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Wednesday, December 7, 2016

Tim Duy on trade-induced structural change

I'm studying "math for economists" for a Saturday night exam. Yes, an exam on Saturday night.


Tim Duy the Economics Guy - desperately searching for a new strategy. Quote:

Politicians, aided by economists, have long ignored the negative impacts of trade-induced structural change. Indeed, they have even cheered it on. After all, the process “releases resources” for use in other, more productive parts of the economy. Those workers are just “low-skilled” workers. The US needs more “high-skilled” workers anyway.

Fact: Workers hate being referred to as “low-skilled.”

How we respond to Trump is important. If we simply fall back on our standard numbers, we lose. If we confidently predict that TPP is a big win because it will add 0.5% to GDP by 2030, we lose. If we just use this as an opportunity to reiterate the importance of a college degree, we lose. We have been doing this for decades, and it helped deliver Trump to office.


The speed of regional labor market adjustment to shocks is agonizingly slow in any area that lacks a critical mass of population. Rural and semi-rural areas remain impacted by negative shocks for at least a decade, but often longer. Relative to life spans, in many cases the shocks might as well be permanent.

And note that this is not just about negative trade shocks. Trade is an easy punching bag for Trump, but his message carries wider because we are really talking about structural shocks in general.


Trump is speaking to all of these workers, not just the trade-impacted workers. And you can complain that they don’t matter, they aren’t high-skilled workers, that the economy is shifting away to urban areas, that they should just move. In the rural Oregon case, you can add in that the big (and labor-intensive) trees were almost gone anyway, that technology was taking over at the logging site and at the mill, that falling transportation costs meant you didn’t need to mill locally.

None of that works because all you are doing is telling people they have no value relative to the lives they knew.

We don’t have answers for these communities. Rural and semi-rural economic development is hard. Those regions have received only negative shocks for decades; the positive shocks have accrued to the urban regions. Of course, Trump doesn’t have any answers either. But he at least pretends to care.

Just pretending to care is important. At a minimum, the electoral map makes it important.

He even gets in a few kicks at Krugman, who to be truthful has been a bit of a leftie bitch since Trump won the election. I mean, he calls the Carrier deal a "descent into banana republic governance", and "government as protection racket", without understanding that the US voted precisely for a government that would destroy anyone who attacked the livelihoods of the working class.

Opinion on the Carrier deal

Well, you have to admit it, Trump is actually going out and doing things.

WaPo - opinion on the Carrier deal. And this is the bit that's interesting:

Now comes Donald Trump — in the public mind, a successful businessman — who as the new president, suddenly declares that the new norm is no longer acceptable, and he intends to do whatever he can to shame and punish companies that abandon their workers. It’s one thing for a company to sustain a few days of bad headlines in the local newspaper when it decides to close a facility. It’s quite another when the president of the United States is not only willing, but from a political point eager, to make a federal case out of it. Suddenly, maximizing shareholder value no longer provides the political and social inoculation that it used to.


He knows that he and his new commerce secretary will have to engage in a few more bouts of well-publicized arm twisting before the message finally sinks in in the C-Suite. He may even have to make an example of a runaway company by sending in the tax auditors or the OSHA inspectors or cancelling a big government contract. It won’t matter that, two years later, these highly publicized retaliations are thrown out by a federal judge somewhere. Most companies won’t want to risk such threats to their “brands.” They will find a way to conform to the new norm, somewhat comforted by the fact that their American competitors have been forced to do the same.

Just as much as changes in the law, this is how norms of business behavior are changed.

Economists study changes at the margin, and if Trump can save the marginal job, then that should work out well for employment.

And with employment already at the supposed "full employment rate", that'll mean wage increases for the working class, and if that starts passing through into inflation, then Yellen can raise interest rates.

Which will then throw those same people out of work, but whatever.

Of course he's bribing companies to keep jobs in the US, but the US government has been giving free money to corporations for decades anyways. May as well make part of the kick tied to jobs, right?

ISM services top expectations

Bespoke - ISM services top expectations. And thus, keep buying the market til all the Trumptards are in.

