Friday assorted links


Shipping containers as housing seems like a poor match for developing countries.

A developing country is going to have abundant labor but scarce capital. Using shipping containers as housing would be capital intensive and require little labor, compared to making a house out of wood or brick.

A solid argument debunking shipping containers as a practical solution to housing problems:

Interesting, thanks!

On the other hand Nigeria imports a lot and doesn't export much except oil and terrorism. Well, e-mail scams. Presumably a lot of containers come in full and leave empty. So I would guess a lot of older containers are just abandoned - not worth the cost of shipping them back to somewhere productive.

I recently started a blog where I plan to post my thoughts about random topics: For instance, I wrote a post ( against the widely held but false belief that much of the US wealth derives from slavery and that without slavery the industrial revolution wouldn't have happened, as well as another ( in which I explain how election models work and why they didn't predict Trump's victory. Sorry for the shameless self-promotion, but I just started my blog and I think readers of Marginal Revolution may find it interesting.

5) Should say the Rich *had* a Lower Rate of Inflation". If lower inflation stems from increased inequality, then surely the reverse is also true. Perhaps over the short run we will continue to see increased inequality, but it seems like a bad assumption to assume it will continue indefinitely.

The paper seems to indicate that the lower inflation is due to product differentiation, which means more new entrants to the market and more competition. So it seems that lower inequality, insofar as it would result in more people buying well established, basic goods, probably wouldn't do much to change price trends for those basic goods, as those are more established product categories where it is likely much riskier and more difficult for new producers to gain a toe-hold and establish a viable business model. It seems to me much easier to become a new supplier to Whole Foods when you are pitching a new product than trying to become a new supplier to Wal-Mart pitching your ability to sell them chicken, milk, beans or rice at a lower price than the established players, not to mention trying to sell them cheaper blue jeans.

I'm not suggesting lower inequality basic goods would inflate less, rather that higher inequality luxury goods would inflate more. If there's less demand for luxury goods due to lower inequality, you'll have less product differentiation, which means less entrants to the market and less competition, and increased inflation.

It looks like mood affiliation got the better of me. I should have consulted my mood ring before posting!

Is there anything that "income inequality" cannot do?

#5: "in the [US] retail sector between 2004 and 2013 the quality-adjusted price index of high-income households rose substantially more slowly than that of low-income households"

The time period is a yellow flag. That period crosses the 2008/2009 period when the market crashed. The time period considered would seem to be a highly atypical one.

It's not a typo but you do point out the idiocy.

Yes increasing demand leads to even more supply so inflation is lower for the rich.

Because that's how equilibrium works. Idiotic.

7 seems legit. Now here is my question: I think we have some Canadians in our little group. Do they expect the same rules applied to them? Canadian energy impacts US energy jobs, and I believe that cars and parts are made there, sometimes by US companies. Would a "35% tariff on US companies that manufacture abroad" apply there?

Or are they confident that they "aren't Mexican?"

Trump is tweeting more about this, but on the other hand he is losing support of his party.

"on the other hand he is losing support of his party."

CNN cites a has been citing unnamed sources. Very convincing.

Fake news.

lol u mad?

Canadians are worried, but don't know what Trump is going to do.

Worried? Trump just approved Keystone, which will improve access to markets for Alberta oil.

The Canada US Autopact which preceeds FTA and NAFTA was a gift for being the good cop when the US was the bad cop in the Suez crisis. The continued access to the US market by Canadian based manufacture has always been a return favor for something Canada has done as an ally; protected US embassy people in Iran, for example.

There is another dynamic as well. Canada has lost employment to Mexico as well. A local auto component manufacturing plant does the productive automated work locally, but ships the parts to mexico for the labor intensive finish and packaging.

Are large numbers of unskilled labors coming over the border from Canada?

Then I doubt they have much to worry about.

As pertains to this site, the less of an economist Trump is, the safer Canada is.

The great frost-back influx ebbed in the 80's.

I do find it amusing that the hive minded fret about applying the same rules to Canada as we do to Mexico. The fact is, we should be worried if do have the same trade policies with Canada as we do with Mexico.

