Part of what interested me in the article was the time requirement to find the best price. Economists tell us that prices are supposed to be signals indicating how utility can be produced with the least opportunity costs. In this sense, exploring alternative prices can be seen as a productive activity. Here, the problem is that business is creating an artificial need to muck around to find the best price.
Parents take eggs out of the refrigerator to hide them on Easter, because children enjoy looking for them. This article suggests that the stores are wasting their own energies manipulating prices in order that they can make potential customers chase around for the best deal.
Thursday, January 31, 2008
Tuesday, January 29, 2008
Time in a capitalist economy
The American Economic Review has a fascinating article that inadvertently points to a relatively insecure, but significant negative consequence of capitalism. The authors find: "Specifically, households in their late forties pay, on average, 4 percent more for identical goods than households in their late sixties. This is consistent with the fact that market labor hours, earnings, and time demands from children all decline after middle age. Additionally, we document that higher-income households pay higher prices than lower-income households, and dualworker couples pay higher prices than singleworker couples."
Aguiar, Mark and Erik Hurst. 2007. "Life-Cycle Prices and Production." American Economic Review, 97: 5 (December): pp. 1533-59.
Normally, we hear that higher prices are a form of rationing scarce goods, but the scarcity here is a scarcity of customers. Stores try to draw customers in with low prices in order to make more profits, often using loss leaders, so they can charge more for less inelastic goods. Even assuming that the average price is somehow "fair" or "efficient," this strategy costs people time, jumping back and forth to get the best deal.
This time cost falls outside of the typical economic measures, along with wait time on the telephone, standing around in a store until a clerk comes your way, long commutes, and interminable security checks before an uncomfortable and often late plane ride.
Aguiar, Mark and Erik Hurst. 2007. "Life-Cycle Prices and Production." American Economic Review, 97: 5 (December): pp. 1533-59.
Normally, we hear that higher prices are a form of rationing scarce goods, but the scarcity here is a scarcity of customers. Stores try to draw customers in with low prices in order to make more profits, often using loss leaders, so they can charge more for less inelastic goods. Even assuming that the average price is somehow "fair" or "efficient," this strategy costs people time, jumping back and forth to get the best deal.
This time cost falls outside of the typical economic measures, along with wait time on the telephone, standing around in a store until a clerk comes your way, long commutes, and interminable security checks before an uncomfortable and often late plane ride.
Does Steven Landsburg Believe in Ricardian Equivalence or Not?
The LA Times featured a debate between Jason Furman and Steven Landburg where Jason opened up with a nice discussion of how Lord Keynes might have viewed the current prospect of a US recession and the possible policy reactions. Steven began his reply with suggesting that most people don’t know who Lord Keynes was and then decided to dismiss much of what we economists teach in macroeconomics with what seemed to be a contradictory counterview. Steven starts with:
Hmm – sounds like Robert Barro espousing his Ricardian Equivalence proposition that any change in taxes not accompanied by a permanent change in government spending will be seen as only transitional. As such, the tax cut will be 100% saved and not increase consumption at all. Of course, transitional increases in government consumption could raise aggregate demand even in a Ricardian Equivalence world. Ah, but then that’s what some Democrats have proposed to do.
But then Steven sums up with this:
What was his objection? That people don’t behave in the way the Barro-Ricardo model of consumption predicts? That somehow the idle production from the types of recessions that Keynes wrote about is a better use of resources than the consumption from induced by tax cuts? Or is Steven saying such recessions do not occur in the first place? After all, he sees the problem not as an insufficiency of aggregate demand but as the need to let “unhealthy industries” adjust.
First, when the government mails you a check, it's essentially making you a loan. That's because they're sending you money that they'll have to recapture with higher taxes in the future.
Hmm – sounds like Robert Barro espousing his Ricardian Equivalence proposition that any change in taxes not accompanied by a permanent change in government spending will be seen as only transitional. As such, the tax cut will be 100% saved and not increase consumption at all. Of course, transitional increases in government consumption could raise aggregate demand even in a Ricardian Equivalence world. Ah, but then that’s what some Democrats have proposed to do.
