Published on 16 Aug 2017
When politicians raise taxes on the rich, what do the rich do to protect their $$$? This Prof. shows how high taxes actually made America less equal.
The Myth of Equality in the 1950s (video): Another myth of the 1950s is that there was economic equality. Prof. Brian Domitrovic explains why this is a myth. https://www.youtube.com/watch?v=wLl9wOivHdc
How Cronyism is Hurting the Economy (video): Prof. Jason Brennan explains why cronyism, like the tax cuts for certain businesses in the 1950s, is bad for the economy and argues why limiting the government’s power would help solve the problem. https://www.youtube.com/watch?v=gSgUENZ9O94
The Good Ol’ Days: When Tax Rates Were 90 Percent (article): Andrew Syrios compares the tax rates in the 1950s to those of the 1980s and today https://mises.org/library/good-ol-days-when-tax-rates-were-90-percentTRANSCRIPT:
For a full transcript please visit: http://www.learnliberty.org/videos/why-the-rich-like-high-taxes/
August 27, 2017
Why The Rich Like High Taxes
August 24, 2017
Words & Numbers: Child Labor Was Wiped Out by Markets, Not Government
Published on 23 Aug 2017
In 1938 the US government passed the Fair Labor Standards Act mandating a forty hour work week, establishing a minimum wage, and prohibiting child labor. Because of legislation like this, government is often credited for making the American work environment safer and more fair. Yet, as Antony Davies and James Harrigan demonstrate with historical data, market forces were already making things easier on the American worker long before the FLSA.
Learn More:
https://fee.org/articles/child_labor_was_wiped_out_by_markets_not_government
https://youtu.be/0zq-2cKENOchttps://fee.org/articles/child_labor_was_wiped_out_by_markets_not_government
Data:
http://www2.census.gov/prod2/statcomp/documents/CT1970p1-05.pdf
See page 170 for average weekly work hours.
See page 134 for child labor rates.
August 23, 2017
Intro to Stock Markets
Published on 5 Jul 2016
Today, we’ll examine a new kind of financial intermediary: stock markets.
As an individual, you participate in the stock market when you buy a company’s shares. This turns you into a part-owner, entitled to some of the company’s profits. Sometimes, profits are paid out directly via dividends. Other times, profits are reinvested for company growth. In this case, you benefit by seeing the value of your shares rise in tandem with this growth.
Still, the buying and selling of stock doesn’t actually create any new investment. Buying and selling only transfers ownership between stockholders. What actually creates investment is when a company offers stock to the public for the first time (known as an Initial Public Offering or IPO), which is when it issues new shares to raise money for key ventures.
This process of turning savings into investment is what makes the stock market an intermediary.
A key caveat, though — buying stock essentially means betting on a company. As with all gambles, sometimes it pays off, sometimes, it doesn’t. For you as a saver, this means some of your stocks will win, and others, not so much.
This volatility makes stock markets more risky than banks. Bank savers typically don’t have to worry about fluctuations in the value of their deposits.
As for the entrepreneurial side, the stock market is a key institution encouraging new businesses. For a founder, the payoff typically comes during the IPO. An IPO allows founders to sell some of their ownership (in a now more-valuable company) so they can diversify their own holdings.
Next time, we’ll look at the third kind of intermediary: bond markets.
August 19, 2017
How bad can a business graphic get? This bad
Found on Colby Cosh’s Twitter feed:
CUT TO DESIGN MEETING
“We need something like a pie chart, but worse.”
“Sure thing, boss.”#PieChartsKillKittens pic.twitter.com/lXJ6SKYxNc
— Thomas LaRock (@SQLRockstar) August 16, 2017
"Bet you can't violate every principle in 'The Visual Display of Quantitative Information' with one chart."
"Hold my beer."— W. Dow Rieder (@Riderius) August 17, 2017
August 18, 2017
What Do Banks Do?
Published on 28 Jun 2016
This week: Dive deeper into one type of financial intermediary: Banks.
