Tuesday assorted links


It isn't just California. New Mexico and Arizona, too.

The problem isn't the counties that voted for Trump. It is the counties that did not.

"I think we're going to hold our Republican majority in the House of Representatives"

You heard it here first! Your boy Mikey Pence

2. There's fiscal stimulus and there's fiscal stimulus. Dropping money from an airplane may boost consumption but doesn't add much to productive capacity and economic growth. Investing in productive capital, on the other hand, adds to productivity and economic growth. Even this late in the cycle business is not investing in productive capital, not even with the enormous tax cut. Zero interest rates didn't do it, historic profits didn't do it, and an enormous tax cut didn't do it. If our country is going full authoritarian, why not go full state capitalism and invest in things that will increase productivity and economic growth. It works for China.

Businesses hire and invest when they are swamped with demand for their products and services.

Dropping money from helicopters would almost certainly cause business to invest in more capacity to meet greater demand. Of course this depends on current levels of capacity untilization, but...it really boils down to the answer to the question of sufficient effective demand for the proposed increased supply. The beat gauge of this is: we are swamped with demand now and can’t make enough to meet the demand we have today.

Mass production requires mass consumption.

Are you arguing only government can drive economic growth by handing out money to be spent buying more imports requiring added local labor, warehouses, delivery trucks, etc?

Why not the Keynes wealth redistribution plan of paying more to more workers until rents and profits go to zero?

"I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock of capital up to a point where its marginal efficiency had fallen to a very low figure. This would not mean that the use of capital instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment. In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour costs of production plus an allowance for risk and the costs of skill and supervision.

"Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital."

I'm old school in seeing capital as that produced by workers, cash from worker savings paid quickly to workers as working capital recovered by workers paying to consume, or savings invested in paying workers to build factories and other durable goods.

Profits going to those who don't work create the incentive to block others from working so the capital they control is kept scarce and thus capable of charging higher prices by paying less to labor to reap higher profits. Lower taxes on profits signals increased economic inefficiency is desirable public policy.

So how is a business supposed to tell that a spike in demand is from a helicopter drop vs a fundamental change in the market? And what happens to those businesses that 'ramp up' production, only to find that all the new demand was a temporary result of a helicopter drop, and now they have more production than they need?

Lord save us from people who think they are smarter than markets and have grand plans to improve our lives by manipulating them.

Money should be a low-entropy communication medium, allowing information about supply and demand to be transmitted without adding noise. All these grand plans to interfere with money for 'stimulus' destroy information by adding noise to the signal, resulting in less efficient markets.

Tax cuts discourages increasing production by both discouraging hiring workers when higher wages are required, and by paying workers to build new productive assets, both of which reduce taxes due, but together reduce the profit on which taxes are levied.

Milton Friedman argued for tax cuts circa 1970 to reduce demand for labor because the over 50% tax rate meant managers found it cheap to solve problems, business and personal, by simply paying more workers.

He argued that business owners, or their managers put deadbeat relatives on their payrolls. As an example, by putting his drunken brother-in-law on the payroll, he reduced his profit by only half the cost, but effectively gave money to his sister without paying the gift tax which would reduce the net by 20-40%.

By cutting taxes, the sister gets divorced, goes on welfare, and her brother helps her out under the table, the ex builds up debt from not paying support which welfare pays instead. Messy, but Milton advocated a negative income tax to support the sister, and the brother would give her gifts, while paying much less in taxes, so the same result.

Businesses that have little to no profits pay none of the taxes cut by the GOP, so the tax cuts do nothing to help small businesses or spur startups.

Unless the startups are rent seeking, ie, importing goods from China and selling them at high markups, e.g. the Trump clothing ventures. If taxes on profits were 100%, would the Trumps be selling clothing? The high taxes on profits would not eliminate the need for clothing, so businesses where the owner paid himself a wage that is bigger the more workers he pays to produce can thrive selling "at cost".

Keynes advocated policies that eliminated profits, which I learned in the 60s were a sign of economic inefficiency, a sign of unused factors of production. As Keynes put it: "In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour costs of production plus an allowance for risk and the costs of skill and supervision."

