food-Providers, over and above Sanitary restrictions. These Restrictions could limit Calorie content per meal unit, restriction of overweight Customers to a Diet Menu, and Advertising concentration of factors other than high Meat content.

2) A single-payer system should utilize intelligent spread of Costs. The total Health Care Cost of this Country should be spread over the total number of Doctor, Clinic, and Hospital visitations, and each Occurrence should carry identical payment Charge. The Poor can thereafter be easily determined, and the total welfare benefit Cost designed for adequate payment. Health Insurance could not claim non-underwriting item declarations, and premium Costs easily determined.

3) Much of American medical innovation is Cosmetic, of a nature simple in design, for the express purpose of attaining Patent royalties. An independent Board of Medical Examiners should be established to approve all Patent applications, based solely on Evidence of genuine benefit; lack of relevant approval will be denial of Patent. Approved Patents should then go to a Board of Medical Economists to determine how much the Patent should be worth per Unit of application; Corporations forbidden to charge more as royalty, and other Companies allowed to itself produce such Products with payment of the stated royalty Fee.

4) Doctors, Clinics, and Hospitals should be limited in the number of Patients for which they may provide health services. Limited? Yes–greed itself should not generate a lack of qualified Time and Care provided. This has the added benefit of propelling sufficient medical facilities being capitalized to serve Patient levels.

5) Cosmetic surgery and medical procedures should be carefully separated from normal health care, and unpaid unless Patients get a specific Waiver from the joint Boards of Medical and Medical Economists established for determination of Medical Patents. This joint Committee must also underwrite all Research Trials conducted under subsidized condition.

The above Considerations would go far to improve American health care. I sketch out an overall Patient loss of 12 lb. apiece due to imposition of Nutritional limitations in reduction of Public meal size. This is all Kentucky Windage here, but this would likely translate into a 18% gain in overall health. The absolute spread of Medical Cost would accurately define true, or real Costs of medical provision, while removing most of the inequities from health care Insurance provision. Medical Patents will become cheaper and more realistic, and the Vain will have to subsidize their own medical treatments. lgl

Thursday, October 18, 2007

How Soon is Soon?

Here is a perfectly sensible article, where I will start to reach into the Ozone in explanation of it. The first item is that one measure states the 30 Industrialized Countries averaged 36.2% of GDP going to taxes–including the United States. Is the measure correct? No–but the Error is on the low side with the actual Average closer to 40%.The second probability states that Government Spending has produced at least 50% of the increase in worldwide Corporate Profits since 2000. The third high probability states approximately 70% of the Cost increase in Health Care since 1965 have come from Government personal welfare programs; the real Cost of Drugs and Medical Equipment is no higher than the Norm in the Chemical and Technology industries. The fourth Protocol statement says the Bush Tax Cuts were a big Lie, simply altering and hiding the increased impact of Taxation. The last on-the-ground evaluation is that Profits-Taking absorb at least 30% of all Government expenditures, and in-house provision of Government Services probably costs only half at much as Outsourcing Government Services through Private Sector agencies. Everyone in the Corporate world will claim I have no proof, and well, the Proof resides in internal Corporate records.

The article states that the Cost of Government has risen over 20% since 1975, a Statement which might not check all the Expenditures of Government; the adjustment for Inflation will only go so far, and all elements of Government Spending are up substantially. One must remember that provision of Government services have increased every year through the Period, Enrollees on each Government program have increased every year of the Period, the charges of Service Providers has increased every year of the Period, and Pork Barrel has become an Art form. Taxpayers need to forget the high Taxes, and roust the Government officials who have brought the excess expenditures.

The Comments of C. Eugene Steurele should be studied in the article. The Income inequality which initially propelled Tax revenue increases will fail under increasing Inflation. Government expenditures fueled the Profitability which paid the increased Tax revenues, but only with a Government commitment to provision of Services, which cannot be supplied under Inflationary conditions without raising Tax rates. The Bush administration is currently supplying this overall provision of Services by Debt accumulation, but this process will fail in the immediate future; foreign Buyers of American Debt will disappear under a declining Dollar. We are in an evolving Crisis, which will reach a climax in the near future. lgl

Wednesday, October 17, 2007

The slightly gray White Knights

Arnold Kling again comes in with a easy-to-Read article on Masonomics; the Word itself an aggrandizement of a group who are mighty in their own minds, and may just be. George Mason does sure enough have a Powerhouse Econ Dept. There is so much to agree with in Arnold’s descriptions, and also much to disagree with under study. Masonomics, MIT, and I agree that perfect markets are a ‘bad approximation’ of reality. I would go further and state that perfect markets will create a static condition where Profits reduce to minimalize Production Costs, with loss of Incentive to capitalize new Investment because simple Purchase is the Risk-avoidance cheaper route. It is the imperfection of markets which generate the Investment advantage.

