Is Blogging Declining?

Recently Tyler Cowen at Marginal Revolution posted asking this question, and getting few answers. He posed it in terms of some people arguing that it has gotten boring and unexciting, but the real issue may be has it been superseded by Facebook and Twitter as the cutting edge source of news and discussion, just as blogging displaced the revered internet lists some years ago in this way, although some such as our own Michael Perelman's revered pen-l continue to truck along. A weird straw in the wind may be that reportedly media mavens are now not going to the Drudge Report (a good move in my view) and are looking at Facebook and Twitter instead, with the recent role of Twitter in reporting the events in Iran being a real straw in the wind. If so, this would seem to be part of a larger trend, the bottom end of which is the decline of the print newspapers, which some such as Brad Delong trumpet as a good thing.


I think blogging will continue as a source of important discussion, at least in economics, even if it loses some of its cutting edge quality as a source of new information. However, I would emphasize that a loss of the bottom end, the print newspapers, would be disastrous in all this. Why? I cite my own experience back on maxspeak in the case of reporting about the problems of Kurdish people in Harrisonburg, VA, who were being mistreated by the FBI and the courts. The maxspeak files unfortunately remain inaccessible, but I posted here an update on that about two years ago.

A crucial aspect of the original blog about this matter on maxspeak, which got picked up by lots of other blogs and went around the globe before even the mayor of Harrisonburg knew what was going on, was that there was a lot of blowback from other blogs (especially the widely read Volokh Conspiracy) to the effect of "How do we know you did not make this up, where is the link to a newspaper story?" In the end, we were able to find an obscure story buried deep in a an earlier edition of the local paper, the Harrisonburg Daily News-Record, which reported on the ongoing prosecution of the Kurds, but which was buried so deep and was so favorable to the prosecution side that no civil libertarians or pretty much anybody outside of the local Kurdish community and a few supporters among the local Mennonite population even noticed it. But in the end, that ability to link to some sort of hard copy source in a print newspaper was crucial for support, and this blog report did have really positive consequences. Maybe twittering will be able to get around this, but twittering and Facebook can be manipulated, and fraudulent reports can be manufactured. Ground verification will still be needed for breaking news.

Amazon’s Income – Who Gets to Tax It?

The following story got me curious as to how much Amazon earned in pretax income over the 2003 to 2005 period:

TOKYO (Reuters) – Japanese tax authorities have told an affiliated company of Amazon.com to pay some $119 million in taxes for unreported income in Japan over three years to the end of 2005, the Asahi newspaper reported on Sunday. But the company said the taxation was inappropriate and asked tax authorities in the United States and Japan to discuss whether the firm properly complied with the tax code in the bilateral tax treaty, the newspaper added. The affiliated company in Seattle, Amazon.com International Sales, has commissioned Amazon Japan and Amazon Japan Logistics to manage sales and logistic operations in Japan, while booking sales from its business in Japan back in the United States where it paid taxes, Asahi said. But the Tokyo Regional Taxation Bureau has judged that Amazon's operations in Japan should be considered as having a 'permanent establishment (PE)', meaning their income should be taxed in Japan under the U.S.-Japan tax treaty, it added. Officials from Amazon Japan were not immediately available for comments.

I learned two things from looking at their 10-K filings. Their most recent 10-K states:

In addition, in 2007, Japanese tax authorities assessed income tax, including penalties and interest, of approximately $119 million against one of our U.S. subsidiaries for the years 2003 through 2005. We believe that these claims are without merit and are disputing the assessment. Further proceedings on the assessment will be stayed during negotiations between U.S. and Japanese authorities over the double taxation issues the assessment raises

Someone at Reuters should consult the 10-K filings as Amazon is saying that the claims of the Japanese tax authorities have no merit. It also turns out that the cumulative pretax income over the 2003 to 2005 period for Amazon on a worldwide basis was $982 million. Does the Japanese tax authority really believe that over 20 percent of this income should be taxable in Japan?

Then again – national income tax authorities will likely be looking for all sorts of ways to increase taxable income from its residents include going after transfer pricing related issues with respect to multinational corporations. Stay tuned – as this could turn fun (or ugly depending on one’s perspective).

Brown and Withered Shoots

by the Sandwichman

Dean buries his lead... again:

"If we all worked five per cent fewer hours, then seven million more workers could have jobs at the same level of demand."

