Politics

Rose thou art sick - The Economist

The central thesis of the center-left has always been that government is the home for exactly those values that are not naturally served by markets, that two such kinds of values can and do exist, that it is legitimate to want for your country “soft” attributes like openness, fairness and civility alongside (and perhaps even at the partial expense of) “hard” attributes like economic growth and military power.…

In the Bizarro World of Negative Interest Rates, Saving Will Cost You - The New York Times

Is it possible we’ve created more money than we know what to do with?…

The Perpetual Bubble Economy - The New York Times

Wealth is the present value of expected cash flows at some discount rate. If you reduce those cash flows by single-handedly reducing economy-wide spending (as the government can do), then the only way to prop up wealth is to drive down the discount rate with which it is computed. This causes wart-like inflations in the prices of long-term assets (e.g. housing), and distortions away from real production (since no one is buying stuff) towards financial intermediation (since you have to go to greater lengths to get any return on your savings).…

Obituary: Margaret Thatcher - BBC

It is a hard sell that Britain’s economic troubles through the 70s and 80s were due to too much stability among banks, too many jobs for the workers, too many houses for the homeless, too many sick people becoming healthy, or too many schoolchildren drinking too much free milk.…

Tilting the playing field - The Economist

Finance Minister George Osborne and his London colleagues argued, unsuccessfully, that the EU’s cap on bankers’ bonuses would drive up base salaries, reducing the money that could be clawed back and leaving total compensation unchanged. This is incorrect. Bankers’ bonuses should be capped, and not for the schadenfreude of seeing it done.…

Wealth Inequality in America - YouTube

People think linearly, though income and wealth accrue geometrically. The differences are enormous, especially over time.

Those who spend all that they earn (or more) are not accumulating the wealth needed to buffer themselves from the vicissitudes of a capital economy. As a result, they accept increasingly poorer deals (can’t afford to be without a job due to the need for health insurance, can’t afford to retrain, relocate, or just relax…). This decreased bargaining power further diminishes their (and their children’s) ability to build wealth, and the cycle continues.…

The law of demand is a bummer - The Economist

Opening with a straw man, the Economist claims that raising the minimum wage requires that we forsake the law of demand: that “raising the price of something–low-skilled labor, in this case– will reduce demand for that thing.”…

Japan Steps Out - The New York Times

We forget that money is a good just like any other. Saying that no one wants to buy things (GDP being the rate of such purchases) is the same as saying people would rather keep the money (or, equivalently, pay down debt). As a result, there is an exorbitant demand for money. Similarly, when long-term government interest rates (for a nation that can print its own currency no less) remain depressed in the face of a recession, there is clearly an exorbitant demand for government debt. The two come together in the fact that real long-term rates on US Treasury securities remain negative on maturities out to 2029; the global markets are paying the US government to spend their money for them, to the tune of trillions of dollars .…

Health Care and Profits, a Poor Mix - The New York Times

Healthcare is not like any other good. It intrinsically suffers from every impediment to ‘free’ markets imaginable. You are compelled by circumstances to purchase it, and thus cannot navigate the ‘marketplace’ with the critical option of simply not purchasing. You suffer vast information asymmetries related to the skills of the provider, error rate of diagnosis, quality of care, likelihood of success, and therapeutic alternatives. You select from providers and therapies that are sufficiently heterogeneous to make meaningful comparison impossible. You pay for treatment so you get more treatment, not more health. And you rely on third-parties whose vested interests simply could not be more different from your own, and who (by virtue of the structural flaws above) have an enormous space in which to operate unchecked in rent-seeking ways.…

Mother’s Eulogy: ‘Take Flight, My Boy’

As a hobby, guns are great: the heft, the history, the sound, the precision. But liberty is more than the space between you and the most mentally unstable person in every crowd.…

To Reduce Inequality, Tax Wealth, Not Income - The New York Times

An economy, like a business, has a (cross-sectional) balance sheet and income statement. In times of inflationary growth, you want to transfer activity from the income statement to the balance sheet, slowing down spending and increasing saving. So you tax income and provide tax breaks for things like retirement accounts.…

If there’s gonna be a class war, do you want to support the guy who fights for the other class, or the guy who fights for his own?

FDR gave everyone a secure retirement, though his retirement was never in jeopardy. Kennedy landed a man on the moon, though doing so would not enrich him. LBJ signed civil rights legislation, though his rights were never in question.…

Documents Show Details on Romney Family Trusts

“I pledge allegiance to my money at the United Bain Holding Co., and to the power which it provides, one interest all mine, inscrutable, with privilege and immunity for me.”…

Open secrets are things everyone knows but no one says in polite company, and they are more prevalent than we admit.

Doctors are professionals? Not always. Investment managers know what they’re doing? Rarely. Business leaders are true visionaries? Almost never. The fact is most people are human. They are merely advancing their own interest and occasionally catch a fast break.…