Tag Archives: economics

09 Sep

So about that Amazon 99 cent phone…

According to Amazon’s press releases about how lower prices *always* mean more success for books, because they’re just widgets and the cheaper they are the more units they sell, and the more I, the author, profits, this means that Amazon just had THE BIGGEST SUCCESSFUL PHONE LAUNCH EVER!


“Amazon has given up on trying to get you to pay $199 for the Fire Phone with a contract. Now the retail giant has brought the price down — way down.

The Fire Phone, Amazon’s first and only mobile phone, will now be available for just 99 cents with a two-year contract, the company announced on Monday. Available exclusively through AT&T, the deal also comes with a one-year membership to Amazon Prime and unlimited cloud storage for photos.”

(Via Amazon Just Slashed The Price Of Its Phone To 99 Cents.)

I’m looking forward to paying hundreds for my next iPhone. Because I actually want that, and I will pay for it. Maybe Amazon has opinions on what Apple should minimally price it at?

Meanwhile, others will pay other various prices for Android and Windows phones.

And it’s all good. A variety of prices (including diamond bedazzled smartphones for crazy money) is how markets work.

09 Sep

How do economists change what they say based on money

HBR has this great article about the impact of money on economists and what they have to say about economics:

“To be an economist, you kind of have to believe that people respond to economic incentives. But when anyone suggests that an economist’s views might be shaped by the economic incentives he or she faces, that economist tends to get bent out of shape. This happened perhaps most famously in the documentary Inside Job, in which filmmaker Charles Ferguson posed his questions to the likes of Glenn Hubbard and Rick Mishkin as tendentiously as possible in order to spark just such reaction. But it’s actually pretty common to hear economists saying things like — this is from the usually no-nonsense John Cochrane of the University of Chicago — ‘the idea that any of us do what we do because we’re paid off by fancy Wall Street salaries or cushy sabbaticals at Hoover is just ridiculous.’

It is perhaps ridiculous to suggest that economists do what they do only because of the prospect of consulting gigs or think-tank stints. Economists are human beings, with diverse motivations. But it is definitely ridiculous to suggest that such rewards have no impact at all. Economists are human beings, and human beings respond to incentives. Right, economists?”

(Via Have Economists Been Captured by Business Interests? – Justin Fox – Harvard Business Review.)

This is fantastic.

03 Feb

Another sign of the death of the middle class?

Corporate America is already pivoting to serve higher and lower class America on the assumption that middle America is squeezing out:

“As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.

If there is any doubt, the speed at which companies are adapting to the new consumer landscape serves as very convincing evidence. Within top consulting firms and among Wall Street analysts, the shift is being described with a frankness more often associated with left-wing academics than business experts.”

(Via The Middle Class Is Steadily Eroding. Just Ask the Business World. – NYTimes.com.)

Strikes me as rearranging deck chairs on the way down. How about paying the people who work for you more and getting out of a quarterly mindset so as to reinflate the phenonoma that created a very prosperous half century or so?

11 Oct

Slippery slope of unrestrained profit engines

This blog post at Sociological Images just firmed up something in my mind that’s been bugging me:

“I sometimes would disagree with Tommy about the talents or behavior of some celebrity — a rock star or an actor.  Today’s equivalent might be Ke$ha or a Kardashian. Tommy’s response was usually, ‘He’s makin’ more money than you’ll ever see.’  And that settled the issue as far as Tommy was concerned.  A huge income trumped just about anything.”


I thought of Tommy and values today when I read the transcript of a CNBC interview with Alex Pereene. Pereene has recently gone on record criticizing Jamie Dimon, the CEO of JPMorgan. That bank currently faces an $11 billion fine for having dealt in shoddy mortgage-backed securities. JP Morgan can afford it, of course, but $11 billion begins to be real money. The question on CNBC was whether Dimon should continue as its CEO.

Pareene says no. The CNBC anchor, Maria Bartiromo then says.

Legal problems aside, JP Morgan remains one of the best, if not the best performing major bank in the world today. You believe the leader of that bank should step down?

Or as Tommy Fiedler would have put it, “His bank is makin’ more money than you’ll ever see.”

(Via Is Profit the Ultimate Value? On JP Morgan’s $11b Fine » Sociological Images.)

