Friday, July 3, 2015

Bernie vs Builderism

Reason recently published this critique... The Foolish Socialism of Bernie Sanders.  It's a good critique... but it's not a great critique.

Sanders supports redistribution because he wants to help the poor.  A. Barton Hinkle, the author of the critique, responds that conceit (top down control) results in shortages.

The poor are definitely hurt by a shortage of food and other necessities... but we need to clarify how they are helped by a wider variety of beer for example...





While Boston Beer Co., Sierra Nevada Brewing Co. and other large craft brewers continue to gain market share, the number of small breweries including nanobreweries at the other end of the spectrum is exploding, providing adventurous offerings to a new generation of beer drinkers who increasingly place a premium on locally produced beer. - David Sharp, Beyond craft brews: Just like foodies, beer geeks go local

A wider variety of products doesn't perfectly correspond to a wider variety of employment options.  But there's certainly quite a bit of correlation.  And the greater the variety of employment... the greater the benefit to the poor.

It's easy to think of the poor as a homogeneous group of people... but they really aren't.  They are all different.  This means that they aren't all going to maximize their individual growth and reach their peak personal potential in the same exact type of environment.  Therefore, it's imperative that we facilitate the creation of the maximum variety of environments.

Entrepreneurs create new environments.  An entrepreneur who starts his own microbrewery creates an environment that isn't exactly the same as all the other environments.  No two working environments are ever going to be exactly alike.  We should encourage, rather than stifle, environmental differences.

J.S. Mill probably put it best...

If it were only that people have diversities of taste, that is reason enough for not attempting to shape them all after one model. But different persons also require different conditions for their spiritual development; and can no more exist healthily in the same moral, than all the variety of plants can in the same physical, atmosphere and climate. The same things which are helps to one person towards the cultivation of his higher nature, are hindrances to another. The same mode of life is a healthy excitement to one, keeping all his faculties of action and enjoyment in their best order, while to another it is a distracting burthen, which suspends or crushes all internal life. Such are the differences among human beings in their sources of pleasure, their susceptibilities of pain, and the operation on them of different physical and moral agencies, that unless there is a corresponding diversity in their modes of life, they neither obtain their fair share of happiness, nor grow up to the mental, moral, and aesthetic stature of which their nature is capable. - J.S. Mill, On Liberty

Here's another way of thinking about it...

Ecological Homogenization - Part of the problem for our native bees is our human desire for neatness and uniformity. Pretty lawns with no bare spots. Non-flowering grass, or pollen-less flowers. Paved spots where a sand bank or brush pile may have been before. All places where a native bee might have made her home or found a snack. - Gwen Pearson, You're Worrying About The Wrong Bees

Diversity of niches is just as important for the economy as it is for the environment.  Maximizing niche variety maximizes the chances that diverse poor people will find spaces where they can thrive and make their unique contribution to humanity.  Diversity also helps us hedge against failure.

Would Bernie Sanders help the poor truly thrive?  Not a chance.  His strategy is purely superficial.  The cover of his book might look good but the content is considerable crap.  There's absolutely no awareness or recognition or understanding of the true importance of diversity.  Like all liberals he'll praise diversity without having a clue what it's good for.  As a result, Sanders' plans won't eliminate the massive barriers to entry... instead, his plans will enlarge these barriers... which will decrease the variety of available niches... which will decrease the variety of employment options available to the poor.  This will create a vicious cycle.

On a related note, here's my reply to The Untold Story Behind the Invention of the Microprocessor

************************************************

What happened? Did I just read, and accidentally enjoy, an advertisement? How did this happen? Oh yeah…it’s because you “conveniently” put the “Sponsored by Intel” part after, rather than before, the content. As a result of your sneakiness…. now I have to go take a shower and try and scrub off the feeling of being so used. Don’t you know I live in Southern California? And there’s a drought going on? How bad do you feel now?

I sense a conspiracy. Just the other day I watched PBS’s Silicon Valley documentary on Netflix. Maybe it was sponsored by Intel as well? I don’t know… I didn’t read the credits.

I just looked at my computer…. which is so old. At the bottom of the tower is a sticker that says “Intel Inside”. For some strange reason I feel like buying a new computer… that also has an “Intel Inside” sticker.

Besides having “Intel” inside my computer… I also have a database. Inside this database is a table that stores my quotes collection. There are over 3000 quotes. It helps that I use tags. For example, if I filter the tags by “orchid” there are four results…

Recall the strong path dependence of individual connectionist learning. The use of external memory systems helps ameliorate some of the effects of this path dependence by allowing achieved innovations (“redescriptions”) to be transmitted between individuals. This allows the collective construction of representational trajectories that crisscross individual cognizers and hence increase the chance of a good idea finding a viable niche for further development. This is, of course, an old idea. But it is one whose value cannot be fully appreciated except in the context of our increasing understanding of the boundedness and extreme path dependence of individual reason. — Andy Clark, Economic Reason: The Interplay of Individual Learning and External Structure

Heh, what? Did that hurt your brain? If not, then you must have a lot of intel inside. Go ahead and make a comic to illustrate this quote. Send the bill to Intel.

I think it means something about my quote database (an external memory system)… and… sharing (transmitting) ideas… among more people… increasing the chance of a “good idea finding a viable niche for further development”.

Here’s the next result…

It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. — Charles Darwin

Good ole Darwin. Hmmm… was Intel the most responsive to change? Or was it the most intelligent? Maybe it just got lucky?

Next result…

In the 60s at Fairchild everybody looks out there and says why are we sitting in the big city we should be out there panning for gold. Let’s go start our own chip company. Fairchild was like a seed pod and it just scattered new companies all over this valley. And that’s what really began what we think of as the modern Silicon Valley. — Michael Malone, Silicon Valley

Eureka! This is the quote that I was looking for!

Maybe you’re wondering why I choose the keyword “orchid”? A single orchid seed pod can contain around a million tiny seeds that are dispersed by the wind. Talk about hedging bets. Which is, in my estimation, a good part of the reason why the orchid family is one of the most successful families on the planet.

How would you illustrate a million seeds being dispersed by the wind? How much variation is there in distance traveled? How much variation is there in the goodness of the seeds/ideas? How much variation is there in cold/drought tolerance? How far do the apples fall from the tree?

Just in case you’re wondering… here’s the fourth result…

Market reasoning is deeply, essentially smarmy. We live, it insists, in a world that is optimized by the invisible hand. The conditions under which we live have been created by rational needs and preferences, producing an economicist Panglossianism: What thrives deserves to thrive, be it Nike or sprawl or the finance industry or Upworthy; what fails deserves to have failed. 
We all live our lives, we’re told, on these terms. If people really wanted a better world — what you might foolishly regard as a better world — they would have it already. So what if you signed up to use Facebook as a social network, and Facebook changed the terms of service to reverse your privacy settings and mine your data? So what if you would rather see poor people housed than billionaires’ investment apartments blotting out the sun? Some people have gone ahead and made the reality they wanted. Immense fortunes have bloomed in Silicon Valley on the most ephemeral and stupid windborne seeds of concepts, friends funding friends, apps copying apps, and the winners proclaiming themselves the elite of the newest of meritocracies. What’s was wrong with you, that you didn’t get a piece of it? 
Of course this is tyrannical. Of course this is false. Everyone is aware that market judgments are foolish and unfair. But what can you do about it? — Tom Scocca, On Smarm

w00t! I wonder if this guy has an “Intel Inside” sticker on his computer?

