Tag Archives: economics

In the future, will you own anything?


In 2030, you may not own any gadgets, says this Gizmodo piece: In the Future, You Won’t Own Any Gadgets.

It makes some strong points. It’s true, younger people aren’t as keen to own things. (Heck, this is also true of older people who get fed up with the accumulation of things). And companies are keen to lease things. Add that up and you will see less and less owning.

From an IT perspective, I’ve been through this before. For a long time IBM had a very strong business in leasing technology. That gradually went away and more and more companies bought their technology. Then server farms came followed by the cloud, and now we are effectively seeing companies lease more IT again. Will it switch back again?

I think so. Eventually the cons outweigh the pros, be it for leasing or owning. People will move to leasing because it saves them money in the short term. Then eventually it gets more costly and the restrictions on the leases push them to own things again. Until the costs of owning add up and they switch back to leasing.

So yes, people will be moving to leasing for some time. Then they will switch back to owning more stuff. Of this I am confident.

(Photo by Michael Dziedzic on Unsplash)

Upgrade your thinking about economics


If you want to upgrade your thinking on economics, I recommend these four pieces:

  • The Choice Isn’t Between Capitalism or Socialism – this seems obvious to me and likely you too, but it is a good reference to keep around for whenever you hear people talking about capitalism and socialism.
  • America Never Learns the Limits of Bootstrapping – a good piece on the limits of social safety nets built using private initiatives. My belief is that social safety nets should come both from governments and individuals, and that we should be looking into how our society is set up to provide a wide range benefits for everyone. For example, unemployment insurance is good, but free or low cost education to allow people to improve themselves and others is important also. We need more initiatives to improve people’s lives.
  • A Basic Income Could Solve 8 of Society’s Biggest Problems – the big initiative in the 21st century should be this. We can eliminate poverty and remove many social ills with it. It will not be a cure all, but it can cure a-lot.
  • If You’re so Smart, Why Aren’t You Rich? Turns out It’s Just Chance – finally, some many say if you have all these social programs, no one will every try again because we need a system in place that encourages people to work hard and get rich. If you think that, read the article.

Not everyone will benefit from these pieces. I did, though, and for some of you reading this, you will as well.

(Photo by Aziz Jus on Unsplash)

Iowa shows why the move from big cities may be only temporary

Brooklyn
One thing that happened during the pandemic is that big cities like New York vacated to some degree. When they did, there was talk about how in the future more people would continue to work from home, and if they did, they might go to smaller and more affordable cities, like Des Moines, Iowa. Indeed, places like Des Moines has been recruiting people.

The problem these cities have, though, is that they are missing part of the puzzle. People in big cities like NYC and San Francisco live there for a lot of reasons. One of those is the freedom and rights that come with living there.  The respect those places have for progressive values are a big draw. Unfortunately, as this really good piece shows, Iowa (and likely other conservative cities and states) can’t and won’t provide that any time soon.

After reading that piece, I thought: yeah, even if the majority of people can still work from home, the mass exodus from Brooklyn to Des Moines is not going to be happening. Some will, for sure. But when the pandemic is over, people are going to head back to the major cities. They have more to offer than  affordability.

(Photo by Julian Myles on Unsplash)

 

Will a $15 minimum wage in the US be a good thing?


If you are wondering if a $15 minimum wage in the US will be a good thing or not, read these two pieces:

  1. Economists reverse claims that $15 Seattle minimum wage hurt workers admit it was largely beneficial
  2. How new research is shaking up the debate about a $15 minimum wage

My belief is it will be a good thing. We may get a chance to see that soon.

(Photo by NeONBRAND on Unsplash)

What do Bernie Sanders, billionaires, global warming and you have in common?


What Bernie Sanders, billionaires, global warming and you all have in common is this: you are all mentioned in one or more of these articles I found on economics. All good pieces.