Next week: Sticking with macroeconomics, we’ll take a look at the next intermediary: Stock Markets.
Some people want to save and invest, others want to borrow. Sometimes, savers and borrowers link up directly. But most times, they don’t know each other. So they rely on institutions that bridge them together. These bridges are called financial intermediaries, and this video will show you one kind—banks.
How do banks operate?
On the savings side, they attract depositors by paying interest on deposits. On the borrowing side, banks make loans, for which they charge interest. The key to a bank’s profit is in charging a higher interest for loans than the interest paid out to depositors. Of course, to make sure that loans are as productive as possible, banks have specialized staff and systems for evaluating loan applications.
That sort of due diligence, and specialization is central to what a bank does. Not only does a bank coordinate the savings of many, but it also undertakes the task of studying borrowers in order to determine the most qualified. And then, to further minimize risk, a bank will spread its money out across a whole portfolio of loans. Thus, if one loan goes bad, the bank won’t go bankrupt.
In this way, you can see how banks provide valuable services—they allow you to earn interest on your savings, while also turning those savings into loans, which help economic growth.
Notice though, that as a depositor, your savings won’t just rest in a vault. But then, what happens when you decide to make a withdrawal? Banks account for that by having reserves. Banks keep an eye on their reserves so they can cover the withdrawals of various depositors. Predictably, problems arise, when there aren’t enough reserves to cover withdrawals. In the words of our previous video, that’s one kind of failed intermediation.
In the next video, we’ll look at a different kind of intermediary — stock markets.
There, we’ll show you how stock markets turn savings into investment. Hang tight, and see you then!
August 17, 2017
The Most Important Invention You Never Thought About
Published on 26 Jul 2017
One entrepreneur’s invention cut world poverty and revolutionized manufacturing. Learn more with Steve Davies: https://www.youtube.com/watch?v=7QLoeehMw0w&list=PL-erRSWG3IoBe1BsaqgTwYx0nS4nl2m_N&index=2
LEARN MORE:
How to Sabotage Progress (video): During the earliest part of the Industrial Revolution, workers worried about losing their jobs to machinery would throw their shoes into the machines in order to sabotage production. We’re seeing recurrence of sabotage again today, but there’s no more successful saboteur than regulation. Duke University Professor Michael C. Munger explains. https://www.youtube.com/watch?v=K0nSiwnbv4oThe Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (book): Economist Marc Levinson delves into the history of the shipping container and how the invention changed the world. https://www.amazon.ca/Box-Shipping-Container-Smaller-Economy/dp/0691170819/ref=as_li_ss_tl?ie=UTF8&qid=1502034038&sr=8-1&keywords=The+Box:+How+the+Shipping+Container&linkCode=ll1&tag=quotulatiousn-20&linkId=ca8f280248e61c2c42aaae2b3c5f1395
An Awesome Map of World Trade and Shipping (article): Daniel Bier uses UCL Energy Institute’s timelapse of global shipping to illustrate spontaneous order. https://fee.org/articles/an-awesome-map-of-world-trade-and-shipping/
TRANSCRIPT:
For a full transcript please visit: http://www.learnliberty.org/videos/the-most-importa%E2%80%A6er-thought-about/
August 16, 2017
QotD: Management
I am no great admirer of management as a science or of managers as people. The latter tend to speak a strange language, a jargon neither elegant nor poetic; they buy very dull books at airports, they are often shifty and ruthless, and they seem to me to live in a constant condition of bad faith. They are bureaucrats pretending to be entrepreneurs even when they work for the state, an organization that secures its solvency by the simple expediency of printing more money — in fact, not even by printing it anymore, simply by adding a few naughts on computer screens. We live in a regime of paper money without the paper.
