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). 

The Restaurant Business is Brutal

There is a shuttered restaurant in the train station by my house.  Great location, had a bar, pretty good food, apparently popular for watching Phillies games.  Should be a slam dunk, but it wasn't.  It closed withing 3 months of my moving in and has been shut for something like 3 years now.  It is [still] for sale and the price just came down, but looking at the price and the setup, I'm not sure the restaurant could possibly do well enough. 

They are asking $700k, and that does not include the building (which leases for a "favorable" $3500/mo for at least the first couple years...the building had a published lease price of $6k/mo).  This means that the business needs to turn nearly $150k/year in profit (not including any salary the owner would need if working there as well).  Restaurant margins, particularly at startup are notoriously small, and a 5% profit margin would require $3 million per year in sales/revenue (or a bit over $8k/day).

Being kind about the lease and not taking that out of profit means only ~$100k profit per year, but adds the lease to the operating expenses cutting the margin by 1-2% and leaving the business in about the same position.  Really well managed/operated could bring margins up to maybe 12%, and then things are getting close.

But even those numbers assume that the $700k is good to go. In reality, there will be lots more upfront costs from cleaning and setup, to training new staff to advertising.  

Restaurants require lots of work, and good management.  I'd love to see this place succeed,and it could, but it will require someone capable and willing.

Horrible People

I'm not sure that the [type of] "men" referenced by Fiona Loyd-Davies were ever in touch with reality when it comes to rape.  This isn't new.  What is really shocking is that any woman, anywhere, no matter how conservative, can vote for any Republican.  I think the GOP has more respect for the gays than the ladies and their lady parts.

Also, the whole Assange thing is just beyond weird.  I'm not even sure how to have an opinion on that without a series of if-then statements or sounding like a conspiracy nut or ass hole or something.  I will say it is possible that he is both guilty and has legitimate fears regarding extradition to the US.

Continued Bad Statistics of the Gender Wage Gap and Why it Shouldn't Matter

Yes, there is a gender wage gap.  Yes, some fraction (maybe a lot maybe very little) is due to discrimination.  No, I don't think people should harp on the numbers because the statistics in this case are just not very good, and Bryce is a bit misleading in the numbers she casually tosses out in the above linked piece.

The best numbers available are probably from Gov Accountability Office (GAO), where they make a major effort to factor out life choices, and that effort cuts the pay gap by more than 50% (the report covers 1983 - 2000 so you can't compare those results directly to the current gap as she did) so the 21% gap that results is compared to a 44% uncorrected gap, which is much larger than the current 23% gap and could imply that the corrected gap today is anywhere from ~20% to less than 5% to anything between. The infuriating thing is the numbers/statistics squabbling.  The issue of fair pay should be an easy one for everyone to get behind.  If discrimination is a huge issue then enacting laws that counter that is necessary and will do good things for women and families.  If discrimination is a complete non-issue, then enacting laws preventing discrimination will lead to no improvement because there is nothing to fix.

Just pass and enact the damned laws!  If the pay gap shrinks, we'll know it works, if it doesn't we will know that there is more going on and we will have information on where to look next.

Eggs

I've a feeling this study is flawed. For a long time eggs were very bad because cholesterol.  But for the past decade and a half we have learned that for most people eating cholesterol is not, itself, bad.  Eating lots of saturated fat and perhaps lots of simple carbohydrates are more likely candidates for bad health.  For eggs in particular, the long run studies say that ~1 egg per day is not bad, except maybe if you are diabetic.

Now I realize that the studies are different, and I don't have full article access so I don't know how they controlled for things like butter, but eggs in general are protein/vitamin rich and the protein and fat helps to feel sated at lower levels of calories than carbs and far more doctors and nutritionists are high on eggs than down on them.  I think I'll eat eggs.

Things I'd Rather Post...

It's so fucking cool the things we can do.

