The Unpleasantness

Government as business protection, as it normally operates. The whole issue is actually based upon the existence of Special Interests, who co-opt the fears of some segment of their fellow Citizens, finding some means to make a Profit from this terror. Some people, like myself, even go so far as to believe that around 60% of all Government expenditures are simply Rent-Seeking, which presents no real value except for the Special Interests involved. I once proposed a national act closing every Government office for one Week every 16 Weeks, and if no one noticed, the Period was to be extended to Two Weeks every four months. I could have cited as defense of the bill that the average Citizen claim for Government action requires almost 11 Weeks for approval, and no probable notice would have been taken. I could now propose a bill which would mandate nonpayment of 3% of any and all Government claims, based totally on Random number generation; the repetitive nature of Claim filings would generate only a minor decrease in Business Interests’ Profits and/or Citizen satisfaction, but at great Savings to the Government budget. No one agrees with my modern Accounting methods!

You know things are bad when ‘Hayseed’ theft (couldn’t help it, I just had to say it) hits the Associated Press. Farmers are transferring to Corn and Wheat because of high Prices, and Hay is heading to $200/ton before Winter. The ethanol subsidies has to be cut, if not canceled; the only question is When. American housewives are going to be dragged into this, as Meat prices will increase by $2/lb. by next Spring, if both Corn and Hay stay high in Price. Government subsidies are always bad, but can become disastrous when it places an industrial sector in competition with Feed and Food prices. Farmers and Industry thinks this is good business, but wait until 12 cents of every Dollar of Food price increase translates into higher Wage Demand.

What is wrong with Post? The Answer may be the Dollar loss of value against other Currencies which has not yet hit the Restock equation for American consumption. It seems so good, but how much of the Gain was Inflation, but hidden until the next Round of Product Pricing? So much of what enters American Products has already undergone high Price increases, or will be generated forward with the new Production models. I am not just talking a specific Series of Products, but an overall Factor Price increase of around 11%. Passed on without any Business intervention to forestall Consumer Sales reduction, this increase will lead to about 6% overall Product Price increases. lgl

Deep Deposit Carbon

This is a sound assessment of the integration of forestry sequestration into the climate model for reducing Carbon emissions, thanks to Tim Haab (be sure to read his Post for important element). My major comment states that forestry sequestration must engage major segments of the Populace, in a manner which is both economically and environmentally viable. Carbon sequestration has to be disbursed throughout the areas of heaviest Carbon emissions; it cannot be restricted only to underdeveloped countries and Tropical areas. Effective conversion must be constructed in a local base. Wind flows will alter in direction and speed with a Smokestack effect, creating adverse Weather conditions which are of higher turbulence; higher Storm surges, concentrations of Acid Rain, and expansion of Drought areas. Current models do not integrate such data into Climate models.

One may ask how We can engineer a uniform spread of Carbon sequestration. A most important venue would start with separating Carbon emissions into Deep Deposit v. Surface Carbon emissions. I prefer a Carbon Tax to Carbon Permits, but in either case, said taxation or Permit should only apply to Deep Deposit Carbon emissions. This Separation would establish a preference to Surface Carbon energy sourcing, and provide the Capitalization of Surface Carbon utilization for Energy. This will not be as difficult as Most think, as Wood Chipping practices are very widespread, and monitored (timed) Wood Chip furnaces can be designed for sufficient Temperatures for Heating and Energy production. The same effort could be exhibited for the burning of Sewage and Garbage Product.

Public involvement could be engendered by an allowance of Property taxes to be paid in 60lb. Bags of Wood Chips–at a monitor rate of say $6/bag. Local Governments could replace Deep Deposit Carbon emission for Heating and Energy for Surface Carbon emission. Local landowners would plant fallow lands to Trees and Bushes, while the 60lb. Bags of Wood Chips could be produced for about $4/bag. Lawn Products would reduce in consumption, pumped Water would reduce, Carbon sequestration would increase, and Deep Deposit Carbon emissions would reduce. Overall Temperatures over Urban areas would reduce, as would intense Smog and Greenhouse levels, and Wind pattern flows would normalize to greater degree. The Energy bill of Local Government could be reduced by a probable 60% of Heating Costs, and 20% of Energy Costs at a comparable rate to Deep Deposit Carbon pricing. lgl

Truth in Advocacy

The first Casualty of War has always been Truth (really original this morning, aren’t I). I will give the first Rule of Statistics: never use any Numbers which disagree with your position. One does not want to create any confusion in Those listening to you. I have enjoyed an excellent grounding in Statistics, and always use casual boundaries to express direction, such as ‘People are still being shot at in Iraq, and fairly frequently’. Pressed for Detail, I might reiterate that most of Iraq is slightly more dangerous than Central Park after Dark. One could also suggest that Iraq suffers from Serial Killers with an Incidence some 70,000% greater than the United States. Such general use of Statistics allows the Reader to understand the progression of events being studied.

