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Webster

The Constitution was made to guard the people against the dangers of good intentions." --American Statesman Daniel Webster (1782-1852)


Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts

Saturday, April 23, 2022

"A Collapse of Economic Rationality"

 I shamelessly snagged this from "SSG", a Next generation Think Tank.  My Apologies for not posting for the past few days, I have been working a lot of hours, My employer is flying the crap out of our planes, and a plane flying is a happy plane, but we are busy with continual maintenance checks between flights and predictive maintenance.  Eh...It pays the bills but I am tired.

 

One of economics’ most infamous theories is that people will, on average, behave rationally in accord with their economic interests. This is demonstrably untrue as a universal law: many people destroy their wealth in order to pursue things like divorce, which they want more than they want the wealth. On average it is supposed to be true, though: by the time you reach whole societies, in general economic rationality is supposed to rule. We have come to the point at which this is definitely not true, not for any of the three great powers of the world. As a consequence, economic recession is becoming increasingly likely.

Russia’s war with Ukraine is explainable in terms of Russian interests, just as the pursuit of a ruinous divorce is explicable in terms of personal interests. Russia hoped to force Ukraine into neutrality so that it would serve as a permanent buffer state between itself and NATO. The failure of the Russian army to perform effectively* has led them to pursue their fallback objective of securing eastern Ukraine as a buffer state. (The Security Studies Group had assessed this to be their mission from the start, because it was the only one achievable with the force structure they deployed. The thrust on Kyiv was a decapitation strike that failed due to fierce Ukrainian resistance, becoming a diversionary mission enabling the envelopment of Ukrainian forces in the east. Even the diversion had to be abandoned in the face of steep losses.)

Russia has elected to suffer significant economic harm in order to attain this end. Yet the harm to the whole world’s economic order should not be underestimated. Ukrainian crops are not getting planted in much of the country; both Ukrainian and Russian fertilizer elements are not being produced or sold at normal rates (though nations like Brazil are dodging the Russian sanctions in order to feed their people). The inflationary cost on food prices will be steep even in the wealthy parts of the world. In places like Yemen, this conflict will lead to famine and death. Our government has not chosen to take the obvious steps to limit this harm, but has instead doubled-down on ethanol production this year.

China, meanwhile, has chosen to pursue a round of lockdowns in major cities like Shanghai that is so inexplicable in terms of health policy that top independent thinkers like Richard Fernandez and Ross Kennedy are speculating about hidden motives. Regardless of just why China is doing it, it has led to a disruption of shipping so severe that it will take months to unravel, ensuring another supply chain shock coming soon and lingering for a while. The economic effects globally will be both bad and lingering.

Here at home, our administration is focused on symbolism rather than economically rational goals. Having opened by killing the Keystone energy pipeline, they then closed public lands to oil and gas leases until forced to open at least some by court order. As consequence, gasoline prices look set to stay above $4/gallon for the foreseeable future, and our nation’s natural gas stockpiles are depleted. This is supposedly in pursuit of a ‘clean energy’ agenda, but it is incoherent: the ethanol production process relies on very dirty energy, and the lack of clean-burning natural gas is imperiling legitimate investments in cleaner energy. None of what they are doing makes very much sense, neither as a way of protecting the national interest nor even as an advancement of their agenda.

Market analysts I have consulted are estimating the probability of America’s economy slipping into recession between thirty and forty percent. The Security Studies Group estimates that probability as far higher. No one is behaving economically rationally, as all the major players are choosing to spend resources and position on political goods rather than economic goods. None of the leadership of the three great powers can be quickly replaced — if indeed they can be replaced at all. There are tough times coming because of this.

 

* One issue that the Russian adventure has laid bare is the fragility of the battalion as a combat team. Organizing into “Battalion Tactical Groups” (BTG) was an error because the battalion has too few people to suffer significant losses and remain combat effective. The United States made the same move to shrink its self-sustaining military organization below the division level, first with the Regimental Combat Teams (RCT), then with the Army’s larger Brigade Combat Teams (BCT). All of these organizations are attempts to make a smaller force deployable on its own, which means giving that group integrated support units like air and/or air defense assets, fire supports, and the ability to integrate units like Psychological Operations. A brigade-sized unit is at least three times the size of the battalion-sized units, and therefore more capable of continuing operations in the face of losses because there are more people involved in every function. The Russians committed too few troops to attain their ends — about half what the United States deployed in Operation Iraqi Freedom I — but they also deployed those too-few troops in fragile units that broke under stress. Some of them are currently being refitted, but some of them are too broken even for that. These, like the British elements savaged by Colonial forces at Cowpens, will have to be broken up and redistributed among other still-operational military units.

 

Friday, May 1, 2020

The Ethics of reopening the economy.

