Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Friday, September 8, 2023

Crankenomics 103

Haves, Sub-haves, and Some-haves, and systemic inflation
Image by 1820796 from Pixabay

This is a weekly column consisting of letters to my perspicacious progeny. I write letters to my grandkids — the Stickies — eventual selves to advise them and haunt them after they've become grups and/or I'm deleted.  

Trigger Warning: This column rated SSC — Sexy Seasoned Citizens — Perusal by kids, callowyutes, or grups may result in debilitating psychological trauma.  



Featuring Dana:
Persistent auditory hallucination and charming literary device

"There are no solutions. Only trade-offs." -Thomas Sowell

Dear Stickies and Gentlereaders,

 Our story thus far. This is the third and final column of a series about...

{Wait-wait-wait. You said, that "Cheat Sheets are a sort of distillation of all the stuff I would like to mention, or reiterate, to the Stickies and my daughter and son-in-law in the event of my sudden demise." So how did we wind up with a three-column series?}

Well... my columns feature "the wit and wisdom of a garrulous geezer." Also, it ain't easy squeezing a commentary on economics into three columns of no more than a thousand words each.

{I thought the limit was 750 words?}

Nowadays I strive for 700 to 1,000 because... Well, it's not that interesting really. Can we move on, please?

{Absabalutely, far be it from me! Tell us, Your Garrulousness, how do we resolve what appears to be an impending class war before the shooting starts?}

That's a vast oversimplification of...

{C'mon Sparky, this is the last column in the series. How do we fix this?}

I don't know.

{Aw geez. Then why...}

We've lost the thread, the beat, and our place <pause> and now we're lost in space.

I'm told, much to my surprise, that hip-hop is now officially 50 years old. I'm trying to find a way to get on the gravy train since it looks like real rock 'n' roll is fading as fast as we Boomers. I wonder what sort of music our current president and minority leader of the Senate prefer to listen to?

{Cute... Hey, how about raising the taxes of the rich?}

Despite what you may have heard, we already heavily tax the rich. Regardless, they're ain't nearly enough of them. The sub-haves, and the some-haves are paying most of the bills. The same people whose taxes would go through the roof to fund a socialist paradise by the way, but I drift.

But seriously, folks, I really don't know how to fix the problem, not without a radical restructuring of The Fedrl Gummit and the economy.

Don't hold your breath.

What I do know is that some people have taken to pointing out that we've painted our way into a financial corner that has little to nothing to do with critical this, queer that, systemic racism, and pasty patriarchs. Me for example.

America's most pressing problem, in my semi-humble opinion, is that we're slowly devolving into the postmodern version of a feudal society that will make most of us serfs. The gap between the haves and the have-somes keeps getting larger.

Many of us have-somes aren't willing to go along. But unlike the lunatic fringe, we don't want to burn down the palace (literally or figuratively) and start from scratch. We don't want a new deal, but we'd like a better one.

When the factories and the mills started shutting down back in the late 70s we were told not to worry, that this was merely the same creative destruction that made us a rich country in the first place, an unavoidable side-effect of the free market.
If it's much cheaper to make whatever, wherever, American consumers will reap the rewards at the cash register. Yes, jobs will be lost, some permanently. But new jobs will be created and former employees associates can learn to do them.

Keep growing or die, or at the very least, stagnate. We got this, we've been here before, what could go wrong?

The market is still functioning the way it's supposed to in that there are plenty of jobs to be had, at the moment at least, and labor shortages and "transitory" inflation have resulted in higher wages.

Big BUT.

The haves...

The unimaginably rich who have more money and power than the "Robber Barons" could've dreamed of,

And the sub-haves...

{What's a sub-have?}

Sub-haves are individuals fortunate enough to have enough cheese in the fridge to enable them to feel like their lives rest on a (more or less) solid financial foundation. For example, they find our current transitory inflation to be vexing, not a potential existential crisis.

The haves and the sub-haves aren't being victimized by the decades of systemic inflation and money printing that have slowly and stealthily devalued our currency. They have enough money coming in (or wealth accumulated) to cover the decline of their dollars, at least for now.

The have-somes, on the other hand, are getting it in the neck. Decades of slow but steady inflation of the price of big-ticket items (e.g. houses and cars, and college) plus regular bursts of ("transitory") inflation in the prices of everyday necessities prove the adage that inflation is a secret regressive tax on everything and everyone.

