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Famed ‘A Beautiful Mind’ mathematician John Nash, wife, killed in N.J. Turnpike crash.

Nash, a West Virginia Native, shared a Nobel Prize for Economics in 1994, the year before he joined the Princeton mathematics department as a senior research mathematician. He is known for his work in game theory and his struggle with paranoid schizophrenia, depicted in the 2001 film, “A Beautiful Mind,” starring Russell Crowe.

Just as primitive peoples tended to attribute such things as the sway of trees in the wind to some intentional action by an invisible spirit, rather than to such systemic causes as variations in atmospheric pressure, so there is a tendency toward intentional explanations of systemic events in the economy when people are unaware of basic economic principles.  For example, while rising prices are likely to reflect changes in supply and demand, people ignorant of economics may attribute price rises to “greed.”
—  Thomas Sowell, Basic Economics
Why I Don’t Like Libertarianism

I was going to put this in a reply to argumate, but it’s not especially personal so I might as well air it out publicly.

Libertarianism is at its heart an ideology based around the concepts of “I got mine, so fuck you” and “I should be able to do whatever I want”. There’s three groups that tend to adhere to it, as a result:

1. The group that does it out of greed. Usually upper or middle class twits who’ve lived fairly sheltered and privileged lives. They’re already sailing high, so they want to stay there, even if it means burning their wings on the sun.

2. The group that does it out of desperation. Usually blue-collared workers who want to hold on to what little they fought for and dream of getting more if only they weren’t held down. They’re not wholly wrong, mind, but the problem is they think it’s solely the government holding them down when it’s actually mostly the rich doing so.

3. Those people who actually don’t agree with the “fuck you” part, and honestly think that keeping yours and doing whatever you want will help the downtrodden against those with power, while forgetting that it will help even more those with power against the downtrodden. The people who forget that while there’s certainly bad regulations, most regulations protect and help people in ways they otherwise wouldn’t get.

As such, the reason why libertarianism keeps being a hotbed of hypocrisy, self-contradictions, and special pleading for keeping certain government regulations and functions, is because all three groups realize subconsciously that it’s a lot easier to go “fuck you” when you have a standing army to employ, a bunch of laws to enforce your right to go “fuck you”, and the people you told to fuck off aren’t left so desperate that even the army isn’t a sufficient enough deterrent.

So it bugs me that a lot of people who consider themselves Rationalists seem to buy into libertarianism, because there’s very little that’s little-r rational about it. It’s an ideology, not a logical economic system. At best it shows an extremely naive and simplistic understanding of socioeconomic interactions–especially where imbalances of various types of power are concerned–and at worst it shows an infantile attitude of refusing to be a participant in society and refusal to be held to any standards of conduct.

P.S. And FFS, they especially need to stop whining that paying taxes and paying higher wages is people stealing their property. That’s especially damn infantile. It’s like saying that if you live with family or roommates and are able-bodied and get your own income, that the other people in the house are violating your property and bodily rights if they expect you to actually contribute anything towards the household upkeep.

Dr. Nash’s theory of noncooperative games, published in 1950 and known as Nash equilibrium, provided a conceptually simple but powerful mathematical tool for analyzing a wide range of competitive situations, from corporate rivalries to legislative decision making. Dr. Nash’s approach is now pervasive in economics and throughout the social sciences and is applied routinely in other fields, like evolutionary biology.

Harold W. Kuhn, an emeritus professor of mathematics at Princeton and a longtime friend and colleague of Dr. Nash’s who died in 2014, said, “I think honestly that there have been really not that many great ideas in the 20th century in economics and maybe, among the top 10, his equilibrium would be among them.” An economist, Roger Myerson of the University of Chicago, went further, comparing the impact of Nash equilibrium on economics “to that of the discovery of the DNA double helix in the biological sciences.”

Dr. Nash also made contributions to pure mathematics that many mathematicians view as more significant than his Nobel-winning work on game theory, including solving an intractable problem in differential geometry derived from the work of the 19th century mathematician G.F.B. Riemann.

Judge for yourself if Robert Reich, in this video promoting a 107% increase in the national minimum wage in the U.S., presents an unbiased interpretation of the data.  (Other problems – oodles of them – swarm throughout Reich’s video.  But let’s ignore these other problems for now.)