I don't know man, lots of contradictions. Trump complains about Apple manufacturing in China, but not Samsung in Korea.

Economics, or enemies list?

There is an obvious difference between the two.

Yeah, just like here.

Next thing you know Sony will try to manufacture in Japan!

If I were Canadian, I'd be terrified that Rosie O'Donnell and millions of democrats could crash the border fleeing fascism and the repeal of ACA.

On a more serious note, to control Trump, the CIA must burn its mole inside Russia, who informed on Rusian hacking of the US election.
Since Trump was going to be an idiot, remove sactions, the CIA has to go public with how they knew. Poor mole.

Now will Trumpians invent new protective beliefs to make Trump/Russia good in their minds again?

7. 'Petroleum products, despite the widespread perception of Mexico as an oil exporter, account for less than 5 percent.'

This is because Mexican production has peaked, though it remains an important source of American oil imports, assuming that the EIA can be trusted - 'Mexico is one of the largest producers of petroleum and other liquids in the world. Mexico is also the fourth-largest producer in the Americas after the United States, Canada, and Brazil, and an important partner in U.S. energy trade. In 2015, Mexico accounted for 688,000 barrels per day (b/d), or 9%, of U.S. crude oil imports.

Mexico's oil production has steadily decreased since 2005 as a result of natural production declines from Cantarell and other large offshore fields.


The role of the petroleum sector as a component of Mexico’s economy has decreased significantly in recent years as a result of tax reform, the drop in oil prices, and diversification of the Mexican economy. The oil sector generated only 6% of the country’s export earnings in 2015, down from about 30% in 2009, according to Mexico’s central bank.'

And if the price of oil were to double, one could safely assume that Mexico's oil industry could expand their percentage of exports significantly.

(Always love the word 'decline,' as if oil were merely a renewable resource. American iron ore production from the Mesabi range

5) I have only read the abstract and conclusion, but the papers seems to rely on data that indicates that higher income households buy roughly the same types of goods as lower income households, but higher quality versions of those goods, however that is defined. Producers then introduce a lot more different versions of the higher quality goods, and that leads to more competition and slower inflation. So if I am characterizing the paper correctly, higher income households have a lower inflation rate because they are buying more new products than lower income households. So while it is technically correct according to this paper to say that the higher income households have a lower inflation rate, that statement may be misleading, depending on the context in which it is used. The basic finding seems to be that prices in higher quality goods are increasing at a lower rate than more basic goods, which given that there is likely more room for differentiation for higher quality goods and hence it is probably easier for new entrants to try to gain market share, should not be surprising, and doesn't in and of itself seem like a problem. The paper's suggestion that measures of inflation should focus on the basket of goods that the relevant population purchases seems sensible, as people on food stamps or SSI are probably more impacted by the cost of chicken than the cost of organic free range chicken.

1. Brazil is the most awesomest country in the universe and Cowen is fortunate to have an article about him published there.

Indeed. Brazil is an exceedingly proud-spirited country. Suffices to say that Brazil's last Emperor used to exchange letters with Victor Hugo, Pasteur and Arthur de Gobineau and met Alexander Graham Bell.

TC speaks Portuguese too? I thought he only spoke English, Spanish, and German.

It wasn't so awesome in 1891

Yes, it was. More awesome even. It crushed the Navy Rebellion and repelled the British coward aggression. Also many great Brazilian writers were alive then, such as Machado de Assis, Lima Barreto, Raul Pompeia, Ruy Barbosa, Augusto dos Anjos and Olavo Bilac. Some people think the late 1800 was the Golden Age of Brazilian culture, a time of unparalleled progress and beauty.

I'm surprised they found time to do all that while being conquered and humiliated by Benjy's Boys from the US.

Indeed, Chile > Brazil

Liars. Brazil is the only major power never defeated in war. And Brazil is much superior to the so-called Chile. Brazil is the Fourth Rome.

1891 and Benjy's Boys are references to Chile, nothing to do with Brazil. msgkings is either confused or relying on alternate historical facts.


"Some people think the late 1800 was the Golden Age of Brazilian culture, a time of unparalleled progress and beauty."

