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economics

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Hell of a Mess

Paul Volcker, at 91, Sees ‘a Hell of a Mess in Every Direction’:

“The central issue is we’re developing into a plutocracy,” he told me. “We’ve got an enormous number of enormously rich people that have convinced themselves that they’re rich because they’re smart and constructive. And they don’t like government, and they don’t like to pay taxes.”

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BernieCare

Why Bernie Sanders’ single-payer push is great policy and even better politics:

The United States, by contrast, is very rich, and already dedicates way more than enough resources to set up the world’s most generous health-care system, and a lot more besides. We spend $3.2 trillion per year — literally twice as much as the OECD average as a share of the economy. We pay enough in health-care taxes alone — that is, the government revenue that goes to Medicare, Medicaid, the VA, and a few other things — to cover a Canada-style Medicare-for-all system for the whole U.S., and then that much again in private money. In other words, if we could simply copy-paste Canada’s universal health-care system into America, taxes would actually go down.

All that means is that America doesn’t have to worry much about costs; it has to worry about allocating existing spending properly. We already have a gigantic pool of resources dedicated to health care — about half private and half public. We just have to adjust that spending so it can support a single-payer system.

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Swedish Welfare

If Americans never understand what a social welfare system is, how it salves wounds of our gross economic inequality, why it is one of the most humane, advanced, amazing efforts we as humans can band together and work on, then this country will continue to go down the toilet.† Here is an exceptionally well-written, non-exceptional story, copied out of a tweetstorm by Alison Gerber — you’ll find that link to be dead, likely because Ms. Gerber’s thoughts attracted tons of attention, and in this toilet bowl internet era we live in, likely lots of death threats. Or worse: requests to do television interviews. Anyway:

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tweet - 3 March, 2017

The Future of Not Working is about a few things, among them the test of universal basic income as viable social policy. It touches on the continuing and seismic shift in labor from humans to machine automation. But what it really helped me understand was how to help those in poverty:

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Capital in the Twenty-First Century

I am reading the conclusions in Thomas Piketty’s Capital in the Twenty-First Century (It is rather unreasonable to try to wade through the 300 pages separating my progress in the book and the conclusions, given our two week old! So, I skipped to the end…). Here are some interesting quotes:

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Wall Street & the Middle Class

John Cassidy’s “What Good is Wall Street? from The New Yorker is full of great parts. Here’s one:

During the credit boom of 2005 to 2007, profits and pay reached unprecedented highs. It is now evident that the bankers were being rewarded largely for taking on unacknowledged risks: after the subprime market collapsed, bank shareholders and taxpayers were left to pick up the losses. From an economy-wide perspective, this experience suggests that at least some of the profits that Wall Street bankers claim to generate, and that they use to justify their big pay packages, are illusory.

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Global Elite

Our current plutocracy makes the 20s look positively egalitarian. Take a look at The Rise of the New Global Elite in The Atlantic.

The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.

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Gladwell on Economics

If you want to understand corporate America and/or nationalized healthcare it is critical that you read this four year-old-piece. Three years before GM went bankrupt, Malcolm Gladwell clearly articulated their problem in his New Yorker article “The Risk Pool”:

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Stocks In Decline

The Atlantic has a nice article titled The Great Stock Myth, which explains the consequences of the (likely) crappy stock market returns over the next 10 years. When the effects of these poor returns are compounded, the demands put on people to save money for retirement increase dramatically. Incidentally, there’s a nice fact about the Bush administration in here:

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Denmark Taxes

I’ve been thinking about this one for SEVEN MONTHS, and finally decided stopped being lazy enough to post it. Denmark Thrives Despite High Taxes:

Mr. PETERSEN: Yeah, there’s a kind of slack in the system.

KESTENBAUM: Denmark has an interesting kind of hybrid economy. It has this huge welfare state, but it has also fiercely embraced a lot of free market ideas. The unemployment benefits are generous, but it’s also very easy to fire people. That makes the economy nimble. Employers can get rid of workers when they dont need them and hire them back quickly when they do. Petersen says losing your job here is just not that big a deal.

Now, all countries face choices like this: How do you want to set up your economy? Those decisions shape how you live and your psychology. In Denmark, for instance, there aren’t severe class distinctions because the poor get helped, the rich get taxed, so everyone gets squashed into a big, fat middle class.

One economist told me: Look, we dont have any geniuses and we dont have the best pro athletes - they leave because of the high taxes - but overall we’re doing well.

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Immigration, Education, Bandwidth

I appreciate Thomas Friedman’s optimistic outlook after he attended the 2010 Intel Science Talent Search:

“If we can just get a few things right — immigration, education standards, bandwidth, fiscal policy — maybe we’ll be O.K.”

Long-Term Unemployment

The New Poor - Despite Signs of Recovery, Long-Term Unemployment Rises:

Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s.

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Widgets from China

I don’t fully understand what’s going on in China. I do have some dispiriting facts, though.

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American Dream

Is the American Dream Over? - Opinionator Blog:

The average American works 9 weeks longer per year than the average Western European, which is insane but does mean our standard of living is higher.

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Cleveland Foreclosures

All Boarded Up - How Cleveland is Dealing With Mass Foreclosure - NYTimes.com — draw your own conclusions, though you might be able to pick from this grab-bag: government is ineffective, government is effective, the economy is on the upswing, the economy is on the downswing, home ownership is great, homeownership is terrible. Etcetera. An interesting quote (emphasis mine):

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Rough Economy

598,000 Jobs Lost in January; Rate Hits 7.6% - NYTimes.com:

“This is a horror show we’re watching,” said Lawrence Mishel, president of the Economic Policy Institute, a left-of-center economic research organization in Washington. “By every measure available-loss of employment and hours, rise of unemployment, shrinkage of the employment to population rate- this recession is steeper than any recession of the last forty years, including the harsh recession of the early 1980s.”

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Buy vs. Rent

A stupendous interactive infographic in the New York Times titled Is It Better to Buy or Rent? allows you to twiddle the dials of interest rates, appreciation, rent increases, taxes, and etc. to see when it makes more economic sense to buy rather than rent.

Oil Prices

James Duncan Davidson, the photographer, is also a good writer. His latest, Surprised about Oil Prices? Really?, has some good (scary, too) points:

$4/gallon gas is definitely here in a big way and that’s going to have major impact on America’s suburban lifestyle. And, as a kicker, the news people are running around talking about experts and ordinary citizens being surprised. Surprised?

How the hell can you be surprised about this? Really?

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Subprime Housing Coverage

This American Life tackles the sub-prime housing market. I’ve read economists writing about this crisis… and it’s rather difficult to understand. I mean, all this talk of AAA overrated paper, etc. — I got a vague idea of the topic, but I wanted something more. Soo, I read a glowing recommendation of This American Life’s coverage of the topic. A quick summary:

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albam

The British company “albam” doesn’t use Chinese manufacturers to make its high quality clothing:

We are an independent company so we can listen to you. We develop and produce our clothes in the UK because we think the extra cost is worth the great quality. If we don’t make a line in the UK it is because we haven’t found a quality high enough to hang our hat on.

As someone told us “it doesn’t have to be radically different, just a lot better”, well we are sticking by this.

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