Archive for the ‘economics’ Category

Virtually all economically wealthy people (and I mean people who are millionaires) got there by underpaying their workers. The workers are the people who created their wealth, the workers are the people who created the products and manufactured the products and sold the products to customers and maintain the products, the millionaire owners have simply kept more of the output of the workers than is justified by what they put into the business. If they shared the wealth created by the workers with the workers in proportion to the amount of that wealth that was created by the workers, they wouldn’t be wealthy. Well off, but not buy-a-Lear-jet-to-fly-to-my-vacation-home-in-the-Bahamas wealthy.

So yes, Elon Musk is evil. When his dot-com got sold he got a huge sum of money even though he himself did not create that dot-com, all he did was invest some money in it. The employees who built that dot com should have gotten their fair share of that wealth that they built, they were the ones who built the web site and back end infrastructure and everything, but they didn’t, Elon took a disproportionate amount. That’s what I mean by evil. Elon gets paid in stock grants that workers who created the wealth of Tesla don’t get (while they are otherwise working long hours for low pay in unsafe conditions). The fact that he has a flair for PR and has done some not-evil things with wealth that should have belonged to the workers who created that wealth doesn’t change the fact that Elon Musk is evil. It merely means he’s trying to absolve the stain upon his soul.

As for the PR stunt of promising clean water for Flint, the devil is, of course, in the details. I doubt Musk is going to spend $1.5 billion to rip up all the streets in Flint to put new water mains under them and new non-leaded laterals to houses, which is what would be required to actually fix it. For one thing, he doesn’t actually have $1.5 billion, not without selling all of his stock in his various ventures. My guess is that he’s going to fund some water filters for people’s houses. Yay. Big fucking deal.

A capitalist system with a working banking system doesn’t require oligarchs in order to start businesses and provide a fair return to the owners of capital. That’s what banks are for. Too bad we don’t have a capitalist system with a working banking system…

— Badtux the semi-Communist Penguin


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If every single member of the Walton family died tomorrow, nobody would notice until the next Walmart board meeting. Even then, all that would happen would be that the outside directors would appoint new board members. You would go to Walmart and it’d be operating as usual

If every single shelf stocker and cashier walked out of Walmart tomorrow and nobody took their place, Walmart would be done. There would be no more company. Because it is the cashiers and shelf stockers who keep the shelves stocked and the money flowing. Without merchandise on the shelves, without cashiers taking money in exchange for that merchandise, there is no Walmart.

Who, then, creates the wealth? It isn’t the Waltons. It is the shelf stockers and cashiers and the purchasing officers and the truckers who bring the goods to the stores and all those other little people. The Waltons are not billionaires because of their hard work or genius. They are billionaires because of government saying that they own the wealth created by all those shelf stockers. Without government police to enforce their ownership of this wealth created by others, they would be as impoverished as a Central American peasant on a subsistence farm. More impoverished, actually. The Central American peasants at least know how to grow their own food. I doubt any Walton has ever gotten his or her hands dirty in the soil, nevermind growing food with them.

If it makes me a socialist to say that the Waltons should be taxed in order to provide health care and education for the people who actually created their wealth, so be it. They are leeches who have wealth only because government allows them to take it from the actual wealth creators, the workers who work in their stores, and if government wants to take some of that wealth back after providing the men with guns that allow them to steal it from the workers in the first place… well, I don’t see what the problem is.

If health care and education for all Americans is “socialism”, then I’m a proud socialist. Economies exist to benefit *all* the people, not just a handful of billionaires who’ve managed to grift their way to the top by rigging the system so they can loot wealth created by others via government guns.

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By which I mean, Karl Marx.

May 5th was the 200th anniversary of the birth of Karl Marx.

Hard-core Marxists are fond of saying “true Marxism has never been tried.” Well, there’s a reason for that. It’s because true Marxism is unworkable. That was the biggest reason why Communism arose — as it became clear that real people just don’t behave in ways that make Marxism workable, the creators of the Communist Revolution in Russia decided that what was needed was a dictatorship of the proletariat to train the people, over the generations, to behave in the ways needed for Marxism to work. In the end that dictatorship became a self-propagating mechanism that completely forgot about why it was created in the first place. After all, what dictator really wants to relinquish power?