If I was a billionaire then I’d buy a million acres of land in Southern Texas and start an orchid reserve. I’d attach 100 million orchids to trees. If an average orchid has 10 seed pods per year… and each pod has a million seeds inside… then how many seeds would be dispersed each year? Errr… my maths aren’t too great. :( How long would it take for every tree in the US to be covered with orchids? Errr… which direction does the wind blow? What if the wind doesn’t blow north? Minor detail? How many people would I have to hire to manually carry the seeds north? Just like Johnny Appleseed…but different.

But I’m not a billionaire! Can I blame the market? What does that even entail? The market isn’t a sentient being… it’s just a bunch of people. Like me… but different.

A bunch of people haven’t put my ideas in their shopping carts. And nobody’s ever made a movie about J.S. Mill! He’s one of the most important thinkers ever… and there’s never been a movie about him!! Market failure!!! Where’s government intervention when you need it?

The government hasn’t made a movie about J.S. Mill… but it did put a man on the moon. And, as a result, we have Silicon Valley!

Here’s the best kept secret in the world. A better world happens when enough people truly understand the value of consumer choice. Then we’ll be able to choose where our taxes go. We won’t all choose the same… because we aren’t all the same. And that’s a good thing.

From where I’m sitting I can look out the window and see a crowd of ripe seed pods on the dozens of Tillandsia aeranthos growing on my tree. They are perfectly happy only getting watered, via drip, twice a week. And the hummingbirds are more than happy to pollinate the flowers. Happiness does grow on trees.

I was just kidding about the needing to shower part. I’m all about the charmercials. And the not showering. Oh man, I stink so good!

************************************************

See also:  Rights vs Results

Thursday, July 2, 2015

Streaming Thoughts On Anacondas: The Hunt for the Blood Orchid

John Quiggin, my second favorite liberal, recently published this critique... John Locke Against Freedom.  I'd like to reply to it.  But then I decided to check and see if Netflix had recently added anything interesting.  Guess what I discovered?

Anacondas: The Hunt for the Blood Orchid

Here's the description...

A team of scientists sets out to find a rare orchid, unaware the flower is protected by deadly anacondas made even stronger by the mysterious plant.  

On the one hand, it's only 1.6 stars (out of 5) and I really should share my feedback with Quiggin (x).  But on the other hand, I do love orchids (y)!!!  

The opportunity cost of y is x.  But, right here right now... y > x.  Figured that I might as well share some streaming thoughts while watching the movie.  

The movie starts off pretty nice.  The opening scene is a zoomed out shot of some hilly jungle.  I love jungle.   I love nature.  The world needs more nature.  The world has a shortage of nature.  

The camera zooms in and I spot a tree fern.  It looks a lot nicer than three of my tree ferns.  Who plants tree ferns in Southern California?  Not just me!  With the mandated twice a week watering schedule because of the drought... three of my most exposed tree ferns are... getting crispy.  They might not make it.  

Crouched under the tree fern are some mostly naked natives.  In the movie.  Not in my yard.  

The natives are stalking a tiger.  A tiger?!  Woah, a mystery!  Where in the world are we?  Tigers are native to Asia and anacondas are native to the Americas.  The natives look a bit Asian... but more so than some American natives?   Yeah... perhaps.  

Some startled parrots just flew over a pond.  Parrots are pantropical but the parrots in the movie sure looked like American parrots.  I'm hardly an expert though.  

A disgruntled black monkey appears in the next scene.  I'm not a monkey expert either.  But it is howling so I'm going to go out on a limb and guess it's a howler monkey.  Kinda like the ones that I heard while stationed in Panama a million years ago.  

The tiger jumps over a native... because... it was running from an anaconda!  Now the native is running... not as fast as I would be running though.  

Because the native isn't running fast enough... the snake manages to grab him and lift him up in the air.  The native uses his knife to persuade the snake to drop him.  After which he runs, again... not so fast... but fast enough where he fails to avoid falling off a cliff into some water.  As he's falling we get a glimpse of what appears to be red flowered orchids growing on the cliff.  The first orchid that comes to mind is Masdevallia... which are from the Americas.  Except the downpour of red flower petals falling on the water are definitely not from a Masdevallia.

Now we're in the city.  :(  I miss the jungle already.  There's crowds of people and cars and buildings.  And a pharmaceutical boardroom... with some African American actor I kinda vaguely recognize.  Also there's a wonderfully "mixed" (maybe Hispanic, maybe African American) lady who I do recognize!  She's from Eureka!  

For some reason I'm infinitely better than my gf at recognizing actors.  I'd love to know why that is.  A fun theory is because she's Korean.  Even though she was raised by white people... maybe something in her nature prevents her from identifying Caucasian (broadly speaking) faces as well as I do.  Heh.  One way to test this theory would be to have both of us look at pictures of different faces... and then see how many and which ones we remember seeing.  Perhaps she's better than I am at remembering Asian faces?  Or maybe I'm just better at remembering all types of faces?  Perhaps I just have a better memory?  I'm sure this topic has already been studied... right?  If you know of any interesting studies then let me know. 

In the boardroom a powerpoint slide of the orchid is displayed.  The orchid is the Blood Orchid... Perrinia immortalis.  It's definitely not a real orchid.  The flower looks more like a wacky red trillium than an orchid.  The slide offers some basic info and a description that is hard to read.  But according to the guy giving the presentation... the orchid is from Borneo!  Well... that solves the mystery of which jungle we were in.  But now there's the mystery of how an anaconda ended up in Borneo.  The presenter says the orchid lies dormant for 7 years and then blooms for "just" 6 months.  Errr.. it blooms for just 6 months?  Hah.

It turns out that the reason the pharmacorp is interested in the orchid is because it could potentially be the fountain of youth.  The orchid family contains the key to immortality?  Totally plausible.  Orchids are all kinds of wonderful for so many reasons.  It's a long list that's bound to get a lot longer.  

Eureka lady is... skeptical.  Evidently she doubts the business model.  Another white guy in a suit is a bit more open minded.  He says, "that would be bigger than Viagra!"  I think I recognize him from this music video.

The boss gives the order to get our asses to Borneo and voila!  We're back in the jungle!  Yes!  Did you miss it?  I sure did.  Although, admittedly... Borneo wouldn't be my jungle destination of choice.  I'd prefer Bolivia or Madagascar.  Given that I live in a desert... I'm more interested epiphytes from drier habitats.  But the boss is the boss!

It's raining a lot in Borneo.  And we don't have a boat to get up river.  So now we're in a Borneo gangsta bar... of sorts.  I don't recognize the Asian guy we're talking to about a boat.  His English is good though and he introduces us to the captain of the boat... some white guy I don't recognize.  He's wearing a black cap.  

