Shaky Danny

Start with fire. You are going to build a fireproof house. Once you have a plan to build a fireproof Los Angeles house build an architectural model using the same materials, say an aluminum foil roof etc. Then take a blow torch and hold it to your model for a day. Dena means valley, Pasadena, Altadena…A valley is a wind tunnel. Say you have a surviving model. Then blast it with your garden hose, raising the water level to half the level of your model. Desert valleys flood. Make sure your model is somehow anchored, so it doesn’t float or slip away. Check your model for mold. The seals on your model must survive fire and flood. Then take a large pail of gravel and dump the gravel from some height on the steel framed model with the fancy Swiss made seals. Valleys also have rockslides. Make sure your model can withstand the landslide without moving. After that, take the entire diorama, including the model, lift it up and bang it on the table as hard as you can. Earthquake proof means...

  Recently there has been some fluff that we couldn’t find American workers to build a new integrated circuit plant. Our workers say it is because they are not getting enough money. Boomers bemoan: -Our kids are too dumb to get the jobs we used to have. Depend on Americans to find the racist reason even when it is against us. Foreign workers may get less than citizens, but that is not enough for a business decision, particularly on a subsidized plant. As I explain in this blog in Income Disparity and Bribes , in 1969 America removed discretionary fund as an accounting entry. This has several consequences. Companies moved the amount in that entry to executive compensation, so it is now after tax. Piketty’s book Capital in the Twenty-First Century has a graph showing executive compensation on an upward diagonal from 1970 on. CEOs used to get ten times base earnings. Take the difference then apply the tax rate gives us the total compensation, for the bribes and kickbacks require...

  Christine asked: -Why is Canada burning? Without hesitation I responded: -Lumber companies planted the wrong trees and it got warm. Seems glib, but in this case my cynicism was correct. If you go out on Google Earth, it is clear that the arboreal, original Canadian forest did not burn. Lumber companies proffer all sorts of rationalizations. Whatever they say, it didn’t work. If they take refuge in regulation, consider the Exxon Valdez. Exxon Mobil went into court and said that Alaska did not require double wall tankers. Everyone laughed because the reason for that was because Exxon had lobbied against it. Covering North America in soot is a lot worse than dumping oil on beaches. Lumber companies have no refuge. This is their game. They ran it. Lumber companies don’t own all the land, but they did the cutting. They didn’t know it was getting warmer? The cutover areas flamed. Arboreal sometimes burns, not like this. Please prevent these boobies from planting trees. Th...

  Inflation wins. We have already had severe capital inflation. Eventually, when rich people spend money, it impacts wage earners. Trickle down becomes a torrent of prices. The pressure for wage inflation was held in check by undocumented immigrant labor, destruction of unions, imports and, until recently, interest rates. Then DJT and Steven Miller terrorized the undocumented immigrants. Terror works, particularly institutional terror. Mexicans love their kids and they quit coming. Fruit rots on the ground. Stores are closed on Monday. We still get immigrants, but they are refugees, and they have status. Undocumented immigrants set the marginal wage rate low. A documented immigrant is less likely to endanger their status by driving the truck or recycling shipping containers. Without our slaves we have to be more rational and that is expensive. There have been multiple economic shocks and we are no longer as cushioned. There is also demographic. A lot of us are retired and index...

Many people in Oak Park, a suburb of Chicago, are installing sewer valves for their homes. Some years back we had an impressive deluge and this is a reaction. Your stack or stand pipe may drain directly out to the street sewer. Putting a check valve or flapper in the way means that when the system hits load those houses refuse service and the overall pressure on the system will increase precisely at the time it is stressed. If you don’t have a flap then super tough on you, the effluent has to go somewhere. A product that creates its market. Once everyone has flaps there should be popped flaps or broken pipes. Flaps are necessary on flood plains. As flood plain construction is common it is difficult for other municipalities, such as Oak Park, to deny their use. Chicago used to require a basement floor drain. You were expected to share your suffering with your neighbors. Most people have their stack drain into their own sewer that then drains into the street sewer. This is a nice fea...

One proof of the market is that economics is obscure. Because of patronage there is no advantage stating the simple obvious.   As I am not getting a grant, I can be direct. Inflation is manifest differently in each of its many components. My parents bought their house for almost $12,000 in 1959. That was about twice my father’s yearly salary. Today the house is almost half a million in Zillow which would be about ten times the salary of a comparable position, give or take. There are some equivalents. Maybe there is a correspondence between a year’s college tuition and a new car. The social security cutoff seems to be about what it takes to comfortably support an upper middle-class family of four. Inflation has two classes: wage inflation and capital inflation. There is no government control of capital inflation. Wage inflation is controlled by four government agencies. The Department of Labor supervises unions. Immigration is restricted. Commerce allows imports. The Federal Res...

Samuelson’s Economics has an entire chapter worrying over wage rates and the efficient allocation of labor. Why do people change jobs? Samuelson would like to tie it to capital allocation, work duration…he doesn’t mention the insult factor. I know a guy who loved his job. He was proud of the job and the work he did. When he learned that someone else made more than him, it was too much. He quit even without another job to go to. Nothing else had changed. It was simply that he felt insulted. Managers fail to understand the insult factor. Headhunters understand it. Unions understand it. Customers understand it. Why go through the folderol of a manufacturer’s rebate? If you are getting points, then someone else is getting ripped off. When the price at the aisle doesn’t match the register, you feel insulted. Bombing me with ads texts and emails after I have bought the product is discouraging. When a headhunter offers a better deal, it feels like your own company doesn’t value you. Co...