Mark Perry and the FDIC provide serious help in understanding the Credit Crisis in the Country today. The greatest problem coming from the Credit Crunch may be that Bank Officers may not get the level of Bonuses to which they have become accustomed, and Bank liquidity may not inflate the Stock Market as a consequence. Hedge Funds are decidedly worried, as Investors wonder if they should pay the extreme Charges demanded from the Funds. I would not assert that the Crisis does not exist, but would suggest that Bankers are most concerned about covering their own ass, rather than worrying about the state of the economy. The greatest Point to remember about the Housing market is that House pricing may hold an average Price equal to what was found somewhere in the last five years.

The New Economist has expectations that Robert Reich should entertain real Solutions for the problems afflicting the current World economy. What is the real source of the Problems? There are too many People, consuming far too much, and in a manner which is extremely Resource-consumptive. Will Capitalism ever fix the Problem? No, but will Welfare or Government Regulation do any better job? The Answer is again No! I will suggest that it will require a fundamental failure with massive human suffering, to redirect human civilization to a sustainable economic platform. Do I sound excessively cruel? I could say that I hope the crippled World will crimp along for as long as possible; hopefully, until after my own demise. lgl

A Waste of My Free Time

JohnWhitehead sucked me into reading the latest EIA Report on Greenhouse Emissions (pdf); a facility which Instructors and bloggers are supposed to possess. I have to say I do not agree with the decline in Methane emissions, considering the melting of the tundra of the Alaskan shelf, the drought in the South (remember that the Report is for 2006), the forest burn patterns in the West and Florida, and the dried overall Groundcover since 2005. The same could be said for the CO2 emissions (natural causes). The N2O emissions increase seems heavy, as 9.9MMTCO2e from agricultural sources seems high, when there should be a consistent pattern, or drop, due to increased Fertilizer Costs. The included 2005 Carbon sequestration rate must be adjusted as well, due to forest fires and Drought; I would suggest about a 20% decline of the 2005 sequestration rates by subsequent environmental damage in 2006. It smells like a very loose Report to me.

I find some disbelief with the U.S. Greenhouse Gas Intensity Summary. Only the last Statement contains real relevance, which is indicative of Production transfers Overseas, rather than any industry adjustment to lower Emissions standards. Redirection to American Manufacturing would again place Us into the earlier ranges for Carbon Gas Intensity. The Greenhouse Gas Emissions Overview show that both Industrial and Transportation releases should be cut by 40% apiece, while Residential releases could be minimized to 20% of current levels. Transportation releases occur because of excessive Product transfers, and better Production practices could produce far less Emission release (moving the Emissions to a regenerated resource).

I will leave the rest of the Report to dedicated Students, as I am tired and in search of a cup of coffee. The report highlights a characteristic of recent Administrations, claiming victories on the environmental front, when there has only an alteration of economic pattern without intrinsic structural alteration for better Emission rates. The American Public will have to learn that the only method to fix anything is to change its operation. lgl

The New Production Lines

David Leonhardt points out a real problem, but is rather short on real Solutions. Identification of the Problem insists that it centered around the switch from traditional practices in almost all Sectors of the economy, this switch itself focused on technological, high-energy use of heavily-capitalized equipment for higher Production levels. Can the Trend be reversed, and would We want that Reversal even if We could accomplish it? The Answer to either question is a probable NO. The advantages of technological Production remain too great to be spiked by accessory problems.

We must learn to turn the disadvantages of technological Production around to Our advantage, retaining the current values of technology while eliminating Capital and Operating Costs from the equation. Some Rules of Thumb are valuable in this context: Smaller is cheaper than larger, micro-production units can maintain Production levels with lower Energy and Materials Costs; alternative Energy sources work far more successfully with micro-production units, there being far less Cost in the Collection processes of alternative Energy production; micro-production units employ higher levels of labor, this labor divided by Job design rather than the previous Production element fulfillment; and multiple Sourcing of Production materials supplies suppression of Material and Energy Costs, in conjunction with eliminating primary dependence on Material sources.

Research must assume the leadership role in transition to greater Productivity, but also an identical position in Job Creation. Government and Business need to fund the Research Costs. I still await a high-Tech small farm experiment where Size is limited to 40 acres, Energy source is underground electrical cables supplied with Energy from solar panels, watered by treated sewage pumped in collectively from neighboring communities and animal confinements at night, capital equipment limited only to the base needs–equipment to run on Set-pattern lines conforming to electrical line access, and powered by no larger than a 12-Horse electrical motor; all of such Equipment to function automatically without human supervision–only human maintenance and Sensor cut-outs, with the Equipment component-capable of being easily switched from Plot to Plot. I cannot wait to see a small Harvester (think Combine) totally powered by Solar, which can harvest 10 acres per day, leaving the Grain in end-bins for Collection purposes; the totality of Capital Equipment Cost for the average Plot coming to less than $100,000.