Mr. Black Cap wants to charge us $50,000 to get up river!  He's exploiting the heck out of us because he knows that the only reason we're talking to him is because nobody else is willing to transport us.  See... this is exactly why the Borneo government needs to impose price ceilings.  Evidently Borneo has a shortage of Krugmans.  What a coincidence... we have a surplus of Krugmans!  Let's send our Krugman to Borneo.  

Unfortunately, Krugman doesn't arrive soon enough to rescue us from exploitation.  :(  

Looking at the boat, Eureka lady remarks that she's seen prettier subway cars.  To which Mr. Black Cap replies, "she may be ugly but she puts out".  Heh.  What?  Now I'm trying to imagine an ugly boat that doesn't put out.  Somebody's going to have to draw me a diagram.  

A red truck pulls up and a black guy gets out.  A different black guy.  It's the guy from Bones.  See how good I am at recognizing faces?  What if I was the best in the world?  Surely somebody has to be the best in the world at recognizing faces.  

Our little ugly ship of fools sets off.  We've got a week to get to our prize orchid.  

The question is... who's going to survive?  

I'm guessing Mr. Black Cap (the ship captain), his Asian henchman... and maybe Eureka lady.  And maybe Bones.  Definitely the monkey.  The monkey is choosing an overhanging fruit (x) rather than staying on the boat (y).  Errr... and is now being chased by the snake.  And eaten.  Heh.  Stupid monkey.

It's the morning after... monkey's nowhere to be found... and Eureka lady manages to fall off the boat.  She's attacked by the snake?  Nope, a crocodile.  The captain pulls a crocodile Dundee.  And the monkey is still alive!  That's probably going to be the best twist in the tale.    

The engine dies and the boat goes over a waterfall.  Ooops.  Pretty white lady narrowly avoids being eaten by the snake.  And now it's jungle trekking time!  Get out your machetes!  We're on our way to get another boat.  A minor obstacle is a swamp.  That has an anaconda.  On the plus side there are some trees laden with epiphytes.  Not a bad trade off.  I'd be fine because I'd be out of the water climbing the trees inspecting the epiphytes.  

Our doctor got eaten.  :(  

Mr. Black Cap explains that it's an anaconda.  Unfortunately, he doesn't explain how anacondas ended up in Borneo.  C'mon director guy.  It wouldn't have been that difficult for Bones or somebody to say, "but I thought anacondas were native to the Americas...??"  And then Mr. Black Cap would have replied, "They are, but they've naturalized because pet owners release them after they get too big.  The same thing happened in Florida."

Did you read that article?  Another naturalized large constrictor... the Burmese python... is kept in check by fire ants...
One Burmese python at Trail Lakes, captured in the wild and kept in a large outdoor enclosure, was swarmed by fire ants that tunneled up from beneath her while she guarded her eggs. By the end of the day she and her brood had been reduced to little more than scales and bones. Given the ubiquity of fire ants in the Everglades, it’s imaginable that the ants are limiting the population growth of the pythons.
It's "funny" because the fire ants aren't native either.  

Unlike the python... the anacondas are viviparous... which means they give birth to live young.  They can just slither away when attacked by fire ants.  Although I'm having a hard time imagining an unenclosed mother python sitting there with her eggs while being eaten alive by fire ants.  Maybe she didn't get the memo about pars pro toto (part for the whole).  Lizards that sacrifice their tails to save themselves got the memo.  

The main concern with naturalized species is that they reduce biodiversity.  But it can't always be the case that introduced species will reduce biodiversity.  Or else Hawaii wouldn't have any biodiversity.  

The main thrust of current conservation efforts is to protect biodiversity.  But I think that in the future there will be a shift from protecting to creating.  If less biodiversity is bad, then more biodiversity is good.  If robbing the future of species is bad, then gifting the future with species is good.  The general rule is more niches means more biodiversity.  So the trick will be to create/fill more niches.  

Jungles have a lot of biodiversity because they have a lot of niches.  Trees create niches for epiphytes and epiphytes create niches for all sorts of life.  The goal should be to develop and proliferate the widest variety of epiphytes that can thrive on trees in drier/colder habitats.  This will get the biodiversity ball rolling.  More rolling.  More faster.  

Ok, let's see who the snake is going to eat next.  

Some debating whether to continue with the mission.  My vote is to continue.  What's your vote?  

More trekking... some leaches and spiders.  Turns out that the drunk captain of the backup boat is the next victim.  And somehow the boat manages to explode.  Shucks.  

Now our new plan is to try and find a village... of ex-headhunters.  Non-practicing headhunters.  

Oh noes, Mr. Black Cap clarifies that it might be anaconda mating season.  

In the village we find a big dead snake.  With a couple legs hanging out of its sliced open belly.  The rest of the villagers had bravely ran, boated, away.  The new plan is to build a boat.

Another twist.  In the village there's a carving of a snake eating the orchid flower.  Ah ha!  The snakes are so large because they live/grow forever.  Although it's not much of a twist because Netflix spoiled it in the description.  C'mon Netflix!  

This discovery rekindles the debate about whether to continue the mission.  The orchid expert guy (Jack) makes the excellent point that the orchid might not be around in another seven years because it could be slashed/burned.  Although, there's this "minor" assumption that we can't just collect the orchid and bloom it in cultivation.  

Jack gets mutinied.  

Turns out Mr. Black Cap used to be in the special forces.  At least that's what he tells the pretty white lady while they are sitting together by the fire.  Nothing like some jungle romance.  As opposed to jungle fever?  

And then the black guy finds a phone, and is about to call for help, when Jack makes him go nigh nigh with a spider he collected earlier.  Mr. Nigh Nigh then gets eaten by the snake... and Jack steals their newly built boat.  Now the rest of the group is going through the jungle trying to cut Jack off at the pass.  They all fall into a cave.  Asian henchman is next on the snake's menu.  Shucks.  

They barely escape from the cave and pretty white lady manages to machete chop the snake's head off.  Bones is doing a celebration dance when a second snake grabs him and quickly slithers off.  Mr. Black Cap chases and kills the snake with a really nice knife throw.  Bones is happy to be saved.  

Meantime, Jack finds the orchid... the group finds his raft... and he finds them.  Jack pulls a gun on them and they have a bit of a moral debate.  Which ends with Jack shooting Mr. Black Cap in the arm.  

Jack forces pretty white lady to crawl on log... over pit of mating snakes... to get flowers.  Again, I'm like, "hey, why are you just grabbing the golden eggs instead of the goose that's laying them?!!"  Nobody listens to me though.  

The two white guys have a bit of a scuffle... Jack falls into pit, gets paralyzed by spider... and eaten.  Pretty white lady also falls into pit of snakes... but she shows off her mad vine climbing skills.  The group somehow manages to kill all the snakes.  It's possible they destroyed the orchid in the process.  :(  

My survival prediction wasn't bad.  Yup.  

The moral of the story?  Movies that people aren't willing to pay for compete resources away from movies that people are willing to pay for.  If Netflix allowed its members to allocate their monthly fees, then I definitely wouldn't have allocated any of my money to this movie.  Instead, I would allocate my fees to movies and shows that I value a lot more.  Everybody else would do the same and resources would shift accordingly.  This improved allocation would create more value.  