Masonomics possesses the regretful failing of a detestation of Government, refusing to grant it a rightful position in the economic spectrum. The basic underpinning for this lies in the inefficiency of Government in all but one area: Taxation. They hold the traditional Conservative hatred of usurpation of another’s money, discounting the legality of the Government’s activity; conscious they are the Prey, not the Predator. They discard the advantages of full employment theory, labor economics, and protective regulation, all because they contain real threats of taxation. Their dedication to Free Trade resides on the real desire to strip taxation from the economy by venue of purchase of foreign Goods. This Attitude prevents their appellation as the Vanguard of economics.

Masonomics worry about Government failure rests in this misapprehension that Government taxation and action are unnatural economic events. Government will always be the largest Customer that the economy will have, and the least-caring Customer in terms of the Prices charged, and the Profits derived. The expenditure patterns of Government are uniform, and thereby naturally regulating; the worst defect of Government being the elimination of deviant Consumption patterns by itself. I truly agree with Robert Hanson about excess medical care provision, and have established for myself that Government regulation causes the excess expenditure, generating the massive Windfall Profits of the health industry. Masonomics, though, would strangle the Baby, because of the existence of the dirty diaper. lgl

Tuesday, October 16, 2007

What Year is This?

I will start by straight out telling Readers that I agree with this viewpoint, and then I go on to mention that increased Water pricing easily can be the worst Taxing mode in existence. Deep-Pocket heavy Users get cheap rates based on bulk usage, content within their threats to reduce employment if the Water rates apply to themselves. Homeowners can do little to alter their Water consumption, once they have shut off their Dishwashers, stopped washing their Cars, and watch their lawns turn yellow; increased Water rates become a simple Tax upon existence. Retailers of all stripes find their Public facilities becoming bathhouses to their detriment. Increased Water rates incurred to fund expansion of Water resource capitalization may benefit, but any punitive effort to punish Water Consumers for overuse always impacts the wrong elements in the wrong manner.

I must be suffering from Memory lapse: it sounds like South Vietnam, Republic of. We do not have enough Troops to hold the Villes, every element of the Government in on the Take, the Black Market is more powerful than normal Commerce, Insurgents simply transplant themselves to unpatrolled areas and start up again, and the Civilian populations are as terrified of American entrance as they are of Insurgents. High Command is living in their own self-developed Disneyland, coming out only to go Home. Journalists are dismissed and condemned because they record the reactions of the Civilian population. Are you sure We are on Iraq now?

Matthew E. Kahn notes the savage practices private Insurers are beginning to adopt to insuring homes along the Coasts. He points out that Governments become the Insurers of last resort when private Insurers prove unwilling to underwrite the Costs, and that it effectively becomes an subsidy granted Coastal areas by the Interior; one that will become increasingly more expensive under climate change conditions, and will become effectively more resisted by Interior Representatives. It is indeed a Problem, but I would point out a Need to set limits to private Insurer profitability and Labor Costs. Private Insurance of all types has become a Cash Cow for Participants, and a industry leader is Labor Costs in comparison to Capital, Bonuses to Executives, and Profits to Stockholders; a situation where the actual practice of underwriting Risk has diminished in importance. lgl

Monday, October 15, 2007


I will be perfectly honest; I am sure I have heard of the Names Hurwicz, Myerson, and Miskin, but can’t remember where, except possibly a Golf Tournament. I did once read a couple things written by Miskin, though where, what, or how come totally escapes me. MDT, or mechanism design theory, reminds me of what my Mechanic tells me about vehicle maintenance. I suspect I may have listened to Hurwicz once at UNL, if he did once Guest lecture there; though undoubtedly I must have slept through the performance. This Post by Alex Tabarrock introduces me to my first cognitive awareness of MDT. I come well-prepared to honor the new Nobel-ity.

The outline of MDT, as gifted to myself by Alex, leaves me perplexed and needing more study. The entire theory seems to revolve around Hayek’s imperfect information. It also poses the ethical problem of conditioning Response to provide the Seller with information, while presenting the potential Buyers with increased imperfect information. The participation constraint seems devoid of capture, as all potential Buyers have the imagery of successful bidding; where they devote labor in documentation and evaluation under the expectation of success, under the illusion that the Seller will entertain their bid. Only one potential bidder will find his effort worthwhile, and he will have to pay more for his extended participation, so the incentive compatibility constraint cannot be truly induced. The Seller locates a higher Price, but only by the creation of Market restraints which hides the true value of the Product.

I am sure I also missed some true value in the MDT, but I feel some degree of moral revulsion at the use of imperfect information to mask true Market values, while organizing the Market structure to deceive the potential Buyers. It is again using institutional practice to freeze out potential individual profit, which is otherwise guaranteed under free market structure. There is also great danger in masking true market values, leading to overpriced Product propelling hazardous levels of Inflation. I am sure Hurwicz, Meyerson, and Miskin are quite honorable, hard-working Economists who deserve their reward; I just wish this blessing was based on something other than MDT. lgl

Sunday, October 14, 2007

Second-Best Camp

Gretchen Morgenson attempts to explain the S.E.C. rule changes to limit the power granted to Investors from the 2006 Court of Appeals decision against American International Group. The essence of the S.E.C. rules is again to make it functionally impossible for Investor groups to challenge current Management Boards, and even worse, their ongoing policy for the Corporations. Lack of proxy access prevents effective nomination of a competitive Board alignment, and stops Investor-sponsored policy changes from being voted upon under the proxy system. Injured Investors should appeal for another Court decision which would insist all policy initiatives and Board Electees must be on the proxy without Management supporting or disparaging any policy or Electee, if Investor signatures of 1000 can be accumulated prior to the proxy printing process.