The following quote is from a great article by Richard W. Rahn in The Washington Times that explains simply, briefly, and clearly, why the Inflation Dragon is eating the country alive:

The U.S. government has been slowly destroying the value of the dollar through inflation ever since it created the Federal Reserve (whose job, in part, is to protect the value of the dollar) in 1913. The U.S. dollar is now worth about one-30th of its value in 1914 — which means it takes on average $30 to buy the same amount of goods and services that one dollar bought.

I firmly believe that too many years of The Fedrl Gummit spending more than it takes in, to buy votes without raising taxes, is the primary problem.

{Howsabout a concrete example of something that illustrates the difference between the lives of the haves and the sub-haves from the lives of the have-somes?}

Sure. Anyone who's been around the block a time or three, and for various reasons absolutely can't get by without a car (or two) is amazed at the average price of new ($50,000) and used ($40,000) cars. 

Have-somes, the 60% of us who limp from paycheck to paycheck while always looking over our shoulders, are inclined to have a panic attack when it becomes obvious we need to buy a car since further repairs on old Bessie would require a bank loan. 

Of course, there's always Cousin Eddie's semi-abandoned 24-year-old Ford. He's selling it 'cause he found out he can easily get at least 5k. Runs good, check it out. 

Poppa loves you,
Have an OK day

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Friday, September 1, 2023

Crankenomics 102

Image by 1820796 from Pixabay

This is a weekly column consisting of letters to my perspicacious progeny. I write letters to my grandkids — the Stickies — eventual selves to advise them and haunt them after they've become grups and/or I'm deleted.  

Trigger Warning: This column rated SSC — Sexy Seasoned Citizens — Perusal by kids, callowyutes, or grups may result in debilitating psychological trauma.  



Featuring Dana: Hallucination, guest star, and charming literary device  

"I wasn't worth a cent two years ago, and now I owe two million dollars." -Mark Twain

Dear Stickies and Gentlereaders,

O.K., where was I...

{You declared that you self-identify as a (sorta/kinda) wild-eyed free marketeer and libertarian and threatened to explain what you mean by sorta/kinda. Not exactly news given that you've written about this in the past.}

Thanks, Dana. Relatively speaking, it was the distant past given that the ever-accelerating pace of life nowadays can make last week seem like the distant past. 

Anyway, I dropped a hint when I mentioned that I think America is "...morally required to install a rationally designed effective safety net to catch everyone that fate shoves off the trampoline, but not necessarily for those who deliberately jumped off because they thought it would be fun." -me  

Now, sorta/kinda points to the fact that mainstream libertarians (I freely acknowledge the term mainstream libertarians is about as semantically accurate as cooperative cats) tend to hold a dim view of the welfare state. 

"Our answer to poverty has largely been to create more and more programs, while throwing more and more money at the problem. That has failed to truly empower the poor. There are better alternatives." 

The quote above is from an article on that discusses the tons of money irrationally and ineffectively dispensed by The Fedrl Gummit. However, the author of the piece, Michael Tanner, doesn't offer much in the way of specific/realistic "better alternatives."

Libertarians like to point out that if not for all the money redistributed by The Fedrl Gummit, people would be forced to find a way to get by, and philanthropy would pick up the slack. But as to exactly, and realistically, how ya get from here to there, well... 

That's the reason for my sorta/kinda. 

While I'm as fully aware as anyone that The Fedrl Gummit, all government entities for that matter, are staffed by H. sapiens as flawed as the rest of us, and powered by other people's money, America is currently devolving into a nation of economic serfs.

I'm all for at least acknowledging the problem before the Rental Coral just down the road starts renting out guillotines.   

 I'm a wild-eyed free marketeer because "the market" got us here. 


Here. The USA, despite its sins and flaws, is the best the planet has done so far, which is why so many people who don't/can't take our way of life for granted, are trying to get here. Legally or otherwise.

{Yeah, but...}

There are always yeahbuts. That's reality. If whoever is the wealthiest/most attractive/healthiest/etceterist person in the world at any given moment is run over by a bus, that's the/a mother of all yeahbuts. 