Quiggin's Implied Rule of Economics (QIRE) states that society's limited resources should be used to create more, rather than less, value for society.  But Quiggin's Stated Rule of Economics (QSRE) states that fiscal stimulus is desirable when resources, like people, are unemployed.  

Let's say that unemployment is high.  Quiggin will cite QSRE.  He will argue that the government should spend spend spend to put people to work.  But if you suggest that a war would put unemployed people to work... Quiggin will kinda cite QIRE. 

Imagine if Netflix had a movie monopoly.  And actor unemployment was especially high.  

Quiggin:  Netflix should tax everybody (or borrow or print) to make movies to employ all these actors!  (QSRE)
Xero:  Yeah, Netflix should make a bunch of really bad movies!
Quiggin:  Well... not really bad movies.  (QIRE)
Xero:  Kinda bad movies?  
Quiggin:  Good movies?  
Xero: Better movies?
Quiggin:  Best movies?  
Xero:  How do we go about ensuring that Netflix spends "its" money making the best movies?
Quiggin:  Let's talk about Locke.  
Xero:  Ok
Quiggin:  Locke was bad because he supported slavery.  And property rights.  
Xero:  Property rights don't come from nature?
Quiggin:  No, they come from government
Xero:  So the government can take all our property?
Quiggin:  Sure
Xero:  And the government can enslave us?
Quiggin:  Sure
Xero:  That sucks.  
Quiggin:  Yeah.  
Xero:  So you support slavery and theft as long as the government does it?
Quiggin:  No.  
Xero:  So we should be protected from government theft and slavery?
Quiggin:  Yes
Xero:  How?  
Quiggin:  Liberalism.  
Xero: Can you be more specific?  
Quiggin:  Kinda like J.S. Mill's liberalism... but better.  
Xero:  I love J.S. Mill
Quiggin:  Me too
Xero:  Did you know he supported weighted voting?
Quiggin:  Nobody's perfect
Xero:  That's true.  I'm a fan of weighted voting as well.  And vote selling.  And tax choice.  
Quiggin:  Nobody's perfect
Xero:  That's true.  


Nobody's ever made a movie about J.S. Mill.  How is that not market failure?  Why doesn't Quiggin write a blog entry suggesting that the government spend money to correct this fundamental failure?  Maybe he's under the impression that the demand isn't there?  Maybe he's under the impression that we're the only two people who would pay to see a movie about J.S. Mill?   

If there's no demand for a movie about J.S. Mill... but the government supplies one anyways... then it's an instance of government failure.  The government violated QIRE.  It did not put society's limited resources to more, rather than less, valuable uses.  

By virtue of this impeccable economic logic... given that we don't truly know the demand for anything supplied by the government... nobody can ever ever ever claim an instance of government success.  

The government put a man on the moon?  Ok, it successfully put a man on the moon.  But what was the demand to put a man on the moon?  You don't know?  Then you can't know whether or not it was an instance of government success.  

That's the kicker.  Liberals want the government to do a lot... and they want us to take their word for it that the demand is there.  Well... the precious few liberals who understand that supply should match demand.  Then again, it's not like there are very many market types who understand the importance of knowing the demand for war.  Sigh.  

Tuesday, June 30, 2015

Hedge Granularity vs Fiscal Stimulus (Scott Sumner)

In a recent entry... Scott Sumner - Keynesian Imperialist... I failed to adequately explain the problem with fiscal stimulus.   Sumner was kind enough to offer some new material for me to work with... Macroeconomics in small economies.

Here's how he starts off...
Like many American economists, I've learned macroeconomics from an American perspective. But America is a very unusual country. For instance, US RGDP growth has averaged about 3% for the past 120 years, if not more. Most business cycles are fairly small, partly reflecting the fact that our economy is well diversified. If Nevada is in recession, Massachusetts may be growing, or vice versa.
At first glance this doesn't seem unreasonable.  We have around 50 states... and each state helps us hedge our bets... so as a country we're pretty safe.

But at second glance... each state is a collection of counties... and each county is a collection of businesses... so why should we be seeing any cycles?

Sumner is essentially arguing that the country is diversified... but the states are not...

1st tier (country) = diverse
2nd tier (state) = uniform

Nevada only supplies gambling... and Florida only supplies oranges.  If there's a bad freeze in Florida... the entire economy is still ok because Nevada's gambling adequately offsets the loss of Florida's oranges.

Here's some confirmation...

If all the booms and busts of recent years have taught states anything, Muro said, it’s that it is dangerous to rely too much on one industry for economic growth—especially if that industry is as volatile as real estate or oil. After the last time oil prices crashed, in 1986, bringing the Texas economy down with them, the state government made a point to broaden its economy into other areas. In the wake of the recent recession, the governor’s office and others claimed that Texas has successfully expanded into industries outside of the oil sector—especially the kinds of newer, fast-growing ones, such as tech, that have made places like Silicon Valley so successful. The Internet scene in Austin was particularly celebrated. “Texas has made a concerted long-term effort to build a broadly diversified economy that allows job creators from a wide variety of sectors and industries to thrive here,” Lucy Nashed, a press secretary for Perry, told me. She said that “will allow the state economy to weather the inevitable ups and downs of the economic cycle better than less diversified economies.” But, Muro noted, “The question is, given what is happening in oil and gas, how far along has that diversification proceeded in Texas?” - Vauhini Vara, How California Bested Texas

Clearly it's possible for any entity... from individuals to states to countries to the world... to be inadequately diversified.  Back to Sumner...

Other economies don't seem to adhere as closely to a stable trend line. Japan did very poorly in the 1940s, then raced ahead for decades, and has seen little growth since the early 1990s. Even smaller economies such as Latvia, Estonia, Iceland and Greece have seen spectacular booms followed by huge busts.

Ok.  These smaller countries are inadequately diversified.  Therefore, the solution should be to increase their diversification.  Right?  Well...

America would be able to support a public debt equal to 100% of GDP. But unlike Krugman, I believe the Greek situation in 2007 was "wildly irresponsible." Greece needed to run budget surpluses during the boom years, so that it would have the resources to do fiscal stimulus during a depression. Instead they ran a very large budget deficit during the boom period.

Eh?  The solution isn't to increase diversification?  The solution is fiscal stimulus?  Here's more of the same...

I would certainly not believe a 10% over capacity estimate for the US economy in 2007, but I don't find it all that implausible for Greece. Suppose your economy is sucking in lots of foreign workers for a real estate boom. The boom ends and the foreign workers leave. Now your "natural rate of output" is lower, as you have less labor. The outflow of Mexican labor after 2007 was not enough to cause a big drop in the US natural rate, but in a smaller economy like Greece, or Nevada, or Dubai, that sort of shock to capacity output could be much more significant. 
In the 1999-2000 boom the US government did run a budget surplus, and I believe Krugman supported that policy. He once suggested that President Bush made a mistake by cutting taxes and putting us back into a structural deficit. I'd argue the same applies to Greece (and Iceland, Estonia, etc.). Countries with those sorts of wild swings between boom and bust need to run surpluses during the good years. Because Greece did not do so, it is now forced to beg for loans from others. Its creditors know that it is unlikely to be able to repay those loans, and not surprisingly are reluctant to grant even more loans without some pretty strict conditions attached.

