Category Archives: Economics

Rule Five Laws of Economics Friday

This recently in from the economics deep thinkers over at the Mises Institute:  Ten Fundamental Laws of Economics.  Excerpt:

In the midst of so many economic fallacies being repeatedly seemingly without end, it may be helpful to return to some of the most basic laws of economics. Here are ten of them that bear repeating again and again. 

1. Production precedes consumption

Although it is obvious that in order to consume something it must first exist, the idea to stimulate consumption in order to expand production is all around us. However, consumption goods do not just fall from the sky. They are at the end of a long chain of intertwined production processes called the “structure of production.” Even the production of an apparently simple item such as a pencil, for example, requires an intricate network of production processes that extend far back into time and run across countries and continents.

2. Consumption is the final goal of production

Consumption is the objective of economic activity, and production is its means. The advocates of full employment violate this obvious idea. Employment programs turn production itself into the objective. The valuation of consumption goods by the consumers determines the value of production goods. Current consumption results from the production process that extends to the past, yet the value of this production structure depends on the current state of valuation by the consumers and the expected future state. Therefore, the consumers are the final de facto owners of the production apparatus in a capitalist economy.

By all means read the whole thing.  Rule #3 re-states Heinlein’s TANSTAAFL, but #9 is my personal favorite:

9. Profit is the entrepreneurial bonus

In competitive capitalism, economic profit is the extra bonus that those businesses earn that fix allocative errors. In an evenly rotating economy with no change, there would be neither profit nor loss and all companies would earn the same rate of interest. In a growing economy, however, change takes place and anticipating changes is the source of economic profits. Business that does well in forecasting future demand earn high rates of profit and will grow, while those entrepreneurs who fail to anticipate the wants of the consumers will shrink and finally must shut down.

To that point:  The reason socialism fails, every time it’s tried (the number and enthusiasm of the socialist state’s Top Men notwithstanding) is the lack of a profit motive.  This is not so much a law of economics as it is a law of human behavior, but people will always work longer, harder and more creatively for personal gain than for any other reason.  I need only look in the mirror for an example; having been self-employed since 2003, I can tell you without qualification or reservation that I drive myself harder than any boss ever did.

There’s a word for this model of economics:  Liberty.  Not capitalism; ‘capitalism’ is a term invented by socialists to describe a system in which people are free to do what they please with their talents, resources, skills and wealth, without interference by government.

Will the incoming Trump Administration move us away from the past few decades of increasing government meddling in the economy?  It’s hard to say.  But it’s damnably certain that Her Imperial Majesty Hillary I would have certainly pushed us farther down the road towards the path Venezuela is on.

Animal’s Daily News

Burgers.
Burgers.

Predictable outcomes are predictable.  This just in from Forbes.com:
Thanks To ‘Fight For $15’ Minimum Wage, McDonald’s Unveils Job-Replacing Self-Service Kiosks Nationwide.  Excerpt:

As the labor union-backed Fight for $15 begins yet another nationwide strike on November 29, I have a simple message for the protest organizers and the reporters covering them: I told you so.

It brings me no joy to write these words. The push for a $15 starter wage has negatively impacted the career prospects of employees who were just getting started in the workforce while extinguishing the businesses that employed them. I wish it were not so. But it’s important to document these consequences, lest policymakers elsewhere decide that the $15 movement is worth embracing.

As the labor union-backed Fight for $15 begins yet another nationwide strike on November 29, I have a simple message for the protest organizers and the reporters covering them: I told you so.

It brings me no joy to write these words. The push for a $15 starter wage has negatively impacted the career prospects of employees who were just getting started in the workforce while extinguishing the businesses that employed them. I wish it were not so. But it’s important to document these consequences, lest policymakers elsewhere decide that the $15 movement is worth embracing.

Let’s start with automation. In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.

Earlier this month, McDonald’s announced the nationwide roll-out of touchscreen self-service kiosks. In a video the company released to showcase the new customer experience, it’s striking to see employees who once would have managed a cash register now reduced to monitoring a customer’s choices at an iPad-style kiosk.

Fishing Trip BearNow, add to the mix the much-touted hamburger making machines, and The Rise Of The Burger Machines is nearly complete; all we need is a sort of Burger Skynet to run the rest of the store, and we can eliminate human employees from the equation altogether.

