Economics

Clarifying Middle Class

This entry was posted in Anarchism Economics Government Libertarianism Politics on by

Here is a chart that makes clear exactly what being middle class means in terms of income: an average annual household after tax income for the middle fifth of households in 2006 of $52,100. Simple interpolation suggests that the top of the middle income group is around $62,950.
Yglesias thinks the chart as a whole implies that:

…the trend is unmistakable. Higher taxes, more transfers, and more government services.

This is undoubtedly true as long as so many believe that government’s role, as our politicians state repeatedly, is focused on protecting and assisting those in the lower 2-3 quintiles.
The chart makes makes a pretty good case, though, that government actions have been around protecting and enhancing the wealth and power of that upper 20% and most particularly the upper 1%.
More taxes, transfers and services are palliatives applied to win votes and do little, if anything, to fix the structural problems that lead to such a poor distribution of income.

The only effective way to make the results among the quintiles more equal will be to change the structure of the economy so that the top 1% is no longer favored. This will require eliminating the extensive government interventions that feed the wealthy on the backs of the poor; on the backs, if you will, of the lower 90+%.

Soros Becomes Incoherent

This entry was posted in Economics on by

In a recent Business Week interview George Soros explained the financial collapse:

Basically, this whole financial system collapsed because regulators failed to regulate. There was a belief that markets are self-correcting. That turned out to be wrong.

Well, markets are self-correcting.
As we know the correction can be pretty dramatic when a government created system blows a massive bubble.
The market will pop it. Violently.
Unfortunately, folks didn’t like the medicine this time so we have additional massive intervention. Let’s hope the market can deal with it and things don’t get drastically worse.
Soros recommends some additional prescriptions:

So it’s not enough to regulate the money supply. You have to regulate credit. And you have to recognize that markets are prone to create asset bubbles and accept the responsibility of preventing those bubbles from becoming too big and self-reinforcing, because that’s what a bubble is—a self-reinforcing process.

Except that all the really cool bubbles over time have been driven by government enabled rent seeking. Even the tulip bubble likely would never have occurred without the wealth derived from a government created monopoly, the Dutch East India Company.
Next Soros starts talking in circles:

You also have to recognize that if the markets don’t know what equilibrium is, then regulators can’t possibly know either. So you have to accept that regulators will be wrong. But with the benefit of feedback from the market, you can judge whether you’ve done too much or too little.

Where to start? If everything were to stay at equilibrium nothing happens and Soros makes no money. That might not be a bad thing but it isn’t at all clear that anyone will be very happy in that state.
Let’s look at George’s wisdom again and assume that equilibrium is a meaningful goal. What is George telling us: markets don’t know where the goal is; regulators can’t know where the goal is; therefore regulators will be wrong; but the market knows something that can guide the regulators; therefore we can figure out whether you have deviated an unknown amount from an unknowable goal. QED, we need more regulators.
Give me a break.
Here’s a shorter George Soros: let’s have lots of regulators because I know they will screw up the market and over the long run I can make money off their mistakes.

Let’s just not go there, please.

On politicians, bureaucrats and the punditry

This entry was posted in Culture Economics Government on by

From an entertaining article in Vanity Fair about the financial debacle in Iceland:

After three days in Reykjavík, I receive, more or less out of the blue, two phone calls. The first is from a producer of a leading current-events TV show. All of Iceland watches her show, she says, then asks if I’d come on and be interviewed. ‘About what?’ I ask. ‘We’d like you to explain our financial crisis,’ she says. ‘I’ve only been here three days!’ I say. It doesn’t matter, she says, as no one in Iceland understands what’s happened. They’d enjoy hearing someone try to explain it, even if that person didn’t have any idea what he was talking about—which goes to show, I suppose, that not everything in Iceland is different from other places. As I demur, another call comes, ….

No, not all that different at all.

Whose Home Is It?

This entry was posted in Ecology Economics on by

Wild horses couldn’t drag me away…
Yet there are many who would eliminate the wild horses. Read this fascinating article in National Geographic:

So the argument about wild horses and the resources they use comes down to this question: Do we have the landscape—physical and emotional—for them? While horse advocates and stockmen often argue the relative merits and demerits of the mustang on more emotional grounds, scientists are arguing on the basis of a fundamental fact: If the horses can be classified as native to North America, they have a right to the use of the land. If they’re not native, they don’t.
“Free-roaming horses are a feral, exotic species,” said Joel Berger, a wildlife biologist based in Teton Valley, Idaho. “They’re in direct competition for habitat with native wildlife.” Berger suggested that the BLM’s budget for wild horses might be better spent on the study and protection of native species. But Kirkpatrick and his sometime collaborator Patricia Fazio, an environmental writer, have long asserted that the wild horse is a native species and should be regarded as such by state and federal agencies. “Modern horses evolved on this continent 1.6 million years ago, only to later disappear,” Kirkpatrick told me. “The two key elements for classifying an animal as a native species are where it originated and whether it coevolved with its habitat. The horse can lay claim to doing both in North America.”

There is one species in North America that can not lay claim to either element:

nonsequitor20090208.gif

Thinning by war doesn’t seem to have been very effective over the past few thousand years and more direct thinning processes would probably not gain consensus.
It is time, then, for real change. Change that will end the practices and policies that focus on multiplying humans, on paving or shaving habitable land, policies that facilitate the vast income disparities that so many progressives decry.

Too bad that real change is not underway.