Benefits of the Financial System

The Economist summarizes the opening of Martin Wolf’s, Fixing Global Finance, as follows:

Finance allows the creation of vast enterprises out of the combined capital, supplied at modest cost, of millions of people. It permits upstarts to launch companies, challenging the power of incumbents. It allows people to smooth their spending over a lifetime. It facilitates risk sharing and insurance. Empirical studies confirm that these advantages are real.

I take it those empirical studies did not take into account the current economic crisis wherein we are all benefiting from the facilitated risk sharing.
Yes, those vast enterprises, governments and large businesses, have done wonders: count the wars, count the environmental destruction, count the devastated indigenous peoples, notice the vast income and wealth discrepancies.

We do need a financial system but perhaps one that does not facilitate disasters.

Does DQ Still Have an Appointment?

Who is DQ?, you ask.
All I know is that DQ works (ed) for the UK Department for Work and Pensions which posted an appointment advertisement in the January 17 edition of The Economist.
I suspect DQ is responsible for website and advertising layout.
At the bottom of the ad is some text asking DQ a question:

[DQ – will the website say “Apllicants for GES posts must be UK Nationals, Commonwealth citizens or European Economic Area nationals with an unrestricted right to reside in the UK”?]

DQ’s answer was apparently “no” as no such language is to be found on the website.
I don’t think the questioner expected that the question would be left embedded in the print add either: two stikes for DQ.
For the curious: a reduced form of the original print add is below the fold. The extra language is toward the bottom of the “Assistant Economists” add on the right side of the page. Click on it for a full size version.

Wondering why this post exists: I found it amusing…:)


Buy Your Roquefort While You Can

Despite what Cookie Jill says, this kind of crap is not unique to the bush administration:

Less than a week before it leaves office, the Bush administration has sparked anger across the Atlantic by tripling the import duty rate on roquefort cheese to 300%, a move which the US hopes will “shut down trade” in the sheep’s milk product by making it prohibitively expensive.

It is a thing of governments and various rent seekers looking for unearned treasure.

In a free country, a free world, there are no tarriffs. Individuals and groups of individuals voluntarily trade goods and services without the interference of third parties unless force or fraud have been used in the transaction

Nebraska’s Steamy, Snow Covered Mountains

I’ll bet you didn’t know Nebraska had magnificent mountains:

(2005 stock photo: AP; see article 2 links down)

Well this is a mountain of cow shit and apparently these mountains don’t have any negative environmental impact.
On the positive side Iowa farmers are taking a liking to manure again, specifically hog manure, as it is now less expensive than commercial fertilizer.
Will that price differential hold up with the dramatic drop in the price of oil? Time will tell…

Via Northview Diary.

Who Should Bail Out the Auto Industry?

The other day Laurie David, writing at the Huffington Post, suggested that the oil industry rather than the us government should bail out the auto industry:

“The best idea I’ve heard in the last few days comes from an unlikely source, the actor Ashton Kutcher on the Bill Maher show, who repeated the suggestion that the auto industry go meet with the oil industry – their partner in crime – and ask them for a bailout. At least we know ExxonMobil can afford it.”

Laurie and Kutcher are partially correct. The oil industry is a partner but, alas, it is not the only partner and not even the main partner.
The big 3 were at their normal and largest trough, congress. The difference now is that the play is visible to the rest of us. Normally the industry’s subsidies are indirect, yet massive, and by some strange perversion of perspective we do not typically lay the consequences at the feet of the auto industry which is much broader than the big 3, the oil industry or their federal, state and local government accomplices.
A subsidy example: like it or not, the thousands of miles of concrete spread across previously fecund land that the vehicles require to be useful are massive subsidies to the auto industry.
A consequence example: over 40,000 people/year die in the US as a result of traffic accidents. Unfortunately, these deaths are diffuse; one or two or three at a time and widely dispersed geographically. We ignore them. Yet, after a concentrated 3,000 die in the World Trade Center the country goes to war.
This is not the only subsidy nor are the fatalities the only consequence.
The appropriate approach begins with not a bailout but eliminating all subsidies at all levels of government…starting with, but not ending with, auto industry subsidies.
In time we will, then, start seeing the best results socially and economically. Amongst other things the former fat cats will no longer get to feed at the public teat; income disparities will start diminishing; legislative types will spend most of their time at home; lobbyists will go in search of real work; government can get back to basics, e.g., providing an accessible judicial system.