But seriously, folks; these two key pieces of automation could very possibly reduce the staffing requirements of a fast-food burger joint from, say, ten – to one.  Maybe two.  You just need someone to address complaints and clear jams in the burger machine.

Now, it’s common to attribute this to the increases in minimum wages, and it’s certain that these prohibitions on unskilled labor have accelerated the rise of this tech.  But this is something that probably would have happened eventually in any case; it’s just a piece of the increasing trend towards reducing costs by automation.

But that doesn’t make the ever-increasing demands of the minimum wage any less silly.  The minimum wage law is and always has been zero.  These laws just force more and more low- and un-skilled workers to that level.

Animal’s Daily News

Smiling BearWell, we can now get Cuban cigars.  Excerpt:

I have good news for the winners and the losers of the election, whoever they may be. The winners may enjoy the pleasure of celebrating victory with genuine Cuban cigars. The losers can drown their sorrows in Cuban rum straight from the island.

That’s because President Barack Obama has made such indulgences easier. Until recently, any American traveler could bring back no more than $100 worth of these items. Under the new policy, you’re free to bring as much as you can carry.

True, you may bring supplies only for your personal use; selling them is forbidden. Ha. Enterprising travelers will either ignore or find ways to evade these rules. I imagine Americans who really want Cuban rum or cigars will be able to satisfy their desire without flying to Havana.

How good are they? Before he imposed an embargo on Fidel Castro’s communist state in 1962, President John F. Kennedy ordered an aide to lay in 1,000 of his favorite Cuban cigars. In the ensuing decades, they have been prized by aficionados. Havana Club’s cachet has been sufficient to make it the best-selling rum on the planet.

Even some smokers who despised Castro were known to indulge when they got the chance. Anti-communists caught puffing Cuban cigars would say they weren’t subsidizing the dictatorship; they were burning the enemy’s crops.

Now, I’ve had Cuban cigars.  On a recent trip to Guadalajara, a bunch of the local company folks took my colleague and I out for a dinner in a rather upscale restaurant, and Cubano cigars were on the dessert menu, so I had one; I also bought one in a small tobacconist’s near the hotel and smoked in while on an evening walkabout.  They were good cigars and I enjoyed them, but honestly they weren’t noticeably better than my normal Coschero Torpedo Maduro.

underwearwinecigarBut that’s not the point.  The point is this:  The Cuban embargo has, for decades, failed to bring down the Castro cabal that rules Cuba.  Maybe trade will do the job.  I’ve long said that the Soviet Union was brought down not only by the arms race that the couldn’t afford, but also by the blue jeans and rock&roll that their younger generations wouldn’t and the apparatchiks in charge couldn’t afford to ignore.

It’s worth a shot to see if the apparatchiks in Cuba could be brought down the same way.

Animal’s Rule Five Debate Recap News

2016_10_19_debate-totty-1We’re all getting tired of this freak show of an election, I think; so while taking notes last night, I decided that I would forgo my usual images of emoting ursines in accompanying last night’s notes.  (I identify with bears; like them, I enjoy scratching my back on trees, roaring, eating and I sleep a lot in the winter)  Instead, I placed some strategically-placed Rule Five totty in the midst of my debate notes.

Going into the debate:  The Donald needed a miracle to overcome Her Imperial Majesty’s growing lead in the polls.  The conversation on the various news networks covering the debate focused on that and how he could achieve such a miracle.  So did he?  My notes on the debate follow.

2016_10_19_debate-totty-2The Donald started things off with a live Facebook video feed.  I long ago eschewed Facebook, as it has the worst noise-to-signal ratio on the internet except for YouTube comments, and yet – and yet – events like this caused me to register a phony Facebook account to monitor them.  So I watched.   What I saw was a couple of Trump surrogates complaining about media bias; a valid point, but not one that’s going to sway many undecided voters.  A few guests provided commentary, most notably Arizona Gov. Jan Brewer and General Michael Flynn.  Ivanka appeared in a recorded message seeking donations.  All in all, fairly pedestrian pre-debate chatter.

Chris Wallace sets the stage – he decided the question, neither candidate nor their campaigns know what will be asked.  And, no handshake between the candidates.  I think they have come to really detest each other.