About 45 seconds into this video Reich begins his comparison of the real value of today’s minimum hourly wage ($7.25) to the inflation-adjusted value of the minimum wage in 1968.  In 1968 the minimum wage was $1.60; according to Reich’s inflation adjustment, this nominal value in 1968 is the equivalent of $10.52 today.  Because $10.52 is significantly higher than today’s minimum wage of $7.25, we’re supposed to conclude that some great injustice is being visited upon today’s minimum-wage workers.

But as the graph below reveals, Reich’s selection of 1968 as the year to use for a comparison of the real value of today’s minimum with that of some presumed past golden era is almost certainly not random.

This graph – taken from this September 2014 study issued by the Pew Research Center – shows the nominal (green line) and inflation-adjusted (yellow line; in 2013 dollars) values of the national minimum wage in the U.S. dating back to the modern American minimum-wage’s origin in 1938.  1968 happens to be the year in which the inflation-adjusted value of this minimum wage was highest.

Indeed, eyeballing the chart shows that, save for the years of the recent Great Recession (hardly a time when one would wish for especially high minimum wages!), one has to go back to the early 1980s before encountering a time when the real value of the minimum wage was as high as is the real value of today’s minimum wage.  While it’s true that for most (although not all) of the 15-or-so-year period between the mid 1960s and the early 1980s the real value of the national minimum wage was generally higher than is the real value of today’s minimum wage, this value was seldom anywhere near the high magnitude that Reich’s comparison of today’s real-minimum-wage value with that of the real value of 1968 would lead you to believe.

And consistently from the early 1960s back to 1938 – the year of the national minimum-wage’s unfortunate (and decidedly non-immaculate) conception – the real values of minimum wages were quite below that of the real value of today’s minimum wage.  Even during the 1950s – a decade celebrated nostalgically by many as a glorious one, economically, for ordinary Americans – the real value of the minimum wage was well below that of the real value of the minimum wage today.  Go figure.

Don Boudreaux also wrote Reich a letter:

In one of your recent videos endorsing a 100-plus percent (!) hike in the national minimum wage, you repeat the popular-in-Progressive-circles assertion that (quoting you) “we subsidize low wage employers” through government welfare programs such as food stamps, Medicaid, and housing assistance.

Basic economic reasoning reveals your argument to be backwards.  Welfare payments of the sort that you mention make work a relatively less attractive option for welfare recipients and, thus, reduce the labor supply.  One consequence is that wages paid by employers to their low-skilled workers are raised (and not, contrary to your mistaken suggestion, lowered).  Thus, far from being subsidized by most government welfare programs, Wal-Mart, McDonald’s, and other employers of many low-wage workers are harmed by them.

Don’t believe me?  Here’s Arindrajit Dube, one of the most prominent economists today who favors raising the minimum wage: “[M]eans tested public assistance programs are not tied to work, and we should not expect them to lower wages.  Let’s take food stamps, which are available to eligible families whether or not a family member works or not.  Indeed, when people are not working, they are more likely to be eligible for food stamps since their family incomes will be lower.  Therefore, SNAP is likely to raise, and not lower a worker’s reservation wages – the fallback position if she loses her job.  This will tend to contract labor supply (or improve a worker’s bargaining position), putting an upward pressure on the wage.”

Your failure to grasp even the most fundamental of economic principles makes your arguments for a higher minimum wage especially dubious.

And he points out another of Reich’s many errors/falsifications:

Starting at around the 1:27 mark in this two-minute-long video in which he calls for the national minimum wage in the U.S. to be more than doubled to $15 per hour, former U.S. Secretary of Labor Robert Reich – dismissing with a contemptuous tone those who point out otherwise – claims that “about half of minimum-wage workers are 35 or older.”

Wrong.

According to this figure that appears in this December 2013 report from the Pew Research Center, the percentage of minimum-wage workers who are 35 or older is about 29.  That’s less than a third and, hence, not remotely close to “about half.”  (In fact, “about half” – 51% – of workers earning the minimum wage haven’t yet celebrated their 25th birthday.)

These data from Pew are consistent with those found in Table 1 of this more recent report (April 2015) from the U.S. Bureau of Labor Statistics.  In this BLS report we learn that 48.2 percent of all workers who earn the minimum wage or less are under the age of 25 (and 21.4 percent of minimum-wage-or-less workers are still teenagers!).  And from Table 7 we learn that the percent of minimum-wage workers age 35 or older is 29.4 – again, less than one-third of all minimum-wage workers.

