Lion of the Blogosphere

Lionomics refresher

with 88 comments

A review is in order.

1. The developed world has a post-scarcity economy, which means that most goods can be produced in great abundance with minimal human labor needed, so that they could theoretically be available to all very cheaply or even freely.

Common signs of a post-scarcity economy:

  • Poor people are fatter than rich people.
  • Clutter becomes a big problem for people, because stuff is so cheap to acquire.

The most common question raised would be something like this: “Well, if we have a post-scarcity economy, why is everything so expensive, and why am I struggling to make ends meet?”

People have a tendency to spend all of the money they have, so when some goods go down in price, equilibrium requires other goods to go up in price. The goods that go up in price fall into two categories:

a. Positional goods. They are goods and services that people value of because their limited supply, and because they convey a high relative standing within society. Examples are a house in a good neighborhood, a prestige university degree. Even a job, traditionally a way to make money, in a post-scarcity economy is a sort of positional good.

If everyone becomes richer, then the price of positional goods go up proportionately. Tax cuts or economic growth will never make positional goods more affordable.

b. Goods afflicted by cost disease. Applies to healthcare, education, civil engineering and construction. This is a mysterious area of economics, but industries with cost disease probably have the same issues as positional goods. You can’t make them more affordable with tax cuts or economic growth, because they just inflate. Structural changes imposed top-down by government are required.

2. Value transference. Traditional economics assumes that people get paid for creating value. But in the real world of the present, if someone makes a lot of money, it’s most likely that they are not personally creating value themselves, but rather they are in a position to transfer value created by other people to themselves. For example, the CEO makes a huge amount of money based on value created by other people, even though many CEOs actually make stupid decisions that driver their companies into bankruptcy.

Most industries today are winner-take-all, in which all the value created by the industry tends to get transferred to a small number of individuals. But such individuals could disappear, and the industry would just keep chugging along the same as before unharmed by their absence.

One of the reasons why libertarians oppose taxing rich people is because they say we are “punishing” them for creating value, and the taxes might discourage their value-creating activities. But if they are really just transferring value, then who cares if they are punished for doing something that’s actually of negative value to society, and who cares if they are discouraged from doing more of that activity?

Written by Lion of the Blogosphere

January 8, 2019 at EST pm

Posted in Economics

88 Responses

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  1. Value transference is your greatest theoretical contribution. Quite profound to map Ivy League graduates to law and finance which effectively are scavengers of capital to fund their lavish yet capricious – ergo prole – lifestyles, contra its allocation toward compounding growth.

    A Dilettante

    January 8, 2019 at EST pm

    • To further add, we might think of venture capital as playing in the same crony setup. Just a few schmoozy dinners and handshakes and with institutional investors and boom your fund can now pick and choose jockeys on some IT project which has a moon shot at scaling massively over 5-10 years.

      Put another way: it is terribly hard to bootstrap nowadays – I was reminded of this when watching a doc on the story of Gilette, no way in heck a man like that could start a business like that today.

      A Dilettante

      January 8, 2019 at EST pm

      • The best way to make money is by investing OTHER people’s money and getting a percent of the profits or a percent of the transaction (but suffering no penalty for the losses).

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • The best way to make money is by investing OTHER people’s money

        Indeed. Passive investing (eg. mutual funds and ETF’s , etc.) is destroying the financial markets.

        Andrew E.

        January 8, 2019 at EST pm

      • The Warren Buffett way.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • yeah. the easiest way to make $1 million is to start with $100 million

        grey enlightenment

        January 8, 2019 at EST pm

      • Just a few schmoozy dinners and handshakes and with institutional investors and boom your fund can now pick and choose jockeys on some IT project which has a moon shot at scaling massively over 5-10 years.

        So the solution is to shut down investing with tax hikes so that no startups ever receive startup capital?

        The Undiscovered Jew

        January 8, 2019 at EST pm

      • The best way to make money is by investing OTHER people’s money and getting a percent of the profits or a percent of the transaction

        The entire finance system is built on loaning others money because almost no one pays in cash to fund their business operations.

        The finance system makes a profit from charging a small percentage of a loan due to the scale of so many millions of financial transactions being executed everyday.

        But without it there would be no business activity of any kind because business operations must be financed on credit due to a lack of cash on hand.

        Blaming the finance sector for making money off of interest and transaction fees is like blaming surgeons for making money off of surgery – it’s their legitimate job.

        The Undiscovered Jew

        January 8, 2019 at EST pm

      • Even very cash rich corporations such as Exxon or Apple use credit, not cash, to finance their operations.

        If there is no financial industry there is no economic activity.

        The Undiscovered Jew

        January 8, 2019 at EST pm

      • The Undiscovered Jew,

        The reason why you finance is precisely to avoid using cash at all. Large cash outlays wreak havoc on the balance sheet.

        This is an odd feature of accounting. If you need to buy an asset like machinery, then you always finance because cash outlays created huge reductions in the balance sheet. You could have $300,000 in journalized transactions and end up with $200,000 on the balance sheet because of large cash outlays of $100,000.

