Economics

The study of choice, scarcity, Social reactions to policies, and unseen consequences. Since our time is limited, and creating/distributing goods/services takes time, everything is finite and has some scarcity. Economics is looking at that value, scarcity and demand -- and how individuals or society reacts with policies. And what the consequences of those policies are. 🖼️ Memes       🔎 Find       📑 All       ℹ️ Info           ~ Aristotle Sabouni Created: 2018-12-10

Economics isn't just about theoretical impacts to money, though many get caught up in that. It's about social engineering or understanding. You can't argue a policy change (or any change) intelligently if you don't think about the consequences of your actions -- and not just to the people you care about, but all people and the system as a whole. How will people react, how can the solution be gamed, sure you helped a few -- but what happened to the rest (and does the help outweigh the costs). Micro-economics is looking at one system, Macro-economics is looking at how that system impacts all the others.

Econ101

Economic Allegories

Basics

Crisis

Government

People

Reviews

Keynes

Minimum Wage

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Econ101

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Econ101 • [5 items]

• 40 Hour work week - To the left, community organizing/Unions/Govt. gave us everything... that we already had. Like the 40 hour work week.
• Alt-Economics - These are the lies (alternate economics) that are told by Fake Economists of the left, and repeated by their rubes and polemics.
• The Broken Window Fallacy - This is a fundamental concept of economics (and logic) about seen advantages versus unseen costs. There's no "win" here.
• Economics of lies, and fidelity - Increase the economic value of a cheat or lie, and you'll use them less often.
• Obama's gun truths and consequences - From Gun Sales to Mass Shootings, how the unintended consequences of community organizing are often detrimental to the stated goal. How divisive rhetoric and drawing attention to your cause can often get the opposite outcome of intent.

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Economic Allegories

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Economics, Allegories • [4 items]

• The Broken Window Fallacy - This is a fundamental concept of economics (and logic) about seen advantages versus unseen costs. There's no "win" here.
• Costs of Defensive Medicine - Saving lives takes a back seat to medical liability as a consequence of abusive medical litigation; aka "Defensive Medicine".
• Economics of lies, and fidelity - Increase the economic value of a cheat or lie, and you'll use them less often.
• Milton Friedman goes to China - Allegory where Milton goes to China and they're using shovels instead of earth movers because it's a jobs program.

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Economics, Basics (or) Econ101 • [5 items]

40 Hour work week
The left thinks the Unions/Government gave us the 40 hour work week. It was standardized a decade before by Henry Ford (Capitalism). By the time we had the FSRA, it applied to less than 20% of the population. The Government created a regulation for the very few remaining, and took credit for something that was already done, and leftist media repeated the lie and the non-skeptical gobbled it up.

Alt-Economics
These are alternate-reality economics that Fake Economists (usually leftist polemics) tell each other and their base. AKA Leftonomics. Never blame on malice that which is more easily explained by incompetence. But when you are an "expert" that knows the facts and repeat the fabrications anyways? Then malice (dishonesty) is all that's left. They know better.

The Broken Window Fallacy

This is a fundamental concept of economics (and logic) about seen advantages versus unseen costs. Henry Hazlitt summed up the art of economics as not merely looking at the immediate consequences but the longer effects of any act or policy, and tracing those consequences not merely for one group but for all groups. In other words, break a window and the glazer might win -- but the shopkeeper and customers did not.

Economics of lies, and fidelity
Increase the economic value of a cheat or lie, and you'll use them less often. Thus permission to do something once (or infrequently) will reduce the likelihood of you doing it, more than the impossible standard of pure abstinence.

Obama's gun truths and consequences
From Gun Sales to Mass Shootings, how the unintended consequences of community organizing are often detrimental to the stated goal. How divisive rhetoric and drawing attention to your cause can often get the opposite outcome of intent. Of course if your intent is to pose for the selfie-stick and drive up gun ownership and mass shootings then maybe it isn't the opposite of intent.

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Economics, Crisis • [6 items]

Big Fraud Theory

There are a few books or movies like "The Big Short", Liar's Poker, who float this Big-Fraud theory (BFT): that the 2008 Financial Crisis was because of Fraud. It is loved by Hollywood, the Media, Progressives (Elizabeth Warren, Bernie Sanders), who know better but want to distract and enrage the gullible. It's becoming the most widely spread theory because simply hate and ignorance spread faster than information, complexity, and introspection.

CRA, Fannie-Freddie Theory (CRAFFT)
CRA->Fannie/Freddie theory (CRAFFT) is that CRA requiring high risk loans, and Fannie/Freddie buying them up and bundling them (GST's) let politicians get loans to poorer people with nothing down. But when real estate started going down, they all walked. With all the defaults, banks were getting credit squeezed by regulations, so couldn't loan, and the credit market froze.