Note also, from the BLS report, that only 2.5 percent of all workers age 25 or older earn the minimum wage or less – meaning that the percentage of workers 35 years or older who earn hourly wage so low is even smaller.  So the notion that the economy is filled with lots of older workers trying to raise families on minimum-wage pay is simply false.

Still other problems fill Reich’s video.  Some of these problems are detailed in earlier posts (here, here, and here); I’ll identify yet others – there are many – in future posts.

entryistscum, the-prolefeed, tohoya:

This essay does a good job of explaining some of the reasons why “I should be able to opt-out of government services and so taxes are theft” is so unrealistic an argument, via showing how even services we wouldn’t even consider ourselves as participating in still indirectly impact our lives.

You have to SPEND money to MAKE money.
—  Brilliant advice frequently given to people with NO money by people who HAVE tons of money.

ten-thousand-rivers asked:

There is something I'd like to ask you, if I may. Are you familiar with the concept of shared value? If so, what is your opinion or view about it?

Sorry, I forgot I still had this question to answer.

I’ve heard about the concept of shared value. However in my opinion what Creating shared value is really saying is that Capitalism suffered only a few false steps and it’s a matter of social direction. 
It’s nothing new, there have been voices in the past (Olivetti or Steve Jobs to name a few) who have talked about the prospect that capitalism is reformable.

I don’t believe in Corporate social responsibility, it is just a fraud, capitalism has nothing to do with ethics, and if it does, it’s just for propaganda purposes. 

First because it makes look as positive sides of capitalism things that should be obvious (human rights, increasing the safety of the workplace, benefits, offering a more humane working hours, less pollution). Indeed, according to them, one should also be grateful to the companies for what they give back (which is still an infinitesimal part of what they take from the environment and the people).

Second because it supports a system based on inequality, exploitation, hierarchy, ephemeral consumerism, profit at all costs, imperialism and unbearable pollution.

Third, because we have no need for capitalism, capitalism needs us.

Reasonable people can disagree about the nature and extent of climate change. But no one should sally forth into this hostile territory without reason and reflection.

“Some scientists make ‘period, end of story’ claims,” writes biologist and naturalist Daniel Botkin in the Wall Street Journal, “that human-induced global warming definitely, absolutely either is or isn’t happening.”

These scientists, as well as the network of activists and cronies their science supports, I will refer to as the Climate Orthodoxy. These are the folks who urge, generally, that (a) global warming is occurring, (b) it is almost entirely man-made, and © it is occurring at a rate and severity that makes it an impending planetary emergency requiring political action. A Climate Agnostic questions at least one of those premises.

Trying to point out the problems of the Climate Orthodoxy to its adherents is like trying to talk the Archbishop of Canterbury into questioning the existence of God. In that green temple, many climatologists and climate activists have become one in the same: fueled both by government grants and zealous fervor.

Room for debate

But the debate must go on, even as the atmosphere for dialogue gets increasingly polluted. The sacralization of climate is being used as a great loophole in the rule of law, an apology for bad science (and even worse economics), and an excuse to do anything and everything to have and keep power.

Those with a reasoned agnosticism about the claims of the Climate Orthodoxy will find themselves in debate. It’s April 22nd — Earth Day. So I want to offer 22 ways to think about the climate-change debate. I hope these points will give those willing to question man-made climate change some aid and comfort.

Here are a few:

1. Consider the whole enchilada

First, let’s zoom out a few orders of magnitude to look at the Climate Orthodoxy as a series of dots that must be connected, or better, a series of premises that must be accepted in their totality.

  • The earth is warming.
  • The earth is warming primarily due to the influence of human beings engaged in production and energy use.
  • Scientists are able to limn most of the important phenomena associated with a warming climate, disentangling the human from the natural influence, extending backward well into the past.
  • Scientists are able then to simulate most of the phenomena associated with a warming earth and make reasonable predictions, within the range of a degree or two, into the future about 100 years.
  • Other kinds of scientists are able to repackage this information and make certain kinds of global predictions about the dangers a couple of degrees will make over that hundred years.
  • Economists are able to repackage those predictions and make yet further predictions about the economic costs and benefits that accompany those global predictions.
  • Other economists then make further predictions based on what the world might be like if the first set of economists is right in its predictions (which were based on the other scientists’ predictions, and so on) — and then they propose what the world might look like if certain policies were implemented.
  • Policymakers are able to take those economists’ predictions and set policies that will ensure what is best for the people and the planet on net.
  • Those policies are implemented in such a way that they work. They have global unanimity, no defections, no corruption, and a lessoning of carbon-dioxide output that has a real effect on the rate of climate change — enough to pull the world out of danger.
  • Those policies are worth the costs they will impose on the peoples of the world, especially the poorest.