        The first time I noticed this inan accounting exercise I thought I made a mistake.

        map

        January 9, 2019 at EST am

      • Taxation also affects finance decisions in that taxes are a huge factor in the net present value of discounted cash flows. Trumps capital-gains tax cut from 35% to 20% is what green-lit every finance project that was previously put on hold and it’s what was causing the market to go up.

        map

        January 9, 2019 at EST am

      • Financing only makes sense when you can earn higher effective interest (adjusted for risks etc.) from your cash vs. interest you will be paying for the loan. So, sometimes it makes sense, sometimes not.

        My 2¢

        January 9, 2019 at EST am

      • So the solution is to shut down investing with tax hikes so that no startups ever receive startup capital?

        No, the solution is to liberalize capital investments instead of only allowing “accredited” investors admission, at the price of letting idiots who take out a second mortgage and throw it at pets.com to go bankrupt. Think lendingclub but with more speculation. This will statistically allocate more capital from the working class towards wealth creation versus parking it in a 401(k) and praying the market doesn’t go to shit when retired.

        A Dilettante

        January 9, 2019 at EST am

      • If the working class already doesn’t use their 401ks, why would they invest in exotic securities except as the sucker portion of a pump ‘n dump. Hello Iraqi dinars. Lion, do you have opinion on the dinar scam?

        Monsieur le Baron

        January 9, 2019 at EST pm

      • Trumps capital-gains tax cut from 35% to 20% is what green-lit every finance project that was previously put on hold and it’s what was causing the market to go up.

        The flood of cash held overseas back to be invested onshore was part of the reason the economic growth surged last year and will probably continue past the 2020 election, although a more moderate rate.

        No, the solution is to liberalize capital investments instead of only allowing “accredited” investors admission, at the price of letting idiots who take out a second mortgage and throw it at pets.com to go bankrupt. Think lendingclub but with more speculation.

        If the industry is liberalized startups will still prefer to do business with established investors because they have more savy, connections, and experience than someone they would find off of lending club.

        This will statistically allocate more capital from the working class towards wealth creation versus parking it in a 401(k) and praying the market doesn’t go to shit when retired.

        They need to be encouraged to invest earlier so that they still come out ahead in the end even if there is a market crash by the time they cash out. With more to compound the gains are harder to wipe out, especially if the portfolio is diversified.

        The Undiscovered Jew

        January 9, 2019 at EST pm

    • A dark future hovers where automation will render proles obsolete, and evict them from their homes. Then the wealthy scavengers will swoop in and scoop up all the nice wasteland occupied by these folks so they can build more luxurious Disneylands for themselves, thanks to value transference.

      America has very good soil and natural beauty that the rich could take for their own personal use. This is not afforded to Canada where it’s too cold and Mexico which is populated with low IQ inferiors who are more destructive.

      Ok, what, who's this again?

      January 8, 2019 at EST pm

      • Proles aren’t likely to be rendered obsolete by automation any time soon. The lower middle class is more likely to be automated away in the near future. bobbybobbob is right about that.

        In the far term future, one of two things will happen to the United States. Either it will fill up with low IQ inferiors, making much of the land will be undesirable, like Mexico currently. Or the remaining whites rise up and kill the overclass, or otherwise subjugate it.

        In either future, the rich will not have the opportunity to buy up all the desirable land. It either becomes undesirable, or unattainable.

        Lowe

        January 8, 2019 at EST pm

      • By today’s measure, the lower middle class is considered a prole class.

        Here’s one phenomenon that has taken place over the last 20 years.

        Our centers of civilization such as Manhattan and SF are occupied by the upper middle class who has access to anything they need to enhance their wealth. These cities are out of reach for anyone lower than them.

        Ok, what, who's this again?

        January 8, 2019 at EST pm

  2. Besides pricey real estate in a coveted part of town that is regulated to a few areas in the nation, the number not exceeding the fingers of a pair of hands, a post-gluttonous society in Meriprolestan is all about prestigious intangibles like a degree from a fancy school and foreign language acquisition. All of which is a moot issue in a place like Montréal, where its inhabitants by default, crowd a school like McGill University and speak more than 2 foreign languages, where French is a requisite.

    I for one believe there will be more status competition between the elitist types in the near future, emphasizing foreign residences and foreign degrees from the various areas of Continental Western Europe, just to push the race to elitism, a notch. Being a mono-lingual American elitist within the confines is low status or prole.

    Ok, what, who's this again?

    January 8, 2019 at EST pm

    • True, being mono-lingual ought to be prole, but because of the natural moat of the USA, it breeds an embarrassing provincialism. For f*ck sake, grammar, which is the quintessence of propriety, is now considered racist by undergraduates at some universities. Indeed, the vandalism of Western culture propagated by “elite” institutions is a sardonic exhibition of proletarian values which resent external demands upon livelihood.

