Lion of the Blogosphere

Archive for the ‘Economics’ Category

Why is liberal California the poverty capital of America?

with 151 comments

This op-ed in the LA Times written by a conservative-libertarian (probably anti-Trumper) type asks the right question but reaches the wrong answer.

It is true that California has the highest “supplemental poverty measure” of any U.S. state (according to a chart in a Wikipedia article), but then look at the demographic composition of California, which is only 37.7% non-Hispanic white (according to another Wikipedia article).

Massive immigration of poor Mexicans means you wind up with a lot of poor people living in the state. Poverty in California is not caused by a minimum wage that’s too high or other libertarian nonsense. Washington State has the highest minimum wage of all states, but a relatively low supplemental poverty measure. Washington is 69.5% non-Hispanic white, with 9% of the minority population being Asian.

To lower poverty, we must restrict immigration, deport illegal aliens, require mandatory E-Verify by employers, and build the Wall.

I believe there is only one factor contributing to poverty that libertarians happen to be right about, and that’s land-use and zoning policies that prevent more housing from being built. California has a lot of that. That’s why super-liberal Vermont also has relatively high supplemental poverty measure (although still below the U.S. average) despite being the nation’s second-whitest state. But Vermont also has a shortage of jobs because there are no major cities, and in the modern economy the jobs are migrating to major cities. Vermont is a place where a certain type of relatively affluent white people from the northeast retire.

Written by Lion of the Blogosphere

January 14, 2018 at EST pm

Posted in Economics, Immigration

Clutter, a sign of a post-scarcity economy

with 61 comments

I came across The Minimalist Plate, yet another blog devoted to getting rid of clutter.

The Google Ngram Viewer shows how the word “clutter” exploded in use in the 20th century.

And no, “clutter” is not a newly invented modern word, it has existed in the English language for a long time. In the Webster 1828 dictionary, clutter means the same thing as it does today. It’s just that in the 19th century, people didn’t have enough stuff for clutter to become a problem worth mentioning in books.

It’s a sign of post-scarcity that stuff is so cheap that getting rid of it is a bigger problem for most Americans than acquiring it in the first place.

* * *

maryk writes in a comment:

There are tons of books out there about how to “de-clutter.” But don’t buy more than one or two or you’ll make the problem worse before you make it better.

I am never again going to buy another dead-tree book, they just take up too much space, and it was so emotionally painful throwing out hundreds of books from my childhood and younger adulthood.

Written by Lion of the Blogosphere

December 22, 2017 at EST am

Posted in Economics

Where does all that increased earnings and productivity go?

The forty-hour workweek became a thing in the early 20th Century. Eighty years since the New Deal, and productivity has massively increased, so why do we still have to work 40 hours per week? On top of that, there has been a large increase in female labor force participation. And for many white-collar workers who don’t get paid overtime, 40 hours is considered a light week. So in aggregate we are working a lot more hours than we did in technologically primitive times.

Where are all of the extra earnings going for all that high productivity work going?

1. Cost disease

2. Positional goods. A house (or apartment or condo) in a “good” neighborhood is the most expensive positional good.

3. Goods and services that were once considered luxuries or didn’t even exist at all, but are now considered essential to live a normal life. Here’s a list of some:

Car + car insurance
Clothes washer & dryer
Air conditioning
Microwave
Television
Smartphone
Computer and internet

Plus the following services are possibly candidates for this:

College
Health insurance

There’s a lot of overlap between the three categories. Some of the goods and services listed above definitely have intrinsic value, but also to an extent they are required because everyone else has one, and society has changed because of that.

The last two services on the list, college and health insurance, have been the most affected by cost disease.

College, I believe, is mostly a positional good. The labor force has changed such that today you probably can’t get a decent paying job, and almost certainly can’t get a self-actualizing career, without a degree. Society has changed, turning something that’s intrinsically not worth that much money into a necessity.

So there’s an economic rule to be gotten out of this. When real per-capita income increases, it gets entirely eaten up by increasing prices for positional goods and cost disease, plus occasionally some new product becomes a “necessity” because everyone else now has one.

Thus, we can predict the futility of tax cuts (everyone has more money, so certain “necessary” things go up in price as a result, eating up all of the money from the tax cut), and the negative-sum effect of increasing labor-force participation.

Written by Lion of the Blogosphere

December 13, 2017 at EST pm

Posted in Economics

Economic transcendence and the singularity

The singularity is the time in the future when computer intelligence becomes more capable than human intelligence. By definition, this means that computers would be able to do any work that humans normally do, and robots powered by singularity-level computing power would make human labor superfluous and there would be an infinite amount of goods and services for humans to consume (because robot would build more robots), limited only by the planet’s available resources.

However, economic transcendence could also happen before the singularity happens. Computer automation could still make most human jobs unnecessary even if the computers aren’t more intelligent than humans. For example, self-driving cars will put the 3 million people (1% of the population) who work as drivers out of work, even though the self-driving cars themselves aren’t as smart as humans.

