2:00PM Water Cooler 2/13/2018

By Lambert Strether of Corrente.


“Trump offered the idea of imposing a ‘reciprocal tax’ on U.S. imports on Monday that economists warn would only serve to drive up prices for American consumers — and that the White House later seemed to walk back” [Politico]. “‘There is nothing formal in the works right now,’ a senior administration official said. ‘He was simply reiterating the same sentiments he’s been saying about reciprocal trade for years.'”



“Bernie Sanders returns to Iowa Feb. 23 for rally with Pete D’Alessandro” [Des Moines Register]. “D’Alessandro is one of six Democrats vying to challenge Republican incumbent U.S. Rep. David Young in Iowa’s 3rd District.”

“Hear John Delaney’s early pitch to Iowa Democrats” [Bleeding Heartland]. Delaney: “Wouldn’t it be amazing if the next president said, ‘I’m actually going to focus on the things we agree on.’ Right? And get some of those things done. And then we could start working on some of the harder things, like how we take 60 percent of this country, that has been hollowed out by [economic] changes, and do the kind of things to make sure capital–private capital and public capital&–will flow to these communities.”


“Can the Economy Stop a Democratic Wave?” [Charles Cook, Cook Political Report]. “Private polling from both parties shows some pretty grisly numbers in individual states and districts. Democratic candidate recruiting in House races is going spectacularly well—in fact, some worry it’s gone too well, with too many contested primaries. Fundraising for Democratic challengers is going very well (and you should ignore Democratic National Committee and Republican National Committee fundraising numbers, which are some of the most irrelevant midterm indicators in all of American politics). All of these signs support the very clear historic pattern of midterm-election losses for the party in power. A disclaimer is necessary at this point: The election is 271 days away, so things can certainly change, but that is precisely the point—things would have to change for the GOP to hang on to their majority. As of now, I’d put the odds of Democrats winning a House majority at about 60 percent, and winning the Senate a much lower 25 to 35 percent… So short of a seismic event like another 9/11, what could deter a Democratic wave? I keep coming back to the economy: Does the economy continue to grow and at some point, might Trump begin to get more credit for that than he does now? Does he become less of a liability for Republicans?”

“A leading Democratic group [SuperPAC]— Priorities USA — is warning party leaders they could squander a strong political climate in 2018 if they don’t start to emphasize pocketbook issues over loose and unfocused critiques of Donald Trump” [McClatchy]. “The memo says that a broad range of metrics show the political climate is still favorable for Democrats. But it also makes an unambiguous diagnosis for Trump’s recent rise: Democrats this year have stopped focusing on economic and health care issues, topics that demonstrably hurt his approval during his first year in office.” Unfortunately, liberal Democrats don’t have a good message on either economics or health care, which is why the Russia hysteria, the drumbeat of moral panics, etc.

Pennsylvania: “Democratic Gov. Tom Wolf will not submit a new Republican-drawn map of Pennsylvania’s congressional districts to the state’s high court, saying Tuesday that it uses the same unconstitutionally partisan tactics as the 6-year-old boundaries struck down in a gerrymandering case” [San Francisco Chronicle]. “Redrawing the map of Pennsylvania districts could boost Democrats nationally in their quest to take control of the U.S. House, and leaves district boundaries up in the air barely three months before May’s primary election.”

Obama Legacy

Not tan:

New Cold War

“Former Senior FBI Official Is Leading BuzzFeed’s Effort to Verify Trump Dossier” [Foreign Policy]. The merger of the press and the intelligence community is certainly a healthy sign for democracy.

“Trump budget anticipates Mueller investigation will stretch into fiscal year 2019” [Politico].

“Deep State agent amused and annoyed by your conspiracy theories” [Duffel Blog]. “Luckily for the American people, the puppet-masters of the US government can’t make a move without you thwarting them via social media. If not for you, we’d already be living in the future liberals want: everyone reduced to a number, mindlessly watching Netflix and ordering on Amazon, and ruled by laws that don’t affect the elites that made them, all while non-compliant citizens are sent to internment camps.” Um…

Realignment and Legitimacy

“RFK’s visit to Appalachia, 50 years later: How Kennedy country became Trump country” [USA Today]. “In two days, Kennedy traveled 200 miles, often over poorly paved, curving mountain roads, visiting places with names like Pippa Passes and Neon that had seldom seen anyone half as famous…. To displaced miners, Kennedy promised help, with this caveat: ‘What can be done to end welfare in the region, and replace it with jobs? … Welfare is no answer. Jobs is the answer.’ But 50 years later, with eastern Kentucky a virtual welfare reservation, Trump’s promise to bring back coal was really an offer of something even more important: self-sufficiency and self-respect.”

Moderate Republican now a Democrat organizer:

Blue Dogs:

More like this please:

“Sports Illustrated’s #MeToo Swimsuit Issue is All About Ideology” [RealClearLife]. “It is, therefore, a bit ironic that this Swimsuit Issue will feature women with slogans of the day written all over their bodies, objectified into living slates or billboards.” But if the message is correct? And what is the message?

“The Deficit Hawks Have It Wrong” [Robert Kuttner, The American Prospect]. ” if they do take back control of the Congress, the last thing Democrats should do is emulate the austerity policies of Clinton and Obama. Instead: cut back military spending and tax breaks for the rich, spend the money on public investments, and appoint a Fed chair in the spirit of Janet Yellen. The stock market will take care of itself. Ditto the deficit.” And see MMT below.

“Americans! Is your state attorney general secretly letting donors shape laws?” [Quartz]. “”The Briefing Room” is a file-sharing network and online bulletin board hosted by Box, a Redwood City, California-based cloud-content website that claims 41 million users. The policy arm of the Republican Attorneys General Association (RAGA), which tries to get Republicans elected as state attorneys general, has been using the board to allow donors to review and comment on laws before they are passed, according to Intercept and Maplight’s investigation. A contribution of at least $25,000 gives donors “posting access” to the online board, RAGA membership documents show.”

“Talk is cheap: the myth of the focus group” [Guardian]. An interesting long-read.

Stats Watch

NFIB Small Business Optimism Index, January 2018: “Leading the monthly index higher to beat consensus estimates was a 5-point gain to a net 32 percent in the view that now is a good time to expand, the highest level for this component in the history of the NFIB survey” [Econoday]. “Expectations that the economy will improve rose 4 points to 41 and plans to increase inventories also rose 4 points to 3. Current job openings rose 3 points to 34, as more than a third of small business owners reported job openings they could not fill. Rounding out the gainers were capital outlays, which rose 2 points to 29.” And: “The new tax law, the Tax Cuts and Jobs Act, produced the most recent boost to small business optimism. And federal government related cost pressures continue to abate, offering a more supportive business climate for small firms. Consumer spending remains supportive, and business spending and housing remain strong” [Econintersect]. And: “Usually small business owners complain about taxes and regulations. However, during the recession, “poor sales” was the top problem” [Calculated Risk]. And then there’s this:

This is the chart:

I wonder if a chart of opinion by those who participate in purchasing manager surveys (for example) would look the same.

