We'll make Millions!!

Mungowitz doesn't know it, but he and I are locked in a brutal citations battle.

It's brutal because, on a lifetime basis, he's KILLING me (they don't call him Killer Grease Mungowitz for nothing, people).

As of today, he strides the earth like a colossus with 7315 citations while I slink around with 5872.

However, slowly but don't call me Shirley, I'm catching up! in the last 5 years it's 1772 for me and a mere 1766 for KGM. Even better, for 2017 its 314 for me and 284 for him (as of today).

Let's say in a best case scenario, I keep up the 30 cites per year lead. I'm in a 1433 cite hole, so it will take almost 50 years to catch him.

People, I MIGHT NOT LIVE THAT LONG!!


So without further ado, let me present my idea, the amazing Citation Counting Tombstone!

Front of the stone contains an electronic display of your cites, alone or in comparison to any rivals you desire. Inside the stone a device running a python script to scrape the relevant info from Google Scholar (oh and a cell / wifi connection).  Back of the stone is a solar panel to power the various gizmos.

Given my intimate knowledge of the arrogance and insecurity of academics, this will sell like the proverbial hotcakes. Looking for a couple angel investors to finance a first round.

Phone call for @PMARCA!!!!! We can even put the word "blockchain" in the prospectus to drive the crowd into a frenzy.

Just another Brick in the wall

Over on Cherokee Gothic yesterday, I wrote about a factory in Russia that was paying its workers in bricks.

I claimed that bricks were not a very good medium of exchange.

It was pointed out to me on social media by Alex Tabarrok and Larry White that James Buchanan had mooted exactly a brick standard for money!

As Larry put it,  "Bank reserves wouldn't be in the vault, they would BE the vault."

There's a discussion of Buchananian monetary musings in Chapter 2 of a recent book put out by Cato. The chapter is written by Hugh Rockoff.

Buchanan also discussed a labor standard, where you could pedal a stationary bike to get cash from an ATM.

In both cases he wanted the monetary system to be "the employer of last resort".

Quantitative Easing

The nice thing is that this raises questions about what "pretend money" would be.




All money is pretend money.

But P-Kroog thinks we need more.  A lot more.

Great Moments in Science: Cold Cash

Money makes people feel cold.  No, really, it's "science."

The Cold Heart: Reminders of Money Cause Feelings of Physical Coldness 

Leonie Reutner, Jochim Hansen & Rainer Greifeneder
 Social Psychological and Personality Science, forthcoming

 Abstract: Mere reminders of money have been shown to cause socially “cold” behavior. Recent research suggests that the metaphor of “social coldness” is bodily grounded and thus linked to actual sensations of physical coldness. We therefore hypothesized that reminding individuals of money causes them to feel physically colder. This hypothesis was put to test in two studies, drawing on predictions from psychophysiological thermal perception. In Study 1, individuals who had been reminded of money perceived the air in the room as colder compared to a control group (an assimilation effect). Contrarily, in Study 2, they perceived water (a medium that was only momentarily experienced) as warmer compared to individuals not reminded of money (a contrast effect). Together these findings demonstrate that reminders of money cause sensations of actual physical coldness and add to the literature of both the psychological effects of money and human thermal perception.

Remarkably, this is apparently a thing.

Blog it out, bros

So Eduardo Porter wrote this, where he lets John Bogle apparently say that passive investing could fix "the greater part" of America's retirement savings "shortage".

Then two of my internet buds, Noah Smith and Ryan Decker threw down.

Here's Ryan.

Here's Noah.

Now if people are approaching retirement with $104,000 and we decide that they need $500,000 or more, then clearly active investing fees are not "the greater part" of the problem. I gotta give that one to Ryan.

But, just because people do things that we think are a problem, doesn't mean it's actually a problem or crisis. Maybe people want to enjoy stuff while they are young and are willing to deal with a lower standard of living when old. I gotta give that one to Noah.

All that said, in general and on average over the long run, people are going to be notably richer from going with the low fee, buy and hold, passive investing approach. Even though his quotes in the Porter piece were messed up, I gotta give that one to Bogle.

Gosh, Who Would Have Thought?

Peter Overby did this story this morning on National People's Radio.

In it, he laments the fact that McCain-Feingold has destroyed party structures, especially in the states.

But when I tried to make this case, in my Senate testimony before the Rules and Admin Committee, in April of 2000, it didn't get very far.  The thing is that it was absolutely clear--fifteen years ago!-- that the BCRA was a party-killing incumbent protection bill.  That Caesar of the Senate, John McCain, just finds competition very inconvenient. It's not an accident that now most contributions to candidates, and therefore to incumbent candidates.