I’m happy to live in a capitalist society, but as I pointed out to someone the other day when they said ‘profit is the *only* motive’ and goal, I asked if they then supported slavery. Much sputtering later, my point was to say that if profit is all that matters, then they’re suggesting that America transform itself into something profoundly different than it has been for the last decades. I mean, if you get rid of minimum wage and squeeze it all the way down as far as you can, you have slavery or indentured servitude.

If you believe profit is the ‘only’ important thing to focus on, then you’re on a slippery slope.

Capitalism is an engine. A powerful one. I believe it’s the most powerful. Profoundly. But the question isn’t ‘which engine is more powerful’ but ‘what are you using that engine for?’

I believe it’s powerful enough to run a society that makes decisions about where the engine is taking them.

I had a strong jolt when reading about an academic who reported on the language used by capitalists from the 1800s who were slave owners:

The research: Caitlin Rosenthal pored over hundreds of account books from U.S. and West Indian plantations that operated from 1750 to 1860. She found that their owners employed advanced accounting and management tools, including depreciation and standardized efficiency metrics, to manage their land and their slaves. After comparing their practices with those described in the account books of northern factories, Rosenthal concluded that many plantations took a more scientific approach to management than the factories did.

The challenge: Did historians get the genesis of management wrong? Professor Rosenthal, defend your research.

Rosenthal: I was surprised by what we uncovered in these account books. The mythology is that on plantations, management was crude and just amounted to driving enslaved people harder and harder. These documents show that plantations used highly sophisticated accounting practices more consistently than many contemporary northern factories, which are often considered the birthplace of modern management. In some ways the conditions of slavery permitted a more scientific approach than the factories did.

Advanced Accounting
HBR: How so?

In the factory books, you see lots of turnover. But slaves couldn’t quit. While factories were worrying about filling positions and just keeping things going, plantation owners were focused on optimization. They could reallocate labor as they saw fit. I found real quantitative analysis in their records. They were literally looking at humans as capital.

This interview is going to make people queasy. I’m already cringing.

It should make you cringe. This is not an easy topic. People tend to think about the positive with regard to management and capitalism. With our modern lens, efficiency is good. Here it was equal to the brutal extraction of labor from oppressed people. But it’s important for businesspeople to read unvarnished history, not just the happy stories.

In other words, capitalism was taken to its logical endpoint once. It was morally problematic.

The question we need to interact with more is… where are we steering this engine, and what is driving?

I face a similar dilemma when I talk to people about alternative energy. “But it’s expensive,” they say, and therefore a country’s economic engine shouldn’t be choked by the drag.

I have two reactions that response.

1) It completely indicates a lack of trust in the power of capitalism’s engine. The engine can handle the load, I believe in capitalism and its ability to factor around. We abolished slavery, capitalism made a lot of money off it. Capitalism continues to do just fine. We abolished child labor. The engine is still turning. To moan about the ‘end of capitalism’ over these things is to devalue capitalism. (i.e.: capitalism will survive Obamacare just fine, as capitalism continues to be the engine for many nations with all manners of universal healthcare).

2) If profit is the only response to alternative energy, then why doesn’t the person then demand that all cars have catalytic converters yanked out, engines spew black fumes, and coal stacks no longer filters to the point where pollution fog makes it hard to breathe? I mean, that would be cheaper for the energy producers, right?

The truth is, we get to define what’s attached to that engine because the country is not just capitalist. It’s capitalist + representative democracy. C+RD. C is the engine, RD decides what’s attached to the C.

The argument against all this (the argument for unrestrained capitalism) is that a rising tide of wealth raises all boats. But as you can easily see from the GINI coefficient of the US, the rising tide is apparently not lifting all boats because that’s just an analogy and the reality is that although the US is making lots more money, it’s not trickling down, arriving at, or showing up in the pockets of anyone outside the tip top of the pyramid.

The *unrestrained* pursuit of profit is becoming such an ideology that someone one TV literally cannot conceive of someone being a bad leader because they harmed millions of lives, and helped almost crater our economy, merely because ‘they made a lot of money.’

That’s fucked up.

18 Sep

The tale of the death of an adjunct at Duquesne University

You know, as Christ would have wanted them to do…

“Meanwhile, in the past year, her teaching load had been reduced by the university to one class a semester, which meant she was making well below $10,000 a year. With huge out-of-pocket bills from UPMC Mercy for her cancer treatment, Margaret Mary was left in abject penury. She could no longer keep her electricity on in her home, which became uninhabitable during the winter. She therefore took to working at an Eat ‘n Park at night and then trying to catch some sleep during the day at her office at Duquesne. When this was discovered by the university, the police were called in to eject her from her office. Still, despite her cancer and her poverty, she never missed a day of class.

