Monday assorted links


#4. Michael Sandel's What Money Can’t Buy: The Moral Limits of Markets is one of the most crap books. It is a series of chapters that have the form of "here is this thing I don't like, therefore there shouldn't be a market for it."

He is genuinely terrible.

Sen's book is far, far better. However, it is far less engagingly written. Sandel is a smoother writer (and lecturer). Alas.

remember the treasure chest

Sandel’s earlier book, Justice, is terrible as well. He goes on and on how awful it is that everything is for sale today, with nary a mention of slavery, indulgences, or tax farming.

1 - Hit them again. Harder.

One of the demographics that was screwed by the Fed's ten years of near-zero interest rates was the 35% of Americans that rent their homes.

4. Making up stuff about stuff and making up stuff about rationally allocating scarce resources/supplies among relatively unlimited wants/demands: evolving to empower central bankers/planners, not markets, to choose losers and who winners.

How exactly does the Central Bank in the US pick winners and losers rather than the market?

Terrible news that Notre-Dame de Paris is burning.

You may be right. For one, near-zero interest rates for the past ten years.

15 April 2019 Barron's: Grant, "Current Yield." Ten years of central planners' Near Zero Interest Rates: "impulsivity, disregard for financial norms, and faulty risk assessment." Highly leveraged transactions and general leverage - stocks rally, unicorns go public with no profit in sight. In ten years, housing prices rose 52% while rents rose 32%, and nominal hourly wages rose 26% - didn't help 35% of Americans that rent homes. Leverage-funded share repurchases at record-high PE's. NZIR are price controls which help some: speculators and hurt others: depositors, savers, and pensioners - low rates inflate account balances needed to fund pension benefits. Grant estimated low deposit rates cost savers $600 billion in interest income in ten years.

13 July 2017: James Grant on FOXBusiness TV: Fed balance sheet holds 18% of US single family mortgage paper and 24% of US publicly-held debt.

4 June 2017, Zero Hedge blog: Central banks hold a third of the world's marketable bonds, $18 trillion of $54 trillion. Can the amount of debt be sold without crashing the bond markets? Less than zero: how the Fed killed savings.

That tells me nothing. Let's take unicorns 'with no profit insight'.

Interest rates are 2%. Can I borrow $1B? Ohhh no, I have no business plan, no credit, Why would anyone with $1B loan it to me.

Wait, rates are now 0%! Ohh ok here's $1B.

That's not how the world works. Whatever you think of unicorn company the Federal Reserve didn't designate any one of them a 'winner' and even with 0% interest rates, there are plenty of other wannabe unicorns that didn't raise $1B. The Fed didn't declare them losers.

"4 June 2017, Zero Hedge blog: Central banks hold a third of the world's marketable bonds, $18 trillion of $54 trillion. Can the amount of debt be sold without crashing the bond markets? Less than zero: how the Fed killed savings."

Why would the Central Banks sell off all the bonds they own? Suppose they did, what would they do with all the cash that would come from such an exercise? All this is really saying is if 1/3 of the world's money disappeared tomorrow, the economy would crash. Indeed it will. That and $3 will buy you some coffee at Starbucks.

" Near Zero Interest Rates: "impulsivity, disregard for financial norms, and faulty risk assessment.""

This line of thinking is a bit like the armor & weapons LARPers use. Looks big on the surface but it's all foam underneath.

People who are making bets on investments doubling or more like to take big risks. There will always be some risk takers and some playing it safe. But if you're into stuff that doubles, a slightly positive interest rate doesn't mean anything. If you think stock A is going to double, it doesn't matter if interest rates are 1%, 5%, even 25%. If you really talked yourself into a 100% price increase, it makes sense to buy no matter how high a 'normal' interest rate is.

The difference between what people will do at a 2% interest rate versus a 0% interest rates should be quite linear. If you demand to see a 1% return then you'll need an investment that yields 3% in the first case and 1% in the second. The idea that going from 2% to 0% will make you a wild eyed lunatic drunk on 'cheap credit' in a way that going from 6% to 4% won't is missing a lot of logic and evidence.

