80/20 Day: July 15, 1848, Vilfredo Pareto joined the human race

July 15, 2014

Happy 80/20 Day!

Italian economist, engineer and political activist Vilfredo Pareto was born on July 15, 1848, in Paris, where his father had fled due to political difficulties.

Pareto should be more famous, for his explanation of the 80/20 rule, and for his contribution to making better things, the Pareto chart.  Many economic texts ignore his work almost completely.  Quality management texts ignore his life, too — generally mentioning the principles they borrow, but offering no explanation.

Vilifred Pareto, Wikipedia image

Vilfredo Pareto, Wikipedia image

His contributions, as accounted at Wikipedia:

A few economic rules are based on his work:

And now you, dear reader, having just skimmed the surface of the pool of information on Vilfredo Pareto, know more about the man than 99.99% of the rest of the people on the planet.  Welcome to the tip-top 0.01%.

Resources:


What happens when “austerity” budget cutting blows up on the GOP? See Kansas

July 8, 2014

Kansas finds itself in a big, big pickle.

Republican Governor Sam Brownback managed to get the legislature to make massive tax cuts, claiming it would boost jobs in Kansas and stimulate the Kansas economy, thereby  paying for themselves.

Instead the Kansas economy is failing. Massive cuts have gutted Kansas’s once-revered public education system, and deeper cuts will be necessary to keep the state government afloat, unless there is some change in tax policy, or a massive, miraculous influx of business beyond what even the Koch Bros. could arrange.

Gov. Brownback is running for re-election, and finds himself behind in popularity in Kansas — behind even President Barack Obama.

Wow.

Full story at Vox, “Kansas was supposed to be the GOP’s tax-cut paradise, but now can barely pay its bills.”

And of course, there is comedy of the kind that you couldn’t make up:  Brownback blames Obama.

Oy.

Chart from Vox, showing what happened to Kansas's surplus revenues, promised to balloon with the tax cuts Gov. Brownback asked for, and got.

Chart from Vox, showing what happened to Kansas’s surplus revenues, promised to balloon with the tax cuts Gov. Brownback asked for, and got.

Turns out Americans, and especially the citizens of Kansas, want government that works.  They’d like taxes to be low, but low taxes won’t make voters happy when the roads are bad and the kids’ schools are crappy.

Wonkblog's chart showing job creation in Kansas is terrible, also.

Wonkblog’s chart showing job creation in Kansas is lagging, also, contrary to the GOP promises when tax cuts were instituted.

Government’s first job is to govern; just governments are established among men to secure human rights, old Tom Jefferson wrote.  Life, liberty and pursuit of happiness make a snappy line in a patriotic reading on July 4, but when the crowd drives home, they don’t want to be dodging potholes, and they don’t want their kids to complain from the back seat of the car that they don’t know what the Declaration of Independence is or what it says, “and who is Jefferson — I thought it was just a street in Dallas?”  When government fails to do basic jobs, voters may not be happy.

Will false advertising be able to bail Sam Brownback out?  Watch Kansas.

More:


Insta-Millard: In the new Gilded Age, the rich do not share the wealth

May 6, 2014

Have the GOP and the Über-wealthy set up the whole world for another Great Depression?  Should we expect a World War to follow?

Or, do we have time to make our societies more egalitarian, and more anti-poverty, and more stable?  Graphic from BusinessWeek:

Super wealthy have concentrated the wealth of the world in their personal control.  Capitalism run riot? Graphic from BusinessWeek

Super wealthy have concentrated the wealth of the world in their personal control. Capitalism run riot? Graphic from BusinessWeek

Opportunity to move up, economically, is stifled when so much wealth blocks access to the top economic rungs.

These figures come out of a clever analysis by economists Emmanuel Saez of the University of California at Berkeley and Gabriel Zucman of the London School of Economics, who is a visiting professor at Berkeley. The Internal Revenue Service asks about income, not wealth, which is the market value of real estate, stocks, bonds, and other assets. Saez and Zucman were able to deduce wealth by exploiting IRS data going back to when the federal income tax was instituted in 1913. They figured out how much property different strata of society owned by looking at the income that was generated by that property, such as dividends and capital gains. To simplify, if a family reported $1 million in rental income one year and the market rate of return on rental properties was 10 percent, then Saez and Zucman concluded that the family must have owned property worth $10 million.

The message for strivers is that if you want to be very, very rich, start out very rich. The threshold for being in the top 0.1 percent of tax filers in 2012 was wealth of about $20 million. To be in the top 0.01 percent—that’s the 1 Percent club’s 1 Percent club—required net worth of $100 million. Of course, even $100 million is a pittance to Bill Gates, whose net worth, according to the Bloomberg Billionaires Index, is nearly 800 times that.

