Category Archives: Economy

The Money Rodeo

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Covid, shelter-in, election turmoil, Afghanistan, Brexit, China, impeachments, perhaps these things still are unresolved but at least we’ve had a chance to beat them with sticks and throw stones, pushing them into some kind of partial remission. There is time now to take a quick shower, put on some clean clothes and prepare for the next item in the national job jar: managing money.

News outlets are covering the party debate about Joe Biden’s infrastructure bill; the sport of legislation will be headlines for a while. Slowly emerging into electorate awareness, however, are the issues of government spending, taxes, user fees and inflation. These are the bucking bulls behind the battle over bridges and health care. Some bucking broncos are bank and investment regulations, bitcoin, and climate change just to mention a few money issues. The rodeo clowns still are putting on a show, that is, everything Trump, McConnell, McCarthy and Gaetz but the main events will take over quickly.

The main attraction is inflation. It is devastating to the value of the dollar bill in our wallets. Economists, both political and institutional, see inflation taking off and running because the US government has – or will – dump $6 trillion dollars into the general economy (6 includes Trump’s contribution). An extremely brief description of how inflation works is “If there is so much money around, then you can afford to pay $10 for this hamburger instead of $4.”

The problem is that common citizens don’t receive salary increases commensurate with the rate of inflation. Everything is subject to inflation from toilet paper to homes and automobiles. Mariner experienced the 1970 inflation by having a pleasant salary that over ten years became a meager one that required him to shift careers. During the 70s the Consumer Price Index (how much things cost) went from 37.8 to 76.7, cutting in half what that dollar in the wallet could buy.

The second attraction is taxes and fees. These actions slow the possibility of inflation to a degree. Biden has said no one with an income below $400 thousand will receive a tax increase; he intends for the wealthy to pay for infrastructure and health services instead of spending government debt money. It can’t be denied that very wealthy citizens are sitting on a pile of money that isn’t doing anything for the economy but republicans don’t want to raise taxes at all. Instead, they prefer that government spending be offset by user fees (an attempt to hide the fact that ‘fees’ actually are taxes applied to specific purchases like gasoline, tolls and utility services) – meaning that the general population foots the bill.

The next two issues of extreme financial importance are regulations to restrict banks to what banks are for and to push them back from ventures into Amazon-like partnerships and credit card manipulations; the other issue is automation of finances generally, that is, replacing the dollar in your wallet with the state of an electron in a computer somewhere.

Finally, climate change will impact everything – everything! Whole industries may disappear as well as whole cities. Climate change is like a very, very, very slow hurricane. There is no doubt all the other money issues will be affected.

Put your chaps and spurs on – the legislators will need guidance.

Ancient Mariner

Democracy at risk

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This morning Guru seemed a bit apprehensive. He is concerned about global readiness for democracies around the world, especially for the United States. It is obvious that authoritarian governments like China, Saudi-Arabia, the ‘Stans in south Asia and mob governments like Russia and Turkey – all can move more quickly than democracy while disregarding human rights and truly collaborative economics.

On the other hand, many democracies, especially in South America and nations around the Pacific Rim are at the edge of economic failure, some even facing national bankruptcy. Many democracies are in worse social condition than the US appears to be as riots and government distrust encourage populism.

These democratic nations are waiting for the United States to create an economic solution that will restore democracy as the way to a sound existence.

Taiwan has been in the news recently as a democratic nation under increasing threat of a Chinese military invasion. Taiwan is a firm ally of the US and is a gem to be owned because they are the largest producer of microchips in the world. If the reader has kept up with real news (hard to find) they know there is a global shortage of microchips which likely will grow larger as the world adapts to artificial intelligence.

Recently there was a meeting of many democracies in Copenhagen. Bravely in defiance of Chinese storm clouds, Taiwan has addressed the issue of democratic unity head-on. From the Politico Newsletter:

TAIWAN — WE MUST COLLABORATE TO UPHOLD RULES-BASED ORDER: President Tsai told the Copenhagen Democracy Summit this morning that she is looking forward to Biden’s summit for democracy (a clear sign she expects to be invited), and urged the EU to “restart negotiation on a bilateral investment agreement” with her country, in light of the collapse of a draft EU-China investment agreement.

