Friday, June 20, 2025
Capital Investments on the rise
If you believe this article, this is more or less mandated by the laws of economics, as goverments get more desperate for money, and interfere more and more in the banking system.
First of all: avoid government bonds. Investors in government debt are the ones who will be robbed slowly. Within equities, there are sectors that will do very well. The great problems we have – energy, climate change, defence, inequality, our dependence on production from China – will all be solved by massive investment. This capex boom could last for a long time. Companies that are geared to this renaissance of capital spending will do well. Gold will do well once people realise that inflation won’t come down to pre-2020 levels but will settle between 4 and 6%.
Labels: economics
Sunday, August 13, 2023
Horatio Alger and Industrialists vs Capitalists
I started at this article about Horatio Alger but ended up on this very interesting article on the differences between industrialist and capitalist CEOs, the US having a deficit of people who have gotten their hands dirty and want to build new things to improve the world. It touches on the insane stupidity of IBM management who
A microcosom of so many others who destroyed the businesses entrusted to them.
instead of plowing profits back into their business, have plowed $200 billion into paper—its stock. In so doing, they have fractured the stakeholder foundation of one of the strongest corporations in the United States of America. Their actions have set a standard despised by Henry Ford and most every industrialist who built this country.
A microcosom of so many others who destroyed the businesses entrusted to them.
Labels: economics
Tuesday, March 21, 2023
New mutual bank for NE/NY argiculture
Always wanted to be part of a mutual.
A mutual is a company owned by its customers, depositors in this case. They'll be focusing on supporting farmers, etc in the local area.
If it opens its doors as planned in January 2022, Walden Mutual Bank will be the first new mutual bank charter in New Hampshire in a century and the country’s first new mutual charter in five decades.
A mutual is a company owned by its customers, depositors in this case. They'll be focusing on supporting farmers, etc in the local area.
Monday, March 20, 2023
RIP lower rungs of the economic ladder
Louis Rossman pointing out that due to manufacturers locking down their supply chains, it's becomming more and more difficult for people to start in the repair business. None of this benefits consumers, it all benefits Apple.
Labels: economics
Friday, December 02, 2022
Michael Novak retrospective
Monday, December 13, 2021
Religion and the size of government
A very interesting look at how the attitude towards independence and security has changed over time.
And, above all, security has become a fetish among all classes of society, from the lowliest wage-earner to the president of the corporation. To be sure, security against the exigencies of life has always been a human aim. But, while in the last century man made provision against disaster, in insurance, in paying off the mortgage on the old homestead, in savings, the tendency during the latter half of the twentieth century is to put the burden of one's security on society. The young man entering the business world is not concerned with the chances of advancement that are open to industry and skill, but rather with the pension system provided by the company; and the candidate for president of the corporation is concerned with his retirement even as he takes on the duties of the presidency. This change of attitude from personal responsibility to collectivized security is probably the result of the income tax; it would be difficult to trace it to any alteration in human nature or any deterioration of character.The author is of the opinon that the state has more or less taken the role of a Freudian religious hierarchy, in a society attempting to return to the nurturing environment of the womb. The transformation was made possible by the income tax, which made everyone much poorer and dependent on those returning that same money to those same people. And once you've paid 40% of your paycheck to the government, you're less likely to want to take any chances, and more likely to play it safe. Anywho, this is taken from a book "Out of Step: The Autobiography of an Individualist".
Saturday, October 03, 2020
Groupthink in regulation
A very interesting look at the mechanism by which the chattering classes around the world arrive at a decision and force it on everyone - with a focus on how the regulatory environment of the last 50 years has prevented the world from getting better. Interestingly,
Where's my flying car by Robin Hanson summarizes Where's my flying car by J. Storrs Hall, and places the blame pretty squarely on over-regulation, of nuclear power in particular, but of all technology in general. We didn't turn to twitter because there were no ideas, but because that was, for a while, the only unregulated area for growth.The greatest engine for economic inequaltiy is the government trying to be nice.
Gordon's central thesis was that our spurt of growth came from mastering fossil fuels -- essentially mastering electromagnetism -- and that's over.
Friday, September 04, 2020
A brief investigation on empty real estate
Always an interesting topic
Granted, I am not a large tenant in my building. I have about a thousand square feet of office space, but we are doubling the size of the company and I sent a note a number of days ago to my building management asking if I could look at getting perhaps twice as much space.
The building is at least half empty and many of the tenants they do have look to be checking out. So I sortof expected some response, but today I had to follow up to a list of several people at my landlord with an email. . .