It will require great creativity to work our way out of this maldistribution without some sort of catastrophe.

More: 

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Can America afford to be great anymore? Many say, “no”

May 1, 2014

A friend posted this on Facebook:

“As of today our total national debt is roughly $17 1/2 trillion. Of that number nearly $12 1/2 trillion is publicly owed. Can you even get your mind around it?”

To which I responded:

As a portion of GDP, our national debt was much greater in 1946.

So, the Congress did what it had to do.

Congress borrowed money to educate millions of returning veterans, and to subsidize their homes. The greatest education aid and housing aid programs in history, both in the GI Bill.

Poster honoring the Marshall Plan, to rebuild Europe after World War II -- on borrowed money.

Poster honoring the Marshall Plan, to rebuild Europe after World War II — on borrowed money.

Congress borrowed money to give it away to our allies in World War II, to rebuild their industrial capabilities, on the assumption that an ally with a strong industrial base and good economy is stronger, and can come to our aid if and when we need it.

Congress borrowed money to give it away to our enemies in World War II, to rebuild their industrial capabilities, because a nation with a good economy and health trade tends to stay out of war. Those nations became our allies.

Congress borrowed to build the greatest road system in history, connecting nearly every corner of America — under the pretense that such a road system would allow us to move troops and armaments quickly from coast to coast in event of a defense emergency.

Congress borrowed to finance space exploration, to go to the Moonbecause, you know, it’s hard.

Congress borrowed to build a library in every county in America, and fill it with books — so that if there were ever nuclear war, everybody who survived would be close to the information necessary to rebuild civilization.

Congress borrowed to build the world’s greatest air transportation system, with airports for sport, business and commercial aviation all over the place.

Congress borrowed to build sewer systems and water systems, doubling down on public health service spending, to prevent disease and make health people.

Funny things happened. Our economy boomed. The world economy boomed. Millions of new jobs were created, filled by people who paid whopping taxes. And the debt sorta melted away.
___________

When I hear people complain about our national debt, and how we as Americans must stop spending money, I hear them saying, “We cannot afford to be great anymore. Our time as the world’s leading economy and leading democracy has passed. It will be a lot cheaper for the nation to curl into a national fetal position, and then taxes won’t be so high.”

In 1946 — and in 1948, 1950, 1952, 1956, 1960, 1962, 1964, 1968, and other election years — there were plenty of Americans who said “we can’t afford the Marshall Plan; we can’t afford foreign aid; we can’t afford to build all these roads; we can’t afford to go to the Moon; we can’t afford to pay for college (or other schooling) for all these veterans/students.”

What would America look like, had leaders listened to those people, and then NOT borrowed the money to build America?  What would the world look like?

I don’t think George Washington spent 8 years at war to curl into the fetal position and give up.

Am I wrong?

The future of an America that is afraid to be great, even if we need to borrow money to do it? (Image from Brogan Knight)

The future of an America that is afraid to be great, even if we need to borrow money to do it? (Image from Brogan Knight)


Insta-Millard: Greenspan explains why and how Fed is accountable

April 30, 2014

A group of people, including a lot of the acolytes of Ron Paul, claim the Federal Reserve Bank system is a renegade organization, unaccountable to anyone.

Alan Greenspan, by the late, very great David Levine

Alan Greenspan, by the late, very great David Levine

Turns out that Ron Paul actually had the guts to ask Fed Chair Alan Greenspan about that.  Greenspan’s answer is worth watching, and hearing.

It was on CSPAN-2, so you probably didn’t see it.  Not the sort of thing Fox likes to run over, and over, and over again, to distraction.

Still looking for  video of Greenspan explaining the annual Fed audits that Ron Paul claims don’t exist . . .

 


Hey, Congress! Fix the roads!

April 24, 2014

Just a crazy idea, I know: But do you think Congress could pass a bill to help the states fix potholes in federal highways, make the thousands of decrepit bridges, safe, and put a few thousands of people to work?

Economist wrote:

ONLY the drunk, they say, drive in a straight line in Chicago. The sober zigzag to avoid falling into the city’s axle-breaking potholes. This year the craters, caused by continual freezing and thawing, are worse than ever, and the spring thaw has brought three times the usual number of complaints from citizens.

As winter retreats, holes in roads and budgets are being revealed—especially in midwestern states, which were hit hard by the polar vortex. Those states with money have made emergency appropriations for repairs; those without will have to cut summer programmes. This means not mowing the grass in parks or picking up litter. It also means delaying resurfacing of highways or fixing guard rails, and putting off capital spending.