I have used Agriculture as a base example, but any Production enterprise can be converted to micro-production. Think of a Machine totally run by the Solar panels above it, which costs no more than five times the Cost of the Product which it produces, and which produces only one unit of Production per day. Seem Insane? Designed Buildings, Solar panels and Mirrors, stacked machinery, and alternative materials for Capital equipment could provide all the necessary Energy and Materials for Production; while eliminating Heating Costs, heavy Building construction to protect against Weather, with high levels of Job Creation in Machine Maintenance, Material supply, and Product Distribution. Think about it! lgl

Wandering through the forest

Here is one of those Cases where the judicial system is screwed either way it goes: one way, nuisance suits multiply without end; the other way, the actual viability of 401(k) style funds will be threatened because of a lack of institutional discipline. The real Answer may be passage of a new Law governing such structured investments, one I like to call the Three Plus Profits Rule. It is a simple thing, insisting the average gain on Accounts must exceed 3% per year, before the investment institution can declare a Profit, the intervening funds to be distributed between the Accounts evenly, to maximize growth of Accounts. This Rule does not say that Accounts must make a Profit yearly, but does insist that institutional employees and Stockholders cannot engage in Profits-sharing before such a gain for the Accounts is reached. Such a law nullifies Court commitment to a set of Suits which are unsatisfactory, and provides protection to Account-holders automatically; the IRS can insist upon the necessary documentation.

This Puppy will make people happy, but will play too long; the Fed should have closed the funds down within the year, I would have chosen December 27. The Fed is trying the wrong help for the Banks. It should have forced the Banks to carry the losses within this fiscal year. The attempt to average out the losses will only destabilize the financial markets for a much greater Period. The uncertainty introduced into the financial markets will impede economic growth far more, than the jolt therapy of registered losses on the Books. Next year will be a Repeat of this year, with Banks still in a race to discount losses on their balance sheets.

I agree with the supposition, but disagree with the rationale behind this Peak analysis. The U.S. economy will not weaken that much, the Dollar will gain renewed strength, and China will face more problems with Quality Control which will deter the American Consumer. China’s lost position, though, results from inability to bring more Power online because of Construction delays, clogged Transport networks which cannot transport both Coal and Finished Products, and increased material Costs in construction materials for Ports, which is almost in direct competition with Dam construction and City Skyscrapers’ construction. The averaged increase in Wholesale Costs of Chinese Products will lead American Purchasers to the more-normalized Cost structure presented by India and Latin America. I may not be right in this analysis, but the Chinese Government no longer has the power to prioritize the Production Schedule. lgl

As the World Churns

Oh my, the use of ‘black propaganda’ when Santa is trying to determine who is being naughty and nice. The EAEPC claims that the EAASM (read the article to get some idea of the ridiculous names) uses maligning claims about Drugs to protect Sales of patented Drugs. It is just wrong to assert that the EAASM would use Scare tactics to protect about $20-80 billion per year of Profits likely to be lost by spread manufacture of Drugs, all of which accrues to a half-dozen companies. Children should play nice, and not accuse each other of Wrongdoing. Besides, there is probably about $2-4 billion of legal fees necessary to prove such an allegation.

Chris Dillow outlines the policy which probably will not work. Extended Education will cost more, pay less, and exceeds the intellectual attainments of a massive share of the Labor force. Workers do not want to spend their most-productive years training for a Position in short supply, and One which may even be eliminated before completion of the necessary study. The whole element reminds of the mid-1980s, when Waiters with Ph.D’s were common. I remember the Graduate Student in Art who gave up Painting and Stipend teaching of Undergraduates to become a Plumber, as it pays the Bills; even selling a few Pieces for some Thousands could not compete with feeding a wife and two kids. I must say that he is a very successful Plumber today.

George W. Bush keeps trying to play Santa Claus for the U.S. Military, but this glossary of military terms shows he may has some distance to go. I personally think that Asymmetrical Threats will defeat the current Military Concept. The definition of Mission as stated by ILSM will be equally self-defeating, especially the outsourcing of architectural design for $10 million PX buildings before the War even starts. Network centric is the capacity for national leadership to screw up an Area Commander’s job, as well as they do their own. The modern military’s greatest Victories come within the halls of Congress, supported by Special Interests as long as the Military can supply high-Profits Contracts. lgl

Merry?? Christmas

John Whitehead attempts to express his apprehension on the occasion of the arrival of the Christmas Season, in his own enviable style. I hope he gets to Pilgrim’s Progress. My own intrinsic need for a Christmas tree might alter the Opportunity Cost Equation, as I have not put One up the last Two years; of course, my sister and brother-in-law altered my economic decisions by buying me a small, artificial tree–no change? Now I got to put the damned thing up! The Twelve Days of Christmas is also up over 3%–higher via the Internet, this saying something about the Core Inflation issue. Retail information says Sales down, but Customers up on Black Friday, only proving that damned fools will get up at 4 am to go Shopping; I won’t even do it after a decent lunch.