Sumner starts off his blog entry by saying that America doesn't have wild swings because we are adequately diversified.  But here he's saying that countries with wild swings need fiscal stimulus.

I find it hard to believe that Sumner is under the impression that Greece is too small to diversify.  Perhaps he's implicitly assuming that diversification isn't, for whatever reasons, tenable?

My hero is Deng Xiaoping... so I'm definitely a huge fan of practical/marginal improvements.  Allowing taxpayers to allocate 1% of their taxes?  Awesome!  A tiny step in the right direction is still a step in the right direction.

Hedging, however, is based on the premise that steps can be in the wrong direction.  Pragmatarianism is a step in the right direction because it increases the quantity of steps and directions.

There's a subtle but important distinction that needs to be made.  The heart of the issue really isn't to increase diversification.  People are already diverse.  Sure we could be more diverse as a species... but the real issue is that our natural diversity is blocked by top down control of the economy... aka "conceit".

Here's what Adam Smith wrote over 200 years ago...

If bankers are restrained from issuing any circulating bank notes, or notes payable to the bearer, for less than a certain sum, and if they are subjected to the obligation of an immediate and unconditional payment of such bank notes as soon as presented, their trade may, with safety to the public, be rendered in all other respects perfectly free. The late multiplication of banking companies in both parts of the United Kingdom, an event by which many people have been much alarmed, instead of diminishing, increases the security of the public. It obliges all of them to be more circumspect in their conduct, and, by not extending their currency beyond its due proportion to their cash, to guard themselves against those malicious runs which the rivalship of so many competitors is always ready to bring upon them. It restrains the circulation of each particular company within a narrower circle, and reduces their circulating notes to a smaller number. By dividing the whole circulation into a greater number of parts, the failure of any one company, an accident which, in the course of things, must sometimes happen, becomes of less consequence to the public. This free competition, too, obliges all bankers to be more liberal in their dealings with their customers, lest their rivals should carry them away. In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition, it will always be the more so. - Adam Smith, Wealth of Nations

And here's what Jeffrey Friedman wrote a few years ago...

Clearly the regulators were predicting that steering banks’ leverage into highly rated MBS would be prudent. This prediction proved disastrously wrong, but the Recourse Rule heavily tilted the field toward banks that went along with the regulators’ prediction. Heterogeneous behavior among competing enterprises normally spreads society’s bets among the different predictions (about profit and loss) made by various capitalists. Thus, the herd mentality is a danger under capitalism, as under every other system. Yet regulation produces the equivalent of a herd mentality by force of law. The whole point of regulation is to homogenize capitalists’ behavior in a direction the regulators predict will be prudent or otherwise desirable. If the regulators are wrong, the result is a system-wide failure. “Systemic risk regulation” may be a contradiction in terms. 
Neither capitalists nor regulators can use crystal balls to avoid making bad bets. That highly rated mortgage-backed securities would be prudent turned out to be a very bad bet. But we all suffered because this bet was imposed by financial regulators on the whole system. - Jeffrey Friedman, What Caused the Collapse?: An Exchange

... and here's what Joseph Stiglitz wrote...

Centralization is like putting all of one's eggs in one basket: just as we now recognize the greater advantages of portfolio diversification in allocating one's wealth, so, too, there are great advantages of diversification in allocating decision making powers. We need only dwell a few minutes on the evils wrought in this century as a result of the concentration of power in the hands of a few individuals. - Joseph Stiglitz, The Invisible Hand and Modern Welfare Economics

... compare it to what James Gwartney wrote...

A recent survey by the Federal Reserve Board indicated the wealthiest 2 percent of American households own 28 percent of the nation’s physical property. At first glance, this appears to be enormous power in the hands of a few people. However, reflection should cause one to question this view. This wealth, enormous as it is, is in the hands of 1.6 million house­holds, representing diverse political, religious, ethnic, and personal interests. Unless it is used to provide services to others in exchange for income, the wealth of these property owners will shrink. Compare the power of these wealthy households with the power of 536 elected federal office holders. This latter group, comprising just .0000025 percent of our population, determines how one-quarter of our national output is allocated. They tax approximately one-fifth of our national income away from earners and allocate it to nonearners. They set the dollar value of the social security benefits received by thirty-six million Americans. The regulatory power under the jurisdiction of the 536 individuals holds a life or death grip on the economic health of literally millions of businesses. In contrast with private owners, members of Congress have the power to take property, a portion of your earnings for example, without your consent. One could go on and on, but the point is clear. When government ownership is substituted for private property, enormous power over the lives of others is bestowed upon a small handful of political figures. One of the major virtues of private property is its ability to check the excessive concentration of economic power in the hands of the few. Widespread ownership of property is the enemy of tyranny and abusive use of power. This proposition is just as true today as it was a couple of hundred years ago. - James Gwartney, Private Property, Freedom and the West

Back on the topic of frozen oranges...

Farming is inherently risky. Weather, insects and disease, over which you have limited control or none at all, can wipe you out. One of the ways farmers manage risk is to plant variety. Okay, powdery mildew got your strawberries, but the broccoli’s going gangbusters. For farmers, crops that are given guaranteed protection from both losses and price drops are lower-risk propositions. - Brian Stauffer, Farm bill: Why don’t taxpayers subsidize the foods that are better for us?

Back to Adam Smith...

When a great company, or even a great merchant, has twenty or thirty ships at sea, they may, as it were, insure one another. The premium saved upon them all, may more than compensate such losses as they are likely to meet with in the common course of chances. - Adam Smith, Wealth of Nations

Yeah, we're going to need a larger megaphone.

Let's review...

Sumner is saying that fiscal stimulus is necessary because some countries aren't diversified.  I'm saying that if fiscal stimulus is ever necessary... then the solution really isn't fiscal stimulus.  The solution is to decrease government centralization/control.  This will allow inherent diversity to naturally flourish... which will eternally eliminate the need for fiscal stimulus.

Pragmatarianism is the best way to decrease government centralization.  Taxes will still be there... the difference is that a much greater diversity of people will choose where they go.  Hedging bets is just as important in the public sector as it is in the private sector.

Sunday, June 28, 2015

We're going to need a larger megaphone

From a recent Marginal Revolution post... King Cotton and Deadweight Loss...

Farmers use the subsidized water to transform desert into prime agricultural land. But turning a California desert into cropland makes about as much sense as building greenhouses in Alaska! America already has plenty of land on which cotton can be grown cheaply.  Spending billions of dollars to dam rivers and transport water hundreds of miles to grow a crop which can be grown more cheaply in Georgia is a waste of resources, a deadweight loss. The water used to grow California cotton, for example, has much higher value producing silicon chips in San Jose or as drinking water in Los Angeles than it does as irrigation water.