But then Steven sums up with this:
In sum, you (along with the president and the majority of Congress) are asking us to:
shower people with loans to encourage reckless spending;
somehow expect that the loan recipients will feel both richer and not richer at the same time (so that they'll spend more without working less), and;
do all this in the name of delaying the sometimes painful adjustments that are going to have to get made a year down the line in any event.
I object.
What was his objection? That people don’t behave in the way the Barro-Ricardo model of consumption predicts? That somehow the idle production from the types of recessions that Keynes wrote about is a better use of resources than the consumption from induced by tax cuts? Or is Steven saying such recessions do not occur in the first place? After all, he sees the problem not as an insufficiency of aggregate demand but as the need to let “unhealthy industries” adjust.
Monday, January 28, 2008
Thoughts on Credit in the United States Economy
I'm far from an expert on credit, so I'm posting this, hoping that some of you may contribute to my education.
My understanding is that most families avoided borrowing for consumer goods, except for pianos and encyclopedias, which were considered moral consumption. Then in the 1920s, the automobile industry, facing a stagnating market, encouraged consumers to purchase automobiles on credit.
The Depression and the unavailability of consumer goods during the war left most families in the United States without much of a credit burden. Over time, an increasing share of consumption depended on credit, the absence of which would have limited economic growth.
After the early 1970s, when the great burst of inequality began, the dependence on credit as an engine of economic growth became more extreme.
My understanding is that most families avoided borrowing for consumer goods, except for pianos and encyclopedias, which were considered moral consumption. Then in the 1920s, the automobile industry, facing a stagnating market, encouraged consumers to purchase automobiles on credit.
The Depression and the unavailability of consumer goods during the war left most families in the United States without much of a credit burden. Over time, an increasing share of consumption depended on credit, the absence of which would have limited economic growth.
After the early 1970s, when the great burst of inequality began, the dependence on credit as an engine of economic growth became more extreme.
Regulatory Neglect and the Subprime Mortgage Crisis
Until a recent Washington Post op-ed piece, I was unaware that the federal government, in particular the Treasury Department's Office of the Comptroller of the Currency, had put an end to state regulations that might have prevented many of the subprime mortgage abuses.
Bagley, Nicholas. 2008. "Crashing the Subprime Party: How the Feds Stopped the States From Averting the Lending Mess." Slate (24 January). [op ed from the Washington Post]
"To combat this surge in predatory lending, several state legislatures decided to stanch the flow of easy credit to subprime lenders. In 2002, Georgia became the first state to tell players in the secondary mortgage market that they might be on the hook if they purchased loans deemed "predatory" under state law. This worked a dramatic change. Before, downstream owners of mortgage-backed securities might see the value of their investments drop, but that was generally the worst that could happen. Under the Georgia Fair Lending Act, however, players in the secondary mortgage market could face serious liability if they so much as touched a predatory loan. The AARP, which drafted the model legislation that formed the basis for the Georgia law, explained that imposing liability on downstream owners would "reduce significantly the amount of credit that is available to lenders who are not willing to ensure that the loans they finance are made in accordance with the law"."
That's when the feds came in. Some of the biggest players in the secondary mortgage market are national banks, and the states' efforts to curb predatory lending clashed with the banks' fervent desire to keep the market in subprime loans rolling. And so the national banks turned to the Treasury Department's Office of the Comptroller of the Currency. The OCC is a somewhat conflicted agency: While its primary regulatory responsibility is ensuring the safety and soundness of the national bank system, almost its entire budget comes from fees it imposes on the banks—meaning that its funding depends on keeping them happy. It was unsurprising, then, that the OCC leapt to attention when the national banks asked it to pre-empt the Georgia-like subprime laws on the grounds that they conflicted with federal banking law.
Bagley, Nicholas. 2008. "Crashing the Subprime Party: How the Feds Stopped the States From Averting the Lending Mess." Slate (24 January). [op ed from the Washington Post]
"To combat this surge in predatory lending, several state legislatures decided to stanch the flow of easy credit to subprime lenders. In 2002, Georgia became the first state to tell players in the secondary mortgage market that they might be on the hook if they purchased loans deemed "predatory" under state law. This worked a dramatic change. Before, downstream owners of mortgage-backed securities might see the value of their investments drop, but that was generally the worst that could happen. Under the Georgia Fair Lending Act, however, players in the secondary mortgage market could face serious liability if they so much as touched a predatory loan. The AARP, which drafted the model legislation that formed the basis for the Georgia law, explained that imposing liability on downstream owners would "reduce significantly the amount of credit that is available to lenders who are not willing to ensure that the loans they finance are made in accordance with the law"."