{Well yeah, but...}

Fine. Any reasonably well-adjusted adult should be aware that despite its sins and flaws, all things considered, the USA is the best the planet has done so far. Please note that I didn't say that there's not a lot of room for improvement.

While our more or less free market has a proven track record, I suspect that almost none of its fans believes that a libertarian utopia is any more possible than a utopia of any sort. There's no shortage of socialists, communists, eteceterists who do seem to believe utopia is possible but many are too young and idealistic to know better, yet. 

Many are, or should be, old enough to know better. 

Most Americans are just trying to pay for a given lifestyle which they've been told is possible for those willing to work hard and live in "the land of the free." 

A very long story short in which the devil resides in his/her/their comfortable condo in the details: Nowadays, Americans are discovering the cost of decades of borrowing, spending, and printing money. 

I'll leave it to the economists to debate exactly how we got here and what can/should be done, but the bottom line is that Inflation — short-term, long-term, and systemic — is turning us into a nation of haves and have-somes. 

{You mean have-nots? And why did you capitalize inflation?} 

I mean have-somes. The have-somes are caught in the middle between the haves and have-nots. They're working their bums off and marching in place double-time. I capitalized Inflation because it seems to keep inflating. 

{What was that popping sound?}

Systemic racism and social injustice are not our primary problems. The haves vs. the have-somes is what should keep us up at night. 

There are more jobs currently available than people who want them and The Fedrl Gummit hands out grants and loans to pretty much anyone who wants to learn how to do something someone is willing to pay for. 

Big BUT, they're also not stingy when it comes to financing the accumulation of knowledge/skills by someone who wants to learn how to do something for which nobody wants to pay very much. 

Rack up enough personal and national debt while subsidizing everything from homeownership to ginormous whale/bird-killing windmills with other people's money and before you know it, here we are. 

If you're smart/lucky/hardworking/networked enough to generate/have generated enough income to be far enough ahead of the game to accumulate and maintain a bit of wealth, good for you. I'm available for lunch (but I prefer breakfast). 

However, it's now widely reported that 60% of us live from paycheck to paycheck. From what I can tell, this appears to be true.

{They should try to get promoted.}

They're not stupid. They know there are only so many bosses needed, only so many people who should be a boss, and that only a minority of bosses can beat the game given that the value of a dollar keeps sliding down a slippery slope. 

This is why when Oliver Anthony started singing about "Overtime hours for bullshit pay" because "...your dollar ain't shit, and it's taxed to no end" a lot of people looked up from their grindstones.

To be continued... and wrapped up, next column. 

Poppa loves you,
Have an OK day

P.S. I've been asked by OSHA to remind all my gentlereaders to never operate a grindstone without a government-approved noseguard. 

Scroll down to share my work/access oldies. Tip me, or Join Cranky's Coffee Club (and access my condensed History of the World), here   

Comments? I post links to my columns on Facebook and Twitter so you can love me, hate me, or try to have me canceled on either site.   




Saturday, October 24, 2015

I'm an Unrepentant Wild Eyed Free Marketeer

In spite of the fact meteorologists have access to plenty of data and no shortage of hi-tech tools they are regularly wrong. Everyone knows why, variables.

If a butterfly flaps its wings in... well, you know the rest. We're pretty good at predicting the weather one to three days out, but beyond that, the farther out you go the more butterflies you have to keep an eye on. If one of Mothra's smaller relatives flies through even a short-term forecast, you're screwed

Economists have the same problem to deal with, variables. They build computer models designed to predict where the economy is headed. Or, they try and predict what might happen if this or that policy is implemented.

Now, like it or not, you're part of an ever-expanding, ever interconnecting global economy. There are roughly 7.1 billion souls on this planet trying to get the most bang for their Bucks, Euros, Rubles and the like -- 24/7/365. That's an awful lot of folks and potential spending decisions to account for.

The Federal Reserve System of the United States of America, where they pull the levers and adjust the dials, never issued a bulletin prior to the Great Recession warning that the economy was about to crash. Turns out that selling houses to millions of people that can't afford them can get ugly, and fast.

Who Knew?

It gets worse. The study of economics is the study of macroeconomics and microeconomics; the big picture as opposed to the local, independently owned, car repair facility that recently ripped me off...

Well Duh! exclaims a gentlereader, everyone knows that!