Looking after America’s roads is a persistent headache. Although $91 billion is spent on them every year, that is nowhere near enough to keep the country’s 4.1m miles (6.6m km) of public roadways in good nick. The Federal Highway Administration estimates that $170 billion in capital investment is needed every year. Last year a report from a civil-engineering group said that 32% of America’s major roads were in poor or mediocre condition. Main roads through cities were in worst shape: almost half the miles travelled over urban interstates in 2013 were a bumpy ride. Ray LaHood, a former transport secretary, thinks the roads are probably in the worst shape they have ever been.

Is it too big a stretch to go back to the hopes in 2009, that we might get a jobs bill to fix this stuff?  Yeah, it’s 2014 — and the roads, and the American people, need a jobs bill more than ever.

Photo from The Atlantic

Photo from The Atlantic

More:


A lot of people reading Piketty — the right ones? Enough to matter?

April 23, 2014

An article in the Washington Post calls Thomas Piketty’s book, Capital in the Twenty-first Century, a “runaway best seller.”

Have you read it?

Thomas Piketty - Professor of Economics, Paris School of Economics; photo from The Next Deal

Thomas Piketty – Professor of Economics, Paris School of Economics; photo from The Next Deal

Are you aware of the contents?

Are the right people reading it — especially GOP Members of Congress whose minds need to be changed?  Or, are enough people reading it to make a difference in American politics?

There are presses cranking it out in the United States, India and Britain, and the book is in at least its fourth run. Even though the book was already a hit in its native France, it’s now taking off among English readers around the world, said Donnelly. She expects that sales in China, Hong Kong and Japan will also soon follow.

Piketty, already widely cited for his work on income inequality, has clearly touched a nerve. The book argues that the underlying mechanisms of capitalism tend towards massive inequality. Piketty argues that the era between 1930 and 1975 — often hailed for the way in which wealth was broadly shared — was actually a departure from the norm. That period of economic growth, he says, was the result of unusual circumstances like World War II, a global depression and the government’s actions in the aftermath of those events: strong policies raising taxes and increasing regulation. But now, with many of those policies rolled back, societies are reverting back to extreme inequality.

What do you think, read it or not?

More:


Great benefits to America from having MORE immigrants – 5 key points from the Dallas Fed

April 19, 2014

Did you know?

Interesting fact sheet from the Dallas Branch of the Federal Reserve Bank system.

All material below this point is directly quoted from the .pdf fact sheet; it is here in text format to aid in indexing, and quoting.

Immigration Get the Facts header

An Economic Overview

As U.S. immigration reform moves forward in 2013, a variety of facts and figures continue to be presented around immigrants and their current and potential contributions to the U.S. economy. This fact sheet—the first in our series on immigrants and the economy—provides key data points on why immigrants are vital to the U.S. economy and why comprehensive immigration reform is necessary for future U.S. competitiveness.

Five Reasons
Why the U.S. Economy Needs Immigrants
FACTS

1.  Immigrants are more likely to be entrepreneurial and to start new businesses, which, in turn, create jobs for U.S.-born workers.

  • Immigrants started 28 percent of all new U.S. businesses in 2011, employing 1 in 10 U.S. workers. 1
  • Immigrants represent 18 percent of small business owners in the U.S.—exceeding their share of the overall population (13 percent)—and are more likely than those born in the U.S. to start a small business. Immigrant-owned small businesses employed an estimated 4.7 million people and generated an estimated $776 billion in receipts in 2007. More small business owners are from Mexico than any other country.2
  • Over the past two decades, immigrants made up 30 percent of the growth in small business creation.3
  • Immigrants founded 18 percent of 2010 Fortune 500 companies, creating jobs for 3.6 million people. When including immigrants and their children, the number of Fortune 500 companies with immigrant roots jumps to 40 percent, employing more than 10 million people.4

2.  Both high-skilled and low-skilled immigrant labor creates additional jobs across the U.S. economy.  Immigration FRSB Population box

  • With immigration reform, newly authorized immigrant workers would produce enough new consumer spending to support 750,000 to 900,000 jobs.5
  • Every additional foreign-born student who graduates in science, technology, engineering, or mathematics (STEM) and remains in the U.S. creates an estimated 2.62 American jobs.
  • Every low-skilled, non-agricultural, temporary worker who comes to the U.S. to fill a job that may otherwise be left open creates an average of 4.64 U.S. jobs. 6  These low-skilled jobs are the necessary backbone to support higher-skilled positions.
  • Passage of the DREAM Act would add $329 billion to the U.S. economy and create 1.4 million new jobs by 2030.7

3.  Immigrants boost tax revenue, enlarge the taxpayer base and help to keep down the price of goods.  Immigration FRSB DYK box1