In general I really don't like politics.  I love science.  But science is very largely funded by the government.  There is no return on investment for the latest Mars lander that would entice a private launch.  It can't happen.  Same with particle physics, fundamental chemistry/biology and more.  Yet that research is necessary to get to the technological breakthroughs that are important.

If you want to open a store be glad that the government built the roads and/or transit that gives [more] people [easier] access.  If you operate an online marketing business be glad that multiple governments did all the hard work creating the internet.  If you want to develop new technology be glad that the government funded all sorts of insane-sounding-at-the-time research projects that led to lasers, PTFE's, quantum entanglement,...

20 years ago science and facts were pretty universally accepted.  Yes, there have always been anti-science people in the US (mostly religious but some cranks, pseudo-scientists, frauds, nuts), but politically they didn't have much of a voice (which is fitting, as they are not much of the public).  Today the anti-science segment of society has a nearly equal share of the seats as the much much larger pro science segment: i.e. pretty much any Republican politician.  This doesn't mean that all Republicans are anti-science, but that all Republican politicians at the federal level must enact anti-scientific policies and legislation in order to maintain their seats.

So we have Romney who maybe/probably is aware that global warming is real, a threat, and largely attributable to human behavior picking a running mate who is full on conspiracy theorist on the topic.  The GOP debates included contests to see who could be the most anti-science (remember the evolution question?).

This is not sustainable.  We deserve political contests where facts are not debatable.  We deserve to vote for Obama or Romney based on policy differences where both sides' policies have reasonable, factual basis.  What we have is a lying and insane right wing controlling the GOP and a set of weak, complacent Democrats who refuse to actually fight them (also too, in many cases, they just appropriate the right's formerly not so crazy positions). 

So I post on politics.  Because we need to have a sane and competent government to get the best out of society.

Obama: Still Not a Liberal

We have laws protecting whistle-blowers because sometimes that's the only way things change. As for where the president stands here:

The Obama administration has responded by ordering that thousands of U.S. intelligence and law enforcement employees be questioned about media leaks when they’re polygraphed during security clearance screenings. In an unprecedented move, the administration also has criminally prosecuted numerous government employees for leaking. Whistleblower and media advocates fear that the aggressive efforts will have a chilling effect on the reporting of government wrongdoing but won’t stop classified information from being leaked when it’s politically advantageous to administrations.

Meanwhile:

Wes Clark reveals he heard, on roughly September 21, 2001, that Bush had a plan to take out 7 countries in 5 years. Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

He told this story about 6 years later. He called it a policy coup.

That was 5 years ago. Since that time, largely in response to the Arab Spring, we “liberated” Libya. We’re preparing to (if have not already done so) arm al-Qaeda related rebels in Syria. We’re inventing reasons to sanction a Lebanese terror-related political party. We’ve been violating sanctions to wage war in Somalia, including with drones, and have fiddled with several incarnations of government. And our Iran sanctions–which are fairly clearly about regime change–are really beginning to hurt the Iranian people.

This is not a liberal/progressive/democratic president.

The GOP is Trying Hard

To make me vote for Obama. 

I have zero desire to vote for Obama.  I think he has been a disaster from a progressive standpoint on just about any issue (women's rights and maybe gay rights withstanding, but even for those he's really just not horrible at his best).  I had no plans to vote the top of the ticket at all.  But it seems like every week the GOP in general and the Romney campaign specifically do something that makes me consider acceptable voting for a president who assassinated an American citizen.

The latest, of course, is the horrid choice of vice president.

Yep

Reading this Post article is more catharsis than anything.  I pretty much agree with Westen on all points, particularly:

Obama’s first mistake was inviting the Republicans to the table. The GOP had just decimated the economy and had been repudiated by voters to such an extent that few Americans wanted to admit that they were registered Republicans. Yet Obama, with his penchant for unilateral bipartisanship, refused to speak ill of what they had done. The American people wanted the perpetrators of the Great Recession held accountable, and they wanted the president and Congress to enact legislation to prevent Wall Street bankers from ever destroying the lives of so many again. Instead they saw renewed bonuses — and then they saw red. Republicans learned very quickly that they could attack Obama and his agenda with impunity. Only at election time, or when he’s up against the ropes, does this president ever tell a story with a villain.