The result of that burial is that only one of the 49 comments (so far) even mentioned the shorter work time angle of Dean's "pay for play" idea.


Dean first mooted his idea for a shorter work time tax credit back in January and since then it has generated hardly any controversy. "Ho hum... create seven million jobs you say? Who cares?"

Now that the prospect of a second (or, more accurately third) stimulus package is looming, what are the chances that a shorter work time proposal will get wider discussion? The Sandwichman is not holding his breath.

Interview with Michael Perelman

Seth Sandrosky published a very nice interview with me.

http://www.truthout.org/070709E

Intellectual Property vs. Global Warming

The damage done by intellectual property goes well beyond the prevention of the downloading of music. Yesterday's story about a Goldman Sachs employee downloading proprietary information was not exactly an example of a violation of intellectual property laws, but rather a theft of trade secrets -- perhaps a distinction without a difference.

Below, is a story about Toyota, supposedly benign force in the green economy by virtue of the Prius. Here is another side of the story in which Toyota is using intellectual property to make competition difficult.

One might be sympathetic to Toyota if you were selling socks or toothpaste, but global warming seems to be too important to be gamed by such shenanigans.

Murphy, John. 2009. "Toyota Builds Thicket of Patents Around Hybrid To Block Competitors." Wall Street Journal (1 July): p. B 1.

The Obama administration's tough new fuel-efficiency standards could pose problems for some car makers, but Toyota Motor Corp. is hoping to benefit. The Japanese company is betting the rules will give an advantage to its expanding lineup of hybrid vehicles, and it also aims to boost revenue by licensing to other car makers the patents that protect its fuel-saving technologies. Since it started developing the gas-electric Prius more than a decade ago, Toyota has kept its attorneys just as busy as its engineers, meticulously filing for patents on more than 2,000 systems and components for its best-selling hybrid. Its third-generation Prius, which hit showrooms in May, accounts for about half of those patents alone. Toyota's goal: to make it difficult for other auto makers to develop their own hybrids without seeking licensing from Toyota.

Solastalgia

Solastalgia: "The solace that one’s environment provides, the desolation caused by that environment’s degradation and the pain or distress that occurs inside a person as a result."



"...The bastard inhabitant rapes the
blue shimmering hills
The spirit is quelled -
To be thrown on the garbage
heaps of the world as a
tribute to man's greatness
The mound of mutilated trees
is yellow and dune-like to
those who don't care
Not a heap of slaughter and
despair.
The motors roar and another
tree dies
The soul screams...
The land writhes...
Yet no one hears ...
The land is forgotten and forlorn.

Woodchipping by David Bowman
From "The West Wind and other verses for the Tasmanian Bush"
Published by The Tasmanian Wilderness Society

Fiscal Stimulus and Fast Acting Excedrin

While the latest nonsense from Eric Cantor gives me a headache, it is typical of what our Republican “leaders” have been saying:

Americans now agree that the stimulus package signed into law earlier this year has not achieved its intended effects, House Minority Whip Eric Cantor (R-Va.) claimed Monday.Pushing back against a possible second stimulus bill, Cantor asserted that the Obama administration-backed first $787 billion stimulus has not worked, and insisted that characterization has now become consensus.

The fact is that Federal purchases have yet to show any significant increase while state and local purchases have declined. Suppose I just took two Excedrin for my headache and haven’t even swallowed the water designed to chase them down and I noticed my headache is getting worse. Should I immediately conclude that the Excedrin will not work and it’s time to take some voodoo medicine? Our course not – but Cantor just might:

House Minority Whip Eric Cantor (R-Va.) said that Republicans would work with President Obama on a second stimulus bill, as long as it's like the tax cut-heavy package the GOP proposed earlier.

I thought we tried that in 2008 – and it hasn’t provided much stimulus even to date.

Save 3kg!

one ecosystem
in diversity
under the sun

- Gary Snyder

How Bureaucracy prepares for Social Collapse

1. Formulate comprehensive plan
2. Generate community enthusiasm
3. Get 'buy in' from industry/government/UN/Vatican etc
4. Use mass media to create public awareness
5. Form action committees and grant structures
6. Develop legislation and lobby parliaments
7. Secure corporate sponsorships
8. Execute pilot programs
9. Publish papers, present results at conferences
10.WATCH THE COLLAPSE!

