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Posts Tagged ‘economics

“Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution”*…

 

What can a 19th-century rebellion against automation can teach us about the coming war– the robots are coming!– in the job market?

Clive Thompson, an author and journalist at the New York Times Magazine and Wired, revisited Luddite’s history in an article for The Smithsonian to see what it could teach us. As machine learning and robotics consume manufacturing and white-collar jobs alike, the 200-year-old rebellion’s implications for automation are more relevant than ever, says Thompson:

“The lesson you get from the end of the Luddites is: Do the people that are profiting off automation today want to participate in distributing their profits more widely around the population, or are they going to fight just as hard as they did back then?”

That economic and political question is hanging over western democracies coping with a wave of populism seemingly tracking a widening gap between stagnant wages and ballooning wealth at the top. While automation eventually tends to create new jobs even after it destroys old ones, that’s little consolation for millions of workers whose skills and experience are obsolete…

More on this all-too-relevant history in a interview with Thompson: “Luddites have been getting a bad rap for 200 years. But, turns out, they were right.”

And do read Thompson’s original article: “When Robots Take All of Our Jobs, Remember the Luddites.”

Then, check out “Robots don’t have to take over jobs in order to be a problem for workers.”

* Stephen Hawking

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As we heft our hammers, we might we might send thoughtful birthday greetings to José Ortega y Gasset; he was born on this date in 1883.  A philosopher and essayist, he is perhaps best known for The Revolt of the Masses, which characterized 20th-century society as dominated by masses of mediocre & indistinguishable individuals– a conception tha converged with other “mass society” theorists like Karl Mannheim, Erich Fromm, and Hannah Arendt.  (Lest his view be seen as too grim and judgmental, he is memorialized in what has become known as “the Ortega hypothesis,” based on a quote in The Revolt of the Masses, that states that average or mediocre scientists contribute substantially to the advancement of science.)

In exile during the Spanish Revolution, he refused to support either side or to hold academic office under Franco.

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Written by LW

May 9, 2017 at 1:01 am

“There are people in the world so hungry, that God cannot appear to them except in the form of bread”*…

 

We stand at the precipice if we don’t re-evaluate our understanding of poverty and inequality. The narrative in the neo-liberal west is that if you work hard, things work out. If things don’t work out, we have the tendency to blame the victim, leaving them without any choices. Brexit, Le Pen, and the defeat of Hillary Clinton are examples of the cracks that result from inequality and poverty, symptoms of my childhood experience writ large. The Piketty pitchforks are out, and the march to global disorder can only be arrested by adopting measures that begin to price in the stacked deck that I and anyone else born into deep poverty sees, and resents.

I believe we will see the Italian Five Star Movement submit a referendum to leave the EU this year, and that Marine Le Pen has better than even odds of winning the French election. The EU is in danger of buckling under a globalist defeat and may exist in name only two years from now.

These trends are being accelerated by the blind belief that the poor have failed to seize the opportunities that the market or globalization has created. This myth deserves to be taken off life support—and the emerging, empirical, and carefully observed science of poverty can help us do so if we pay it the attention it deserves…

A powerful plea for a fundamental re-understanding of the economic inequality that vexes our society, and of the myth of meritocracy that has helped sustain it: “Why Poverty Is Like a Disease.”

* Mahatma Gandhi

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As we agree with FDR that “the test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little,” we might recall that this date in 1907 was “Bloody Tuesday.”  The San Francisco streetcar strike, which had begun two days earlier, erupted into violence when armed strikebreakers fired into an angry crowd of strike supporters.  Soon armed strike sympathizers returned fire.  2 died; 20 were injured.

Armed strike breaker, left, shoots into the crowd on Bloody Tuesday, May 7, 1907. The original caption in The San Francisco Examiner said that “Photographer Coleman” took the picture “the moment before the man running beside him was fatally shot.”