  1. Sanders & Socialism: Debate Between Nobel Laureate Paul Krugman & Socialist Economist Richard Wolff | Democracy Now!
  2. Free exchange – Why Americans and Britons work such long hours | Finance & economics | The Economist
  3. Billionaires should be taxed out of existence, says Thomas Piketty
  4. The technological and economic prospects for CO 2 utilization and removal | Nature
  5. Daily chart – How much would giving up meat help the environment? | Graphic detail | The Economist
  6. The Flaws a Nobel Prize-Winning Economist Wants You to Know About Yourself
  7. Frederick Douglass Railed Against Economic Inequality

(Photo by rupixen.com on Unsplash)

If you are slogging through your laundry this weekend

Then read this: Laundry is a never-ending chore – Vox

It’s about the social, historical, and economic aspects of laundry. It will make you think of laundry in a whole new light.

P.S. It’s the pandemic. I hope you are giving the ironing a pause in this difficult and wrinkly time. 🙂

(Photo by Filip Mroz on Unsplash)

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What if the Government Gave Everyone a Paycheck? Well it just did. What did we learn?

Before the pandemic (i.e. 2018), people were asking this: What if the Government Gave Everyone a Paycheck? – The New York Times.

It seemed impossible at the time. Then the pandemic came, and governments in the US and Canada essentially did just that.

What I fear is going to happen is economic conservatives are going to rush in and start yelling “Deficits are Bad!!!” and all the Establishment will nod and a new wave of austerity will come in. What I hope is that better economists will come to the fore and push and see how close we can get to UBI, given what we learned so far.

Much depends on what happens in the next six to twelve months.

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Inequality is a fundamental problem over many centuries


At least, according to this:  700 years of Western inequality, in one chart – Vox

The chart shows the percentage of wealth owned by the top 10% since 1300. There are only two times it takes a major drop: during the Black Death in the 14th century and during World War II in the 20th century.

If true, it means that wealth concentration will continue unless another major catastrophe occurs (pandemic? global warming?).

There is lots to debate in all this. The numbers themselves are debatable (i.e. just how accurate and representative are they?)  As well, there is an argument to be made that it doesn’t matter how inequally distributed wealth is  if generally life for the 90% is good. But the Vox piece argues that such inequality leads to political instability and other problem, and that a good life for the majority isn’t enough.

Read the piece and consider it for yourself.

 

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Is it time for Frank Ramsey to get his due?

In some ways, that question is ridiculous. Ramsey and his ideas are embedded in so many fields of thought, from mathematics to economics to philosophy. However, I had never heard of him before. Or I should say, I had heard of him, but I never thought of him the way I thought of Russell or Wittgenstein or other contemporaries he had.

That might change now. There are two good pieces I recently found, here on CBC Radio and here in The New Yorker. I really enjoyed both. If you do too, you can get a recent book on him called, Frank Ramsey: A Sheer Excess of Powers
by Cheryl Misak
.

Recommended.

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The Free-Time Paradox in America

Here’s something to ponder on a Sunday:

The rich were meant to have the most leisure time. The working poor were meant to have the least. The opposite is happening.

That is extracted from this: The Free-Time Paradox in America – The Atlantic

It’s a fascinating study of work and leisure and why it is not what many expected.

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How to think of climate change/the environment in terms of economics

Forget what Steven Mnuchin said about Greta Thunberg needing to study economics before offering climate change proposals. That was an asinine thing for him to say.. But read that article in the Washington Post for the ideas. They spoke to an economist about climate change and how economics comes in and it’s worthwhile for that.

People might argue that we need to do something about climate change, but we can’t afford it. If you want to argue back, the article can help.

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Is Muji doomed?

Not yet, but clearly it is in trouble, based on this: Why Muji Is Struggling | News & Analysis | BoF.

My feeling is they have expanded past the point it is sustainable, and now they are going to have to adjust. Hopefully they can adjust: they are a good company and they could be as big as IKEA or H&M. Or they could go bankrupt. The next few years will show which direction they go.

Thanks to Jeff Smith for sending me this link!

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Falling

We don’t talk much about poverty anymore. We talk about the middle class a lot. We don’t talk about the upper class or the rich anymore: instead we talk about them in terms of percentage points. And we don’t talk about the poor as much as we talk about those who are homeless. But there are still poor people in our society, and one member of that group wrote about it here: Falling.