The previous argument ties in well with this article by Joe Nocera. The Question revolves around exactly when is a market created in the realm of C.E.O. Pay Packages. A unitary slate of Candidates on a proxy cannot possibly lead to the development of a market for Pay Packages, where Management sets the Candidates, who approve all the Pay Packages–including Those for themselves; it is a real retention here to remember that Management has current total control of the issuances of the proxy system. Still, there is a market for Pay Packages, if one checks the extortion practices exercised by fellow Corporate Managements. It reminds of a set of Bank thieves in a Bank Vault, trying to estimate how much they should steal by the weight they must carry.

I was meandering through the Internet landscape, and came across this Post by Dani Rodrik. He talks about the market imperfections which cause him, and others of the Second-Best camp, to doubt the efficacy of economic models to perfectly predict economic results. I belong to the Second-Best camp myself, though unlike the others, I find the real imperfection derives from moral corruption of Managers, rather than from hidden Market deterrents to classic performance. It is the pursuit of cheap, illicit Profits which brings on almost every imperfection in the Market system when examined. I also, though, belong to the Third Camp, which finds Government probably the worst vehicle for economic success ever devised. lgl

Saturday, October 13, 2007

Honest Venality

Somewhere in this Tyler Cowen montague rests the suggestion, I believe, that social insurance may already be overrated, and that progressive taxation, while quite kosher, seems to fall too heavily on the higher Incomes. I might feel the same as Tyler, if one of a number of conditions were existent. The first and most paramount consists of enjoying the Income parameters which would leave myself affected by the chicanery. The second condition would alter my belief that persons enjoying higher Income actually don’t work much harder than their unfortunate lower Income brethren; the later Group often working less because they cannot find or fund the additional Work–or is that the Third condition. It may or may not be a potential Fourth condition that higher Incomes produce a much higher Pollution rate, basically based upon their retention of the greatest majority of that Income; this being simply a disgruntled anger at flagrant expression of Wealth, elicited from Those who ‘Work Hard for the Money’. There is always the final condition which states that a Tax Code littered with Tax loopholes cannot be considered a progressive taxation.

Greg Mankiw finds Us a Chart from Chris Edwards, who contends that the Bush Tax Cuts simply reversed the Clinton Tax increases for the top two groups, while giving all Tax Groups a massive Cut in Taxes. I sincerely wish brilliant young Economists would include Tax rate data from the 1970s and Reagan Era as well, which could outline the direction of Tax rates in this Country with perhaps greater understanding for All. It also might be more edifying to actually chart the Tax Revenue flows from these Income Groups for the entire Periods involved as well; I have always liked charts that flow upwards to the Right. It also amazes me that Taxpayers cannot seem to even pay their monthly Electric bill from the great Tax Cuts, until One hits the top 5% of Income Earners. Anyway, the Bush Tax Cuts were supposed to have brought great Prosperity.

Paul Krugman is analyzed by Mark Karlin, which I thought to provide for the heightened awareness of my Readers, though I admittedly read very little of it; the basic rationale being my clinging to my own cherished bias for and against Paul Krugman. It is still worth Reading for comprehension of a renowned Commentator and Economist. Paul may not understand that the chief Conservative bias against helping other People, comes from their basic desire to earn Money off the existence of those People, not to support such existence. I personally lack great desire to help these People as well, but this disincentive does not derive from a personal desire to save Money. lgl

Friday, October 12, 2007

Income Accounting

Sanders and Hambrick have written a Paper on risk preference among Corporate Executives, finding a greater likelihood of risk-taking under Conditions of heavy Stock Options usage, but that the risk-taking is far more precarious; and accounting fraud far more likely to result upon business failure. I have always been a relative opponent of Stock Options, thinking such practice allows for another level of Power shifts at the Corporate Board level, further deteriorating Stockholder representation in the Decision process. Like all things I consider, I study on the problem, and have developed my own system of Executive compensation I feel would operate better; basically leading to a unity of Executive and Stockholder interests.

My basic idea starts with elimination of the Windfall mentality which currently infects the Corporate structure. The first Step is to establish a permanent Bonus system for Executives, based upon set levels of Net Profits; when the later decreases, so does the amount of Bonus, and vice versa. The next Step is to forbid immediate execution of the awards; stipulating that all Bonuses will only activate upon Retirement from the organization. Bonuses cannot exceed Twenty in number, paid only from future revenues, but based upon the Profits record from the Executive’s years of employment where Accounting fraud is verified not to have been used. Corporate Executives immediately desire high performance, under their own reign, and under the management of their Successors. The only Problem with this system of compensation remains the necessary backbone expressed by Stockholders, in order to push through this compensation system.

