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Economics

Buck Collecting

Debt at the government level has become the accumulated losses for a society that refuses to confront its problems.

Quoted from: Commentor “Roundtine” at Vox Popoli

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Capitalists Cross Final Frontier

The Enterprise, from Star Trek, was a government vessel. In the 1960s it would have been fantasy to think a privately-owned company could boldly go where no man had gone before.

Fifty years later, it isn’t a fantasy. I’m acquainted with Virgin Galactic. But that’s more an vertically-oriented amusement park ride than a serious industry. Enter SpaceX:

SpaceX was founded in June 2002 by PayPal co-founder Elon Musk who had invested US$100 million of his own money by March 2006. On August 4, 2008, SpaceX accepted a further US$20 million investment from the Founders Fund.

SpaceX has nearly doubled in size every year since it was founded in 2002. It grew from 160 employees in November 2005 to more than 500 by July 2008, to over 1100 in 2010.

Drill, Barry, Drill!

Motor fuel prices—gasoline, to the ordinary folk—have risen to a headline-making level. Many people who mock those with doubts about the current President’s birth status are willing believers in some shadowy conspiracy by oil speculators. Scapegoating speculators is an indication of ignorance.

The short version is that speculation may be able to rise prices for a short time. But it cannot keep prices up. That’s because the method speculators use is futures contracts, which are paper agreements to deliver some physical commodity on a given date at a given price.

Speculators can’t take physical delivery. Even if they have the money, there’s nowhere to put the oil. Our storage tanks are full. Which is a product of past speculation; people bought oil and held it thinking the price would rise. It did, and that led to more oil being delivered than was consumed.

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Barrels per Ounce

Gold is trading at record-high prices, above $1500 per ounce. Oil is trading around $110 per barrel ($2.60 gallon, to put it in terms similar to retail gasoline).

The politicians and pundits and current President have opinions and policy proposals regarding the price of oil. The touts and investment gurus are using the record gold price as reason to suggest buying gold. Buy high, sell higher!

Nobody outside the trading and investing universe seems to realize that the prices of gold and oil are relative. Not to each other, directly. But they’re both priced in terms of dollars, so the trading prices of those commodities are a reflection on the value of the dollar itself.

Oil and gold are fetching high prices due to not just the supply and demand of oil and gold, but also due to the supply and demand for U.S dollars.

Barack the Selfish

Steven Landsberg comments on the current President’s tax return:

Now we learn that on an income of $1.7 million, the Obamas paid $450,773 in taxes, taking full advantage of the Bush tax cuts. I think it is fair to ask: If the President believes that people like him ought to be paying more, then why didn’t he pay more? There is absolutely no rule against sending in more money than you owe.

Some voice on lefty radio said that such voluntary payments wouldn’t work because the IRS isn’t set up to take in a mess of checks. Non-stop comedy on that end of the dial, I tell you.

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Tax Day 2011

It’s Tax Day. Both ends of my radio dial can talk about little else. But I didn’t hear them explain why it was moved back from April 15th. Tax Day was postponed because a District of Columbia holiday (Emancipation Day) fell on the Fifteenth this year.

It’s interesting to me that today is also Passover, but the Jews do not get any official holidays. Even after decades of multiculturalism and diversity worship. Anyhoo…

If I could make only one point about taxes, it would be this:

Every nickel a government spends is a tax.

The spending may be a nickel that was taxed away last year and deducted from the government treasury. Or it may be a nickel borrowed from the private economy which will need to be taxed away at some time in the future to settle the debt.

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Minneapolis Riverfront in the Days of Disco

The now-demolished Great Northern Depot in downtown Minneapolis could inspire many posts on railroads, how changes in transportation technology changed the role of railroads, and how that allowed planners to re-purpose land at the core of cities, specifically Minneapolis, since this depot stood at the gateway to Northeast Minneapolis. Those changes were driven by economics and politics.

But I’m not ready to launch into any of those. I just happened across an archive of photos of the Great Northern Depot from the 1970s. It was one of those times where I was following the intertracks without a destination in mind, and found a treasure. For railfans and history buffs, at least.

Mainstream preservationists and historians—if that’s not an oxymoron—seem mostly interested in façades. I’m more fascinated to understand how the buildings worked.