I'm so old I can remember years of very high rates - like 20.61% FF in 1980. In1984, I financed a house purchase with a 10.25%, one-year adjustable mortgage when the 30 year fixed rate was 14%. In 2013, I obtained a 3.875% (prime was 3.25% 30-year, fixed rate to buy another house. Today the 30 year fixed-rate is 4.12% (April 11) and prime is 5.50% - sounds like some sort of inverted yield curve - huh.

There are no right answers or crystal balls. Tbe2008 catastrophe blindsided nearly everyone.

Assuming you are under 40, you have not experienced high interest rates and inflation.

The US was not as outlandish as the EU CB's, which is still at zero or negative rates.

The Fed kept the FF target and prime at 0% to 0.25% and 3.25%, respectively, from December 2008 to Dec 2015, when they raised to rates to 0.50% and 3.5%, respectively.

Then in late 2016, the economy, housing, and equity markets began to accelerate after Trump was elected in November 2016 and the Fed began raising rates eight times from December 2016 to December 2018, 200 basis points to 2.50% FF target and 5.50% prime.

Low rates facilitated highly leveraged transactions and leveraged stock repurchases which elevated market values. Can/Will it continue?

Your comment about how CB's took up so much is valuable. Did it help? Can they get out away from it? Some of us think it's unnatural for CB's to hold so much debt. Some think otherwise. How and When will the next financial catastrophe happen?

"Low rates facilitated highly leveraged transactions and leveraged stock repurchases which elevated market values. Can/Will it continue?"

Again I don't think this defends your original question about picking winners and losers. You say lower rates make it easier for a company that wants to borrow to buy back share. Sure it does. But then again it also makes it easy to borrow money to build a factory in Detroit, or China. The central bank doesn't lend money to companies to buy back shares, they borrow from the market. Given a choice between companies A and B, A has strong profits, good management, good prospects relative to B, the market is always going to want to give A the better rate than B even if overall rates are low. So I see A is a 'winner' but I'm not seeing how it was picked by the Central Bank even though the lower rates may have 'facilitated' the fact that a loan happened to begin with.

5. Question: Is Cowen naive or does he assume his readers are naive? Probably the latter. Manipulating public opinion is far more sophisticated than hiring dopes like Roger Stone and Paul Manafort. Consider the propaganda network, Fox: when companies advertise on Fox, aren't they supporting a biased political and ideological message? Or more subversively, when companies advertise on social media, aren't they supporting a biased political and ideological message? Or what about high brow support for ideological public policy institutes like AEI? Indeed, manipulating public policy has long since abandoned lobbying as the way to preferred public policy and gone directly into manipulating public opinion through media. A current example is Boeing and its 737 Max. I've been impressed by how Boeing has been able to control the message, that the problem is software and easily fixed. Software? The problem is a defectively designed aircraft. What percentage of Americans are aware that the 737 Max is defectively designed? One percent? Less? Businesses manipulates public opinion constantly and the public isn't even aware of it. No, not through lobbying, but through sophisticated use of media. An aside, don't fly in the Boeing 737 Max.

Actual, CNN, MSLSD, et al narrative: Conservative speech is violence. Advocating violence against Trump and conservatives is free speech.

This entire Boeing brouhaha is simply something some people did. And, if you quote me, I'll sue you.

Fox is arguably one of the less biased when it comes to actual news, compared to say CNN or MSNBC or any of the marquee newspapers.

Yes, they are one a the few that separate news from opinion. No doubt the opinion shows lean right, but the new is about as close as you can get the center.

'but the new is about as close as you can get the center'

Give or take no go zones in Europe (the totally delusional fantasies start around the minute and half mark).

That one made a big splash actually, illustrating not only how far Fox News is from the center, but from actual reality. Not that most Fox News viewers cared, of course.

Merkel? What would she know?

Angela Merkel admits German NO-GO zones are 'a REALITY'

And from your link - 'When quizzed over the names of the areas, Mrs Merkel's spokesman Steffen Seibert told reporters on Wednesday that "the chancellor's words speak for themselves"

Interior Ministry spokesman Johannes Dimroth declined to comment on the no-go areas, saying it was a matter of security for local not federal authorities.'

That is, no actual information, just an attempt to win re-election by supporting law and order by saying that no one should fear being in public anywhere. For example, like in this incident -, where the police lacked the resources to deal with gangs of young men committing violence.