First up:  The Supreme Court and how they should interpret the Constitution.  Her Imperial Majesty talks in platitudes:  The Court should “Corporations!  The wealthy!  Stand up on behalf of (enter your favorite special-interest group here.)  No mention of the Constitution except as regards to confirming Her Majesty’s picks.  Drink!  The Donald:  “Justice Ginsburg said something mean about me!”  Then:  The Court should uphold the 2nd Amendment a2016_10_19_debate-totty-3nd all the other Amendments – special mention to the 2nd, as it is “under attack.”  No argument there.  The Donald is calm, reasoned, talks in a measured tone about his list of judges, how they will interpret the Constitution as it was written; mentions the Founder’s intent.  Good opening.

On gun control, Her Majesty:  “I support the Second Amendment.”  Spit-take.  She goes on about loopholes that don’t exist.  She thinks it’s OK to have a gun in your home for defense, as long as it’s secured so you can’t use it.  The Donald on the 2nd Amendment:  “D.C. v. Heller was correct, a well-crafted decision, and Hillary was extremely upset about it.”  Her Highness goes on again about toddlers injuring themselves with guns, and repeats “…there is no doubt that I support the Second Amendment.”  Spit-take.  Again.  More talk about loopholes that don’t exist and “common-sense” measures that aren’t.

Trump counters with Chicago.  Good call.  “I’m proud to have the endorsement of the NRA.”  Point to The Donald.

On to abortion.  A bit surprised to see this as a debate topic, as it hasn’t been a big issue in the campaign.  Wallace asked him, “do you want to see Roe v. Wade overturned?”  He says yes, because he will put pro-life judges on the Court – and if it is, the issue will go back to the States.  Her Imperial Majesty:  “I strongly support Roe v. Wade.”  Talks about states 2016_10_19_debate-totty-4putting restrictions on women’s reproductive rights, which usually means states trying to keep taxpayers from subsidizing those treatments.  Still, this is (in my opinion) a losing issue for the GOP, especially with the sought-after Millennial vote.  I’ve got to give Her Highness this point.

Moving on to immigration.  Wallace:  “Secretary Clinton, you have offered no plan to secure the southern border.”  Trump goes first; hammers the Dowager Empress on amnesty, hammers her on crime committed by illegal immigrants, hammers on the drug trade:  “We have no country if we have no border.”  Touts his ICE endorsement, correctly mentioning that ICE has never before endorsed a candidate.  Also, The Donald did a neat lateral arabesque to attack the Obama/Clinton foreign policy failures.  Nicely done.

Her Imperial Majesty again brings up the girl she “…just met” in Las Vegas who is afraid her parents will be deported.  I’m calling bullshit; I’m guessing that girl doesn’t exist.  Her Majesty’s penchant for lying is well-documented.  But she hits him on separating families, a point that has some legs.  “I’m strongly for border security.”  Spit-take.  She goes on to repeat some platitudes.

The Donald circles around to hit Her Majesty on NAFTA (“the worst deal of any kind ever made”) and her previous support for a border wall as recently as 2008.

Great comment from fellow Colorado blogger Stephen Green, who is live-blogging the debate:  “Clinton’s at her best tellin2016_10_19_debate-totty-5g stories about actual people, which is ironic given that she hates almost every actual person.

The Donald makes clear the difference between legal and illegal immigration, which point he has not clearly made in the past.

Oooh!  Wallace hits her on a mega-buck speech where she advocated for open borders.  Trump:  “Thank you.”  Her Majesty complains that Wallace is quoting Wikileaks, blames the Russians for hacking American emails.  Note:  That doesn’t mean that the material in Wikileaks isn’t true.  The Donald:  “That was a great pivot off the fact that she wants open borders.”  Zing.  “I don’t know Putin.  If we got along well, that would be good.  If the United States and Russia got along well and went after ISIS, that would be good.”  Agree.  “Putin has no respect for the President, no respect for her (Clinton.)”  The Dowager Empress repeats her complaint about the Russians.

The Donald:  “She doesn’t like Putin because Putin has outsmarted her every step of the way…  She has been proven to be a liar.”  Her Majesty:  “The United States has kept the peace through our alliances.”  Where?  Iraq?  Syria?  Libya?  Yemen?   Point narrowly to The Donald here; he hammered Her Highness on some good points, although she got some good slams in too.