GDP: “While the annual deficit to gdp ratio is higher than the last two cycles, it’s been looking to me that the ‘neutral’ deficit to gdp ratio has been going up as well. This is likely because the unspent income (pension fund and other retirement accounts, corporate reserves including insurance reserves, cash in circulation, $US foreign central bank holdings and other non resident ‘savings’, etc.) is growing at ever higher rates, while private sector deficit spending has been subdued. Consequently, even with what may seem to be what historically has been a sufficiently high Federal deficit, GDP can retreat” [Mosler Economics].

Employment Situation: “[T]he rate at which unemployed Americans receive layoff compensation overall has fallen from about 36 percent in 2007 to about 28 percent in 2017, according to data from The Department of Labor. Wayne Vroman, an associate with the Urban Institute, said a big reason for the decline is that states are finding ways to kick unemployed people off benefits after they’ve already been deemed eligible” [HuffPo]. “States are still smarting from the Great Recession. At the beginning of last year, only 21 state trust funds had achieved what the Labor Department considers a minimum level of solvency. If they can’t catch up before layoffs hit, there will be political pressure to follow the new path that other states have taken to reduce benefits…. It’s an old pattern. After the recession of the early 1980s, changes in state benefits helped reduce the proportion of unemployed workers receiving compensation from 50 percent in 1980 to 37 percent in 1990.”

Debt: “The warning signs in consumer credit data” [The American Banker]. “Still, there are reasons to be concerned about rising debt levels. The personal savings rate hit a 12-year low at the end of 2017, which means that many households likely do not have enough of a financial cushion to weather sudden economic shocks, like a major medical bill or a busted refrigerator. Delinquencies on all types of consumer loans, while nowhere near 2009 and 2010 levels, have started to tick up in recent quarters. Factor in slow wage growth and high housing costs in many urban markets and it is not hard to imagine many households struggling to keep pace with their monthly bills.” And all the goods are coming East in containers on the assumption that “consumers” with depleted savings and high debt will keep buying. Maybe they will.

Housing: “Robust D.C. Home Prices All About Federal Power, Power, Power” [RealClearInvestigations]. “The beauty of buying residential real estate in Washington, D.C., is that the town is largely recession-proof. Washington is insulated from the “real” economy by your tax dollars and the permanent presence of millions of bureaucrats, contractors, lobbyists, military personnel, journalists, academics, service workers and others whose livelihoods are tied to the world’s most powerful government, not to mention thousands of well-paid diplomats and official at high-powered institutions such as the World Bank. As a result, values in both luxury homes and the broader market tend to hold their ground and appreciate in value over time – providing a less obvious leg up in life’s most important personal investment to those within the federal government’s orbit. If you’re one of the lucky ones, think of the high-end D.C. market as a casino where over time the house pretty much always wins – your house.”

Commodities: “World’s largest gold project just got even bigger” [Mining.com]. “The updated resource assessment shows estimated inferred gold resources have increased 302% to 20 million ounces. Estimated inferred copper resources, in turn, have grown 379% to 8.6 billion pounds.”

Shipping: “Shipping first as commercial tanker crosses Arctic sea route in winter” [Guardian]. “While polar conditions remain tough, the trend creates market opportunities. The northern sea route is shorter than alternatives through the Suez Canal for many trade links between Europe and Asia.” Tankers in the Arctic… What could go wrong?

The Bezzle: “John Bray: Agents use sunk-cost psychology to encourage bribery” [FCPA Blog]. “In her summary, Justice Adamson commented on the process by which the Jousif and Al Zubaidi had persuaded the Elomars to pay the bribe. They had already invested ‘psychologically and financially’ in Iraq before the demand came. Arguably, they were susceptible to the sunk costs fallacy – ‘the more you invest in something the harder it becomes to abandon it.’ However, she did not think this was a mitigating factor. The Elomars were seasoned businessmen who ‘calculated the risk and decided to send the money.’ She added, ‘It was their greed which motivated them to do so.'”

The Bezzle: “Online furniture pioneer Wayfair Inc. proved it can solve a logistics challenge, but doing it profitably is another matter” [Wall Street Journal]. “The company’s rapid growth has made it an icon in e-commerce logistics, with its in-house logistics network to manage delivery of bulky, heavy furniture to consumers helping the company pile up some $4.3 billion in sales in the past four quarters…. One study found Wayfair spends about $69 to acquire each new customer, but only gets $59 back from each acquisition. The weak brand loyalty may be tied to its lack of stores, which it must make up for with a big advertising budget, and that leaves the business vulnerable as online laggards get their web presence up to speed.” Blue Apron has the same problem with customer acquisition and retention.

The Bezzle: This is an important thread; Bray is a well-respected old-timer:

Mr. Market: “A Stock Market Primer, in Six Easy Steps” [Counterpunch]. “This bubble is a cloistered biosphere of Teslas and beach houses, of con artists, kleptocrats, and financial sorcerers.” Fun stuff!

Infrastructure: “‘The Trump administration unveiled its long-awaited plan to revitalize the country’s infrastructure, and its 53-page proposal amounted to little more than “a Hollywood facade,’ Schumer said from the Senate floor on Monday” [Politico]. “Schumer blasted the proposal in particular for leaving out any ‘Buy America’ proposals, an initiative aimed at using more American labor and materials in infrastructure projects that Democrats widely support and that Trump has championed. The top Senate Democrat went on to call on members of both parties in Congress ‘to sort of ignore’ the White House’s infrastructure request, saying Trump was ‘way off base on this.’…. Some conservative Republicans are already expressing shock at Trump’s total price tag, while Democrats say the share coming from the federal government would be too little to fill the backlog of crumbling roads, bridges, railroads, tunnels and airports, along with other needs like rural broadband service.”

Infrastructure: “Tennessee Republican Gov. Bill Haslam said Washington needs to replenish the Highway Trust Fund, which provides most federal transportation funding to the states. Several transportation groups are dubious about the plan. Waterways operators say it would hand them a tab for running inland navigations systems that far exceeds their trust fund. And American Trucking Associations’ chief Chris Spear says it falls short of the president’s campaign promise ‘to go big and bold'” [Wall Street Journal].