1978 view beside Post Office looking upriver toward GN Depot

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Women Getting Even

Today is Equal Pay Day. Or at least a convenient approximation so lefties can feel righteous without making any meaningful sacrifice.

This date symbolizes how far into 2011 women must work to earn what men earned in 2010.

Equal Pay Day was originated by the National Committee on Pay Equity (NCPE) in 1996 as a public awareness event to illustrate the gap between men's and women's wages.

…NCPE leadership decided years ago to select a Tuesday in April as Equal Pay Day. (Tuesday was selected to represent how far into the work week women must work to earn what men earned the previous week.) The date also is selected to avoid avoid religious holidays and other significant events.

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It’s Not Just Minneapolis

A decade or two of the New Urbanist vision has led to some shiny and popular developments. But on the whole, urbanist claims about walkable villages being what the market demands are not supported by the facts.

Take Gotham City:

Some of the best evidence that the tide has not turned against dispersion and suburbanization comes from an unlikely source:  New York’s 2010 census results. If dense urbanism works anywhere in America, it does within this greatest of US traditional urban areas.


In all, this 23 county metropolitan area has the nation’s largest population and actually extended its margin over second place Los Angeles, which has been converted from a growth leader to a laggard giant growing slower than most Midwestern metropolitan areas. New York added 574,000 residents, while Los Angeles added 473,000.


If you had read the New York Times and other Manhattan-based media over the last decade you would have assumed the suburbs were in decline and cities ascendant, particularly in the New York area.

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Minneapolis Planning Fail

I used to be one of those urban snobs who would rant about the god-forsaken suburbs. I could go on and on about treeless cookie-cutter tracts of sterile garage doors hiding soulless monotony that passed for neighborhoods. Now I am wiser.

The suburbs have advantages, and the form of development is a minor factor in quality of life. I still prefer the city, but I am not so arrogant about it. Planners and the electeds who hire them, however, are still filled with hubris.

For the decade-plus I have been involved in neighborhood activism, at the grassroots of urban planning efforts, I have seen millions poured into subsidizing development in Minneapolis. We’ve turned abandoned downtown railyards into residential neighborhoods, home to tens of thousands. We built a light rail line to connect the Minneapolis core to the other major regional amenities.

It’s Never Too Late to be Irrelevant

Last night, local public television aired an episode of what they think is relevant and even-handed science programming. It was really poltical propaganda and disaster porn for comfortable lefties:

Featuring environmental visionary Lester Brown, “Plan B: Mobilizing To Save Civilization” delivers a clear and unflinching message – either confront the realities of climate change or suffer the consequences of lost civilizations and failed political states.

What makes Plan B significant and timely is that it provides audiences with hopeful solutions — a road map that will help eradicate poverty, stabilize population, stabilize climate, and protect and restore the earth’s forests, soils and fisheries. It includes ways of protecting and restoring soils, forests, rangelands, and oceanic fisheries, plus conserving the earth’s biological diversity. It also features case studies that clearly show signs of a new energy economy emerging.

They’re still harping on global warming? And the short version of those solutions was, “Invest heavily in rainbows and unicorns!” Forced spending does not create an “energy economy”, it creates a rent-seeking subsidy economy. There’s no accounting among these types for what people value (by spending their own money).

Dilbert cartoon mocking green energy.

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Godzilla in Pinstripes

The headlines appear obsessed with panic about radiaton. That danger has largely passed. Although, there is no such thing as “safe”. There is always risk. And Big Media plays into ignorance and panic.

First, the good news.  The second plant, containing four reactors about a dozen or so kilometers from the one that has been the subject of all the reporting, has reached cold shutdown on all four reactors.  The destroyed pump motors (from the tsunami) were replaced and the plant is stable.  That part of the story, barring some sort of new issue, is over.  Note that a couple of days ago this plant was on the verge of a full-scale disaster.

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Robots Displacing Clerks

In economic theory, labor combines with capital to produce goods. In normal language, that means people work with machines to make stuff.

