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Piggies, markets

A can of worms, wrapped in a puzzle, buried inside an enigma, with a little pink flag sticking up, the only thing visible, while the sound of one hand clapping faintly echoes in the background

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By the time the subject of the movie finally comes up, we’d already spent half an hour discussing the ossification of our own culture. We talk about how New York City, the place in which Gray set his first five films, has changed so drastically since the mid 1990s; Gray says the Brooklyn of Little Odessa “is totally gone,” and that, while the 1920s tenements in The Immigrant are still there, they now tower above John Varvatos boutiques. Gray specifies that he’s less interested in romanticizing the crime-ridden city of the past than questioning what’s led to the kind of environment in which, he says, one of his friends seems to be the only person actually living in his apartment building on Central Park West, not using it as an investment.

The fundamental issue on Gray’s mind when we talk is how capitalism impacts our priorities as human beings. Saddled with student debt from the moment we set foot in a university, our ability to “study for the sake of learning” is over; instead, we’re “forced to become budding capitalists.” It’s a critique that received major airtime during Bernie Sanders’s campaign, and Gray’s clearly given it some serious thought. “We haven’t figured out a way to monetize integrity, and when you can’t monetize integrity, and you can’t incentivize integrity and incentivize individuality, and you pray at the god of the market, you get a very strange beast that almost consumes itself,” Gray says. “It’s almost like everyone is beholden to this market god, and nobody knows what to do.”

All in one place, this short article has it all. Best of luck to Gray with the The Lost City of Z.

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Formidable Powers of Intervention

This is some incredibly confusing news to decipher, but given the players and subject that’s not too surprising.

The European commission underlined the negative impact of David Cameron’s summit gambit by pledging that the City’s financial institutions would be subject to new regulations hatched in Brussels.

So… the City, as it were, is England’s version of Wall Street, Charlotte and/or wherever else calls itself the center of the financial industry. Cameron evidently went to bat for it, protecting London’s sprawling financial sector from ‘excessive regulation’ at the European summit last week. He either vetoed the EU treaty or it proceeded without him. Whichever, it moves on now without the UK.

Cameron’s move isolated Britain in Europe as seldom before, producing weekend headlines and comment across Europe that the UK was on the way out of the EU.

“We want a strong and constructive Britain in Europe, and we want Britain to be at the centre of Europe, and not on the sidelines,” said Rehn. “If [Cameron’s] move was intended to prevent bankers and financial corporations in the [City of London] from being regulated, that is not going to happen. We must all draw lessons from the financial crisis, and that goes for the financial sector as well.”

It’s almost like a glimpse into the future, where industries sponsors national governments to protect their interests, couched in proprietary language that conflates the country with the industry, and makes their interests one and the same. The future, or the recent past – I can’t figure which.

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America: Too American?

If there are two consecutive sentences in this long article one of which does not smack of the utter idiocy of our present epoch, I can’t find them. The whole thing is summed up in this one sentence:

So thousands of companies here remain stubbornly small — all of which means Italy is a haven for artisans but is in a lousy position to play the global domination game.

Game. Set. Match. Because if you’re not trying to do that, why do anything? Positively everything that is wrong with our present trajectory is contained in that one little nugget. Delusions of scale? Check. Outright antagonism toward localized ventures? Got it. Condescension toward quality as value? In spades.

The thing is, this is also perfectly indicative of the tone of all business reporting; anything that can be interpreted as gains for workers is seen as negative, as is anything which diverts revenue from shareholders. It’s all of an anti-human, anti-person scale piece. As if it is inevitable that the high-quality fabric in question would give way to lower-priced faire from elsewhere because, well, that’s how we define things: down.

But it is rich how Italy is castigated for its lack of competition, as if the U.S. was some kind of hot bed. It is true that companies do most anything to drive others out of business, though in the sense freedom is just another word for a race to the bottom. Even the article sites the thousands of small bakeries in Italy vs. Quiznos here. Enough said. I guess the entire meaning of cheap never occurs to anybody.

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Coming Soon

Very dour outlook in Nevada.

The decay in Vegas doesn’t stay there: It reverberates throughout the state. “Coming Soon” signs have been pulled down across the city, because nothing is coming soon other than more foreclosures. The Nevada landscape is pockmarked by empty condos and casinos, some of them fully built and sitting there empty, others are shells frozen in time. When analysts talk abstractly about Wall Street sucking capital out of the real economy, these stalled construction projects are the on-the-ground reality. “60% Reduced Prices” promises one empty condo development.

The $3.1 billion Fontainebleau Las Vegas construction project sits nearly complete but the lender pulled out and everybody is suing everybody else. The first Ritz-Carlton in the company’s history to shut down is in Las Vegas.