Presumably most managers want to be managers; it is their ambition to become such, though some, I think, are sucked into management from other activities without a full realization of what is happening to them. At any rate, they soon come to have a sense of importance and entitlement by comparison with everyone else in society, even the nominal owners of the enterprise in which they work, for they believe themselves to be doing the world’s real work, as it were. James Burnham, in his book The Managerial Revolution, pointed this out as long ago as 1941:
The managers’ training as administrators of modern production naturally makes them think in terms of co-ordination, integration, efficiency, planning; and to extend such terms from the realm of production under their immediate direction to the economic process as a whole. When the managers think about it, the old-line capitalists, sunning themselves in Miami and Hawaii or dabbling in finance, appear to them as parasites, having no justifiable function in society….
They therefore appropriate shareholders’ funds (or public money) with a good conscience, reasoning that without them there would be no such funds in the first place.
Theodore Dalrymple, “Flying Off the Handle”, Taki’s Magazine, 2015-10-10.
August 15, 2017
Cathy Young talks to James Damore
At Reason Cathy Young interviews former Google employee James Damore, who was fired after an internal memo he wrote criticizing the company’s diversity policies “went viral”:
James Damore, a former software engineer at Google, was suddenly propelled to fame after an internal memo he wrote criticizing diversity policies at the company leaked to the media. The document, sometimes labeled a “manifesto” (and, less kindly, a “screed” and a “rant”), asserted that the gender disparities in tech jobs are at least partly the result of innate differences between the sexes (primarily of women being more people-oriented and less attracted to such work) and that the diversity programs intended to boost the number of women at Google are counterproductive and possibly illegal.
While the document proposed alternative ways to make the workplace at Google more female-friendly, it was widely labeled “anti-diversity” and “anti-woman.” After 28-year-old Damore was identified as the author of the memo, he was fired for “perpetuating gender stereotypes.”
Since then, the controversy has raged unabated — perhaps unsurprisingly, since it touches on many hot-button, polarizing issues from gender equity in the workplace to freedom of speech. A few days ago, I wrote about the debate for USA Today. I interviewed Damore via Google Hangouts text chat on Friday. The transcript has been lightly edited for style, flow and clarity.
Cathy Young: All this must be a little overwhelming?
James Damore: Yes, especially since I tend to be pretty introverted.
CY: Did you think when you wrote the memo, that it could become public at all, let alone as such a huge story?
JD: No, definitely not, I was just trying to clarify my thoughts on Google’s culture and use it to slowly change some of our internal practices.
CY: You’ve mentioned in other interviews that you decided to write this memo after attending a staff meeting on diversity at Google.
JD: Yes, I decided to write my thoughts down after attending a particular “Diversity and Inclusion Summit,” although I had seen many of the problems in our culture for a while.
CY: Who was this summit for? All employees, or employees at a certain level?
JD: It was generally for high level employees in my organization that were interested in diversity efforts.
CY: Does Google have a lot of diversity events? Do any of them have mandatory attendance, or is it primarily for those interested in the issue?
JD: Google has many diversity events, including many during our weekly company-wide meeting (TGIF). They’ve also recently made “Unconscious Bias” training, which is ideologically similar, mandatory for those that want to evaluate promotions, all managers, and all new hires.
CY: You’ve mentioned that the summit that prompted the memo had some material that you found disturbing and offensive. I don’t know how specific you can be, but any examples?
JD: They outlined some of the practices where employees were being treated differently based on their gender or ethnicity at Google and during the hiring process. For example, there’s special treatment during the interviews (like more being given) and there are high priority queues for team matching after an employee gets hired. Also, there were calls to holding individual managers accountable for the “diversity” of their team, which would inevitably lead to managers using someone’s protected status (e.g. gender or ethnicity) during critical employment situations.
August 13, 2017
August 12, 2017
Troll the Patent Trolls
Published on 11 Aug 2017
Patent trolls are on the run. Let’s finish them off.
