7,613 karma · joined September 20, 2013
https://en.m.wikipedia.org/wiki/The_Denationalization_of_Mon...
how do you decide how to allocate it between rent, food, savings, entertainment, etc.
most rational people would use some type of internal or subconscious utility calculation to decide what how to budget their income
i dont know what marginalism is or why its useful when you can simply approximate a value by looking at the price of the good/service and use that to compare with other goods and services
eg 1 banana = 10 utils, 1 apple = 5 utils, 1 car = 100 utils, etc
utils are just a proxy for money and/or time which are interchangeable through wages paid for labor
money is our real world way of valuing the utility of goods, labor, and more generally time (the scarcest resource of them all)
utility functions will never describe an individuals preferences perfectly (hell you couldn’t perfectly describe the utility of any of the transactions you make) but they’re useful when describing and predicting aggregate behavior, especially when fed a lot of consumer data (higher confidence)
all of game theory also uses the concept of utility to weigh payoffs and there are many many real world applications of game theory
its not perfect but no models are perfect, that’s why we have statistics and probability theory to guide us as well
1. author argues that Rothbard's austrian "value scale" approach is unable to derive the key income and substitution effects used in neoclassical modeling, but that Rothbard adds them into his framework ad hoc without properly deriving them
this has nothing to do with the reality of modeling the utility of potatoes for individuals vs. shopping malls for society, rather deriving key properties that are used in logical predictive modeling (eg my wages increase ∴ consumption curve shifts right BY income effect)
2. yeah, not related to any precepts of austrian or neoclassical economics, more of a philosophical discussion of how preferences must be revealed by action in econ rather than introspection, freezing time, or flipping a coin every time you're indifferent. he's rejecting both of their rejections of an implication of neoclassical theory, but it's not practically important, just a reflection of caplan's beliefs
3. rothbard and mises reject the notion that preferences are continuous, which means they can't be neatly drawn on 2D graphs and used in calculus. Rothbard continues to use diagrams and calculus somewhat hypocritically, while Mises doesn't use diagrams. author thinks (as do most economists) that graphing utility and preference functions as continuous and therefore being able to do useful things such as find their intersections, take their derivatives, etc. far outweighs the utility of describing them in non-continuous terms
author thinks all austrian economists reject continuous micro functions, which is untrue (just Rothbard and Mises) but supports his larger theory that austrian economics is not as useful/actionable as neoclassical
4. author is defending the principle of pareto efficiency, another fundamental neoclassical principle which allows economists to measure how free market distortions such as communism and rent control effect different groups within the economy. author is criticizing rothbard's framework which only allows one to call acts of government welfare "indeterminate" and thus be unable to measure their effect and get things done
5. defending the technical definition of "efficiency" again because the technical definition is needed to construct proofs and get things done
basically author is saying neoclassical is much more useful for getting things done with economics, and that rothbard and mises (who he takes to represent the whole school of austrian econ) didn't provide many useful tools from which others could predict/model/build off
Saying austerity led to the end of a recession is like saying that cutting costs at your restaurant led to an increase in customers, or allowed you to charge higher prices for your food.
Greece and Italy are fighting austerity because they take the traditional economic stance - government needs to spend tax dollars on increasing investment, education, employment, etc. instead of cutting investment costs and ensuring tax money is channeled to interest payments.
Perhaps foreign investors saw that Portugal was taking its austerity seriously and began to increase investment, reassured their money would be relatively safe. But how could austerity lead to the boom in tourism and exports cited in the NY Times article?
