Babylonian Economic Towers برج بابل‎

You will recall the bible story in which the babylonians tried to build a tower so high that God was obliged to strike them unintelligible to each other for fear they would consider themselves omnipotent.

Rabbi Lapin (I always want to say Levine, his predecessor as to peripateticism in the Seattle area) wrote a on the tower of Babel, an extended sermon to edify the contemporary mind.

Anyone who approaches the field of economics quickly learns that there too, all is babel.  There are no set definitions of money, rent, profit, loans, credit, interest, corporation, banking or even "value."  This is a field with pretenses of being science.

Economics as a separate field emerged about 250 years ago, as the restrictions on usury were relaxed.  Moral Philosophers, who began to replace theologians as the public intellectuals, headed off into brave new worlds where usury was not a crime.  Devoid of that one restraint, thereafter there was no restraint.  Specious definitions abounded, sophistry carried the day.  No one economist could quite communicate clearly with another.  It is as though once mankind had decided with economics there were no limits to the heights they could hit, they were again struck unintelligible to each other.

Disaster followed disaster.

Let's examine one tiny, specific controversy from 250 years ago, free banking.   First, we must understand at this point there was no definition of either "free" or "banking."  The controversy centered on whether one could issue more currency for circulation than the amount that represented what money (defined as gold and silver at that moment) the bank had on deposit.

Feelings were extreme on this point.

People against this practice called for free banking.  People for this practice called for free banking. You read that right, both sides called for free banking.

Up to this point the practice of issuing more currency than you had backed by gold and silver was often forbidden by law, so people who wanted to do it wanted the "free" in free banking to mean free of govt, and free to practice what we call fractional reserve banking, where you issue more currency than you can redeem.  The wanted to be free of govt forbiddence.

Now at times government did allow it, and so the people against it also called themselves "free bankers" to get away from government allowing it.

So we have people at opposite ends of an argument using the exact same terms to advance their opposite agendas.  It actually is even more complicated, and you can read details here.

Who knows if we'll ever be able to carry on a sensible conversation about economics.  Maybe if we forswear usury, we'll begin to understand each other again.

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Invest When There is Blood In The Streets

Rothschild said that, meaning there is no where to go but up.

The City of Stockton California got out of hand in the real estate boom, and built up way beyond any need of capacity, let alone reason.  Cities build infrastructure not because it is needed, but because the process yields fantastic profits for contractors and so on.

The contractors are paid up front, and the taxpayers are on the hook.  Bondholders are the mediators who front the money on the bond that the taxpayers will repay it.  Lawyers run for office to put it all together and then make fantastic fees handling the lawsuits and "consulting."

At the same time, with all this money flowing through, the firefighters and cops require they get cut in on the swag, and the lawyers need their votes and support to get the bonds to pass.  So the cities make promises to the cops and firefighters that the cops and firefighters know cannot possibly be fulfilled.  The cops and firefighters expect that ultimately the taxpayers will fork over the money to fund their pensions, because, as you know, cops and firefighters are indispensable.

One of the most serious errors a person can make in life is to believe their own PR.  Stockton is going bankrupt, which means the pensions are null and void.  One day the Samurai in Japan were in control of the country. The next day they were struggling for a living.  The Samurai believed their own PR.

Stockton is the first of the larger cities to go bad.  Cops and firefighters will try to transfer to other cities, public services will degrade, and there will be on balance far less city interference in the life of the people.

What happens is the self-government that atrophied as pasrt of the damage done during the boom will re-emerge to make Stockton a far better place than it ever was.

So, if you plan to start a business, and you want inexpensive housing in a lovely area, chose Stockton, becuase as a city it is dying and the people who ruined it are fleeing.