That isn't to say that I disagree with Kevin Drum here.  My biggest frustration is to try and reconcile the above statement with Drum's semi-rebuttal:

First: Obama had to invite Republicans to the table. When he took office Democrats didn't have a filibuster-proof majority...Still, life in the White House is pretty difficult when you have to constantly concern yourself with getting a couple of Republican votes, or, at best, the 60th most liberal Democrat — especially when the 60th most liberal Democrat is a self-righteous showboat like Joe Lieberman or a Nebraska pol like Ben Nelson.

The answer in a rational world should have been simple:  Any GOP senator from any state in the northeast that ever wanted to be reelected should go along with whatever Obama had put on the table those first months.  I think both the Obama administration and Senate Democratic leadership (Harry Reed) were horrid failures when it came to recognizing that they had the upper hand and could have used it.  Maybe they didn't want to but then that is their failure. 

The reality is certainly more complicated, but lots of people were pretty open to trying anything then, and what ended up being tried was just not enough.  I would add that the stimulus was sold as a major victory that would right the economy which really made the first failure even worse. 

Inter-Generational Mobility is Confusing

When I read through posts and then comments on [wealth/income] mobility in society I get the feeling that lots of people don't understand that inter-generational aspect of it.  Mobility in society is less about me making a bit more or less over time and more about where I am compared to where my parents are.

If we really believe that wealth/income relate to achievement and ability then a high mobility is a defining characteristic of that.  Low mobility doesn't mean better off individuals are pushed down by up and comers, it means that the children of better off individuals do better than the children of less well off individuals.  Think of high mobility as a generational reset.  Each new baby will end up as successful as their talents allow, no more no less.

There is no reason to believe that the children in the Walton family are any more capable than the children of school teachers or janitors.  The reason the Walton children do well is because their parents have wealth, and the reason that the Walton parents have wealth is because Sam Walton had a lot of success.  Someone could be born to the Walton family without the mental facilities to tie shoelaces and that person will be a incredulously wealthy individual for his/her entire life.

On the other hand if a genius is born in inner city Baltimore to a way below the poverty line black family then that child will have to struggle to survive and even if he/she does "get out" and find success that success is most likely to mean a college degree and $60k/year.  Pretty good and remarkable considering the outlook, but in a "fair" society that strives for greatness then the Walton child would end up a janitor and the Baltimorian [?] would be a rocket scientist or CEO.

Now we can't have the level of mobility that resets everything...mostly because more successful people would never (nor should they ever) allow their children to be subject to such a system.  Society may have been better off if W had ended up failing out of state school and living the rest of his life as a drunk in a trailer park working as carnival operator, but George and Barbara would never have stood for such.

This is why people use the term "upwardly mobile".  We don't want to prevent parents from doing well by their children, but we do want to give children opportunities when their parents cannot afford to do so.

High mobility means that ability and drive can create success (and that sloth and idiocy can destroy it) even when mom and/or dad can't foot the bill.

A-yup.

Even when HAMP was announced it didn't seem that great a thing.  As time went on it was pretty obvious that about the only folks who could possibly benefit were bankers.  Li'l Timmy is, by most accounts, a pretty smart guy, and he is certainly a very pro-financial institutions kind of guy, so that this program was deliberately designed to help the banks and not homeowners isn't really surprising to me.  That there is some form of evidence regarding this that is only now being brought to light is...well, not really surprising either. 

Yes, It is Terrorism

I'm fairly certain that the media just don't understand what "terrorism" is (which is why Atrios put this up).  Just to be clear: someone who goes someplace with lots of people and starts killing them is a terrorist.  That person may not be connected with any organization, and may not have any agenda, but that is a terrorist.  Full Stop.