Finally, in the spring, she was let go by the university, which told her she was no longer effective as an instructor — despite many glowing evaluations from students. She came to me to seek legal help to try to save her job. She said that all she wanted was money to pay her medical bills because Duquesne, which never paid her much to begin with, gave her nothing on her way out the door.

Duquesne knew all about Margaret Mary’s plight, for I apprised them of it in two letters. I never received a reply, and Margaret Mary was forced to die saddened, penniless and on the verge of being turned over to Orphan’s Court.”

(Via Death of an adjunct – Pittsburgh Post-Gazette.)

As the corporatizing of everything continues, either we will have to figure out how to create safety nets that do not depend at all on where we work, worship, or live, or we will all die like Margaret Mary. The fact that she was a fellow of the same belief system, university, or educated class did nothing for her, I doubt any of them will save any of us either.

Stories like these make me hope ACA gets through in the next couple months.

[link via M J Locke]

Follow up thought. Corporations are always whining, particularly HR, about the fact that Millennials job hop, and have no loyalty to systems (corporations, parties, religions).

Gee whiz. I wonder why the fuck not?

13 Sep

Six Radical Life-Extension Technologies

For trans-humanists to consider:

“CLEAN WATER This is a basic innovation. However, the marketing upside is huge. There is massive, seemingly endless demand for this tech. While on the low end it is highly at risk of being commodified, there is much profit to be made from premium versions of the product for all market segments.”

This list isn’t complete, of course. It’s simply six things that came to Paul Graham Raven’s mind as he considered the transhumanist argument for the moral need to research medicine to help humans live longer.

(Via Six Radical Life-Extension Technologies for Transhumanist Consideration — Weird Future — Medium.)

On twitter I alluded to the fact that by implementing these, of course, the possibility of cognitive surplus being unleashed to create even more innovation is then guaranteed, leading to the more sexy sort of transhuman technologies the transhumanists get very excited about.

Nice article.

12 Sep

On Bullshit Jobs

I’m guessing Strike! magazine comes from a very certain perspective (labor, union oriented). Nonetheless, as an entrepreneur and artist, a lot of this rings a bell with me:

“This is a profound psychological violence here. How can one even begin to speak of dignity in labour when one secretly feels one’s job should not exist? How can it not create a sense of deep rage and resentment. Yet it is the peculiar genius of our society that its rulers have figured out a way, as in the case of the fish-fryers, to ensure that rage is directed precisely against those who actually do get to do meaningful work. For instance: in our society, there seems a general rule that, the more obviously one’s work benefits other people, the less one is likely to be paid for it.  Again, an objective measure is hard to find, but one easy way to get a sense is to ask: what would happen were this entire class of people to simply disappear? Say what you like about nurses, garbage collectors, or mechanics, it’s obvious that were they to vanish in a puff of smoke, the results would be immediate and catastrophic. A world without teachers or dock-workers would soon be in trouble, and even one without science fiction writers or ska musicians would clearly be a lesser place. It’s not entirely clear how humanity would suffer were all private equity CEOs, lobbyists, PR researchers, actuaries, telemarketers, bailiffs or legal consultants to similarly vanish. (Many suspect it might markedly improve.) Yet apart from a handful of well-touted exceptions (doctors), the rule holds surprisingly well.”

(Via On the Phenomenon of Bullshit Jobs | Strike! Magazine.)

I tend to come at this from the opposite perspective though. I often make the argument to my anti-red, flag-loving, 40-hr a week wage-bound friends that they live in a more Russian communist looking sort of environ than I do. To whit:

the number of salaried paper-pushers ultimately seems to expand, and more and more employees find themselves, not unlike Soviet workers actually, working 40 or even 50 hour weeks on paper, but effectively working 15 hours just as Keynes predicted, since the rest of their time is spent organising or attending motivational seminars, updating their facebook profiles or downloading TV box-sets.

These same people get corporate healthcare (the large behemoth hands it out) socialized by the size of the large company. Their profits are handled by the large company. Many of them expect retirement to be handled by the large company.

Of course, that whole system is vaporizing too, to be fair.