Infrastructure: “The White House’s more nuanced approach is not intended as a massive ‘stimulus’ program, which is not what America needs. What we do need is much better targeting of investment to infrastructure projects that deliver better value for money” [Reason]. “Both the Incentives Initiative and the Transformative Projects Program are aimed at this kind of project. And the former, in particular, is aimed at expanding the use of long-term public-private partnerships (P3s), for which hundreds of billions in private equity capital is interested and available. This money resides in for-profit infrastructure investment funds and in nonprofit public employee pension funds. Both are already investing in P3 infrastructure in Europe, Latin America, and the Asia/Pacific region, but very little here in the land of free enterprise. What they lack is a ‘pipeline of P3 projects.’ To the extent that states are unwilling to provide 80% of the funding for major infrastructure improvements, they will be motivated to offer such projects as long-term P3s—as pioneer states such as Colorado, Florida, Indiana, Texas, and Virginia have been doing.” Oh, great. Private equity putting up a toll-both everytime you turn around. Value for money indeed!

Tech: “How Apple Plans to Root Out Bugs, Revamp iPhone Software” [Bloomberg]. “Apple Inc. concluded it needed its own major upgrade in the way the company develops and introduces new products. Instead of keeping engineers on a relentless annual schedule and cramming features into a single update, Apple will start focusing on the next two years of updates for its iPhone and iPad operating system, according to people familiar with the change. The company will continue to update its software annually, but internally engineers will have more discretion to push back features that aren’t as polished to the following year.”

Tech: “Facebook Sees Its Gen Z Audience Slipping Away to Snapchat” [AdAge]. “Facebook is not just losing its audience, it’s losing its youth. The social network is expected to shed 18-to-24-year-old users this year for the first time, according to a new report from eMarketer, which predicts a 5.6 decline for the age group on Facebook. The analytics and data firm had already predicted a decline in usage of kids younger than 18, but now sees that exodus widening.” The harder they come…

Five Horsemen: “All five Horsemen are outperforming the S&P 500 again as last-place Apple rallies” [Hat Tip, Jim Haygood].

Five Horsemen Feb 13 2018

Today’s Fear & Greed Index: 12 Extreme Fear (previous close: 10, Extreme Fear) [CNN]. One week ago: 17 (Extreme Fear). (0 is Extreme Fear; 100 is Extreme Greed. Last updated Feb 11 at 7:00pm. Still lagged, WTF!!


“Warren Mosler, Connecticut’s Independent candidate for U.S. Senate today announced that it is an indisputable fact that U.S. Government spending is not operationally constrained by revenue and will give $100 million of his own money to pay down the Federal deficit if any Congressman or Senator can prove him wrong” [Mosler Economics]. I checked with Mosler. The offer is still good. Bring it on!

“Shelling Out: The Origins of Money” [Nick Szabo]. “The precursors of money, along with language, enabled early modern humans to solve problemsof cooperation that other animals cannot – including problems of reciprocal altruism, kin altruism,and the mitigation of aggression. These precursors shared with non-fiat currencies very specific characteristics – they were not merely symbolic or decorative objects.” Very interesting!

“The Full Employment Solution” [Mark Paul, William Darity Jr., and Darrick Hamilton, The American Prospect]. “What the nation needs is federal legislation that would guarantee employment to every American at non-poverty wages. Similar legislation to what we envision has already been introduced to Congress (H.R. 1000, the Jobs for All Act, which has 29 co-sponsors). In our proposal, we would first establish the National Investment Employment Corps (NIEC), a permanent agency to oversee direct employment of all Americans seeking a job. If individuals were unable to find adequate employment in the private sector, they could turn to the government for employment. In return, the government would provide employment at non-poverty wages. The minimum yearly salary would be at least $24,600, with guaranteed benefits as well.” Darity, at least, is not a CAP creature.

Our Famously Free Press

“Giant advertiser Unilever threatens to pull its ads from Facebook and Google over ‘toxic content'” [Los Angeles Times]. “One of the world’s largest advertisers is threatening to pull its ads from social sites such as Facebook and YouTube if the tech companies don’t do more to minimize divisive content on their platforms…. ‘Fake news, racism, sexism, terrorists spreading messages of hate, toxic content directed at children — parts of the internet we have ended up with is a million miles from where we thought it would take us,’ [Unilever’s chief marketing officer, Keith Weed] said in a speech at the Interactive Advertising Bureau’s Leadership Meeting in Palm Desert. ‘It is in the digital media industry’s interest to listen and act on this.'” Hopefully, a Sanders 2020 campaign message won’t be declared “divisive.” Not that our famously free press needed an excuse to censor Sanders in 2016.

“INSIDE THE TWO YEARS THAT SHOOK FACEBOOK—AND THE WORLD” [Wired]. A tick-tock on Facebook’s ugly last two years. Nobody talks about breaking Facebook up, oddly.


“When people think of water crises, they tend to think of big cities like Flint, Michigan, or Cape Town, South Africa. These places understandably attract the most attention, because one faulty system in an urban area can affect vast numbers of people at once. But, in reality, most health-based violations of drinking-water standards occur outside of big cities, in places like Martin County: small, poor, out of the way. Of the 5,000 drinking-water systems that racked up health-based violations in 2015, more than 50 percent were systems that serve 500 people or fewer. In those small areas, who is going to raise hell except for the people affected and maybe the local paper?” [The New Republic]. “Put all these systems together, however, and rural America’s drinking-water situation constitutes a crisis of a magnitude greater than Flint, or any individual city.”

Neoliberal Epidemics

“We know that a low sense of control is highly associated with anxiety, depression, and virtually all mental health problems. Researchers have found that a low sense of control is one of the most stressful things that people can experience” [Scientific American]. “Changes in our culture in the last 10 or 15 years appear to have contributed to an even sharper decline in a sense of control. For one, kids play much less than they did even a decade ago, as their time is taken up by more school hours, more scheduled activities, and more screen time than ever before. Researcher Peter Gray was one of the first to connect fewer opportunities to play to a decline in a sense of control. When kids could spend most of their Saturday playing, they could choose their own games and how to play them. They had a lot more autonomy and a lot more agency than kids do today. A typical Saturday now is often packed with homework and organized sports events.” Oddly, the article doesn’t mention security culture at all…

News of the Wired

“An effortless way to improve your memory” [BBC]. “When trying to memorise new material, it’s easy to assume that the more work you put in, the better you will perform. Yet taking the occasional down time – to do literally nothing – may be exactly what you need. Just dim the lights, sit back, and enjoy 10-15 minutes of quiet contemplation, and you’ll find that your memory of the facts you have just learnt is far better than if you had attempted to use that moment more productively.” Wait, what?

Here is another example of tech people having no idea what they’re really “disrupting”:

Can they really believe that the central functions of the Manhattan door man have anything to do with opening doors?

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Readers, feel free to contact me at lambert [UNDERSCORE] strether [DOT] corrente [AT] yahoo [DOT] com, with (a) links, and even better (b) sources I should curate regularly, (c) how to send me a check if you are allergic to PayPal, and (d) to find out how to send me images of plants. Vegetables are fine! Fungi are deemed to be honorary plants! If you want your handle to appear as a credit, please place it at the start of your mail in parentheses: (thus). Otherwise, I will anonymize by using your initials. See the previous Water Cooler (with plant) here. Today’s plant (Annie Spratt):

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


    1. MyLessThanPrimeBeef

      I realized my mistake immediately, for there was no reason at all to confuse that with a suit pinned or duct-taped with dollar bills.