Here is another Grinch Stole Christmas, no matter which Side you are on the Question; I stealing the Grinch from Newmark’s Door. I once made the remark that the level of Taxes did not matter, once people became hungry, they would Work despite the Taxes on the practice–now, I am not so sure! Honest Business personnel become Thieves in the Night, when it comes to paying Taxes. Tax evasion is the leading crime in this Country by total volume of Commissions, the most common forms being self-payment in Cash, and filing of exorbitant Expenses; these two forms rapidly being challenged by No Filings at all. I could tell you the Tale of four Businesses being run by One Taxpayer, but Reporting only one Business, except no one likes a Tattletale on Christmas Eve.

Here is the Grinch who wants to have Christmas, placing much of the blame for the Credit Crunch on Greenspan; well, really not so much, as David Warsh tries to spread the blame with the traditional ‘Well, he was with me!’. The one thing which no one mentions about the ‘new-fangled Securities instruments’ is that they were designed to hide the degree of Risk involved, to aid in their Sale and dispersal of that Risk. The Designers actually did too great a Job, no one can put Humpty Dumpty back together again. All I Want for Christmas, Is my Two Front Teeth, preferably in Gold at the current Market value. lgl

Modern News Print

Joe Nocera objects to Cable going a la carte. He says it would be too expensive for the Consumer, as networks charge by total Consumer volume, rather than specific Consumer use. A group can buy any old Studio, run in Second-hand equipment, program nonsense, get a Cable company to bundle your station in, and suddenly you are one of the major networks. One of the channels in my bundle finally gave up the Ghost. Did they quit? Oh no, they simply went to total Paid Programing without any editorial at all, and rarely even change the Paid Programing; I think the Station is down to Tapes and a Duty Engineer. Still, I wonder at the national revenues generated by this stimulating network. I guess I am only saying that Cable bundling is crap, and the anti-corruption people should be looking at their own television sets; if there is no Kickback system at work, then Cable executives have been imitating Forrest Gump too well, or they have been watching re-runs of Dumb and Dumber too often.

Nelson Schwartz is trying to tell the Investor that success at Retail does not mean success as Stock Share value. Why? The Answer is simple: the Retail market has been saturated, and Stock issuances have destroyed the value of the Stock. It is all a question of Retail volume and Stock volume. Stock is issued in Good Times, and Retail volume must continue to match the volumes of the Good Times Retail, or the Stock is in the Toilet. One of the potential values coming from a Recession, if it comes, will be a mechanism to regulate issuance of Stock Options, Stock Grants, and Stock buyouts. The current system of doing Business is designed to limit previous Stockholders to the same level of Stock Dividends, without Stock divisions or rise in the Price of the basic Stock; simply so that the value of increased performance can go to the Executives who engineered the Windfall. The Trouble comes in the failure to build up intrinsic value in the over- issued Stock, and the tying of Retail volume to a treadmill simply to keep constant value: the Greyhound eventually runs itself to death.

This article by Robert Schiller bothers me, though not because Robert is a bad economist, even Elizabeth Warren’s advocacy of a Financial Products Safety Commission has much merit. I do not like the Schiller/Weiss proposed blockage of market forces determining home values by venue of insurance; which would fail at any rate, under a sharp decline of housing market values. His praise of Fannie Mae/Freddie Mac lacks of real sincerity, as both institutions have shown all the foibles of private lenders, simply maximized by Government intervention. I am afraid that the Schiller advocacy for Business as Usual is the wrong sentiment, as that is what has brought Us to this Point in the first place. lgl

Efficiency Value of Current Leadership

The regional leadership will not enforce national policy in China when it comes to the Environment, so what else is New? Regional leaders have about as much Power to change national policy, as does national leadership in the EU possesses to alter policy; knowing the national leadership in China will not replace them, until they fail to meet the Production priorities of other regional leaders. This Country should not feel complacent; the American Electorate has consistently shown an unwillingness to replace their own leadership, and political leadership’s response to Special Interests is as great as has ever been shown, with almost no response to a national conscience. The only difference is American leadership only does that which will rob, rape, or corrupt the Electorate, while Chinese leadership will engage in practices which will eventually kill Us all.

Here is an attempt by Republicans to center the coming campaign upon reforming Social Security, a situation which is not vital to either the Electorate, or national interests. Social Security needs to be fixed, but We have a 20-year Window in which to fix it. Medical practice must be reformed in the near term, else it will fail within the next 8 years; this means construction of a Means to control Prices in the industry, Millions will have to opt out of Medicare within this Period simply because they cannot even afford the partial Payments of the medical expense. Switching Everyone to Medicaid as well as Medicare will not fix the Problem; We cannot ask the States to fund the largest, and most expensive, industry in the Economy. This paragraph also has something to do with the preceding one, with Voters being unwilling to punish corrupt leadership.