He has a home, he was middleclass, and now he is poor. The story is sad but not exceptional.

I don’t know why we don’t talk about the poor so much any more. Perhaps we see poverty as shameful, not for the people who are poor, but shameful for people who don’t see themselves as poor. I don’t know. I think we do need to talk about it and the spectrum of financial status, and I think we need to work towards a fairer and more equitable society. First, we need to look and talk about it more clearly.

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The greatest thing Obama did

Is the one thing about the Obama legacy that can’t be repealed. Namely this:

There is no mystery about Barack Obama’s greatest presidential achievement: He stopped the Great Recession from becoming the second Great Depression.

Obama did many important things, Obamacare being the obvious. As someone who had seen many failed attempts at achieving this, to see him team with Pelosi and others to achieve this was astounding.

That said, there would have been nothing accomplished by Obama if the US spiralled into a second Great Depression, dragging down the world economy with it. I continue to see criticism of the actions taken by his team then, especially among progressives. They argue that more should have been done. You can google “Obama terrible” and find pieces like this.

Time will tell, but so far Obama is holding up as anything but terrible. I predict he will rise in Presidential standing in the future. Meanwhile, the world is in much better shape due to the actions he took in the early stages of his presidency to avert worldwide economic disaster.

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Something I think on often: capital Is no longer scarce


I have thought about this piece on capital often since I read it: Continuations by Albert Wenger : Capital Is No Longer Scarce.

I realize it is relative and that there are people and organizations that have difficulty accessing capital. But I believe overall there is an abundance of capital. I believe that is why you see a lot of the behaviours you see in the world, from negative interest rates to bogus unicorns like We and Uber and Lyft to high housing valuations to no inflation.

 

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The case for unions


German Lopez from Vox makes it, here: America needs more unions – Vox.

As for me, many unions fall under the idea of countervailing power, which I am a strong proponent for. The countervailing power aspect is important.  The worst unions are not that.

 

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Can cities be affordable?


If you read articles like this, Why Homes in Major U.S. Cities Are Nearly Impossible To Afford – Curbed, it can be hard to believe than any city not on the decline can be affordable. But there are exceptions, and it is good to know about them and why they are. One such city is Vienna, and this piece has a good explanation on why it is.

If you are concerned about cities being affordable, I recommend the piece on Vienna. Affordable cities is going to be one of the big challenges of the 21st century. We need good ideas to deal with this.

(Image via pexels.com)

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The law of supply and demand strikes again, this time with truckers for Walmart

It seems to me that the law of supply and demand stops working from time to time. But I think that is wrong, and pieces like this remind me that I am wrong: How Walmart has successfully recruited truck drivers amid a labor shortage crisis.

The reason I think it stops working is because I see wage growth stagnating in many places. But I also see productivity stagnating too, and I think there is a relationship between that. There is some elasticity there that allows wage growth to stagnate but in return productivity growth stagnates too.

In Walmart’s case, the elasticity is gone: if they can’t get truckers, they lose business. It’s simple.  But for businesses without such hard and fast metrics, you might just continue to see slack productivity and slack wage growth.

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New York City and the future of retail in cities


I’ve read a number of articles talking about the demise of New York due to rising rents and gentrification. After reading them, tt’s easy to feel hopeless about New York and cities in general. Which is why I was glad to read this: New York City Reveals the Future of American Retail – The Atlantic. It’s true, there are big changes in New York, just like there are big changes in other cities. And it’s true that many beloved retail stores are disappearing in cities everywhere. But it’s untrue that vacancy rates are shooting up and it’s untrue that it’s only big chains taking over. While retail stores threatened by Amazon are closing, places like restaurants and fitness locations are filling the gap.

You can argue that a city needs more than this new world of cafes and restaurants and gyms. The article points out to ways cities can encourage that. Specifically:

According to Jeremiah Moss, specific policies caused the disappearance of old New York—like tax breaks for big businesses, which have been a hallmark of city governance since the Ed Koch days (and up through HQ2). Moss says that several new policies could fix the problem. First, he is an advocate of the Small Business Jobs Survival Act, which would make it easier for small retailers to extend their lease in neighborhoods with rising rents. Second, he favors zoning laws that would limit the density of chain stores. He and others have also called for “vacancy taxes” that punish landlords who sit on empty storefronts for months at a time. All of these policies could help small businesses push back against the blandification of New York and the broader country.