The Bush Tax Cuts gets a fair Profile from this article, which indicates the basic inequity of the Tax Cuts in the first place. Some 95% of all Taxpayers reported reduced Income in Inflation-adjusted terms in 2005 from their Income in 2000. Take-home Pay was stated to have increased, but in terms so small as to be ludicrous; you had to make in excess of $62k to make more than $52 more per month, even the One Percenters only saved $5400 per month on Incomes averaging $1.2 million per year. I seriously wonder why Bush’s own Supporters don’t turn against him. The Tax Cuts were financed by a vast increase in National Debt, and if this Debt were Accounted like a Mortgage, the loss of Income would seem monumental. lgl

Thursday, October 11, 2007

Marines and Deflation

The Marines want to move on Afghanistan, and leave Iraq to the Army; a genuine Troop shift for obvious Purpose. Concentration on Afghanistan would allow the Marines to bring their own equipment to the Country, maximize their effort, and minimize their potential Casualties. The first benefit for the Marines is the separation of Marine and Army performance, highlighting the fact that Marine performance has been superior to that of the Army; the Army lacking the orientation to military virtues, even the Reserve and National Guard elements have been showing better military factor Readings. Marines are winning their war in Iraq, against a more determined force than faced by the Army. The Marines expect they will face less disciplinary problems in Afghanistan, where they will patrol traditional terrain of Operations, unlike the urbanized setting they face in Iraq. Combined Operations in Afghanistan will give them an Edge, one which is lost in the chaos of Iraq where multi-factions join with splintered Command to defeat coordinated effort. It would be a very good Move for the Marine Corps, if the U.S. Army can be convinced to accept responsibility for Iraq, where the Army has shown the same disorientation as once expressed by itself in Vietnam.

Tim Harford asks a question which I have asked for years: Why not eradicate Inflation? I take it even further, Why not engineer a Period of Deflation? The most obvious answer consists of the increased effort necessary to pay off Debt. No one likes the Thought that their Debt load will be higher, and take more effort to pay off. Most Economists stop at this Point, not desirous of explanation of any benefits to Deflation. They are present, though, and should be explored. The paramount benefit is an actual smaller Debt load level, and lower Interest rates servicing that Debt; this due to the greater Supply of funds for Debt provision. Most Business Costs would be paid before actual Price reductions, eliminating an obvious element of overall Business Cost. Debt Service Costs would decrease faster than the Deflation rate itself. Government would enjoy higher Taxes in relationship to Expenses, without raising Tax rates. Government economic policy would be cheaper to finance. Business would pay less in Performance Raises to Salaried personnel, a Situation without disadvantage to Employees, but advantageous to Consumers. The Economic bias against Deflation holds less water than always claimed.

One may ask how an Economy can incite Deflation in the first place, only Japan giving a good example of modern Deflation; Everyone still avoiding definition of its exact causation. The Answer to Deflation provision is simple, though almost all Economists would disagree with this Estimate. Japan has its Deflation because it has not taken the Marginal Tax rate route of Western economists. Economists will all claim that Japan has widely engaged in deficit spending at all levels, so this cannot be the Answer. The fact remains, though, that Japan has did almost nothing to alter the basic Tax package demanded of Japanese Taxpayers, and their individual Debt levels and Savings rates have remained relatively stable. Japanese Production schedules are still based upon Japanese Purchase patterns, and Japanese Business basically transfers their inflationary pressures into their Exports. Economics will eventually catch up with economic practice. lgl

Wednesday, October 10, 2007

Pests, Bugs, and Pestilence

This Post by knzn adequately explains both contango and backwardation, though he sounds as if he is somewhat mystified by it. The Keynesian definition of both term relationships has always left a little to be desired, as it is at heart speculation driven as to future Demand for a Product. No risk-free investment could ever be realized, as movement in the market to meet risk-free contango conditions would automatically raise the Spot price. Backwardation is basically future Price-locks to ensure a base Price for immutable Demand–that Demand which is structurally Constant, as contretemps mutable Demand–which alters given then-current Market conditions. The current Spot Price in any Product reflects two factors in the market: the level of mutable Demand, and the amount of speculation funds in the Market; either of which can impact Spot Prices. The key feature here, as unexplained by knzn or James Hamilton, is that future prices basically set Production Schedules with guaranteed Underwriting of those Schedules, while mutable Demand is fulfilled by those Production Schedules, while Spot prices only indicate Profits-taking and excess speculation funding.

John Quiggin turns a less than straightforward Point of Discussion into something somewhere off the Deep End. Greg Mankiw says that Economists cannot understand Tipping, Matt Yglesias thinks it should be based on utility theory, while John attempts to change the Whole into expression of preferences and rational choice. No one has yet adopted the simple formulation that Tipping is simply Custom, exercised as peer pressure to perform a lesser charity to laborers on your behalf. Maybe there is a need for more Sociology, and less Economics.