This gives Us an article of Wistful Thinking, where the Money managers hope to avoid claims of a Recession through practices to devalue the Dollar, and thereby lower the Standard of Living of average Americans; rather than endure the embarrassment of admission of Recession. This is again throwing the burden of maintaining the economy onto the family households, a form of hidden taxation aimed at destroying their viability. The Money managers do not understand that the wreckage of this practice will be far more violent and destructive to the American economy, than would be any Recession. I fully expect universal Wage Demands of in excess of 15% within a year, and future attempts at preventing Inflation will fail in the face of the Demand pressures allowed to have been built up. So much for a qualified leadership with foresight. lgl

Oil, Retail, and the Dollar

This article makes me turn philosophical about the entire situation. I am going to go way out on a limb, and say that I don’t believe Oil will hit $100/barrel, Now or any time in the near future. This runs against the greatest majority of Thought on the matter, but there are real reasons I could base my suspicion upon: early Christmas Shopping numbers could easily be very low, Air traffic snarls and high Gas prices could reduce Christmas travel by a potential 8-10 million, any Recessionary conditions will generate new Jobs closer to the Home environment, and foreign consumption of Oil will decrease equally or faster than American domestic consumption. This is followed by the fact that any new Congress will pass a Carbon tax of some type; economic studies have indicated such taxation impacts the Supplier more than the Consumer, and with a Carbon tax, higher Prices can translate into actual lower Profits. The impulse towards higher Prices has been expended in this market cycle, and the future trend is Downward.

Here is another example of why it might be a bad Christmas season for both Shoppers and Business. Advertising areas are too large, Discounted Product are too few in numbers and with insufficient supply of Product, and Consumer resistence to paying normal Market margins. Consumers do not have the funds to adopt normal Purchase patterns, and Businesses lag in conversion to a large-volume, low Profit margin environment. The later event is especially sad, as a large volume sell-off would have secured much relief throughout the Production chain.

Here is access to Economists’ views on the weakening Dollar for all those dedicated Readers, who are not watching the Nebr./Colorado game like myself as I write. I agree with Tyler, by the way, on the undervalued Dollar. The major underlying component for my belief comes from the still necessary American markets for foreign Manufacturers; a weaker Dollar generates insufficient Profits for them, and alternate market Sales have not yet been devised. I think I will leave it there. lgl

Thankful??

Here is an interesting Read provided by the WSJ Blog. Study the graph provided, which gives the actual breakdown on Incomes based upon purchasing power parity. It would be nice if there was a similar graph describing PPP outcomes divided between American States. It could present a good overview of the distribution in the United States, and highlight the importance of Local and State regulation of Business in determining overall success. Concentration on the elements generating success, and distribution of capital to develop regional advantages, could be far more effective than crowding in high-Profit arenas.

Readers may want to read about the Liberty Dollar. It is interesting, but boring. Alternate Currencies will always fail if their value is listed on the Coin in other Currencies. Money is the prime market Product, which cannot attain any value at all outside of Trade. Precious metal bases can achieve some value, though only with the defacement of the Coin. Markets and Currency must intertwine, else both the Currency and Market are ruined.

Here is a list of things to be Thankful for this holiday. Six of the things listed are not what I would really be Thankful for, but to Each his own. 1,2, and 3 hold real resident dangers; 5 does not present a real evaluation of purchasing power parity, 6 could mean excessive economic Heat, and 8 seems great only to Those who do not fear the erosion of Survivalist traits in the various economies. Alan Greenspan might be like Old Soldiers who should fade; still, antagonism is not something to be Thankful. lgl

Social Security Revisited

Paul Krugman first wrote this article saying that Social Security was not one of the pressing problems. Greg Mankiw rebuts Paul claim, saying that all fears came from dispassionate analysis by some of the best policy economists. Brad Delong and Mark Thoma both criticize the attitude expressed by Greg Mankiw, but the best rebuttal must be given to Dean Baker, who attempts to deflate the hysteria. The whole Issue might be simplified by first stating that Conservative desire is concentrated in minimizing all potential taxation, refusal to repay the Social Security Trust Fund by venue of discarding Social Security Benefits, and forcing a dismantlement of the basic Social Security system.

Economists would do far better to simply answer certain basic Questions about Social Security. I will list a number of Questions, whose Answers could aid the Argument:

What percentage of Benefits would have to be foregone, to maintain the current rate of Taxation without the Social Security Fund falling into deficit?

What percentage of Tax increase must be mandated to maintain the level of Social Security Benefits without the Fund falling into deficit? What would be the added actual taxes per $100,000 of Income per year?

How much longer could the Fund remain in surplus, if Medicare was broken off from Social Security, and Medicare funded by a proper Health Care law?

What increase of Fund security would come from cutting the Federal ability to spend the surplus from the Social Security Fund, and dictating that the Federal Reserve first lend Social Security receipts in intra-bank loans, before using their own reserves?

How much longer could the Social Security Fund surplus survive, if the system was switched to a uniform monthly Benefit?

