tag:blogger.com,1999:blog-8375175091050207746.comments2013-09-03T03:23:05.128-04:00Chaos LyceumFibocyclehttp://www.blogger.com/profile/05270612148813063514noreply@blogger.comBlogger33125tag:blogger.com,1999:blog-8375175091050207746.post-48843326666014616412010-07-24T08:03:44.441-04:002010-07-24T08:03:44.441-04:00Another example of regulatory capture in action.Another example of regulatory capture in action.Mitchhttps://www.blogger.com/profile/07278208825096999552noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-50826052949889402762010-07-06T02:20:00.205-04:002010-07-06T02:20:00.205-04:00Mitch:
Your hypothesis sounds appealing and it wou...Mitch:<br />Your hypothesis sounds appealing and it would be convincing if you could provide some research that would show this notion to be true. However, although I am extremely far removed from being an expert on these matters, it appears that there are not a lot of studies available to substantiate your claim. Here are some interesting comments made in a few research journals I was able to findFibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-68435687774692611962010-07-06T02:19:25.520-04:002010-07-06T02:19:25.520-04:00Education and Income Distribution:
Gregorio & ...Education and Income Distribution:<br />Gregorio & Lee<br />http://www.trabajoyequidad.cl/documentos/temp/jdeg-ineq_1999_2002.pdf<br /><br /><br />“The other issue is how education and income distribution have evolved in each country over time. While we showed that income distribution across countries is clearly accounted for by differences in education, we have found that the variation of income distribution for each country over time is not clearly explained by education and income factors alone. This is because actual changes in education and income within countries were quite large over the decades, while changes in income inequality were relatively small over time. Therefore, while our results may help to understand better why countries<br />show persistent differences in income distribution, the stability of income distribution over time must be explained by other factors. This is exactly what our simulations show: the interplay between income, education and its distribution does not produce significant changes over time.”<br /><br />“This paper provides empirical evidence on how education and income have related to income distribution in a panel data set of a broad range of countries for a period from 1960 to 1990. We have also analyzed the effects of social expenditure. The findings indicate that education factors – higher attainment and more equal distribution of education - play some role in changing income distribution…However, we should emphasize that a significant proportion of cross-country and over-time variations of income inequality still remain unexplained. Simulation exercises show that the expansion of income and education alone cannot make income inequality decline substantially in a short period”<br />“The small quantitative effects of educational expansion on income distribution are due in part to the impact of educational expansion on the inequality of educational attainment in the population. Therefore, a policy to expand education needs to focus closely on the inequality of education if the aim is to reduce income inequality.”<br /><br />There is another study by Lim & Tang that has some interesting conclusions with regard to Income distribution and Education.<br />http://www.uq.edu.au/economics/mrg/0506.pdfFibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-6024630685468935662010-07-06T02:18:46.834-04:002010-07-06T02:18:46.834-04:00I think that some other factors to consider would ...I think that some other factors to consider would be:<br /><br />• Disproportionate migration of income to Wall Street from other sectors of the economy. A comparison of Wall Street compensation as compared to other industries has been skewed tremendously over the last 3 decades.<br />• Consider the case of the unemployed Engineer—his career farmed out to an overseas operation.<br />• The transition of a production economy to a service economy where minimum wage is a significant segment of labour costs.. <br /><br /><br /><br />Your point may have substantial merit but even if you are correct this does very little to formulate a solution to the crisis that is forming due to the polarization of –the destruction of the middle class at the hands of the corporate elite and sycophantic politicians. <br /><br />Here are some interesting studies...cont...Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-36040797502976019882010-07-06T02:17:33.443-04:002010-07-06T02:17:33.443-04:00Mitch:
Your hypothesis sounds appealing and it wou...Mitch:<br />Your hypothesis sounds appealing and it would be convincing if you could provide some research that would show this notion to be true. However, although I am extremely far removed from being an expert on these matters, it appears that there are not a lot of studies available to substantiate your claim. Here are some interesting comments made in a few research journals I was able to find.<br /><br />Education and Income Distribution:<br />Gregorio & Lee<br />http://www.trabajoyequidad.cl/documentos/temp/jdeg-ineq_1999_2002.pdf<br /><br /><br />“The other issue is how education and income distribution have evolved in each country over time. While we showed that income distribution across countries is clearly accounted for by differences in education, we have found that the variation of income distribution for each country over time is not clearly explained by education and income factors alone. This is because actual changes in education and income within countries were quite large over the decades, while changes in income inequality were relatively small over time. Therefore, while our results may help to understand better why countries<br />show persistent differences in income distribution, the stability of income distribution over time must be explained by other factors. This is exactly what our simulations show: the interplay between income, education and its distribution does not produce significant changes over time.”