Cities thrive when there is a mix of establishments servicing the wants and needs of its occupants. After reading this article, I think cities, New York and elswhere, are doing well and have a viable path to get better.

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Are the new iPhones more expensive than ever?

That’s been a question I have been asking myself for some time. I felt like the price just keeps going up. And if you read articles like this, it’s easy to conclude it’s true.

But here’s some numbers on the least expensive models over time, taken from this:

iPhone (4GB): $499
iPhone 3G (8GB): $599
iPhone 3GS (16GB): $599
iPhone 4 (16GB): $599
iPhone 4S (16GB): $649
iPhone 5 (16GB): $649
iPhone 5s (16GB): $649
iPhone 6 (16GB): $649
iPhone 6 Plus (16GB): $749
iPhone 6s (16GB): $649
iPhone 6s Plus (16GB): $749
iPhone 7 (32GB): $649
iPhone 7 Plus (32GB): $769
iPhone 8 (64GB): $699
iPhone 8 Plus (64GB): $799
iPhone X (64GB): $999

Looking at that, I have to think that the phones are getting more expensive, but likely they have always been that way. (And note, this doesn’t account for inflation or the improved quality of the phones, including greater storage.)

Occasionally Apple will make a cheaper phone like the 5C or the SE that are essentially remixes of older models. Or they will continue to support a wider range of phones, like continuing to sell the 7, the 8, and now the X. But it seems the high end was never inexpensive and likely never will be.

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Senior Citizens Are Replacing Teenagers as Fast-Food Workers. Some thoughts.

Worth reading: Senior Citizens Are Replacing Teenagers as Fast-Food Workers – Bloomberg.

Some thoughts:

  • the reasons to hire older workers for fast food places is also true for other work as well.
  • the notion of retirement needs to be rethought. People are living lives well past traditional retirement ages, and some people retire involuntarily decades before they die.  Additionally, many of them cannot afford to not work all that time. Having work and an income in their later years makes sense.
  • Good work is uplifting. If you can find good work as you get older, you can find a way to make your later years more worthwhile.

 

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How economic hardship traumatizes people individually and as a culture

This piece, Opinion | Still Haunted by Grocery Shopping in the 1980s – The New York Times, by a Brazilian economist highlights the emotional scars that economic hardship has on a person. Key quote for me was this:

Research has found that children living in poverty are at increased risk of difficulties with self-regulation and executive function, such as inattention, impulsivity, defiance and poor peer relationships. It takes generations until society fully heals from periods of deep instability. A study in the early 2010s showed that Germans were more worried about inflation than about developing a life-threatening disease such as cancer; hyperinflation in the country ended almost 100 years ago.

Not only does it touch people individually, but you could make the case that it gets embedded into the culture. Germans are still worrying about inflation! Indeed, I remember my mom telling me how the Great Depression affected her mother to the point that she adopted behaviors she could never shake, not matter how much she had in the future.

Economics can seem dry, especially when people focus on numbers. But those numbers paper over how people are really affected. What is the emotional impact of high (or low) unemployment? What do we see happening in the culture when housing becomes unaffordable or work impossible to get. The numbers are an essential part of the story but they are also just the start of the story.

 

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Can housing be affordable?

Based on many affluent cities currently, the answer is “no”. But there are exceptions we can learn from like Vienna. As this piece shows,  Vienna’s Affordable Housing Paradise | HuffPost, it’s possible even in affluent cities and countries to have affordable housing under the right conditions.

Well worth reading that if you are feeling it is impossible to have affordable housing these days.

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It’s Monday morning: are robots going to replace you at your job?

Possibly, but as this article argues, there are at least three areas where robots and suck at:

Creative endeavours: These include creative writing, entrepreneurship, and scientific discovery. These can be highly paid and rewarding jobs. There is no better time to be an entrepreneur with an insight than today, because you can use technology to leverage your invention.