That's when the feds came in. Some of the biggest players in the secondary mortgage market are national banks, and the states' efforts to curb predatory lending clashed with the banks' fervent desire to keep the market in subprime loans rolling. And so the national banks turned to the Treasury Department's Office of the Comptroller of the Currency. The OCC is a somewhat conflicted agency: While its primary regulatory responsibility is ensuring the safety and soundness of the national bank system, almost its entire budget comes from fees it imposes on the banks—meaning that its funding depends on keeping them happy. It was unsurprising, then, that the OCC leapt to attention when the national banks asked it to pre-empt the Georgia-like subprime laws on the grounds that they conflicted with federal banking law.
China and US Macroeconomic Policies: More Expenditure Switching and Less Expenditure Adjusting Please
As we worry about a US recession, BusinessWeek says the Chinese are hoping for one:
I had tried to summarize an interesting economist blog discussion a while back with a tribute to the Tinbergen condition and Brad DeLong got it right with this discussion of China’s policy conflict:
Tinbergen might look at the problem this way (assuming a 2-nation model with China and US and the two nations). The US is worried about a lack of aggregate demand as well as a current account deficit, while China is worried about excessive aggregate demand. Now China’s current account surplus in a 2-nation model is essentially the same thing as our current account deficit. We have three policy tools: (1) US domestic demand; (2) Chinese domestic demand; and (3) a host of expenditure-switching policies. China is employing tight domestic demand policies, while the US is considering expansionary domestic demand policies. Both will tend to widen the current account deficit as China’s exports to the US will grow, while our exports to China will fall. While China will lament our expansionary domestic demand policies (at least according to Business Week), some American policy makers might be hoping to export more to China and would therefore be cheering against their attempts to control Chinese inflation. But what about policy option (3)? Of course, some American policy makers are advocating tariffs and quotas against Chinese goods as a form of expenditure-switching policy. Those of us who still belong to the free trade bandwagon on the other hand are hoping for more yuan appreciation – which was Brad’s (2). But to sacrifice full employment in the US so as to satisfy what the Chinese wish to do in regards their own macroeconomies strikes me as very short-sighted.
In China, some people might be looking forward to a U.S. slowdown. That's because an American recession could do what Beijing has not been able to accomplish -- namely, cool off China's overheated economy, which in 2007 grew at its fastest pace in 13 years.
I had tried to summarize an interesting economist blog discussion a while back with a tribute to the Tinbergen condition and Brad DeLong got it right with this discussion of China’s policy conflict:
This policy conflict could end in one of several ways: (1) A sudden large burst of inflation in China, as the PBoC finds that it can no longer maintain both the current exchange-rate peg and a stable effective money stock, and sacrifices the second to the first. (2) A sudden large rise in the value of the yuan, as the PBoC finds that it can no longer maintain both the current exchange-rate peg and a stable effective money stock, and sacrifices the first to the second. (3) Slow and gradual versions of (1) and (2) as holders of nominal yuan assets in the first case and nominal dollar assets in the second let their wealth be gradually but substantially be eroded without ever taking steps to cut their losses. (4) Something more unpleasant.
Tinbergen might look at the problem this way (assuming a 2-nation model with China and US and the two nations). The US is worried about a lack of aggregate demand as well as a current account deficit, while China is worried about excessive aggregate demand. Now China’s current account surplus in a 2-nation model is essentially the same thing as our current account deficit. We have three policy tools: (1) US domestic demand; (2) Chinese domestic demand; and (3) a host of expenditure-switching policies. China is employing tight domestic demand policies, while the US is considering expansionary domestic demand policies. Both will tend to widen the current account deficit as China’s exports to the US will grow, while our exports to China will fall. While China will lament our expansionary domestic demand policies (at least according to Business Week), some American policy makers might be hoping to export more to China and would therefore be cheering against their attempts to control Chinese inflation. But what about policy option (3)? Of course, some American policy makers are advocating tariffs and quotas against Chinese goods as a form of expenditure-switching policy. Those of us who still belong to the free trade bandwagon on the other hand are hoping for more yuan appreciation – which was Brad’s (2). But to sacrifice full employment in the US so as to satisfy what the Chinese wish to do in regards their own macroeconomies strikes me as very short-sighted.
