People who dismiss the unemployed and dependent as ‘parasites’ fail to understand economics and parasitism. A successful parasite is one that is not recognized by its host, one that can make its host work for it without appearing as a burden. Such is the ruling class in a capitalist society.
—  Jason Read

The very stupid, class warfare,  fixed-pie progressive message of Elysium.

"The fallacy that many people blunder into is that economics is a zero sum game.  This is the idea that there is a finite, fixed amount of wealth to go around. I can only grow wealthy at your expense or vice versa.  If I own a Corvette, you can only own a jalopy. If I get a top hat, you get polio."


Austrian Economics vs Keynesian Economics

What I like about this chart is that Keynesians are unlikely to feel mischaracterized. Which is good. Because the supernatural silliness of “animal spirits” is front and center.

I’d also note that Keynesians previously defined inflation the same way as Austrians and everyone else did (even Keynes himself defined inflationism as “debauch[ing] the currency” and “print[ing] notes.”) until they realized how politically inconvenient accuracy can be.

(See also: “What Inflation Is: On (Re)Defining a Term,” “On Monetary Inflation Leading to Price Inflation,” “Re: What Inflation Is,”)

Something I’ve seen claimed over and over again (I know Ariel Rubenstein has claimed this) is the idea that economists are market fundamentalists because they have some quasi-religious belief in the mathematical beauty of free markets.

Setting aside the “market fundamentalist” canard, I’ve never seen any evidence that the use of mathematics in economic analysis correlates with free market views. The only mathematical economist who could really be called a libertarian was Pareto. Libertarians are mostly Marshallian, who are usually more restrained in their use of mathematics than the Walrasians, and the most extreme libertarians tend to be Austrians who use essentially no mathematics.

Low-Wage Paying Employers Are the Real ‘Welfare Queens’

The federal minimum wage of $7.25 is now worth 30 percent less than it was in the 1960s, after adjusting for inflation. It is quite literally a poverty wage — if you support a child, working full-time at the federal minimum will land you $650 below the federal poverty line; supporting two kids will put you more than $4,000 beneath it.

We’ve noted before that low-wage employers shift some of their labor costs onto the backs of taxpayers by encouraging their workers to apply for public benefits. These employers are the true “welfare queens,” their profits indirectly subsidized by the public, which allows them to keep prices artificially low. We’ve argued in the past that this is one of several reasons why conservatives who oppose spending on the social safety net should favor raising the minimum to a point where workers can get by on their own labor.

Complying with federal regulations costs Americans $2.028 trillion in lost economic growth annually, or roughly equivalent to 12 percent of total GDP that could be invested back into our nation’s businesses, according to a new study commissioned by the National Association of Manufacturers (NAM).

The study, conducted by economists Nicole V. and W. Mark Crain, concluded that manufacturing businesses face a disproportionate share of the burden, or $19,564 per employee per year—nearly double what the average U.S. business pays to comply with federal rules. Small manufacturers pay more than three times as much as the average U.S. firm. That is $34,671 per employee per year that small manufacturers could use to grow their businesses and create jobs.

“Manufacturers have long cited more and more complex regulations as a barrier to their growth, and today, we have new data demonstrating the true burdens shouldered by manufacturers throughout the supply chain, particularly the smallest firms, in complying with growing federal mandates,” said NAM President and CEO Jay Timmons. “Manufacturers rely on a stable, balanced and commonsense regulatory environment to create jobs and fuel economic growth. With growing regulatory compliance burdens, policymakers should be alarmed that our nation’s smallest manufacturers are being put at a competitive disadvantage within the global economy.”

The newly released NAM study builds on previous studies conducted by the Crains for the U.S. Small Business Administration’s Office of Advocacy. This study updates previous estimates of the cost to comply with federal regulations using new data sources and incorporates the findings of an extensive survey of NAM members that validate conclusions reached in the economic analysis. That survey, for instance, shows that manufacturers would invest more in their businesses and in their people if compliance costs were lessened. 

“Our data continue to show that small businesses and manufacturers bear a disproportionate share of compliance costs,” said Nicole V. Crain.  


A hard look at corn economics — and world hunger

"We plant more than 90 million acres of corn, and it’s in huge surplus. And it’s not even food. What if we planted actual food instead? Take corn, and add in other giant crops that basically just feed animals—crops like soybeans, barley, hay, sorghum—and two-thirds of U.S. farmland goes to animal feed.

Such a small portion of our land goes to grow actual food that people consume, that if we really wanted to increase that supply, it would be pretty easy. The trick would be convincing the country — and other countries that import animal feed from the U.S.— to go vegan.

