Tiny Living

I am a big fan of small housing (an opinion not shared by all in my household).  My house is just under 1200 sq ft, and if it were not for family/friend visits I would be happy with something half the size.  So I have enjoyed looking at/reading this piece on CNN and this other piece on small apartments in the city.  I have a bit of a bone to pick...

At a minimum 150 square feet of living space — 220 when you add the bathroom, kitchen and closet — the proposed residences are being hailed as a pivotal option for singles. Opponents fear that a wave of "shoe box homes" would further marginalize families of modest means who are desperate for larger accommodations.

So opponents, at least as represented here, are stupid.  Then...

The number of micro-units that could be built under the proposal would not be capped, although critics are pushing for controls on the experiment. New York Mayor Michael R. Bloomberg, for instance, has signed off on just 60 apartments that would be 275 to 300 square feet small.

One of the best thing about these micro units is that they can bring down costs for all housing (increased supply, constant demand, you know, basic econ).  However, that will not be possible if they are constrained in number to such a degree.

In fact, one of the reasons that housing in some areas is inaccessibly expensive is because zoning prohibits undertaking the kind of development that would drive costs down.  And that is, of course, because current owners don't want to see their property values decline.  The odd thing is people who don't want removal of the obstacles to low priced housing because they want low priced housing?!?

A-Yup

From Noahpinion's EconoTrolls Bestiary...

Scientists

"[M]acro is mostly a 'science' without falsification. In other words, it is barely a science at all. Microeconomists know this. The educated public knows this. And that is why the prestige of the macro field is falling."

How they see themselves:

How the world sees them:

Favorite blog: Noahpinion

Favorite dead economist: Are you kidding? That's the only good kind!

Will appear in response to posts regarding: Economic methodology, statistics, math

Craziest idea: That economists should do experiments

Special attack: the "economics isn't science" taunt

Secret weaknesses: bad posture, the knowledge that economists get paid more than they do

Notes: This troll, which periodically ventures into the Econ Blogworld, attempts to intimidate its enemies by the puffing up of its Physics Credentials in a strange sort of dominance display. This tactic can easily be defeated by immediately presenting the troll with a deceptively difficult or even insoluble math problem, and then ridiculing the troll for failing to solve it in short order.

Fiat Money

Fiat money is very confusing.  It is magic, and to both stupid people who focus on it and smart people that don't it is too good to be true, so it must be crap. The thing is, though, that the gold standard is pretty much the same, except that it is hugely beneficial to people who managed to get some wealth together in the past.  Gold's "intrinsic value" as a currency comes from the fact that it is a noble metal (doesn't go bad), it is relatively easy to verify, it can be broken into smaller units, and so for people with less technology available is an excellent source of liquidity currency.  Unfortunately it is relatively fixed in supply, so it can't well accommodate growing economies (necessary deflation will always end up killing any growth potential).

Basically the only way for prices to be stable or (prefereably) inflate over time is for the amount of gold found to meet or exceed the growth in the economy.  That may be possible over certain periods, but not in a predictable way or for the long run: the world has a fixed supply of gold, and after enough time the only profitable industry would be mining gold.

So gold is a pretty good currency 1000 years ago, but really, really bad today.  What about the magic of fiat money?  I think Brad DeLong has up an excellent overall post that gets down to why any advanced economy needs (yes needs) fiat currency.

It is simply not the case that we can cheaply and easily buy things with money because it is valuable. It is, instead, the case that money is valuable because we can cheaply and easily buy things with it.

One way into the tangle of understanding why it is wrong is to ask each of us: Why are you happy accepting money in exchange when we sell useful commodities?

Hint: It's not because we are looking forward to going down to the bank, exchanging our bank notes for the little disks of gold usually decorated with pictures of bearded men on one side and allegorical female figures on the other with lettering saying things like "Fecund Augustae" or "Concordia Militum" or "Fides Exercituum" on them, taking our little disks home, and feeling happy looking at them.

That's not why we accept money.

We accept money because if we don't have any money we have to buy commodities with other commodities, and when we do so we are unlikely to receive the cost of production for what we sell. Have you ever tried to buy a latte at Peets with a copy of Ludwig von Mises's Money and Credit? It does not go well.