  1. DJG

    Today, I will channel Paracelsus:

    Paracelsus was born in Egg, a village close to the Etzel Pass in Einsiedeln, Schwyz. He was born in a house right next to a bridge across the Sihl river (known as Teufelsbrücke). According to Wikipedia.

    I have met the Green Man. I know the Green Man. Obama is not the Green Man.

    Is that tweet PhotoShopped?

    And he still can’t figure out how to tie his damn necktie.

    1. MyLessThanPrimeBeef


      Egg, and Teufelsbruecke (Devil’s Bridge?).

      Wonder if he liked or made good deviled eggs?

  2. Mark Gisleson

    You can never have too many contested primaries. Eliminating contested primaries is a tool used by neoliberals to keep crappy incumbents in office.

    When I was an officer of the Democratic party in Des Moines in the late ’70s, it was considered absolute gospel that you wanted as many contested primaries as possible. We actually recruited challengers, once even to run against an incumbent (not to win but simply to keep that race in the news).

    The strategic reasons are countless. The only reason for objecting to contested primaries is if you believe that only MONEY can win an election, and that contested primaries dilute that all too precious commodity.

    Reliance on money has ruined the Democratic party. Contested primaries will fix that.

    I’ve said this here before: out-of-state money BEFORE the primaries is a crime against democracy. Let the locals decide. The DCCC is only local in DC.

    P.S. When money drives races, our corrupt media gets most of that money with consultants next in line.

    1. Summer

      Contested primaries are the only way to lower the big money ROI – even if the challenger to the establishment candidate wins.

      Need even MORE contested primaries – even if the challenger isn’t really seriously raising money, make noise to make ’em spend and spend and spend and spend and spend to win…

      1. Pat

        Also to make it obvious they are trying to drown out popular ideas, things like not cutting up but expanding Social Security, Medicare for All, and yes, even no more military adventurism. It is going to take awhile for the extent of the security state spying on Americans gets popular, but I think that is coming as well.

        I especially want it for big names in the Democratic Party. Nancy Pelosi having to actually defend her record would be very nice. (Losing to some Medicare for All, Russia is not our problem, no privatization lefty firebrand would be even better as I remember a whole lot of Republicans began shaking in their boots when Cantor lost).

        But yes, lots of people running is a very very very good thing.

      2. Arizona Slim

        A longtime friend and mentor is now in the Arizona House of Representatives because she won a contested Democratic primary.

        Winning that contest, against someone who had been hand-picked to fill an open seat a few months earlier, sharpened my friend’s game and made her the one to beat in the general election. She won and is now running for reelection.

    2. makedoanmend

      M Gisleson, Thanks for the ‘mechanical’ insights into how local races should be contested, and especially how outside money (money in total?) should be banned. Actionable info. Ta

  3. Left in Wisconsin

    On house prices in D.C.:
    providing a less obvious leg up in life’s most important personal investment to those within the federal government’s orbit. If you’re one of the lucky ones, think of the high-end D.C. market as a casino where over time the house pretty much always wins – your house.”

    That “within the federal government’s orbit” strikes me as another dig at the public workforce. But if it is, I don’t think it is right. My guess is that government towns have become boom towns NOT primarily due to recession-proof public workers but due to the business of government, i.e. outsourcing/privatization. While it is certainly possible to earn a middle class lifestyle as a career federal employee (between the shutdowns), there is simply no way the typical federal employee is going to be able to spend a million, or whatever it costs, to buy a modest house in DC. Whereas the real money in government is in contracting. And lobbying.

    1. Lambert Strether Post author

      > My guess is that government towns have become boom towns NOT primarily due to recession-proof public workers but due to the business of government, i.e. outsourcing/privatization

      I agree!

    2. Jim Haygood

      The beauty of buying residential real estate in Washington, D.C., is that the town is largely recession-proof.

      This is reminiscent of claims during 2001-2006 (and even as early as the 1980s) that coastal real estate only goes up for-evahhhh.

      Nineteenth century residents of DC were scathing in denouncing its miserable lowland climate — suffocating in August (thus the enduring Congressional recess in that month); prone to snowstorms in winter.

      Crackpot fiscal stim to the tune of five percent of GDP may make DC boom for a day or two. But in the long run, it’s not sustainable. And neither is DC’s real estate bubble. There are nicer places to live.

      1. NotTimothyGeithner

        There are still neutron bombed areas from the end of the Cold War in Northern Virginia, less now (I was there the other day). Property prices have gone up of course, but those outside the lobbyist sphere are still over paying. A realignment of federal spending would be a financial disaster. The bed room communities of the DC metro area have nothing going for them except for the federal spending.

        Interestingly enough, the prices for places such as Old Town Alexandria aren’t terrible when you compare them to similar metro areas. The prices of those just awful match stack houses are so out of control, people are just throwing money at houses that aren’t going to last and in crummy neighborhoods where you have to drive everywhere and in awful traffic.

  4. Pat

    I realize the American Prospect piece on full employment is advocating for non-poverty level wages with benefits, which seems to me to be a term that allows for a lot of smoke and mirrors, and that I’m of the school that wages should cover housing, utilities, food and transportation so we are probably not talking the same thing. Especially since I believe that the federal poverty level is not just artificially low, it is *family blog* ridiculous.

    Still I think the authors should address how many places $24,600 gross will not cover housing, utilities, food and transportation even if having benefits means that someone doesn’t also need to fund any healthcare costs (which in America is also NOT a given even for government provided health insurance) .

    1. none

      There’s some kind of economic rule or principle that actually has a name–does anyone know what is? It basically says that in a region (think of Silicon Valley) that somehow attracts economic growth and increasing income, the cost of housing invariably increases until almost all the new surplus ends up going to landlords. I forget were I heard this but it explained a lot.

  5. Jason Boxman

    In Orlando, they’re solving the horrendous traffic on I-4 through a decade long project of widening it to add express toll lanes for wealthy people that vary based on congestion. At that point, I realized it was time to peace out of the state. I don’t regret my decision. (Orlando resides in Orange county Florida, where the county mayor conspired via text with local companies to nix paid sick leave from the ballot some years ago. Great place to live…)

    1. SerenityNow

      Toll roads built in the service of profits for shareholders are probably never a good thing. But toll roads built in the service of regulating road space are probably the best way to ensure a consistent flow of traffic at whatever level is desired. “Free” roads encourage unlimited driving, but suffer from congestion, which gets paid for in time. Tolls and congestion pricing are a way of letting people pay in currency instead of time. Yes, this may disproportionately impact people who have more time than money (or less of both), but there are better ways to ensure good traffic flow than providing unfettered access to road space (such as providing people under a certain income X amount of stipend for tolls, etc).