Most consumers seem to want superfoods like ‘Açaí from the Amazon,’ ‘Inca Berries from Peru,’ ‘Goji Berries from China’ and ‘Cloudberries from Finland’ because they want some sort of miracle silver bullet, harvested from deep in the jungle, or gathered from the top of the purest mountain. It’s fetishistic, in the anthropological sense of the word: you’re the Don Quixote of the health food store, searching for the right combination of exotic antioxidants, that will let you live forever.

Nobody seems to want to hear that red cabbage will accomplish almost all the same things these ‘magical’ berries will, for a fraction of the sugar, and 1/20th of the price. For some people, when superfoods are staring at them in the grocery store for $1.99, it seems too easy.


The power of marketing, as it applies to produce:

"Quinoa may deliver a complete protein—all of the amino acids you require—in a compact package, but rice and beans together actually do better. And like goji berries, blueberries and strawberries are packed with phytochemicals. The only problem is that lacking an exotic back story, food marketers can’t wring as exorbitant a markup from these staples: The domestic blueberry, for example, is periodically (and justifiably) marketed as a superfood, and in 2012, products featuring blueberries as a primary ingredient saw their sales nearly quadruple. But they only raked in $3.5 million—less than 2 percent of açaí-based product sales.

-Tom Philpott, "Are Quinoa, Chia Seeds, and other ‘Superfoods’ a Scam?" (from Mother Jones)

The lesson? Find your local superfoods. I assure you they are just as good. But, if you must have your Inca and Goji berries, it’s a hell of a better price point to grow them yourself.

It turns out that there’s a law in economics known as the first fundamental law of demand, to which there are no known real-world exceptions. The law states that the higher the price of something the less people will take of it and vice versa. Another way of stating this very simple law is: There exists a price whereby people can be induced to take more of something, and there exists a price whereby people will take less of something.

Some people suggest that if the price of something is raised, buyers will take more or the same amount. That’s silly because there’d be no limit to the price that sellers would charge. For example, if a grocer knew he would sell more — or the same amount of — milk at $8 a gallon than at $4 a gallon, why in the world would he sell it at $4? Then the question becomes: Why would he sell it at $8 if people would buy the same amount at a higher price?

There are economists, most notably Nobel Prize-winning economist Paul Krugman, who suggest that the law of demand applies to everything except labor prices (wages) of low-skilled workers.

Krugman says that paying fast-food workers $15 an hour wouldn’t cause big companies such as McDonald’s to cut jobs. In other words,

 Krugman argues that raising the minimum wage doesn’t change employer behavior.

Before we address Krugman’s fallacious argument, think about this: One of Galileo’s laws says the influence of gravity on a falling body in a vacuum is to cause it to accelerate at a rate of 32 feet per second per second. That applies to a falling rock, steel ball or feather. What would you think of the reasoning capacity of a Nobel Prize-winning physicist who’d argue that because human beings are not rocks, steel balls or feathers, Galileo’s law of falling bodies doesn’t apply to them?

Krugman says that most minimum-wage workers are employed in what he calls non-tradable industries — industries that can’t move to China. He says that there are few mechanization opportunities where minimum-wage workers are employed — for example, fast-food restaurants, hotels, etc. That being the case, he contends, seeing as there aren’t good substitutes for minimum-wage workers, they won’t suffer unemployment from increases in the minimum wage. In other words, the law of demand doesn’t apply to them.

anonymous said:

He is right though, and it would be nice if you actually responded with some...I dunno, content? Certain majors, especially STEM, are seen as more valuable largely because they are in higher demand, and fewer people attain the skills to go into it because those skills tend to require more prep, and also because they typically have to go to school much longer. It isn't made harder artificially. It's just a naturally more difficult subject matter.

Here’s the thing though.

So we live in a society where decision making and analytical capabilities are delegated to the top rung, in pretty much every major organization, right?  You don’t get burger flippers or even minor night managers questioning decisions made by the top because the top is correct because they know better, right?

This isn’t actually the case, though.  No amount of knowledge at the top substitutes for local knowledge about the context particular to one store or another.  But making decisions at that local level requires critical thinking and stuff which clearly some foolish burger flipper or night manager doesn’t have!

But there’s the issue: the skills taught in the humanities are actually key, at all levels of daily decisionmaking.  It’s just that we have delegated the making of those decisions to the top.  This isn’t because it’s more efficient or because we live in such an uneducated society (we have the highest level of literacy right now than in any point in history), it’s because that hierarchy is seen as legitimate.

So the humanities are in low demand because we don’t ask anyone at lower levels to think critically.  And I’ll reiterate that the STEM fields are highly dependent on government funding of the sciences, which has not been forthcoming as of late.  And neither I nor anyone else is denying that engineering and the hard sciences aren’t difficult disciplines.  But the establishment of the kind of knowledge that the hard sciences embody over all other kinds of knowledge says more about our society than the objective value of those disciplines.

Mod R