The technical flaws in Piketty’s argument are pervasive. When you dig, you find them. The fundamental problem is that Piketty does not understand how markets work. In keeping with his position as a man of the left, he has a vague and confused idea about how supply responds to higher prices. Startling evidence of Piketty’s miseducation occurs as early as page 6.
He begins by seeming to concede to his neoclassical opponents: “To be sure, there exists in principle a quite simple economic mechanism that should restore equilibrium to the process: the mechanism of supply and demand. If the supply of any good is insufficient, and its price is too high, then demand for that good should decrease, which would lead to a decline in its price.” The words I italicize clearly mix up movement along a demand curve with movement of the entire curve, an error of first-term college students. The correct analysis is that if the price is “too high” it is not the whole demand curve that “restores equilibrium,” but an eventually outward-moving supply curve. The supply curve moves out because entry is induced by the smell of super-normal profits.
Piketty does not acknowledge that each wave of inventors, entrepreneurs, and even routine capitalists find their rewards taken from them by entry. Look at the history of fortunes in department stores. The income from department stores in the late 19th century, in Le Bon Marché, Marshall Field, and Selfridge’s, was entrepreneurial. The model was then copied all over the rich world. In the late 20th century the model was challenged by a wave of discounters, and they then in turn by the internet. What happens is that the profit going to the profiteers is more or less quickly undermined by outward-shifting supply. The original accumulation dissipates. The economist William Nordhaus has calculated that the inventors and entrepreneurs nowadays earn in profit only 2 percent of the social value of their inventions. If you are Sam Walton the 2 percent gives you personally a great deal of money from introducing bar codes into stocking of supermarket shelves. But 98 percent at the cost of 2 percent is nonetheless a pretty good deal for the rest of us. The gain from macadamized roads or vulcanized rubber, then modern universities, structural concrete, and the airplane, has enriched even the poorest among us.
Deirdre N. McCloskey, “How Piketty Misses the Point”, Cato Policy Report, 2015-07.
September 3, 2017
QotD: Picketty’s misunderstanding of the supply and demand curves
September 2, 2017
[Medieval] Castles – Functions & Characteristics (1000-1300)
Published on 30 Sep 2016
» SOURCES & LINKS «
France, John: Western Warfare in the Age of the Crusades 1000-1300#
Ohler, Norbert: Krieg & Frieden im Mittelalter
Contamine, Philippe: War in the Middle Ages
Pounds, Norman J. G. Pounds: Medieval Castle in England & Wales: A Political and Social History
http://faculty.goucher.edu/eng240/early_english_currency.htm
http://www.ancientfortresses.org/medieval-occupations.htm
https://www.britannica.com/technology/castle-architecture#ref257454
http://www.castrabritannica.co.uk/texts/text04.html
https://en.wikipedia.org/wiki/Harlech_Castle
Making zero clearance table saw inserts
Published on 13 May 2012
Showing the steps for making a zero clearance table saw insert
http://woodgears.ca/delta_saw/insert.html
QotD: All aboot that Canajan accent, eh?
I was also delighted to learn that “rhotacized speech — that is, speech in which the “R” sound is somehow disfigured — tends to be amusing for English speakers.” As an English speaker with a rhotic, Canadian accent, I delight in my English wife’s non-rhotic pronunciations of “hair” (“hehhh”) and “there” (“thehhh”), and often find myself parroting her when she says them to the point where selectively rhoticizing and de-rhoticizing our speech has become a running gag in our family.
Cory Doctorow, “The true story behind the ERMAHGERD meme just makes us love it more”, BoingBoing, 2015-10-16.
September 1, 2017
The Moscow State Conference – Black Sea Revolutionaries I THE GREAT WAR Week 162
Published on 31 Aug 2017
The political factions that oppose the rise of Bolshevism in post-revolutionary Russia come together for a conference this week 100 years ago. But apart from the Moscow State Conference, some people in the military actually aim for a military dictatorship to restore order in Russia and continue the war. At the same time the 2nd Battle of Verdun comes to an end with a French victory and revolutionary fever also spreads across the Black Sea Fleet.
The complex dance of supply, demand, scarcity, and price
Tim Worstall explains why laws against “price gouging” are denials of economic fact and actually work against getting urgently needed items to the people who require them:
Those little diagrams at the start of the Econ 101 class (supply, demand, price) are not optional extras to our universe, they are instead accurate descriptions of how we humans interact with it. If and when demand rises then price rises, this in turn encouraging an expansion of supply. Thus why we desire to have price flexibility in the face of either changes in supply or demand.