  • On average, immigrants, including the undocumented, pay nearly $1,800 more in taxes than they receive in benefits.8
  • Households headed by undocumented immigrants paid $11.2 billion in state and local taxes in 2010. That included $1.2 billion in personal income taxes, $1.6 billion in property taxes and $8.4 billion in sales taxes.9
  • Immigrants lower the price of products used by highly educated consumers by 0.4 percent of GDP and for less-educated consumers by 0.3 percent.10

4.  As baby boomers retire, immigrants will increasingly be critical for continued economic growth and for ensuring a steady flow of new workers.  Immigration FRSB DYK box2

  • Without immigrants, the U.S. will not have enough new workers to support retirees. Seventy years ago, there were 150 workers for every 20 seniors; 10 years ago, there were 100 workers per 20 seniors.  By 2050, there will be only 56 workers for every 20 seniors. The U.S. needs new taxpayers to help fund Social Security and Medicare and new workers to fill retirees’ positions and provide health care services.11
  • Current levels of immigration will temper the aging of the U.S. population over the next two decades, slowing the increase in the old-age dependency ratio by more than one-quarter.12
  • Nearly 65 percent of Latino immigrants in California who stayed more than 30 years are homeowners, making them a critical pool to buy homes as baby boomers downsize.13

5.  The majority of immigrants in the U.S. today are from Latin America, representing a huge potential economic opportunity due to the region’s burgeoning economic standing.

  • Immigrants are a vital link with their home countries and offer new prospects for the U.S. to capitalize on Latin America’s economic expansion, which saw 3 percent growth in 2012—double the 1.5 percent growth in the United States. In addition, 11 of the 20 U.S. free-trade agreements in force are with Latin American countries. Immigrant-owned small businesses have a unique opportunity to connect to the global marketplace.
  • Over 7 percent of immigrant firms export their goods and services, whereas just over 4 percent of non-immigrant firms export.14
  • Mexico boasts the second largest economy in Latin America and grew at a rate of 4.0 percent in 2012, with a projected 3.5 percent growth in 2013.15  With 29 percent of all immigrants and 58 percent of undocumented immigrants coming from Mexico,16 this demographic represents a human gateway to one of Latin America’s fastest-growing economies.

This fact sheet is a product of the AS/COA Hispanic Integration and Immigration Initiative, which advances the integration of immigrants and promotes positive dialogue around the economic contributions of immigrants and Latinos overall across the United States. It was produced by Jason Marczak, AS/COA Director of Policy, in collaboration with Leani García. For more information, visit AS/COA Online at:  http://www.as-coa.org.  For media inquiries or to speak with an expert on this topic, please contact Adriana LaRotta in our communications office at:   alarotta@as-coa.org

Population:  The 40 million immigrants in the U.S. today—of which 29 percent are from Mexico— represent 13 percent of the U.S. population.

In addition, the 53 million Latinos in the U.S. account for about 17 percent of the population and 10 percent of voters in the 2012 election.

However, the demographics of new immigrants have changed in recent years, with Asians having overtaken Latinos as the largest group of new immigrants.

Did you know?
Google, Procter & Gamble, Kraft, Colgate Palmolive, Pfizer, and eBay are among companies with immigrant founders.

Did you know?
Hispanic immigrants help revitalize communities across the U.S., including Ottumwa, Iowa, a 30,000-person city southeast of Des Moines, which, according to The Wall Street Journal, saw its taxable property value double in the last 10 years after making a concerted push to bring in new immigrants who opened up shops to replace shuttered storefronts.

Endnotes

1.  Robert H. Fairlie, “Open for Business: How Immigrants are Driving Small Business Creation in the United States,” Partnership for a New American Economy, August 2011. http://www.renewoureconomy.org/sites/all/themes/pnae/openforbusiness.pdf

2.  Fiscal Policy Institute, “Immigrant Small Business Owners: A Significant and Growing Part of the Economy,” June 2012. http://fiscalpolicy.org/immigrant-small-business-owners-FPI-20120614.pdf

3.  Ibid.

4.  Partnership for a New American Economy, “The ‘New American’ Fortune 500,” June 2011.  http://www.renewoureconomy.org/sites/all/themes/pnae/img/new-american-fortune-500-june-2011.pdf

5.  Raúl Hinojosa-Ojeda, “Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform,” Center for American Progress, January 2010.

6.  Madeline Zavodny, “Immigration and American Jobs,” American Enterprise Institute for Public Policy Research and the Partnership for a New American Economy, December 2011. http://www.renewoureconomy.org/sites/all/themes/pnae/img/NAE_Im-AmerJobs.pdf

7.  Juan Carlos Guzmán and Raúl C. Jara, “The Economic Benefits of Passing the Dream Act,” Center for American Progress and Partnership for a New American Economy, October 2012.  http://www.americanprogress.org/issues/immigration/report/2012/09/30/39567/the-economic-benefits-of-passing-the-dream-act/

8.  James P. Smith & Barry Edmonston, eds., The New Americans: Economic, Demographic, and Fiscal Effects of Immigration (Washington, DC: National Research Council, National Academy of Sciences Press, 1997), 220, 353.

