Tuesday assorted links


Is this blog losing its #1 mojo? Why am I the first to comment a mere 15 minutes after this post went up?

Saludos desde el desierto de los alimentos
harvard is living in a climate of fear &
we are drinking coffee
cnn sez the donald is "laying an impeachment trap for the democrats"
we think this is another common case of cnn not comprehending causality

#3. Cochrane poured some cold water on your patent hobbyhorse. Maybe you should have read it.

Are you either really young Ray, or just so insecure that you must be first to post (and crow about it)? Even the fascination with Patents is connected to being “first” (because of course Patents typically go to those who register them first).

@GoT - I am young at heart. @BD - I did comment on Cochrane's discussion of patents, to his credit, as most people who talk about growth fail to even mention patents. His site is moderated so I'm not sure my comment will appear. I don't read anybody who doesn't publish my views. What's the point of that? It's not that I'm actually going to learn something reading almost anything anybody publishes online, TC excepted...as I pretty much know it all at my age.

I appreciate most of your posts; and chuckle at the immodesty: “... I pretty much know it all at my age”. Lol, I had a friend say that about her teenage daughter, “imagine that at her age she already knows it all”.

A man is as young as the woman he feels.

#1 - inequality theme. From my notes, you will note the 1%--of which I'm one--not only pay the most taxes but also disproportionately so (i.e., the tax is progressive). Who's adding value? Who's doing God's Work? GS. Not you, not the lower 80%. Sourced below. - RL

Taxpayers and US income taxes. Top 1% of all taxpayers (income tax) pay 37% of all government taxes but only get 20% of the total adjusted gross income. Top 5% pay 58% of all taxes but only get 36% of all income. Top 10% of income taxpayers pay for 69% of all taxes. Top 50% of all taxpayers pay for 97% of all income taxes. Source: ttps://conversableeconomist.blogspot.com/2019/05/snapshots-of-us-income-taxation-over.html For just Federal taxes, the stats are as follows: top 1% gets 17% of total pre-tax income and pays for 26% of federal taxes; top 20% gets 55% of total pre-tax income and pays for 69% of federal taxes.

Is your point that without having to pay taxes, the top 1% would consume 20% of all production, and the top 5% consume 36% of all production?

The bottom 50% would never consume more than the what 15-20% they are paid to produce without transfers. Transfers like free road used by both workers, consumers, and businesses to run the economy bby "dumping" goods and services below total zaverage costs, and for many cases below marginal costs. Eg, delivering a package to some rural customers costs more than the postage, which was suubsidized by the roads to the rural area which generate less revenue than just the cost of plowing the snow and patching potholes.

Would the US be better off with GDP much smaller by eliminating the consumers who depend on government (tax and spend) to pay for what they consume, eg 99% of those over 67 years of age, half of all children?

#2 Race-to-the-lowest outsourcing is far from over but I have a question for American importers addicted to China's manufacturing-crack, why are you still there? Seriously? Every importer I know has shifted to Vietnam, Indonesia, Southern India, Thailand, etc. They might not be better in some categories (LCs and QC) but they're certainly no worse. Oh, and get this, you can actually own and set up shop there too in something more than name-only. The China-US political risk is only going to get worse and we still live in a world where capital works hard to leave China at its first opportunity.

#5 Yesterday was the SF "plate-picker". Today CA roadkill. Is there a CA food crisis we're not aware of? A Cali Consumables Crash? Inquiring minds want to know...

Whenever I run out to Walmart to buy beer and Lotto tix, I only pick up lunch/road kill that wasn't on the road on the way out.

'why are you still there'

Because Foxconn is the world's premier manufacture of electronics?


Foxconn has 12 factories in nine Chinese cities—more than in any other country.

The largest Foxconn factory is located in Longhua Town, Shenzhen, where hundreds of thousands of workers (varying counts include 230,000, 300,000, and 450,000) are employed at the Longhua Science & Technology Park, a walled campus sometimes referred to as "Foxconn City". The park produces the bulk of Apple's iPhone line.' https://en.wikipedia.org/wiki/Foxconn#China

Foxconn and Apple are not the economy. I'm talking about the 97% of SMEs that aren't Foxconn and Apple. I'm talking about the mfg concerns that show up at the Guangzhou Trade Fair. I'm talking about the manufactured goods - other than iphones - that most consumers pick up at Walmart, Target, and Amazon worldwide.

It is not that simple. Red China controls America. It says what America can eat, watch, study and buy.
It keeps America's lights on by buying and holding American debt.

Let us be blunt, Red China is now a threat bigger than the Soviet Union and Nazi Germany never were.

Hmm, movie studios watering down international blockbusters to avoid offending large parts of their audience is now Nazism? Are there any Chinese-made movies featuring America as the villain that have become blockbuster hits in America?