Consider Houston right now in the wake of Hurricane Harvey. It seems a good bet that the tapwater supply is disrupted — flooding has a tendency to do that. We would therefore assume the demand for bottled water has risen – the sensible who normally hydrate from that wondrous invention, the municipal water supply, will not be able to do so, thus increasing the demand for the bottled stuff. Equally, on the other side, there’s going to be a certain difficulty with supply at present — roads 5 feet underwater don’t exactly help trucking.
We thus desire to do two things simultaneously. We want to restrain demand to only the really important things and we want to incentivize greater supply.
Which is exactly what a price rise does for us.
With water at (just to make up a price) $99 a case, people are only going to buy it for drinking water, perhaps only in sippy cups. Which is excellent — we want whatever limited supply of potable water (we’ve really plenty of non-potable around, that’s the basic problem) there is in place to be used for that most valuable use, being potable. We’ve achieved one of our goals therefore, by allocating that scarce resource to its most valuable use: keeping people alive.
We also want to increase supply, though, and being able to sell in Houston for $99 something bought for $9.99 in Beaumont (again, just to invent an example) might well get a few boats carrying loads in – although quite possibly not from Beaumont. Thus, by allowing prices to rise, we’ve at least potentially increased supply.
Our price system, operating without constraint, is thus achieving the two things we desire, a curtailing of demand through rationing to only truly important uses, and a rise in supply.
“But,” goes the cry, “this isn’t fair!”
Indeed it isn’t, and ain’t that a shame, fairness not being a notable feature of this universe we’re struggling to inhabit. All we can do is the best we can. Which is, again, why I insist that there should be variable prices, why there should be no laws against price-gouging. Because this really is a disaster, there really are significant shortages in Houston right now, we really do want to solve them. Which means that we should be using all of the tools at our disposal.
“Antifa looks increasingly like the militant wing of Safe Space fanaticism”
Brendan O’Neill posting to Facebook a few days back:
People are shocked by images of antifa activists beating up normal, peaceful right-wing protesters in Berkeley or physically shoving right-wing people off Boston Common. Why? This is what happens when you tell an entire generation that other people’s ideas are dangerous, that their speech is toxic, that their words can wound you and traumatise you: you invite that generation to shut people down, to use any means necessary to ensure “dangerous” ideas are not expressed and do not cause injury to people’s self-esteem or sense of safety. We are starting to see what happens when speech is talked about as a form of violence: it green-lights actual violence against certain forms of speech. If speech is violence, shouldn’t it be met with violence? Antifa looks increasingly like the militant wing of Safe Space fanaticism, the bastard offspring of a culture that elevates mental safety over intellectual liberty, and people’s feelings over public freedom.
Mis-placing Your Plane? | Paul Sellers
Published on 21 Aug 2017
Paul shows how he handles and places his bench plane in the day to day of woodworking for practical use.
For more information on these topics, see https://paulsellers.com or https://woodworkingmasterclasses.com
QotD: Writing as a profession
“Changing the world” or even “changing the world of science fiction” was never my goal, fortunately. “Not getting my utilities cut off for nonpayment of bills” was. That, happily, turned out to be a more feasible aim.
It is the nature of the book market that one cannot be financially successful without also being well-known, one’s name being one’s brand-name, more or less. Which is felt to be the means and which the end will vary from writer to writer, natch. And whether one really needs “rich and famous” or if “self-supporting and well-known in my field” will do. Beware those moving goalposts, which can always make one feel artificially bad.
“How high is up?” is one of those dangerous questions that each writer must answer for themselves. Setting goals unrealistically high guarantees frustration, too low risks not challenging oneself to do as well as one otherwise might. (As a rule of thumb, it is also better to focus on what you can do, and not on other people’s non-controllable responses. “Finish a book” is controllable, “sell a book” less so, “become a bestseller or win an award” still less so. Unhappy is the writer who boards this train wrong way round.)
As for time, it passes at exactly the same rate for everyone, regardless of how one chooses to apportion it. It’s all choices and tradeoffs. Some prices might really be too high, some rewards too meager; only the person who is leading that life can decide.
That said, when I contemplate the ever-upthrusting mountain range of reading matter in the world, effectively infinitely more than I could ever read in my remaining lifetime, I do sometimes wonder why on earth I’m trying to make more, yeah — if that were my only motivation. Except that writing is in itself an intrinsic pleasure for me, if a weird one — I sometimes wonder if writing fiction ought to be classified as a dissociative disorder. So I would likely still be making up stories even if no one else wanted them, only with less social approval.
Lois McMaster Bujold, “Ask the Author: Lois McMaster Bujold”, Goodreads, 2015-04-21.