On to the economy.  Her Imperial Majesty goes on about infrastructure, clean energy, investing, raising the minimum wage… In other words, spend and regulate.  “We’re going to have the wealthy pay their fair share.”  Drink!  The Donald had a tight little smile during that last, as though she was playing into his hands.  He replies:  “Her tax plan is a disaster.”  Well, yeah.  “Why aren’t other nations paying th2016_10_19_debate-totty-6eir share in defense?”  But then he inexplicably invokes NATO – where some NATO members have long sheltered under the U.S. defense umbrella.  Touts his plans on free trade, on commerce, but offers no specifics.  Cut business taxes – a good plan, since our ridiculous tax policy is driving businesses overseas.  But he was a little unsettled on that point.

Her Imperial Majesty:  “He’s advocating for tax cuts!  OMGWTFBBQ!!!!1111!!!”  Well, yes.  That’s one of the big reasons he has the support he has.  Her Majesty:  “Investments!  Investments!”  Translation:  “Spend!  Spend!”  Wallace hits her on the similarity on her plan to President Obama’s 2008 stimulus, which was followed by years of 1-2% growth.  Her Majesty’s reply:  “Buuuuusssh!  President Obama saved the economy!  We need to spend more!”  Claims her plan won’t add a penny to the Imperial debt, which is laugh-out-loud absurd.  Wallace to Trump:  “Even some conservative analysts say your plan won’t achieve what you claim.”  The Donald:  “India is growing at 8%.  China is growing at 7%.  We are growing at 1%.  We have an anemic jobs report.”  Zing.  Repeats his usual points on trade and the loss of American manufacturing.  These are his strongest points in this campaign, and he hit them well.  Point to The Donald.

2016_10_19_debate-totty-7Her Majesty slams Trump for using Chinese steel in building.  “You made it impossible for me to do otherwise.”  Slams Her Majesty for being in the Imperial City for thirty years and achieving little or nothing.  Her Majesty deflects by touting fluff work she did as First Lady?  Really?

On to fitness to be President; Chris Wallace (who, by the way, has been tough but fair to both candidates” asks The Donald about his behavior with women.  He deflects, blaming the Clinton campaign and invoking the Project Veritas tapes of Clinton campaign staffers provoking violence at Trump rallies.  Good pivot.

Her Imperial Majesty says in effect, “All women should be believed when they allege sexual assault, unless they are accusing my husband.”

This is The Donald’s weakest point, and one of the biggest reasons he’s struggling in the polls right now is because a plurality, if not a majority, of American women don’t want to vote for him because of 2016_10_19_debate-totty-8these allegations.   He could have done a better job of deflecting, but honestly he doesn’t have a lot to work with.  Point to Her Imperial Majesty in that round.

Her Imperial Majesty:  “He applauds pulling, pushing and violence at his rallies.”  The Donald:  “Amazing that she talks about that, since her campaign caused the violence.”  Zing.

FINALLY, a debate moderator hits Her Majesty on the Clinton Foundation, pointing out that contractors for rebuilding in Haiti were selected from Clinton Foundation donors.  “I’m so proud of the Clinton Foundation!”  Uh huh.  Wallace:  “You didn’t answer the question.”  Trump:  “It’s a criminal enterprise.”  Observes that the Foundation took money from people who push gays off buildings and brutally suppress women – which is true.  Points out that Haitians hate the Clintons, which jives with what I was told by a Haitian Uber driver a few weeks back.  That’s a sample size of one, but still.  Good pivots and counter-punches by The Donald.

Her Imperial Majesty:  “He has not paid one penny in income taxes in years.”  If he hasn’t released his tax returns, how does she know?  The Donald:  “The tax code makes that possible.  If you don’t like it, you should have changed the law when you were a Senator.  You 2016_10_19_debate-totty-9won’t, because your donors take the same tax breaks.”  Zing.  Point to The Donald.

On the “rigged election,” The Donald claims “She shouldn’t have been allowed to run, because of her recklessness in handling secure documents.”  Good point, but then he says, when asked if he will accept the results of the election, “I’ll tell you at the time.”

Huh? That won’t play well in Paducah. My jaw dropped a little at that one.

Her Imperial Majesty cites the FBI investigation, which is now tainted by outspoken FBI agents accusing Comey of being a creature of the Clintons; that dulled her counter-attack, but not completely.  The Donald cited the Tarmac Summit, but it fell kind of flat.  Point to Her Majesty on that one.