And as the article title asserts, this is the future for much of the country. I wish I could say or you could think that this is wholly attributable to the economic recession and unrelated to the causes underpinning our crisis of ecology, but we can’t. Unsustainable growth, over-building, mindless reliance on cheap materials and energy, exacerbating resource scarcity… it’s all there. There is greed but also ambivalence about consequences that is too obvious to ignore, that allows for the kinds of rapacious development that built Las Vegas into what it is – which is a gilded yet crumbling metropolis, in the desert, no less. The human toll is tragic and cannot be quantified only by the number of empty subdivisions, but the region’s supposed rebound will be divined in corporate dividends and ephemera like new housing starts. Might as well be reading entrails.

And on top of it all… Fontainebleau? Really?

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Helicopter Drop

We are all the financial crisis now.

But when you have bought so much debt and created so much money that rates are near zero, the public is saturated with liquidity; from that point on, they’re holding money simply as a store of value, which makes it no different from bonds — and hence a perfect substitute for bonds. And at that point further open-market operations do nothing — they just swap one zero-interest asset for another, with no effect on anything.

So why not forget about open-market operations, and just drop the stuff from helicopters? Well, remember that at this point cash and short-term bonds are equivalent. So a helicopter drop is just like a temporary lump-sum tax cut. And we would expect people to save much or most of such a tax cut — all of it, if you believe in full Ricardian equivalence.

Ricardian equivalence refers to the suggestion that it does not matter whether a government finances its spending with debt or a tax increase, the effect on total level of demand in an economy being the same. And it doesn’t seem that we believe this at all.

Definitely difficult for the casual observer to stay out front of the forward thinking on what to do about the meltdown, especially where unemployment is the lead canary staggering out of the mine – ostensibly the easiest thing to do something about – infrastructure!

Burying billions and hiring people to dig it up would be productive, to the extent that it put money in people’s pockets, money they would then spend. But what if instead we hired people to re-build bridges, and/or faltering water and sewer systems… much less super trains.

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Eco-Nomics

It always seems like your eyes glaze over before you get to the end of the word. But, hyphenate it… Hey! now we’re talking.

Or they were talking – Washington Post blogger Ezra Klein and James Galbraith.

EK: You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.

JG: No, I think the danger is zero. It’s not overstated. It’s completely misstated.

EK: Why?

JG: What is the nature of the danger? The only possible answer is that this larger deficit would cause a rise in the interest rate. Well, if the markets thought that was a serious risk, the rate on 20-year treasury bonds wouldn’t be 4 percent and change now. If the markets thought that the interest rate would be forced up by funding difficulties 10 year from now, it would show up in the 20-year rate. That rate has actually been coming down in the wake of the European crisis.

So there are two possibilities here. One is the theory is wrong. The other is that the market isn’t rational. And if the market isn’t rational, there’s no point in designing policy to accommodate the markets because you can’t accommodate an irrational entity.

You should read it. So much of the conversation about deficits, recessions, taxes and stimulus that goes on is just wrong. It’s a way to punch a hippie, push an agenda, empower corporations, screw the poor or some combination of all of these. You’d have to understand, very deeply, a lot of this stuff to be able to call bullshit on the faux-populist balderdash that gets most of the play most of the time (for instance, the business page in any newspaper taking a sour attitude toward statistics or policy measures that benefit workers). This guy does. Check it.

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Math Lesson v. Popular Garbage

Now, popular garbage can and does take all kinds of forms. In this case, it’s Superfreakonomics, the swftly-selling follow-up to Levitt and Dubner’s Freakonomics. A counter-intuitive take on economics? Whoa, count me in!

Panned in all the finest establishments, not least (and maybe the best) by Elizabeth Kolbert in the current New Yorker, the new book has all of the appeal of high-minded contrarianism for the too smart to think mixed with the feel good ease of shortcuts to to problematic solutions. Consider the promise of certain geoengineering solutions to the AGW set (The denierati, in common parlance). Anyway, Kolbert slices, dices and disposes, but also gives the nod to one of Levitt’s colleagues at the University of Chicago, Raymond Pierrehumbert.

In an open letter published to RealClimate, Dr. P-h brings it:

By now there have been many detailed dissections of everything that is wrong with the treatment of climate in Superfreakonomics , but what has been lost amidst all that extensive discussion is how really simple it would have been to get this stuff right. The problem wasn’t necessarily that you talked to the wrong experts or talked to too few of them. The problem was that you failed to do the most elementary thinking needed to see if what they were saying (or what you thought they were saying) in fact made any sense. If you were stupid, it wouldn’t be so bad to have messed up such elementary reasoning, but I don’t by any means think you are stupid. That makes the failure to do the thinking all the more disappointing. I will take Nathan Myhrvold’s claim about solar cells, which you quoted prominently in your book, as an example.