Note that Jeff Bezos and Elon Musk find it easy to thrive with zero profit, creating more jobs in the US than any high profit venture gaining huge benefits from the many business tax cuts since 2001. How many US manufacturing jobs has Apple created since its got the benefit of huge tax cuts? Keep in mind, that its easy to turn investment costs into labor expenses that eliminate all business profit tax liability. For example, Apple would need to train workers for new factories to create the human capital Apple depends on to produce in China. If Apple were to pay $100 million to workers in manufacturing startup, that would eliminate all taxes on a $100 million in repatriated profits.

Except that a great deal of what China is building is not productive at all. Office towers with no tenants, aircraft carriers that only turn left, that sort of thing.

It's not enough to build blindly, you have to build things people are actually going to use.

The Empire State Building was vacant for over a decade and didn't reach breakeven in 1950 or so. In your view, a worthless investment, and if you owned it today, you'd be happy to sell it to me for $1.

The US has spent probably two orders of magnitude more on failed military hardware than China. Ironically, the wasted money on failed military stuff has occurred as military spending has been cut to cut taxes. The military spending has been directed away from the innovators on the coasts to the conservatives seeking to retain jobs in their districts.

Just read about the funding for two more Bush class carriers being authorized, while the first one commissioned can't deliver bombs to be loaded on aircraft because it's 11 elevators don't work correctly.

Have yoh ever started a business? Every new business owner believes they have a winning formula for competing in the market. MOST of them are wrong. And yet, academics seem to think that their grand ideas for manipulating the economy could not possibly be wrong, and once those plans are in place they are nearly perpetual.

People should have a little more humility when it comes to grand ideas for making the economy 'better'. You may think that your government program is going to be the next Apple or Facebook of government programs, ut it's far more likely to be the next Friendster or MySpace. The only difference is that without competition and choice we never know what we could have had instead.

Defense businesses that sell to the government are a different breed from real private sector businesses. More like pork projects to shore up votes. You don't need to be an academic to see this.


I'm sure you'll recognize that the innovators on the coast are gaining big from the defense spending, your own statements agree.

"The military spending has been directed away from the innovators on the coasts to the conservatives seeking to retain jobs in their districts.

Just read about the funding for two more Bush class carriers being authorized, while the first one commissioned can't deliver bombs to be loaded on aircraft because it's 11 elevators don't work correctly."

#1 Brutalism, brought to you by the virtual-world designers of Halo and Blizzard entertainment. Bringing the alien off-world architecture of tomorrow, to you, today!

#3 Is this the same chick that did the attack-helicopter-hairstyle? (https://www.pinterest.com/pin/493988652849602440/). I must admit, some of these are pretty amazing.

#4 "Only the toughest head west" - Jedediah Smith. Unfortunately that fails to explain CA's current politics.

#5 And I am most skeptical of "memory experts", so we're even.

How is that brutalism? Just because the major material is concrete doesn't make it brutalist. It focuses on wood finish and atriums with natural lighting.

Yeah, but it still looks like crap, so.....

Agree, needs to be more Blade Runner like and huge to count as new brutalism.


The curved lines would also seem to be disqualifying.

Warning! I’ve seen so much voter fraud happening today! Remember this when you see the results. So much voter fraud going on!

It's clear that the Republicans are stuffing the ballot boxes and stealing the election!

2. Goldilocks monetary!: https://www.bloomberg.com/opinion/articles/2018-11-05/fed-s-rosy-outlook-snubs-history

4. I grew up in rural Central California. Of course that's what happened. We all talked about the Okies and Arkies living out there, among the orchard owners.

And don't forget the Armenians!

Or the Assyrians, or the Punjabis, or the Portuguese...

Really, it's quite cosmopolitan for a rural area. You learn that the #1 opinion of any group over any other group is, "Oh, those people, they'll do anything for a dollar. Not like us. We have morals." All the moral outrage and superiority complexes look ridiculous in the world at large, as a result.

A single small building does not = "being back"

especially when that single small building isn't brutalist. But it is made of concrete.

I'm giving all of the money from my next book to Laetitia. Magnificent!

She looks Photoshopped, but maybe it's real.

Brutalism is great for when you need to defend yourself from the collapse of society and need to be able to deflect small arms fire.