Here are a couple of houses for sale.

http://www.trulia.com/property/3088243898-2203N-N-Hunter-St-Stockton-CA-95204



and   http://www.trulia.com/property/photos/3079588055-1973-Middlefield-Ave-Stockton-CA-95204#item-1




Now Trulia helpfully tells you the serious crime report in each neighborhood.  Prices are lower where crime is higher.  it is a trade off, but people who are abandoned by the city learn to police themselves.  Like unemployment, being a victim is largely voluntary.   Pioneers rely on each other and see to their own security.  You and yours can become swiss-like and be well trained and armed.  California politicians have banned open carry in California, so you will be arrested if you carry a gun to protect yourself.  Only cops can carry guns openly and when seconds matter, the police will be there in ten or fifteen minutes, assuming they can pull together enough back-up to form a perimeter to assure officer safety.

The ban is being challenged in court, but in the meantime, prices are lower because self-defense is banned, thus making Stockton less attractive in th measure you have no right to protect yourself.  On the other hand, you can look at the fines for illegally carrying a gun, and calculate the cost/benefit of defending your life and the far lower costs of living in Stockton.

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ExImBank Knows No Limits

Now that the ExIMBank has been reauthorized, the Chief is revealing the massive amount of taxpayers dollars spent lobbying for its reauthorization, and how it was sold to politicians, not business.

Hochberg, a former businessman and Clinton administration official, said the road to reauthorization was a long one for the bank. Ex-Im officials held more than 40 events with members of Congress over the past two years to explain the bank’s benefits and build support.

Hochberg said one of the pluses of doing the events “was we built a real relationship with members because we were actually in their districts, and they saw for themselves first-hand the companies and the small businesses that were using Ex-Im services to build employment and to build exports.”

The chairman is a staunch advocate for his agency and pushed back aggressively when it came under attack this spring. He has repeatedly noted that client fees, not taxpayer money, fund Ex-Im and pointed out the bank racked up $1.9 billion in revenue surpluses over the past five years.

Note also, the citation of "profits" from the last five years.  That is suspicious.  I wonder what the last four years would show.  Or the history of the program.  In any event, we'll see if the doubling of loans leads to massive taxpayers losses later.  But why should these people care, they will be long gone with their millions anyway.

There is no rational limit to the state, so those who accept it will in time find they are consumed by it.

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I Am Exempt From Obamacare

The Supreme Court ruled years ago the Amish do not have to pay into the Social Security tax.  The Amish appealed on conscientious objector grounds, and were granted the exception on the grounds they already had their own system, so they fulfilled public policy.

I too will appeal on conscientious objector status, and demonstrate I have my own means in place.  I will be exempt from this new "tax with mandate."

What is offered within the four walls of hospitals and clinics is not medicine to me, it is social engineering.  So I have no interest in what the progressives call health care.  I've come up with my own program.

In time, if and when I am presented with a bill or fine, I will go to federal court as a conscientious objector, and win on practical grounds.  I am just sorry the rest of the citizens are now sitting ducks.

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Competing On Design: How China Is Winning

I teach that if you want your product to sell in USA, it must be designed in USA, by USA designers.  China has opened a design center in USA so they can sell their cars in USA.

One particular complaint about auto repair is we are at the mercy of the mechanics.  The Chinese cars will have a system in which all owners of their cars will know by diagnostic equipment what the problem is before they enter a repair shop.  They will have access to DIY solutions.  They will share their knowledge with all other owners of cars.

In USA, automakers buy ratings from JD Powers, scam the repair reporting system to gain higher rankings, and bail-out failed companies.  In the meantime, the Chinese simply listen to the consumer.  It is a disgrace that USA has not come up with such a system.  But then why should they?  They know they will always be bailed out.

China has announced they do not intend to make shoes for Nike, they intend ot be Nike.

So far so good.

I teach cheap labor is not a factor in international trade. What matters is management.  USA management competes with foreign management.  China has offered to rebuild USA infrastructure.   

Over the past 10 years, China Construction America has grown from about a dozen employees to today's 1,000 in the US. Ninety percent of the staff, according to Yuan, are local hires.

...

"We only employ union workers at our New York job sites," said Yuan, adding the company agreed to follow the "Buy America" rule for the Alexandra Hamilton Bridge project as one condition prior to the bid.

What to make of this?  if the 900 are USA citizens and 100 are Chinese, we can imagine the 100 are managers.  The Chinese buy “America” and hire union labor. What matters is management.  USA management competes with foreign management. 