“Taiwan’s response to Covid-19 shows how pandemics can be contained without curtailing democratic freedoms … we are determined never to surrender these freedoms,” Tsai said, adding “it is imperative that we collaborate to secure our supply chains and safeguard the global economic order.”

The United States is not prepared to step up to its role as the democratic leader of world democracies. Unfortunately, the moment is fleeting; autocracies do not wait and are destructive in the process.

The news that is marketed in the US [Yes, marketed, a thorn in mariner’s side – news is a public service and should not be a profit center] is all about 1980 Reagan economics; pundits are using words similar to supply and demand, runaway inflation, keep corporate and private equity taxes low, and stop paying a dole to pandemic victims because they won’t come back to work – but don’t raise the minimum wage. All these arguments are virtually irrelevant in today’s economic circumstances and reek of political attitudes that long ago became inadequate.

In a recent post mariner expressed joy about a move by the Biden administration to visit Guatemala to see if the US could help that nation restructure its failing government and somehow generate a GDP for its citizens – an alternative solution to separating children from parents. This gesture is a form of supply chain dependency where democratic nations bond together and share an economic partnership rather than depending on twentieth century trade negotiations. Jeff Bezos understands this concept. Amazon is a business that depends on many businesses sharing a common outlet, that is to say, a supply chain.

Internationally, the US needs to be more like Amazon.

Ancient Mariner

Environment

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We humans have become increasingly aware that we live in an environment not as a dominating owner but simply as just another renter who tends to trash the apartment. Perhaps it’s the global warming issue that helps with human awareness; perhaps it’s the growing scarcity of food resources for the planet; perhaps it’s the cost to farmers when they plow the soil which strips the fields of all nutrients and plants, especially in regions where there are strong winds that carry away the soil farmers just tilled and fertilized and put weed killer down – producing poor yield in the fall.

Evidence of growing awareness is all about. TV broadcasts about gardening, farming, waste management, and collaborative sharing with the environment are frequent. Extension agencies, libraries and garden clubs sponsor programs about collaborative gardening. Mariner has a relative whose hobby is planting colorful plants around the base of trees along New York streets; mariner has a friend who has decided to let violets stay in the lawn. And mariner himself is tinkering with a number of collaborative projects in his own garden.
֎ One example is the cursed Creeping Charlie, a very rapidly spreading weed that defies elimination. It still is a killing pest in the lawns but in some garden beds mariner has decided to experiment with Creeping Charlie as the ground cover to keep other weeds out and at the same time add to the décor of the garden. It turns out that Charlie has taken hold of his new job with relish. Not even the dreaded crabgrass can sprout beneath a robust covering of Creeping Charlie. In fact, mariner is saving money because he doesn’t have to buy mulch for those areas.

֎ Another experiment is mariner’s tolerance of a rambunctious mole. He must protect against the mole’s burrowing in vegetable beds where seedlings are emerging but otherwise he has let the mole venture about. Tolerance by the mariner is an experiment to see how many Japanese beetle grubs can be eaten; mariner has many fruit and ornamental trees on a property surrounded on all sides by large concrete pads and accompanying large garages. All beetles come to mariner’s garden.

An unexpected reward is the mole gradually aerates the lawn. Typically, a lawn keeper occasionally will need to rent an aerating device to pull plugs from the lawn so it can grow and accept water. Mariner keeps his lawn a bit high (another anti-weed collaboration rather than performing the typical buzz cut) so the lumps from the mole burrowing aren’t noticeable.

Mariner has mentioned in past posts that his town has lawn Nazis. It is of a different spirit, certainly not one of collaboration with nature but comparatively speaking takes more time, labor and cash to maintain. This difference between collaboration with and dominance of nature has existed throughout history from the first scraping of the ground to cast wheat seeds to the large open mining pits and deliberate elimination of forests today.

In just a few years many farmers have proven that any way to collaborate with the environment is more productive, less expensive, saves waste and is good for surrounding atmosphere, water and wildlife. One common practice by farmers that has been implemented for many decades is a natural easement by creeks and rivers rather than plowing closer to the water’s edge.[1] It is entertaining to work with nature as a partner – both existentially and philosophically. What projects does the reader have?