Next:  “Will you put U.S. troops into the Middle East to fill the vacuum once ISIS is defeated?”  Her Majesty:  A flat no.  She manages a quick pivot to “if you’re on the no-fly list, you can’t buy a gun,” without explaining which other Constitutionally defined rights she favors restricting with no due process.  The Donald:  “We had Mosul.  When she (actually, President Obama) took everyone out, we lost Mosul.”  A fair point; nature abhors a vacuum, and the Middle East really, really abhors a power vacuum.  “The Obama Administration is only going after Mosul now to make her look good.”  I suspect that’s not the only reason.  Pivots to the Iran nuke deal, another strong point for The Donald; that was a catastrophically stupid deal, although the Obama Administration bears the blame for that.

Her Majesty tells people “Google Trump in Iraq.” Huh?   “We got Bin Laden!”  Funny, I didn’t know Her Imperial Majesty was ever a Navy SEAL.  “We can take Mosul and then move into Syria and take Raqqa.”  The old soldier in me wants to ask “What’s this ‘we’ shit, Kemosabe?”

Now they’re both talking over each other; for once, Her Imperial Majesty seems to have lost her temper.  The Donald on the Wikileaks emails2016_10_19_debate-totty-10:  “John Podesta said some horrible things about you, and boy was he right.  He said you have terrible instincts.  Bernie Sanders said you have bad judgement.  I think they are right.”  Her Imperial Majesty:  “Ask Bernie Sanders who he’s supporting for President.”  That one’s a wash.

On to Aleppo.  The Donald:  “We’re backing rebels (in Syria.)  We don’t know who they are!  We may end up with someone worse than Assad.  If she did nothing, we might be in better shape!”  Invokes the piss-poor screening of Syrian refugees – again, one of his strongest points.

Her Imperial Majesty on a no-fly zone over Syria; Wallace asks “If a Russian plane violates the no-fly zone, would you shoot it down?”  Her Highness:  “We’d have to make some deals.”  Uh huh.  Not really her strongest point.  “We’re not going to let people in to our country who isn’t vetted.”  The Donald:  “We had a cease-fire three weeks ago.  During the cease-fire, Russia took over vast swaths of land.  We are so outplayed.”  Admits she wasn’t part of that.

Final segment:  The national debt.  Wallace points out that debt is now 77% of GDP.  “Why are both of you ignoring that?”  Trump cites a message of growth, of jobs.  Again one of his better points.  “Political hacks are making deals – we don’t use our business people to make deals.”  This will play well to his base; unsure how it will appeal to any undecided voters out there.  But the pro-growth message is a good one.

Her Imperial Majesty:  “I wonder when he thought America was great.”  “I do not add a penny to the national debt.”  That doesn’t even begin to pass the giggle test.  She continues:  “Invest, invest, wealthy and corporations pay their fair share, rebuild the middle clas2016_10_19_debate-totty-11s, spend spend spend spend.”  Pure Keynesian malarkey.

Wallace points out that neither candidate addresses that entitlements are the biggest Imperial payout – by far.  Final question:  Would you make a deal to save Medicare and Social Security that would involve tax increases and service cuts?”  Trump deflects by talking about growth (somewhat valid; robust growth would increase Imperial revenues) and Obamacare.  Her Imperial Majesty:  “I will raise taxes on the wealthy.”  Again?  “We (have to) have sufficient resources.”  Meaning, more suction on everyone’s wealth from the Imperial City.  “I won’t cut benefits.”  But when she says in effect “Obamacare is good,” Trump interjects “…your husband disagrees.”  Heh.

Stephen Green again:  “Clinton says she’ll save entitlements by raising taxes on the wealthy, which is like putting an eyedropper of scotch in my glass and telling me it’s a drink.”

Both candidates are in denial on this issue.

One minute apiece for closing statements, which was not planned on.  Her Imperial Majesty largely repeats her opening platitudes.  The Donald repeats his boilerplate “Make America Great Again” and slams Her Imperial Majesty as a continuation of the Obama Administration.  No handshake between the candidates.

Summary:  The Donald probably turned in the best performance of all three debates.  Her Imperial Majesty was well rehearsed, well prepared, but in this debate, for the first time, she was a) hit on the Clinton Foundation and 2) appeared to lose her cool.  Both candidates hit their strongest positions and deflected their weakest points.