Though as noted in the article - 'There are as many as 40 places named in confidential police reports - despite repeated denials from officers - according to a report by US think-thank Gatestone Institute.'

And just who is the Gatestone Institute? - 'The Gatestone Institute (formerly Stonegate Institute and Hudson New York) is a right-wing anti-Muslim think tank with a focus on Islam and the Middle East. The organization has attracted attention for publishing false articles and being a source of viral falsehoods.

Gatestone was founded in 2012 by Nina Rosenwald, who serves as its president. Former U.S. Ambassador to the United Nations John R. Bolton, now national security advisor, was its chairman from 2013 to March 2018. Its current chairman is Amir Taheri. Its authors include Nonie Darwish, Alan Dershowitz, Raymond Ibrahim, Denis MacEoin, Daniel Pipes, Raheel Raza, Khaled Abu Toameh, and Geert Wilders.'

You are welcome to translate Merkel's words yourself, of course - „Das heißt, dass es zum Beispiel keine No-Go-Areas gibt. Dass es keine Räume geben kann, wo sich niemand hin traut. Und solche Räume gibt es und das muss man dann auch beim Namen nennen und man muss etwas dagegen tun.“

You are also welcome to note that the provided examples to support Merkel (that do not stem from something like Gatestone) such as in Duisburg resemble a number of areas in American cities - in DC, Anacostia (or Ward 9 in general), for example. Oddly, no one calls Anacostia a no go zone, though it is not a good idea to visit it after the sun sets - and the police do not go alone there either. Merkel is opposed to the sort of conditions that have existed in parts of DC for pretty much my entire life, and definitely does not want them to become normal in Germany.

(For that matter, there is an apparent 'no-go zone' in Karlsruhe - a complex with several not very high rise buildings at the end of the 5 street car line, where various addicts are apparently found in abundance, and it is considered a very bad idea to visit that area after dark. This comes a lot closer to what Merkel was talking about than the Fox News commentator spinning fantasies about how England's second largest city was completely off limits to non-Muslims.)

Ward 8, of course.

opinion shows lean right

Lean? No, they are horizontal. Not to mention stupid and dishonest. Fox News is a destructive force in the country.

Let us be blunt: American corporations are corrupt, and its leaders are more than willing to exchange innocent lives for money. I can not imagine a Brazikian company doing something like that.

Businesses manipulates public opinion constantly and the public isn't even aware of it....Yes but the Scottish tie persists.

"Fox: when companies advertise on Fox, aren't they supporting a biased political and ideological message?"

OK suppose that isn't the goal. A lot of general advertising is because that's where the people are. If you see an ad for Coke on Fox, is it because Coke wants a right wing POV to be the norm among the population or is it because a lot of people watch Fox and Coke wants them to drink Coke products? How come Fox is littered with ads for those who can't hold their urine in? Are catheter makers, for some reason, exceptionally right wing politically? How come I see ads on normal news for things like 401K's? Might it be not because Wall Street is all that left leaning but because people with jobs and money are a bit more?

5. That $3B spent by Big Biz on lobbying seems very well invested.The federal government was authorized to spend up to $700B to bailout the banks in 2008. They also spent ~$30B bailing out auto companies during this period.

I'm not sure how Tyler would dismiss these bailouts...In terms of magnitude of $ spent on cronyism, has there ever been anything worse? If not, doesn't this suggest cronyism is getting worse?

Or the bailouts were the only realistic solution to a massive problem.

See Bernanke's book, The Courage To Act.

There is a lot of ruin in a nation, but for almost 40 years now, US elites have treated the US as something to loot, and assumed that the good times would keep rolling. They were uninterested in actually governing. They were happy to move much of the US’s core manufacturing overseas, to the most likely nation to replace America as a hegemony, because the Chinese were smart enough to make American elites rich.

Maybe so, few of us will ever understand it; but in light of that episode, though but one example, even we dummies may puzzle over the continued and quaint framing of global free market and government as if they were hand and opposable thumb.

Yea this doesn't play that well at all. Did Big business spend $3B a year on lobbying as a sort of social safety net to do a bailout just in case there was an economic collapse? Seems like if that was their goal it would be easier to just have a safety net system in place. Consider unemployment insurance. When recessions hit, claims go up. If regular people have pulled that off without having to spend extra to 'lobby' the Federal Gov't year in year out why don't 'big businesses'.