Ancient Mariner

 

[1] An excellent documentary on collaborative farming, ‘Kiss the Ground’, is available on Netflix but the reader must search ‘The Littlest Farm’ – the title is in error. The Littlest Farm also is an excellent film about how a family uses nature to transform virtual wasteland into a productive farm but mariner could find it only as a rental or purchase. 3 minute trailers are available online for both films.

Wealth is for the Wealthy

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Several of mariner’s news sources have begun to focus on issues that fall under the general subject ‘plutocracy’. Latest topics are from Florida, a government that sees itself as a partner with business, having passed legislation to protect obstetricians from lawsuits about botched births and now passing legislation to protect sugar harvesters from lawsuits about polluting the air.

On manipulations of the rich to stay rich, Elizabeth Warren just released her wealth tax legislation – she is back on the hunt and is the archenemy of the banking industry. The legislation targets the wealthy’s privileged investment practices that in fact are protected by Federal investment practices. Further, Banking has become more involved in partnering with nonbanking enterprises as a legitimate partner and not just a source of financing (Did you notice an American bank tried to launch the Super League in European soccer?)

ProPublica just posted an article that says “longstanding inequality in the U.S. has been exacerbated by the Fed’s role in touching off a multitrillion-dollar boom in stock markets — and stock ownership is heavily skewed toward the wealthiest Americans”. It is worthy to note that the average citizen’s IRA and 401(k) accounts don’t share comparatively in this boondoggle. [1]

Further, Social Security is the top source of wealth for most lower-income households with workers nearing retirement, according to Teresa Ghilarducci, an economist at The New School in New York City who specializes in retirement. If the guaranteed income stream of Social Security is treated as an asset, she estimates it amounts to 58% of the net worth for near-retirees in the bottom half of the U.S. wealth distribution. Other retirement savings represent only about 11% of their net worth, and stocks are just 1% – meaning that the wealthy have their own, federally supported economic world while the remaining US citizens still struggle with minimal income and no long term security. Apparently Andrew Yang’s chart about the distribution of income was correct.[2]

The most effective way to attack this plutocracy is to have term limits for all legislators state and federal and to outlaw party-managed redistricting, otherwise known as gerrymandering. In the meantime, the voting citizen will be caught in a battle between those who collect dollars for satisfaction and those who extol populism for satisfaction. It’s up to the electorate in 2022.

Ancient Mariner

[1] It is mariner’s opinion that ProPublica is by far the most honest, accurate AND the most thorough investigative reporting source among many online services. He recommends everyone subscribe to their email service at https://www.propublica.org

[2] See mariner’s post, “A Stipend for a Day Lived” published April 19, 2021.

Moving South

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As regular readers know, one of mariner’s political dreams is to merge North and South America into a planet-leading powerhouse for economics, culture and science. This is fantasy of course; the United States considers brown people second class citizens – whether Mexican, Guatemalan, Puerto Rican, Columbian or the far reaches of Asia. If there were more Eskimos, they’d be thrown in as well.

But wait! As if it is the first creature to move out of a primordial sea, there is a glimmer, a faint, fragile thought that has emerged in Congress. Senator Tom Carper (D-Delaware) is traveling to Guatemala to meet with that nation’s president to discuss ways to eliminate the migration of its citizens to the United States. The subject of the visit is economic in nature, that is, how can the US help Guatemala’s economy.

Further hope comes from Tom’s close relationship with Joe Biden, himself an ex-Senator from Delaware. If white supremacists were rational, they would push the republicans to back these ventures to keep nonwhites below the border. (Yes, racist, but mariner is desperate; otherwise republicans will fight this idea for sure. Consider mariner’s effort similar to throwing a stick to entertain a dog)

It took a long, long time for aye-ayes to become humans. Mariner suspects the same will be true for unified Americas. Mariner asks that the reader be careful where they walk lest they squash this primordial thought.