Written by Lion of the Blogosphere

December 12, 2017 at EST am

The coming economic transcendence

True economic transcendence will happen when robots can do almost any human job plus manufacture other robots. At that point, the amount of things we can produce is only limited by the earth’s existing resources and not human labor.

We are not there yet, but there is clear evidence we are in the transition period between scarcity and economic transcendence.

From a 2009 NY Times article:

With paying jobs so hard to get in this weak market, a lot of college graduates would gladly settle for a nonpaying internship. But even then, they are competing with laid-off employees with far more experience.

So growing numbers of new graduates — or, more often, their parents — are paying thousands of dollars to services that help them land internships.

Call these unpaid internships that you pay for.

Then in 2013, David Brooks wrote, completely unironically:

Thanks to the labor of low-skill immigrants, the cost of food, homes and child care comes down, living standards rise and more women can afford to work outside the home.

The point of the above quote is that now, working is something people do if they can afford it, instead of the older viewpoint that working is something people do because they haven’t inherited enough money to live a life of leisure.

In 2014, an influential Atlantic article recommended that to make yourself happier you should “buy experiences, not things.” Apparently, things have become so commonplace and cheap, there is no longer any joy in buying more of them. At least not for the kind of elite person who reads the Atlantic.

Can you imagine any of these things being written a century ago? Not a chance.

Yet economics hasn’t changed at all during the last hundred years. “Economics is sometimes called the study of scarcity because economic activity would not exist if scarcity did not force people to make choices.” We need a whole new field of study to deal with the modern economy where there is only an illusion of scarcity because of cost disease and the dominance of positional goods.

Written by Lion of the Blogosphere

December 9, 2017 at EST pm

Posted in Economics

Secret to success in the arts

https://lareviewofbooks.org/article/the-secret-recipe-for-success-in-the-arts/#!

The woman who wrote this article (and a previous article) has some valuable observations that most people are unaware of (although people who read this blog will not be surprised).

If you meet someone who appears to be “successful” in an artistic field, it’s probably because they have rich parents, or a spouse who makes enough money that they don’t mind that their marriage partner isn’t contributing anything economically to the marriage.

A college degree in art is a pretty crappy deal. After spending $150,000 to $250,000 to get a degree, you wind up making $25,000/year as an artist, if you are lucky.

So in conclusion, does the author recommend that people major in something practical like computer programming or HVAC? Nope, instead she demands that society change its ways so that people who don’t have rich parents can still have a career as artists:

• universal healthcare;
• universal care for children, seniors, and those with special needs;
• free education and vocational programs for all, from preschool through graduate school;
• affordable housing for all;
• redistribution of wealth through taxation, reparations, and universal basic incomes;

Back when I was a libertarian, I would have been outraged. But now that I realize that robots are replacing human workers, and we have a post-scarcity economy, so I just have minor nitpicks. Such as:

Affordable housing: Housing is very affordable if you want to live in a mobile home on the outskirts of a prole city in flyover country. But because there’s a zero sum game of people wanting to live in the most desirable neighborhoods (including artsy neighborhoods like Chelsea or Williamsburg if we are talking about the NYC area), those neighborhoods are never going to be affordable. Someone should establish a mobile home coop for artists in a place like Reno, Nevada.

But since a basic income and free college is definitely not going to happen during the next decade, it would be good advice for young people whose parents aren’t rich to not spend a lot of money for college and to major in something practical. Someone needs to say “sorry, if your parents aren’t rich, then you can’t do something cool and fun with your life.”

Written by Lion of the Blogosphere

December 8, 2017 at EST pm

Make bad neighborhoods better

To follow-up on my post explaining that living in a “good” neighborhood is a positional good. In the previous post, we learned that no amounts of tax cuts or economic growth will make a “good” neighborhood more affordable, because only so many people can afford to live the “good” neighborhoods.

Thus, the best thing to do to improve people’s lives is to forget about tax cuts and economic growth, and instead focus on how to make poor neighborhoods more palatable.

The first thing we need to do is to make poor people behave better so it’s not as bad to live next to them. As red-pilled HBD believers, we understand that the majority of poor people are genetically inferior to their betters on important attributes like intelligence, future-time-orientation, and natural inclination towards peaceful cooperative behavior. But that doesn’t mean that that there is nothing to be done. There has been a massive increase in crime since the 1950s, and that’s because society became more permissive. Society used to understand that poor people lacked the self-control and future-time-orientation of rich people, and thus poor people were kept on a tighter leash, encouraged to believe in religion that set them on the straight and narrow, policed by policemen who had a no-nonsense approach to policing, who could dish out an extrajudicial beating when it was called for.

The second thing we need to do is make schools safe for smarter and better behaved children. This means the smarter and better behaved children are separated from the other children. And the worst-behaved children need to be expelled from regular schools and confined to schools specifically for delinquents.