The Chinese no doubt lost a bundle getting to this point, but so does USA getting to the point where Boeing jets sell well overseas.  What sustains them is competence.


Not all Chinese have gotten the message.  Heavy ad dollars are going into this new brand:

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Keep Blacks Out of Architecture!

When scientific racists get together, one item of evidence to indicate the inferiority of Afro-Americans is their apparent lack of capacity when it comes to the art of architecture.  Quick: name a black architect.

The idea offered is that Americans with some African ancestry are inferior, and the evidence is they had their chance of a million years or so to develop architecture in Africa, but failed to do so.

Let’s pause for a second and consider the Indian mathematician Ramanujan.  As the British Empire spread, it taught the liberal arts with a view to spotting the best and brightest to admininster their newly claimed lands.

Ramanujan, young fellow who was remarkable for his ability to work out solutions to problems, was introduced to the top people back in the UK, by means of some of his calculations.  A top mathematician was reading his solutions and laughing, thinking it some sort of joke, and how childish the calculations were, when bam!, the solution jumped out at the end.

Ramanujan was profoundly talented, in a way termed childish, and he was called to the UK to study, where the food literally killed him.    Before he died, the examiners asked how he came up with his solutions, and he answered a mother-god came to him in his dreams and gave him the solutions.  Not quite the thing, but his solutions were there.

Here is a point from his wikipedia:  

Ramanujan received a scholarship to study at Government College in Kumbakonam, but lost it when he failed his non-mathematical coursework. 

Note he is a world class performer in mathematics, but a failure at the other subjects in a school with a UK curriculum.  He can master math on his own, and become fluent in English, but unable to handle history and geography.  Is it possible that his genius ran to the other fields as well, that he could only master those fields in his own unique way, a way that the tests cannot measure?

When I was pursuing a masters degree in education we studied testing, and the statistics professor demonstrated none of the entrance exams predict success n school, so they are for some other purpose.  And what tests we do have are what the people in education call “white man tests” that is, so replete with certain cultural references one must be steeped in the white man’s culture to pass the test.  Chinese tend to master both cultures and offer the white man his cultural references in reply when a test is indicated.

What we have in the USA is a system that limits the number of desks and the number of professors and strictly controls the content, scope and sequence of what is being taught.  Step outside of that range, you lose.  We have a very narrow definition of knowledge in the USA.

There are people who do step outside, but only after playing the game until their white man qualifications are impeccable.  Thomas Szasz is an example, he a psychiatrist with an unassailable critique of psychiatry as quackery.

Once upon a time doctors were like mathematicians, they advanced based on their results and reputation.  From Galen to Jenner, Jenner no doctor but he introducing vaccination to the west.

Now to architects of some African ancestry, something the scientific racists call “blacks.”

In a recent NPR report, less than 2% of architects in USA have some ancestry rooted in africa, reminding everyone of the argument that is ever-present in state-owned media, and that is the people with some African American heritage are somehow inferior.

Well, that blacks can master “white’ architecture,” if you want to call an unnecessarily narrow range of activity “white,” was well known to southern slaveowners.  It was a point of honor if your ability to select slaves to buy was so good you managed to get ones that could figure out house design, constructions, etc.  Although slavery is never acceptable, and truly some people abused their slaves, at $700 each most slave owners desired to get maximum benefit from their slaves.  Autodidact slaves did architectural work.

African American Antebellum Architecture 

During the revolutionary war, the British offered slaves their freedom if they would support the British, since the slaves were the ones who could actually build forts, dig irrigation, hunt, fish, cook, and handle all manner of arts, at times in their unique ways.  The sharp memory of American slaves supporting the British during the revolutionary war was stark in the mind of Southern soldiers.

With less than 2% of architects having some African heritage working architecture today,  we can say with confidence that people with some ancestry grounded in Africa had more freedom to develop their skills under slavery in USA than in "freedom" if that if what you want to call what we have.

Review the NPR website to see the amazing work of a “black” architect.

As usual read the comments, especially note how many comments have been deleted.  This topic gets people very hot.