———
It’s been a bad year for patent trolls, from a Supreme Court decision squelching their ability to funnel lawsuits to East Texas, to this week’s ruling that Personal Audio LLC can’t claim it owns a patent on the entirety of podcasting. In the latest Mostly Weekly, Reason’s Andrew Heaton explores what patent trolls are, the damage they do, and the next step in driving them out of courtrooms and back into dank caves.Trolls camp out on piles of weak and frivolous patents, hoping to one day sue inventors and businesses. Many of the patents they register or buy are vague, representing novel ideas only insofar as trolls are innovative at finding things they didn’t invent to claim legal ownership of. It doesn’t matter that these patents wouldn’t hold up in court, because a business is more likely to pay off a troll than to hire an expensive attorney to fight them. Trolls suck more than twenty billion dollars out of the economy each year.
The parasitical nature of “non-practicing entities” (the PC term for trolls) has raised questions about whether the modern patent system helps or hinders innovation, and if the best solution is for comprehensive reform or just to burn the whole thing down.
Heaton has an idea to hinder patent trolls. It may not be a silver bullet, but it will definitely piss them off.
Mostly Weekly is hosted by Andrew Heaton with headwriter Sarah Rose Siskind.
Script by Andrew Heaton with writing assistant from Sarah Siskind
Edited by Austin Bragg and Sarah Rose Siskind.
Produced by Meredith and Austin Bragg.
Theme Song: Frozen by Surfer Blood.
End supply management in one swell foop!
As always, Colby Cosh can express my thought far more eloquently than I can myself:
Why should eliminating supply management take forever? The dairymen opposed Bernier’s huge buyout: just do it overnight without one. https://t.co/k2U1kdZ3I9
— Colby Cosh (@colbycosh) August 11, 2017
Mad Max tried to sugar-coat it as much as possible. They rejected that option with great vigour. Now let’s just burn the whole thing down … before Trump forces us to.
August 10, 2017
Words & Numbers: Has Tipping Gone Out of Control?
Published on 9 Aug 2017
In 1922, famed etiquette writer Emily Post advised her readers that 10% is the standard for tipping your waiter. Since then, “gratuity creep” has been so steady that tip jars are now ubiquitous and 25-30% is considered the rule in New York City. Uber once resisted this trend, but recently added a tipping feature to its app.
What is the economic rationale behind tipping? Does the usefulness of tipping diminish the more that a certain rate becomes an expectation? At a certain point, would it be better to do without the fuss involved and simply include that portion of a service-provider’s compensation in the wages paid by the employer?
Our valiant hosts, Antony Davies and James Harrigan explore these questions and more!
QotD: The comfortable shoe revolution
When I was a kid back in the 1960s and early 1970s, “shoes” still meant, basically, “hard leather oxfords”. Ugly stiff things with a high-maintenance finish that would scuff if you breathed on them. What I liked was sneakers. But in those bygone days you didn’t get to wear sneakers past a certain age, unless you were doing sneaker things like playing basketball. And I sucked at basketball.
I revolted against the tyranny of the oxford by wearing desert boots, which back then weren’t actually boots at all but a kind of high-top shoe with a suede finish and a grip sole. These were just barely acceptable in polite company; in fact, if you can believe this, I was teased about them at school. It was a more conformist time.
I still remember the first time I saw a shoe I actually liked and wanted to own, around 1982. It was called an Aspen, and it was built exactly like a running shoe but with a soft suede upper. Felt like sneakers on my feet, looked like a grownup shoe from any distance. And I still remember exactly how my Aspens — both of them — literally fell apart at the same moment as I was crossing Walnut Street in West Philly. These were not well-made shoes. I had to limp home.
But better days were coming. In the early 1990s athletic shoes underwent a kind of Cambrian explosion, proliferating into all kinds of odd styles. Reebok and Rockport and a few other makers finally figured out what I wanted — athletic-shoe fit and comfort with a sleek all-black look I could wear into a client’s office, and no polishing or shoe trees or any of that annoying overhead!
I look around me today and I see that athletic-shoe tech has taken over. The torture devices of my childhood are almost a memory. Thank you, oh inscrutable shoe gods. Thank you Rockport. It’s not a big thing like the Internet, but comfortable un-fussy shoes have made my life better.