The fact is that your wealth is only worth its cost of production if you are liquid--if you can wait to sell until somebody willing to pay full cost of production comes along, which is not every minute. The use-value of money is that it allows you to time your other transactions so that you can realize the full exchange value of what you sell, rather than having to sell it at a discount.

I don't think there is a good way to summarize, but the way I try and think about fiat money is this: the worth of an economy is measured by its total production of goods and services, not the amount of gold it possesses.  But direct trading of goods and services is difficult so something liquid should exist to make transactions easier.  That something must, however, be able to grow (and shrink) to accommodate the changes in the total economic output as well as to provide stability with some modest inflation (deflation is bad, bad, bad).  Gold cannot do this, but fiat money can.  If you want an economy that grows, innovates, advances, and improves the lives of everyone, you need to have fiat money flowing through that economy.

Aside: How much inflation?  Historically it looks like ~4% is probably good, but I like the arguments for using NGDP (~5% total inflation plus growth) which is probably a better target since it allows for inflation and growth to trade off without running away. 

The Rich Are Still Mostly Greedy

Rewind the clock 60 years.  There was a much smaller gap between the 1% and the rest of us.  The lives and well beings of workers was improving dramatically.  The wealthy were, however, doing just fine, much, much better than were workers even in those halcyon days of labor unions, responsible, regulated banks and when the wealthiest actually did create jobs and do good.

Today large numbers of the wealthy do not create so much as destroy (break contracts, lay off workers, extract profits and bankrupt companies and communities).  And yet, such is technological progress that even with the leaches at the top the less fortunate still have a higher standard of living compared with 60 years ago.  Food is cheaper.  Things that were luxury items are necessities, and items that didn't even exist are now commonplace.  A modern $1000 entertainment system transported back 60 years could probably fetch millions in 1950's dollars!  So maybe the wealthy today don't feel like they have things as good as 60 years ago despite their swollen coffers simply because it is so much cheaper to have a modest level of comfort.

Technology is doing what it is supposed to: it is improving everyone's standard of living.  The wealthy (Wall Street types in particular) are using this, however, as an excuse to take more for themselves.  This is what the Romney campaign is really about, as made clear in his video.  Imani makes the point at that link:

If you think for one second that just because The Poors™ may have a cell phone, or an Xbox, or a refrigerator (A FUCKING REFRIGERATOR!), or are unfortunate enough to get gout (because apparently only rich people get gout, doncha know!), that they are living high off the hog (as they try to raise a family of four on $20K per year), then you lack empathy for Americans; you lack respect for Americans...

Maybe the rich are angry because the standard of living for rich vs. poor was greater in the past even as the income disparity was less.  Maybe the great equalizer that is the internet--which has made many more wealthy--has allowed more knowledge and insight into other classes, so the masses can get justly angry at the means by which they acquired their means, and the mechanisms that they employ that wealth, and so the rich get angry because people now can find them out in a way that wasn't possible before.  Also, too, the rich who were so proud of their first flat screen TV 12 years ago that cost $10k see people earning $35k a year with a bigger, flatter television (which only cost them $700) so clearly the "poor" are better off.

In fact the major discrepancies today between rich and poor come down to health (care and prevention) and housing/property.  There are certainly differences in degree on things like travel, vacation, possessions (particularly high end cars, boats, and in some cases planes) but the major differences to living standards come in housing and health, the rest is just show.  

As bad as things seem today, and as much as many people look to days of yore as a model to what we could be, I would still rather be alive in my prime today. That doesn't mean we can't learn from then, but all of us really do have it better now.  The wealthy just don't seem to think that's fair.

Confirmation

I wonder if Rahm thinks it's a good thing that Paul Ryan is on his side, or if maybe, just maybe, it'll help him see things from the Democratic perspective.

Explaining the Fed

Through animated gif's.  More fun than reading Krugman say the same thing.

But But But...Drugs Are Baaaad

I really don't understand why marijuana is illegal, so this type of finding will likely have no effect on things.

Fact Checking the Fact Checkers

I really don't see how this is going to end well.  Republicans are just better at gaming the system, and it works for them so the logical conclusion to the mess is for the Democrats to lie cheat and steal in the same way and to the same extent (which they very much do not do right now).