      A Dilettante

      January 8, 2019 at EST pm

    • lol nobody cares about montreal. I’m sure its a very beautiful city but when you think of major metro centers in north america – they are NYC, SF, Chi, Boston, DC, LA, Seattle, Houston, TOR, Dallas, Philly, Atlanta, etc. my order may be way off but you get the idea.

      uman

      January 9, 2019 at EST am

      • Wrong, sophisticated continental euros like spanairds and the more civilized and better assimilated Muslims care about montreal. It’s only Angloproles and Asian grinds that care about us cities because they’re value transference parasites who are only interested in consuming

        Gm

        January 9, 2019 at EST pm

  3. OT: I thought that this was hilarious. https://apple.news/AMjELBdgJQWGufjw1GYrIMQ

    Let me know if you’d like some follow up comments.

    Fang eng

    January 8, 2019 at EST pm

  4. This post scarcity claim total nonsense. The only thing that’s bizarrely cheap is stuff made by asian slaves with zero environmental standards. Everything else is expensive. Food that isn’t crap is expensive, and anything require human labor is very expensive. If we were post-scarcity I would not be wasting hours a week on laundry and cooking and cleaning.

    bobbybobbob

    January 8, 2019 at EST pm

    • “Food that isn’t crap is expensive”

      I would say that the kind of food that my grandparents ate, purchased at a big suburban supermarket, is very cheap indeed. Walmart sells 10 pounds of flour for only $5. Do you know how much bread you can bake with that much flour? Also Walmart sells rice and pasta for the same price.

      Food is so cheap that poor people are fat because they are stuffing themselves with cheap food (and poor people aren’t so poor that they are baking their own bread).

      Luxury food, which is really a positional good, is expensive.

      Lion of the Blogosphere

      January 8, 2019 at EST pm

      • Studies show the mineral content of that cheap produce and flour has plummeted and it’s all coated in glyphosate and other chemicals. It may seem a bit cheaper in real terms than what your grandparents paid, but it is actually garbage now and a worse deal.

        bobbybobbob

        January 8, 2019 at EST pm

      • https://www.walmart.com/ip/Centrum-Adult-100-Count-Multivitamin-Multimineral-Supplement-Chewable-Tablet-Vitamin-D3/10417504

        Eat half of one of those each day, mineral deficiency problem solved for only 5 cents a day.

        Glyphosate is only harmful to plants.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • Food that isn’t crap indeed!

        In the early 20th century, ordinary working class Americans spent 40-50% of their income on food. Pellagra, a severe vitamin deficiency, was endemic. 22% of working class Pittsburghers caught typhoid from fecal-matter contamination in 1909. It was literally crap.

        It’s not just better for prole origin people. My father grew up eating ground beef and liked it. There’s a whole restaurant themed with meals for members for his class. Want… tomatoes dusted with sugar? A shredded radish? Seaweed salad with pickle chips? Some dumplings? And a braised pig knuckle? That will be $800 in inflation adjusted money (significantly cheaper at the real modern restaurant). What about the Russian elite and their famed decadence? One aristocratic meal was pierogis, a suckling pig, caviar, cabbage soup, and tea. I could get that at the Asian market for $15. This cost more than a commoner’s whole income. Merriweather Post, one of the richest women in the world, ate soup, a meat dish, potatoes, and broccoli.

        This is literally paradise. People could only imagine such abundance in the context of the hereafter.

        Thank God for the Green Revolution.

        Monsieur le Baron

        January 8, 2019 at EST pm

      • “Pellagra, a severe vitamin deficiency, was endemic.”

        Because people were involuntary vegans?

        Did I mention that Walmart has a dozen eggs for $2.58, pretty cheap way to get non-vegan protein. And eggs are an example of the kind of food my grandparents ate that is extremely cheap today.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • Gahahahaha! Involuntary vegans. I like that. People had mostly enough most of the time, but the hard times were hardest on the old and young.

        Monsieur le Baron

        January 8, 2019 at EST pm

      • Lion makes some good points. The study of food production inputs and outputs is fascinating. I learned a great deal about agriculture since I forayed into suburban homesteading a year ago.

        It turns out that the relative prices of most foods have always been close to what they are now. The traditional staple foods of humanity: rice, wheat, corn, and potatoes all have the following things in common:
        * They were domesticated roughly 8,000 years ago.
        * They’ve been delivering high calories at low cost since our ancient ancestors harvested them for the first time.
        * They allowed human society to support high populations, and were most of what the vast majority of humans ate on a daily basis, up until after WWII.
        * They actually got cheaper since the end of WWII due to due to the widespread adoption of labor saving agricultural automation before 1980.

        See the below graphical representation of the price of wheat relative to gold:

        Man used to have to eat his bread by the sweat of his brow. Then he was happy to get bread and circus. Now he’s mad if all he gets is bread and water. I guess if we had a millennial bible, it would have to translate “לֶ֔חֶם” as “avocado toast”, since bread is no longer good enough for us.

        The book “A Framework for Understanding Poverty” explains that people of different socioeconomic status view food differently. It explains that if you recently ate food, and tell someone this fact:
        A poor person will wonder: “Did you get enough?”
        A middle class person will wonder: “Was it good?”
        An upper class person will wonder: “How was it presented?”