9.  Immigration Policy Center, “Unauthorized Immigrants Pay Taxes, Too,” April 2011.  http://www.immigrationpolicy.org/just-facts/unauthorized-immigrants-pay-taxes-too

10.  Patricia Cortes, “The Effect of Low-Skilled Immigration on US Prices: Evidence from CPI Data,” 381-422.

11.  Immigration Policy Center, “The Future of a Generation: How New Americans Will Help Suppport Retiring Baby Boomers,” February 2012. http://www.immigrationpolicy.org/just-facts/future-generation-how-new-americans-will-help-support-retiring-baby-boomers

12.  Ibid.

13.  Dowell Myers, Immigrants and Boomers: Forging a New Social Contract for America (New York: Russell Sage Foundation, 2007).

14.  Robert H. Fairlie, “Immigrant Entrepreneurs and Small Business Owners, and their Access to Financial Capital,” Small Business Administration, May 2012.

15.  The World Bank, “Mexico Overview,” 2013. http://www.worldbank.org/en/country/mexico/overview

16.  Pew Hispanic Center, “A Nation of Immigrants: A Portrait of the 40 Million, Including 11 Million Unauthorized,” January 2013. http://www.pewhispanic.org/files/2013/01/statistical_portrait_final_jan_29.pdf

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Historian David McCullough: What is the value of education?

April 17, 2014

Branch banks of the Federal Reserve work hard to provide economic education; alas, in the era of state standards requiring “teach to the test,” a lot of this stuff goes unused.

What is the value of education?  The Dallas Branch of the Fed had historian David McCullough in for consultations; they asked him on video, and here’s his response.

“We must be an educated people. We cannot be a productive, original, innovative society if we aren’t educated.”

For more information, visit the Dallas Fed’s website.

6,645


Dramatic, graphic difference between Labor and Capital

March 28, 2014

How do Labor and Capital differ?  They differ in two key ways:  First, in the burden they carry; and second, in the way they carry that burden.

Illustrations from a book I would definitely like:  Monash University Publishing, Drawing the Line, Chapter 6. ‘All the World Over’ The Transnational World of Australian Radical and Labour Cartoonists:

Figure 6.5: Anon, ‘The Difference between Labor and Capital’, Life, c. 1887.  Courtesy Huntingdon Library, California.  From Monash University Publishing, Drawing the Line, Chapter 6. ‘All the World Over’ The Transnational World of Australian Radical and Labour Cartoonists

Figure 6.5: Anon, ‘The Difference between Labor and Capital’, Life, c. 1887. Courtesy Huntingdon Library, California. From Monash University Publishing, Drawing the Line, Chapter 6. ‘All the World Over’ The Transnational World of Australian Radical and Labour Cartoonists

 

This view of Capital and Labor was not unique to the anonymous source; from the same year:

Figure 6.4: Phil May, ‘Poverty and Wealth; It all depends on the position of the bundle’, Bulletin, c. 1887.  Courtesy State Library of New South Wales.

Figure 6.4: Phil May, ‘Poverty and Wealth; It all depends on the position of the bundle’, Bulletin, c. 1887. Courtesy State Library of New South Wales.

Capitalists appear to have all eaten well, well enough in the eye of the public that a fat man with a vest was quick, cartoonist shorthand for “capitalist.”  If it did not apply in every case — see John D. Rockefeller, Andrew Carnegie, and the younger Cornelius Vanderbilt, for example — it applied often enough that “the fat guy” was instantly recognized as the capitalist, the factory owner, the boss.

Click over to that Monash University site; there are a score of great cartoons in that one chapter.


Can dog whistle politics keep the GOP in power, or is America too smart to stay enthralled?

March 2, 2014

Especially if, by some grotesque misunderstanding, you don’t think you’re in the 47% Mitt Romney wrote off as undeserving of a vote and a life, you ought to listen to Ian Haney López describe what’s going on in GOP and conservative politics.

From Bill Moyers.

Transcript here.

Cover of Ian Haney Lopez's Dog Whistle Politics, How coded racial appeals reinvented racism and wrecked the middle class; Oxford Books

Cover of Ian Haney Lopez’s Dog Whistle Politics, How coded racial appeals reinvented racism and wrecked the middle class; Oxford Books

Moyers’s website describes this interview:

Ian Haney López on the Dog Whistle Politics of Race

February 28, 2014

What do Cadillac-driving “welfare queens,” a “food stamp president” and the “lazy, dependent and entitled” 47 percent tell us about post-racial America? They’re all examples of a type of coded racism that this week’s guest, Ian Haney López, writes about in his new book, Dog Whistle Politics.