Social interactions: Robots do not have the kinds of emotional intelligence that humans have. Motivated people who are sensitive to the needs of others make great managers, leaders, salespeople, negotiators, caretakers, nurses, and teachers. Consider, for example, the idea of a robot giving a half-time pep talk to a high school football team. That would not be inspiring. Recent research makes clear that social skills are increasingly in demand.

Physical dexterity and mobility: If you have ever seen a robot try to pick up a pencil you see how clumsy and slow they are, compared to a human child. Humans have millennia of experience hiking mountains, swimming lakes, and dancing—practice that gives them extraordinary agility and physical dexterity.

Read the entire article; there’s much more in it than that. But if your job has some element of those three qualities, chances are robots won’t be replacing you soon.

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On Finland and UBI (Universal Basic Income)

Two links worth reading on Finland and UBI: this one and this one.

Essentially, Finland did a form of UBI and it didn’t work. Those for UBI will argue it was implemented poorly. Those against UBI will argue those people are purists and in fact UBI will never work.

I think there are limits to UBI, but the Finnish implementation was poor. I think it can be done better than that. Read the two pieces in the New York Times and decide for yourself.

Can we have greater equality without great catastrophes?

This is the question reviewed here:  Are plagues and wars the only ways to reduce inequality? | Aeon Essays.  (It’s a long read but a good one.)

If you are not familiar with this idea, consider this graph:

The higher the red line is, the greater inequality is. Throughout the last 2000+ years, inequality has been reduced only by terrible events like plague and war.

For a time post World War II, inequality was declining in much of the world. Then, around the 1980s, it started to increase and continues to do so. Now we have a race on. Population declines should occur over the next 100 years, leading to greater equality. To counter that, we have greater automation occurring which may boost inequality as those with the means to control the automation make much of the income and increase their wealth. Will this inequality lead to events that once again levels off the distribution of wealth and income? Or will we reach a balance somehow?

I highly recommend the article. Rising inequality will be one of the great strains on the 21st century, and this article helps to provide some context on the subject.

 

Good news regarding food and agriculture


The good news is this: There’s More Farmland in the World Than Was Previously Thought | Agweb.com.

There are still problems in preventing hunger and famine, but decreasing farmland should not be adding to that. Good! Now to decrease conflicts and ensure everyone has access to good, cheap, nutritious food.

(image via pexels.com)

An introduction to Richard Thaler, winner of this year’s Nobel Prize for Economics

Often times it is hard to appreciate the work of Nobel Prize winners, including those in Economics. Thaler is not one of those people. His work is very approachable for laypeople, and the benefits of his work is obvious.

Here’s one example, of how his work led to better results for people in terms of pensions.

Youtube is a great source of videos on Thaler. If you want to get started understanding what is behind his thinking, you can start there.
In addition, the New York Times covers his award winning here and it is another good introduction. Finally, here is a piece in the Times that Thaler wrote himself, on the power of Nudges. If you do anything, read that.

Good to see him win.

How technology can enhance work and not simply eliminate it

robot and human working together

This piece: What it’s like to be a modern engraver, the most automated job in the United States — Quartz, reminded me once again that the best use of technology is to augment the people doing the work, and not simply take away the work. Must reading for anyone who’s believes that the best way to use AI and other advanced tech is to eliminate jobs. My believe is that the best way to use AI and other advanced tech is to make jobs better, both for the employee, the employer, and the customer. The businesses that will succeed will have that belief as well.

(Image from this piece on how humans and robots can work together.)

Some thoughts on the end of the CBC mail robots

mail robot
According to Haydn Waters, a writer at CBC, the mail robots at the corporation are being discontinued. Instead:

Mail will be delivered twice a week (Tuesday and Thursday) to central mail delivery/pickup locations on each floor.”

What gets lost in alot of discussions of robots, AI, etc., taking all the jobs is that the drivers for the decisions is not technology but economics. If there is no economical need for robots and other technology, then that technology will not just appear. There is nothing inevitable about technology, and any specific technology is temporary.