 

 

 

 

 

Ancient Mariner

A Stipend for a Day Lived

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Mariner has read Andrew Yang’s book, The ‘War on Normal People’. The reader may recall he was the democratic candidate who espoused a monthly $1,000 stipend be paid to citizens of working age which had no relationship to what would be called wages earned from a job. His first chapter is about how the nation arrived where it is today. He cited some startling statistics. Just one of many as a sample:

Cumulative growth in average after tax income by income group

To clearly demonstrate the percentages in dollars, assume mariner gives the reader, a member of the top one percent, one dollar. Below is the number of dollars reader’s dollar will grow every two years:

 

80 82 84 86 88 90
95¢ 1.10 1.40 87.40 165.40 225.40
92 94 96 98 00 02
286.40 330.40 378.40 542.40 736.40 930.40
04 06 08
1,092.40 1,348.40 1,626.40

On the other hand, if mariner gives one dollar to a reader in the bottom twenty percent, the reader ends with less than they started, losing as much as $50.05 spending value in 1992 before finishing in 2008 still with less than they started: -$1.05.

80 82 84 86 88 90
95¢ -9.05 -21.05 -31.05 -41.05 -46.05
92 94 96 98 00 02
-50.05 -45.05 -45.05 -35.05 -30.05 -24.05
04 06 08
-24.05 -19.05 -1.05

 

These numbers seem really out of whack but mariner has charted these values in several different ways in past posts and Yang’s numbers are in the same ballpark. The big discriminator is that labor wages have remained stagnant as inflation has risen an average of 3.27 percent each year since 1980 for a total increase from 1980 of 91 percent overall – meaning that in real purchasing power labor wages are half what they were in 1980.

Is it any wonder that the working classes are up in arms and mad with the US government? This separation of economic circumstances may suggest why the stock market continues to set new records even while a different economy exists for the average citizen. [An issue for another post is the relationship between economic stress and the rise of racial prejudice in the working classes.]

One more chart from Andrew’s book:

Level of Education Attainment Median Income – assume 40-hr week
Less than ninth grade 16,267     –        315.25
Ninth to twelfth grade no diploma 17,116     –        331.70
High school graduate 25,785     –        499.70
Some college no degree 30,932     –        599.45
Associate degree 35,072     –        679.68
Bachelor’s degree or more 55,071     –     1,067.26
Bachelor’s degree 49,804     –         965.19
Master’s degree 61,655     –     1,194.86
Professional degree 91,538     –     1,773.99
Doctorate degree 79,231     –     1,535.48

Another statistic that mariner culled from the news is that the average person does not have the cash to pay an unexpected bill for $500. Further, the average disparity between white total assets ($34,755) and black total assets ($2,725) is astonishingly unbalanced – making race an economic issue that is bound to cause disruption.

As to Andrew’s arguments for guaranteed income, we have forgotten that in the more affectionate times of the Kennedy era, the US government prepared to pass the Family Assistance Plan – a plan endorsed by President Nixon – which would have provided a base income of up to $10,000 for every citizen beneath the poverty line. In a study performed to determine whether workers would stop working with such a benefit, it was found that men continued to work and women dropped out of their jobs by an average of five hours per week, typically to be with children.

Mariner is pleased to note that Andrew also espouses dropping Adam Smith capitalism. To quote Andrew:

“Human capitalism would have a few more tenets –

  1. Humanity is more important than money.
  2. The unit of an economy is each person, not each dollar.
  3. Markets exist to serve our common goals and values.”

Mariner’s post grows long but it should be noted that job displacement, especially to the working classes, is a serious issue that may well damage the American economy – especially as artificial intelligence and global warming take their toll on available jobs for the working class.

Ancient Mariner

Tactics

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Tarun Chhabra, now a senior director on Biden’s National Security Council, wrote in Foreign Affairs in 2020 an article titled “The Left Should Play the China Card: Foreign Rivalry Inspires Progress at Home,” Chhabra argued that framing “large-scale public investment” as a way to counter China was the surest way to get conservatives on board.

Asia always has been perceived as a direct competitor. The increased, mindless abuse on US Asian citizens today by the socially inadequate Trumpists and racists reflects how misdirected the US electorate becomes when dealing with sophisticated, foreign diplomacy issues.

Mariner is concerned about Chhabra’s militant attitude. It is very true and proven throughout history that a foreign enemy unifies the home front. It is also proven, even back to the Mesopotamian wars in 2900 BC, that if the home front wins the skirmish, the losers are deliberately killed or made into slaves. (Did the reader see the news clip where a man shoved an older Asian woman to the ground and stomped on her face?) Today it’s a game of teamsmanship not survivorship.