Accountants used to be merchants, businessmen, politicians, lenders, financiers, and insurers all rolled into one. Now they are (at entry level, or working for the state at least) seen as excel jockeys and bean counters enforcing some arcane business/legal code that nobody else wants to touch
And as much as I hate to bring in taleb, most accountants/auditors have no skin in the game, and therefore what they do is intriscally boring. If they stood to lose a pound of flesh as in the merchant of Venice when the businesses they oversee go bankrupt, perhaps they would be written about in Shakespearean terms today
The trigger for interest rates rising by that much in a short period of time is not apparent and/or explored in the article, and frankly I don't see one, but that would be the real worry, and would probably have a large, negative effect on junk government bonds as well
https://www.mckinsey.com/business-functions/strategy-and-cor...
basically the total amount of corporate debt has jumped, but corporate debt defaults have also decreased sharply
aka corporate debt has become safer, and investors are buying it up because it has been relatively safe and provided attractive returns
if interest rates begin to rise, corporate debt defaults could start increasing, potentially severely. mass defaults could trigger another crisis
"New McKinsey Global Institute research finds that one-quarter of corporate bonds in Brazil, China, and India are from companies that are already at higher risk of default even at today’s low interest rates.
If interest rates were to rise by 200 basis points [2%], that share could rise to as much as 40 per cent. In advanced economies, most corporate borrowers are in good financial shape, but there are pockets of acute vulnerability, for instance, among speculative-grade borrowers, and in certain sectors like energy and retail...
Is the next global financial crisis at hand? We do not think so. Unlike the subprime mortgages that sparked the previous financial crisis, defaults in the corporate bond market are unlikely to have significant ripple effects across the system.
While mortgages were packaged into securitised assets and multiple layers of synthetic securities were built upon them, the same is not true of corporate bonds. Losses will therefore be sustained by the direct bond owners, but the systemic risks seen in the previous crisis are minimal."
i agree, and a 2% increase in interest rates doesn't seem anywhere near possible with today's current combination of low productivity growth, low global capital demand, and easy liquidity (granted QE is starting to wrap up in the EU at least and the US is toying with the idea of raising rates against Trump's will)
of course this is a McKinsey economist/investment manager somewhat talking their book, so draw your own conclusions, but the FT article on the state of the corporate debt is much more well-researched and written
PS subscribe to and read the FT, you won't regret it. this CNBC coverage is complete garbage
[1] https://www.ft.com/content/bc1d327a-91c1-11e8-bb8f-a6a2f7bca...
guaranteed if you go out to your local beach and poll the surfers, 50%+ are well-paid workers in corporate america, otherwise they wouldn't have the means and time to buy all the gear needed and live close enough to the beach to surf as a hobby
the wave machine is perfect for practicing, showing off, and competing for a televised audience, which will bring in more sponsors and of course put more money/attention into the sport. the surf you know is mostly dead [1], which isn't necessarily a bad thing, everything changes
the heart and core of each company is just more efficient matching with less regulation and more technology between renters and owners of capital
Check out where job gains in the US were in November: https://www.bls.gov/news.release/pdf/empsit.pdf
Healthcare added +32k jobs, the majority of which were ambulance drivers/EMS jobs
Manufacturing added +27k jobs, mainly in chemicals and heavy metals
Transportation and warehousing added + 25k jobs, mainly in package delivery and warehouse work
Business services added +32k jobs
All other sectors remained largely unchanged
I don't think a 50YO radio engineer at Verizon is going to be happy retraining to be an EMS or package delivery courier. Labor, especially older and higher paid (non management) positions, is not in the best position right now despite the record low unemployment rate
the yellow jackets are out rioting, killing, and dying to protest what they see as unfair
the prime minister has already agreed to suspend the gas tax for 6 months, and will need to make further concessions or else risk being ousted/replaced
the carbon taxes should be levied on large corporations and their shareholders rather than than low income individuals and employees
furthermore you would be met with a huge backlash from wealthy center/progressive proponents over your anti-immigrant policy. many in power are wealthy enough to see anti-immigrant sentiment as racism rather than an economic necessity (unlike the yellow jacket protestors who are probably making around 30k euro per year - the median in france, and for whom a 25c/gallon increase in gas prices is catastrophic)
i'd be interested to hear your ideas for fiscal expansion - what should the government be prioritizing spending on to increase economic growth, rather than simply making the cuts you've suggested
this is currently working in both russia and china to the point where many are content with quasi-dictatorships because they've seen such a vast improvement in their quality of life through improved economies
at the end of the day more food on your table and more money in your bank account speaks volumes louder than having an infinitesimal say in who represents your interests in an increasingly dysfunctional local and federal government