Of course there will be more use of robots and AI and other technology to replace the work people may currently do. The key to finding work will be to continually improvise and improve on the tasks one has to do to remain employed. That’s something humans do well, and technology will struggle with for some time in the future, AI hype not withstanding.

34 good links on AI, ML, and robots (some taking jobs, some not)

If you are looking to build AI tech, or just learn about it, then you will find these interesting:

  1. Artificial intelligence pioneer says we need to start over – Axios – if Hinton says it, it is worth taking note
  2. Robots Will Take Fast-Food Jobs, But Not Because of Minimum Wage Hikes | Inverse – true. Economists need to stop making such a strong link here.
  3. Artificial Intelligence 101: How to Get Started | HackerEarth Blog – a good 101 piece
  4. Deep Learning Machine Teaches Itself Chess in 72 Hours, Plays at International Master Level – MIT Technology Review – the ability of tech to learn is accelerating.
  5. Now AI Machines Are Learning to Understand Stories – MIT Technology Review – and not just accelerating, but getting deeper.
  6. Robots are coming for your job. That might not be bad news – good alternative insight from Laurie Penny.
  7. Pocket: Physicists Unleash AI to Devise Unthinkable Experiments – not surprisingly, a smart use of AI
  8. AI’s dueling definitions – O’Reilly Media – this highlights one of the problems with AI, and that it is it is a suitcase word (or term) and people fill it with what they want to fill it with
  9. A Neural Network Playground – a very nice tool to start working with AI
  10. Foxconn replaces ‘60,000 factory workers with robots’ – BBC News – there is no doubt in places like Foxconn, robots are taking jobs.
  11. 7 Steps to Mastering Machine Learning With Python – don’t be put off by this site’s design: there is good stuff here
  12. How Amazon Triggered a Robot Arms Race – Bloomberg – Amazon made a smart move with that acquisition and it is paying off
  13. When Police Use Robots to Kill People – Bloomberg this is a real moral quandary and I am certain the police aren’t the only people to be deciding on it. See also: A conversation on the ethics of Dallas police’s bomb robot – The Verge
  14. How to build and run your first deep learning network – O’Reilly Media – more good stuff on ML/DL/AI
  15. This expert thinks robots aren’t going to destroy many jobs. And that’s a problem. | The new new economy – another alternative take on robots and jobs
  16. Neural Evolution – Building a natural selection process with AI – more tutorials
  17. Uber Parking Lot Patrolled By Security Robot | Popular Science – not too long after this, one of these robots drowned in a pool in a mall. Technology: it’s not easy 🙂
  18. A Robot That Harms: When Machines Make Life Or Death Decisions : All Tech Considered : NPR – this is kinda dumb, but worth a quick read.
  19. Mathematics of Machine Learning | Mathematics | MIT OpenCourseWare – if you have the math skills, this looks promising
  20. Small Prolog | Managing organized complexity – I will always remain an AI/Prolog fan, so I am including this link.
  21. TensorKart: self-driving MarioKart with TensorFlow – a very cool application
  22. AI Software Learns to Make AI Software – MIT Technology Review – there is less here than it appears, but still worth reviewing
  23. How to Beat the Robots – The New York Times – meh. I think people need to learn to work with the technology, not try to defeat it. If you disagree, read this.
  24. People want to know: Why are there no good bots? – bot makers, take note.
  25. Noahpinion: Robuts takin’ jerbs
  26. globalinequality: Robotics or fascination with anthropomorphism – everyone is writing about robots and jobs, it seems.
  27. Valohai – more ML tools
  28. Seth’s Blog: 23 things artificially intelligent computers can do better/faster/cheaper than you can – like I said, everyone is writing about AI. Even Seth Godin.
  29. The Six Main Stories, As Identified by a Computer – The Atlantic – again, not a big deal, but interesting.
  30. A poet does TensorFlow – O’Reilly Media – artists will always experiment with new mediums
  31. How to train your own Object Detector with TensorFlow’s Object Detector API – more good tooling.
  32. Rise of the machines – the best – by far! – non-technical piece I have read about AI and robots.
  33. We Trained A Computer To Search For Hidden Spy Planes. This Is What It Found. – I was super impressed what Buzzfeed did here.
  34. The Best Machine Learning Resources – Machine Learning for Humans – Medium – tons of good resources here.