<br /><br />“This paper provides empirical evidence on how education and income have related to income distribution in a panel data set of a broad range of countries for a period from 1960 to 1990. We have also analyzed the effects of social expenditure. The findings indicate that education factors – higher attainment and more equal distribution of education - play some role in changing income distribution…However, we should emphasize that a significant proportion of cross-country and over-time variations of income inequality still remain unexplained. Simulation exercises show that the expansion of income and education alone cannot make income inequality decline substantially in a short period”<br />“The small quantitative effects of educational expansion on income distribution are due in part to the impact of educational expansion on the inequality of educational attainment in the population. Therefore, a policy to expand education needs to focus closely on the inequality of education if the aim is to reduce income inequality.”<br /><br />There is another study by Lim & Tang that has some interesting conclusions with regard to Income distribution and Education.<br />http://www.uq.edu.au/economics/mrg/0506.pdfFibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-91133572845926722292010-07-06T02:16:36.343-04:002010-07-06T02:16:36.343-04:00Mitch:
Your hypothesis sounds appealing and it wou...Mitch:<br />Your hypothesis sounds appealing and it would be convincing if you could provide some research that would show this notion to be true. However, although I am extremely far removed from being an expert on these matters, it appears that there are not a lot of studies available to substantiate your claim. Here are some interesting comments made in a few research journals I was able to find.<br /><br />Education and Income Distribution:<br />Gregorio & Lee<br />http://www.trabajoyequidad.cl/documentos/temp/jdeg-ineq_1999_2002.pdf<br /><br /><br />“The other issue is how education and income distribution have evolved in each country over time. While we showed that income distribution across countries is clearly accounted for by differences in education, we have found that the variation of income distribution for each country over time is not clearly explained by education and income factors alone. This is because actual changes in education and income within countries were quite large over the decades, while changes in income inequality were relatively small over time. Therefore, while our results may help to understand better why countries<br />show persistent differences in income distribution, the stability of income distribution over time must be explained by other factors. This is exactly what our simulations show: the interplay between income, education and its distribution does not produce significant changes over time.”<br /><br />“This paper provides empirical evidence on how education and income have related to income distribution in a panel data set of a broad range of countries for a period from 1960 to 1990. We have also analyzed the effects of social expenditure. The findings indicate that education factors – higher attainment and more equal distribution of education - play some role in changing income distribution…However, we should emphasize that a significant proportion of cross-country and over-time variations of income inequality still remain unexplained. Simulation exercises show that the expansion of income and education alone cannot make income inequality decline substantially in a short period”<br />“The small quantitative effects of educational expansion on income distribution are due in part to the impact of educational expansion on the inequality of educational attainment in the population. Therefore, a policy to expand education needs to focus closely on the inequality of education if the aim is to reduce income inequality.”<br /><br />There is another study by Lim & Tang that has some interesting conclusions with regard to Income distribution and Education.<br />http://www.uq.edu.au/economics/mrg/0506.pdf<br /><br />I think that some other factors to consider would be:<br /><br />• Disproportionate migration of income to Wall Street from other sectors of the economy. A comparison of Wall Street compensation as compared to other industries has been skewed tremendously over the last 3 decades.<br />• Consider the case of the unemployed Engineer—his career farmed out to an overseas operation.<br />• The transition of a production economy to a service economy where minimum wage is a significant segment of labour costs.. <br /><br /><br /><br />Your point may have substantial merit but even if you are correct this does very little to formulate a solution to the crisis that is forming due to the polarization of –the destruction of the middle class at the hands of the corporate elite and sycophantic politicians.Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-22644124431055147262010-07-03T20:29:45.529-04:002010-07-03T20:29:45.529-04:00This chart tells only one story based on fact. It...This chart tells only one story based on fact. It shows the transition of the U.S. economy from a labor to a knowledge based economy, and the premium being paid for that ability to acquire the skills needed to excel in a knowledge based economy. What would make this a more insightful chart is if you ranked percentile of income by year based on highest level of eduction attained. Then, you would get a better understanding of what the biggest driver is of this. Would it explain all of it? Nope, but I bet if you did a regression analysis it would explain about 90% of it.Mitchhttps://www.blogger.com/profile/07278208825096999552noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-50154531008799253332010-06-12T11:23:44.158-04:002010-06-12T11:23:44.158-04:00Good points Mitch. I suppose that the gist of this...Good points Mitch. I suppose that the gist of this entry is to demonstrate the ineptitude of elected officials in sticking to a plan. I am sure that the intentions of Reagan's cronies actually believed in their economic model but the reality of politics put an end to any effective application of Laffer's economic principles. Spending is the problem--which is not surprising considering that Congress views the retention of power more important than adhering to any form of discipline in administrating economic policy. As usual, greed and lust for power trumps any notion that politicians are guided by a moral compass.Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-56741937849525442782010-06-12T09:33:09.520-04:002010-06-12T09:33:09.520-04:00I guess the first question is, have we ever had tr...I guess the first question is, have we ever had true "supply side" economics applied. I would say no, more so inept Keynesianism. I think Laffer's thoughts on effective tax rates and government revenues is suspect, as we are realizing that federal government tax revenues as a percentage of GDP have been constant even though top marginal rates have fluctuated between 90 and 28%.<br /><br />What I would say, is regardless of what the talk is - revenues are more or less the same, and spending keeps going out of control. "supply side" seems more of a marketing term along with "third way".Mitchhttps://www.blogger.com/profile/07278208825096999552noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-30466840990604142672010-05-31T00:56:59.906-04:002010-05-31T00:56:59.906-04:00Erratum: If we lived in a true democracy the answe...Erratum: If we lived in a true democracy the answers to your questions would not be necessary--there would be no need to consider them.Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-64559266323607074182010-05-31T00:52:22.333-04:002010-05-31T00:52:22.333-04:00I have to agree with you that the posting came acr...I have to agree with you that the posting came across as 'anti right' but the point you make about the Clinton Era demonstrates that the entire political system is failing the people--not just Republican or Democrat--right or left. The same political malaise defiles most democratic nations today. When you look at how governments operate--aside from its inefficient and cavalier bureaucracy--but instead look at where the true power emanates from, it becomes clear who is really in charge, the moneyed elite. If we lived in a true democracy the answers to your questions would not be necessary--they would be need to be considered. When an elitist fragment of society controls the legislative institutions via the financial sector, it becomes clear who is also in charge of any notion of justice. <br />I can assure you that my contempt for the extreme left is as spirited, but most of their ideology and political chicanery is too bizarre to warrant a comment. It is the very foundations of our culture that is in desperate need of a paradigm shift. Unless that occurs we are guaranteed that we will continue, as a civilization, to make the same blunders ad infinitum.Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-35028703807373140982010-05-30T15:47:07.663-04:002010-05-30T15:47:07.663-04:00Your anti-right (Reagan, Bush Sr. and Jr.)comments...Your anti-right (Reagan, Bush Sr. and Jr.)comments seem biased against the right. Clinton was as much a problem as those three. He dictated that ability to access debt be dramatically increased which in the short run enabled the economy to grow thus reduce deficits but at the long term expense of governments, corporations and worst of all individuals to take on far too much debt.<br />All this debt is what is ruining the economy and peoples lives.<br />The real problem is government of all stripes that allowed all this to happen. <br />Is it socially just to encourage people to take on more debt (through lower than market interest rates, zero downpayments, mortgae value higher than market value of house etc.)than they have the ability to repay? Is it socially just to allow the finance community to create financial instruments that didn't reflect the risks involved (actually were designed to hide it) and were so complicated that no one really fully comprehended? Is it socially just to let normal citizen not involved in these instruments pick up the tab for their failure instead of allowing the investors to lose?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-16481274880372761622010-05-12T22:40:12.540-04:002010-05-12T22:40:12.540-04:00integrity, accountability, honesty: all rare attri...integrity, accountability, honesty: all rare attributes of human nature in contemporary society.Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-63734289328132898852010-05-12T20:05:11.883-04:002010-05-12T20:05:11.883-04:00The problem is not in socialism as you have pointe...The problem is not in socialism as you have pointed out. The problem is in human nature - the hubris to think that one knows what is best for another, the laziness of gaming the system rather than just working hard, and the ignorance to learn from history.Mitchhttps://www.blogger.com/profile/07278208825096999552noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-82518528511204903902010-04-03T15:35:42.652-04:002010-04-03T15:35:42.652-04:00plus ca change, plus c'est la meme choseplus ca change, plus c'est la meme choseFibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-32601279169463221432010-04-03T10:55:21.171-04:002010-04-03T10:55:21.171-04:00The changes we need will not happen through "...The changes we need will not happen through "reform". The Federal Reserve Act, hailed by progressive like William Jennings Bryan as