Sunday, January 27, 2008
Jonah Goldberg's "Liberal Fascism": Some Big Problems
Jonah Goldberg is not wrong about everything in his mostly annoying book, _Liberal Fascism_. Thus, the term "fascism" has been too readily thrown about by many on the left; there were racist eugenicists among American progressives, with Hitler particularly copying the forced sterilization laws first pushed in the US by Woodrow Wilson, and indeed Mussolini was originally a socialist, and Italian fascism in particular had some socialist elements about it. That said, the book is crawling with numerous mislabelings and errors. I note only two here, at least one of which has not been pointed out so far by others.
That one involves the Church and corporatism. Goldberg identifies fascism as being against traditional Christianity. However, the central core economic doctrine of fascism was corporatism. The unequivocal origin of corporatism was encyclicals of the Roman Catholic Church in the late nineteenth century. I will also point out that a core concept held by all the fascist parties was to oppose democracy. Goldberg likes to label the American progressives as "fascist," (including Richard Ely, co-founder of the American Econmic Association), but none ever opposed democracy, and I am unaware of any current US politician who might be labeled a "liberal" who does either (or any who ever was who did). On the basis of these two points, Goldberg's book amounts to largely a partisan screed.
Barkley Rosser
That one involves the Church and corporatism. Goldberg identifies fascism as being against traditional Christianity. However, the central core economic doctrine of fascism was corporatism. The unequivocal origin of corporatism was encyclicals of the Roman Catholic Church in the late nineteenth century. I will also point out that a core concept held by all the fascist parties was to oppose democracy. Goldberg likes to label the American progressives as "fascist," (including Richard Ely, co-founder of the American Econmic Association), but none ever opposed democracy, and I am unaware of any current US politician who might be labeled a "liberal" who does either (or any who ever was who did). On the basis of these two points, Goldberg's book amounts to largely a partisan screed.
Barkley Rosser
Saturday, January 26, 2008
Bank Failures in Second Life
I have never seen how Second Life works, but I am fascinated by the game's connections with the real economy -- often replicating some of its worst aspects. For example, players hire people in China to make play money for them & then sell the play money for real dollars -- a relatively obvious production of surplus value.
The Wall Street Journal just published an article about bank frauds and failures within the game.
Here are some extracts from the article:
Sidel, Robin. 2008. "Cheer Up, Ben: Your Economy Isn't As Bad as This One in the Make-Believe World of 'Second Life." Wall Street Journal (23 January): p. A 1.http://online.wsj.com/article/SB120104351064608025.html?mod=todays_us_page_one
"Yesterday, the San Francisco company that runs the popular fantasy game pulled the plug on about a dozen pretend financial institutions that were funded with actual money from some of the 12 million registered users of Second Life. Linden Lab said the move was triggered by complaints that some of the virtual banks had reneged on promises to pay high returns on customer deposits."
"The banks of Second Life were operated by other players, who enticed deposits by offering interest rates. While some banks paid interest as promised, others used depositors' money for unsuccessful Second Life land and gambling deals. Under its new banking rules, Second Life says only chartered banks will be allowed -- though it isn't clear any real chartered banks will operate in the virtual play world."
"The shutdown has caused a real-life bank run by Second Life depositors. Though some players managed to get their Linden dollars out, others are finding that they can no longer make withdrawals from the make-believe ATMs. As a result, they can't exchange their Linden-dollar deposits back into real dollars. Linden officials won't say how much money has been lost, but a run on another virtual bank in August may have cost Second Life depositors an estimated $750,000 in actual money."