Here is Arnold Kling’s review of Shannon Brownlee’s book Overtreated. I enjoy Arnold so much because I don’t really disagree with him, but I always can’t really agree with him either; he reminds me of my Doctor. Don’t imagine that I agree with Shannon Brownlee; maybe I just don’t agree with Anyone. I tend to agree with Paul Krugman’s Single Payer Health Care system, though I know I could not agree with him on its structure. I think Doctor’s compensation should be determined by his total Patient load’s good Health Days, say a Dollar per day when a Patient didn’t have to see the Doctor, pop an extraordinary amount of moderative Pills, or call his Boss to claim ill health. I do know that We should establish a Bonus program to Doctors who provide adequate treatment to Patients at under $30 per day of Treatment. Is Everyone laughing? lgl

Tuesday, October 09, 2007

Bias, Farmland, and Trade Advantage

Rob at Business Pundit perhaps slights the world of bloggers, but then again, he is right. Read and study his outline for the search for cognitive bias. He uses the word ‘Disconfirm’; something which is really hard to realize and act upon without the creation of an alternative model. Nature despises a vacuum, and if the replacement model is not as well-thought out as the original, then again you are in hazard. Here is the proper vindication of blogs, a matrix where a several themes can be explored concurrently, without real bias attributed to the work based upon position, wealth, or Public Relations funding (fancy term for financed propaganda). The downside to blogs lie in their proliferation inciting confusion by saturation, with the suppression of dissent by countervailing mass. One suggestion is choice of Liberal and Conservative bloggers for comparison, and for presentation of the greatest number of views on any issue.

Here is a long article which explains the current attempt to exempt farmland in total from Estate taxes. It might seem a Joke to Those long associated with other forms of labor, but the threat reported by the article is real. I myself go to a Dentist who came to town some 40 years ago, possessing not one acre of land, and today is one of the largest landowners in town; the rationale being land is a good appreciating asset alongside the already great Estate tax grants to landownership. There is great differential in land prices throughout the Country, due to climate and soil compositions, and therefore much variation in land prices; still, I would estimate that liberal Estate tax law for farmland would already have raised the price of farmland anywhere from $200-400 per acre by sketch estimate. Complete annulment of Estate taxes for farmland could raise that Cost by up to $500 per acre.

Dani Rodrik has a good discussion of the potentiality for both Good and Bad outcomes from the external discipline of Trade treaties. Consistent Readers of this blog know I almost universally oppose multi-national treaties, seeing them as basic instruments to discount real Trade advantages in the first place, by forbidding the horse-trading of bilateral Trade agreements. The later are renegotiable Contract agreements where both Parties can play to their Strengths, and away from their Weaknesses in Trade advantages. The demand for multi-national provision strips them of their ability to maneuver judicious allotments. Multinational Trade agreements also rob Trade partners of the very ability which Dani discusses, where future Governments can alter Trade policy to conform to future Trade advantages from altered economic conditions. There are Those who suggest this later released freedom of movement would be a basic disadvantage to poorer Trading partners, but I would challenge Anyone to prove that on-going Trade ever hampered either Trading partner. lgl

Monday, October 08, 2007

The New Hassle of American Life

Life used to be simple in my youth, at a time where the only Concern was to make a living. One needed only marketable skills and Money, thereafter obtaining almost anything you wanted not outside what was defined as legal. Today, the complexion has most definitely altered. Xerox machines seem destined to photocopy every Driver's License and Social Security Card some Thousands of times. The complusion to copy has infected Everyone--your Doctor, your Banker, your Doctor, your Dentist, your landlord, and coming soon, your favorite bartender. I cannot wait until they start doing Security Checks to buy Concert Tickets.

The misery of the above state of being resides in conscious fear on the part of Everyone in any position, of failure to provide sufficient documentation. I know I could make a fortune simply by investing in File Cabinet construction. I shudder for the square miles of scenic forest already cannabalized for Paper pulp. It might only be envy that my paperwork gets photographed more often than myself, even though it is far less handsome.

I am only angry because I am again attempting to Move to a new Apartment. Those who have read Me for awhile know that I had a Heart blockage two years ago; one of the results was the Sale of my residence, and my movement back to Apartment living. I have now once again decided I should move once more into an Apartment closer to what I required, both in access and benefit. Imagine my amazement when I heard that the new Management desired a copy of the old Sale and Mortgage Agreement still in progress from my old owned Property. I thought to refuse such a Request, but realized it would only hamper my movement into a new facility, and possibly get me placed on a Homeland Security Watchlist. I can only ask when will it ever end. lgl

Sunday, October 07, 2007

Cutting the Power of the Purse

Tom Redburn has identified the Problem which We all know stand athwart all desires to control both Taxes and fiscal responsibility. It constitutes the greatest Issue of Issue Politics, and is understandably the most politically funded of the lobbied Interests. No one expects that this engine of destruction, organized along lines adopted by Boss Tweed in New York, can be defied. A basic reason for this image of invulnerability comes from allowing this political agenda to set the language and rules of the debate. We must learn to attack towards our Opponents’ weakness, if We are ever to hope to rein in the exploding Debt, and the Rule by earmarked federal spending.