a populist reform for democratizing money, actually brought Wall Street more control over the system. It is still the same today, a prime example of regulatory capture and rent seeking. At least with the banking panic of 1907, Wall Street was on its own. <br /><br />As James Grant once said, monetary systems only last for so long. Politicians under the 'progressive' guise, gradually abolished the gold standard for a fiat currency. Now that people are realizing again that ultimately politicians cannot be trusted with stewardship of their currencies, the era of fiat currencies will eventually come to an end.Mitchhttps://www.blogger.com/profile/07278208825096999552noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-45240503243447896502010-03-15T15:40:22.191-04:002010-03-15T15:40:22.191-04:00Thank you for sharing this Pete. The plot of radi...Thank you for sharing this Pete. The plot of radical financial evil thickens...."If you pay enough, then they will not see the truth.....Wall Street deluded itself." (M. Lewis)<br />10-12 investors "at most" involved? And Bond holders beware: Moody's rates crap as AAA? <br />OK....if we are thinking about Nuclear Weapons and the current political order, then can we learn something from Delusional Thinking on Wall Street?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-41410357255701344622010-03-12T21:06:41.494-05:002010-03-12T21:06:41.494-05:00Well stated Mitch:
As you said the social science...Well stated Mitch: <br />As you said the social sciences cannot be treated in the same manner as the physical sciences. To make 'law-like' generalizations based upon man's capricious nature can only lead to fiascoes like we recently experienced on Wall Street.<br />For an interesting explanation regarding the four sources of unpredictability in human affairs see: MacIntyre, Alasdair. 1981. "After Virtue". University of Notre Dame, Indiana pp. 93-101.Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-5736461291718186092010-03-12T19:13:39.991-05:002010-03-12T19:13:39.991-05:00Part of the problem lies with the idea that we can...Part of the problem lies with the idea that we can use models to determine the "fair market value" of an asset. Models work in physics because God has not changed how the universe works. Models absolutely do not work once you insert human behavior into the equation, because unlike God, we change incessantly.<br /><br />Then layer on top of this the idea that we used a model that is already inherently flawed, and use its output on a financial statements that are supposed to be based on historical cost!!! So now we throw on top of it - the basic concept of balance sheets being based on historical cost.<br /><br />Then layer on top of this, people who cannot utterly understand what Lehman was doing, nor what Lehman was putting on its financial statements, and buying the stock or their products even though it is normally a good idea not to buy stuff you don't understand.<br /><br />I'm just surprised that people forgot the lessons of Enron less than 10 years after it collapsed.Mitchhttps://www.blogger.com/profile/07278208825096999552noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-6309928375008697022010-03-12T16:13:12.422-05:002010-03-12T16:13:12.422-05:00Amen
(it ain't that complicated)Amen<br /><br />(it ain't that complicated)Ann Randnoreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-67295244506641321652010-03-01T10:43:39.571-05:002010-03-01T10:43:39.571-05:00This comment has been removed by a blog administrator.天台https://www.blogger.com/profile/16881617801951926744noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-73898292367506024922010-02-05T23:16:43.703-05:002010-02-05T23:16:43.703-05:00exactly...right on Mitchellexactly...right on MitchellFibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-69979695417814943752010-02-03T20:09:27.249-05:002010-02-03T20:09:27.249-05:00Interesting article but I think it omitted a major...Interesting article but I think it omitted a major difference between Canada & the U.S. in terms of mortgages. Mortgage debt in Canada is recourse debt while in most states here it is either non-recourse or limited recourse debt.<br /><br />There is every incentive for the U.S. homeowners in most cases to leverage up as much as possible. Not only can they walk away from an upside down house without any real inconvenience, but the tax code subsidizes this Minsky-esque behavior. I have seen multiple examples of this.<br /><br />The opposite is true in Canada - no tax subsidy for leverage, and lenders have much more recourse rights.<br /><br />That distinction between recourse and non-recourse debt I think has a major impact on behavior.Mitchhttps://www.blogger.com/profile/07278208825096999552noreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-39002189675712295652010-02-03T12:27:34.601-05:002010-02-03T12:27:34.601-05:00Thanks for posting the link on that excellent arti...Thanks for posting the link on that excellent article on the US-Canada housing market connection. Keep on sharing excellent articles.Jeff Greenhttp://www.alternative2foreclosure.comnoreply@blogger.comtag:blogger.com,1999:blog-8375175091050207746.post-1648136477508903562009-12-06T00:26:59.964-05:002009-12-06T00:26:59.964-05:00I could not agree with you more. Perhaps you have ...I could not agree with you more. Perhaps you have read After Virtue by Alasdair MacIntyre. In it he discusses the doctrine of emotivism in which moral judgments are nothing but expressions of preference, attitude or feeling. He goes on to critique the Enlightenment project and the consequences of its failure--including the generalizations of social science. So many of the problems encountered in contemporary culture is eloquently dealt with in this important tome. If you have not had a chance ot read it, I suggest you do.Fibocyclehttps://www.blogger.com/profile/05270612148813063514noreply@blogger.com