It is called appeasement. Let us be blunt. Red China's regime indoctrines its citizens, teaching them to hate the West.

It don't mean nothing. In 12 years we all will be dead.

Of course, China is the bigger threat than were the USSR and Nazi Germany, which are in the dustbin of History. And, look how they ran out of Korea in 1950 the US Army.

It won't be war. Before too long Chiner's domestic economy will have developed and grown to the point where it doesn't need to sell to smart phones and poor quality junk in US markets. Then, Chiner won't have ship-loads of dollars to park in Treasuries. That's when the US is kaput.

Even with that, Chiner is not the biggest threat. That is the Democrat Party.

It is time for action.

It is time to buy gold.

One can't eat gold. It is time to attack Red China.

senor ribby
has that david brooks from harvard
ever tried to gaslight you!

1. Roberts' explanation makes the answer to the question "do the rich get all the gains" obvious. But why then do Stigliz and Krugman write those op-eds? Do they want their taxes to go up? They can't be stupid; are they writing them in bad faith? Is Roberts wrong? Genuine questions.

Roberts complains that lower quintile gains are deceiving because it doesn't take into account transfers and benefits. The hilariously ironic part is that he neither takes into account income from non labor sources by the richest quintile. The very rich earn a vast majority of their income from non-labor sources, which is kind of the whole purpose of Piketty's book. How he thought he could write an honest article and get away with that glaring omission is beyond me.

The rich are amassing incredible amounts of WEALTH over time, and at a disproportionately higher rate than everyone else.

Not sure you clicked through to read Robert's argument, which barely touches on transfers and benefits. His point is that quintiles over time don't reflect actual people over time - so a poor person in 1980 may be in a higher quintile 30 years later, and there is good evidence to suggest that is true on average. Wealth accumulation comes from years of high income and interest on the savings therefrom. Roberts would agree that snapshots of income data do not tell you much about wealth.

My point was that maybe we would see income gains if we tracked the same people over time due to the increase in the career ladder, but that point is moot. Using his data, the bottom 20% went from a little below 20k to a little below 40k in that time. WOW, thats double! I'm being sarcastic of course because 40k is still basically living in poverty, especially for a family.

Roberts is trying to dispel the myth that all the gains have been flowing to the top, by showing income movement over time. That absurdly ignores the fact that Piketty's claim that wealth begets wealth, and that the upper decile is richer than any time in history.

Who cares how much Bill Gates makes.

Any inequality study that doesn’t use individualized panel data is a bold faced bullshit lie. Any high school dropout can see 26 > 22. Why come you no have tattoo?

Either you’re incapable of math, or you understand this. Vox is recruiting economic experts, I think you’ll fit right in.

Let's perform a thought experiment to see if its bullshit.

Lets say our total population in the U.S. is 1000 people in 1990, separated into income quintiles. those 1000 people are tracked each year until 2020. Let's say generously that 500 of those original thousand have moved up at least one income quintile(0-20k, 21-40k etc) Certainly there will be some that moved from the very bottom to the very top, some that moved only one. 50% of the original population moved up the economic ladder, and we could call that a success right?

Aside from the 500 of the original 1000 that did not move up, our population has now expanded. In 2020, our total population is now 2000 people. While many of the original 500 are now in the 1st and second quintile(61k-80k, 81k-100k), there is now a much larger fraction of the population within the 4th and 5th quintile. Whereas in 1990, our 1000 people were evenly distributed between each quintile(200,200,200,200,200) the case now is: 500,400,350,300,250,200).

Long story short, intergenerational tracking is useful to determine the mobility of that generation, but if you're trying to measure the health of an economy as a whole, it would be much more useful to look at how the composition of income distribution changes over time.

40K is poverty? That's rich by historical and world standards.

I said basically living in poverty, especially with a family. Asking a generation of families to live off of 40k is not a sustainable model, especially when it relates to increased costs like housing and healthcare. Additionally, key tools to economic mobility for those families like education is a non-starter. You could argue that they may qualify for loans, but that is a separate issue and also not sustainable in the long term.

#2..."MR. MERRIAM: You would repeal all tariffs, would you? MR. HAYEK: I am a convinced free-trader, and free trade is part of the same philosophy. MR. MERRIAM: Without any limitations or qualifications whatsoever? MR. HAYEK: One thing which makes me unhappy is that so many people who take up my book are not free-traders and do not see that this is an essential part of the same philosophy. MR. MERRIAM: Are you against price parity for the farmer? MR. HAYEK: If “price parity” means that a particular price is to be insured by the government, I certainly am, because it means the price system of competition is completely ineffective. MR. MERRIAM: You think, then, that if we are to avoid the road to serfdom, we must repeal all tariffs and the price parity for the farmers? MR. HAYEK: It would be one of the most certain means to avoid that path."