Yes, the decline of Brazilian culture, progression and beauty is a sad thing.

We flew too close to the sun. No country ever was or wilbe like 1800's Brazil.

Brazil is a third world shithole but I grant you Brazilian women have the finest back sides on planet earth.

And front sides, too.

#5. It seems like there's a problem here. Very often when new products are introduced, they are priced high and only affluent households buy them (think iPads or flat screen TVs -- or VCRs and microwaves back in the day, but the organic grocery example from the paper fits the pattern too). Eventually, low-income households buy them too, but by then much of the decline in price has already occurred. So it will appear that only the wealthy enjoyed the benefit of the price declines (since the item was in their basket during the time of greatest deflation but not in the low-income household basket). But of course the poor benefited from the decline in prices before they ever were buyers, and it seems like this kind of measure would entirely miss that. I guess you might say "those who wait are also served" by price deflation.

This is the most likely explanation.

5. Too long for me to read, but I thought the inflation rate for the wealthy was much, much higher, the prices of homes in the Hamptons, private jets, and yachts having risen significantly. Does this mean I no longer have to feel sorry for the wealthy?

6. It's likely just a coincidence, but I've noticed that this new interest in eliminating the corporate income tax has coincided with criticism by the new president of US companies that shift jobs overseas and their schemes to avoid US tax by deflecting income to tax havens. I'm sure it's just a coincidence. I mean, is the new president actually going to challenge those tax schemes. If not, then why waste time and resources on a tax, the corporate income tax, that US companies so easily evade.

No need to 'challenge the schemes'. Just get rid of the ridiculous worldwide taxation (something no other developed country imposes), drop the corporate tax rate to something like Canada's and all the inversions, and other tax schemes will disappear naturally.

According to the IMF, Greece, South Korea, Ireland and Israel all tax worldwide profits of domestic corporations.

Sorry, I should have 'G-7' instead of 'developed nations'. And that handful you cite all have corporate rates substantially lower than the U.S.

#7: good info but it doesn't seem like as big an "Aha!" as the author thinks. Consumers already know most of their clothing, footwear, small appliances, etc., come from Southeast Asia. It says so right on the product packaging, nine times out of ten.

#6...I agree about getting rid of the corporate tax, but I'm a strong supporter of a progressive income tax. I like how it works in the business cycle, and I think it's fair to tax the better off. But, even more, I like the fact that you only pay higher taxes if you are demonstrably better off than the year before. Taxes should lessen growing wealth, but not make people poorer than they are already.Of course, no deductions.

Only about 5% of the business in the US are corporations but if the corporate tax rate were zero or even reduced very much, most of the top earners who now pay individual income tax on their profits would become corporations again.

A corporation is a legally constructed fiction, and needs to undergo some changes. Your issue is one that needs to be addressed, as does its legal protections. But that's a different question. We want all business, like corporations, to pay wages and invest. If it does these things efficiently, we don't want to tax them.

#6. Major sign of the Apocalypse, I agree with John Cochrane on something!!!! I agree with him on both counts regarding the corporate tax rate as well as the need for a consumption tax. However, not sure I agree with him on the elimination of personal income taxes which would make the consumption tax quite high.

#7. In Trumpland auto parts are a consumer good, not an intermediate good. O'Reily's isn't your local Irish-themed bar and grill.

7 - This guy is something of a dope.

He believes investment goods and industrial inputs cannot be readily obtained outside of Mexico. This includes vehicles, computers, auto parts, raw materials, machinery, "equipment," and oil.

Sure thing, Spanky. Where are we gonna get vehicles if not Mexico?

I am confused by the significance this guy attributes to his observations. It feels like he found somebody who thought all Mexico exported was Corona, and its important to point out that there is so much more. First, I didn't think that, and in any event, so?

6) No corporate income tax is fine, as long as ALL the extra investment is directed to domestic production--a border tax is a good thing. Feldstein is right; Summers, wrong.

A border tax is a scam for more tax cuts. You might as well use capital controls. More effective.

Capital controls for nonbank entities usually involves tax incentives/disincentives.

