Category Archives: Culture

Oxymoron: Funny Economics Story

3 Replies

While working on HoundWire I would often go to Park Bench Deli (a few blocks up the hill from where that photo was taken) in Altadena with various interesting people. One fellow diner was our intern from Caltech. Caltech is the west coast rival of MIT so they have some very smart professors wandering the halls. One out of every thousand alumni has received the Nobel Prize. The point is that the professors there know a little bit about what they teach.

To the story. Stephen, the undergrad, had a math class that was being taught after an economics class. The econ teacher inconsiderately left his scribbles on the chalk board for the math professor to deal with. According to the story the math professor walked in, looked at the econ equations for a minute, turned to the class and proclaimed “This is complete nonsense”.

A great analogy I heard about economics is that of a book report. Modern economists look at novels, run statistical analysis on the average words per paragraph and paragraphs per chapter. It’s all very scientific, high brow stuff based on calculus. Then they use that information to try to predict what the author’s next novel will be about. Of course that’s completely ridiculous but it explains why economists have predicted 9 of the last 4 recessions.

The Austrian School argues that you can’t predict the author’s next book unless you understand human nature. One of the most important books in the Austrian School is called Human Action by Mises. It just makes sense in my not yet well enough read opinion.

If you have an hour to kill I highly recommend this 70 minute podcast about the Austrian School from the Econ Talk website:
http://www.econtalk.org/archives/2007/12/boettke_on_aust.html
I’ve listened to it about 4 times and it’s sinking in. Good for long, caffeinated drives.

Photo info

OpenID + WordPress = Finally Working

5 Replies

OpenID is basically an attempt at single sign on. In theory you’ll be able to go to any site and log in or comment without the need to remember 31 passwords and user names.

So far it’s working great. I have it setup so that I just have to type in my blog’s url unbeknownst.net, it remembers my password, and I can log in and comment at a growing number of sites. My next goal was to add my blog to said growing cadre of OpenID compatible sites.

The best option currently looks like the WP-OpenID plugin. It was a pretty straight forward install but for some reason it was giving me blank pages when I submitted a comment at first. Seems to be humming along now. Feel free to try it out with your OpenID if you dare. I’ll leave the first comment using my OpenID account.

I allow anonymous comments on this blog so it’s not a big deal but you do get to bypass the spam filter if you’re using OpenID (at least for now).

* Update: Delegation doesn’t work. On other sites I can use my blog URL to log in but this plugin won’t let me do that for some reason. I’m sure they’re going to fix this in an update one of these days.

The Fed, Sausage, and Angry Southerners

2 Replies

Most people think of higher gas prices when they hear the word inflation. I like to look at how our food portions shrink while retaining their prices. The outcome is the same, higher cost per ounce, but it probably makes more business sense to put fewer chips in the bag than to raise prices. Apparently this phenomenon also angers sausage eating southerners as evidenced by the following recording.

This gets a tad not safe for work near the end…

Angry Jimmy Dean Sausage Customer

I keep wondering what the Fed is going to do about this situation. I imagine that by the middle of December things will be worse and they’ll be forced to cut, probably 50 basis points. Let the sausage lovers eat cake.

Happy Turkey

Leave a reply

When I searched for ‘happy turkey’, a common Thanksgiving greeting, Flickr found this photo of happy Turkish kids. Which I think is more cheerful than a picture of a hapless, flightless, delicious bird.

Here’s a video in case you feel like making turkey soup with the leftovers:

Photo by Traces in the Sand

Maslow’s Hierarchy of Capitalism, Rent, Personalized Democracy

Leave a reply

On my way home from the garage I find myself looking at businesses and wondering: What the world would look like if we ran on batteries instead of food, didn’t get sick, and bought things that didn’t break? I’ve come to the conclusion that we would be left with flower shops and the UPS store, so you could send flowers to people.

The question is really about wealth. How do jobs, which exist only due to inefficiency, create wealth? If we removed that inefficiency we would be somehow more wealthy but the economy would collapse. I think it all gets back to labor and capital. We have brains and arms. If we’re able to successfully satisfy our basic needs then we have time to satisfy the needs of others. We’ve hunted down the sheep and now we’re bored.

Maslow’s Hierarchy of Needs says something similar. We have some basic needs according to the Hierarchy. Ranked from fundamental to optional they are: Food, security, hot monkey love, self esteem, creativity. We’ve got food production down to a science. That frees up the potential assets between our ears to focus on using the crap we dig out of holes in the ground for the betterment of our quality of life. So the dentist does rely on the fact that teeth fall apart as we age but there appears to be no distinction between pain prevention and creativity. That’s what was having a hard time grasping. I think I get it now.

In other words, the dentist won’t care if he has to look for a new job if he knows his car will never break down again. The question posed by some union leaders is valid: If even knowledge economy jobs can get automated/outsourced then what comes next? This gets back to one of my theories: Economic inefficiency is the glue holding the middle class together. Maslow might call this the deficiency economy. Sounds terrible but the analogy works.

Some guesses as to what industries will continue to boom as the deficiency economy gasps for it’s last breath. Travel, news, food, arts/culture, sports.

Tired. I’m still having trouble converting the tangible to the real. How many kilos of rice is a trip to Disneyland worth? Wealth is subjective once needs are sated. To what extent are our wants derived from their ability to find a price? $300 jeans trendy because they cost $300. I need to think about this more.