      Basically, roads are a lot like electrical lines—they shouldn’t be metered because someone wants to make money, but because society desires a constant, consistent flow, and attaching a price to that helps people regulate their use (think of how people use resources in places where they don’t pay for water, or natural gas, or a renter doesn’t pay the heat–they use it as much as they can. Using road space is just the same). If electrical rates weren’t higher on the hottest hour of the hottest day of the year, the electrical infrastructure would run out of capacity. Our road system, for the most part, is just like that electrical infrastructure but without any metering.

      I’m no fan of the privatization of infrastructure, especially because the public ultimately loses–but the concept of regulating through prices, if evenly applied, could do remarkable things for our traffic congestion problems (As in Singapore: because of their road pricing you can expect to drive 60mph at any hour of the day, you just must be willing to pay for it). And to emphasize again that I am not for the privatization of infrastructure, I would propose even returning the toll/congestion/road pricing fees paid to each payer at the end of the year, making that money less of a profit than a tool for managing space. Of course, I’m aware this is all a pipe dream…

      1. tegnost

        well there’s always funding public transportation, but what will you do to upsell, charge more money for the front seats in the bus? Tolls on public thoroughfares, otherwise known as the commons, are a simple pay to play scheme. I got this argument re net neutrality, just this weekend, why shouldn’t people be able to pay for faster service? Why shouldn’t you, if you can afford it, pay to get access to a public right of way that has been throttled so only rich can afford to use it? You’re no fan of privatization, but the not so free market can solve this “problem” of rich people having to suffer in the decrepit infrastructure that in their zealous pursuit of wealth has left in shambles? But now they’re willing to (possibly) pay (a fraction of the cost) if all the benefits go to them. I also had to listen to npr, and this may come as a surprise to ali of you but RUSSIA!… It’s a bit numbing to say the least…..

      2. Octopii

        A portion of I-66 in Northern Virginia was recently turned into HOT lanes, operated by the state. Today the toll from the beltway in to DC hit forty-six bucks and change, just short of the all time record. It’s routinely $15-40 for the ten mile trip in rush hour.

        Dynamic tolling doesn’t work if you don’t have any spare road capacity and your public transit system is always broken.

        1. SerenityNow

          The question is—if you pay the $15-40 for the hot lanes, are you able to time your trip with a measure of certainty? Are people in Woodbridge, VA able to leave their houses at whatever time and be sure that they can reach their destination by 9am? That is where dynamic pricing becomes very efficient–because they can build some amount of certainty into the system.

          Dynamic tolling is the same as dynamic electric pricing–it cannot create any spare capacity, but it can manage existing capacity to whatever level is required. Imagine all lanes into DC became HOT lanes tomorrow–all of a sudden driving would get a lot more expensive, and living in West Virginia wouldn’t really make sense anymore. But, the road managers (again, I’m imagining an ideal, publicly owned system) could guarantee that if you were willing to pay for your road space, you could reach your destination at the same time every single day, with a consistent level of service.

          And, a city can have all the public transit in the world, but if people find it more convenient/cheaper (in terms of time or money) to drive, that is the choice they will make. Transportation mode choice is generally not a moral choice, but a practical one.

  6. allan

    Consumer protection agency drops lawsuit against lender that charged 950 percent interest rates [The Hill]

    … The case against Golden Valley Lending had taken CFPB staffers years to establish, but new agency director Mick Mulvaney instructed staffers to drop the lawsuit, according to NPR. …

    And from the original NPR story:

    … Mulvaney declined requests for an interview. In an email, his press representative first said the decision to drop the Golden Valley lawsuit was made by “professional career staff” and not Mulvaney.

    But several CFPB staffers that NPR spoke to say that’s not true. The staffers, who spoke on condition of anonymity for fear of losing their jobs, say Mulvaney decided to drop the lawsuit even though the entire career enforcement staff wanted to press ahead with it.

    After repeated questioning from NPR, Mulvaney’s press person acknowledged that Mulvaney was indeed involved in the decision to drop the lawsuit. …

    Counting how many of the Ten Commandments are violated in this story is left as an exercise for the reader.

    1. cm

      Hmm, if we’re supposed to be outraged by the idea of 900% interest rates, maybe we should ask Warren (D-MA, and the effective creator of the CFPB) why the Legislative Branch didn’t pass a law outlawing 900% interest rates during their various times of power (that is, when the D’s held a veto-proof majority)…..

      It is almost as though the R’s & D’s are indistinguishable in regards to actual policy.

  7. Summer

    Re: The Full Employment Solution” [Mark Paul, William Darity Jr., and Darrick Hamilton, The American Prospect]
    “If individuals were unable to find adequate employment in the private sector, they could turn to the government for employment. In return, the government would provide employment at non-poverty wages. The minimum yearly salary would be at least $24,600, with guaranteed benefits as well.” Darity, at least, is not a CAP creature.”

    First, this shows how out of touch they are with the cost of living for ESSENTIALS (not the fraudulent “inflation” basket).

    Second, it doesn’t address economic disparity as a factor in creating poverty. It’s talked about as an economic structure that would be sound with just adjustments to the floor of structure with no discussion about a ceiling, or the relation between the floor and the ceiling.

    Third, the private sector also has to raise wages. Back to the floor/ceiling analogy. Triggers for increases and pay for the CEOs/VPs should cause triggers for wage increases for other employees.

    1. DanB

      The $24.6K figure may be in touch with a neoliberal reality: give just enough to survive, be consumers, and still be deprived of a decent life.

      1. Summer

        Additionally, the poverty line and inflation rates should be set regionally/locally – not nationally.

      2. Left in Wisconsin

        Darity and Hamilton are not neoliberals – don’t know who Paul is. This is a proposal to show that such a plan is feasible. I’m quite sure they don’t expect it to become reality.

        1. Summer

          “I’m quite sure they don’t expect it to become reality.”

          Indeed. One ear their whispering job guarantees for people and in the other they’re whispering invest big money in automation.

  8. Pavel

    Re: Obama Legacy

    In a previous lifetime I was an art collector so I hope I have some semblance of good taste :)

    That aside, my verdict on the B. Obama portrait: “trying too hard”. All very green and almost hippie-esque but this is after all the man who didn’t prosecute the banksters or torturers, droned countless innocents, and enabled a vast surveillance state. So forgive me if I’m not impressed.

    As for the M. Obama portrait: I find her a very attractive woman, but the painting didn’t do her justice (and she was barely recognisable), and seemed too focussed on her her oh-so-trendy dress.

    Of course YMMV :)

    1. Pat

      I’m not an art collector, but in truth I believe you are being too kind. It isn’t just that you notice the dress first, as in focus, for the Michelle Obama portrait, it makes her wallpaper in the piece. It’s like those drawings that were in Highlights magazine where you had to find the objects hidden in picture, only in this case it is the supposed subject of the painting.