This is what conservatives should be pushing for to improve the lives of Americans, not tax cuts for the top 1%.

* * *

The point of the schools paragraph is that people believe they need to pay out the wazoo to live in “better” neighborhoods for the sake of their children’s schooling, which really means a school safe from ghetto kids.

But right now, this is pie in the sky, because liberals are opposed to making schools better for the smart and well-behaved kids, they believe it’s RACIST to do that (while sending their own kids to private schools).

Written by Lion of the Blogosphere

December 1, 2017 at EST am

Posted in Economics

Neither a borrower nor a lender be

In Hamlet, Polonius counsels his son:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

“Husbandry” means the management and conservation of resources in general, not the more common modern usage specifically meaning the care, cultivation and breeding of crops. So Polonius means that borrowing harms your ability to take care of your money and property in a prudent manner such that you never fall into the trap of needing to borrow in the first place.

Those who believe in libertarian economics believe that humans are hyper-rational consumers who only spend money after careful consideration that the spending of it increases their utility by an amount greater than what is spent.

But society has always known that the libertarian belief is false. 400 years ago, Polonius knew that his son needed to be trained to have higher future-time orientation, otherwise he’d spend all of his money on hookers and booze and useless trinkets and have nothing left for his future married life. So don’t borrow money you don’t have, and don’t lend money to your friend because that just enables your friend to behave in an imprudent spendthrift manner and furthermore you might not get paid back and may lose a friend trying to get paid back.

Polonius’ advice is badly needed by American proles. According to Google, 40% of Americans have credit card debt, and the average amount of debt is scarily high.

This is where the government should step in. When people act against their own interests, and they lack a wise father like Polonius to set them straight (and the percent of people who even have a father who was married to their mother and helped raise them is shrinking every year), for the good of society the government should step in and prevent people from making bad decisions.

But aided and abetted by Republicans, the government has been doing the opposite by enabling student loans for bogus for-profit colleges. Also, there used to be usury laws to prevent people from being ripped off too badly by unscrupulous lenders, but libertarian types are against those laws because they “interfere with the free market.”

Written by Lion of the Blogosphere

November 30, 2017 at EST pm

Posted in Economics

The positional good of living in a good neighborhood

An unknown commenter writes:

The “nice neighborhoods” with “good schools” are becoming prohibitively expensive for many people, and it’s only going to get worse.

As I’ve stated many times before (and I think Steve Sailer said it first), the worst part about being poor (in modern-day America) is that you are forced to live in the same neighborhood as other poor people, and send your kids to schools full of other poor kids.

Living in a good neighborhood is a positional good. Wikipedia defines a positional good:

Positional goods are goods valued only by how they are distributed among the population, not by how many goods there are in total. For example, getting a college degree is useful in the job market because it helps the new graduate, yet slightly worsens the situation for all others holding that degree as it increases competition from that graduate. That is, the total benefit from all instances of a positional good is zero-sum, neither increasing nor decreasing.

Our value-transference economy is based primarily on positional goods, but too many are still stuck in 19th century economic thinking. “Economic growth” and tax cuts are of no benefit to people who can’t afford to move to “good” neighborhoods, such things just increases everyone’s nominal wealth and the cost of the “good” neighborhood goes up proportionally and remains just as unaffordable as it was before.

* * *

In fact, I would say that the cost of desirable positional goods have been increasing faster than the rate of inflation and faster than the rate of growth of the median person’s income. This is a consequence of the top 1% (and other topmost percents) getting a larger share of the wealth, which they then use to buy up the best positional goods for not only themselves, but also for their children.

Republican tax cuts for the top 1% will only make things WORSE (except for those already in the top 1% or who have parents in the top 1% who give them financial support).

Written by Lion of the Blogosphere

November 29, 2017 at EST am

Posted in Economics

Something I once wrote about Microsoft

Microsoft dominates software, but it’s hard to see what value Microsoft actually created. The company only exists because IBM made a really dumb decision to give Microsoft ownership of the operating system instead of developing it in-house or with consultants who signed contracts giving all intellectual property rights to IBM. This is not a mistake that any big company will ever make again, I guarantee you that.

Nearly everything Microsoft sells has been copied or purchased from other business entities. The idea for Windows was copied from Apple and Xerox. Excel was copied from Lotus which was copied from Visicalc. Microsoft is able to dominate all application software because they dominate the operating system, and Microsoft dominates the operating system because Microsoft was first, and Microsoft was first because IBM was stupid and because Bill Gates’ mother knew some top executives at IBM. If anything, Microsoft has actually destroyed value by using its dominant marketing position to make its own software the standard, even though a lot of their software sucked in comparison to their competitors. I call this value creation suppression.

Written by Lion of the Blogosphere

November 22, 2017 at EST pm

Posted in Economics, Technology

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