        Yes people in the past might have preferred a bowl of cherries to a plate of bread, but these arguments about food quality are really proving The Lion’s point. While cheap food is not totally free, being unable to obtain it in sufficient quantities has all but disappeared as a concern for people living in the first world.

        Hence, he is correct. We are essentially live in a post-scarcity society.

        MoreSigmasThanYou

        January 8, 2019 at EST pm

      • This is true. Even when I was a kid in the eighties, my mother fed us for dinner the kind of dishes she had grown up on: roast chicken or meatloaf with cooked peas, gravy, and mashed potatoes, pot roast, tuna noodle casserole, spaghetti with meatballs. Garlic and olive oil were not common, nobody had heard of arugula, and you didn’t make sandwiches with artisanal mayonnaise made from organically grown canola oil and locally-raised free-range chicken eggs.

        Hermes

        January 8, 2019 at EST pm

      • Hermes:

        The first time I saw arugula was in the 1990s. According to google ngram, the plant did not exist in the year your mother was born:

        https://books.google.com/ngrams/graph?content=arugula&year_start=1800&year_end=2000&corpus=15&smoothing=3&share=&direct_url=t1%3B%2Carugula%3B%2Cc0

        MoreSigmasThanYou

        January 9, 2019 at EST pm

      • Hermes, the chicken is now loaded with heavy metals and soy PUFA, and the pesticide and herbicide load from the other foods are a serious problem. A modern potato is basically grown in a bath of toxic chemicals. This is not hippy bullshit. We are seeing cancer rates and other diseases directly correlated to this.

        The food is cheap, but it is much worse. Milk is really the only amazing modern bargain. The cow’s entire digestive track and udder is basically a machine for removing toxins, so milk is still pretty high quality and cheap. But most stuff is worse than it was 40 years ago in rather serious ways.

        bobbybobbob

        January 9, 2019 at EST pm

      • There was a ton of trade war BS about American chicken and pork in the 90s and Aughts, where Europe and Russia were saying “We can’t accept this stuff for our citizens because it’s bad for health.” In the USA it all got spun as “unfair practices” but the reasons they wanted to bar the stuff were entirely legit.

        bobbybobbob

        January 9, 2019 at EST pm

    • The current paradigm is that we are in a post scarcity world of abundance in low end food and non perishable consumables.

      Real estate remains to be expensive in areas of civilization, which is not post scarcity thing, but a positional one.

      Post Scarcity Item = accessible to the poorest members of society

      Positional Item = accessible to a select few with means

      There are relatively more post scarcity items accessible to NAMs in today’s world than a decade ago.

      Ok, what, who's this again?

      January 8, 2019 at EST pm

  5. *b. Goods afflicted by cost disease. Applies to healthcare, education, civil engineering and construction. This is a mysterious area of economics, but industries with cost disease probably have the same issues as positional goods. You can’t make them more affordable with tax cuts or economic growth, because they just inflate. Structural changes imposed top-down by government are required.*

    Also includes rent, insurance, cable tv, internet, credit card interest, daycare, phone plan, and much more.

    Wouldn’t the wealthy CEOs of companies that employ a lot of people and generate a lot of economic be an exception ot the value transference rule. Some CEOs are dumb (yahoo comes to mind) but others are more competent (Steve Jobs).

    grey enlightenment

    January 8, 2019 at EST pm

    • The whole “value transference” meme is really dumb. What we really have are widespread anti-competitive practices that are are already illegal, but the relevant anti-trust law simply goes unenforced. No need to try coin a silly term.

      bobbybobbob

      January 8, 2019 at EST pm

      • What we have are people whose main goal is to capture a middle management lifestyle towards retirement instead of taking their discretionary income and investing it towards directly competing against the corporate lords they are so eager to serve, creating new demand for labor along the way – it’s literally an act of job creation. Granted, F500 companies have a very strong defense, but most that’s not the majority of the economy.

        A Dilettante

        January 8, 2019 at EST pm

    • Anything that is truly of value, such as land, capital investments, and even fixed income assets, remain stubbornly expensive. This is in addition to valuable services like healthcare and education being expensive. It’s literally only cheap, easily replaceable goods like food, electronics, and entertainment that have become much cheaper.

      You can tell this is true because the money is still competing to find an investment with a reasonable return, and failing to find it. Despite Fed open market operations and raised inter-bank rates, etc, interest rates remain fairly low. Equity prices remain fairly high, even though there is not much volatility.

      The picture of the world hasn’t really changed in the last decade. What we see is an incessant march into a world with relatively few producers, and many consumers, whose labor is worth relatively little. Value transference may be real, but there is relatively less and less value to fight over. Getting to transfer value from workers means only so much when a growing percentage of the workforce is ineducable primitives.

      bobby may be a chicken-little who believes the ozone layer is going to be swept into space right before the plague takes us all, but he is more right than the Lion about this subject.