The central theme We will have to adopt is a Concept of Tax Remissions limitations. This consists of a law which would limit any Tax Remission to a specific maximum value; I would set this amount at $25,000 per Individual, and $75,000 per Business organization of any type. This would separate the Sheep from the Goats, in that Those who need Tax relief would get it, but Those who want only Tax Avoidance cannot achieve it. Those who cannot understand allegory will be told that the Rich will be separated from the Needy for Tax purposes, and Those committed to fiscal responsibility will possess the rallying cry of Fair Tax Impact.

The next Step along the Road to clear the federal dead load will be the legally-imposed limit of Taxpayer ability to utilize more than Three Tax remission deductions in any Tax Filing; Those unable to do the Math can be told no Individual can claim more than $75,000, and business organizations no more than $225,000, in special Tax remissions other than certified Business Costs. The two Steps, together, will drive the fatal wedge between suffering Taxpayers, and Those who pay the political campaign contributions and Lobbyists. The vast majority of Taxpayers will come to understand We can attain Tax Relief, without surrendering to Those who would use Our efforts to avoid their own Tax burden. It is the necessary first achievement, before We can begin to rein in Our spendthrift elected officials. lgl

Saturday, October 06, 2007

Modest Retrenchments

Consumer credit rose by $12.2 billion in August, a rise of 5.9%, the article discussing the loss of home equity credit as the leading push. This remains the actual problem, as home equity credit will be slow to recover as a Purchase factor within the next few years. Measurement of actual lack of Consumer funds is difficult, but Wage factors are not expected to increase, and Consumer credit may charge in excess of 3% more for Credit; so that the shortage of Consumer liquidity will probably remain. Here lies additional hazard, whereby Consumer Credit agencies will become wary is the current expansion rates continue.

The world of Electronics is being upset by Legislative action. The lead in solder prevents whiskers, or slivers of metal, from springing from the fused material; but lead is being banned by Countries throughout the world. The whiskers are shorting out electronic equipment, and industry is scrambling to find a cheap Substitute. One of the major culprits may actually be industry philosophy with its dedication to Micro technology. Slightly larger connections would allow for a plastic coating of connections to prevent whiskers. I am not talking about the huge Boards of Old, but film-coating Soldering.

I should first say that I disagree with this article, but it must be Read under the principle of knowing your Opponent, and this is as well-written as Most. The Thomas Palley argument presents serious qualifications to the Free Exchange position, and it is extremely hard to deny the downward equalization of Income. The freed Corporate structure may be the most extreme to defend, as Corporations typically rely on nothing but Profits to determine policy. I perhaps remain the lonely element who perceives Tariff policy as the proper inducement to incite social consciousness in the Corporate community. lgl

Friday, October 05, 2007

Woe to the Heretic!

Congress again sets about the task of destroying the economics behind hiring private Contractors, instead of using Government employees or military personnel. American law, as interpreted by the American Courts, insists that prior attack must be instigated, before Security personnel can responds with violent methods. The Secret Service conducts its protective details using the principle of area saturation, something prohibitively expensive and unworkable in the protection of lower level Personnel below a President or Cabinet officer; foreign nations resent a battalion of armed personnel arriving with every diplomat. Current Employment schedules will not protect Our personnel with the added burden of Congressional regulation. We also lose the flexibility of hiring already-trained personnel for Security duties; the Congressional legislation in action will require extensive Training programs for these Security personnel, who will probably be rubbing shoulders with FBI Trainees at Quantico. There will be few to train, though, as Security personnel learn that they cannot put down Suppression fire, even though they lack adequate backup. A better Course would be to make a polite apology to Iraq, and express hope that it will never happen again.

I read Robert Lawson’s Post, then Dani Rodrik’s Post, which first left me with no desire to read the Report cited, and feeling that the evidence was far more telling than Dani would allow it. I have always personally felt economic growth was based more on down-sloped Education than on economic freedom; where having Everyone with the equivalent of a Grades school education was more vital than Expertise, Economic freedom, or available Capitalization. Economic growth continues to expand as the universality of Education expands to a High School education, but thereafter economic growth depends more on Trades school education spread than great numbers of higher Academics. The real fact I am trying to define is that excess numbers of Collegiate Graduates to total labor elements will lead to excess Capitalization debt retarding economic growth by Middleman Costs. I just know my colleagues in the Blogs will burn me for this one!

Dani Rodrik also penned another Post which Everyone should read. I would first comment that the Conflict discussed is a ‘Tempest in a Teapot’, only important in the arena of collegiate faculty representation. I belong to the Second School and believe that Free Trade and Free Markets are not the source of success. No nation which arose to high development status has acquired their status from Free Markets or Free Trade. History records that the most primary organs of development were the creation of enlightened Oligarchies for Capital concentration. I say ‘enlightened’ because All were quick to innovate, and mostly steal, new technologies from elsewhere in the World. It is why I believe Patent and Copyright protection will always be a futile effort, and why I believe an intelligent, universal system of national Tariffs produces more Gains than Losses in economic growth. Boy, am I heterodox today! lgl

Thursday, October 04, 2007

School Days-School Days. . .