Eric S. Raymond, “Eric writes about the shoes”, Armed and Dangerous, 2005-09-09.
August 3, 2017
QotD: Improved quality of life doesn’t always show up in GDP figures
We economists marvel, too, but we also wonder how free apps fit into GDP. They do have their long-run downside, as we forget how to read maps and plot routes ourselves. (Anybody out there remember how to work a slide rule? No? That’s not a loss for computation but it does mean lower average numeracy.) But in the short run they save billions of hours in wrong turns not taken and trillions of cells of stomach lining no longer eaten up by travel anxiety. Not to mention their entertainment value.
But hardly any of that very big upside shows up in GDP. In one respect, in fact, GDP goes down. I used to buy maps, including travel atlases. I’m unlikely to do that anymore. Maps purchased by consumers are a “final good or service” and thus do enter into GDP. Maps I interact with online but don’t pay for aren’t GDP. So well-being has gone up — a lot — as a result of Google Maps. But GDP may well have gone down.
In fact, apps do produce some GDP. Google sustains itself in part by selling ads, including to retailers and restaurants looking to pay for prominent mention on its map display. Its ad revenue is an intermediate input into GDP. Many of the entities buying Google ads are in the business of selling “final goods or services” and if they’re money-making, the prices of their goods have to cover the cost of their ads. So by that circuitous route the “value” of the apps does end up in GDP.
But what’s the relationship between what advertisers pay for my eyeballs and the value of the app to me? The two are not completely unrelated. The more I use the app the more I’m likely to buy the advertised products, presumably. But in practice, the probability of my buying is pretty small while my benefit from the app is pretty big. How strange that miracle apps can change our lives but not our GDP.
William Watson, “How using Google Maps on your summer road trip messes with the GDP”, Financial Post, 2017-07-18.
August 2, 2017
Ontario has scared off foreign home-buyers, but bureaucratic delays still make housing more expensive
Josef Filipowicz and Steve Lafleur explain why Ontario’s recent crack-down on foreign home-buyers in the Greater Toronto Area still leaves one of the biggest barriers to affordable housing untouched:
The Ontario Legislature in Queen’s Park, Toronto. (via Wikimedia)
According to a recent announcement from Queen’s Park, 4.7 per cent of properties purchased in Ontario’s Greater Golden Horseshoe (between April 24 and May 26) were acquired by foreign individuals or corporations. This in the wake of the raft of measures announced in April including a 15 per cent “Non-Resident Speculation Tax” ostensibly aimed at improving housing affordability.
It’s difficult to say how this portion of the housing market — foreign buyers — ultimately impacts the cost of buying or renting in Canada’s biggest urban region, and it’s far too soon to estimate the effects of the myriad of policy changes the Ontario government is introducing. But what we do know is that the laws of supply and demand apply to housing, and it’s hard to believe that a small percentage of buyers are responsible for the massive appreciation of housing prices in the GTA over the past decade. Rather than focus on a small tranche of buyers, we should focus on ensuring that regulations don’t prevent the supply of new housing from meeting demand.
[…]
So what’s preventing cities in the Greater Golden Horseshoe from issuing more building permits?
In short, red tape at city hall. Between 2014 and 2016, Fraser Institute researchers surveyed hundreds of homebuilders across Canada to better understand how government regulation affects their ability to obtain permits. In the Greater Golden Horseshoe, it typically takes one-and-a-half years to obtain a permit in this region, and per-unit costs to comply with regulation amount to almost $50,000. Approval timelines can also be affected by the need to rezone property. Approximately two-thirds of new homes in the region require this procedure, which adds 4.3 months (on average) before builders can obtain permits.
Another deterrent to more supply is local opposition to new homes. Survey results show that council and community groups in Toronto, King Township and Oakville are more likely to resist the addition of new units in their neighbourhoods, effectively preventing newcomers from moving in.
Update, 3 August: Mission accomplished. Toronto home sales plummeted 40 percent in July.