Authors: Alex Tabarrok, Tyler Cowen
BookModern Principles of Economics
Year: 2014

The natural advantages which one country has over another in producing particular commodities are sometimes so great that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expence for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines merely to encourage the making of claret and burgundy in Scotland?

Author: Adam Smith
Book: The Wealth of Nations
Year: 1776

2014 - 1776 = 238 years

Rights vs Results

Reply to: I Agree with Milton Friedman! by James Kwak


**********************************************

This is kinda a strawman. A “rights” based argument for property ownership is an extremely flimsy argument. Is it even an argument? The bible says, “thou shall not steal”. That’s not an argument… it’s a divine decree.

From the economic perspective… the issue really isn’t “rights”… it’s “results” (aka abundance).

Bob calls himself a “maker”. Should Bob keep his money? From the economic perspective… the answer depends on whether taking his money increases or decreases abundance.

If you want to argue that Bob has skills… then taking his money will decrease abundance. If you want to argue that Bob doesn’t have skills and just got lucky… then why are you also arguing that we should take his money? Perhaps you’re actually arguing that Bob is always lucky?

If you want to argue that Bob is always lucky… then your redistribution argument would have some logical basis. But it sure wouldn’t have any economic basis. Taking money from Lucky Bob would decrease abundance. This is because Lucky Bob consistently manages to invest in beneficial ventures. For example, he invested in Uber from the get go. Did you? I sure didn’t.

Getting back to the bible… the most relevant story is the parable of the talents. Taking gold from the most skilled and giving it to the least skilled would certainly decrease abundance.

In terms of fighting poverty… decreasing poverty depends on increasing opportunity. And increasing opportunity depends on increasing abundance. Abundance is a function of how society’s limited resources are used.

Moreover, what is a resource today may cease to be one tomorrow, while what is a valueless object today may become valuable tomorrow. The resource status of material objects is therefore always problematical and depends to some extent on foresight. An object constitutes wealth only if it is a source of an income stream. The value of the object to the owner, actual or potential, reflects at any moment its expected income-yielding capacity. This, in its turn, will depend on the uses to which the object can be turned. The mere ownership of objects, therefore, does not necessarily confer wealth; it is their successful use which confers it. Not ownership but use of resources is the source of income and wealth. — Ludwig Lachmann, The Market Economy and the Distribution of Wealth

Also…

Taxes upon transfer, besides the mischief of pressing upon capital, are a clog to the circulation of property. But, has the public any interest in its free circulation? So long as the object is in existence, is it not as well placed in one hand as in another? Certainly not. The public has a perpetual interest in the utmost possible freedom of its circulation; because by that means it is most likely to get into the hands of those, that can make the most of it. Why does one man sell his land? But because he thinks he can lay out the value to more advantage in some channel of productive industry. And why does another buy it? But because he wishes to invest a capital, that is lying idle, or less productively vested; or because he thinks it capable of improvement. The transfer tends to augment the national income, because it tends to augment the income of the two contracting parties. If they be deterred by the expenses of the transfer, those expenses will have prevented this probable increase of the national income. — J.B. Say, A Treatise on Political Economy

Markets work because it’s up to consumers to decide how well producers are using society’s limited resources. Consumers, with their infinite variety, preferences and circumstances, are the ultimate judges. Aka “consumer sovereignty”. It’s up to consumers to decide, for themselves, whether Bob has adequately earned their money.

Let’s review…

If Bob is skilled, and you take money from him, then you’re subverting the true will of the people. You’re also decreasing abundance which decreases opportunity which increases poverty. If, on the other hand, Bob just got lucky… then there’s no point in taking money from him. Chances are just as good that his money will circulate soon enough on its own.

So I’m against taxes because I’m for abundance. Actually, I’m not against taxes per se… I’m against the absurdity of allowing congresspeople to allocate them. If 500 government planners were better than an entire nation of people at allocating for abundance… then socialism would have worked. The absolute absurdity of our age is the belief that socialism somehow manages to succeed for the public sector despite the fact that it fails for the entire economy. Socialism fails just as much for public goods as it does for private goods. Taking consumer choice out of the equation will always have logically detrimental consequences.


**********************************************


Reply to: The False Tradeoff Between Efficiency and Equity by Haynes Goddard


**********************************************

The heart of efficiency isn’t just opportunity cost… it’s also the choices we make… which depend largely on our preferences and circumstances.

A vegetarian looks at a menu and rules out any dishes that contain meat. Then she looks at the prices and imagines how much value she’d derive from the alternative uses of her money. She also recalls the last time that she had each dish. Perhaps she also counts calories and considers nutritional value… or lack thereoff.

After an immense amount of computation/calculation…most of which occurs as a background process… she filters out all the other options and orders a salad. The waiter brings her a steak. It’s a non sequitur because the conclusion (steak/supply) doesn’t follow from the premise (her vegetarian preference).

It’s an inefficient allocation of resources.

As we can see, efficiency is easily and reasonably defined by the supply’s distance from a consumer’s demonstrated preference.

Except, you’re not defining efficiency in terms of consumer preference. You’re just throwing opportunity cost out there without any recognition or acknowledgement of all the other relevant parts. This vagueness allows you to argue that efficiency is a type of fairness.

Efficiency really isn’t fairness. Efficiency is the most valuable uses of society’s scarce resources. And value is a function of choice, sacrifice, preference, circumstance….which can all be rolled into “demand”. How well supply matches demand is a matter of efficiency.

Fairness disregards demand. Fairness is voters reaching into each other’s pockets. Fairness is an argument made by people who think that abundance is a function of taking rather than trading. Fairness is about diverting scarce resources away from more valuable uses. Fairness is a function of economic ignorance.

There’s nothing false about the tradeoff between efficiency and equity. There’s a very distinct and concrete tradeoff. We either have efficiency and abundance or equity and scarcity. These two things are diametrically opposed.

To be clear… because of the free-rider problem… taxation can increase efficiency… if, and only if…taxpayers are free to choose where their taxes go.

Friday, June 26, 2015

Scott Sumner - Keynesian Imperialist

And I'd say the same about Jose's comments on Keynesians. Lots of Keynesians do favor wealth redistribution, but there isn't any necessary linkage. As I point out in this post, it's perfectly possible to be a conservative Keynesian and favor small government. You can simply use tax cuts as your preferred form of fiscal stimulus. - Scott Sumner, I don't favor an interventionist monetary policy to fix recessions

Ouch, my brain.

This is so many types of weird.

A small government Keynesian (SGK)?  This is perfectly possible?  Like, Big Foot is perfectly possible?  What's the point in telling us that Big Foot is perfectly possible?  I'm not interested in the perfect possibility of his existence... I'm interested in evidence of his existence.  If Sumner knows of a SGK then he should tell us this person's name!  So we can take pictures.  And perform experiments.

Maybe Sumner is a SGK?  If not, then why not?  Let's pretend that he is!

Let's say that Sumner and Henderson both want tax cuts.  However, Sumner is a SGK while Henderson is not.  This is because Sumner wants tax cuts to stimulate the economy while Henderson just wants tax cuts to...uhhhh... not stimulate the economy.