That is a lot to swallow. And yet, it appears that the Climate Orthodoxy requires we accept all of it. Otherwise, why would the Intergovernmental Panel on Climate Change (IPCC) publish a document called “Summary for Policymakers”? …

Keep reading

A higher tax rate increases reinvestment into a company and upkeep of factory/fleet/salaries as a way to decrease taxable income. Conversely, a low tax rate is a green light to skim profits solely for CEOs and shareholders. 

The 1950s/1960s had a robust economy and great state/public benefits. All ships were rising. 

Baby Boomer Financial Advice

Seen in a newspaper column purporting to offer financial advice to college students:

“Don’t keep more than $250,000 in any one checking or savings account at a single bank because that’s the limit insured by the FDIC against loss.”

Is trying to decide where to keep all their millions really a concern of 99% of today’s college students?

My biggest financial worry when I began college 20+ years ago was “Will everyone on my paper route pay their bill this month so I can buy textbooks?”

The worker becomes all the poorer the more wealth he produced, the more his production increases in power and range. The worker becomes an ever cheaper commodity the more commodities he creates. With the increasing value of the world of things proceeds in direct proportion the devaluation of the world of men. Labor produces not only commodities: it produces itself and the worker as a commodity—and does so in the proportion in which it produces commodities generally.

This fact expresses merely the object which labor produces—labor’s product—it confronts it as something alien, as a power independent of the producer. The product of labor is labor which has been congealed in an object, which has become material: it is the objectification of labor. Labor’s realization is its objectification. In the conditions dealt with by political economy this realization of labor appears as loss of reality for the workers; objectification as loss of the object and object-bondage; appropriation as estrangement, as alienation*.

So much does labor’s realization appear as loss of reality that the worker loses reality to the point of starving to death. So much does objectification appear as loss of the object that the worker is robbed of the objects most necessary not only for his life but for his work. Indeed, labor itself becomes an object which he can get hold of only with the greatest effort and with the most irregular interruptions. So much does the appropriation of the object appear as estrangement that the more objects the worker produces the fewer can he possess and the more he falls under the dominion of his product, capital.

All these consequences are contained in the definition that the worker is related to the product of his labor as to an alien object. For on this premise it is clear that the more the worker spends himself, the more powerful the alien objective world becomes which he creates over-against himself, the poorer he himself—his inner world—becomes, the less belongs to him as his own. It is the same in religion. The more man puts into God, the less he retains in himself. The worker puts his life into the object; but now his life no longer belongs to him but to the object. Hence, the greater this activity, the greater is the worker’s lack of objects. Whatever the product of his labor is, he is not. Therefore the greater this product, the less he is himself. The alienation of the worker in his product means not only that his labor becomes an object, an external existence, but that it exists outside him, independently, as something alien to him, and that it becomes a power on its own confronting him; it means that the life which he has conferred on the object confronts him as something hostile and alien.

—  “Estranged Labor,” from Economic and Philosophic Manuscripts of 1844, by Karl Marx

*Alienation — Entäusserung

“It is estimated that Australian women born in 2012 will, on average, live for 94.4 years, and their male counterparts will live for 91.6 years. Over the next 15 years, the number of people aged 65 and older will increase by 85%, from 3.1 million in 2011 (14% of the population) to 5.7 million in 2031 (19% of the population); by 2050, it is expected that almost a quarter of the population will be aged 65 or over.

“While in 1901, there were 15 people of traditional “working age” (15–64 years) to support each Australian aged 65 and over, this potential support ratio dropped continuously over time to 7.5 in 1970, 5 in 2010, and it is projected to be 2.7 in 2050. These demographic developments will have a noticeable impact on the country’s society, economy, and government budgets over the next decades.”

From Work, Aging and Retirement in Australia: Introduction to the Special Issue. You can browse the freely available special issue for more articles on this topic.

Image: Australian Continent Aerial View. Public Domain via Pixabay.