Dozens of Questions could be posed, but these above could provide sufficient detailed information on which to base a policy decision. Study of these Questions could even suggest Means to better Social Security performance. Readers have to understand Politicians, Economists, and Ideologues hate to be pinned down for actual specific Answers, hiding both their Sins and foibles within confusion. lgl

Trade, Jobs, and the Farm Bills

Dani Rodrik led me to this Paper(pdf), and Dani states it is the strongest evidence to date he has found that ‘new products play in shaping the pattern of export composition during the development process’. It does provide that defense, but I believe that the Paper tells Us a little more than just that. Export facility (capital infrastructure) will probably be found to come mainly from the ‘within’ component of traditional exports; therefore, the change in ‘between’ trade expansion past a PPP$14,000 can be accounted in the completion of the capital infrastructure formation in normal economic patterns. The second element of importance is that a concentration of exports occurs around PPP$20000-22000. I believe that it is around this Point that normal economies develop the technology and trained labor to eliminate dependence upon foreign sources in all common-practice industrial sectors--redirecting their Trade commitment. It is my belief Economists perhaps confuse themselves with unimportant issues in the trade development evaluation.

Mark Perry makes a very valid Point, there were far more Jobs generated in other sectors to replace those Jobs lost in the Manufacturing sector since 1997. There was actually about a 14 million increase in Jobs, two-thirds of which actually paid more than the eliminated Manufacturing Jobs. The Rub, though, comes in the form of two Questions: one, did the increase in Jobs keep pace with the increase in the size of the Labor force; and two, did the new Jobs maintain Wage increases to keep even with the Inflation rate? The Answers to those Questions bring a little depression (Could this be called the Little Depression?) where real Personal Purchasing Power has been declining, but hidden by a ballooning of personal debt. Those whose Income is ahead of the curve of Inflation like to claim Times are great, but about 83% of the Labor force cannot enjoy that claim.

I rarely agree with Don Boudreaux, but in this Case I must agree. It is not that I believe that farmers and ranchers should not have some form of federal underwriting; it is only that every version of farm support fueled by lobbying interests is ridiculous. I have long been an advocate of farm subsidies based upon the Cost structure, not on potential Yield capacity. This would insure that no Subsidies would go to Anyone not engaged in Agriculture, such Subsidies would be dependent on actual verified Costs, and perhaps exclude all Payments to any Agricultural enterprise which made more than a 10% Profit. Such a Program could be limited to less than $50 billion in good years, and less than $100 billion in bad years. But what do I know, except that I grew up on a farm. lgl

Oil, and the state of American mentality

James Hamilton presents a very balanced look at the World Oil Supply, though he doesn’t enter into speculation on methods to rejuvenate older fields. It is all a question of Pocket pressures, where Oil production in new fields is added by the higher pressures of the original state, in the extraction of the Oil. Some Oil companies are experimenting with injecting Greenhouse gases deeper in the fields than the Oil-producing wells. Other companies are attempting to pump water at depth in the fields to maintain the pressure. The Greenhouse gasses provide an added chemical reaction to separate the Oil from the holding sands and clay. The problem with the later is the Cost of Sequestration of the Greenhouse gasses, which actually does very little to improve the environment, considering the released gasses present in the Oil itself. My Solution would be to pump raw sewage to the bottom of the Oil fields, a process which would provide the needed chemical reaction, bury affluent whose degeneration releases great amounts of methane gas–a far worse Greenhouse gas, and which would be far cheaper to obtain. It has a much greater attraction, in that it would produce a larger interjection of pressure on the Oil, which would increase over time through the degeneration process.

Here is a Post which almost All will actually find hard to answer. Are the allegations true? Most Readers would hopefully claim not, but all hold the glow of truth; meaning their charge will be hard to bury. The greatest share of Americans are disenfranchised, recognizing their leadership have not been working in their own interest for years. They have little association with Immigration outside the economic arena, and the majority of small Businesses are still mainly employing Workers who they watched grow up. They watch their Property taxes go up to fund Education for Immigrants, as their children have cultural conflicts with Immigrant youth. They endure Coffee and Lunch Breaks where English is a foreign language in their own lunch room. They go to a Walmart or Pizza Hut, and Spanish rings in their ears. The worst Insult comes when they watch their own Incomes stagnate, while illegal Immigrants fill Showroom floors looking at vehicles which they themselves cannot afford. Americans wonder where the promise of America has gone.

Tim Haab wonders why Walmart even bothers to be Green. He can identify with Walmart’s desire to make Money, but has trouble with Kant’s moral obligations. He should not worry, because Many before him have struggled with Kant’s offer of a perfect world, by venue of the pursuit of a pure heart. Walmart may do injury, or perhaps aid, by their desire for the wealth in the pockets of Those feeling guilty about the rape of the Earth. Neither Case will incite irreversible damage, either to the altruistic, or to the immortal Kant. It will make Walmart serious money, else it will be discarded. lgl

Medical Accountability

Cynthia Fitzgerald faced the question of whether to be a Whistle-blower, and answered in the affirmative. The only Change over the years has been that such practices have even invaded her home State of Nebraska since her move to Texas. It is indeed Common Practice today, and even extends to the level of Practitioners; Doctors insisting on Lab trials which they know are valueless, and insisting on Brand-Name proscriptions though they are aware that other Drugs are more efficient and less-Costly. Will Novation be found guilty? Of course! Federal prosecutors will not take on a Case they cannot win; it is again a Prestige and Money-making thing. Will Novation discontinue the practices–then, Now, or in the Future? No! Everyone will simply consider it the Cost of doing business, and pass the Expense onto the Patients. Isn’t there something which can be done?