Labor and capital (people and machines) can be subsituted for each other. If the backhoe breaks, we can dig holes by hand. Or, if hiring workers becomes too costly, someone will develop machinery to do the job:

Automation — long a force in agriculture and manufacturing — is accelerating in the retail sector, a trend that could hamper efforts to bring down the nation's stubbornly high jobless rate.

Sign Me Up

As a member of The Bastiat Society:

The Bastiat Society promotes the fact that the world is getting better, and that it's the creation of wealth through business that is doing it.

The Society's argument can be simply stated:

* Trade is a fundamental and virtuous human activity.
* Peaceful and profitable trade creates wealth.
* Wealth makes the world better.
* Those who create wealth through trade are not villains, but are the true owners of the moral high ground and benefactors of the human race.

Instead of abandoning the moral high ground to glib academics, politicians, and other condescending moralists, the Bastiat Society reclaims the moral authority of peaceful and profitable business.

Well, since the annual dues are beyond my prudent reach ($200), I’ll have to remain a shadow member.

Newsprint Kills Newspapers

From a lengthy—but worthwhile—London Review of Books story about the newspaper business:

in the US, the newspaper business is a local one, with a strong tendency towards de facto monopoly. Most of America’s cities have (or had) a dominant newspaper, and that paper had a monopoly of classified advertising. During the long years of the 20th century’s newspaper boom, that monopoly was the proverbial licence to print money.

Economic theory holds that there are very, very few sustainable monopolies. Without government protection from competition through licensing and regulation, human nature will produce either competition for the monopolist’s profits, or technology which makes the monopolist‘s business model obsolete.

The internet is the package of technologies which killed print newspapers. Not the desire for news, but abilty to print money by publishing news:

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Corporate Socialism

Obama and CEO announcing a dealThe fascist model embraces state control of industry while maintaining private ownership of industry. Favorite corporations are allowed favored treatment under the rules. Granting special status—and the profits that follow—is the major means by which government gets corporate management to go along.

It works like this:

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The Knowledge Problem Goes to Court

In her recent post about UnicornCare, MaxedOutMama notes the law puts lawyers and judges out of their element. They’ll have to make economic decisions:

The new health care law ignores all these [fiscal impossibilities], and just mandates that Medicare payments not be increased past a GDP limit. The only way to actually achieve that goal would be to kill expensive older patients, as far as I can see. The problem is that modern medicine works pretty well, but not treating older patients can often be far more expensive than treating them. Also, hospitals are mandated to treat them. And what about nursing home care? If you let an older person degenerate to the point to which the person can no longer live independently, they'll end up in a nursing home on Medicaid, which is going to cost us all a lot and which is not limited under the law.

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Another Road to Ruin

Vox Day offers a different pathway toward a brief period of violent upheaval in the United States:

The American middle class is on the verge of collapse, at which point it will almost certainly revolt in some manner. It will likely be less spectacular than the burning buildings in Cairo, but there is no way that the confluence of collapsing bubbles in real estate and education are not going to have a significant effect on middle class behavior once it becomes sufficiently obvious to everyone how they have been played for suckers and financially raped by the banks with the full connivance of the state and federal governments. The middle class revolt is going to start with a refusal to continue paying its debts for mortgages, credit cards, and college degrees.

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2011 Looking Up. Or Down.

Local TV news has a story of economic optimism:

What a difference a year makes. Last year at this time, a trip to Mall of America showed empty stores and struggling businesses. This year, they’re packed with people ready to spend, even after the holidays.

The 2010 holiday season was the best since 2006. Shoppers spent $584 billion in the 50 days leading up to Christmas – up 5.5 percent from 2009. And economists believe the trend will continue into the new year.

Doing what Big Media does so well, the reporter interviews a handful of shoppers and store managers who say they’re seeing more traffic and more spending at the malls. But as I am so often reminded, the plural of “anecdote” is not “data”.

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Hippie Mousetraps

I’m annoyed by the relentless greenwashing of every product offered for sale. I don’t care if your factory is powered by unicorns. Tell me that your stuff is good and a good value. If your primary market advantage is that your workers don’t use very much soap, you should probably spend less time giving yourself virtue awards and improve your product.

Cutting short what might be a therapeutic rant, consider this perspective from an amazon.com customer review of The Market for Virtue: The Potential And Limits of Corporate Social Responsibility:

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