      Lowe

      January 8, 2019 at EST pm

      • Land in much of the country is very cheap. And education is too, you can pirate most textbooks and watch high-quality lectures on YouTube. It’s only the positional component of those markets where costs are high.

        Tanturn

        January 8, 2019 at EST pm

      • “Land in much of the country is very cheap. And education is too, you can pirate most textbooks and watch high-quality lectures on YouTube. It’s only the positional component of those markets where costs are high.”

        This is 100% correct. Real estate in the most desired location, and education from the most desired credential-issuing instituiton are very expensive positional goods. But COLLEGE itself has been subject to cost disease, even crappy low-prestige colleges are extremely expensive.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • Education means certificates to most earthlings, Tanturn. Virtually no potential employer will believe that you understand a technical subject unless you offer proof. Which for most people cannot consist of open source projects, or anything like that. Usable educational certificates? Never been more expensive.

        On that note, why would employers show little trust to potential employees? Because dumb people are not trustworthy, and that people are dumb is increasingly the default assumption, because it’s increasingly accurate.

        Land is not expensive because it has signalling value. That’s backwards. Land goes up in value because it has commercial purpose (can create income), or it is near to commerce (so you can have a good job if you live there). Basically everything connected to productivity is increasing in value, whereas only replaceable, consumable products are decreasing.

        Lowe

        January 8, 2019 at EST pm

      • “Virtually no potential employer will believe that you understand a technical subject unless you offer proof. Which for most people cannot consist of open source projects, or anything like that. Usable educational certificates? Never been more expensive.”

        That is correct. We need top-down government approach to fix that, the free market never will, the free market is quite happy with that situation.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • Land goes up in value simply because other rich people live in the area. That’s why land in the Hamptons is so much more expensive than land in Kentucky.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • > Land in much of the country is very cheap

        Even crappy scrub land in the middle of nowhere has shot up in real terms. So on any historical basis it’s not cheap.

        bobbybobbob

        January 8, 2019 at EST pm

      • Maybe I am mistaken, but my understanding of the Hamptons is that rich people have their vacation homes there. It’s not where they live normally. It’s an extreme luxury.

        How about we talk about where middle class to upper middle class people live, in large numbers? Not where a small number of extremely wealthy people live for fun sometimes. Status signalling is not what motivates people to bid up homes in the Bay Area, or around Washington DC, for example. It’s their need for a good job, and for good schools.

        Lowe

        January 8, 2019 at EST pm

      • Still positional goods.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • “That is correct. We need top-down government approach to fix that, the free market never will, the free market is quite happy with that situation.”

        What we need is stronger, smarter elites, who will do something about our real problems, not just mandate solutions for sub-problems piecemeal.

        We desperately need leaders willing not only to deport illegal infiltrators, but to stop allowing foreign people to come here to bid up our land, take up spots in our educational and professional institutions, and otherwise displace Americans and make their lives less livable. We need leaders willing to break corrupt institutions like birthright citizenship, by fiat, because it is NOT going to happen otherwise.

        Lowe

        January 8, 2019 at EST pm

      • One of my friends lives in Boston and bought her house after a year of work. There are plenty of jobs everywhere. The expensive neighborhoods are expensive because of their proximity to cultural attractions.

        The Southie is a mostly harmless creature. Also, they don’t like being called Southies. Their neighborhood is Southie but they’re… surly Irish? I dunno.

        Monsieur le Baron

        January 8, 2019 at EST pm

      • We need top-down government approach to fix that, the free market never will,

        Degree inflation is a classic example of Socialistic monopolization.

        “Non-profit” colleges can inflate tuition to such a degree because they hold near cartel power over credentialing even though a private sector solution such as cheap online courses could teach as well as any brick-and-mortar college class for over 90% of classes; granting a few specialized exceptions such as medical training that are best taught in-person with a living instructor.

        The private sector isn’t allowed to offer cheaper online class alternatives at 4-year public colleges for the same credit as an in-person class without the permission of the colleges – which refuse because online classes would destroy their business model.

        The Undiscovered Jew

        January 8, 2019 at EST pm

      • People are if anything slightly smarter than they used to be, they certainly aren’t getting dumber. Look at IQ scores over time.

        Tanturn

        January 8, 2019 at EST pm

      • SAT scores have down.

        Lion of the Blogosphere

        January 8, 2019 at EST pm

      • “The private sector isn’t allowed to offer cheaper online class alternatives at 4-year public colleges”

        Yes, it is. It can’t call the degree the same thing a 4-year public college can, but it’s allowed to offer the classes and then grant a “certificate of completion” or whatever euphemism they want to use. The private sector just refuses to accept them.

        Tanturn

        January 8, 2019 at EST pm

      • “One of my friends lives in Boston and bought her house after a year of work. There are plenty of jobs everywhere.”

        This is dumb. You say your friend lives near a major American city, with some of the best universities in the world. That is supposed to contradict my point that the good jobs are getting more concentrated, and there is fiercer competition for them, and to live in the desirable areas near those jobs? No.