There are Options, but can Patients get Congress to resist the extremely powerful health lobby? The probable best enactment which Congress could pass would be a limitation upon Proscription Costs ( a legally-mandated Drug Benefit for all Patients), past which the Doctors themselves must pay for all Drug Costs utilized out of their personal charges to the Patient. Patients could Shop around for Cost-effective Doctors. Here is the Rub: Say that the Drug Benefit is set at a maximum of $2500 per year. Within a relatively Short Period, all Patients would be paying $2500 per year for Drugs; Drug companies soon realizing the Value of Kickbacks to Doctors. Malfeasance will continue as long as leeway is allowed.

A more effective Option would be making the Doctors, Clinics, and Hospitals defend their Medical Expense practices–sort of like having an Income Tax audit. The difference would be that all Three would have a mandatory Audit every 3-5 years. The Auditors would be a Commission consisting of equal numbers of Doctors and Medical Economists. Fines would be very simple, the crime being excess over-charging: 15% of all disputed charges. The Commission would also be entailed to periodically publish an Overview Manual listing the best overview discovery of means to save on Medical Costs in Treatment. This Manual would become mandatory practice withing 3 years of publication. Any added Cost of Paperwork would be paid with a mandatory Sales tax on all medical Drugs, medical equipment, and services. The entire purpose, here, would be to criminalize bad medical practice, in a manner which does not punish individual action, but records and punishes overall poor performance. lgl

China as Trading Partner

Many are the comments on the Chinese Trade surplus, this article more reflective than the Norm. China is downplaying its Trade surplus, while developing alternate Trading partners with Third World countries. Study of these Relationships will find China attempting to replace Western technology in the Development policies of these Third World countries, desiring to become the principle Technology supplier for them. Their goal is to get the Western industrialized nations to capitalize this transition, and they have been fairly successful in this endeavor. They hope to utilize the U.S. Debt held by Chinese to counteract any counter-cyclical effort by the industrialized nations to forestall this dominance. Readers may do well to remember that the Chinese have always led the World in negotiating bad faith Agreements, which there was never even any attempt to live up to the terms of the Agreements.

The nature of Chinese politics stands as the major culprit behind this Stance, as it has since the origins of China. China has always been ruled by a Warlord style of Provincial Chief, who has almost unlimited power within his fiefdom, setting and interpreting the laws, but responsible for meeting the goals set by the central throne; this consisting of the entire coalition of Provincial chiefs. All are judged by a very ruthless All, and replaced if there is any failure of Group desires. Provincial chiefs have absolutely no impulse to meet any legal standards–especially legalities established by foreign powers. Laws against intellectual piracy will never be enforced, as it introduces an added Cost as well as slowing the Production function; making it difficult to meet the goals of the congregated Provincial chiefs. Coal is cheap and abundant, while Pollution abatement is extremely expensive and Time-consuming; again making it difficult to meet the national demands of the Provincial chiefs. Product Quality means nothing to Provincial chiefs, unless the Product is designed to be distributed within their own Province. Uniform Business law impedes the control of Provincial chiefs, as well as curtailing the impost of desired levies to defray Provincial expenses. American Business have always believed there was a fortune to be made in China; the problem remains that the Provincial chiefs will never allow such a fortune to leave their own particular Province, let alone China.

One must understand these Provincial chiefs are quite unabashed in their pursuit of their own aims, to the point of arresting foreigners until they have squeezed the Profitability from them of their Chinese Production operations. Foreign Business will still be protesting previous ill-treatment, when they are hit by further discriminatory action from the Provincial chiefs. Chinese businessmen, under the protection of Provincial chiefs, will run up huge debts to Westerners, and claim Bankruptcy under hard pressure; never ceasing their Purchases and extension of financial liabilities to Western suppliers of Capital. Foreigners will file lawsuits, which will get lost in the Chinese courts by order of the Province chiefs; a situation which will either be denied by the national government, or by promising corrective action which is never pursued. What every Westerner needs to understand is that what goes to China, stays in China; it is a Tradition older than Capitalism itself. lgl

Different Attitude

I tried reading the CBO’s Economic Forecasting Record: 2007 Update (pdf), at least, until I went to sleep at my desk. Menzie Chinn advises his Readers to pay attention to pages 11 and 12; I would advise simply to pursue the pages 40 and 42. The later pages are far easier to compare as to the validity of CBO and Administration Forecasts. What I like most about such Papers is the proven theorem that Numbers can confuse as well as highlight, and only firm grounding in the basics of Economics can save Anyone from intrinsic error.