Financial Terms
These are a bunch of financial terms (concepts really), that you can scan to get familiar with the jargon and ideas. Especially before reading the Financial crisis of 2007-2008, but they're good jargon to know when watching financial shows or reading financial press.

Financial crisis of 2007-2008

The left's view of the financial crisis misses on everything from how over-regulated we were, to the causes of the criss, to what happened during it, or why we pulled out. They can't tell you how removing Glass-Steagall or derivatives caused the crash, or why it never happened anywhere else that didn't have Glass Steagall. But if the facts don't fit your narrative, just lie louder, and attack any sources that question you.

Glass-Steagall
Glass-Steagall was the 1930's new deal regulation that said Commercial and Investment banks had to be separated. There would be no "universal" banks (that did both). In theory, by separating sides there would be more transparency, and people might behave less risky. In truth, there's just more inefficiency and the same risk.

TARP
Troubled Asset Relief Program: this was Government forcing Banks to take money, so they could comply with government regulations to make loans. All to get around a crisis that government (mostly Democrats) created. Then Democrats blamed the banks for taking the money, and used it as an excuse to put more regulations on the banks.

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Economics, Government • [12 items]

40 Hour work week
The left thinks the Unions/Government gave us the 40 hour work week. It was standardized a decade before by Henry Ford (Capitalism). By the time we had the FSRA, it applied to less than 20% of the population. The Government created a regulation for the very few remaining, and took credit for something that was already done, and leftist media repeated the lie and the non-skeptical gobbled it up.

Bay Bridge Boondoggle
The bay bridge is a metaphor for San Francisco. The Golden Gate was built privately and under budget for $35M ($1.2B in today's dollars), one span of the Bay Bridge needed a retrofit. It was run by the city and came in late, and over budget at $6.4B, has metallurgy issues. All show, but we could have built 4 other bridges for the price.

Cell Phones

A good example of government helping is what the FCC did for cell phones: it delayed them by 40 years. In 1945 the Saturday Evening Post was talking about handle-talkies, which could have been done with transistor radios of the time. But while the technology was known for how to do it, as well as business plans and motivation, it took until 1982 for the FCC to allocate the spectrum to do it, and another 7 years (1989) to authorize licensing the service.

Costs of Defensive Medicine
There are often unexpected consequences for everything we do. I had a minor epiphany for improving a medical device/process, that heads my company (Baxter) agreed would save lives... but they could never use it because of medical liability. When they say, "Defensive medicine"... it is about protecting the company from lawsuits, thanks to overlitigation.

Dispersed Knowledge

In the battle between Keynes and Hayek, history has shows Keynes wrong and Hayek the winner. Keynes models broke with Stagflation, Post WWII economy, Japans Lost Decades, China and Russian growth by privatizing. Hayek won the noble prize for explaining why: Dispersed Knowledge. Leaders don't know more than everyone else combined, then the more decisions you make from the top, the less efficient those decisions will be.

Gender Wage Gap
This one is many myths (lies) in one: (a) Women get $.77-.82 cents on the dollar compared to what men make (this injustice is called the "Gender wage/pay gap" or GWG) (b) We need big government (politicians) and new laws/regulations/taxes to fix it (c) Democrat politicians motives are all sincere, anyone that opposes is a sexist/misogynistic/bigot. All false, and debunked here.

Gini Coefficient
The Gini Coefficient came about when Corrado Gini wrote the book on Fascism. He said that income should be evenly distributed, and if it wasn’t, the imbalance is an excuse to seize and redistribute wealth and liberty to make things “more fair”. His coefficient is basically just that: a measure of how economically fascists (socialist) your country is.

Income inequality
The left pretends that we're getting poorer by ignoring that our Real GDP has doubled. Our grandparents didn't have cellphones, gene-therapy for cancer, had one car, 3 generations lived in 900 sq. ft. homes, they didn't take as many vacations, the rest of the war wrecked globe wasn't competing with us (yet), and social programs and taxes/regulations hadn't driven up the costs of everything.

Numbers Covered by Obamacare

Those claiming 20 million more people are insured because of Obamacare (ACA) either don’t know what they’re talking about, or are bald-faced liars. We're around 29 million people short of the campaign promise for universal coverage. And it's well below the 20 million new people covered that the fools and frauds like to claim. The facts: about 2.8M were covered because of Obamacare, and another 4-6M because of medicaid expansion, at a cost of about $20K per new person covered.

Prop D
This is a vacancy tax that penalizes landlords for the inability to find tenants for their storefronts after the city has made it harder to find tenants for their storefronts. If you want to know why businesses flee the state, and why the rest of the nation thinks that SF is a city of fascist morons, look no further than the Prop D.