Very popular in the Balkans, concrete is. And in the former Yugoslavia. And the Philippines. What's really ugly (Brutal) is unpainted concrete, which they do in poorer parts of the Balkans and in PH, and the concrete gets tiny cracks that collect mold and dirt, and the stuff looks hideous. All of our buildings in the Balkans are painted with white stucco gypsum 'paint' that lasts about 10 years and prevents that ugly rotted concrete look, but it costs money so a lot of people don't do it.

This is off topic slightly, but it is election Tuesday so...

Saw this interesting quote on 538 from someone called Seth Masket:

"The forecast I’m most confident in for today’s elections is that, if Democrats have a remotely good night, Trump will claim that some sort of voter fraud took place in one or several races. This is especially likely if Democrats take over one or both chambers of Congress, in which case Trump may make such claims in order to call into question the legitimacy of any new Democratic majority. He’s already hinted at this, and he said in 2016 that he’d only accept the results of that year’s presidential election if he won it. He even claimed voter fraud after he won.

If Trump does make claims along these lines, there’s a good chance Fox News will repeat and amplify them, which Trump will may then cite the next time he repeats his claims, creating a Trump-Fox feedback loop. But other news organizations don’t have to add to that. And they certainly don’t need to lend credence to baseless claims just to appear unbiased."

All very true, and a big part of why Trump is awful. It's not policy, it's not being a boorish jerk. It's his constant bullshit undermining our fragile democracy. Lots of folks here go on about how other shithole countries don't have proper institutions, or even don't have people capable of handling proper institutions. Well Trump is how we go down that road ourselves.

It's his constant bullshit undermining our fragile democracy.

So our democracy (you probably mean one-man-one-vote republic) is so feeble that a seventy-year-old goof ball surrounded by career pseudo-statesmen can talk people out of something or other. If that's the case, the vaunted democracy is destined to evaporate no matter what anybody does in an attempt to sustain it.

Barry Ritholtz is not an economist.


Thanks for the link that was a good screed by Barry Ritholtz, so good I wanted to send him money after reading it.

You're kidding right? Wasn't this the same drumbeat going into the 2016 election (Trump won't accept election results, tearing at the fabric of our fragile democracy)?

And now kindly recall after the last election, millions of people rejecting the outcome and casting doubt on its legitimacy. But that was the good guys I suppose.

No, not kidding. Name one high up Democrat who disputes the 2016 outcome. Like the quote says, Trump was claiming voter fraud after he WON.

I'm not saying it's a torn fabric yet, but a guy like Trump is how these things get going. I think that's common sense.

"High up" is the distinction, and it is an important one. Usually high up politicians (on both sides) make at worst misleading claims that are technically true from a certain point of view but which also often (intentionally) cause people to draw the wrong inference. They leave it to pundits and entertainers to progressive distort things and give the wrong impression, especially out of context. As a result, yeah, you do get stupid things about polls showing enormous percentages of Democrats willing to say that Russians literally changed vote totals, but you don't get any "high up" person saying that.

This applies not just to conspiracy theories, but to all sorts of true-but-misleading claims. This also adds some extra opportunity for fact checkers to be biased, because my guy's "technically true but misleading" should be counted as "Mostly True" since it makes a larer point, but the other guy's is "Mostly False." It also makes for a cottage industry of pundits and wonks on both sides that work to frame the issue and deliver the defensible meaning to the smarks even as the marks lap up the "wrong" meaning.

Trump, OTOH, just says remarkably untrue things in a blatant way that leaves no wiggle room for weaselly insisting that he meant the technically true thing, and it's not his fault that people drew the wrong conclusion. I've heard people claim that they don't find it more dishonest than the typical politician slipperiness (and even find it "more honest," which shows up in polling), but I agree that it's terrible and worse.

My point is that our democracy ain't so fragile. Trump can bleat about voter fraud and Dems can bleat about Russia, but it's mostly a load of crap.

You see, Ma was a precinct captain in the Great Cook County Democratic Machine. I've seen democracy in this country up close, and it's never been pretty, or fragile.

Fair enough, I suspect you're right. I'm not a 'Trump is the end of the world!' guy. But he's not helping matters to say the least.

Yeah. I often think of George Washington, and how painfully aware he was of the judgment of history and how closely everyone was monitoring his decisions. Trump has none of that kind of self-awareness, which is not good. But I think he's a symptom of cultural coarsening more than an accelerant, and I think his long-term impact will be minimal. We'll see.