Still; Trump needed a slam-dunk in this debate, and he didn’t get it.  I’m guessing that it won’t bump him much in the polls.  His single biggest gaffe:  Refusing to state that he will accept the results of the election.  That’s going to hurt.  He scored a bunch of points, but Her Imperial Majesty just needed to show up and not actually have a seizure on the stage; he needed a big win he didn’t get.

This was not a game-changer.  Unless something dramatic and unexpected happens, Her Imperial Majesty will stay in the lead.

2016_10_19_debate-totty-12

Animal’s Daily News

Relaxed BearThanks once again to The Other McCain for the Rule Five links!

I’m going to circle back to politics for one day, with this article from libertarian scribe John Stossel:  What Candidates Won’t Say.  Excerpt:

Clinton promises more than $1 trillion in new “investments,” free day care, maternity leave, an expansion of Obamacare, more funding for veterans, new solar subsidies, new bridges and tunnels and “college, tuition free!” Then she says, “We’re not only going to make all these investments, we’re going to pay for every single one of them!” But that’s absurd.

Sometimes she says money will come from new “taxes on the rich,” but America’s rich aren’t rich enough to fund her grand schemes. Even if they were, they’d move out of the country or use tricks to evade her high taxes. Even The New York Times admits that Clinton’s tax plan adds “so many new layers of complexity” that it would “be a huge boon for tax lawyers.”

Trump is as bad, promising tax cuts and new spending on the military, infrastructure and that giant wall. Other than promising that Mexico will pay (it won’t), he never says where he’ll get the funds.

The biggest chunk of America’s budget is entitlements: Medicare, Social Security, Medicaid. Trump never talks about making those benefits sustainable — in fact, he says he “won’t touch” Social Security.

Clinton rarely talks about entitlements at all.

Both major candidates are Santa Claus, promising different bags of goodies, but neither has a plan to pay for those goodies.  Both parties are running on the ticket of fiscal insolvency, both parties ignoring the massive heaps of debt we have laid on the backs of future generations.

But in this sort of a race it’s the Democrats that have the edge; Her Imperial Majesty Hillary I makes no pretense of fiscal responsibility, selling her bags of goodies as paid for by “making the rich pay their Sad-Bearfair share,” a nonsensical claim that has never been realized; the top 1% of income earners already pay for more than their fair share, and the more Congress tightens its grip on those producers, the more capital will flee the country for havens in other nations.

Maybe the Dowager Empress’s administration will finally be the one that runs up against Stein’s Law.  More likely, the fiscal can will be kicked down the road for at least another generation.

A nation’s got a lot of ruin in it.

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

I’ll just run through a few odds and ends this morning, as I have an early morning scheduled and a long day ahead.  So – once more into the breach, dear friends, once more!

It seems Her Imperial Majesty paid internet trolls to flood comments sections on stories.  This is interesting; I’ve seen plenty of commenters on both sides of various issues accused of being paid trolls, but this is the first actual evidence I’ve ever seen of this being a for-real thing.  Who knew?

This man did what the Dowager Empress did with her private email server – now he’s in jail.  But the law, you know, that’s just for the little folks.

Here’s a good piece from the always-worth-reading Dr. Thomas Sowell:  Words Versus Deeds.  Key point:  Do you choose a President by talk — or by actions and consequences?  I’m sorry, Dr. Sowell, but it’s been many, many years since we chose a President by any rational standard in this country.  Pretty speeches and Free Shit have ruled the last few elections, and this one – sadly – is shaping up to be the same.

Sad-BearBut there may be one possible game-changer; yesterday the stock market hit a bad bump.  The 2008 crash certainly affected the election that year, although 2008 was going to be a bad one for the GOP no matter what.  A stock market crash would be a Bad Thing – a very Bad Thing – but at this point it may be the only thing that will save The Donald’s imploding campaign.

We’ll see.

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

The always-worth-reading Dr. Thomas Sowell (one of my personal heroes) weighs in on misleading statistics.  Excerpt:

Mark Twain famously said that there were three kinds of lies — “lies, damned lies, and statistics.” Since this is an election year, we can expect to hear plenty of all three kinds.

Even if the statistics themselves are absolutely accurate, the words that describe what they are measuring can be grossly misleading.

Household income statistics are an obvious example. When we hear about how much more income the top 20 percent of households make, compared to the bottom 20 percent of households, one key fact is usually left out. There are millions more people in the top 20 percent of households than in the bottom 20 percent of households.