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Written by LW

May 7, 2017 at 1:01 am

“If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid”*…

 

Economists have a name for this

There are plenty of economics terms regular people would find not only very interesting, but useful for thinking about policy. Sadly, the most commonly used econ words tend to be the ones with the vaguest meanings — “rational,” “equilibrium” and “efficient.” Instead, here are some of my suggestions:

• Endogeneity

Everyone knows that correlation doesn’t equal causation, but somehow people seem to forget. Endogeneity is a word that can help you remember. Something is endogenous when you don’t know whether it’s a cause or an effect (or both). For example, lots of people note that people who go to college tend to make more money. But how much of this is because college boosts earning power, and how much is because smarter, harder-working, better-connected people tend to go to college in the first place? It’s endogenous. The media is full of stories about how which kind of people stay married, or what diet is associated with better health. Whenever you see these stories, you should ask “What about endogeneity?”…

Noah Smith suggest four other useful concepts in “5 Economics Terms We All Should Use.”

* John Maynard Keynes

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As we get dismal, we might send fancy birthday greetings to Sir Frederick Henry Royce; he was born on this date in 1863.  An engineer and car designer, he founded (with Charles Rolls and Claude Johnson) the Rolls-Royce company, which introduced the first successful luxury cars in the emerging automotive industry.

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Written by LW

March 27, 2017 at 1:01 am

“The only function of economic forecasting is to make astrology look respectable”*…

 

We should remember that we will pass down a whole society to our kids—including the natural environment that underwrites the quality of life of future generations. If the cost of ensuring that large numbers of children do not grow up in poverty and that the planet is not destroyed by global warming is a somewhat higher current or future tax burden, that hardly seems like a bad deal—especially if the burden is apportioned fairly. Now suppose, by contrast, that we hand our kids a country in which large segments of the population are unhealthy and uneducated and the environment has been devastated by global warming, but we have managed to pay off the national debt. That is, after all, the future that many in the mainstream of the economics profession are prescribing for the country. Somehow, I don’t see future generations thanking us…

Economists have botched the promise of widely distributed prosperity: why they have no intention of stopping now– and why that matters so much: “The Wrongest Profession.”

* John Kenneth Galbraith

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As we recalculate, we might recall that it was on this date in 1602 that Vereenigde Oost-Indische Compagnie (VOC, or The Dutch East India Company, as it’s known in the Anglophone world) was born.  Generally considered the world’s first trans-national corporation and the first publicly to issue stocks and bonds (and the first company to be ever actually listed on an official stock exchange), it began with a 21-year monopoly on the Dutch spice trade.  The VOC also prefigured the mega-corporation of today in that it had quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, strike its own coins, and establish colonies.  Considered by many to be the greatest corporation in history, the VOC eclipsed all of its rivals in international trade for almost 200 years.

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Written by LW

March 20, 2017 at 1:01 am

“Sameness is the mother of disgust”*…

 

Let’s imagine we’re on a beach that’s a mile long, and on that beach there are a couple of ice cream carts…

cart1

Let’s also imagine that the ice cream sold at each cart is identical in quality and cost, so the only reason customers choose one cart over the other is when one cart is closer. Given all of that, the best location of the carts is with each cart halfway between the middle of the beach and one of the ends. In this arrangement each cart gets 50% of the customers, and no one has to walk more than 1/4 mile to get some ice cream.

cart2

But what if one of the ice cream vendors decides to move their cart a bit closer to the middle of the beach…

cart3

They are now the ice cream cart of choice for a bigger segment of the beach, and will get more business. The other ice cream cart has no choice but to retaliate…

cart4

Now once again they each serve the same percentage of the beach-going public. Since any further movement by either cart would mean a loss of business for that cart, they end up permanently side by side, in the middle of the beach, even though this is a less optimal location for their customers.

That is a simple example of something called Hotelling’s law; the tendency of competing products to end up as similar as possible…

“Producers of products and services tend to make their products and services as similar as possible to those of their competitors.”  From The Laws of the Universe, the story of Hotelling’s Law.