Which is why this article was an interesting swirl, and got me wondering how we transition to whatever seems to be coming down the pipeline…

18 Aug

Must read article: College for free? America can afford it

America already invests enough in college education that if the money were just given directly to the colleges as a per-student free education grant, everyone could go for free. It’s the complicated structure that makes it a mess (and banks parasite out in the middle). Some one actually ran the numbers, if you don’t think this is possible:

“Q. You write that free education is critical for democracy. Why?

A. As Thomas Jefferson argued, people in a democracy need to be able to understand the current issues in order to participate in an effective manner. If you don’t have a population that’s been well-educated, they’re not going to understand the difficult issues of the time and they’re not going to be able to participate fully.

Q. How much will all this cost? Where does that come from?

A. In 2008-09, there were 6.5 million full-time undergrads in public four-year universities and 4.3 million in community colleges. In 2009-10, the average cost of tuition, room and board at public four-year schools was $15,014; at two-year public colleges, it was $7,703. Do the math: The cost of making all public universities free would have been $97 billion in 2009-10, and $33 billion for all community colleges — total $130 billion.

That seems like a lot, but remember: In 2010, the federal government spent more than $30 billion on Pell grants and billions more to subsidize and service student loans. States spent $10 billion on financial aid and another $76 billion for direct support to universities. Include various state and federal tax breaks, and tax deductions for tuition, and it’s possible to make all public higher education free by just using resources more effectively.

It’s important to remember, too, that tuition rates are inflated because colleges charge more to subsidize financial aid for low-income students and to provide merit scholarships for high-scoring students. If we eliminated financial aid, and each college were given a set amount per student, we could significantly reduce the cost of making public higher education free in America. And the government would save billions in servicing and subsidizing student loans, as well as defaults.”

(Via College for free? America can afford it: Opinion | NJ.com.)

16 Aug

Interesting thoughts on meritocracy and lead

Matthew Yglesias on meritocracy and lead:

“Obviously the right response to lead and other atmospheric toxins is to clean them up. But the fact of the matter is that we’re not going to eliminate lead from the build environment next year, and we’re certainly not going to go back in time to the late 1960s and clean up the environment that today’s 45-year-olds grew up in. And though lead is very important, it’s also obviously not the only source of relative cognitive disadvantage out there (consider mercury or bad school lunches or just noise). The point, however, is that the unfairness that who your parents were and where they lived 30 or 40 years ago has a major impact on your income and opportunities today isn’t a contrast to the idea that the American economic system in some sense rewards merit—this happens precisely because the system rewards merit and possession of ‘merit’ is largely driven by factors that are themselves totally beyond a person’s individual control.”

(Via Meritocracy isn’t fair: Lead poisoned children are genuinely less able but still deserve great lives..)

15 Aug

Public Transit and density multipliers getting more study, with amazing economic benefits

Density and moving people around in density is the most critical innovation and economic enabler. The city is technology, and a force multiplier. So is transit:

“Every time a metro area added about 4 seats to rails and buses per 1,000 residents, the central city ended up with 320 more employees per square mile — an increase of 19 percent. Adding 85 rail miles delivered a 7 percent increase. A 10 percent expansion in transit service (by adding either rail and bus seats or rail miles) produced a wage increase between $53 and $194 per worker per year in the city center. The gross metropolitan product rose between 1 and 2 percent, too.

On average, across all the metro areas in the study, expanding transit service produced an economic benefit via agglomeration of roughly $45 million a year — with that figure ranging between $1.5 million and $1.8 billion based on the size of the city. Big cities stand to benefit more simply because they have more people sharing the transit infrastructure. They also tend to have more of the traffic that cripples agglomeration in the absence of transit.

‘As to how big it is,’ says Chatman of this hidden economic benefit, ‘it’s most likely to be large in places that have congested road conditions, transit networks that are at capacity — those kinds of places — and probably less in smaller cities without very much road congestion.’

Chatman stresses that because his method is so new, the results must be replicated before they’re accepted. He also knows that some people will question the causality of the data: How can the researchers know, for instance, that transit alone is responsible for agglomeration? In response, Chatman points to the controls he and Noland installed in their statistical models — and to the fact that he’s been critical of rail as an economic investment strategy in the past.

‘Put it this way: I’m a skeptic on this stuff, and I was surprised to see these results so robust,’ he says.”

(Via Public Transit Is Worth Way More to a City Than You Might Think – Eric Jaffe – The Atlantic Cities.)