The number of households is the same but the number of people in those households is very different. In 2002, there were 40 million people in the bottom 20 percent of households and 69 million people in the top 20 percent.

A little over half of the households in the bottom 20 percent have nobody working. You don’t usually get a lot of income for doing nothing. In 2010, there were more people working full-time in the top 5 percent of households than in the bottom 20 percent.

Household income statistics can be very misleading in other ways. The number of people per household is different among different racial or ethnic groups, as well as from one income level to another, and it is different from one time period to another.

The number of people per American household has declined over the years. When you compare household incomes from a year when there were 6 people per household with a later year when there were 4 people per household, you are comparing apples and oranges.

ThisBig-BearNow, I make my living teaching high-tech companies to solve problems.  Part of that work involves showing high-tech company employees not only how to analyze whether the solutions to a given problem worked, but how to prove that those solutions worked.  That, True Believers, takes statistics, and some knowledge of statistical analysis.  Now I am not and never will be a statistical maven on the scale of Dr. Sowell, but I do know a few rules that must be applied if your analysis is to be meaningful:

  1. Compare apples to apples.
  2. Examine trends.  A snapshot of data is interesting, but trends are evidence of effects.
  3. If your results do not prove your hypothesis, change your hypothesis; don’t “test until passed.”

As you can see from the examples Dr. Sowell provided, pols and their legacy media supporters are good at ignoring the rules of valid statistics.  In other words:  They are good liars, in the sense of Mr. Clemens’ quote:  “Lies, damn lies, and statistics.”

Animal’s Daily News

Sad-BearThanks once again to The Other McCain for the Rule Five links!

First note of the day:  R.I.P., Gene Wilder.  The Waco Kid may not be with us, but he was and always will be the fastest gun hand in the world.  Mr. Wilder brought a unique talent and perfect timing to the art of comedy; he’ll be missed.

Incidentally:  Can you imagine the howls of outrage from lefties and Social Justics Warriors (SJWs) were Blazing Saddles filmed and released today?  And yet it stands alone as one of the funniest movies ever made, co-written by the Jewish Mel Brooks and the black Richard Pryor.

Moving on:  Here’s an interesting tidbit our of Germany:  German Savers lose Faith in Banks, Stash Cash At Home.  Sound familiar?  Excerpt:

German savers are leaving the security of savings banks for what many now consider an even safer place to park their cash: home safes.

For years, Germans kept socking money away in savings accounts despite plunging interest rates. Savers deemed the accounts secure, and they still offered easy cash access. But recently, many have lost faith.

“It doesn’t pay to keep money in the bank, and on top of that you’re being taxed on it,” said Uwe Wiese, an 82-year-old pensioner who recently bought a home safe to stash roughly €53,000 ($59,344), including part of his company pension that he took as a payout.

Interest rates’ plunge into negative territory is now accelerating demand for impregnable metal boxes.

Burg-Waechter KG, Germany’s biggest safe manufacturer, posted a 25% jump in sales of home safes in the first half of this year compared with the year earlier, said sales chief Dietmar Schake, citing “significantly higher demand for safes by private individuals, mainly in Germany.”

Central banks and planners have, for years, kept interest rates as close to zero as makes no difference, and some are dipping into negative interest rates – meaning that the bank will charge you to store your money in their vaults.  This may be an inevitable consequence of currencies that have no worth other than a government stating “because we say so,” but the real problem is the poor incentives on saving.  President Obama likes to tout the rise of the stock market during his tenure, but a big part of the stock market bubble is certainly flight capital driven into equity markets because ordinary savings return nothing, and the rest of that rise is because cheap money has driven reckless investment and manipulation.

If/when the Fed raises rates, what do you suppose will happen to the stock market?

Plane-crash(Note:  Not a real plane crash, this is from the Nick Cage grenade Knowing.)

Hold on to  your butts, True Believers.

Goodbye, Blue Monday

Goodbye, Blue Monday!
Goodbye, Blue Monday!

Thanks once again to The Other McCain for the Rule Five links!

We may be moving a few steps closer to a cashless society, at least if we follow Sweden’s example.  (Note; in most things I’m not really in favor of following Sweden’s example.  Add this to the list.)  Excerpt:

To get a glimpse of the future of commerce in America, look no further than Sweden.