Suffocating Liberty - the cost of red tape
Each new tax, law or regulation, comes with costs (compliance, non-compliance, enforcement and punishment). We have 174,545 pages of regulations, 73,954 pages in our tax code, 23,000 page in our federal legal code, double that for statutes, 300,000 criminal punishments from administrative agencies. Then add in the state+local laws, regulations and taxes on top.

Zero Sum and the Government
A progressive said my problem was that I saw government as a zero sum game: where every dollar you used to help one person, came from the pocket of someone else. I explained it is worse. Government adds overhead, waste, fraud, work rules, politics, and other things that kill efficiency, freedom, pride and value, as part of the transaction. Thus it is a negative-sum (lose-lose) game.

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Economics, People • [2 items]

Paul Krugman
No one in the economic press is as consistently wrong as he is. There are economics sites dedicated to debunking and mocking him. He even times his flip-flops to be stay wrong when situations change.

Thomas Piketty
The woman-beating Pikkety, wrote a NYT best seller for a fictional depiction of economics, based on bad research by Emmanuel Saez. His Socialist Manifesto was called "Capital... in the Twenty First Century" is a play of Karl Marx's Das Kapital, and like Marx has been completely debunked in peer review. But the far left prefers confirmation bias to the truth, so they believe it anyways.

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Economics, Reviews • [3 items]

Capital in the 21st Century
Economists can't agree on anything, but one thing that 80% of economists do agree on: that Piketty's r>g and is the cause of rising income inequality, is just wrong.

IPencil

The podcast on i pencil is an economics treatise by Lawrence W. Reed, founder of fee.org (circa 1958), explaining the complexity of making something as simple as a pencil in the modern world. (No one person knows it all, thus no one person/committee can optimize it). I’d heard parts of this, was very familiar with fee.org, so read I pencil in it’s entirety. It’s definitely worth a listen and/or read.

Think like a Freak
A lot of it is confirmation bias: I already think like a freak (much of the time), so most of their stories were snippets of things I'd read, or ways that I try to approach problems, or ways I like to think. But I still enjoy it, and there's always a few tidbits of new in there.

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Keynes • [12 items]

The Broken Window Fallacy

This is a fundamental concept of economics (and logic) about seen advantages versus unseen costs. Henry Hazlitt summed up the art of economics as not merely looking at the immediate consequences but the longer effects of any act or policy, and tracing those consequences not merely for one group but for all groups. In other words, break a window and the glazer might win -- but the shopkeeper and customers did not.

Dispersed Knowledge

In the battle between Keynes and Hayek, history has shows Keynes wrong and Hayek the winner. Keynes models broke with Stagflation, Post WWII economy, Japans Lost Decades, China and Russian growth by privatizing. Hayek won the noble prize for explaining why: Dispersed Knowledge. Leaders don't know more than everyone else combined, then the more decisions you make from the top, the less efficient those decisions will be.

Government spending
I'm not arguing government spending never produces anything good. In theory, they can invest in infrastructure and that will benefit the economy in the long term. Hoover dam meant cheap power, and helped enable Vegas and L.A. However, for each Hoover dam, there are dozens of government spending disasters. When averaged, you get far more downs than ups for your economy because: politics.

IPencil

The podcast on i pencil is an economics treatise by Lawrence W. Reed, founder of fee.org (circa 1958), explaining the complexity of making something as simple as a pencil in the modern world. (No one person knows it all, thus no one person/committee can optimize it). I’d heard parts of this, was very familiar with fee.org, so read I pencil in it’s entirety. It’s definitely worth a listen and/or read.

Keynes and the 2 day work week
Keynes said in 1930 that our grandkids would work 2 days a week and have a 5 day weekend. This is a typical flaw in thinking of the brightest minds on the left: (a) that people don't value work/being productive or get rewards from it (b) that people given more cash won't want to spend it on things and earn still more (some will trade more income for more free time: while others will not).

Keynesian failures

It would be great if Keynesianism worked. But history shows it has failed every time it has been tried. Examples: the new deal, the new new deal, post WWII boom (cutting military should have caused depression), 1970's Stagflation broke the models, Japan's lost decades (Abenomics), every Communist economy that failed, every one that opened up and grew (N. Korea, Russia, China, Vietnam). All went the opposite of Keynes predictions.

Keynesianism
Keynes microeconomics was brilliant, his macroeconomics have never worked in the real world. It failed in Japan, Venezuela, China, Russia, North Korea, U.S. in every administration since WWII. Stopping it succeeded in China, Russia, and every country that gave up communism.