Haney López is an expert in how racism has evolved in America since the civil rights era. Over the past 50 years, politicians have mastered the use of dog whistles – code words that turn Americans against each other while turning the country over to plutocrats. This political tactic, says Haney López, is “the dark magic” by which middle-class voters have been seduced to vote against their own economic interests.

“It comes out of a desire to win votes. And in that sense… It’s racism as a strategy. It’s cold, it’s calculating, it’s considered,” Haney López tells Bill, “it’s the decision to achieve one’s own ends, here winning votes, by stirring racial animosity.”

Ian Haney López, a professor of law at the University of California, Berkeley, is a senior fellow at the policy analysis and advocacy group, Demos.

Producer: Candace White. Segment Producer: Robert Booth. Editor: Sikay Tang.

Does revealing the existence of dog whistles help kill the cheap trick?  My fear is that those who hear the whistle clearly understand that they are responding to a racist call, and that is why they respond.  Exposing the racism, or exposing the subtle use of racism, only makes the politicians who use the whistle more appealing to those voter segments, and those policies more appealing to those voters (though they would not admit it).

If you think dog whistles don’t exist, consider the hot controversies surrounding education spending, vouchers to kill public schools, immigration reform needed to boost our economy, or health care reform.  Consider also the birther movement.

After hearing Mr. Haney López’s interview, what do you think?

More: 


No, the Fed has NOT discouraged saving

February 19, 2014

Fed can’t explain it, but, no, low interest rates appear not to have discouraged savings.  Tea Party catastrophe mongers won’t change their claims, though, I’ll bet.

Do they even look at the facts?

Also:  No, the Fed is not “flooding the nation with increased money supply.”

According to Rex Nutting at MarketWatch:

According to Rex Nutting at MarketWatch: “The Fed is not flooding the economy with money. The growth of the money supply has actually slowed since the adoption of QE3. Yes, the Fed has conjured about $1 trillion in the past year to buy super-safe Treasury and mortgage-backed bonds from the private sector in a bid to force investors to put their money into riskier investments that will help the economy grow a bit faster.

Nutting’s column at MarketWatch is worth the read just for the links he provides to documents that explain what the Fed does and how the economy works — documents that appear beyond the reading and perhaps beyond the ken of far too many critics of the Fed and actions we need to take to get to robust economy.

(Why, yes, Nutting is a veteran of the Daily Utah Chronicle and Utah’s journalism program.  Why do you ask?)


January 5 is Fair Deal Day; thanks to Harry Truman

January 5, 2014

Front page of the New York Times on January 6, 1949, with news of President Truman's State of the Union message.  Oddly, via Conservapedia

Front page of the New York Times on January 6, 1949, with news of President Truman’s State of the Union message. Oddly, via Conservapedia

President Harry Truman delivered his State of the Union address to Congress on January 5, 1949, the first after he’d won election to the presidency in his own right (he succeeded to the presidency on the death of Franklin Roosevelt on April 12, 1945, remember).

Campaign button from the 1948 presidential campaign; on January 5, 1949, Truman presented a more detailed program backing the slogan, in his State of the Union Address

Campaign button from the 1948 presidential campaign; on January 5, 1949, Truman presented a more detailed program backing the slogan, in his State of the Union Address

Not a barn-burner of a speech, but an important one.  He appealed to history and the Square Deal of Teddy Roosevelt and the New Deal of Franklin Roosevelt; he appealed to Americans’ innate patriotism, and he appealed to a nation grateful to the soldiers who had defended freedom and democracy in World War II.  Truman called for a Fair Deal for all Americans, because they’d earned it, and it was the American thing to do.

This was barely eight weeks since Truman pulled out a stunning re-election win against the “do-nothing Congress.”  In many, many ways, the problems of 1949 look stunningly familiar to us today.  He spoke of the successes of the country in World War II, and the successes in business and finance since the war, and he said:

Reinforced by these policies, our private enterprise system has reached new heights of production. Since the boom year of 1929, while our population has increased by only 20 percent, our agricultural production has increased by 45 percent, and our industrial production has increased by 75 percent. We are turning out far more goods and more wealth per worker than we have ever done before.

This progress has confounded the gloomy prophets–at home and abroad who predicted the downfall of American capitalism. The people of the United States, going their own way, confident in their own powers, have achieved the greatest prosperity the world has even seen.

But, great as our progress has been, we still have a long way to go.

As we look around the country, many of our shortcomings stand out in bold relief.

We are suffering from excessively high prices.

Our production is still not large enough to satisfy our demands.

Our minimum wages are far too low.

Small business is losing ground to growing monopoly.

Our farmers still face an uncertain future. And too many of them lack the benefits of our modern civilization.