"Steve Smith, who runs BCX bank under the avatar name Travis Ristow, yesterday said depositors -- who are owed a total of $20,000 -- will be able to get their money back next week. The bank, which had promised to pay depositors more than 200% in annual interest, is now allowing only small withdrawals."
"When virtual environments first started, they were viewed as libertarian dreams with no interference," says Behnam Dayanim, a lawyer who specializes in Internet law at Paul, Hastings, Janofsky & Walker LLP in Washington. "As companies that sponsor these environments become more accountable to investors or regulators, they are starting to encounter real-world limitations"."
"The banking crisis at Second Life surfaced during the summer, when Linden banned gambling on the site, citing "conflicting gambling regulations around the world." That caused a run on Ginko Financial, a Second Life bank that had invested heavily in the virtual world's gambling operations. Ginko capped withdrawals, and ultimately issued bonds to customers instead. The bank went out of business in August."
"Linden essentially acknowledges that the financial services being offered in its virtual society have evolved to the point that they need to be regulated in the real world. From now on, "proof of an applicable government registration statement or financial institution charter" will be required of anyone collecting deposits in Second Life, according to Linden. The company insists it "isn't, and can't start acting as, a banking regulator." "If this is real money, there is an argument that you need to follow real law," says Benjamin Duranske, a lawyer who runs the Second Life Bar Association and is writing a book on virtual law."
The Wall Street Journal just published an article about bank frauds and failures within the game.
Here are some extracts from the article:
Sidel, Robin. 2008. "Cheer Up, Ben: Your Economy Isn't As Bad as This One in the Make-Believe World of 'Second Life." Wall Street Journal (23 January): p. A 1.http://online.wsj.com/article/SB120104351064608025.html?mod=todays_us_page_one
"Yesterday, the San Francisco company that runs the popular fantasy game pulled the plug on about a dozen pretend financial institutions that were funded with actual money from some of the 12 million registered users of Second Life. Linden Lab said the move was triggered by complaints that some of the virtual banks had reneged on promises to pay high returns on customer deposits."
"The banks of Second Life were operated by other players, who enticed deposits by offering interest rates. While some banks paid interest as promised, others used depositors' money for unsuccessful Second Life land and gambling deals. Under its new banking rules, Second Life says only chartered banks will be allowed -- though it isn't clear any real chartered banks will operate in the virtual play world."
"The shutdown has caused a real-life bank run by Second Life depositors. Though some players managed to get their Linden dollars out, others are finding that they can no longer make withdrawals from the make-believe ATMs. As a result, they can't exchange their Linden-dollar deposits back into real dollars. Linden officials won't say how much money has been lost, but a run on another virtual bank in August may have cost Second Life depositors an estimated $750,000 in actual money."
"Steve Smith, who runs BCX bank under the avatar name Travis Ristow, yesterday said depositors -- who are owed a total of $20,000 -- will be able to get their money back next week. The bank, which had promised to pay depositors more than 200% in annual interest, is now allowing only small withdrawals."
"When virtual environments first started, they were viewed as libertarian dreams with no interference," says Behnam Dayanim, a lawyer who specializes in Internet law at Paul, Hastings, Janofsky & Walker LLP in Washington. "As companies that sponsor these environments become more accountable to investors or regulators, they are starting to encounter real-world limitations"."
"The banking crisis at Second Life surfaced during the summer, when Linden banned gambling on the site, citing "conflicting gambling regulations around the world." That caused a run on Ginko Financial, a Second Life bank that had invested heavily in the virtual world's gambling operations. Ginko capped withdrawals, and ultimately issued bonds to customers instead. The bank went out of business in August."
"Linden essentially acknowledges that the financial services being offered in its virtual society have evolved to the point that they need to be regulated in the real world. From now on, "proof of an applicable government registration statement or financial institution charter" will be required of anyone collecting deposits in Second Life, according to Linden. The company insists it "isn't, and can't start acting as, a banking regulator." "If this is real money, there is an argument that you need to follow real law," says Benjamin Duranske, a lawyer who runs the Second Life Bar Association and is writing a book on virtual law."
Andy Carnegie and Bill Gates
My recent post about the two faces of Bill Gates brought some comparison with Carnegie. There is an interesting difference between the two. Gates is a recent convert to philanthropy. Carnegie, however, began at an early age. He decided that he would make a fortune and use it to contribute to a better world.