Speaking of conferences, here's a talk from one entitled 'The New Emergency' in Dublin held a few weeks ago (June 11, 2009) Dimitry Orlov gave his presentation: 'Definancialisation, Deglobalisation, Relocalisation'. (html document).

"What I want to say" says Mr Orlove "can be summed up in simpler words: we all have to prepare for life without much money, where imported goods are scarce, and where people have to provide for their own needs, and those of their immediate neighbours."

"Many of the problems the world faces today are the eventual result of short-term measures taken last century."

-- Jay Forrester

Half a Million Green Chutes?

By the Sandwichman

Oh, you thought it was spelled s-h-o-o-t-s?

"We were on the road of things getting less bad in the jobs market, and that has been temporarily waylaid," said economist Ken Mayland, president of ClearView Economics."

Although employment was not as less bad in June as it was in May or April it was still much less bad than it was in January to March. On a year-to-year basis, even January to March was less bad than November, which was hideous.

Actually, things got worse.

Cutting through the statistical noise and economystical public relations spin, the June employment numbers were pretty much in line with the average monthly job loss since September 2008. About a half a million jobs have disappeared per month. The month-to-month fluctuations don't really mean much because the raw changes are overwhelmed by seasonal and birth/death model adjustments. Those adjustments are reasonable but far from ideal. And sometimes they inject noise in an effort to counter other noise.

Here's a raw number: employment fell by 295,000 in June, not seasonally adjusted and without the birth/death model adjustment. Even adding in the birth/death factor, employment fell by 110,000. The contrast with April and May is that in those months non-seasonally adjusted employment actually increased, albeit not as much as it usually would have at that time of the year.

Some History of Debt Colonialism

"Were I a Third World Leader in the dock, accused of getting my country hopelessly ensnared in debt, my defence would be that money was too cheap in the 1970s not to take advantage of the windfall...How was I, a debtor government, to foresee - much less control - the unprecedented upward swing of interest rates, due largely to demented military spending by the capitalist world super-power? I would further tell the jury: 'Every single Western expert who ever came to our country, especially those from the development banks, told us that to develop we had to industrialise. Was our country to remain for ever in peonage, exporting raw materials North so that others could transform them into finished goods and make all the money? Where were we supposed to get the capital for energy and for industrialisation if not by borrowing?" [1]

"...a large part of the cost of controlling inflation and introducing structural change in the North was borne by the South. Developing countries had to pay out more and more to service their debt whild receiving less and less for their exports. As these contrasting movements aggravated their financial difficulties, commercial banks decided to stop lending them new money, and the result was the international debt crisis of the 1980s." [2]

"Underdevelopment, far from constituting a state of backwardness prior to capitalism, is rather a consequence and a particular form of capitalist development known as dependent capitalism." [3]



[1] Susan George (1988) 'A Fate Worse than Debt', Pelican.

[2] The South Commission, The Challenge to the South, Oxford University Press

[3] Political Scientist Theotonio Dos Santos, 1969

Update on the Period of Financial Distress and a Bubble Mystery

Nearly a year ago (7/12/08) I posted here on "Falling from the Period of Financial Distress into Panic and Crash". In that I noted my own work on this concept, which Charles Kindleberger claimed in his Manias, Panics, and Crashes has been the most common pattern of speculative bubbles and crashes (37 out of 47 bubbles listed in Appendix B of his 2000 4th edition). What is involved is for there to be a gradual decline in prices initially after the peak of a bubble, with the crash coming sometime later. The paper I cited then on this by Mauro Gallegati, Antonio Palestrini, and me ("The period of financial distress in speculative markets: interacting heterogeneous agents and financial constraints," available on my website), has now been accepted for publication and is forthcoming in Macroeconomic Dynamics.

The three patterns that Kindleberger, drawing on the work of Hyman Minsky, argued we have generally seen are ones with such a period of distress as described above, ones that go up to a peak and then crash hard (which are what most theoretical models of crashes predict), and ones that go up to a peak and then decline gradually without a crash, but usually a bit faster than they went up. In the last few years I would argue we have seen all three patterns. The peak-followed-by-crash pattern looks like the oil market last year, which hit $147 per barrel last July only to fall hard to $32 per barrel by November. The more or less symmetric up-then-down-without a crash pattern looks like the US housing market, which, according to the Case-Shiller index, began rising in 1998, peaked in mid-2006, and has been going down since about the way it went up, with quite a ways to go.