Also if you look at the bailout most big businesses that lobby didn't get it. Most of the bailout wasn't even a bailout but loans that were paid back.

Seems like this line is a narrative failure.

Something like ~27 calls between Goldman Sachs CEO and the Secretary of the Treasury in the week leading up to the bailout for the financial industry.

Which cabinet secretary was taking personal phone calls from consumers who had their houses foreclosed on? Which homeowners were given an emergency loan from the government to make sure their assets weren't sized by a bank?

Lobbying and cronyism takes many forms.

I'm not surprised there were 27 calls between one of the major financial firms and the Treasury department during a financial crises. Why wouldn't there have been? If Goldman Sachs had a 'no lobbying' policy would Treasury have watched world financial markets melt down without talking to them? I doubt it.

Likewise suppose instead of a 'bail out' Treasury put in place a program to pay off people's mortgages. Wouldn't that have massively helped Goldman Sachs and other firms that held hundreds of billions of CDO's made out of peoples' mortgages?

Many of the 27 calls were the secretary trying to convince Goldman Sachs' CEO to accept the bailout money. Goldman Sachs, which had $100b in cash, didn't need any help at that time. But the secretary feared that if some big banks refused the bailout, it would signal that the others were in bad state and cause a panic about them.

Moreover the outflows of the bailout were $632b (amount loaned to banks, Fannie and Freddy, Auto Industry, AIG, and a few others)
while the inflow (reimbursements of the capital, interests, etc.) was $739b.
Even taking the interest rate into account, the bailout was beneficiary.

So your narrative is skewed.

Sorry, it was a response to Jeff.

5. Does the relatively small amount that corporations spend on lobbying (which is likely just a fraction of what they really spend to influence government) mean that it's a small issue or that it's a great investment?

With the increasing body of research pointing to unregulated corporate consolidation and regulatory enhanced market-domination driving corporate profits and inequality in the country, it would seem like the latter.

#5...I agree.They spend enough to get the job done. There's no a priori figure that tells us what they should spend.

Perhaps lobbying has a fixed capacity issue. If lobbying means getting access to lawmakers and their staff to push a position, a problem that jumps out at me is that there are only 24 hours in a day and people can only eat so much. You can have lunch with your lawmaker every day but is he going to eat two lunches? Three? Once the lobbyists have hit the capacity to smooze with lawmakers/staff by sucking up all their free time, meals, special events and so on what are you left with for the lobbying industry to 'expand'?

A very good list. I'd add...
"The End of Value-Free Economics" by Hilary Putnam/ Vivian Walsh (Editors)
And, my favorite... Frank Knight..."On the History and Methods of Economics: Selected essays"

Hilary Putnam, the Harvard philosopher? Great thinker even if he changed his mind a bit too much. However, can we take his economics seriously? Wasn’t he a Maoist?

#1: Increasing supply is good, subsidizing demand is not so good, minority set-asides par for the course. Rent control is some learned nothing, forgotten nothing BS. Back to exile in Ghent, Warren, you twit.

5- People always forget that businesses also have the ability to provide jobs to the family and friends of politicians. They can move contracts to the family of politicians. That won't show up in lobbying or donations numbers. You put the kid who could only get into USC because his family bribed his way in to the school into a low impact, low 6 figure job (where they cant screw up things), then get a subsidy or tax exemption worth a few million. Good trade off and harder to track. Or, you ending up paying a fine of a couple of hundred thousand on the millions in profits you made by committing fraud. Also a good deal.

Also, I think that Boonton hits on a key point. Sometimes it doesn't really take much to persuade a politician. Especially at the state level most elections involve fairly small amounts of money. A few thousand dollars makes a big difference.


The effect of crony capitalism can’t be measured in terms of campaign contributions or lobbying alone as suggested in the article. The farm subsidies are a collective influence of farmer votes, corporate influence on government nutrition and food policy, campaign donations, processed food, drug and animal farming companies. It’s a multitude of players collaborating toward the same goal of influencing food subsidies and policy favorable to their financial interests.

Sadly, these subsidies then are used to effectively lower prices on unhealthy processed and animal foods. These then increase chronic illness that is treated by the bloated healthcare and drug industry using the high cost reimbursement model mentioned. The incentives are to treat the diseases, not prevent or reverse.