Carnegie came from a family of radical Chartists. Philanthropy was his way of being radical. So, he felt justified in screwing anybody -- even sanctioning the bloody battle of Homestead to promote his philanthropy.
209: "... there are higher uses for surplus wealth than adding petty sums to the earnings of the masses. Trifling sums given to each every week or month -- and the sums would be trifling indeed -- would be frittered away, nine times out of 10, in things which pertain to the body and not to the spirit; upon richer food and drink, better clothing, more extravagant living, which are beneficial neither too rich or poor."
Carnegie, Andrew. 1895. "The Best Use of Wealth." in Miscellaneous Writings of Andrew Carnegie, 2 vols. Burton J. Hendrick, ed. (Garden City, NY: Doubleday, Doran & Company, 1933): pp. 203-18.
Carnegie came from a family of radical Chartists. Philanthropy was his way of being radical. So, he felt justified in screwing anybody -- even sanctioning the bloody battle of Homestead to promote his philanthropy.
209: "... there are higher uses for surplus wealth than adding petty sums to the earnings of the masses. Trifling sums given to each every week or month -- and the sums would be trifling indeed -- would be frittered away, nine times out of 10, in things which pertain to the body and not to the spirit; upon richer food and drink, better clothing, more extravagant living, which are beneficial neither too rich or poor."
Carnegie, Andrew. 1895. "The Best Use of Wealth." in Miscellaneous Writings of Andrew Carnegie, 2 vols. Burton J. Hendrick, ed. (Garden City, NY: Doubleday, Doran & Company, 1933): pp. 203-18.
Friday, January 25, 2008
Bushist Ideology Runs Rampant Over Any Sense Whatsoever
The front page of the Washington Post today reports that the current US Transportation Secretary, Susan Peters, has thrown up impossible barriers to allowing the US government to provide $900 million out of an estimated $5 billion to extend a metro line from Washington through now-unserved Tyson's Corner to the area's main airport, Dulles International, far west of town. This project has been in the planning for 40 years, is supported by local politicians in all jurisdictions of both parties, plus local business people, would help the environment, reduce congestion, and end the absurdity of Washington being the only major capital city in the world from which an international traveler cannot get to downtown from its main airport by public transport. As it is, there is a monopoly on transport for the Washington Flyer, and one hears announcements over the loudspeakers asking people to report to the police anybody daring to offer one a cab or other kind of ride out of Dulles not from Washington Flyer, the only "approved" transport from the airport.
This decision is totally and utterly ideological, with Peters being an advocate of paid toll roads, automobile uber alles. Those involved in the negotiations have complained of "goal posts constantly being moved" with the various local governments having jumped through endless hoops to satisfy the DOT. This is one more sign of how much damage Bush can still do to US society and economy in the year he still has to remain in office as president, and given his appointments to the Supreme Court, for decades to come. (I am not against congestion tolls as are in place in London and Singapore, but those places provide good metro transport from their airports as well)
This decision is totally and utterly ideological, with Peters being an advocate of paid toll roads, automobile uber alles. Those involved in the negotiations have complained of "goal posts constantly being moved" with the various local governments having jumped through endless hoops to satisfy the DOT. This is one more sign of how much damage Bush can still do to US society and economy in the year he still has to remain in office as president, and given his appointments to the Supreme Court, for decades to come. (I am not against congestion tolls as are in place in London and Singapore, but those places provide good metro transport from their airports as well)
Thursday, January 24, 2008
The Two Faces of Bill Gates
Gates just gave a speech advocating a kindler, gentler capitalism, posing a good brother to the poor. At the same time, Microsoft is embarking on the most far reaching monitoring of workers ever contrived in which wireless sensors could read “heart rate, galvanic skin response, EMG, brain signals, respiration rate, body temperature, movement facial movements, facial expressions and blood pressure”, the application states. The system could also “automatically detect frustration or stress in the user” and "offer and provide assistance accordingly".
Guth, Robert A. 2008. "Bill Gates Issues Call for Kinder Capitalism: Famously Competitive, Billionaire Now Urges Business to Aid the Poor." Wall Street Journal (24 January): p. A 1.