      Mind you, in some ways the Barack Obama painting is more appropriate than I think they might want, the drab shades of gray man ignoring the teeming life behind him fits his Presidency. If it wasn’t part of his colorless money driven world it was ignored and pushed to the background. Still doesn’t make it good.

      1. polecat

        The B. Obama ‘portrait’ looks to me anyway, as of a rare moment when Barack partially disengaged his cloaking device. Publicly, the O-Man was a mirage, while his true visage was that of a shiny, shimmering predator, looking for trophies and acceptance in places high and low .. at the expense of hOpe less.

        I do kinda like Michelle’s portrait however …. especially those accent on the dress, the ones that remind me of radiation symbols.

  9. a different chris

    >that economists warn would only serve to drive up prices for American consumers

    Fixing it: that economists warn would only serve to drive up prices for American tenured ivory-tower economists.

    There. “American Consumers”, subtracting the parasite class, are also American Workers and you know, I’m not for walling us off but there needs to be a balance between maintaining a tenured economist’s purchasing power and ensuring Junior something better than a McJob.

  10. a different chris

    >parts of the internet we have ended up with is a million miles from where we thought it would take us

    Wow, get out much Keith? BTW, did you notice you last name was “Weed”??? Teh whole internet did :) :) :)

  11. Synoia

    Unfortunately, liberal Democrats don’t have a good message on either economics or health care, which is why the Russia hysteria, the drumbeat of moral panics, etc.

    The lack of a good message is a bug or a feature?

    My money’s on feature. The D’s wouldn’t want to piss of the rich donors….

    1. polecat

      This ! .. and their full-on new found reverence for all things Big Security, domestic and abroad.
      … which is why they will likely lose, in both the `18, AND the 2020 festival of cLoWn$.

  12. shinola

    The Counterpunch Stock Market Primer article reminds me of an Econ. prof I had in college. His take on the stock market:

    -The stock market is the only form of gambling that is legal in all 50 states.

    -The only way to consistently make money in the stock market is by having insider information. (Tihe “House” always wins)

    This was circa 1974.

    1. Arizona Slim

      When Joe Dominguez (of Your Money or Your Life fame) worked on Wall Street, he called it The Casino. That moniker didn’t make him very popular among his fellow Wall Streeters.

        1. The Rev Kev

          Good book that. I have it sitting on my shelf right next to my copy of “The Richest Man in Babylon”

    2. Jim Haygood

      Since the end of 1974, a buy-and-hold investment in the S&P 500 index has returned 12.26% compounded annually in the succeeding 43 years.

      Jack Bogle founded the first S&P 500 index fund around that time, so you could actually have achieved this result, minus a fractional percent for fees (quite high back then, negligible now).

      You could have beat this result running your own business. But only a tiny portion of Americans ever succeed in the attempt.

  13. MRLost

    Regarding H.R. 676 Medicare For All Act, I just checked and Don Beyer, Virginia Democrat, is a cosponsor of H.R. 676. Since I am a constituent of his, I sent a nastygram email to his congressional office and they emailed me right back, directing me to his House Members page listing the legislation he sponsors or cosponsors and sure enough, there’s H.R. 676.

    I am no fan of Rep. Don Beyer because he is proof positive that if you have lots of money, you can buy a House seat and get to be US Ambassador to Switzerland in the process. He’s a Blue Dog, but he is also a cosponsor of the Medicare For All Act.

  14. Daryl

    > 73 of the 193 House Democrats aren’t cosponsoring H.R. 676, (#MedicareForAll).

    Surprised to see Lloyd Doggett on the “not” list, as well as Beto O’Rourke (the Democratic senate candidate who claims to be for single payer).

  15. Elizabeth Burton

    For those interested in finding and/or supporting the many newcomers challenging incumbents for this November and later, I got this from Brand New Congress this a.m. Note that the examples are each from a different party, which seems ample evidence to me that it’s the message, not the party.

    BNC Democrat Anthony Clark (IL-07) almost had his petition for candidacy thrown out after supporters of the incumbent outrageously accused him of submitting forged signatures. They even tried to bully voters into lying to support their claim. Anthony had to hire an attorney to defend him against these false accusations. Thankfully, the truth prevailed, and the judge ruled in Anthony’s favor. But victory is bittersweet: He spent 2 months in court instead of meeting voters, and now he’s stuck with $12,000 in legal fees he needs to pay ASAP.

    BNC Republican Robb Ryerse’s (AR-03) story is a little more straightforward. Robb doesn’t have to collect thousands of signatures or hire a lawyer to fend off false claims. He only has to pay a king’s ransom of $15,000 just to get his name printed on the ballot in Arkansas.

    The current representatives for Illinois’ 7th and Arkansas’s 3rd, Danny Davis (D) and Steve Womack (R), may not agree much on policy, but they both benefit from this system that protects them from new people with new ideas running for their seat.

    Anthony and Robb are different. Even though Anthony is a Democrat and Robb is an Independent Republican, they stand united on the policies most Americans want. Things like: Medicare for All, transitioning to a 100% renewable energy economy, rebuilding our infrastructure, and getting money out of politics, just to name a few.

    We’re sick of the same old tricks from the same old Congress. It’s time to put people before party and elect a Brand New Congress.

    All of BNC’s candidates are forgoing Big Money, so being forced to spend hard-won cash on legal and other fees is bad.

  16. Matthew G. Saroff

    I think that Unilever is dog whispering to Facebook & Google.

    On my blog, I note a little quote about halfway through the message, “We cannot continue to prop up a digital supply chain – one that delivers over a quarter of our advertising to our consumers – which at times is little better than a swamp in terms of its transparency.”

    That’s not about ads inadvertently showing up on a Logan Paul video, that is about how ad metrics are about as reliable as Tesla’s autopilot feature.

    I think that this is his way of saying that he wants to stop shelling out to Chinese click farms.

    IIRC, NC has commented on this occasionally.

  17. Fastball

    Obviously, Obama needs to break up his outline with camoflauge to avoid anyone spotting him and asking him about the $400K speeches he makes to Wall Street.

  18. Paul Cardan

    In “Shelling Out: The Origins of Money,” Nick Szabo tells us that “Evolutionary psychology starts with a key mathematical discovery of John Maynard Smith.” The “discovery” seems to be a matter of applying game theory to genes. There are at least two questionable moves here. First, game theory is not predictive. The “theory” of a game, like Prisoner’s Dilemma, no more predicts an outcome than the Pythagorean Theorem predicts that every right triangle will satisfy it. Rather, just as the Theorem tells us that anything that counts as a right triangle must be re-describable in accordance with the formula of the Theorem, so the “theory” of the Prisoner’s Dilemma tells us that any game that counts as a game of that kind must be re-describable as a game in which both players confess. But I thought folks in ev psych want to explain both historical change and present-day institutions, and I thought the kind of explanation they’re after is retrodiction, predicting after the fact. Second, players in the games of game theory are conceived of as agents whose doings amount to actions, where actions are to be explained in a distinct way: by reference to reasons of various kind, chiefly goals but also motives and that which the agent believes or even knows. Human agents are, moreover, rule-followers, as when a chess player, having adopted some strategy, distinguishes between moves that are correct, relative to the strategy, those that are not, and chooses to make some move for the reason that it accords with the strategy. In fact, it seems that the players in game theory are conceived of not only as agents but also as rule-followers, since they are said to adopt strategies. If this is correct, then it makes little or even no sense to apply game theory to genes. Genes are not agents; they do not follow rules.