Wages, Nash equilibrium, and the productivity paradox: a small theory of my own

Economists write a lot about the mystery of why productivity is not increasing, with pieces such as this. There’s even a section on it in Wikipedia.

My own theory is that limited wage increases is also limiting the benefits of productivity aids. How I think this works is so:

  1. Employers wont raise wages for employees.
  2. Employers deploy technology that should result in productivity gains.
  3. Employees take the technology deployed and use them to decrease their efforts.
  4. The employer sees some productivity gains and assumes that is the limit for the technology deployed.

Look at this chart:

In much of the world economy, all the job growth is in the services sector (green line), not the manufacturing sector (red line). Achieving productivity gains in the manufacturing sector is more straightforward: replace people with robots and you are done. It’s not as straightforward as that in the services sector. In some services sector jobs, it is not possible to decrease effort without it being visible. But in many services sector jobs, it is. If employees cannot improve their lives by making more money, they may decide to do so by working less and working right up to the point where they don’t lose their job.

If you look at employment as a game, then we currently have a Nash equilibrium where the employees know that they won’t get paid more working for the same company, because that is the best strategy for the company. Therefore the best strategy for the employee is to minimize their effort without getting fired and while showing little if any productivity gains.

That’s to me is key reason why I think we have the productivity paradox.

I would add that the reason this is a paradox is because no one wants to admit that this is happening. It seems like a failure on both the employers and the employees side. The employee wants to be seen as a good worker and the employer doesn’t want to admit it could be paying more. Instead technology is brought in to solve an organizational problem, which is something technology cannot do.

(Chart from Business Insider).

 

 

Capital and slavery in America

It is striking to see what percentage of American capital attributed to slavery in the 18th and 19th centuries (the striped section in the chart above). In the late 18th century only agricultural land counted for more, and there slavery contributed to that too.

The American Civil War and the emancipation of those bound in slavery destroyed all that capital, and that was great and necessary. While it is wrong to consider slavery only in terms of money, it is impossible to talk about slavery in the United States without considering its relationship to the economy and capital.  The capital that derived from slavery was massive.

In the U.K. the abolition of slavery resulted in the government providing capital back to the slave owners. It was a terrible omission that neither the U.K. nor the U.S. provided capital to the freed slaves.  There are those, like Ta-Nehisi Coates, who argue that such capital in the form of reparation is due.  Based on the chart above, a case could be made that it would be a tremendous amount of money.

(Chart above taken from “Capital in the Twenty-First Century” by Thomas Piketty)

Two interesting pieces on UBI (universal basic income)

There have been many articles written on UBI. (If you don’t know what it is, it’s  universal basic income: a cash payment made to every individual in the country).

Two of the more interesting ones I’ve read are here: The UBI already exists for the 1% – Medium, and this one here (on how India is looking to do it).

UBI is coming. It may take some time though.

Is the FED broken? Some random thoughts.

Is the FED  (Federal Reserve System) broken? If not broken then certainly being strongly tested, as this piece shows to me: The Fed Is Searching for a New Framework. New Minutes Show It Doesn’t Have One Yet. – The New York Times.

Since the start of the Great Recession, the target interest rate has gone from just over 5% to just over 0% and has more or less stayed that way for over half a decade. (See the chart). After a very long pause, the chairwoman of the Federal Reserve has begun the process of raising interest rates,  a process that her predecessors have engaged in over recent decades as they put their own distinctive stamp on the economy. (See A History of Fed Leaders and Interest Rates – The New York Times). Some of them, like Paul Volcker, have been hugely successful in shaping the economy. Others, like Alan Greenspan, also have shaped the economy hugely, but I would add, unsuccessfully. So what should the FED do?

Paul Krugman has his take, here. Perhaps an extreme inflation target is the answer, just like Volcker’s extreme interest rates were the answer for their time. However, I don’t think they are symmetrical, and the goals of a higher inflation target would be dampened down by other forces. Furthermore, the FED and most other central banks seem only capable dealing with tamping down inflation and not so capable when dealing with unemployment.