"In a speech at the World Economic Forum in Davos, Switzerland, the software tycoon plans to call for a "creative capitalism" that uses market forces to address poor-country needs that he feels are being ignored. "We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well," Mr. Gates will tell world leaders at the forum, according to a copy of the speech seen by The Wall Street Journal. Mr. Gates isn't abandoning his belief in capitalism as the best economic system. But in an interview with the Journal last week at his Microsoft office in Redmond, Wash., Mr. Gates said that he has grown impatient with the shortcomings of capitalism"."
Mostrous, Alexi and David Brown. 2008. "Microsoft Seeks Patent for Office 'Spy' Software." The Times (London) (16 January).
http://technology.timesonline.co.uk/tol/news/tech_and_web/article3193480.ece
"Microsoft is developing Big Brother-style software capable of remotely monitoring a worker’s productivity, physical wellbeing and competence. The Times has seen a patent application filed by the company for a computer system that links workers to their computers via wireless sensors that measure their metabolism. The system would allow managers to monitor employees’ performance by measuring their heart rate, body temperature, movement, facial expression and blood pressure. Unions said they fear that employees could be dismissed on the basis of a computer’s assessment of their physiological state."
"Microsoft submitted a patent application in the US for a “unique monitoring system” that could link workers to their computers. Wireless sensors could read “heart rate, galvanic skin response, EMG, brain signals, respiration rate, body temperature, movement facial movements, facial expressions and blood pressure”, the application states. The system could also “automatically detect frustration or stress in the user” and "offer and provide assistance accordingly". Physical changes to an employee would be matched to an individual psychological profile based on a worker’s weight, age and health. If the system picked up an increase in heart rate or facial expressions suggestive of stress or frustration, it would tell management that he needed help."
Guth, Robert A. 2008. "Bill Gates Issues Call for Kinder Capitalism: Famously Competitive, Billionaire Now Urges Business to Aid the Poor." Wall Street Journal (24 January): p. A 1.
"In a speech at the World Economic Forum in Davos, Switzerland, the software tycoon plans to call for a "creative capitalism" that uses market forces to address poor-country needs that he feels are being ignored. "We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well," Mr. Gates will tell world leaders at the forum, according to a copy of the speech seen by The Wall Street Journal. Mr. Gates isn't abandoning his belief in capitalism as the best economic system. But in an interview with the Journal last week at his Microsoft office in Redmond, Wash., Mr. Gates said that he has grown impatient with the shortcomings of capitalism"."
Mostrous, Alexi and David Brown. 2008. "Microsoft Seeks Patent for Office 'Spy' Software." The Times (London) (16 January).
http://technology.timesonline.co.uk/tol/news/tech_and_web/article3193480.ece
"Microsoft is developing Big Brother-style software capable of remotely monitoring a worker’s productivity, physical wellbeing and competence. The Times has seen a patent application filed by the company for a computer system that links workers to their computers via wireless sensors that measure their metabolism. The system would allow managers to monitor employees’ performance by measuring their heart rate, body temperature, movement, facial expression and blood pressure. Unions said they fear that employees could be dismissed on the basis of a computer’s assessment of their physiological state."
"Microsoft submitted a patent application in the US for a “unique monitoring system” that could link workers to their computers. Wireless sensors could read “heart rate, galvanic skin response, EMG, brain signals, respiration rate, body temperature, movement facial movements, facial expressions and blood pressure”, the application states. The system could also “automatically detect frustration or stress in the user” and "offer and provide assistance accordingly". Physical changes to an employee would be matched to an individual psychological profile based on a worker’s weight, age and health. If the system picked up an increase in heart rate or facial expressions suggestive of stress or frustration, it would tell management that he needed help."
Wednesday, January 23, 2008
Why to Tax the Rich: How the Rich Get Richer
The Ken Griffin interview got me to think about some earlier contributions about his thinking.
A Pennsylvania businessman wrote a book with a revealing title.
Farquhar, A. B. in collaboration with Samuel Crowther. 1922. The First Million is the Hardest: An Autobiography (Garden City, NJ: Doubleday): p. 19.