Labels: economics
Sunday, April 19, 2020
Shortages
Prices preventing shortages
The failures of communism to provide goods
And so on.
The failures of communism to provide goods
In contrast, those who propose to replace markets with government direction have no theory – none – of how resources would be allocated in ways that satisfy as many as possible consumer demands. Such people have only faith – faith that government officials somehow ‘know’ what the ‘correct’ prices are – faith that bureaucrats somehow ‘know’ which goods and services fellow citizens ‘should’ produce more of and which they should produce less of – faith that politicians somehow ‘know’ which things ‘should’ be imported and exported and which things ‘should not’ be imported and exported.
And so on.
Labels: economics
Tuesday, December 24, 2019
Bank regulation making things worse
As usual, the response to a great failure of regulation was... more regulation. Deposit insurance protected depositors. But offering insured deposits to bankers is like sending your brother-in-law to Las Vegas with your credit card. So the government started extensively regulating how banks invested, and forbade banks to compete for deposits. But people in Las Vegas with your credit card, for 20 years, get creative. From Continental Illinois to the savings and loan Crisis, to the Latin American and Southeast Asian crises, to LTCM, and Bear Stearns, and finally the great crisis of 2008, we repeated the same story: bailout larger classes of creditors, add regulations to try to stop more creative risk taking, add power to regulators who really really will see the next one ahead of time, promise it won’t happen again. Dodd Frank, and today’s “macroprudential” policy are not new, they are just the last logical patch on the same leaky ship.
Labels: economics
Wednesday, July 25, 2018
New York State and car rental madness
Trouble for the independents started in 1989, when the state passed a law limiting what rental companies could charge for vehicle damage to a mere $100. Customers could total a rental car and pay less than the cost of a steak dinner for two in Midtown Manhattan. Compounding the risk, Albany set the minimum age to rent at just 18 and prohibited companies from requiring that customers hold a personal car insurance policy or even a credit card. According to Faulkner, some 200 operators in the state went out of business shortly after the law went into effect.Presumably someone thought it was a good idea to allow widespread chaos in the car rental business . . . but I'm not sure who, other than the big rental companies. And even they got tagged. No one should stand for this nonsense.
Under its so-called "vicarious liability law," New York also exposed rental car companies to the risk of having to insure for unlimited damages when their customers were found negligent. In 1997, Faulkner was running an independent outfit in upstate New York when she got sued because an unauthorized driver—the 15-year-old son of the woman who had actually rented the vehicle—hit a pedestrian.(Faulkner's insurance company settled for an undisclosed sum.) The largest award came in 2003, when Budget was ordered to pay nearly $20 million to an accident victim.
Labels: economics
Monday, July 16, 2018
Do I hate workers?
No
When I grew up, public policy discussion meant projecting the benefits of a policy and balancing them against the costs and unintended consequences. In this context, I am merely attempting to air some of the costs of these regulations for unskilled workers that are not often discussed. Nowadays, however, public policy is judged solely on its intentions. If a law is intended to help workers, then it is good (whether or not it will every reasonably achieve its objectives), and anyone who opposed this law has bad intentions.
Labels: economics
Wednesday, September 20, 2017
Interventionary monetary prices increasing inequality
In accordance with the Cantillon effect, inflation can increase inequality depending on the channel it takes, but increasing inequality is not a necessary consequence of inflation. If it happened that the poorest in society were the first receivers of the newly created money, then inflation could very well be the cause of decreasing inequality.Most interesting, but not unexpected. HT to Soylent News.
. . .
In other words, commercial banks and other financial institutions are credited with so-called base money that has not existed before. Thus, the economics of Cantillon effects tells us that financial institutions benefit disproportionately from money creation, since they can purchase more goods, services, and assets for still relatively low prices. This conclusion is backed by numerous empirical illustrations.
Labels: economics
Tuesday, June 27, 2017
Harmful minimum wage
Thing is, there has been an awful lot more empirical research on the effects of minimum wage increases than this one paper by Card and Kreuger. The overwhelming balance of that research has found harmful employment effects, falling mainly on an especially disadvantaged population: young black males.Oops.
Labels: economics
Thursday, June 09, 2016
Public company costs
The SEC is complaining that companies aren't going public, and their investors would do better if there was more regulation.
That these things were written without irony shows how unmoored our discussion of corporate governance has gotten from reality. Clearly, the poor investors of Uber, Airbnb, and Snapchat must be slapping their foreheads, saying “THAT’s why success has eluded us! We need more SEC oversight!”Oy.