If the Russia scandals are a bunch of crap, then why are so many people in prison because of it? At some point, you must accept that Russia has a history of these types of shenanigans and the US, having done similar things in its past, would know exactly how the game is played. Don't be stupid, Putin is no saint.

Hillary and her crew have complained repeatedly about the electoral college, and how she actually won the popular vote and that this somehow should be an important thing to note. This caused a whole lot of Democrats to claim that the EC 'enabled' Republicans to steal the election. They said the same thing in Bush vs Gore.

The proper prediction is that BOTH sides will yap about stolen elections anywhere where it's close. Republicans will claim vote fraud, and Democrats will blame either voter suppression, machine tampering, or both. Count on it.

This year the howls of cheating will be greatly magnified by bad actors and trolls feeding the fire by claiming they witnessed fraud or intimidation or both.

"The Republican nominee said he may not accept the results of November's election and reserves the right to file a legal challenge. " From PBS. He did not say he wouldn't accept them if he lost, but he wouldn't unconditionally say he would accept them before the election. Why would he? If there were examples of fraud, he should contest the election.

What is ironic, is that during the Dust Bowl, Californians wanted to erect a border to block the Okies from immigrating here.

It was thought that they weren't bringing their best; They were bringing rapists, thieves, and of course, some were fine people.

+1. Underreported history.

Yeah, probably underreported in high school history textbooks. Very well reported in Steinbeck's "The Grapes of Wrath" however, such a classic title that the authors of the paper used it in their title.

When I taught a college freshman writing seminar, I assigned "The Grapes of Wrath" as one of the readings. It's effect was maybe too powerful, at the end of the class a good portion of the class was in favor of agricultural price supports and farm subsidies (despite my doing the usual Econ 101 graphs of price controls and the deadweight loss from subsidies). But at least they knew something about California's migrant history.

#2...Willem H. Buiter The Simple Analytics of Helicopter Money: Why It Works – Always... When Keynes argued that people should be paid to do nonsense work, the point wasn't about infrastructure. If an investment by the government makes sense, then it should be done. The point was for the government to borrow money, giving a boost to the idea of future inflation, and, thus, giving an incentive to current investment. The radical idea of Keynes General was that government borrowing makes sense in a debt caused economic downturn, a paradoxical proposition at the time. Fortunately, the cure had already been proposed by Knight, Simons, and Fisher in the Chicago Plan of 1933. What Simons objected to was Keynes inventing new terminology to explain something that others had already explained and had been put into place and had worked.

5 Post Kavanaugh repressed memories are nonsense. Pre Kavanaugh a different story.

The story people remember were the children who remembered abuse and people were imprisoned. It was far more widespread than that. Some mixed up person, usually a woman would show up at a therapist who would help them remember why they are so screwed up.

It was nonsense, still is, but extremely handy when it comes to destroying people who you think need destroying. Ideas like that never really die.

So Kavanaugh got Swift-boated!

Nah, the attacks on John Kerry had nothing to do with repressed memories. They're a lot more similar to the stories about how Ted Cruz's college roommate hates him.

Except that 17 of Kerry's peers didn't care for him and they had the documentation to back it up. He was awarded the purple heart 3x and the worst injury he received put him in the infirmary for a day and a half.

Craig Maizin's complaints about Ted Cruz were the issue of the space between Craig Maizin's ears. Craig Maizin's a TV writer. He dreams up fiction for a living.

Swift boated? No, the Kavanaugh allegations were false.

"Grapes of Path Dependence" is a classic pun paper title.

#4 - Of course it does. As does the migration of East Coast Yankees explain the blue portions of California. The Okification of California also explains The Bakersfield Sound.

Anecdote: My wife's brother (born and raised in Oklahoma ) went into a paint store in Ca and discovered a lost cousin.

#4...You can't speak seriously about the Bakersfield Sound without mentioning the great Don Rich, who died in 1974 at 32 years 0f age.
Owens said, "He was like a brother, a son, and a best friend. Something I never said before, maybe I couldn't, but I think my music life ended when he died. Oh yeah, I carried on and I existed, but the real joy and love, the real lightning and thunder is gone forever."

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