Andrew Carnegie's rumination throws light on this subject:
2 & 15: "wealth has been produced as if by magic, and fallen largely to the captains of industry, greatly to their own surprise ....The community created the millionaire's wealth. While he slept it grew as fast as when he was awake."
Carnegie, Andrew. 1906. "Wealth." in Problems of To-day: Wealth, Labor, Socialism (Garden City, NY: Doubleday, Doran, 1933): pp. 1-39.
A Pennsylvania businessman wrote a book with a revealing title.
Farquhar, A. B. in collaboration with Samuel Crowther. 1922. The First Million is the Hardest: An Autobiography (Garden City, NJ: Doubleday): p. 19.
Andrew Carnegie's rumination throws light on this subject:
2 & 15: "wealth has been produced as if by magic, and fallen largely to the captains of industry, greatly to their own surprise ....The community created the millionaire's wealth. While he slept it grew as fast as when he was awake."
Carnegie, Andrew. 1906. "Wealth." in Problems of To-day: Wealth, Labor, Socialism (Garden City, NY: Doubleday, Doran, 1933): pp. 1-39.
The Latest Recommendation from the Washingtoon Ethnic Dining Guide
Anybody interested in a spoof on Tyler Cowen and his Ethnic Dining Guide of Washington, link to: The Latest Recommendation from the Washingtoon Ethnic Dining Guide (.pdf)
Barkley
Barkley
Fiscal Stimulus: Little Bang for the Buck
CNN reports on the politics of fiscal stimulus:
As the politicians iron out their differences, let’s think about this from an economic perspective.
Those who preach the Life Cycle Model (LCM) would tell us that that one-time rebates will be mostly saved with very little aggregate demand stimulus. In other words, a big impact on the current deficit but little impact on consumption demand just when we likely need it.
There is a possible rebuttal to this LCM view that goes like this. Lower income households are likely liquidity constrained so a tax rebate is sort of like the loan they could not get from the bank. So if we target this temporary tax relief to lower income types, then maybe we will get a strong bang for the buck.
But back to the politics where it has been standard operating procedure for the GOP to shift taxes onto the young by giving most of the tax breaks to rich older dudes. And these rich older dudes are not likely to be so liquidity constrained, which means the LCM view likely is valid if we let the GOP have its way. But isn’t this the real problem with the use of fiscal policy – partisan agendas tend to trump what most reasonable economists would consider the most effective means of handling our economic issues.
A one-time tax rebate is at the heart of an economic stimulus package being negotiated by House leaders and Treasury Secretary Henry Paulson on Wednesday … The tax rebate would be similar to the $300 to $600 checks that were sent out in the summer of 2001.While there is bipartisan agreement that a stimulus package should be moved quickly, Democrats and Republicans still disagree on who should receive the rebates.
As the politicians iron out their differences, let’s think about this from an economic perspective.
Those who preach the Life Cycle Model (LCM) would tell us that that one-time rebates will be mostly saved with very little aggregate demand stimulus. In other words, a big impact on the current deficit but little impact on consumption demand just when we likely need it.
There is a possible rebuttal to this LCM view that goes like this. Lower income households are likely liquidity constrained so a tax rebate is sort of like the loan they could not get from the bank. So if we target this temporary tax relief to lower income types, then maybe we will get a strong bang for the buck.
But back to the politics where it has been standard operating procedure for the GOP to shift taxes onto the young by giving most of the tax breaks to rich older dudes. And these rich older dudes are not likely to be so liquidity constrained, which means the LCM view likely is valid if we let the GOP have its way. But isn’t this the real problem with the use of fiscal policy – partisan agendas tend to trump what most reasonable economists would consider the most effective means of handling our economic issues.
Bush and Crew Lied 953 Times About Iraq
This is probably old news to most, but it is very precise and documented. At http://juancole.com today one can find a report on the Center for Public Integrity that documents 953 specific cases of outright lies by Bush, Cheney, Rumsfeld, and Rice about Iraq during the two years following 9/11/01. Some of these lies are simply outrageous and clearly fully conscious that they are lies by those uttering them when they did. Let the record stand.
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