    The opening genetic gambit is a neat trick though, since it allows the author to avoid the problem of having to take account of the myriad of conceptual schemes (aka languages) employed by non-Western, premodern, and/or “primitive” people. We can ignore their reasons in favor of the little, genetic homo economicus inside each and every one of them. Unfortunately, it seems to me as though he bungles the job once he gets into the details of the problems of barter. He explains the problem by appeal to notions of cost and benefit which he attributes to the human agents in question. Do all human beings everywhere and at all times have these concepts? ‘Costs’ in our sense are comparable and ordered, as are benefits, even though the items to which the term refers can be of the most varied quantity and quality. Benefits can be somehow weighed against costs. Similar considerations hold for the author’s use of ‘trade’ and ‘exchange.’ ‘Money’ too.

  19. Summer

    Re: “1/ Suffering from disorientation and cognitive dissonance around blockchain and Bitcoin. It’s time to stop the craziness.”

    I read the thread in response. They think crypto-currencies are a hedge against a financial collapse. However, I still don’t see either the currency or the blockchain, in the event of collapse, being anything but more of the same with a different name. It’s still all the same speculative mindset that leads to financial collapses.

  20. Tomonthebeach

    Where William Stixrud and Ned Johnson may be off the mark in their study reported in the Scientific American is that old guys, like me, they assume a future society in which autonomy was a factor in happiness and success.

    It is possible that we are appropriately preparing our offspring for a very different future – one with far less autonomy – a monopoly-owned corporate existence in which survival will depend on being told what to do, and doing it; and one in which leisure recedes into corporate life along with individualism, and achievement needs. The future is already moving toward a caste society in which the havalots cannot fail, and the don’thavemuch depend on their largesse for survival. A benign term for it was fiefdom and monarchy.

    1. Lambert Strether Post author

      > It is possible that we are appropriately preparing our offspring for a very different future – one with far less autonomy

      Yes, I worry about that a lot. IIRC, evolution can be seen in historical time. So what if market-driven behavior in our neoliberal “environment” is adaptive? Until it isn’t.

  21. polecat

    You know, upon reflection .. I now think google’$ DeepDream should’ve been the, uh, ‘artist’ commissioned to, er, ‘paint’ the Obama portraits …. Just imagine if you will .. a whole googleplex of shimmery, erratic, and radiating protuberances/eyes/holes .. and dog knows what else !!
    × 2

  22. Greg

    Don’t be too snark about the new frame they’ve built for bigdog at Boston Dynamics – the point is not to open doors, but opening doors is one of the things that make it onto the list of useful robot capabilities. Featured in many forms in the life saving routines required in the darpa challenge the other year, as well as cutting through walls and unreeling firehoses and stuff.

    And you know, prior evidence is that everything it does, doors or otherwise, is first intended for military purposes. The new lighter frame is probably a direct response to the failure of the marines LS3 trial of the original bigdog generation due to the excessive bulk and noise of the turbine generator they had to use.

    1. polecat

      If they can open doors, they can also bar them ! … perhaps with YOU or I on the inside, or out … depending on the circumstances !
      And just imagine that little doggie, seething with tinsy tiny slaughterbots .. like fleas, but with a higher, more sinister purpose !!
      The Future will not be flying cars and jet packs. It will be Death, by a 1000 cuts !

  23. dcblogger

    Consortiumnews has been running a great series on the national security state runamuck:

    Upon closer inspection, it’s a safe bet that many of the people called “Russian trolls” that are allegedly destroying American democracy aren’t Russian or on Russian payrolls at all. They are Americans expressing political views and sharing articles.

    The sampling that Clint Watt’s and Aaron Weisburd’s failed Hamilton 68 Dashboard uses is tiny and easily skewed. If a handful of people can generate the second highest hash tag position, the “real time” tracking of Russian propaganda is totally undermined.

    More troubling, in recent years more of these Intel-for-Hire contractors have gone offline working with direct action units in other countries that are committing murder. More on this in a later installment.

  24. Jessica

    “Shelling Out: The Origins of Money”
    A minor quibble about an excellent article, but as anthropologist David Graeber points out, there is no actual evidence that barter preceded the use of money. Historical cases of actual barter occur where there has been a money system in the past but it has broken down. What precedes cash money is credit systems. Cash seems to arise when there is no longer enough trust to run a credit system, for example when kings start waging war with mercenary armies.

    1. Wukchumni

      The indians tribes around me never had money, but traded extensively with other tribes that had something that was scarce in their community. Barter was a way of life.

      For instance the Paiute had obsidian and pine nuts, while the tribe where I live had chert, which was lousy for using as arrowheads compared to obsidian, but they had oodles of acorns and animal pelts with which to trade. The indians @ Tulare Lake had tule reeds, perfect for roof thatching.

    2. Paul Cardan

      Right. He assumes the old story about the origin of money. But it seems to me there’s no shortage of old wine here. Paleolithic people, we are told, were constantly on the verge of starvation, and they were very warlike. Hmm, I’d guess their lives were probably short then. So, nasty, brutish and short. Where have I heard that before? And he doesn’t hesitate to naturalize our society at every turn, even going so far as to project it onto non-human animals. So very Victorian. Consider the following passage:

      The appraisal or value measurement problem is very broad. For humans it comes into play in any system of exchange – reciprocation of favors, barter, money, credit, employment, or purchase in a market. It is important in extortion, taxation, tribute, and the setting of judicial penalties. It is even important in reciprocal altruism in animals. Consider monkeys exchanging favors – say pieces of fruit for back scratches. Mutual grooming can remove ticks and fleas that an individual can’t see or reach. But just how much grooming versus how many pieces of fruit constitutes a reciprocation that both sides will consider to be “fair”, or in other words not a defection? Is twenty minutes of back scratching worth one piece of fruit or two? And how big a piece? Even the simple case of trading blood for blood is more complicated then it seems. Just how do the bats estimate the value of blood they have received? Do they estimate the value of a favor by weight, by bulk, by taste, by its ability to satiate hunger, or other variables? Just the same, measurement complications arise even in the simple monkey exchange of “you scratch my back and I’ll scratch yours” (4)

      We are invited to believe that bats engage in trade. Since cooperation is a problem (conflict being treated as if it required no explanation) solved by the optimal strategy of tit-for-tat and that strategy requires measurement of value (so as to identify defectors), bats must employ some measure by which to distinguish more or less of some homogeneous value stuff. If you think about it, such a measure just is one of those things we mean by ‘money.’ So, monetary considerations determine whether or not blood trading bats will engage in acts of reciprocal altruism with non-kin. It’s as though they’re making decisions about cooperation on the basis of credit scores. Didn’t know they had it in them. Even bats. Good thing bats were never able to develop a system of signs with which to track changes in account balances. They might have invented banking long before we arrived on the scene. We’d all be working for them.