Sumner:  I support tax cuts so that people will have more money to spend!!!
Henderson:  I support tax cuts so that people will have more money to save!!!

I take issue with this idea of needing, for any reason, to stimulate the economy.  If the economy has problems... if it's sluggish...  then it's because resources are inefficiently allocated.

Like, one time, my gf accidentally threw her keys away.  Hey Sumner, how do you translate her action into "econ"?  You know the answer... right?  Yeah?  The answer is... she "inefficiently allocated her keys".  Because she inefficiently allocated her keys, we wasted several hours searching for them.

When Sumner talks about "fiscal stimulus"... then I honestly have to wonder whether he truly grasps what it means for resources to be (in)efficiently allocated.

My second favorite liberal in the whole wide world kinda has this rule...

Quiggin's Implied Rule of Economics (QIRE) - Society's limited resources should be put to more, rather than less, valuable uses

Does Sumner think QIRE is a good rule?  Wouldn't you like to know?  I sure would.

Personally, I think it's an excellent rule!  Society maximizes benefit when it does the most beneficial things with its limited resources.

So where is the role for "fiscal stimulus"?  In theory, it has a role when the economy needs fixing.  But the only reason that the economy should ever need fixing is because QIRE is being violated.  The goal for every economist should be to clarify how, exactly, QIRE is being violated.

Tyler Cowen recently linked to this article in the LA Times about minimum wages...
Garcetti said county adoption of the minimum wage proposal would put the Los Angeles area “past the tipping point.” He predicted other cities would follow suit to avoid losing the most qualified workers to higher-wage areas. 
Some cities, including Santa Monica and West Hollywood, are already considering raising the minimum wage. However, larger cities in the county, including Pasadena and Long Beach, have remained on the sidelines of the debate. - Abby Sewell, Jean Merl, Sarah Parvini, Business concerns stall minimum wage vote by L.A. County board
Eric Garcetti is the mayor of Los Angeles.  Here's his logic...

Cause: LA mandates higher wages
Effect: LA increases its supply of workers

By mandating higher wages, Garcetti is effectively saying, "Hey everybody in the world!  LA has a shortage of workers!!!  So we're increasing your incentive to help us solve this huge problem!!!"

LA has a shortage of workers?  I guess.  Because, why else would Garcetti want to increase the supply of workers?  It sure wouldn't make sense to increase the supply of workers when there's a surplus of workers.  Except, if LA truly does have a shortage of workers... then why in the world would the mayor need to mandate higher wages?  Usually prices automatically increase when supply doesn't meet demand.  Evidently Garcetti is under the impression that prices are broken.  From his lofty vantage, the mayor can clearly see that LA has a shortage of workers... and the price of labor does not accurately communicate this reality.

Who should we trust?  Garcetti?  Or prices?

If we trust prices then, in reality, LA has a surplus of workers.  And raising the minimum wage will only make this problem worse.  It will result in an even more inefficient allocation of unskilled labor.  It will hurt the economy.

And how do we help the economy?  Stimulus!  Uhhhh...no.  In order to help the economy we first have to identify exactly how QIRE is being violated.  When my gf threw her keys away she violated QIRE.  When Garcetti throws workers away he violates QIRE.

Cause: Garbage in
Effect: Garbage out

Society's limited resources are misallocated and the inevitable problems are "solved" with... stimulus.  And what's stimulus?  The misallocation of resources.    

Keynesians really did an excellent job of capturing the narrative.  I'll give them that!  The topic of debate isn't the system... it's stimulus.  Scott Sumner is allocating his scarce resources to help promote this narrative.  The economy isn't my girlfriend and I digging threw the trash to find her keys.  It's not unskilled workers wandering around LA trying to find jobs.  Instead, the economy is some sentient being... completely independent of individuals.  When this being has a problem... then invariably the solution is stimulus.  Just like in the military how Motrin will "solve" any problem.  Sucking chest wound?  Have some Motrin.

Motrin is an easy "fix".  Just like stimulus.  Even the word "stimulus" is easier to write than "inefficient allocation of resources".  The revolution was postponed...yet again, because of semantics.  The other side has all the best word smiths!  And in our superficial system, style always wins over substance.

Monday, June 22, 2015

Elizabeth Bunn vs Builderism

ActionNetwork.org decided to send me this e-mail from the AFL-CIO...

*********************************************

Friend,

Too many workers fear retaliation from their employer for speaking out about dangerous working conditions. A lot of workers remain silent, but Kimberly King—who worked at the Lear Corp. auto parts plant in Selma, Alabama, where she made seat cushions for Hyundai cars—couldn’t take it anymore.

Kimberly was diagnosed with asthma for the first time in her life and a doctor’s visit found high levels of toxins in her blood that could be from the chemicals she was exposed to at work. Turns out, Lear Corp. had been cited multiple times by the federal government for violating health and safety laws.

Kimberly decided to speak out. She joined a community delegation to ask Hyundai to protect workers who build parts for their cars. But she ended up being fired and sued by Lear Corp. for standing up. Hyundai has the power to step in and require Lear to do the right thing.

Sign the petition now to demand Hyundai take action to ensure safe working conditions and fair wages for Kimberly and other workers who build the parts for their cars. We’ll make sure your petition is added to the others being delivered to Hyundai on the day of action workers are holding next week.

Toluene Diisocyanate, or TDI, is the chemical that may be making workers at the plant ill. The chemical is used to make the foam in many car seats. Researchers say isocyanates like TDI are among the leading causes of workplace-induced asthma.

This is no way for a global auto parts manufacturer to be treating its very own workers. That's why auto parts workers and their families are organizing a day of action on June 25, 2015. We can’t do this without you and working families everywhere.

Click here now to demand that Hyundai protect workers at Lear and other companies that provide parts for their cars.

In Solidarity,

Elizabeth
-------------
Elizabeth Bunn
Director of Organizing, AFL-CIO

*********************************************

Not exactly sure how I ended up on this list.

After reading the e-mail I immediately searched for and found the "unsubscribe" link.  But... I didn't click it. It's not like I receive daily e-mails from ActionNetwork.  Plus, I suppose I derived some utility from the insight.  At least Elizabeth Bunn gave me a good excuse to share this chart...



Yeah

I'm tempted to sign the petition.  Because... solidarity.  For poor people in developing countries.  Like China.

Except, thanks to unions, China's no longer a developing country!  Right?  The cost of labor in China has skyrocketed.  So this makes it a lot less likely that Lear would move its factory to China.

What about Africa though?  Right now Elizabeth Bunn is doing her hardest to make Africa look more attractive to Lear.  And I could help out by signing the petition.

Maybe this petition will be the tipping point that will send manufacturers to Africa?  Probably not.  I wouldn't be surprised if union participation has to increase a bit more before Africa starts looking good... enough.

In theory, Bunn is supposed to represent the best interests of American union workers.  The question is... what's in their best interest?  Is it for Bunn to petition Lear to move its factory to Africa?  Or is it for Bunn to petition to eliminate barriers to entry?