Some of our natural resources are still being wasted.

We are acutely short of electric power, although the means for developing such power are abundant.

Five million families are still living in slums and firetraps. Three million families share their homes with others.

Our health is far behind the progress of medical science. Proper medical care is so expensive that it is out of the reach of the great majority of our citizens.

Our schools, in many localities, are utterly inadequate.

Our democratic ideals are often thwarted by prejudice and intolerance.

Each of these shortcomings is also an opportunity-an opportunity for the Congress and the President to work for the good of the people.

Hello, boy howdy!  Prices aren’t so stifling as they were considered to be, then, and inflation is far from the plate of problems we face.

But the rest?

Perhaps we should look back to see what Congress, and the nation, did in 1949, as instructive to us in 2014.  Did Americans get a Fair Deal then?  Do they deserve one now?

From “Today in History” at American Memory, the Library of Congress:

On January 5, 1949, President Harry Truman used his State of the Union address to recommend measures including national health insurance, raising the minimum wage, strengthening the position of organized labor, and guaranteeing the civil rights of all Americans. Referencing the popular “New Deal” programs of his predecessor, Franklin Delano Roosevelt, Truman styled his reform package the “Fair Deal.”

A few months earlier the president’s career seemed over.  Political pundits of the time agreed that Truman needed a miracle to win his 1948 bid for reelection against the popular Republican governor from New York, Thomas E. Dewey. Adding to the incumbent’s troubles, a revived Progressive Party attempted to attract left-leaning Democrats, while segregationist “Dixiecrats” broke with the Democrats to run South Carolina Governor Strom Thurmond for president. Responding to the competition, Truman embarked on a campaign tour by train, delivering “whistle-stop” speeches to thousands of voters in small communities throughout the United States. This tactic proved effective, and President Truman was reelected by a slim margin. Still, the Chicago Daily Tribune was so confident of the president’s defeat it went to press with the November 3, 1948 headline “DEWEY DEFEATS TRUMAN.”

Truman had begun to push for Fair Deal-type legislation following the end of World War II in 1945. However, Congress resisted his plans for the extension of federal social and economic programs. Concerned about the transition from a wartime to a peacetime economy, lawmakers ultimately accepted the role of government in maintaining full employment and stabilizing the economy, but rejected Truman’s proposals for national health insurance, educational aid, and federally-supported housing programs. Even after Truman’s successful 1948 campaign, the mandate for expanded social programs remained weak. The minimum wage rose and social security coverage broadened, but few Fair Deal programs were enacted.

On July 26, 1948, President Harry Truman issued two executive orders. One instituted fair employment practices in the civilian agencies of the federal government; the other provided for “equality of treatment and opportunity in the armed services without regard to race, color, religion, or national origin.”

Gib Crockett cartoon on Truman's Fair Deal, 1949.  May still be under copyright

Gib Crockett cartoon on Truman’s Fair Deal, 1949. May still be under copyright

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December 31, 2013: Bright Idea Day, anniversary of Edison’s light bulb

December 30, 2013

Between Christmas and New Year’s Day, here at Millard Fillmore’s Bathtub we celebrate a variety of historically holy days.  December 31, by tradition, is Bright Idea Day, the anniversary of the day Thomas Edison demonstrated for the public a working light bulb in 1879.

100,000 people gather in Times Square, New York City, tonight, and millions more around the world, in festivities for the new year made possible by the work of Thomas Alva Edison.

Here it is, the invention that stole sleep from our grasp, made clubbing possible, and launched 50,000 cartoons about ideas:

The light bulb Thomas Edison demonstrated on December 31, 1879, at Menlo Park, New Jersey - Wikimedia image

The light bulb Thomas Edison demonstrated on December 31, 1879, at Menlo Park, New Jersey – Wikimedia image (GFDL)

The light bulb. It’s an incandescent bulb.

It wasn’t the first bulb. Edison a few months earlier devised a bulb that worked with a platinum filament. Platinum was too expensive for mass production, though — and Edison wanted mass production. So, with the cadre of great assistants at his Menlo Park laboratories, he struggled to find a good, inexpensive filament that would provide adequate life for the bulb. By late December 1879 they had settled on carbon filament.

Edison invited investors and the public to see the bulb demonstrated, on December 31, 1879.