Bottom line is there is no counter party to this arrangement because the consumer victims are unaware of the overall consequences. Tyler should focus on the forest, not the trees, when addressing our food, nutrition and medical policies. The forces are a multiple headed monster with pervasive influence on government.

Wouldn't health insurance companies, who pay these health bills directly, and employers who buy the health insurance directly, be a natural counterparty to lobbying efforts to make processed foods and sugars cheaper?

Would we have the ethanol fuel requirement without the Iowa caucuses? Does the $3 billion corporate lobbying figure capture that influence peddling?

#2 patents- this is the placeholder for this topic. I bet nobody comments. But if TC were to link to Kim Kardashian going to law school (in California, where they still allow apprenticeship rather than law school as a prerequisite to taking the state bar exam, good for them as law school is a waste of time), the comments section would be flooded with comments... Then people wonder why innovation is down and out.

#2 I'm fine with drug patents for actual breakthroughs because they deserve to be compensated for their risks but not patents where they tweak a small thing here and there and then claim it's something new so they can charge outrageous prices. "Evergreening" they call it:


Kim's daddy was an OJ lawyer so it's in her genes. That's something this crowd understands.

It doesn't exist though. You can't file a new patent to extend the term of an existing one

"Our results show that NIH funding spurs the development of private-sector patents: a $10 million boost in NIH funding leads to a net increase of 2.7 patents. Though valuing patents is difficult, we report a range of estimates for the private value of these patents using different approaches."

Paper is behind a paywall, does anyone know what their results were for the private value of the patents?

I can tell you from experience (since patents can be freely bought and sold) they average low six figures. Even a strong patent that's being infringed by a large company (hence holding litigation value) is unlikely to be worth more than several hundred thousand.


Law school has a very important function, it's to weed you out (literally you)

5. Comparing the amount spent to influence a few hundred legislators versus global advertising budgets is just. plain. dumb.

All youve proven is that politicians, and the massive budget and regulatory preferences that they control, can be bought cheap.

5. Ah, I see Professor Cowen quickly gained popularity on MarketWatch. Though I would argue that corporate lobbying is the really big thing when it comes to crony capitalism. I would say it's just the weakest form of cronyism - it is present in all countries and while it indeed shifts bias from rational choices, it won't set the government upside-down. I doubt it's the major topic that should be discussed as a failure of capitalism.
The next level of cronyism is something that Japan or Singapore did: a lot more favoritism involved in the decision making, but given enough common interest with the coprorate world, it can still yield a successful economy. Albeit it's difficult to figure out how it actually works.
Top-tier crony capitalism is present in African and ex-Soviet countries with oligarchs in nearly full-control of the economy. The problem is that unlike corporations, these individuals do not even try to act with rational motives - they are unpredictable, it's total chaos. Generally these economies tried to embrace capitalism, but the problem was the contrary of what they had in the US: corporate interest was too weak to overcome personal greed. So as long as the source of failed decision making is clearly identifable as corporate pressure, there isn't much to worry about it. Both players have limited power (and are rather vulnerable) so they will only engage in limited corruption.

1. So Mercatus joins Niskanen in Professor Cowen's campaign to dekulakize the USA by using the tax code to force the nasty wreckers and hoarders from their private homes into collective apartment spaces from which they can be easily shipped to where the greater socialist-capitalist gods of industry deem them to be highest value use and allowed to contribute to the greater good. This new school of authoritarian-libertarianism is turning out to be quite entertaining.

"'… a $10 million boost in NIH funding leads to a net increase of 2.7 patents.' — Good or bad? Or can you tell?"

All I know is that U.S. patents cause global weather-related natural disasters. So the more U.S. patents we have, the more global weather-related natural disasters we'll have:

Paul Coates interview was of interest, highly recommended for US 60's history buffs.

Also of interest, the comment on Liz Warren's idea, in particular the side-discussion below (for those who are curious about comparative zoning approaches):

#4 recommends "The idea of justice" by Amartya Sen. Which reminds me of a fun thread on Voat, where the goats discuss Sen's parable of three children and a flute, with this picture, (link on Voat has rotted)

The subthread crisply captures something important about the human condition. It also casts a dark shadow over Amartya Sen's book.

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