He then goes on to quote-unquote do the math, to show that Levitt and Dubner’s refutation of solar energy capture solely on the basis of the waste it generates is yet another example of making us play a game of ‘fool or liar’, in which he respectfully eliminating the possibility they are fools. He even shows his work, by manner of screenshots of wikipedia searches and other applications of The Google.

So, to recap… the tally after 4 innings

Math lesson: 1,  PG: infinity- 1

But PG is definitely on the run.

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Time – the Revelator

We spend all manner of time and effort trying to de-couple these things which cannot be separated, no matter how much we want them to be.

I’m talking about economic growth and any of the things we don’t want to tackle because we’re afraid tackling them might harm our prospects for growth: health care reform, immigration policy, energy policy, especially regarding carbon emissions. Not only only will addressing these policy challenges head-on not jeopardize the future of the economy – the future of the economy is pretty-well destined to leave the toilet and head toward the sewer if we don’t address them. Stop me if you’ve heard this before.

gdpannualized1_2

via.

So what do you see when you see this graph? Are the prospects for growth drying up? Are they tied to other coincidental developments( peak stupid oil, the internet, the economic rise of Yurp and China? The wild swings of yesteryear and the policies that conjured them should not be the goal now. But this is a difficult idea for our better minds to grasp. We want to go back back back. Time goes forward forward forward, and well have to do way more with way less or we’ll just be like those crowds of people in old movies that are all dead now.

The prospects for and directions of future growth are changing; not in-a-phone-booth kind of changing but cloaked in the heavy disguise of things we’ve [supposedly] never done and so appear foreign and frightening, even un-American. But that charge is scurrilous and ignorant, and done they must be if the growth we crave is to become the reality we so desperately seek to escape. The extent to which we do not get this can become depressing; the extent to which we do will liberate us in the direction that turns hopes into certainty. Warning: An opposite set of outcomes may apply to the more resourceful among you.

Can you hear me, Doctor?

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Creative Destruction

Or, what will green mean once it has been destroyed and re-cast again? At the end of this Newsweek article about IBM and how it is “detaching” from the U.S., was this:

This is the new world of global business, one in which the U.S. becomes simply a market among markets, and not even the most interesting one. IBM is one of the multinationals that propelled America to the apex of its power, and it is now emblematic of the process of creative destruction pushing America to a new, less dominant, and less comfortable position.

It’s part global rah-rah, but having heard the term before in nearly the same context – as a seeming euphemism for the kind of havoc that is endemic to business interests in such a way as to insulate them from moralistic concerns about people or planet – it made me wonder how long it had been around and, at the risk of misunderstanding it, whether it could be true in multiple directions. I mean, destruction for gain, if truly amoral, could advance along an Eco axis if that was what where the gain is, Nes Pa?

Creative destruction was originally coined by Joseph Schumpeter (1883-1950) in his Capitalism, Socialism and Democracy. Some choice bits on CD:

Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. And this evolutionary character of the capitalist process is not merely due to the fact that economic life goes on in a social and natural environment which changes and by its change alters the data of economic action; this fact is important and these changes (wars, revolutions and so on) often condition industrial change, but they are not its prime movers.

These would be new means of production and transportation, new markets, new forms of industrial organization. Sound familiar? Also note that he says capitalism can never be stationary; does this put sustainability out of play? If so, what then?

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .

Ah, essential facts. We quickly revert to protecting that (competition) which does not require guarding, because its forms are designed to go away, or be transformed into something else. Something which may appear unrecognizable, but only because of our tendency toward the above reversion. One more:

But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition (the price variable) which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)–competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.

Now, there could be something very sexy about this, but we’ll have to get over the sad-sack ‘greed is good’ paradigm in which so many have found solace for so long, which has been under seige since the minute after it was created. It’s not merely being sanguine to say it is the nature of the system to destroy itself this way, just a reminder of the very necessary likelihood of possibilities that should be injected into the project. That are indeed its lifeline, if not its blood.

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You’ve Got Your Gender Composition in my Employment Parity

When the banality of economics becomes seductive. Via Matt Yglesias, Economix offers this chart undermining the truly pathetic neologism of a “mancession.” Please.

We could use crises to take a second look at issues in society – budget crises ostensibly allow us to prioritize our concerns, even if cowardly politicians address them with ridiculous across-the-board-cuts. Steep drops in employment bring up gender equity issues in the workforce in a way which, combined with other forces, should reflect not just changing demographics but shifts in national economy itself – toward education and healthcare, for example, and away from certain types of heavy manufacturing. Which itself reflects the tack away from industrial-based activity and toward a service economy. We will still have to make things and build stuff, and women may be increasingly designing the buildings, negotiating the contracts and cutting the ribbons. But this is less ‘XX takin’ XY’s jobs’ than ‘the nature of our jobs is changing.’