Still, none of that changes the fact that Karl Marx correctly diagnosed the problems of the capitalist system of his era, a capitalist system that monopolized the output of workers at gunpoint into the hands of leeches who would be bankrupt if not for the output they stole from workers at gunpoint, a capitalist system that viewed workers as disposable, safety nets as dangerous weakness, and old people should just die, already, as useless eaters. His policy prescriptions for dealing with those problems were unworkable and eventually distorted into something horrific (the Communist system that killed tens of millions of people worldwide, maybe even hundreds of millions, over the roughly hundred years that it was extant), but his observations were correct — and are becoming true again. Alas.

– Badtux the History Penguin

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According to a new study, withdrawing from NAFTA would cost 18 million jobs in the United States during the first year alone.

So where would those jobs be lost? Well, large swathes of the economy are dependent upon Mexico and China now. U.S. automakers Ford and Chrysler would be especially hard hit. I know Chrysler best, so here’s the scoop on what repealing NAFTA would do to Chrysler:

Roughly 40% of Chrysler’s engines are built in their Saltillo, Mexico engine plant, including 100% of their world-famous Hemi V8 engines and roughly 60% of their Pentastar V6 engines. 100% of Chrysler’s best-selling minivans are assembled in Windsor, Canada, and roughly 60% of their pickup trucks are assembled in Saltillo, Mexico, accounting for a significant portion of their profits. 100% of their large cars — the Charger, Challenger, and 300 — are assembled in Brampton, Canada.

In short, if NAFTA is repealed, Chrysler has no engines for their large vehicles, and many of their most profitable vehicles get stranded on the other side of the new Iron Curtain that Trump is trying to build. It’s unclear whether Chrysler would survive. Jeep is about the only thing actually built in the United States today, but Jeep isn’t enough to sustain an auto company, especially a Jeep that has no access to V8 engines and limited numbers of V6 engines.

But hey, gotta keep them darkies on the other side of the border. And make sure that none of them benefit from money spent by white folks. But there’s an interesting thing about walls. They not only keep people out. They keep people in, too.

Just like the original Iron Curtain.

– Badtux the Walls Penguin

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Did the economy do better under Ronald Reagan than under Jimmy Carter? There’s lefties who argue that Republicans are *always* worse than Democrats, but then Republicans shout, “Jimmy Carter!”. Was it true?

Technically yes. According to the St. Louis Fed, GDP in chained billions of dollars was 5732.462 in on 1/1/1977, and 6635.726 on 1/1/1981 when Reagan took office, for an average increase of 3.9% per year. GDP in chained billions was 8831.544 when Reagan left office, for average increase of 4.1% per year. So yeah, technically, you’re right, Reagan’s economy performed better than Jimmy Carter’s, but it’s like claiming that your guy will give us 11 cents rather than the other guy’s 10 cents. Nobody’s going to get too excited about the minimal difference there.

When you look at wages, on the other hand, things look different. In inflation adjusted dollars (taking Bureau of Employment Statistics numbers and feeding them into the official inflation calculator), average hourly wage for non-supervisory workers fell from $21.82 in January 1977 to $20.07 in January 1981, or an average of 2% per year. From there they then fell to $19.35 in January 1989. So: average hourly wages for non-supervisory workers fell by 0.45% per year under Reagan, as versus 2% per year under Carter.

In both cases the working class was fucked. But they were fucked less under Reagan than under Carter.

So I call foul on the notion that Republicans are *always* worse for the economy (and for wages) than Democrats. It is true that Clinton and Obama did better than any Republican president back to Eisenhower, but Jimmy Carter is the counter-example that proves that the rule really isn’t a rule.

On the other hand, Reagan’s policies decidedly set up today’s situation where wages are in free-fall for everybody who’s not one of us technology elites, so this isn’t saying that Reagan was a great President or anything. I mean, real wages fell during his Presidency. You can’t say a President is great if real wages fall during his presidency. On the other hand, he was not the Worst president of the past fifty years. That honor falls on Jimmy Carter, a nice man who tried (and tries) to do right, but a lousy President.

– Badtux the Numbers Penguin

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As some of you know, my cat has been diagnosed as diabetic and requires insulin injection. He was prescribed Lantus, which is a long-acting insulin called “glargine insulin” that slowly infiltrates the body from the injection site during the course of the day rather than hitting in one big insulin hit. This is sort of the Gold Standard of insulin, controlling blood sugar far better than anything other than an insulin pump. Sometimes you can bring a cat with Type 2 diabetes back to non-insulin-dependent status by using this stuff to regulate his blood sugar until his body readjusts to operating with normal level blood sugar. Tapering off then lets his pancreas take over insulin production again and you have your cat back, albeit with severe dietary restrictions to keep his weight and blood sugar down. Yeah, that doesn’t really happen with people, but cats are weird.