Anyone saying that the killings at the movie theater in Colorado are not the work of a terrorist really means, "not a [Muslim/Arab/Middle Eastern/...] terrorist".  For fuck's sake the people who protest abortion by calling doctors murderers and the women whores are terrorists.  They are trying to intimidate and frighten people. 

The murderer in Colorado is also a terrorist.  He may be white (and Christian) and he may not have an agenda (at least not one that is known yet) but he is a terrorist. 

Option B

In the post below I reference an older idea where the Fed would buy student loans.  People would keep paying them off, but however much was sent in for the loans would be returned on a cash card that they had one month to spend.  Basically it was a way to boost the economy that would also help deal with the "people will just save the extra" issue that can arise from most give people money schemes.

It made me think of other strategies to work this.  A clearinghouse strategy that people could opt into.  Basically the government (maybe the fed) will pay off your debt matched to your spending.  It would have a similar effect to that above, but would be more versatile.

It starts with a government owned/subsidized/controlled bank, let's call it "The Fed" which has effectively unlimited supply of money at its disposal.

Then every citizen of the US is issued an account with this bank, into which it can transfer certain debt.  Different limits would apply to different debt.  The transfer option would be open for 1 year.  The account would last for a [user defined?] period of 2-5 years.  No debt accrued after the opening of the accounts would be eligible (not the transfer, the opening).

This would function like any standard bank account.  Any amount of money could be transferred into the account up to the total debt initially placed in there, and that money would a) pay off the debt and b) be available for use through a debit card.  It cannot be transferred to savings or be used it to pay a mortgage or student loans (they don't go away...yet) but it could probably pay most bills.  Any savings, investment, along with the mortgage and student loan payments would have to be from funds not deposited to the account.

For example: someone with $4k take-home per month, $45k of student loans and a $225k mortgage on a $185k house transfers in $40k of student loan debt and $100k in housing debt for $140k total.  The timer is set to 5 years.  She sends half of her paycheck to her normal bank from which she pays mortgage, student loan (minimums), any bills that can't be charged, and maybe sets some aside for savings/emergency cash.  The other half goes to the debt bank, and with that card she pays for groceries, online purchases, clothing, bills, maybe some is saved up over time to be used for vacation, et cetera. At the end of 5 years $120k of debt is "paid off" and that total is dispersed to the relative accounts proportional to what went in (~$85.7k to the mortgage and ~$34.3k to the student loans).  If this is enough to pay off entirely either one of these then the excess goes to the other, and if both are paid off entirely is returned in cash to her.  If she added a bit more after year one and reached the $140k limit ahead of time, then that would end the program and everything would be paid out then.

Note that any funds put into the account but not spent would be "lost" (actually just the bonus money is lost, it still pays off debt).  To encourage faster spending setting a 3 month time period on the funds going in would help.

This type of mechanism is helpful for a few reasons.  One is that it helps with getting out from under debt in a meaningful way: if she can put $140k into that account over 5 years she can probably completely eliminate her student loan and get a huge fraction of her mortgage covered.  It is also no risk: she doesn't lose out on that money to paying off debt, it pays off debt and she gets to use it for normal spending.  She doesn't have to worry about a surprise repair bill preventing her from paying into this, because money paid in can be used to cover that surprise.  It is also a boost to demand: the money is only a bonus if people spend it on stuff, so it encourages more spending.

The biggest downside is that it is overly beneficial to people with decent jobs and lots of debt, but there are a couple fixes: one is the debt limits, and the other is some partial to complete payoff option.  The payoff option would be a benefit to lower income individuals: anyone who put at least [income/2k]% into the account could be forgiven up to [10k/income]% of the total (someone making $25k/year would need to put at least 12.5% into the account and could be forgiven up to 40% of the total).