The Supreme Court functions as a safety valve. When the court fails, it is a big mess, we have had a civil war. In 1974 people were voting with their feet. Illegal abortion was so prevalent that the court had to act. The prisoner’s dilemma underlies our concept of justice. Say a juror is fixed. How does the juror know that they will be paid? If they are paid ahead of time, how does the fixer know the juror will stick? At this time, it has been announced that there are five judges who will rule against abortion. The early decision is a blatant loud fart. As Biden explained, it ignores the ninth amendment. The ninth amendment is intended to prevent this argument. As Pogo said: -I got rights I ain’t even used yet! If privacy or women’s equality are rights, then abortion should be legal. Buttigieg explained why abortion, whatever the term, should be a private family, not an arbitrary government decision.  It is a difficult medical and personal decision made in hard circumstance...

There is a new word, apophenia, created by Klaus Conrad to describe false correlations. I propose a duality with gestalt. This isn’t fair to gestalt. Gestalt is intended to break you out of your current patterns and recognize more useful ones. Sometimes we recognize incorrectly. Let us apply this duality to the USA invasion of Grenada in 1983. When Thatcher remonstrated with Reagan over this breach of international law and convention, Reagan responded that he wanted some nutmeg for his eggnog. This was just after England had defended the Falklands. While this remark is appropriate within the history of the spice trade, in 1988 Grenada exported 2,230 tons of nutmeg and 256 tons of mace for a total export value of $15,761,107. This was a good year.   Let us find the street value. 2,486 tons is 87,691,069 ounces. I have a price of 6 ounces is $10 listed on the internet currently. Divided by 6 is 14,615,178. Times $10 gives a markup of more than 10 times the export value. Somewhere...

Historical Materialism was once all the rage. Freakonomics is historical materialism without Marx. I am giving an overview and then showing how Marx and basic questions about material conditions can enlighten. Review of Marx Wading through the invective and gossip of three or four volumes of Marx’s Capital to find the nuggets is tedious: dictatorship of the proletariat labor theory of value class struggle money isn’t capital failure of colonialism Centralization of production leads to unions. business cycle Competition drives down margins in investment and production. Profit requires disaster and  disruption. You’re welcome. Sorry if I missed any. These ideas have been absorbed into common use. Occasionally an economist makes a living inveighing against or rediscovering one. Bernanke’s bad asset class or Tom Peter’s excellence, for instance. Here is a list of some other market issues:    Winners change the rules.   Pa...

Usually historical inevitability means the king is great, the empire will last forever and I want to keep my job. The counter story, Noah, Gilgamesh or Ur, is that when you live on a delta surrounded by mountains things may change, someone building a boat in the middle of a plain may not be ridiculous and you should be nice to the hill kids. The first to directly disagree with inevitability as permanence was Adam Smith. Smith liked explanations. Smith said empires inevitably fall because they are inefficient.   He attempted to convince England to abandon empire, particularly the American colonies. Wealth of Nations , Smith’s book, is not taught despite its central place in political and economic philosophy. I think the fall of civilizations is more basic. I was in Cahokia, Illinois at the Native American trash heaps. The museum said that this town only lasted about two or three hundred years and they didn’t know why. Two or three hundred years is a decent run. How long can pe...

Milton Friedman made his living arguing that the Federal Reserve caused the 1929 stock market crash and thus the Great Depression by jacking around discount rates.  Economic argument is difficult. We cannot even prove that the stock market crash caused the Great Depression. But his point that the Fed should be considerate, respectful and measured is well taken. As any driver can tell you, when you don’t know what you are doing, it is better to do it slowly. Fiscal policy should be deliberate as well.  When there is uncertainty it is difficult to plan or invest. The new tax law dumps everything into the chipper. People keep talking about individual effect or ethic. The real problem is that we have no idea what the cumulative impact will be. That is bad. What will be the systemic impact on America? This law assumes instability. It was passed in the belief that many issues will be addressed in subsequent legislation. What a wonderful fetcher, how can Congress not shake that ...

Any time someone gives you a rate for anything, it’s been jiggered.  The unemployment rate is a well-known example. In 2012 the reported unemployment rate was around 8%. If I take the total reported employment of around 134,000,000 then apply it to the total population between 20 and 64 of about 162,000,000 I get around 17%. That seems a little high for 2012 but it gives you an idea of the variance. At this point economists start throwing smoke.  Most economics seems to be disputes about rates.  Disability, yadda yadda, looking for work, employability, underemployment, I’ve known a lot of deranged people who have jobs.  A good rule of thumb seems to be double the reported rate. Google real unemployment and double the rate seems the general conclusion. Given the tremendous amount of data available and studied we should have immediate, accurate and complete information segmented across any desired index of our unemployment.  Given that we don’t it is obvio...

After Marx, academics had a serious issue:    they had to build on his work without referencing it.    This isn’t all that different from the difficulty academic psychologists had with Freud.    Freud talked goofy and it sounded silly when you were writing grant proposals.    Cognitive Behavioral Therapy is the latest attempt at building a rational sounding justification for talking therapy.   Sounds like a prissy version of Freud to me.   With Marx the difficulty was much more immediate.    One citation and your funding disappeared.    Poor Keynes had to throw in Calculus and talk all the way around his fulcrum to say that if you wanted to keep the game going you had to grab money away from the winners and keep the losers in the game. Sociology hung onto its journalist roots; that shred of honesty kept it halfway decent.    But then they threw in statistics.    The real ugliness was when they...