TMF probably isn’t going to be in that cat-egory because his blood sugar was so high, but my vet said it was worth trying. my vet said “Okay, it’s expensive, but this is the gold standard and a $180 vial will last you several months.”

Well, it was a $180 vial in 2014, the year before its patent expired. Today it’s a $290 vial.

What happened? Competition happened. Two competitors entered the market, releasing two competing products, Basaglar and Toujeo. So, what happened? Why did prices go up rather than down the way the free market maniacs are always claiming competition will do in healthcare?!

Well: The maker of Lantus has a fixed amount of profit they want to make from Lantus. If volume goes down — which happened with competition — then they raise the price to make that amount of profit. And the competitors have similar price desires, so try to compete based on something other than price –Toujeo is more concentrated than Lantus (more doses per milliliter). Or if they’re wanting to compete on price, they price 10% below the market leader, because that’s what maximizes their profit (see: Basaglar). Every time Lantus raises their price to meet their profit goals, the other two raise their prices in lockstep to maximize their *own* profits.

So competition nearly doubled the price of my cat’s insulin within three years.

So much for that healthcare “reform” nonsense about “competition reduces prices!”. It just doesn’t seem to work that way in the real world, at least not for healthcare.

– Badtux the “Free Market Orthodoxy is religion, not fact” Penguin

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Those things have to arise elsewhere, because they are not natural attributes of capitalism or markets. As the following example makes clear.

So, you’re a retailer. A hurricane has hit your city and the city water plant was wiped out. The water won’t be back on for weeks at the earliest.

You have four cases of water in your store. Four people come into your store:

Person A: A wealthy banker with $250,000 in the bank and $500 cash in hand who wants to buy all four cases of water at $80 apiece.
Persons B,C,D: Three single mothers with two kids making $400/month at a minimum wage job while living in subsidized housing. Most of her money goes to food, utilities, or the car that is all that allows her to get to her job, and she has a total of $20 cash left over from paying that month’s bills. She wants to buy a case of water at the normal $4.95 price in order to keep her family alive until FEMA water deliveries start.

What do you do?

If you’re a follower of Ayn Rand, a worshipper of capitalism, you say “Sell the water to the wealthy banker.” It’s what gets you the most money. Which is the whole point of capitalism, right?

If you’re a worshipper of the Free Market Fairy, you’ll say “well, I’m sure those mothers will find some resources *somewhere* to buy water if they really need it,” and shrug your shoulders. If they don’t find water elsewhere, or can’t raise the money in any way, well, they must not have tried hard enough, right?

If you’re a typical economist, you say “well, there’s not enough water to fulfill demand, so high prices ration it amongst the multiple parties.” Ignoring the fact that the rich person can buy more water than he needs because he has money coming out of his ears, while the single mothers even combining all their resources can’t even afford $80 for the single case of water that one of their families needs to stay alive. But dead single mothers aren’t a concern of economists, they’re all about abstractions. Ignoring the fact that their rationing abstraction ends up with 75% more people dead than if the rationing was done according to need rather than according to wealth.

If you’re a Republican sociopathic lizard person (but I repeat myself), you say “those poor people don’t contribute anything to the economy, while the rich man does, so I’ll sell it to the rich man because he’s the only one who deserves to live.” Ignoring the fact that the average rich person would starve to death if it wasn’t for all those poors stocking shelves and cashing out people at supermarkets, and waiting tables and cooking the food at restaurants.

If you’re a moral person, you ration the water — you give each person who comes through a fixed amount that they need to get through the next couple of days, and that’s that. So you sell one case of water to each single mother at the regular price, and one case of water to the rich banker at the regular price, and four people survive to live to see FEMA come in, rather just one. Four people surviving is more moral than only one person surviving, right?

But there seems to be fewer and fewer moral people each year. Perhaps what we need to be selling are moral compasses. Sadly, the vast majority of them seem to be defective right out of the box. Maybe because we outsourced production to China. In the absence of a moral compass, we rely on government to impose morality on the market via, e.g., anti-profiteering laws. When government doesn’t do that… we get dead bodies.

And nobody seems to care.

– Badtux the Morality Penguin

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