During World War II, Asian citizenry was collected and imprisoned in internment camps until after the war – something like seizing a whole hay pile for fear there may be a needle. Innocent lives were ruined. The same was true for Germans and Italians although their appearance protected them to a great degree. The point is that militancy quickly will unify a nation but at great cost to civilized behavior and especially to a democracy. With the Trumpists running at large and with the nuclear warhead potency of social media, this is a dangerous strategy.

Mariner believes the real war will be fought with international economic liaisons, something like drafting the best players to make a championship team, otherwise known as supply chain economics.

It boils down to this: Who is our most dangerous enemy? Congress.

– – – –

But wait! There is another enemy: plutocracy. As if corporate graft weren’t already a major influence in legislation, JPMorgan CEO Jamie Dimon urges companies to play a bigger role in fixing the world’s problems. He thinks government isn’t up to the job. Already Big Data has used the pandemic to install tracking devices in hospitals, police departments and corporate marketing activities with virtually no regulations. Does the American citizen want to place control over ethics, morality and citizen rights in the hands of corporations? God forbid they may be successful instead of our woeful government. (Note that JPMorgan is a prime target of the democrats who want to restructure the role of banks.)

We may appreciate the social awareness of today’s boycotting corporations; we shouldn’t let them be in control of social issues.

As a footnote, remember the TPP? It failed because it was written by corporate interests instead of government diplomats. They wrote it in a way that ignored human and national rights.

Ancient Mariner

The New Global Economy

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In a number of posts mariner has suggested that stand-alone national economies have peaked and are not the solution to the economic future. Virtually every economist feels that the economic health of the globe is failing more rapidly on a yearly basis. This may not seem as evident to the rich nations because they have a depth of wealth and assets that continue to produce profit but there are many telltale signs that even the wealthy nations have gathering clouds. (Mariner loves to mix metaphors)

Interestingly, the industry that has forced nations to reshape their economic philosophy is rare-earth minerals. In a report by The Economist the point is made that only a handful of nations have rare-earth resources (US has only one mine in California). Two of those nations are China and Peru.

Couple the disparate distribution of rare-earth minerals with the immense demand in the manufacture of electric cars, lithium batteries, jet aircraft, computers and dozens of lesser products and a classic supply/demand situation arises that will further unbalance global economics, making just a few nations wealthy while more nations succumb to severe trade imbalances.

A second but less focused desire to reshape world economics is the political war emerging among the wealthier nations. In this century China, United States, India, the European Union, Canada and Japan have taken deliberate steps to restructure international liaisons by developing supply chain relationships. Supply chain economics guarantees a dependable GDP for participating nations. The one example in recent times was the Trans-Pacific Partnership (TPP) which created an economic role for 11 nations on the Pacific Rim.

As a first time effort, TPP failed by displacing cultural and human rights in each nation in favor of capital gain; in effect the partnership would have authority over national governments. That should be a lesson learned as supply chain economics matures.

One muses that as China seeks to unify the small Pacific Rim nations, might the United States do the same with the Caribbean – yes even Cuba?

Ancient Mariner

IF

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IF the reader was born before the Vietnam War (1954), their core understanding of reality and related social values is outdated – functional but outdated. Life values accumulate via growth experiences until around the age of 25; developing pragmatic skills through adulthood by participating in society benefits society. The opportunity to successfully participate in society fades after the age of 60 because two younger generations have created a different reality during their growing and productive years.

A good analogy for elders is walking lost on a Manhattan sidewalk at noon. What is important to social stability is that everyone over 60 has earned and deserves a pleasant time during their retirement.

It is true that some personalities will insist on an active, decision-making role in this century but their values and experiences are not quite in tune with the needs of a newer society.

IF

If the reader believes in the sanctity of the Universe, its tough and rugged rules for existence, its rules for sustaining a sensitive balance of life forms and further that all life forms are subject to the rules of Nature – then the reader tends toward being a naturalist. Perhaps the broadest philosophical point for a naturalist is sustaining Nature’s status quo, its balancing act among all matter living and nonliving.