Labels: economics
Tuesday, June 07, 2016
GDP considered not useful
“We know less about the sources of value in the economy than we did 25 years ago,” wrote economists Erik Brynjolfsson and Adam Saunders in a 2009 article. “We see the influence of the information age everywhere, except in the GDP statistics. More people than ever are using Wikipedia, Facebook, Craigslist, Pandora, Hulu and Google. Thousands of new information goods and services are introduced each year. Yet, according to the official GDP statistics, the information sector (software, publishing, motion picture and sound recording, broadcasting, telecom, and information and data processing services) is about the same share of the economy as it was 25 years ago - about 4%. How is this possible? Don’t we have access to more information than ever before?”
Labels: economics
Monday, March 07, 2016
Don't waste time over-policing charity programs
It makes everyone worse off and no one better off.
Even the financial costs of any detection and enforcement mechanism serious enough to even try to get these false negatives (people who aren’t caught and thrown out of SNAP) down to 0 will be high; it wouldn’t surprise me for those costs alone to exceed $14 million (and I don’t for a second believe there will be $14 million in savings). As conservatives know when it comes to business, environmental, and health regulation, trying to turn one-in-20,000 events to 0-in-20,000 events is hard and expensive and complicated. Moreover (and as they also know) it generates errors in the other direction. “Zero-tolerance” policies are a plague on the American political and legal climate right now. The effort to make sure that no American child ever brings a narcotic or firearm to school is doomed to fail to begin with, and also results in stupid expulsions of children carrying aspirin or squirt guns. What we have here isn’t a new substantive rule (big-money lottery winners are already income-inelgiible for SNAP) but a zero-tolerance mindset applied to the existing rule, an effort to move from trivially-few to zero offenses; and innocent people will get caught in the net. (Something everyone could stand to remember: the lower frequency an offense is, the worse the ratio is likely to be between the false negatives you’re trying to prevent and the false positives you’re going to create.)
Labels: economics, government
Tuesday, January 19, 2016
Compare and contrast wealth
Should we ban being rich?
Reducing a person's assets from, say, $10 billion to $20 million, and limiting annual income to $1 million might sound outrageous. Perhaps cruel! But is it really all that terrible? How would it change the life of that person? Obviously it would not affect security, or health, or the ability to lead a comfortable, even luxurious, life. The only use for additional millions of dollars would be the ability to exercise more power, or to indulge in outlandish luxuries, such as owning several lavish homes in diverse places, or owning a jet airplane. The monetary loss might be perceived as a loss of prestige. But the last point would perhaps be softened by the fact that the same treatment would be inflicted on all other super-rich people, so there would generally not be much of a loss in standing. There are, very roughly, about 160,000 American families with assets over $20 millionOr understand that everyone can do it?
But while there are a lot of people who get rich through rent-seeking of various forms, and a lot who get rich by playing games that though not crooked are zero-sum, there are also a significant number who get rich by creating wealth. And creating wealth, as a source of economic inequality, is different from taking it—not just morally, but also practically, in the sense that it is harder to eradicate. One reason is that variation in productivity is accelerating. The rate at which individuals can create wealth depends on the technology available to them, and that grows exponentially. The other reason creating wealth is such a tenacious source of inequality is that it can expand to accommodate a lot of people.If you ban people from making money, they may stop creating wealth, no? PG also reminds us that the problem is poverty, not that people have different levels of wealth, so why don't we attack that problem?
There are lots of things wrong with the US that have economic inequality as a symptom. We should fix those things. In the process we may decrease economic inequality. But we can't start from the symptom and hope to fix the underlying causes.
Labels: economics
Tuesday, April 28, 2015
Flash Crash and justice
However, given the prevalence of similar and even more morally dubious practices in single-stock world, it is bemusing to say the least that the only entity to be arrested (to Macro Man's knowledge, at least) is a small-fry punter who conveniently happens to be a foreign national. No mention at all has been made of the HFT algos, for whom spamming phony orders and front-running is a (very profitable) way of life.What a joke.
Labels: economics, nonplussed and friends
Wednesday, March 25, 2015
Another business getting screwed by the High Line
Sean sometimes thinks of going up on the High Line, after work, when the weather is nice. But he won't do it.My man.
"I boycott the High Line," he said. "I'll never go on it. After I've seen what it's done--and what it almost did to us."
Labels: economics, local, New York