Anyway, you may have the Tobin tax in mind.

#7: Our problems with Mexico are 1) They conspire to undermine out immigration laws, b) It is practically a narco-state and iii) it is a haven for US companies to dodge our labor, tax and environmental laws. Trump's wall gambit is obviously both a PR offensive and a way to apply pressure to Mexico's government. The wall itself is a trivial expense to build and maintain and is probably a good thing for a number of reason. The real game here is to crack down on the Mexican political class so they begin to act responsibly.

The hilarious part of the liberal panic about this are the contradictions. Mexicans are allegedly a boon to America, yet sending them back will destroy Mexico! A trade war with Mexico will crater the US economy, but it is unnecessary as we have little trade with Mexico.

Liberal contradictions? Remember a little conversation about the National Endowment for the Arts?

Behold all the conservatives who thought $146 million was too much to spend, and a vital cut to save the budget.

Now, how much for the wall again?

The National Endowment for the Arts, supporting the important governmental function of submerging Christ in piss, so you don't have to.

1987. Let it go.

Yes but the Wall is a one off cost. Build it right and it will pay for itself as a tourist draw card. I bet those Beijingers are happy that their Ming dynasty ancestors built that Wall now. It must be worth a fortune to them.

The NEa may be small beer but it is small beer that is painful each and every year. And leave us with a radioactive-waste-like sludge of useless and offensive crap that the taxpayers have to pay to house and protect for decades to come. And which no one in their right mind ever pays to look at.

The Wall wins in every respect.

A Great Wall tourist attraction! My hat is off to you sir.

So you're not a braying arse because someone somewhere else said something once.

It's no wonder everyone here thinks you are an idiot.

Nothing personally, but the US is conspiring to undermine Mexican immigration laws as well as labor laws. Trump is doing nothing but posturing to make Mexican laws even worse. You sound like the idiot that doesn't get it. Liberal panic my ass.

You sound like every child molester ever.

Corporate Tax
"My view: the corporate tax should be zero. Not just a zero rate, but the tax should be abolished. Lowering a rate is just an invitation to renegotiation, and a quick raise when the next party takes over."

Exactly!! Can you even imagine the benefits to all Americans if we did this? It would be the sustained boom heard around the world. Everyone could have a job. We could (almost) eliminate welfare. There would be more revenue into the treasury. We could cut the federal budget and actually begin paying down the debt.

It's a helluva piece of writing when you can't tell whether the author is serious or not.

6. Yes but what do trumpy economists say ?

Sorry but Mexico's attempt to undermine US immigration laws go back a 100 years. If you notice Republican, they have not been getting away with it nearly as well over the last decade so easily. Trumps obsession with them is purely political. He is a neocon, zionist backer and part Ashkenazi himself. He feels for the "tribe". Steven Bannon just added another one of them to the staff. Before to long, there won't be many gentiles on that staff. That takes me back to Mexico. Nominal neo-con voters love bashing the "Mexcrement". It is a easy target. Many Americans though, live in Mexico and love the place. Cheap beer, easy, sexualized women that don't act "feminist" and warm weather. It is a political ploy. What do the global capitalists get? A worse version of NAFTA and lowers wages and less environmental regulations.

It is like Trumps so called "China bashing". That is hardly the case. Trump is manipulating TPP so his own version has China IN IT? Got it yet boys and girls. The yellow hoard has already been rising in frequent "abusing of US labor laws" and after Trump is done, it will get worse. I see many boxes full of people being "allowed" to swish over the border.

I feel bad for right-hegelians. You will meet your destiny by trashing the welfare state. It will come back stronger than ever in the 2020's and then tariffs make a bunch of sense.

hang on, little poopies,

Would a US VAT b pretty green?

WASHINGTON, Jan 28 (Reuters) - People holding so-called green cards, making them legal permanent U.S. residents, are included in President Donald Trump's executive action temporarily barring people from seven Muslim-majority countries from entering the United States, a Department of Homeland security spokeswoman said on Saturday.

"It will bar green card holders," Gillian Christensen, acting Department of Homeland Security spokeswoman, said in an email.

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