I gave Daron Acemoglu the respect today of reading the Table of Contents to his Work in progress, Introduction to Modern Economic Growth. Now you, he, and I realize I should read the entirety of it; only I know the relative probability of that occurrence, the book reminding me of my undergraduate Calculus text. Still, the Six pages of the Table of Contents introduces a wealth of information and Models, some of which the energetic author might have had some difficulty in establishing integrating relationship betwixt them. I hope Daron has planned at least a 3-Semester program for its use as a Text. I will leave it to my Readers to decide how much of the material is necessary for their own achievement.

Dani Rodrik takes on Austan Goolsbee for sloppy reasoning about the effect of globalization on Income. Dani is correct about the Margin call, but I find greater error in Austan’s reasoning. Goolsbee suggests 60-70% of the domestic of the economy faces no international competition. He discusses basically filled Labor categories, and ignores the downsizing of the Manufacturing sector, which is the traditional labor-intensive sector employing unfit Candidates for the aforementioned labor categories under press of full employment in these sectors. Goolsbee doesn’t understand that Living Standards cannot rise significantly without expansion of these labor-intensive Trades.

George Will Op-Ed should be read by All, before considering the totality of Goolsbee’s position. My position states that vastly increased Education Funding stands as irrelevant under the compression of full employment in the labor sectors supplied by Education. Simple supply of Educational attainment to labor elements will not grant higher Incomes; One had to live through the labor markets of the late 1970s and early 1980s. Allowing Production advantage to flow Overseas simply to feed the higher Incomes in the fully-employed sectors will not advance the Living Standards of the total Labor market. lgl

Wednesday, October 03, 2007

Alternative Methodology

The new EPI Snapshot shows how median Wages have remained stagnant; 21 States suffering real Wage decline. Wage rates are a good Indicator, but should be seriously joined by two other Indexes which I do not see: a Commercial Cost per Unit Product Price Index, and a Profits minus financial obligations Index for State businesses. The three Indexes in conjunction could explain much of the interior functioning of business in the overall economy, and bring much greater evaluation skill to determination of Living Costs expansion. Where are the bright young economists We always hope for in the Graduate Departments?

Chris Dillow discusses the generation of tolerance in this Piece; One should check out the links in the Post. I personally have always hated the term ‘Networking’, but it provides the significance correlation between prosperity and tolerance. The former can most often not be accomplished without an expansion of Contacts beyond the individual’s normal sphere of social friendships. The entire concept of Networking not only implies an expansion of individual communication for Profit, but a loss of social compulsion to aid oneself by confrontation. Being unable to intrude oneself into another’s physical space, it becomes vital not to antagonize Others when in need of their cooperative labor. One does not want to lose valuable Business contacts, because ‘I didn’t know you were Black, Brown, or Jewish." Still greater impediment comes from a Network reputation of being a Racist.

Alex Tabarrok brings Us a good composite of opinion about the superiority of medical systems between Canada and the United States. Shafrin reviews the NBER Paper tending to agree with the O’Neills, but I tend to agree slightly more with Robin Hanson that We could be equally served by vastly cutting U.S. medical Costs through limitation of Services. It is equally obvious that the heavy incidence of American disease can be accounted by the much greater obesity rates in the United States; this said by Someone himself obese. The excess of fat on Americans, both North and South, probably account for 40% of the illness of Americans. Truly good medical practice would activate Food laws to reduce obesity; Examples: Restaurants required to limit all Meal provision to less than 800 calories; all Candy must be packaged individually with less than 4 ounces per Serving, all Drinks sold must be limited to 6 ounce Containers, and All priced as a full Serving. Limitation of medical service use, aka Robin Hanson, would require completion of a 20-Question list by phone to obtain a Doctor or Clinic appointment, with qualified medical Operators suggesting alternate medical treatments from an accepted list of Drugs; Cost of the Call to be $10 to defray Expense of the system. lgl

Tuesday, October 02, 2007

Good Marks, Bad Marks

Embrapa (remember the name) is the World Research Leader in tropical agriculture, making Brazil a direct Competitor for the foremost Exporter of foodstuffs. The importance of the article is the essential fact that the United States has identical Soil-building opportunities to what Brazil has done. American Sewage today drains into Fresh Water systems as basic Pollutant, when Sewage is an excellent base for a Soil-building Starter. Research has already constructed working Test Plants which turn Sewage in a pellet-form of Fertilizer by mass production means. Railroads could start a Triangle trade of delivery of Coal, transfer of processed fertilizer to Soil-building sites in covered Coal dump cars, and then a shorter Deadhead to the Coal fields. The alternate form of Sewage disposal would increase actual Fresh Water supplies, and Research could find basic Water-fixation Plants for rebuilt Soil acreage. Actual Research Costs would probably cost less than one major-city Sewage system today. The Sewage Processing plants for fertilizer can be competitive with current methods, and the separate Projects would supply as many good Jobs at the military/industrial complex, but at only a fraction of the Cost. The United States must learn to Work again, if We intend to maintain Top Place.