Last year I had it in my mind that the global financial derivatives market smelled like a period of financial distress pattern, and now I think that it was indeed. The peak was in August 2007, when the problems in those markets first began to appear. The crash was the dramatic "Minsky moment" in mid-September 2008.

Which brings me to a fourth pattern that is somewhat mysterious, a variation on the pattern that does not have a crash. Whereas most such bubbles go down more rapidly than they went up, and some go down at about the same rate, there is one that has gone down at a much slower rate, indeed may still be in its decline. I am referring to housing in Japan. A graph of the pattern up to 2005 can be seen at http://en.wikipedia.org/wiki/File:EconomistHomePrices20050615.jpg. Around 2006 there was a brief cessation of the decline, but it has since resumed. In any case, that figure shows that the index rose in three years from 150 to its peak around 200, but took ten years thereafter to get back to 150, and it took 15 years from the peak in 1991 to get back down to the level it was in 1986, a clear asymmetry in the direction of going up much faster than it has gone down.

Now, according to private communication from Kindlebeger to me, this is the only major bubble in world history to exhibit such a pattern, and why it has done so remains a mystery. I saw a paper (still unpublished) some years ago that argued that it was Japanese banks manipulating the real estate market to keep the value of their most important collateral from declining too rapidly in the face of broader financial pressure that have been behind this pattern, but I have not seen that confirmed. That would suggest that the pattern has had deep implications for the broader Japanese economy. In any case, this curious decline in Japan remains a mystery (and some say that US housing prices could go down for a much longer time than many think, pointing to this strange case), but it may ultimately have to do with the Japanese wishing to preserve their broader economic system in the face of pressures to more deeply transform it.

Krugman Does Right In His Published Nobel Address

I have complained a lot here about the Nobel for Paul Krugman, both that others did not share it with him, and that he seemed not to mention those others (especially Avinash Dixit and Masahisa Fujita) in the Nobel address that he gave in Stockholm. However, the published version of the address has just appeared in the June issue of the AER. He does properly cite the relevant, key work by both of those individuals, so I note here that has done right in this case.

It's going to get very ugly, very soon

“Everything we measure is at the upper end of that range of uncertainty. So everything is worse than we were expecting it to be, and that's not surprising, because, science by its nature, is conservative. I think most of us know that, and it's going to get very ugly, very soon, and I want to say to you tonight, it's not the problem, it's actually just a symptom of the problem. We’re operating at 120% of the world’s capacity and planning to growth that a lot more."[1]

Paul Gilding's talk can be downloaded here. (mp3)

Mind the Aussie accent!


The great disruption. Paul Gilding. 14th June 2009
http://www.abc.net.au/rn/backgroundbriefing/stories/2009/2592909.htm#transcript

Fiscal Restraint from Those 50 Little Herbert Hoovers

I just checked with this source to see how state&local government purchases during 2009QI compared to where they were in 2008QIII and they declined by $78.8 billion in real terms over this 6 month period (while nominal spending fell from $1848.1 billion per year to $1784.0 billion per year, the GDP deflator rose by 0.83%). A post from Stephanie Kelton was my motivation.

But it isn't their fault. Tax revenues have fallen off a cliff, leaving states with a cumulative budget gap of more than $100 billion for fiscal '09. To deal with these shortfalls, states have laid off or furloughed thousands of employees, raised taxes and fees, and slashed spending on education and other social programs - some, many times over. It was supposed to balance their '09 budgets. But it wasn't nearly enough. As it turns out, state officials were far too optimistic about the '09 revenue picture, and they are scrambling to deal with widening shortfalls before the end of the fiscal year (which, by the way, is tomorrow for all but a few states). At this stage in the game, there are only a couple of ways for states to balance their '09 budgets (it's too late for more tax hikes and spending cuts). Most are expected to do one of two things: (1) tap rainy day funds or (2) use federal stimulus money.

Dr. Kelton argues for even a greater commitment to Federal revenue sharing or “state and local fiscal relief”. She has a point.