Settle down, I'm working here! No, everyone doesn't know that, they're busy leading busy/crazy/hectic lives and hoping that whose ever job it is to figure out the best way to keep the economy on track has a clue, but that's not my point.

What I was going to say was that since these divisions are two sides of the same coin, this introduces another layer of complexity. Also, if you happened to stumble into the bar where your local economists like to hang out after work, the arguments that are most likely to lead to a brawl are about macroeconomic issues.

The study of microeconomics has generated a good deal of consensus. Macroeconomics, on the other hand, has not -- and probably never will.

There are two reasons for this: Economists with radically different ways of viewing how the world works, proposing theories from radically different starting points, that's the first one.

The other is that a theoretically objective, unbiased professional can't set up an experimental economy in a laboratory and start tinkering to see what happens. Like meteorologists, they must rely on computer modeling and, well...please refer to paragraph two.


Though major paradigm shifts in hard science can turn a given field of study on its head, these are, to put it mildly, few and far between. A chemistry major may show up for class on some random day and be startled to find that her favorite (married) professor has turned his back on academia and accepted a lucrative job offer from DuPont because his grad student girlfriend is pregnant and now there are doctors and lawyers to be paid.

However, she's highly unlikely to discover that the professor's replacement wants her to forget about all this atoms and molecules drivel and instead begin studying the basic principles of magic and alchemy.

On the other hand...

The next time she shows up for what's turned out to be her least favorite elective, macroeconomics, which was being taught by the newly impregnated grad student who's on leave due to medical and legal problems -- it wouldn't be particularly shocking if the new professor announced that although she will gracefully continue to teach university approved mainstream Macroeconomics 101, she's a communist and frankly thinks it's a bunch of bonkercockie.

But you can trust her professionalism and objectivity.

Meanwhile, off campus...

The market -- free, sorta free, heavily regulated, and/or all of the above -- continues to (seemingly) perform miracles on a daily basis This is true in spite of the obvious fact it's not perfect, it will never lead to utopia -- and no one's actually in charge.

How? 7.1 billion souls doing what needs to be done to survive, and when possible, with a little style.

Adam Smith explained the who/what/when/where/why (coincidentally) the same year America was born, but all he did (besides inventing modern economics) was formally codify what had been going on since Og (master spear maker, lousy hunter) made a deal with Ug (master hunter, lousy spear maker).

Og and Ug accidentally invented free trade. By specializing in what they were good at instead of trying to do everything themselves, both improved their lives exponentially. The market they created was self-regulating -- as long as they both played it straight.

If Og's Spears and Stuff dealt in sharp, durable spears and Ug's Meats and Things fulfilled their pledge to trade in only fresh, healthy meat it was a win-win. Og was an idealistic socialist and thought Ug was a mean-spirited, selfish libertarian. Ug was a rugged individualist who thought Og was a hopelessly naive dork. So what?

It gets better.

Both Og and Ug started trading with other specialists and free trade went viral. Since many people were good at the same things, businesses had to find a way to lure customers into their cave instead of the other guys. Competition was born and it also went viral.

Only the specialists that provided the best service or products survived, the rest were driven out of business and had to find another specialty. The customer wins and the failed specialists drive innovation by specializing in something else, occasionally something that nobody else had thought of.

The innovators occasionally made a cave full of money, occasionally changed the world. A few of the winners retired, moved to a larger cave with a great view and doted on their grandkids. The rest prepared to fight off the inevitable competition.

Wait a sec', Self-regulating?

Yup. Think about it. Two grocery stores at opposite ends of a small town are locked in competition. Both seek to offer consumers the ideal mix of price and service, the customers will unsentimentally decide on the winner, the loser will go out of business.

Or, the loser (necessity is a mother) will come up with a new angle and like the fake wrestler in a fake wrestling match, who clearly should be dead, will rise from the canvas and secure victory. Or maybe just become a laundromat with a bar where you can get loaded and meet chicks/dudes.

Ah ha! But then the survivor will have stumbled into a monopoly and that's why we need the gubmint or even The Gubmint to step in, The Gubmint has tons of economists on the payroll, The Gubmint...

...Needs to manage the safety net, make sure no one's getting cheated, enforce contracts and property rights, and lock up or kill the bad guys. (PERIOD)

Have an OK day.

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©2015 Mark Mehlmauer   (The Flyoverland Crank)

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