        Lowe

        January 9, 2019 at EST am

      • A year of work. That’s not a long time. It’s supposed to contradict your point that things have gotten completely unaffordable. Most of my tenants could afford a house, they just don’t save up down payments.

        When I move to the Bay, it will be true that land is way too expensive, but the Bay Area, like New York, is a positional location. The good jobs there aren’t just good jobs, they’re prestige versions of elite careers.

        If expensive is defined as too costly for the bottom half, then land is probably too expensive in almost all metros. But places like the Bay and NYC are special because buying a place is hard even for the 1%.

        Monsieur le Baron

        January 9, 2019 at EST am

      • “People are if anything slightly smarter than they used to be, they certainly aren’t getting dumber. Look at IQ scores over time.”

        This is nearly as dumb as the last remark. SAT scores have not gone up, and even if they had, the SAT has been changed a couple times. It’s become easier over time.

        The Flynn effect is over, because stupid people are having more children, and we are enabling them to continue, not only by sending them money, but by something even stupider: letting them into our country.

        Lowe

        January 9, 2019 at EST am

      • >That is correct. We need top-down government approach to fix that, the free market never will, the free market is quite happy with that situation.

        Nope. It is exactly *because* of the top-down approach that we ended up with these requirements.

        How? Via HR. Most of HR’s job is to really be government commissars and shove diversity and sexual harassment sensitivity training down everyone’s throat and up the butt. As more and more regulations, including labor are passed, HR’s role is really all about managing liability.

        It is only natural for HR, as any body, to expand their role into filtering resumes. And, of course, what better way to shield a company from liability than by introducing hard requirements about educational background. Plus, it also makes the fat ladies staffing feel extra good about their otherwise useless degree in English literature.

        Ilya

        January 9, 2019 at EST am

      • What is interesting is that education is tracking the price of gold.

        map

        January 9, 2019 at EST am

      • Nope. It is exactly *because* of the top-down approach that we ended up with these requirements.

        How? Via HR. Most of HR’s job is to really be government commissars and shove diversity and sexual harassment sensitivity training down everyone’s throat and up the butt. As more and more regulations, including labor are passed, HR’s role is really all about managing liability.

        Only because the government is liberal and believes in things like diversity and sexual harassment sensitivity training. If instead the top down approach enforced the norms of traditional Western Civilization, we’d be in fine shape.

        Hermes

        January 9, 2019 at EST am

      • The only way to reverse liberal top-down is with conservative top-down.

        Lion of the Blogosphere

        January 9, 2019 at EST am

      • The only way to reverse liberal top-down is with conservative top-down.

        Yes, that’s what I meant, and a very good and succinct way of putting it. Dumb cuckservatives think that a more conservative culture will just organically emerge from a laissez-faire system, if we just “get government out of the way,” but that’s just a fantasy with no basis in reality.

        Hermes

        January 9, 2019 at EST am

      • “And, of course, what better way to shield a company from liability than by introducing hard requirements about educational background.”

        If you want to believe that corporations act rationally, this sounds obvious. If you don’t, you want actual evidence, and I’ve never seen convincing evidence that this is true.

        Tanturn

        January 9, 2019 at EST pm

      • >If you want to believe that corporations act rationally, this sounds obvious. If you don’t, you want actual evidence, and I’ve never seen convincing evidence that this is true.

        I believe that corporations, sans maybe the really big publicly traded ones, which are (mis)managed by non-founders, are guided by, firstly and secondly, profit motives. It is not profitable to keep large HR apparatus. It is not profitable to worry about liability and invest in protections, direct: via insurance, procedures, and hiring affirmative action-type/diversity candidates, and nonsense training of various kinds, as well as less direct, like having to fire and pressure people for rather normal behavior.

        Ilya

        January 9, 2019 at EST pm

      • Yes, it is. It can’t call the degree the same thing a 4-year public college can, but it’s allowed to offer the classes and then grant a “certificate of completion” or whatever euphemism they want to use.

        What online colleges exist don’t have the reputation that legacy colleges do.

        What is needed is for legacy colleges to offer cheaper online degrees that are indistinguishable from degrees earned on-campus because those institutions have the most market value to employers.

        Legacy outfits won’t do off them because they, having been protected by credentialing monopoly for centuries, aren’t exposed to market pressure to provide cheaper online alternatives.

        The Undiscovered Jew

        January 9, 2019 at EST pm

      • Online degrees can’t possibly work to suss out people that will spend six years jumping through hoops because the Indian and Chinese horde will cheat.

        bobbybobbob

        January 9, 2019 at EST pm

    • Cable is a monopoly.

      Jokah Macpherson

      January 8, 2019 at EST pm

    • This is not a cost disease.

      These are monopolies enforced by either the public utility model or the regulatory capture model.

      map

      January 9, 2019 at EST am

  6. The upper tail of human ability is getting thinner, not fatter. What does this mean? Do we see the evidence?

    1. There is a buck to be made simply by outsmarting the increasing number of dummies, and thus indirectly enslaving them. Yes, this is happening.