So, forgive me.  But I TOLD YOU SO.  We even did a letter, fergoshsakes. 

Everyone should enjoy your work

This is an actual email that I received this week:


Dear Author,

I’m Simona Vinerean (editor at Expert Journals) and it's a great pleasure to invite you to contribute your best knowledge to Expert Journals! I thought you might be interested in a new publishing opportunity, with extra benefits for you!

As authors, we are all too familiar with the traditional (and expensive) way of publishing our articles. But, what if you could get more benefits out of this process?

Luckily, at Expert Journals, you can benefit of a fast peer-review process of your theoretical or empirical article and you will get published in an open-access system (because everyone should enjoy your work), at a low fee of only 150 Euro.

......

Thank you so much for reading this email!

We look forward to receiving and publishing your paper!

Have a fantastic week!

Warm regards,

Simona Vinerean

I am pretty confused about exactly what the "extra benefits" are for me here. I am also confused about how the "traditional" way of publishing (i.e. peer review) is expensive.

Maybe someone can straighten me out in the comments? In the meantime, I just add the "Expert Journal of Economics" to my list of crap that doesn't count when you see it on someone's vita. Sadly that list gets longer almost every month.

Dolla Dolla Bill

Dollar stores got beef!

Dollar Tree had an agreement to buy Family Dollar, but nowDollar General is offering $9 billion cash for Dollar Tree.

So I guess we know how many items Dollar Tree has in its inventory, no?

No word yet about what the new conglomerate plans to do about 50 Cent.

Watch Your Cash

So, I needed some cash when I was in Bratislava.  I spent nearly 10 minutes trying to get cash from this ATM.

But then the bellhop told me it was NOT an ATM, but a parking validation machine.  I suppose the coin slot should have been a tip-off...

guaranteed income vs. open borders

I thought I'd muscle in on Mungo's turf and post about a guaranteed income for all Americans.

In principle, I'm in favor. Shall we say $12,000 / year  for every American 18 and over?

But as always, the devil is in the details.

(1) Is this going to add to our current mish-mash of "safety net" programs or replace it?

Obviously, I'd like to see it replace the current set of arrangements. I would think many libertarians would love this. Reduce paternalism, shrink the size of the state, what's not to like? If we used it to replace the current system, it wouldn't even be all that expensive. If we also phased out social security, we could up the annual guaranteed number to maybe $16,000 or so?

(2) Can a guaranteed income be compatible with significantly increased immigration?

In other words, if we allow more immigration must we restrict the guaranteed income program only to citizens for fear that masses of people would show up just to collect the 12 large and sit on their butts?

But I think there is a fundamental unfairness of collecting taxes from people to pay for a "universal" program that excludes them.

And, even if we did limit it to citizens, would we still fear that masses of people would show up, wait to become citizens, and then collect the 12 dimes and sit on their butts?

We could only allow increased immigration for higher skilled immigrants for whom $12,000 would not be a magnet, but that really reduces the incredible poverty-fighting power of allowing increased numbers of low-skilled immigrants.

If a guaranteed income program was an addition to existing safety net programs and required choking off immigration, I am not sure it would be worthwhile, no matter how attractive it is to me in the abstract.

Since No Taxpayer $$ is Involved....

Since No Taxpayer $$ is Involved....why not buy the really NICE police cars?  Anonyman sends this suggestion (note the Lamborghini on the wall, to save space).

You remember, I hope, that if the police finance their purchases from money they seized because it was "related" to a drug bust (distant cousin, by adoption, in many cases), then "no taxpayer money was involved."  Lamborghinis all around!  They gots 'em in Dubai, why not Wendell?

What Happens when you try to give away money?

Prof. Newmark provides a nice set of examples and varieties of rent-seeking.  Well linked, sir.

The video version of my own effort:

The Fokken Twins Retire

In Amsterdam, the 70 year old Fokken twins, Louise and Martine, decide to hang up the garter after 50 years each as prostitutes.  Yes, those Fokken twins.  "People like twins."

A very cute interview with them also.  They enjoyed all the new people they got to meet, 350,000 people in fact.  "Hallooo!  It's far away!"  Sounds like Gumby Theater.

Nod to M.K.