Rent: Renters don’t care what you paid for your house, the rent must equal what they can afford + their ability to increase their debt. So what does that mean for a price floor on your bestuccoed asset? The assumption is that housing has some immutable, fundamental value attached to the land and construction. But the problem lies in the fact that houses fall apart. A house can be a liability if the maintenance is greater than the equivalent rent provided. If people start moving home with their parents or renting out spare rooms when times are tough the demand for housing will fall off a cliff just as supply(spare rooms) goes up. If you can only get $1100 a month in rent for a house it’s probably only worth $150,000, even if you paid $400,000 for it. Would you buy an investment house in Detroit for $5,000 if nobody wanted to rent it?

Also thinking about personalized democracy. And that it would never work because wealth transfer works across classes.

Next time, labor as wealth – “I like my job”. Money as a tangible abstraction of needs.

Photo by China.64

DMV – The Department of Meat and Vegetables

2 Replies

I love the irony that is Trader Joes. It’s a shining beacon of capitalism frequented by anti-capitalists. Sometimes, when debating the Left, I like to use their favorite grocer to make a point. The left wants socialized medicine because capitalism shouldn’t be trusted with something so important. When I debate people that don’t know me I like to take it further.

Me: “Yeah, I totally agree. Food is at least as precious to the nations health so we really should get rid of food stamps and socialize food as well. We could set up government run supermarkets and copy the policies and procedures used by the DMV to manage the operations and lines. Then, once we got the hang of it, we could get rid of private doctors.”

At this point they realize my logic is perfectly aligned with theirs but, in the back of their head, they’re imagining waiting in line for a half hour for a bottle of Two Buck Chuck that has been replaced with Schwarzenegger Vineyards. Which would require 40 tax payer dollars and 38 unionized workers to make it to the shelf. But hey, it’s free!

We can give food stamps to the poor and they can shop at Trader Joes so why can’t we do the same with health stamps instead of socialized medicine? The typical response to that question goes something like. “Well, that addresses the poor, but I wouldn’t be caught dead using food stamps.”


So I’ve been getting closer to the crux of the issue. The implication of the left’s stance is that they don’t want free healthcare in the form of stamps because the government is much better able to hide the wealth transfer. People would rather get crappy but “free” healthcare from a bureaucracy than swallow their pride and go knock on their rich neighbor’s door to get better healthcare.

In other words: Hiding the wealth transfer from the rich to the middle class (using a layer of bureaucracy) allows the belief that we can all be productive members of society to continue even when we’re getting handouts. The reason we have food stamps and not health stamps is because the middle class can afford food. I would predict that if the wealth divide got big enough people would shun food stamps and demand that the government take over Trader Joes and let politicians run the supermarkets. Because that’s apparently more dignified.

* Note: I don’t really like the terms upper and lower classes because it implies that the rich are somehow morally superior. Click the photos for their Flickr pages.

Global Warming, Inflation, and Radiohead

Leave a reply

Radiohead’s new free album is killing the environment.

The Federal Reserve hasn’t hidden their absolute terror of a deflationary spiral. Bernanke is a student of the Great Depression and has vowed to never let it happen again. Greenspan and now Bernanke slash rates at the first sign of trouble because they can simply gloss over inflation with a questionable CPI. People are less forgiving when they suddenly lose their job when compared to paying more for eggs. And the foundation of this whole crazy debt laden financial system relies on constant inflation.

If the new Radiohead album does well the music industry as it currently exists is pretty much toast. Music is the first to go only because songs can more easily be squashed into small files. Movies will go the same route eventually. The deflationary forces of technology are no doubt freaking out the Federal Reserve. In fact, Ray Kurzweil’s new AI book has an entire chapter on deflation. At least in the ’30s entire industries weren’t forever vanishing, people just bought less for a while. If music goes free there will be no CD revival in five years.

So here’s my justification for the thesis. The Fed is watching the deflationary forces of technology bring down massive industries. They’re also watching the end of the housing bubble. The trillions of dollars recently created flowed to housing prices instead of food, energy, etc. Housing prices aren’t used when calculating inflation. The end of the housing bubble means a couple of things. One is the need for a new asset bubble which can hide inflation, the other is the risk of deflation due to the tsunami of foreclosures we’re witnessing.

The powers that be are currently worried or they wouldn’t have cut rates 50 basis points. Environmental regulations are only going to put downward pressure on the economy regardless of their potential long term benefits. If the Fed cared about the long term they wouldn’t have nearly completely devalued the dollar. As technology kills off gigantic industries you can bet the people at the Fed are telling the powers that be not to do anything that will destabilize this already battered ship.

Photo by FB42 on Flickr

Soupy Norman

Leave a reply

The promise of technology (including the internet) isn’t fancy new gadgets… it’s finding interesting lumps of culture buried in the nooks and crannies of the interweb. Polish soap operas dubbed over by mildly insane Irish people in this case.

A Post for the Family

2 Replies

Hello family and friends, I made a funky little video of the reunion which you can play by clicking below. It’s a bit long but you can use the scroll bar at the bottom to jump around.

You can visit the slide show here or the photo album by clicking here. My poison ivy is pretty annoying but I think I’ll live. Plus the doc gave me steroids which “cause agitation” (read roid rage) but the free beach muscles will make it all worthwhile. Some of my favorite photos can be found below but click the previous link for the full slide show.

Some interesting links and furry dogs

Leave a reply

EDIT: I’m suddenly getting a ton of traffic from StumbleUpon for some reason. So hello, the blog is about economics, journalism, technology and a news startup I’m trying to get launched with a lot of help from some people in LA. My about page needs some updating…

Some interesting links making the rounds these days:

I’m slowly piecing together what may be my longest post ever covering some predictions I have about technology, culture, etc. I figure if I’m going to criticize PC Magazine’s vision it’s only fair to post my own.

Photo information here. It’s by Sandie Marie on Flickr. It has absolutely nothing to do with this post but it’s the 2nd most interesting dog picture according to Flickr.