Both Ford and Volkswagen both suffered from a drop in Sales, Ford worse than VW. Audi showed a Gain in Sales, though these were totally dependent upon the overall superiority of the vehicle. The Credit Crisis has obviously impacted the Auto industry, but I wonder if the Market is simply just saturated. Beginning Drivers cannot manage the high current Cost of new automobiles, while the Population is Ageing at the fastest rate ever; with the predictable decline in new Car Sales to the Elderly. The heyday of American Auto Sales may have been reached and passed. It might require study of Replacement rates in this Country; I wonder how Many are currently maintaining the Three-Year Replacement rate which the Industry has been touting for years.

Lynne Kiesling has a good Piece on the unintended consequences of the ethanol subsidies. It has somewhat drastically altered Food prices, and there has been an overproduction of ethanol, lowering the price of it; putting the ethanol investment capitalization in danger. I don’t know if I like the sweeter tomato, in fear that Heinz will lose that special tang which is its real Trademark. The Whole of Today’s argument may be that Government does poorly in both Monetary policy and Subsidies, average in Funding projects, and excellent only in Taxation; Republicans and conservative Economists long abandoning the only arena where Government can show any success. lgl

Monday, October 01, 2007

There Sould be something to watch on TV

I spent a boring TV evening previewing this Paper (pdf) by Jim Cao and Gerhard Illing. Their basic point is that private banks will engage in less liquid investments, when and if they acquire some form of guarantee (implicit or explicit) that central banks will maintain liquidity; the Process inciting greater illiquidity during Times of heavy illiquidity. They obviously do not state what I believe: private banks adopt high Profits profiles under such guarantees, and they themselves incite the stressed high illiquidity risk. It is indication of private bank desires that central banks face repetitively echoed demands for reductions in the intra-bank funds rate to sustain their high Profits Investment posture. This pattern of Funds distribution ensures no idle Bank deposits.

The folly of this posture presumes no needed aggregation of Capital to propel the economy, as Bank Deposits do not expand rapidly; the entire Banking system relying upon imaginary Reserves existent in a central bank. It is at this point where central bank lending policy devolves into a simple expansion of Inflation. There has been no real aggregation of Capital in the form of stored Bank reserves. Central banks, past the point of stored Bank Reserves, might as well be printing Money. Raising of central bank lending rates will provide no impediment to Inflation as long as stored Bank Reserves do not expand. Here is where We find Ourselves today!

I am no Expert in This, or any other area, but I know that when a House is on fire, you don’t douse it with Gasoline. I believe the Banking sector is a special sector, and exterior Rules should be implemented. My Favorite is a legal inhibition of any form of Bonuses being paid for subscription of loans, the logical replacement being Bonuses based only upon subscripted loans which meet their Contractual obligations yearly. This turns the subscription of loans unprofitable if they are unstable. Another idea would be to insist that Twenty percent of all growth of Deposits of any type must be held as Reserves for one calender year past deposit. Some might not understand these Suggestions, but both are directed to the construction of stored Reserves. lgl

More Prisoner Dilemmas

Crocker, Petraeus, and Bush would frighten, if their Message was not so garbled. This toning down of Violence in Iraq would lead to 768 American Deaths per year if it continued, which it won’t; or 1024 more Americans killed before Bush leaves Office. The drop of Violence among and to Iraqis is supposed to be dramatic, with a yearly Average of 23568 of Iraqi Deaths by Violence. It is alright, though, as Iraqi Defense forces should be able to kill about 16060 Insurgents per year, if they can maintain their current Average; here is a slight problem, as the monthly Average would indicate that they will lose about 1860 Soldiers per year, with an indicative additional 3000 Wounded per year. Luckily, American military forces will be there, at least until George W. Bush leaves Office, to act as Replacements to the Iraqi Casualties. It is clear that We have turned the Corner, and Peace reigns in Iraq.

Kraft could possibly save itself a great deal of their Advertizing Budget of $1.4 billion per year (sounds a little fantastic, doesn’t it) by pre-preparation of Grilled Cheese Sandwiches (Units hard to construct and Toast) which are Microwave ready. Many Fast-Food restaurants would like the addition of Grilled Cheese Sandwiches to their Menu, if the pre-prepared Sandwiches had additional Garnishes supplied–like Mustard, Jalapenos, Horse Radish, etc.; supplied on Restaurant order. The End-Goal maybe a pre-prepared package of Grilled Cheese Sandwiches (up to 10 in number), which is competitive in Price with a Package of Hot Dogs and a Package of Buns. Devising fancy jingles, or snappy Time-Spots, will not do much for the famed Grilled Cheese Sandwich, as Most know what they taste like. Mothers, though, will appreciate a easy Fill of Lunch Boxes where most Schools supply Microwave facilities.

Export Orders dropped from 57 to 54.5 on the ISM scale from August to September, even though this still means moderate growth in the Sector. Economists estimated there would be Gain, what with the weakening U.S. Dollar. The Reason behind this is understandable: High-Value Goods, under flexing Currency evaluations, are best limited in Order magnitude; so that the Purchasing Agents can fully establish the resident Cost of the Product. America is the Prisoner of her own Product lines, where Purchase Orders are too expensive; mid-Contract negotiations of Price remain common, with eventual provision of Product (Time-line) has been dependent on those negotiations. Heavy Export orders cannot be expected until the Dollar stabilizes. lgl