Ownership and Physical Currency

Money is essential: Ownership intuitions are linked to physical currency 

 Eric Luis Uhlmann & Luke (Lei) Zhu Cognition, May 2013, Pages 220–229

Abstract: Due to basic processes of psychological essentialism and contagion, one particular token of monetary currency is not always interchangeable with another piece of currency of equal economic value. When money loses its physical form it is perceived as “not quite the same” money (i.e., to have partly lost the original essence that distinguished it from other monetary tokens), diminishing its intuitive link with its original owner. Participants were less likely to recommend stolen or lost money be returned when it had been subsequently deposited in an electronic bank account, as opposed to retaining its original physical form (Studies 1a and 1b). Conversely, an intuitive sense of ownership is enhanced through physical contact with a piece of hard currency. Participants felt the piece of currency a person had originally lost should be returned to him rather than another piece of currency of equivalent value, even when they did not believe he would be able to tell the difference and considered distinguishing it from other money illogical. This effect was reduced when the currency had been sterilized, wiping it clean of all physical traces of its previous owner (Studies 2a, 2b, and 3).

Nod to Kevin Lewis

Decline in Crime

Interesting to think about explanations for declines in crime.  Gun violence generally has collapsed, just fallen off the charts, outside of turf wars for drug gangs.  As the WSJ puts it,

"Bank holdups have been nearly cut in half over the past decade — to 5.1 robberies per 100 U.S. banks in 2011. Though the nationwide crime rate is dropping, the decline in bank robberies far exceeds the decline in other crimes, according to Federal Bureau of Investigation data...Bank-security experts and former FBI agents attribute the decline to stepped-up security and tougher sentencing for bank robbers. Many also say that more recently, sophisticated criminals are recognizing bank robbery as a high-risk, low-reward crime and are migrating online." [WSJ]

 As I do think that there is an extra explanation we are missing.  Many of the most ruthless criminals were able to sell mortgages to government agencies Fanny Mae and Freddie Mac during the housing bubble, so that diverted them from bank robberies.  The Fan/Fred combo didn't care about cost, and so it was too easy.

And today thugs can sell subsidized solar panels to religious zealots who worship Gaia and don't care about cost.

Who needs to rob banks, when the government will actually pay you to steal, legally?

Nod to Kevin Lewis for the WSJ piece; I doubt he endorses my interpretation.

Do we have a spending problem?

The usual suspects have been passing around a chart they claim shows that we don't:

(clic the pic for an even more bigger image!)

Well, I have to say that it sure looks like a spending problem to me (N.B. I am not a Republican or a "conservative").

Remember that the graph is in per capita terms. Population growth has averaged right around 1% a year over this period, so there's a lot more spending than it seems.

Often it's appropriate to express things in per-capita terms, but government spending is *not* an obvious candidate. First off, much government spending is on public goods, which by virtual of their being non-rival (or partly non-rival) in consumption means that per-captia is a very poor way to express their spending levels. Defense spending per-capita is kind of a weird and meaningless concept. Infrastructure falls in the middle. Eventually population growth would require greater infrastructure spending due to crowding or faster depreciation, but per-capita is just not a completely appropriate way to express it. Entitlement spending might be best expressed per-recipient rather than per-captia.

Another strange thing about the graph is it attributes total spending to the president in office. This is just weird. Yes Bush was a terrible president. Yes we spent like crazy and ran up deficits with nothing to show for it. I get it. I agree with it. But the president doesn't control Federal spending, he only has the veto threat to try and shape congressional decisions. He doesn't have any real direct lever to affect state and local spending at all.

There is simply no reason to expect that real government spending per capita should constantly rise and there is not reason to impute said spending completely to the president in office when it occurred.

What is "Wealth"?

The Asset Price Meltdown and the Wealth of the Middle Class

Edward Wolff, NBER Working Paper, November 2012

Abstract: I find that median wealth plummeted over the years 2007 to 2010, and by 2010 was at its lowest level since 1969. The inequality of net worth, after almost two decades of little movement, was up sharply from 2007 to 2010. Relative indebtedness continued to expand from 2007 to 2010, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. In fact, the average debt of the middle class actually fell in real terms by 25 percent. The sharp fall in median wealth and the rise in inequality in the late 2000s are traceable to the high leverage of middle class families in 2007 and the high share of homes in their portfolio. The racial and ethnic disparity in wealth holdings, after remaining more or less stable from 1983 to 2007, widened considerably between 2007 and 2010. Hispanics, in particular, got hammered by the Great Re cession in terms of net worth and net equity in their homes. Households under age 45 also got pummeled by the Great Recession, as their relative and absolute wealth  declined sharply from 2007 to 2010.

This raises, as always in my mind, the question of policy:  is the problem the boom, or the bust.  After all, there's a boom and bust cycle, and good reason to fear it.  But should we blame low interests, or the animal spirits?