Now, if it was a good idea to to protect society by keeping certian groups out of certain fields, then certaily architecture should be off-limits to Swedes.  Here is the result of three years labors of a dozen Swedes in Sweden.

*

And here is the home of a renown mid-century Swedish architect, Roland Terry, in the Seattle area.

We are not talking much progress here.

Here is an African hut, a few days work of a dozen Africans.

And an african girl who lives in a hut.

African girl.

Here is a mid-century home designed by an American with some African ancestry.

Paul Williams design, and American with some African ancestry

Compare the two African rooted homes. You'll perceive the African roots of the USA architecture, just as you perceive the Swedish roots of the Swedish USA architecture.  But which house would you prefer to live in?  

We in the USA do not have freedom, we have a system of tests and requirements that keep the fields of study so narrow few can perform within those narrow boundaries.  This limits who can work in a field, and denies the rest of us the benefits of competition with other cultures.

Let Americans with some African ancestry compete against the Americans with some Swedish ancestry, and let’s see who does best, or more to the point, how many categories of different we get.  Just unregulate the field of architecture.

A system that has fewer requirements to succeed is superior to a system that has more requirements to succeed.

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China Exports Straw Huts

Bill Gates famously said something to the effect that poor people need to get rich because he cannot make money off of them if they are poor.

Somehow the Chinese have figured out how to make money with poor people.

Here the Chinese make and export straw huts to Africa.



Africans get in the business of importing straw huts, and people get more better cheaper faster.  Plus people who once made straw huts can now make something else and earn the savings consumers gain from buying imported straw huts.  Economy'll grow.

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World Productivity Distribution

First what do they claim to be measuring?  GDP is reported for a year, and is the sum total of all goods and services a country produces. Wonder how he got the figures for the Mayans? USA produces more war materiel then the next seven biggest countries, and counts massive financial and legal services.  It may be huge, but it is obviously not sustainable.

Second, they never miss a chance to blame population

For the majority of human history the most important factor in economic growth was the relationship between births and deaths.

If there were too many births then there was not enough food to go around and without mass production techniques people went without until there was starvation or disease.

If you ignore war, that might be persuasive.  But the bad times, shortage, death by disease are always proximate to war.

Finally, if you divide GDP by population you get a popular standard of living rating, and so we leanr Hong Kong citizens are on par with USA citizens.  Except the people of Hong Kong are experience economic benefit of more of that ration since it has none of the military and little of "services" component.

If you define wealth as what range of goods and services and the degree of access thereto by the population, then USA looks no where so good.

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Economic Recovery Prescriptions

Mish has an excellent summary of why our economy will not recover.  So what to do?

1. Unregulate something, anything.  We had deregulation of telephones, which brought fantastic results.  We hard differently regulated banking which brought disaster.  Something new would be unregulation.  Introduce a field in which all regulations would be gone.  Then as is the case with anarchy, there would emerge order from the chaos of the state.

A very good start would be our legal structure.  Simple announce as of July 4, the state would not longer have any interest in legal matters, the free market would take it over.  That is a very good idea, but unlikely.

So an alternative until people are mature enough for that, is to regognise what Kant pointed out, and this is a conflict of interest.

Unregulate medicine.  We'll see in medicine what we saw in internet.

Unregulate power.



2. Since we will never get unregulation, we need to form a free place.  Begin to draw the lines of New Hong Kong, as once they were drawn for a New York.

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Labor Shortage Plagues China

I've long been saying labor rates are not a factor in international trade, and allied to this is the problem China has had for a decade or so of labor shortage.  Here a professor notes it and advises a solution: improve worker conditions.  Yes, that is how markets work.  Expect workers to begin to get benefits on top of salary.  And, expect China's production to rise even as labor rates rise.  We've see it before.  It happened in Japan.


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Fabio & Power Whey

Fabio has gotten the message, start a business now.  He is making and selling a power-whey, available at Trader Joes, and other fine retailers.  Here is a friend of mine, Laz, who spent an hour to get ahold of Fabio.  Literally.

My friend is on the left, Fabio is on the right.     Feel free to forward this by email to three of your friends.

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