The Chairwoman is signalling she will be raising rates soon. We should see what the effect is, and how the economy and President Trump and Congress responds. If the economy goes into a recession, that would say to me the FED is broken.  If the economy does not go into a recession, I would say this means the FED still has a limited role in managing the economy. Let’s see.

On entrepreneurism and ageism

Col Sanders
Should you become an entrepreneur if you are older? If you are an entrepreneur, should you hire older workers despite worrying they won’t be a good fit? This piece, Don’t Let Your ‘Senior Citizen’ Status Kill Your Entrepreneurial Spirit, makes the case that the answer to both questions is yes. Well worth reading if you have been asking yourself these questions.

And why is Colonel Sanders shown here? The article will explain.

(Image linked to is on Wikimedia)

Is facadism/urban taxidermy bad?

In this piece, Are we killing Yonge Street? from NOW Toronto Magazine, there is a good discussion on what is happening to development on Yonge Street in Toronto. NOW reports that for a lot of development happening on Yonge Street, the facades of the existing building are kept and much of the development is happening behind it. The article argues that this is a bad thing, and they raise some good points.

What I think they don’t touch on are some of the alternatives. Toronto is fortunate in that there is development ongoing. For poor cities, the alternative is boarded up or demolished buildings and vacant neighborhoods.  Instead, we have neighborhoods and buildings being improved. That’s good.

Another alternative is the old buildings being torn down and replaced with new storefronts and new buidlings. I think some of that is good, but I also think preservation of old buildings is also good.

When it comes to preservation and improvements of old buildings, I also think that some of them should be preserved outright. However, Toronto is a growing city, and in some cases, we need larger buildings. In that case, facadism is a good compromise.

Now whether or not facadism is effective or not depends on at least two things. The first is how well the new architecture uses the existing architecture. Done well, the marriage of the old and new building results in something that enhances the area and preserves the city while allowing it to grow.  The second thing that determines if facadism is effective is how the new building affects the neighborhood. Here, I think, is the root of the problem. It’s not so much facadism as it is gentrification. Old buildings get preserved, but old stores do not. New developments can cause rents to rise, driving out the stores and organizations that made the neighborhood great. You get bank branches and big chain stores replacing old bookshops and cafes.

I hope the next phase of development tries to understand how to preserve not just the existing architecture, but the neighborhood as well. I realize that is a difficult task, but it is one worth trying to accomplish.

Want to know why it is so expensive to get tickets to special events?

Then you want to read these two really good pieces on why it is brutally tough to get tickets to an event without paying a fortune:

What it comes down to is a very limited supply and a very high demand. But that’s obvious. Read the pieces to see just how it really plays out.

Nate Silver and Paul Krugman on the importance of good models to understand and predict

This piece by Nate Silver, How I Acted Like A Pundit And Screwed Up On Donald Trump in FiveThirtyEight, is ostensibly about how he messed up in his predictions on the rise of Donald Trump. What I think is worth reading is how he goes about his work and what he learned from his mistakes. Specifically, it’s a great study on how important models are and how a good model works and what it can tell us.

Related, Paul Krugman talks about his model here: Economics and Self-Awareness in The New York Times. Like Silver, he uses models both to understand and predict. Obviously they are modelling different things, but in both cases good models are the basis of their thinking and the work they do.

It’s likely too much to ask now, but eventually anyone doing analysis and making predictions should have to disclose the models they are basing their decisions upon. The opinions of anyone not having such models are likely not worth much.

Detroit: imploding city

While I knew things were rough in Detroit, this story, Volume of abandoned homes ‘absolutely terrifying’ (from DetroitNews.com), gives you a context of just how incredibly bad it is. Two take aways from that story. First, this statistic:

Since 2005, more than 1-in-3 Detroit properties have been foreclosed because of mortgage defaults or unpaid taxes

Two, this map of foreclosures:

The situation is terrible, but the story is worth reading and the visuals (e.g. a bigger view of that map) really illustrate the damage. Worth reading, especially if you have recently read some pieces, as I have, of good news coming out of Detroit.