    2. It means top value creators will be drawn into this work. Facebook and Google pay software engineers more than anyone else, and these software engineers are among the biggest value creators. Yes, this is happening.

    3. It means top value creators will be paid more than they were relative the past. I think this is happening, but it is harder to know for certain.

    4. It means there will be an increasing number of gates to stop a person from entering a top value creation field. This is necessary because in a society with a growing number of incompetent people, it is harder and harder to guard against hiring these incompetents. Yes, this is happening.

    Lowe

    January 8, 2019 at EST pm

    • I agree that raw value creators are capturing more of the wealth that they create. This is primarily driven by software and improved software tooling. A good developer can be on an order of a magnitude more effective than a bad one.

      But I disagree that more gates to becoming a top value creator are being put up. The internet is democratizing information and education. A small example would be the field of investment banking. Thirty to forty years ago, most of the lower classes simply didn’t know how to enter that field or how to rise in it. Now you can google that information. This effect is especially strong for software.

      Look at the field of finance and hedge funds. Now more than ever investment firms are held accountable for actually providing real investment returns. Previously the nature of their work was opaque, hires were mostly driven from professional networks, where everyone went to the same few schools. Now we have quant hedge funds full of Russians who barely speak English (and were not educated here) that are competing with, and winning against, Harvard graduates from Goldman Sachs. This was previously unheard of. The old guard is disappearing, the world is becoming an intellectual caste system.

      slave

      January 8, 2019 at EST pm

      • What your examples demonstrate is that value transferrers cast their nets wide and deep, to get the best people they can get. H/e, no matter how wide or deep the nets, or how genuinely capable the fish they catch, the good fish are running out, at least compared with the number of trash fish. That is why the nets have to be cast like this.

        Also these examples don’t contradict my claim that the gates are narrow, get narrower the higher you get, and are getting even narrower as time goes on. You’re pointing out the gates have become more objective, more based on IQ and measurable performance. That means they’re tougher to get through.

        Lowe

        January 9, 2019 at EST am

      • Most hedge funds succeed because they have an inside track to the Federal Reserve.

        The rest is smoke and mirrors.

        map

        January 9, 2019 at EST am

  7. People don’t try get a home in a good neighborhood so that they can rub other people’s nose in it. Saying it’s positional makes it sound like that, though. People want that good home because of physical reasons, which are why it is good to begin with.

    They want a home in a good neighborhood because these neighborhoods offer access to good jobs, or good schools. They enable maintaining a high income, or they protect your children from violence and negative influences. An increasing number of unintelligent, violent, and uncooperative people makes this harder as time goes on.

    Lowe

    January 8, 2019 at EST pm

    • Just because there are real benefits reasons for desiring positional goods doesn’t mean they aren’t positional.

      Lion of the Blogosphere

      January 8, 2019 at EST pm

  8. Software developer has been at or near the top of these annual best jobs for nearly 40 years, and probably was the main reason why I earned a BS Computer Science in 1985. But others credulously claim that IT jobs suck, and I don’t disagree.

    USA Today, 01/08/19 – Software developer tops list of U.S. News & World Report’s annual best jobs rankings

    https://www.usatoday.com/story/money/2019/01/08/software-developer-tops-list-u-s-news-best-jobs-2019-rankings/2471576002/

    Are you in search of the best possible job? Look no further than software developer, according to U.S. News & World Report’s annual list, which ranked the position as its top pick for the new year.

    The publication’s Best Jobs of 2019 list takes seven factors into account, including median salary, employment rate and stress level. The median salary for a software developer is $101,790, and the unemployment rate is 1.9 percent, according to the most recent data from the U.S. Bureau of Labor Statistics.

    Though software developers have neither the highest median salary nor lowest unemployment rate on the U.S. News Best Jobs of 2019 list, the position’s projected increase in demand – roughly 30 percent between 2016 and 2026 – and average stress levels helped it land the top spot, said Rebecca Koenig, careers reporter at U.S. News and World Report.

    “Unlike some other jobs that do pretty well on the list, which are very demanding, software developer tends not to be a really stressful profession,” Koenig said.

    Other positions within the top 10 for the U.S. News Best Jobs of 2019 rankings include pediatrician (No. 8), nurse practitioner (No. 7) and dentist (No. 4). The No. 2 job on this year’s list, statistician, jumped up four spots from last year’s list. Koenig attributes this rise to the statistician’s drop in unemployment rate – from 1.4 percent previously to 0.9 percent this year.