I snagged this from SSG,  This pertains to what is going on here right now with the "Karens" that want 100% safety and must remain inside before the economy restarts and others that want it to start sooner.  The tug of war between those that champion safety above all else and those that champion freedom and risk above all else for the soul of the nation continues.  My Governor looks really tired, he has started opening the state and there has been a lot of protest here in Atlanta against it, mostly from the democrats and the "Karens" that want 100% guarantees and there are no such things.  And I saw him in the interview and he really looks tired.  If things works well, he will be hailed a hero, but if it fails, he will be the goat.

The heated debate on when and how to re-open America’s economy is often portrayed as a conflict between “safety versus economics.”  Those on the side of economics point out that there will be much bigger consequences to remaining closed than admitted by safety advocates.  Those who consider themselves to be on the side of safety warn that re-opening poses unacceptable risks because it can lead to new virus hotspots, which can lead to more deaths.
This is a bad frame for this discussion.  Safety does not exist.  As the United Nations points out in a new study of the economic consequences of these lockdowns, it is likely that hundreds of thousands of children will die from starvation from the predicted economic collapse.  All roads lead to death.  Such safety as we can have comes coupled with economic collapse, harms centered on the poorest people, and starvation.  Alternatively, you can reduce the stress of the economic collapse on the poorest, but you have to accept an increased danger to others.  The ethical discussion should not be about “safety.”  It should be about proportionality and a fair distribution of risks.  This piece will explore a model for making the decision in an ethical way.  It does not endorse either course.
Because all of the options entail highly undesirable consequences, the ethical model that is most relevant comes from the ethics of war. If you want to explore the model carefully in the context of war, the standard work is Michael Walzer’s Just and Unjust Wars. I am going to write today on how to apply the military ethic to the current crisis.
Let me give a brief example of the model for the sake of clarity.  Consider a wartime decision like bombing a arms factory run by a totalitarian enemy that employs unfree labor in round-the-clock shifts.  If you blow up the factory, you kill innocent workers but save whomever would have been killed by the arms your enemy would have employed against your own people.  If you refrain from blowing up the factory, you save innocent lives among the workers, but put your own people at additional risk of death.  Both decisions probably kill innocent people, so it is similar to the choice we face today.
In military ethics, there are two considerations that tell you whether or not it is an acceptable decision to bomb the factory. The first is whether the action is discriminate, and the second is whether the action is proportionate. An action is discriminate if and only if the harm you are causing to innocents is neither your end nor the means to your end.  There is an easy test for this:  if by miracle the harm did not occur as a result of your action, would you be satisfied with the result?  If you bomb the factory and by miracle all the workers survive and only the equipment was destroyed, you would in fact be satisfied with the result.  Thus, the bombing is discriminate.
A forbidden alternative would be to poison the workers, so that they could not operate the equipment.  Then, if the harm did not occur to the innocents, you would not be satisfied with the outcome.  This direct targeting of innocents fails the test.
Fortunately in the current crisis the options we are considering are all discriminate.  No one is actively trying to cause deaths among the elderly by re-opening, nor the starvation of children by keeping the economy restricted.  This is important to note, because whichever choice is made we are likely to hear voices from those who favored a different option declaring that political leaders “have blood on their hands” because of their decisions.  That is unfair.  There is no option of avoiding blood.  All of these choices are discriminate, even though they have unfortunate consequences.
So the second consideration is proportionality.  In the military example, it is satisfied:  you will probably kill some number of one shift of workers, but you will save the lives of everyone who would likely have been killed by the arms you kept from being made.  In the current crisis, proportionality is going to be the key consideration.  Steps will need to be taken to try to minimize the harms done by whatever choice is made.  The choice should be made based on ensuring that the harm done is proportionate to the good achieved.  If we risk an extra ten thousand American deaths by re-opening, might we save a hundred thousand children?  That would be proportionate.  If the math cuts the other way, then the other choice is the proportionate one.
That is as far as military ethics carries us.  There are a few other things about the current case that are different from the military model.  In wartime ethics, for instance, it is perfectly ordinary to favor the victory of your own nation.  This is moral in war in part because the other nations are actively trying to harm you.  There is an argument that China has behaved in a vicious way by hiding the virus, destroying scientific research, disappearing doctors who tried to give warnings, and allowing the spread to the rest of the world.  The Chinese leadership can be treated as an enemy.  Nations other than China, however, are in this with us.  It may not be moral to pursue the survival of ten thousand Americans over a hundred thousand African or Asian children.  They are not our enemies, and it is not fair to them to put them at greater risk to protect our own.
There are also considerations of justice as related to poverty.  Both here and abroad, the poor are necessarily more exposed to harms from economic closure, and they are also more likely to be forced into ‘essential work’ that requires them to expose themselves to the virus even during the lockdowns.  As a result, the lockdowns actively harm the poor while sheltering the relatively well-off, and also unfairly force the poor to assume extra risks that the relatively rich do not run.
It is also true that the poor have less access to healthcare resources.  Increased economic activity may impose an unfair burden on them by exposing them to more people who may be sick.  Whoever is performing these duties, because they are running enhanced risks for the benefit of everyone, their access to necessary healthcare resources becomes a public concern central to making an ethical choice.  How we address that concern is open to interpretation, but that we address it is crucial because we need these things done.
These non-military factors seem to me to incline toward re-opening as much as possible, taking whatever safety precautions are reasonable.  The proportionality requirement from military ethics may or may not, depending on how many additional deaths are likely from re-opening.  Whether the numbers can be kept proportionate is a question for medical experts, but that is the question we need to ask them to make the best decision we can.