#1...This might be true. I hope it is. I also agree with the list of current problems we face. But much depends upon how people perceive their current situation, and , if they perceive themselves to be falling behind or living in an unfair society, then to show them a graph that points out they're better off than they think isn't going to persuade many people they're wrong. You're going too need to deal with how they perceive their situation. I continue to believe that economists telling people things aren't as they seem is itself having unforeseen and paradoxical results. Something like' is there no end to the bullshit these economists can come up with to justify their own views'. It might be unfair. Very probably it is unfair. Economics isn't like physics, where being told the universe is a very odd place is easier to stomach since we don't feel competent to judge physics, whereas economics is an area we do feel able to see most of what's up.

#1 I always wondered why I never see this kind of apples-to-apples comparison.

It seems like most people that I know are doing better and better, and most of the people having many kids are people not doing so well.

So it seems like the only reasonable way to do the analysis is using the same families over time.

#6: I wonder how I had not heard of this before, the musical even has a wikipedia page. It seems to have received good reviews and been nominated for some awards, and one of the creators has won an Olivier award.

The other question is how good is the philosophy and economics content? The creators were students at Oxford who were studying exactly those subjects and seem to know what they were talking about.

One third of Monty Python came from Oxford, this looks like it could combine elements of Monty Python, Tom Lehrer, and Hamilton.

#3: This was quite good, I wondered why the heck Cochrane was talking about rock climbing but his analogy is very good.

Two minor quibbles: he almost draws a contrast between "knowledge" and "technology", implying that technology is gadgets but in fact technology is simply ... knowledge. Knowing how to take some wood and metal and make it into the Wright Flyer -- that was an advance in technology, and it was pure knowledge because the wood and metal were sitting there all along.

And he could've made more out of the important observation that most of the advances in knowledge are not just un-patented, they are un-patentable. So there will be "leaks" in patents and intellectual property rights in general, i.e. there will be important positive externalities.

The sheer number of people, and improvements in communications, do aid increases in knowledge as Cochrane said. But another big factor is that this is yet another reason for agglomeration, cities, universities and research institutes, and communities in general to exist: the leaky nature of knowledge means that progress will be faster if the people who are increasing that knowledge can bump into each other. More and more researchers do use the web to share knowledge and build social networks, but if you want to say win a Nobel prize you're probably not going to do it by working remotely and doing your research via the web while living in Alaska, you better move to Cambridge (MA or England) or the like.


Sad news about Alice Rivlin...

Sad indeed but somehow I'd been assuming she'd already passed. Maybe simply because she used to be in the news all the time and then became absent from the news all the time.

A guy in our office killed a deer a few months ago. He gave it to another guy who works here who made a meat pie out of it. It tasted good.

The idea that changing the law will "incentivize" drivers is ridiculous. Have any of those people ever actually hit an animal? It happens so fast that you don't have any time to react. If you do have time to react then the animal will be gone by the time you get there. The only roadkill in that situation would be the people in the car. I don't want to eat that.

The best book I have read in the last year is

Something Rotten: A Fresh Look at RoadKill by Heather Montgomery

It will give you a much broader perspective on the issues surrounding road kill.

From the cover: "Wildlife-vehicle collisions kill over a million animals a day in the United States alone."

You should read it.

meant as a response to Brad F

And just for the record, both my wife and I have hit deer. Did we kill them? We don't know.

The guy behind me also hit me when I braked to avoid the deer. His insurance company argued that it was an act of God that I hit the deer and that he should not be held responsible for the damage he did to my vehicle. It was God's fault not his.

This is a standard insurance company defense and they get away with it too, too often.

Though at dinner they always say "Thank God!!!"

"You should read it."

This also works if re-spelled: "You should eat it."

As for the hit-deer-rear-ender story: some states have no-fault auto insurance. In theory there might be moral hazard, but it presumably reduces the need for lawyers.

3 I remember reading in Time magazine back in the 70's about these free climbers and how they developed techniques to climb these mountains. What had changed was the incentives. I watched evil knievel do crazy stunts on TV around the same time. There is an industry of risk takers who are sponsored by various manufacturers as advertising. Someone will do something even more extreme than Honnold.

I also remember riding bicycles on trails. We took what we considered risks, hurt ourselves from time to time. I walk the mountain biking trails around here and wonder who in their right mind would ride a bicycle down these almost vertical slopes over rock faces. But they do, in droves. So the culture of risk has changed. I suspect that as playgrounds get safer the other avenues of risk and play get riskier. Same with ski hills. Around here the lifts are a means to get to the top of the mountain to access the open country beyond.

I developed a healthy respect for pain in the playground.

#3 another great example is skateboarding. The youtube link below is a current professional (Max Geronzi) riding a board shape from the mid 80s. It demonstrates clearly that advances in street skating ability have little to do with technology, and everything to do with knowledge and knowledge externalities.

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