    “You could have a great profession, but if you can’t get hired to do it, or there are tons of people trained to do it who are out of work, it doesn’t matter much,” Koenig said. “So unemployment rate is definitely a considerable factor in figuring out which jobs are going to be among the top.”
    U.S. News Best Jobs of 2019
    Top 10, in order:

    1. Software developer

    2. Statistician

    3. Physician assistant

    4. Dentist

    5. (tie) Orthodontist

    5. (tie) Nurse anesthetist

    7. Nurse practitioner

    8. Pediatrician

    9. (tie) Obstetrician and gynecologist

    9. (tie) Oral and maxillofacial surgeon

    9. (tie) Prosthodontist

    9. (tie) Physician

    E. Rekshun

    January 8, 2019 at EST pm

    • > But others credulously claim that IT jobs suck, and I don’t disagree.
      You have a lot of free time. Free time is good, but too much free time and you start to wonder why you even exist. Management sucks. You might think this is because they’re know-nothing MBAs, but most of them are former engineers. Nobody knows how to manage engineers, but that’s not why the job exists. Compensation is essentially arbitrary and not tied to value production. I recall lion mentioning his salary here before, and it’s barely higher than a fresh elite school grad. Even with his blogging, he is almost assuredly many times more productive than a snot-nosed punk. Some people get the title “developer” because management figures they’re prole or H1B. These people basically do the same thing, but a developer at Microsoft makes like 80k and an engineer a quarter million. There are a lot of coding bootcamp suckers who get convinced to take a job for low 100s. Sometimes people are hired for no reason. Sometimes people are fired for no reason. Forced socialization, and more generally, weird management trends. I recently heard that at Facebook people are being forced to make new friends. And here, we were surveyed as to whether we have enough friends. Do I think this is a good idea? No. But it was probably brought up at some stupid party and everyone bought on. Sometimes hours are long and sometimes the amount of work is far, far too little, and it’s almost never just right.

      That being said, I think it’s a great option for people wanting to move up. Over 400 Apple employees come from the local state school. That may not sound like a lot, given there are 12,000 at the corporate campus… but it’s a lot. It’s so much that people make charts and infographs about it. If 400 people at a BigLaw firm came from Guido Law, that’d be amazing. Tech is significantly more meritocratic than alternatives. And you’ve got way more growth potential than something like nurse practitioner, another item on your list. It’s way better to be the proliest elite than the most elite prole.

      Monsieur le Baron

      January 9, 2019 at EST am

  9. I see no evidence that most goods can be produced in great abundance with minimal human labor needed. As others have pointed out, the phenomena that your’e seeing in this light are actually just the product of outsourcing manufacturing to poor countries.

    And speaking of poor countries, please don’t the liberal phrase “developed countries.” The terms “developed” vs. “developing” are rooted in the liberal fiction that safety and prosperity are the “default” state, and that poor countries are “developing” because they just haven’t quite gotten there yet, similar to the liberal idea that people are basically good. I propose continuing to use “first world” even though the Cold War is over, and honoring President Trump by using “shithole countries” for what used to be called the third world.

    However, your points about positional goods and cost disease are valid. It’s worth noting that libertarians and cuckservatives often think tax cuts and economic growth can solve these problems, saying stupid things like that more families could afford houses if taxes were lower or there were less financial regulation.

    Hermes

    January 8, 2019 at EST pm

  10. Since this thread is about cost of living, I have a fairness/justice question I’d like to run by everybody. Hooe that’s OK.

    A friend’s elderly mother, who has dementia, received a physician bill for a hospital ER exam which she did not request. Instead, the exam was ordered by the county “elder abuse” investigator who, along wiith the police, broke into her apartment l, while the caretaker daughter was at work, on the strength of a neighbor’s report. Some weeks before, the neighbor had seen the lady with a bruised face, which occurred in a fall. The bruising was gone by the time the authorities broke in, and the exam revealed no injuries. It’s not a huge bill, but still the family feels that they don’t owe, since the exam was involuntary, abd that if anyone tge agency shoukd pay. What does everybody think?

    Vipltd

    January 8, 2019 at EST pm

    • Is this in the United States? If so, just don’t pay it. For a small bill they don’t have any practical recourse. You can even dispute negative changes in your credit rating, if it were to come to that, but it probably won’t.

      Lowe

      January 9, 2019 at EST am

    • Don’t pay it.

      Tell them you dispute the bill.

      map

      January 9, 2019 at EST am

  11. Other than being attention grabbing word, post-scarcity is as meaningless as communism.

    My 2¢

    January 9, 2019 at EST am

    • Okay, but at least people don’t starve under post-scarcity. So that’s one way that it’s better than communism.

      MoreSigmasThanYou

      January 9, 2019 at EST pm

      • We are getting there.

        My 2¢

        January 10, 2019 at EST am

      • People of Walmart has determined that was a lie.

        MoreSigmasThanYou

        January 10, 2019 at EST am

      • The point of those photos are that (1) proles are fat; and (2) proles have no shame about showing off their fat.

        Lion of the Blogosphere

        January 10, 2019 at EST am

      • Yup. Prisoners and bums sleeping in the gutter have the lowest income of all social strata. The social strata with the least income after that is low-prole. Low-prole people have very little shame about things that would shame people of higher social strata.

        If the U.S. economic system resulted in starvation, we’d expect to see low-proles not being the fattest of all social strata. I don’t think starvation is a real problem even for bums. They tend to die of overdoses, disease, freezing to death, maybe even being set on fire by local teenagers. Starving, no. Food from the dumpster behind the 7-11 is free.

        MoreSigmasThanYou

        January 10, 2019 at EST pm


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