Wednesday, June 6, 2012

The 4 economic systems....

I have been seeing these articles asking of Obungler is a socialist.  Well I did some surfing around and was able to pull these definitions,
                                           


Capitalism:
The means of production is privately owned and controlled with only minimal regulatory interference from the state for the purposes of public health and safety.  Economic decisions made by millions of independent consumers acting in the marketplace.  Individual rights are fully on display and there are minimal restrictions on your activities.
Socialism:
The means of production is owned and controlled by the state.  Private property and business ownership is not permitted.  State is in complete control of the economy.  The people have some freedom, but there are more restrictions.
Fascism:
The means of production is privately owned but state controlled; a command economy driven by political whims.  your rights depend on what group you belong to.
          Communism: The state owns everything (including your ass) and tells you what job you will do,
          where you will work, where you will live and how much you will be paid and some nameless  hack
           from the government will totally control your life "for the greater good" 
            
       

Wednesday, October 19, 2011

Decision time about Greece

I was looking at this, and this is the OWS crowd as a nation state.  Greece made poor decisions and basically used other people's money to float itself with generous socialist programs so its people didn't have to produce.  Well now the bill is due and the people are having temper tantrums because of austerity measures.     Kinda like the OWS crowd.


Wednesday, May 18, 2011

New investments.

I got this from Here

 

Consumers and Investors Seek Protection With Guns and Gold

leadimage
05/09/11 Laguna Beach, California – Even after last week’s steep selloff in the commodities markets, the “Flight to Safety” trade is still on…big time. Gold may have retreated from its all-time high, but applications to purchase a handgun continue soaring to record levels.
According to the FBI, background-check applications for handgun buyers are on a record-setting pace so far this year. “In this year’s first quarter,” Bloomberg News reports, “the FBI’s Instant Criminal Background Check System processed 4.25 million requests on prospective gun buyers – up 16% from a year earlier.” If the current pace continues, the number of “gun checks” would hit a seventh straight annual record.
Background Checks on Prospective US Firearms Buyers
America’s gun-buying craze stands in stark contrast to the dismal trend of overall consumer spending. Bloomberg notes that spending on guns, ammo and other sporting equipment rose about 10% during the last 12 months – or more than four times the 2.5% increase in total consumer spending. Although spending on guns and ammo has been outpacing total consumer spending for more than a decade, the gun-buying trend has been accelerating during the last few months.
US Consumer Spending on Guns and Ammo vs. Childcare vs. Overall Consumer Spending
Meanwhile, Wal-Mart CEO, Mike Duke, observes that the retail giant’s “core shoppers” are “running out of money much faster than a year ago.” Since many of Wal-Mart’s core shoppers live paycheck to paycheck, they typically do most of their shopping at the beginning of the month…and less of it at the end. “Purchases are really dropping off by the end of the month, even more than last year,” Duke says. “This end-of-month [purchases] cycle is growing to be a concern.”
This troubling trend is not just a Wal-Mart thing. As a retailer that averages 140 million shoppers per week to its US stores, Wal-Mart’s “concern” is also the American economy’s concern. Wal-Mart is, as CNNMoney puts it, “a barometer of the health of the consumer and the economy. Wal-Mart has struggled with seven straight quarters of sales declines in its stores.”
Maybe that’s why Wal-Mart announced last week that it would resume selling guns and ammo in many of its stores – ending a five-year hiatus. (Handguns will not return to Wal-Mart shelves, but rifles and other “long guns” will, according to a recent press release).
Your California editor is not certain that America’s “gun boom” (pun only partially intended) means something, but he suspects it doesn’t mean nothing. Roughly 14 million Americans – about one in twenty – tried to buy a handgun last year. Another 16 million will shop for a sidearm this year. These 16 million folks certainly do not share identical motives for their purchases, but they do share an identical objective: to arm themselves. They are buying handguns in record numbers because they are feeling uneasy in record numbers.
It would be easy to dismiss the “gun boom” as an irrelevant cultural curiosity…if it wasn’t so seemingly relevant. Investors are also “arming themselves” in record numbers. They are buying gold and silver and oil and almost any other commodity under the sun. At the same time, they are also unloading US dollars in exchange for almost any other currency under the sun. The Norwegian kroner, Swiss franc, Aussie dollar and Canadian dollar are all trading near all-time highs against the US dollar.
Something serious is going on here. America’s economic recovery may be much weaker than advertised, while her economic vulnerability may be much greater than widely believed.
Confident citizens do not usually buy record amounts of guns and gold.