      1. UserFriendly

        Yeah, that article was highly derivative of Adam Smith. There is a whole ton he got flat wrong. I highly recommend Alfred Mitchell-Innes for a great debunking of all this barter nonsense.

        ‘What is Money‘ 1913
        ‘The Credit Theory of Money’ 1914

        Though it would be hard to imagine a greater contrast than that between the condition of feudal France and that of North America in the eighteenth century, yet it is interesting to observe the close analogy in some respects between the monetary situation in olden France and that of the new world in colonial days and in the early days of the United States. There the Pound behaved just as the Livre had done in France. It was the monetary unit in all the colonies and subsequently for a time in all the States, but its value was not everywhere the same. Thus in 1782 the silver dollar was worth five shillings in Georgia, eight shillings in New York, six shillings in the New England States, and thirty-two shillings and sixpence in South Carolina.

        But there were no coins bearing a fixed relation to any of these various pounds and, in consequence, when Alexander Hamilton wrote his report on the establishment of a mint, he declared that, while it was easy to state what was the unit of account, it was “not equally easy to pronounce what is considered as the unit in the coins.” There being, as he said, no formal regulation on the point it could only be inferred from usage; and he came to the conclusion that on the whole the coin best entitled to the character of the unit was the Spanish dollar. But the arguments which he gave in favor of the dollar lost, as he himself said, much of their weight owing to the fact that “that species of coin has never had any settled or standard value according to weight or fineness; but has been permitted to circulate by tale without regard to either.” Embarrassed by this circumstance, and finding in fact that gold was the less fluctuating metal of the two, Hamilton had difficulty in deciding to which of the precious metals the monetary unit of the United States should in future be “annexed” and he finally concluded to give the preference to neither, but to establish a bi-metallic system, which, however, in practice was found to be unsuccessful.

        One of the popular fallacies in connection with commerce is that in modern days a money-saving device has been introduced called credit and that, before this device was known, all, purchases were paid for in cash, in other words in coins. A careful investigation shows that the precise reverse is true. In olden days coins played a far smaller part in commerce than they do to-day. Indeed so small was the quantity of coins, that they did not even suffice for the needs of the Royal household and estates which regularly used tokens of various kinds for the purpose of making small payments. So unimportant indeed was the coinage that sometimes Kings did not hesitate to call it all in for re-minting and re-issue and still commerce went on just the same. The modern practice of selling coins to the public seems to have been quite unknown in old days. The metal was bought by the Mint and the coins were issued by the King in payment of the expenses of the Government, largely I gather from contemporary documents, for the payment of the King’s soldiers. One of the most difficult things to understand is the extraordinary differences in the price which was paid for the precious metal by the French Mint, even on the same day. The fact that the price often, if not always, bore no relation to the market value of the metal has been remarked on by writers; but there is nothing in any record to show on what it was based. The probable explanation is that the purchase and sale of gold and silver was in the hands of a very few great bankers who were large creditors of the Treasury and the purchase of the metals by the Mint involved a financial transaction by which part payment of the debt was made in the guise of an exorbitant price for the metal.

        1. dontknowitall

          On this whole subject I recommend the wonderful book by David Graeber “Debt: The First Five Thousand Years” where he clarifies a lot of the unfounded theorizing on debt and barter.

  25. VietnamVet

    The West is driving towards monopolies, concentration of power and the end of democracy. The downside of the demise of cheap energy is that growth needs new markets to loot. Russia and China have nixed Eurasia. All that is left at home is the privatization of infrastructure, VA, Medicare and Social Security. The Trump Administration turned its back on populism that elected them.

    The outlook is bleak; a once in a century middle class revolt or the intentional outbreak of a world war with North Korea or Iran or by mistake with Russia and China.

  26. The Rev Kev

    Talk is cheap: the myth of the focus group

    The trouble with focus groups is how they are chosen and if, in fact, they are representative of the people that you are trying to reach. A few years ago I saw another example of this at work with behavioral scientists of all people. Their whole body of work became suspect when behavioral scientists out in the field were getting strange results when testing indigenous people. The results found were not what they should be getting. It took a little while to realize that when testing their theories at home, that they were selecting the easiest people to find to study – students at the universities that they worked at.
    Thus their samples were drawn almost entirely from Western, Educated, Industrialized, Rich, and Democratic (WEIRD) societies which is a very narrow slice of the sociological pie indeed. This even became a study (http://hci.ucsd.edu/102b/readings/WeirdestPeople.pdf) to help off-set all the broad claims about human psychology and behavior in the world’s top journals.
    Sometimes the results of focus groups are ignored like in early 2016 when focus groups of swing voters picked up warning signs for Democrats about Donald Trump’s general election candidacy and their difficulties with young African-Americans were highlighted in September of that year. The warning signs were all their but I guess that they were all swept under the rug as it would throw doubt on the democrat candidate.

  27. Wukchumni

    “Shelling Out: The Origins of Money” [Nick Szabo].
    Interesting article…

    Most of the examples were what are termed ‘odd & curious money’ and all kinds of things have been utilized for exchange, almost always based on scarcity. In Europe some of the more fascinating ones are money struck whilst a city is under siege. In the Netherlands, coins were ‘struck’ out of bible pages, and in Ireland, coins were struck from metal that came from cannons.

    An interesting example of scarcity was the California Gold Rush, the one thing nobody lugged out from back east was coins, who would bother?

    As a result, most everything was priced in gold dust or nuggets, and not long after, a series of private mints struck gold coins to satisfy the need in commerce for fungible money, and in 1854, a U.S. mint was opened in San Francisco to satisfy the demand.

    1. Mel

      “coins were struck from metal that came from cannons”

      Inapropos, an alchemy joke from John Gay’s The Beggar’s Opera. To the march from Rinaldo by G.F.Handel:

      Let us take the Road.
      Hark! I hear the Sound of Coaches!
      The Hour of Attack approaches,
      To your Arms, brave Boys, and load.

      See the Ball I hold!
      Let the Chymists toil like Asses,
      Our Fire their Fire surpasses,
      And turns all our Lead to Gold.

  28. Wukchumni

    A banner day on the slopes, 8 new inches of snow yesterday covered up icy bits and a mixture of fast moving clouds and blue skies made for a fun day.

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