Tuesday, December 6, 2016

Seattle minimum wage update

Invictus - Seattle minimum wage update. Long story short, raising the minimum wage doesn't cause unemployment, because

1. there are feedback effects that mean the higher-paid plebs can now spend more, and

2. employers pay their employees far, far less than their marginal product of labour.

Greg Mankiw would admit this stuff if he was an economist, instead of a rentawhore grifter for the Republican party.

Monday, December 5, 2016

Uber's entire business model is a sham

FT Alphaville - Uber's entire business model is a sham.

Basically, they're subsidizing their business with capital from share sales.

Basically, they're a junior gold exploreco.

Cats kicking themselves in the face, and you can too!

There's nothing so much like a goldbug as a cat kicking himself in the face:

Sunday, December 4, 2016



According to Zerohedge, Renzi just lost his referendum, which will mean heightened uncertainty in Italy and imminent Italian banking sector contagion. Because obviously when Renzi lost the referendum, everyone in the country decided to leave their jobs and go home.

As Business Insider adds, ermagerd the Euro has collapsed in thin overnight trade.

Oh also gold went up $10 for a sec but then went back down.

Sorry, Zerohedge, but I think this is going to be faded by morning, and all your stupid typing was for naught. Your fifteen minutes of dooooom will just make you look stupid, yet again, in the long run.

You should maybe concentrate more on your Russian-funded disinformation campaign about western NGOs secretly conspiring to help refugees enter Europe.

essays on geology

OK, exam time is upon me, so I really should quit the bullshit and start studying.

I was doing really badly around October, but it turns out I was just suffering from life-threatening encephalopathy, no big. I've since pulled my marks up and have a chance for 3 A+es, and I have a lot of study time because my last 2 exams are on the 22nd, so I may as well try to do my best, right?

So, in case you miss reading a lot of stuff, why not bookmark some essays on the history of geology, metallurgy, and precious metals from a professor at UC Davis:

Essays on Geology and History

The section on the high middle ages is good.

Thursday, December 1, 2016

Daniela! and Rick Rule too

Lot of searches hitting my blog again for Daniela Cambone, so she must have been doing something....

OK, she's interviewed a bunch of weevils at some goldbug summit or other.

Here she is with Rick Rule:

And FFS Daniela, quit doing your hair with a center part. This right here is how your hair should look.

Bit of reading


Calculated Risk - ADP employment up in November. I guess that all the petit-bourgeois small business owners have no reason to hold back on hiring, now that The Trump is president, right? So expect a big gush of positive economic expectations news for the next few months.

Bespoke - yuuuuuge increase in consumer confidence. The 5 u's suggest that Bespoke reads my blog. Again, the news itself points to a massive surge of happiness now that the ebil sociamalist gay Muslim Barack HUSSEIN Taxbongo is no longer in charge.

Bonddad - the US is a service economy and has been for a long time. Only ideologues can deny empirical fact.

Tuesday, November 29, 2016

You know who they are, really?

"You know who they are; they are the ones who denied and denied the ginned up bull market in US stocks that nearly tripled under the socialist regime, circa 2009-2016.  They are the ones who clung to gold well past the caution point last summer."

You mean like the blogger with a newsletter who made a 0% profit all through 2012 and 2013 while the US stock market was taking off, because he was still fixated on gold stocks, which were collapsing, and he thought that dooooom was just around the corner?

Some news

Isn't it amazeballs how one can completely forget about a dental appointment?

Here's some news:

NDD - weekly indicators. Everything's grand, except interest rates, which either was an overdone hasty spike by cokeheads who trade instantaneously based on long-run stories, or alternately was a sign that Republicans who've kept their money in savings all these years are about to take their money out of bonds and spend it. Either way, it doesn't arse me as much as it arses NDD.

Francisco Saraceno - some animals are more equal than others. A reminder that Germany has been in complete violation of the EU's Macroeconomic Imbalances Procedure, which shows that all they care about is beggaring the rest of Europe for their own benefit.

Mickey Fulp - the fallacy of belief (pdf). Mickey's actually a philosopher, believe it or not. Good piece, read.