Suppose I have a house, and you have a house.  Each is worth $100,000.  Then I value your house at $1,000,000, and loan you $500,000 based on that collateral.  You do the same for me.

Now each of us has a house "worth" $1,000,000, plus $500,000 in cash to go buy stuff with.  But neither of us can pay back the loan, and we both go bankrupt.  The houses, however, are still worth the same old $100,000 each will actually command in a stable market.

If you measure from the peak of the bubble, we lost a lot of wealth.  But that wealth was entirely fake, created by a revved up demand for houses as assets expected to appreciate rapidly.  (The rule in financial pricing:  "anything we all know will happen tomorrow actually happened yesterday").

So...an existential, ontological, and epistemological question:  was there a wealth loss?  Or did the wealth never "really" exist in the first place?  And how would we know?

Helping the private sector in Argentina

Argentina has now passed a decree allowing the government to direct both the amount and the type of investment behavior of private insurance companies. Here's the scoop from the AP (via Fox News so you KNOW it's true):


she (President Christina Kirchner)  decreed that insurance companies must invest up to 30 percent of their holdings in "productive activities" to improve Argentina's infrastructure. "This decree links the insurance industry with the development of the actual economy," said the decree published Tuesday. 

With her government redirecting resources toward "projects that have a clear productive and social purpose," insurers will "encounter new possibilities of investment that that will feed a virtuous cycle of development with social inclusion," it said. The decree, effective Wednesday, puts Deputy Economy Minister Axel Kiciloff and Commerce Secretary Guillermo Moreno in charge of a committee that will decide where the insurers can invest their holdings. 

The list begins with projects already sponsored by the nationalized pension system and other government-run funds, but also can include whatever the committee decides is "productive, according to the objectives of the political economy." 

Economy Minister Hernan Lorenzino said Argentina's insurers are sitting on $13 billion but put only $18.5 million in what the government considers productive projects. The government hopes to raise that to $1.5 billion by mid-2013. This "will be good for the national economy and for the insurance sector as well, since these investments have proven to be the best in terms of profits and security in recent years," Lorenzino said in a radio interview. 


That's right, private money decreed to go to either "infrastructure" or projects with a "clear social purpose".

Gee this sounds like a great idea. Win-Win-Win. I wonder what  other Argentine investors think?

Argentina's Merval stock market index dropped more than 3.5 percent Tuesday after Fernandez made the surprise announcements Monday night.

Uh, oh, more people making bad decisions with their money.  Sounds like La Penguina has some more work to do!

Hat Tip to NC

YYM in Portugal

So, I get this phone call at 7 am Saturday from the YYM:  "I got pickpocketed in the Lisbon train station."

He still has his passport, and he is with his girlfriend so he has access to cash.  But it is worrisome.  Apparently the two of them had "met" this aggressive woman who stood very close to them and asked for directions.  Presumably confederate behind him reached and took the wallet.

From his front jeans pocket?  Because that is where I always tell him to keep his wallet in train stations and public place:  keep your wallet in your FRONT jeans pocket.  Make them "kiss the dog."

No, it was in his outside jacket pocket, the big open one where you put your hands.  *&$^#$&^@!

Later in the day, he sent this picture, after they had rented a car and driven over to the coast.  Things must not be TOO bad...

Click for an even more happy image.

Carter Wrenn On NC Dem Money Woes

My good friend Carter Wrenn, longtime political operative, thinker, and trouble-maker, has an interesting view on the current money race in NC.

First, let me show you this.  It may be hard to understand, but Bev Perdue outspent Pat McCrory by a truly huge margin.  None of our local media objected, because that was how it was supposed to be.  Everyone knows that Dems are more popular... 

Now, Carter's observations...

The Democrats’ treasure chest has vanished. Year after year in elections, Democrats like Jim Hunt and Marc Basnight had war chests brimming with cash. Bev Perdue defeated Pat McCrory last election by outspending him by $7 million. But now the Democrats’ larder is empty. Phil Berger’s outraising Martin Nesbit (Basnight’s Senate heir) seventeen to one and Pat McCrory raised a million dollars more than Walter Dalton last quarter.

So, for Democrats, what went wrong?

 

The answer, I think, is that the Dem machine in NC was so corrupt that, once out of power, there was very little actual support for the candidates or the policies.  The Dems lived off theft for more than a century.

 

Now, to be sure, it is not clear that the Repubs will do anything different...  To be fair, the Dems never claimed that they were going to do anything else.  They took money from people who earned it, and gave the money to their friends, whooping and squealing about "the poor! the poor!" in the meantime.  The Repubs say they are going to cut, and then they just end up TAKING their cut.