Thomas Edison in 1878, the year before he demonstrated a workable electric light bulb.  Library of Congress image

Thomas Edison in 1878, the year before he demonstrated a workable electric light bulb. CREDIT: Thomas Edison, head-and-shoulders portrait, facing left, 1880. Prints and Photographs Division, Library of Congress. Reproduction number LC-USZ62-98067

Edison’s successful bulb indicated changes in science, technology, invention, intellectual property and finance well beyond its use of electricity. For example:

  • Edison’s Menlo Park, New Jersey, offices and laboratory were financed with earlier successful inventions. It was a hive of inventive activity aimed to make practical inventions from advances in science. Edison was all about selling inventions and rights to manufacture devices. He always had an eye on the profit potential. His improvements on the telegraph would found his laboratory he thought, and he expected to sell the device to Western Union for $5,000 to $7,000. Instead of offering it to them at a price, however, he asked Western Union to bid on it. They bid $10,000, which Edison gratefully accepted, along with the lesson that he might do better letting the marketplace establish the price for his inventions. Other inventive labs followed Edison’s example, such as the famous Bell Labs, but few equalled his success, or had as much fun doing it.  (Economics teachers:  Need an example of the marketplace in action?)
  • While Edison had some financial weight to invest in the quest for a workable electric light, he also got financial support, $30,000 worth, from some of the finance giants of the day, including J. P. Morgan and the Vanderbilts who established the Edison Light Company.
  • Edison didn’t invent the light bulb — but his improvements on it made it commercial. “In addressing the question ‘Who invented the incandescent lamp?’ historians Robert Friedel and Paul Israel list 22 inventors of incandescent lamps prior to Joseph Wilson Swan and Thomas Edison. They conclude that Edison’s version was able to outstrip the others because of a combination of three factors: an effective incandescent material, a higher vacuum than others were able to achieve (by use of the Sprengel pump) and a high resistance lamp that made power distribution from a centralized source economically viable.”
  • Edison’s financial and business leadership acumen is partly attested to by the continuance of his organizations, today — General Electric, one of the world’s most successful companies over the past 40 years, traces its origins to Edison.

Look around yourself this evening, and you can find a score of ways that Edison’s invention and its descendants affect your life. One of the more musing effects is in cartooning, however. Today a glowing lightbulb is universally accepted as a nonverbal symbol for ideas and inventions. (See Mark Parisi’s series of lightbulb cartoons, “Off the Mark.”)

Even with modern, electricity-saving bulbs, the cartoon shorthand hangs on, as in this Mitra Farmand cartoon.

Fusilli has an idea, Mitra Farmand, Fuffernutter

Brilliant cartoon from Mitra Farmand, Fuffernutter

Or see this wonderful animation, a video advertisement for United Airlines, by Joanna Quinn for Fallon — almost every frame has the symbolic lightbulb in it.

Other resources:

Patent drawing for Thomas Edison's successful electric lamp.  Library of Congress

Thomas Edison’s electric lamp patent drawing and claim for the incandescent light bulb CREDIT: “New Jersey–The Wizard of Electricity–Thomas A. Edison’s System of Electric Illumination,” 1880. Prints and Photographs Division, Library of Congress. Reproduction Number LC-USZ62-97960.

Yeah, this is mostly an encore post.

Even More, in 2012 and 2013:


Insta-Millard Pundit, economics edition: Adam Smith was a bleeding heart liberal

December 21, 2013

In a new book, author Jack Russell Weinstein argues that we should pay more attention to Adam Smith’s first book, The Theory of Moral Sentiments,  and not allow Smith’s humanitarian pleas for good community be hijacked by libertarians, conservatives or liberals.

Adam Smith’s Pluralism, Jack Russell Weinstein, Yale University Press, 360 pages

Adam Smith, updated. Illustration by Michal Hogue.

Adam Smith, updated. Illustration by Michal Hogue.

A review of the book explains further, at American Conservative, “Adam Smith, Communitarian:

Weinstein builds upon Smithian harmony, explaining that while life is not always commercial, it is always communal. Community, in turn, derives its lifeblood from “imagination,” because imagination creates the capacity for sympathy. Unlike Kant and other Enlightenment thinkers, Smith “presumes human difference” as a necessary and inherent aspect of civilization, rejecting the Kantian ideal of “noncontextual normativity.” Smith recognized that cultural, temporal, and social differences shaped norms and values, making it impossible to create a single, all-inclusive norm of human behavior. This is why sympathy is so important. It offers a means that is natural to the human condition—our desire to commiserate with our fellow man—to bridge the gap between our differences.

Smith believed that “political society is not derived from a social contract,” according to Weinstein. Instead, society is a natural expression of what it means to be human. The state of nature for Smith is one of community, and the ultimate questions related to human society are questions of morality and virtue, not economics and politics. Thus, a broad, morally robust education rooted in a particular community is essential to forming sympathetic individuals. While Smith did not idealize the role of education—it could not completely eliminate human selfishness and vanity—he believed it had the power to “direct vanity to proper objects” and to “convert competing passions into a harmonious character.”

[The blog post's headline should be read with more than a hint of sarcasm; hate to have to explain that.]

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