New Keynesian
Keynes microeconomic models work. His macroeconomic model of models, didn't. Stagflation proved it. Instead of rethinking their premise, the Keynsians just made New Keynesian models, so they could stick with their discredited religion. Keynesians today are really New Keynesians, all the stubborn wrong-headedness, with new models that still don't work.

Tragedy of the commons
We often get dire warnings about Malthusian Catastrophes, Ehrlich's population bombs and how individuals can't be trusted to manage shared interests. We need government to protect us from ourselves. History shows the opposite: individuals form small governments for common interests better than big governments, unless big government stops them.

Treasury View

"government spending crowds out private investment", is widely accepted as at least partly true. Keynesians want perfect efficiency, and thus bubbles and bursts are examples of inefficiency, and an opportunity for government to step in and spend (stimulate/destimuate) to where politicians think perfection should have been. However, once a program starts, it will soon crowd out private investment, and prove the Treasury view correct.

Trickle Down Economics

Cutting taxes gives people more money to spend. Unless you literally burn cash, the only things you can do with money is give it away, spend it, or save/invest it: and all stimulate the economy (create jobs/growth).(Saving is passive investing). Thus only debate is the best way to stimulate the economy. Nobody informed and honest will deny that trickle down works. If they argue it doesn't, they discredit themselves.

Why can't Keynesianism work?
The idea is that during recessions markets overreact to fear and government spending can offset that loss. It asssumes (1) an information vacuum (2) we know where spending should be (3) they will cut spending into the recovery (4) they're replacing like jobs (5) equal efficiency between public and private sector. None of those things is true, so Keynesian promises have never been realized.

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Minimum Wage • [8 items]

California fast food council
California can't manage anything well, so they created a Fast Food Council to try to regulate wages at some chains. And because it's California it's completely screwed up from the start.

Does minimum wage impact employment?
The problem is that minimum wage doesn't always immediately cause noticable unemployment (some exceptions). But as soon as you look deeper you find it suppresses growth, increases a decline. Sometimes people reacted knowing the increase was coming. It hits certain segments harder than others (teens, starting out, part time work, and so on).

Goldilocks and 3 wages
Minimum wage is like Goldilocks, there are three ways you can set minimum wage: too low, too high, and just right. Too low, means it's doing nothing of value. Too high means it's hurting employment and growth. And since just right can never apply to two different people, places or moments in time, there's really only one way to set minimum wage: and that's at the wrong level.

Livable Wage
Progressives often see the choice as: (a) A livable minimum wage (b) A lower minimum wage... But the reality is: (a) What the market will bear (b) Unemployment ($0/hour). So the choice isn't pulling people out of poverty or not, it's what value an opportunity is worth to an employer, before they automate, outsource, or just give up (skip the job) -- and the person is unemployed.

Minimum Wage Laws
The minimum wage and living wage warriors seem reluctant to accept the economic realities: price and wage controls never work. There are extremely rare cases where they can work (or do minimal damage) in one small location for short amounts of time, but there's no magic wage that's right for everywhere and everywhen at once. Thus wage controls start out bad and get worse over time.

Minimum Wage and Automation
Value (Money) is derived from the product of work (productivity/results), not based on what you paid for it. Thus the less you pay, the better off you are. Despite Social Justice Warriors (also known as economically illiterates) will tell you, minimum wage is not good, you can't lose more money on every transaction and make it up in volume.

Minimum Wage: Cost basis
I hear all the time, that McDonald’s can afford to pay a “livable wage” without raising costs, or "it’s just a few cents a burger", by people that don’t understand basic economics, or business. Doing the math? The avg McD's sees ≈$150K in profits, and this would rause costs by ≈$250K, putting them in the red by $100K. They will pass that $4.50/order on to customers.

Minimum Wage: Poverty
Poverty and who makes minimum wage is complex: 75% of it is due to underemployment (which is more insidious than unemployment), Most poverty is short term (<1 year), Most of the rest is due to under-education, immigration, fatherless families, and social program programs that hold people down. Explain how raising minimum wage helps with those things.

Conclusion

Of course both sides want to help people. The left just believes that the way to do it is through government. And the right understands that even if there was some benefit, it's only in the short term and for a few -- to help the most people, you need to help the economy. If you increase demand for labor (and supply goes down), then salaries will go up naturally -- and you don't increase demand for workers by putting a burden on hiring and allowing unfettered illegal immigration. Compassion is putting reality above your desires, and looking at what works better. Historically, that's never been the more socialist/government centric approach... at least not for long.

Videos

Economics in 5 minutes

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Terms We need to agree on what terms mean. This used to be easy, before SJW's/Marxists started Orwelling our language.

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Facts Something that is true, provable, demonstrable or verifiable.

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