If barriers to entry are eliminated.... then, logically, workers like Kimberly King would have more employment options.  How many more employment options?  I have no idea.  But it's a given that making it easier to start a business will ensure a larger supply of businesses.  It's also a given that no two employment options will be equally beneficial to workers like King.

Is it really a difficult concept that it's in the best interests of workers that they have more, rather than less, employment options?  When there's a smaller supply of employers... then employers will have the upper hand.  When there's a larger supply of employers... then workers will have the upper hand.

What, if anything, does Elizabeth Bunn do to help ensure that there's a larger supply of employers?  What percentage of its resources does the AFL-CIO allocate to making it easier to start a business?  Imagine if the AFL-CIO allocated 100% of its resources to making it easier to start a business!!  Wow!  How awesome would that be?  What would that e-mail look like?  Maybe something vaguely like this...

*********************************************

Friend,

There's more than one way to attach an epiphyte to a tree.  Up until now, we've endeavored to improve working conditions and compensation by trying to coerce business owners.  This strategy has backfired because, well, many jobs simply left the country.  Unfortunately, we're not omniscient.  We just don't know where the tipping point is.

It's time for a new strategy.  We're going to endeavor to improve working conditions by trying to make it easier for people to start a business.

Right now it's very difficult and costly to start a business.  The barrier to entry is extremely high.  There are so many regulations designed to benefit workers that every business has to hire an army of lawyers.  As a result of our good intentions, we've inadvertently erected a huge barrier to entry... which has massively reduced employment options.

If we can help tear down the barrier to entry... then workers will have more employment options.  More employment options means more competition for labor.  This will be immensely beneficial for workers.

Not only will this strategy benefit workers... but it will also benefit consumers.  Eliminating the barrier to entry will help ensure that consumers have many more products to choose from.  Businesses will have to compete harder for both workers and consumers.  With our new strategy the interests of workers and consumers will be perfectly aligned.  

Even with consumers firmly on our side though, this will be an uphill battle.  Any preexisting business greatly profits from the reduced competition that results from the existence of a very high barrier to entry.  But, with your help, we can win this battle.  Securing a lasting victory for competition will usher in a new era of prosperity and progress.

In Solidarity,

Elizabeth
-------------
Elizabeth Bunn
Director of Organizing, AFL-CIO

*********************************************

Perhaps a bit of history will help...

Every colonist gets more land than he can possibly cultivate. He has no rent, and scarce any taxes to pay. No landlord shares with him in its produce, and the share of the sovereign is commonly but a trifle. He has every motive to render as great as possible a produce, which is thus to be almost entirely his own. But his land is commonly so extensive that, with all his own industry, and with all the industry of other people whom he can get to employ, he can seldom make it produce the tenth part of what it is capable of producing. He is eager, therefore, to collect labourers from all quarters, and to reward them with the most liberal wages. But those liberal wages, joined to the plenty and cheapness of land, soon make those labourers leave him, in order to become landlords themselves, and to reward, with equal liberality, other labourers, who soon leave them for the same reason that they left their first master. The liberal reward of labour encourages marriage. The children, during the tender years of infancy, are well fed and properly taken care of, and when they are grown up, the value of their labour greatly overpays their maintenance. When arrived at maturity, the high price of labour, and the low price of land, enable them to establish themselves in the same manner as their fathers did before them. - Adam Smith, Wealth of Nations

America!  With high wages!  Without labor regulations!  It was stupid easy to start a business (farming).  And it was stupid easy to employ people.  The high wages reflected the fact that it was stupid easy to start a business and employ people!  There was a larger supply of employers... which meant that workers had the upper hand.

What about England?

It frequently happens that while high wages are given to the workmen in one manufacture, those in another are obliged to content themselves with bare subsistence. The one is in an advancing state, and has, therefore, a continual demand for new hands: The other is in a declining state, and the super-abundance of hands is continually increasing. Those two manufactures may sometimes be in the same town, and sometimes in the same neighbourhood, without being able to lend the least assistance to one another. The statute of apprenticeship may oppose it in the one case, and both that and an exclusive corporation in the other. In many different manufactures, however, the operations are so much alike, that the workmen could easily change trades with one another, if those absurd laws did not hinder them. - Adam Smith, Wealth of Nations

England!  With absurd laws!

What about America now?  Absurd laws!  If you need some clues here's the most recent/relevant article... 'Employee' Label Would End Uber as We Know It.

I blame people like Elizabeth Bunn.  Good at organizing, bad at understanding.  I can't really blame her though.  Just like Hitler, she's a victim of the system.

Watch...

Politicians aren’t experts, Mr. Laffer said. “They give a speech and if anyone boos, they change their speech,” he explained. “They’re living, breathing polls and that’s the way it should be.” - Patricia Cohen, Nelson D. Schwartz, Matchmaking Season for Republican Presidential Candidates and Economists
In sober truth, whatever homage may be professed, or even paid, to real or supposed mental superiority, the general tendency of things throughout the world is to render mediocrity the ascendant power among mankind. In ancient history, in the middle ages, and in a diminishing degree through the long transition from feudality to the present time, the individual was a power in himself; and if he had either great talents or a high social position, he was a considerable power. At present individuals are lost in the crowd. In politics it is almost a triviality to say that public opinion now rules the world. The only power deserving the name is that of masses, and of governments while they make themselves the organ of the tendencies and instincts of masses. This is as true in the moral and social relations of private life as in public transactions. Those whose opinions go by the name of public opinion, are not always the same sort of public: in America they are the whole white population; in England, chiefly the middle class. But they are always a mass, that is to say, collective mediocrity. And what is a still greater novelty, the mass do not now take their opinions from dignitaries in Church or State, from ostensible leaders, or from books. Their thinking is done for them by men much like themselves, addressing them or speaking in their name, on the spur of the moment, through the newspapers. I am not complaining of all this. I do not assert that anything better is compatible, as a general rule, with the present low state of the human mind. But that does not hinder the government of mediocrity from being mediocre government. - J.S. Mill, On Liberty

Popular/Opinion = Shallow

Elizabeth Bunn is a product of shallowness.  This is because our education system is a product of shallowness.  Elizabeth Bunn did not read either the Wealth of Nations or On Liberty in high school.  She should have.  But she didn't.  As a result, she has a shallow understanding of the true source of prosperity and progress.  And she votes accordingly.  So does the majority.  The logical result is an abundance of absurd laws.

How do we break this vicious cycle?  J.S. Mill's solution was weighted voting...

But (though every one ought to have a voice) that every one should have an equal voice is a totally different proposition. When two persons who have a joint interest in any business, differ in opinion, does justice require that both opinions should be held of exactly equal value? If with equal virtue, one is superior to the other in knowledge and intelligence—or if with equal intelligence, one excels the other in virtue—the opinion, the judgment, of the higher moral or intellectual being, is worth more than that of the inferior: and if the institutions of the country virtually assert that they are of the same value, they assert a thing which is not. - J.S. Mill, Considerations on Representative Government

This is a catch 22 solution though because obviously the majority would not vote for weighted voting.  Tax choice is another catch 22 solution.  It only has 81 likes on facebook.

What are the chances that a solution will be discovered anytime soon?  Can you even imagine what a deep culture would look like?