The Scandinavian country is largely a cashless society, with consumers relying on mobile phone payments or plastic. While the U.S. is still far from achieving the same level of cash-free existence, increasing numbers of restaurants and retailers are now snubbing the lowly dollar bill.

Some merchants such as SweetGreen, a salad chain, refuse to open their registers for cash, telling customers they can pay only with mobile payments or cards. With some newer vending machines, only a card or mobile wallet will get that cold Coca-Cola to roll down the chute.

The stance may appear un-American — after all, currency is considered legal tender for all debts or dues — but the Treasury permits private businesses to set their own policies, which means going cashless is fine with Uncle Sam.

It may be fine with Uncle Sam, and will actually have some benefits for taxpayers, as the linked article notes:

Cash isn’t in any danger of disappearing, but maybe it should: The U.S. has much to gain by phasing out cash, according to researchers from Tufts University. Writing in the Harvard Business Review, they noted that the U.S. spends $200 billion each year to keep cash in circulation. (China also has high costs related to reliance on cash, they noted.)

But here’s the problem, if we are going to remain a society that at least pays lip service to the idea of individual liberty:  Cash equals privacy.

Let’s say I go up to Denver’s huge Tanner Gun Show, looking for some .45 caliber hard cast bullets for reloading.  I can use my bank-issued debit card to pay for those bullets, or I can use cash (cash being the medium of choice at gun shows, at least for smaller purchases like ammo and components).  Which one of those purchases leaves a trail?

bears-cute-awesome2-25I’m not paranoid about my ammo or component purchases.  In fact I buy most of my components from MidwayUSA, which requires payment with a card and also leaves a record of shipment with UPS.  I’m not worried that BATFE is going to come kick down my door because I bought 500 148-grain .358 Speer wad-cutters to run up some target loads for Mrs. Animal’ .357.

But as our government becomes increasingly intrusive and restrictive, cash will increasingly become vital in maintaining any privacy in our personal economic transactions.  Absent cash, barter will become more prevalent.  As is always the case, government intervention will just drive these kinds of transactions underground.

So no, a cashless society isn’t really all that desirable.

Animal’s Daily News

Office-Bear_HibernateOne more minimum-wage story:  The Bitter Lesson From Seattle’s Minimum Wage Hike.  Excerpt:

The Post recently highlighted a new study from a group of economists who were commissioned by the city of Seattle to look at that city’s minimum wage hike from $9.96 an hour to $11.14 an hour. What they found was enlightening.

To begin with, the economists said, some of the workers weren’t helped at all, since their pay would have likely gone up anyway with experience and tenure on the job.

But the city didn’t bargain for what happened to other workers it had sought to help: “Although workers were earning more, fewer of them had a job than would have without an increase,” the Post said. “Those who did work had fewer hours than they would have without the wage hike.”

Indeed, depending how it’s calculated, the economists found that the minimum wage hike that sounded so generous when passed resulted in somewhere between a $5.54 a week raise and a $5.22 a week reduction in pay.

And:

The tragic irony of this is that those who are worst hurt by a higher minimum wage are those with little education or training, mostly minorities, immigrants and the young. They get priced right out of the labor market by the well-meaning nanny-staters who want to impose a one-size-fits-all minimum wage on the entire country — regardless of the damage it does.

Let’s be perfectly clear about this; the minimum wage isn’t a minimum wage.  It is a ban on low-skilled workers taking low-wage jobs.  The minimum wage prices many, if not most, low-wage workers out of the market by forbidding them from freely entering into an employment arrangement with an employer on terms agreeable to both parties, when the agreed wage is below the Imperial (or state, or city) minimum.

Bear MinimumIn what free society is appropriate for the government, at any level, to arbitrarily set a minimum on low-skilled labor?  If a retired man decides it would be entertaining to work in the bait and tackle shop his nephew runs, say for ten hours a week, and agrees to take $5/hour for doing so – why should the government prohibit that?

You’ll hear a lot of shrieks that “you can’t raise a family on $7.25 an hour,” which is the current Imperial minimum.  To that I can only say this; if you are trying to raise a family on one income at $7.25 an hour, you need to take a long, hard look at your life.

Heartless?  Hell yeah.  It is (for the umpteenth time) not the role of government to shelter people from the consequences of their own poor decisions – or their own poor planning.