Being a naturalist, the reader is aware that Homo sapiens has tinkered with longevity beyond what Nature would grant. Just in the modern era, the lifespan of humans in 1943 was 53; today it is close to 80. “Why,” the reader might ask, “has society nearly doubled the lifespan of humans but feels no responsibility for the overpopulated outcome not only concerning humans but their imbalance with the rest of the ecosystem?” Three alternatives have been tried that inadvertently limit population but have not become a sustained practice for balancing human population:

(1) Execution. Imposed death of family members and servants was practiced by Egypt for centuries; even today there is a voodoo group that still practices ceremonial sacrifice for the good of the family or society. A small remnant of ritual assassination remains through execution of unwanted criminals. And, of course, before the invention of explosives, changes in culture or climate forced relatively large armies to brutally kill each other in a war.

(2) Limited reproduction. From time to time, especially in Asian societies, a family was constrained by social rules to have only one child. A different variation existed recently when Asian families decided not to have that one child be female because males were more valued for their opportunity to work and bring more resources to the family. In 2015 Xi Jinping removed the offspring limitation for economic reasons.

(3) Prevented reproduction. These methods can be considered to be common practices to prevent pregnancy; for example, abortion, sexual preventatives like condoms and vaginal obstruction, and pharmaceuticals.

If one is a naturalist, given the overpopulation issue, one is confused by a culture that insists on enforcing the birth of children who may not be wanted or who will burden the life of the family beyond normal circumstances and at the same time other factions insist on pregnancy as a personal choice unaffected by reproduction issues.

As is almost always the case, Nature controls biological balance. Does the reader know that caucasians, Asians, Europeans, Russians, in fact the whole world is losing population? Just in the United States, where white supremacists are active, the white race will be a minority in the 2124 Presidential campaign and will disappear as a political entity by the end of the century.

Mariner is reminded of the noted mouse and rat studies in the 1960’s that showed when the caged population reached a point of imbalance in terms of space, mating environments and social bickering, the population suddenly dropped to about a third and stayed there for a long period.

Ancient Mariner

These are trying times

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Trying times is an understatement.

The migration of tens of millions of people, exacerbated by a changing climate, will be one of the mega-trends of the 21st century, Bryan Walsh writes in Axios Future:

“For both humanitarian and political reasons, wealthy countries like the U.S. will need to figure out a way to handle a flow of people that may never stop. People make the difficult decision to leave their homes for many reasons, including conflict and crime, political persecution, and the simple desire for a better life.

“But a growing factor is the push of extreme weather and climate change, which disproportionately affect people living in poorer, hot countries that are already a major source of migrations to the U.S. That means the U.S., as well as the rich nations of Europe face a permanent and likely growing flow of climate migrants that they — and the international refugee system — are ill-equipped to handle.

“The catch: Climate change’s precise role in migration is tangled up with more immediate factors, like security and economic well-being.

“A Gallup survey released this week found that more than a quarter of the population of the 33 countries in Latin America and the Caribbean — which would amount to 120 million people — would like to permanently move to another country.

“42 million of those want to come to the U.S.”

More and more folks recognize that global warming is real. In the United States the political resistance comes from fossil fuel interests, the Trumpist anti-science movement and twentieth century conservatives. The combination of global warming, social modification due to artificial intelligence, a global virus pandemic and an apocalyptic shift in global economy – all at the same time – easily is more disruptive socially than the eruption of Vesuvius was to Mediterranean society or the environmental disruption caused by Krakatoa.

It is true humans are their own worst enemy. There are some egregious habits like death by war, life by stunting the Earth’s natural threats of viruses, visceral disorders, unnaturally prolonged lifespan, and other relationships that would control human population.

Adam Smith’s concept of moralistic capitalism no longer serves the common people. For one thing, there are far too many common people; for another, capitalism is competitive and slowly has separated wealth from the far too many common people; and finally there are far too many common people for the amount of natural resources available.

Humans added to population by inventing self-propelled transportation that easily spreads population centers over greater areas, easily heated homes and technologies capable of wiping out any number of biomass balances from air and water pollution to the directly related extinction of over 16,000 species.

These are trying times!

The trouble is, we can’t go back. We’re stuck with this mess and finally must take drastic actions to restore order – actions that we should have been managing all along but didn’t bother.

Has anyone seen Chicken Little? Is it true Amos went back to the farm? Guru is taking strong antidepressant pills.

Ancient Mariner