* Petrarch

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As we nose around for niches, we might send ambitious birthday greetings to Count Giovanni Pico della Mirandola; he was born on this date in 1463.  An Italian philosopher, he undertook, in 1486, at the age of 23, to defend 900 theses on religion, philosophy, natural philosophy and magic against all comers, in the process of which he wrote his famous Oration on the Dignity of Man, which has been called the “Manifesto of the Renaissance”; a revitalization of Neo-Platonism, it was a seminal text of Renaissance humanism and of what has been called the “Hermetic Reformation.”

Pico’s portrait, from the Uffizi Gallery in Florence

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Written by LW

February 24, 2017 at 1:01 am

“The man who invented doritos has passed away at the age of 97. He asked to be buried with the creators of Fritos and Cheetos in a variety pack”*…

 

All told, there are 26 separate ingredients in Doritos Nacho Cheese Tortilla Chips…

While most of these individual ingredients aren’t all that bad for us, they’re a cheese-dust-covered grenade when consumed together. “The more you mess with food, the more you’re demanding your immune system to figure out what the heck all these new things are — and it can make mistakes,” Shanahan says. For instance, studies show that over-processed foods have contributed to the rise in food allergies in Western countries.

Weirdly, while the ingredients that sound like they’d be unhealthy (i.e., disodium inosinate) aren’t really all that bad, the ingredients we think we recognize (i.e., vegetable oils) are slowly waging the real war on our insides. “The main thing people need to pay attention to are the first few ingredients in these foods, like vegetable oil,” Shanahan urges. “Vegetable oils alone can cause diabetes, and they don’t even contain any sugar.”

All 26 ingredients in America’s favorite cheese-flavored chip, singly and as a whole, explained:  “What’s in This?: Doritos Nacho Cheese Tortilla Chips.”

* Jimmy Fallon

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As we wipe our fingers, we might send apocalyptic birthday greetings to The Reverend Thomas Robert Malthus; he was born on this date in 1766.  An English cleric and scholar, he was influential both in political economy and demography.  He is best remembered for his 1798 essay on population growth, in which he argued that population multiplies geometrically and food arithmetically; thus, whenever the food supply increases, population will rapidly grow to eliminate the abundance, leading inevitably to disastrous results – famine, disease and/or war… a conclusion that remains controversial to this day.

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Written by LW

February 13, 2017 at 1:01 am

“Consider the furniture!”*…

 

Ikea is a behemoth. The home furnishing company uses 1 percent of the planet’s lumber, it says, and the 530 million cubic feet of wood used to make Ikea furniture each year pulls with its own kind of twisted gravity. For many, a sojourn to the enormous blue-and-yellow store winds up defining the space in which they sit, cook, eat and sleep.

All that wood is turned into furniture that tries to bring a spare, modern aesthetic to the masses. “We’re talking about democratizing design,” Marty Marston, a product public relations manager at Ikea, told me.

The furniture is also sold according to some unique economics. In many cases, Ikea’s famously affordable pieces get dramatically cheaper year after year. In others, prices creep up. In some cases, products disappear entirely. The result is an ever-evolving, survival-of-the-fittest catalog that wields an enormous amount of influence over residential interiors…

Pull up a chair at “The Weird Economics Of Ikea.”

* Arthur Conan Doyle, The Adventure of the Mazarin Stone

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As we avoid the meatballs, we might spare a thought for Sir Thomas Bouch; he died on this date in 1880.  A railway engineer and executive whose career began at age 17, Bouch was knighted for designing the two-mile-long Tay River Bridge— on which an estimated 75 people died when the bridge collapsed.  An enquiry found Bouch to be liable, by virtue of bad design and construction; he died four months after the verdict.

Bouch is thus also indirectly responsible for the best-known poem, “The Tay Bridge Disaster,” by the gentleman widely-regarded to have been the the worst published poet in British history, William Topaz McGonagall.

Sir Thomas Bouch

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Written by LW

October 30, 2016 at 1:01 am

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