E.J. Dionne presents an incisive argument for placing the Iraq/Afghanistan Wars in context with the rest of the Federal Budget. Several Questions should be asked about the Wars, which no one asks. What is the exact value of Our intervention in Iraq; what are the real consequences of chaos in Iraq to Our national interests. The Answer to that One is not much; in fact, pulling out unilaterally would alter the nature of Geopolitical demographics, with Mideast concentration on securing a Regional conflict, rather than resisting the United States or elimination of Israel. Are We really going to advance the cause of Democracy in Iraq, Afghanistan, or anywhere else in the Mideast? The Answer is No. This Region has about 4000 years of history, with Democracy never but a pale, unworkable Choice; always failing soon after introduction. The fact remains that wastage of American resources in the Region will never overcome a religious and cultural bias against the United States.

The correct policy for all of the industrialized world, not simply the United States, would be to drive home to the Mideast the real economic Cost of the provision of Goods and Services, without the West running scared from the loss of Oil supply. This would again call for a effective Tariff system, which almost all Economists rant against. Western Economists cannot endure the thought of discriminatory tariffs against the Underprivileged, simply because they are a bunch of Terrorist-sponsoring totalitarian Governments who happen to treat their own people as badly as their Terrorists treat Us. lgl

Fairness in Economics

John Whitehead paraphrases this WSJ article which discusses the Cap-n-Trade, and in doing so explains the inferiority of the methodology when compared with the Carbon Tax. Caps, first of all, can be manipulated by Congressional action, and the Energy industry and Business possess the only lobby coalitions capable of affecting Congress effectively; this means that the Caps will never hold. Probably a great number of Economists, and most certainly the CBO, will have long and involved equations which will prove that Consumers will pay about 88% of a Carbon Tax by higher Prices with the introduction of the Cap-n-Trade provisions, even if the Caps are given away for free. The Energy industry, on the other hand, will get out of paying the Carbon tax, and will even gain from the Transactions which place the full blunt of the Cost on the Consumers and Government–if the Permits are free. Cap-n-Trade is basically only a Corporate Tax Break, injureous the Consumers, and does nothing to alter the Pollution problem.

Do Women know something We don’t? Caroline Baum certainly thinks so, though she doesn’t come straight out and Say it. The trouble is that I think she is right. The sensible Proof of the assertion is to check current News articles to following Events, to see how the Predictions co-aligned with resulting Reality per Quarter over the last 25 years, or 100 Quarters. I will not say that the Women would win, as I have not did the Survey, but I will take small Side-Bets. Men, even the most perceptive, tend to ignore unsavory signs which conflict with their desires, while Women are Achievement-oriented, and place Price frames on their Goals which will match final needs.

Mark Thoma leads Us to this Paper which tries to put a Price on distributive justice (fancy term for redistribution efforts) while they classify three Types of Distribution: Need, Equality, or Equity. This segregation is excellent for their Study, but highly irrelevant in the Real World. No one needs more than a Welfare recipient receives, but tell that to the greatest majority of People. 80% of People could not manipulate the funds adequately to produce a Surviving Economy, if funds were distributed equally. Equity possession can be either fair or unfair. Fair Equity would insist that Equity holders have no higher Tax exemptions than Average Income Earners, after which Equity holders would pay the full nominal Tax rates as real tax. Fair Equity would state Equity holders could not pass onto heirs more untaxed Equity, than that which is passed by the Average Death amount. Fair Equity would insist that Capital Gains be taxed by the same Progressive rates as Income tax. Notice that Fair Equity does not prohibit any current practice of Equity exercise, it simply insists that Equity pays in the same magnitude as Income Earners of Taxes designed to restrict individual division of their Earnings. Does this sound excessively altruistic? lgl

Doing Things Wrong???

Some of my people may be somewhat angry for my yesterday’s advocation of buying JC Penney stock as a hedge against Inflation. It first expresses how reliable I am as a Stock Analyst, and second, I think the heavy Players are wrong and Investors should buy counter-cyclical to the Market. I still think that Penney Stock were better $5 per share for the year, which is better than 10 percent at current Market price. It does highlight the fact that I should not be treated as a Guru capable of solving Anyone’s problems, including my own.

It is sad to learn that I owe myself $10 million because of Smoking, especially as I spent so much to do it in the first place. The Paper states the Tobacco Tax should be increased by 2675%, a minor effect of making it more expensive than Driving a vehicle at current Prices. Viscusi and Hersch, to get these Numbers, had to ignore every other source of illness. They might need an additional Course in Counterweight theory. I contend that Petrol fumes comprise an equal danger to that of Smoking, and don’t get me started on Food Additives. I’ll finish with the Statement that the Kids have lost sight of the term: Natural Causes.

Cactus at Angry Bear found this article somewhat disturbing as well he might, though I knew that something of like order was in the Works, due primarily to the accumulation of Debt ratios since 2000, and since 1990. The Cost of Consumption has been increasing for a long time, defined by the degree of Debt raised–holding Wages around a Inflation-related increase level. The Effect, if found to be true, indicates that the Consumption-Now philosophy in America, propelled by American Advertising, not only artificially raised Consumption but generated the excess use of Resources. This concentration on Retail Sales, rather than on infrastructure development of Private Sector Manufacturing, will leave Us poorer. lgl