Tag Archives: Economy

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The End of the Upper Middle Class?

The End of the Upper Middle Class? is a fantastic article on the Fiscal Times that I stumbled across. The funny thing is that I just happened to stumble across the original article about “making it” on $250K a year over a year ago, and that struck me too. Danica points out to me that some of the budget isn’t fair, with a lot of — strictly speaking — unnecessary line items, but I think the reality of the message holds: if taxes go up much more upon this sector of the country, you’ll just have one of the breadwinners “go John Galt” and opt out of the work force. That will result in LESS tax revenue, not more.

These Are the Smart Guys?

Innocent Bystanders has been tracking the actual unemployment rate these past few months against what Team Obama said would be the unemployment numbers if the Trillion Dollar Stimulus package passed, and what it would be if it didn’t pass. Holding the country hostage via fear, uncertainty, and doubt? You betcha. It’s one thing if it would have worked, but guess what? They weren’t even close. So wait, these are the smart guys we’re supposed to trust, like, way more than the last guys?

Warehouse Prices Compared

This is interesting. I’d like to see a more extensive list, though. I could also couldn’t care less about the comparison between different discounters: in Oregon, you only have one choice. I do find that for produce, Costco doesn’t regularly beat out regular supermarkets. For those that have been stocking up, a Costco card is pretty invaluable. A family of four will save over $50 in no time at all.

That’s why it’s important to compare prices on the items you need most frequently. A gallon of skim milk at Sam’s Club, for example, costs $1.88, while Costco charges $2.29. Need to stock up on Secret deodorant? At BJ’s, it’s 81% cheaper than at the supermarket, while it’s 67% less at Sam’s Club.

Dean Kamen: New Hampshire Super Geek

Esquire has a great piece on Dean Kamen (Segway millionaire inventor) and his current projects. His latest potentially world changing invention is a machine that purifies water for drinking — even outright sewage — powered on cow patties. The problem is that he can’t get anyone to put it into mass production. This is the section that stood out for me:

Back in his office, Kamen fires out explanations for why the Slingshot hasn’t taken off yet. It starts with the day Deka finished the first prototype and realized — shades of the Segway — there was no real market for it. The poor people who needed it couldn’t even begin to afford it, so no big corporation wanted to invest $50 million or $100 million or more to tool up a factory and take it to market. “So now you’ve got these things, and you go, ‘Wow, the kinds of companies that we do business with have to make their return. They’re not going to do this.’ A few of them said, ‘Dean you’re –‘ “

He stops himself before he says the word. But he knows these big corporate guys, and they’re good guys, this is just an example where the great power of capitalism fails. So where do you take an idea that’s not right for big companies? How about the United Nations? The World Bank? This was something he had never thought about before. What does the World Bank do? Does the World Bank loan money to poor people? Does the World Health Organization flood the Third World with doctors? Does the United Nations unite nations?

“I absolutely thought you could go to the United Nations or the World Bank or the World Health Organization or USAID or any of these organizations that have moral imperative and even a legal obligation to find the best solution to a given problem. You’d think they would be obligated to look at this. But they’d say, ‘Great, Dean, as soon as you have these in production, call me, I’m here to buy them.’ “

There’s a very interesting problem that peaks out from there: a fundamental failure of the world’s particular implementation of capitalism. Capitalism is a system in which supply and demand set distribution of goods and services. That’s the simplistic, perfect version, at least. Here’s a case, though, where it’s broken down completely. Hundreds of millions of people do not have access to clean water. Here’s a product that makes clean water. It’s not being made and distributed to them. It’s not a lack of supply (we can make them easily) or a lack of demand. It’s a lack of what — purchasing power? Yes, but why is THAT? A break down of capitalism — human capital that isn’t being utilized in a productive manner that rewards the workers and allows them to meet their own requirements.

This is turning into a stream of consciousness piece, but seriously, this is a looking glass view into a fundamental issue with the world economic system. What’s the solution? I tend to believe that more state control would only harm matters, and that the root of the issue is too much hampering of natural capitalistic forces.

Bretton Woods III?

The New Republic has an intesting background on the current financial crisis: how we got where we are, the gravity of the situation, and perhaps some ideas going forward. It posits that we’re currently facing a need to change the fundamental rules of the global financial system that has been running for, depending on how you count, either since the 1940’s or the 1980’s. It’s an educational read.

I’m not an economist, but then again, when Real Live Economists attempt to predict the future of complicated chaotic systems like the global or national economy very far into the future, they’re wrong a heck of a lot more often then they’re right. They’re just too many things that can affect matters. My feeling is, though, that we’re in for something akin — at least — to the recession of the early 90’s, and perhaps worse, like the stagflation of the 1970’s. I’m still trying to wrap my head around what’s going on. Could the financial system really break down in a fundamental way like it did in the 1930’s? Or are we just looking at a another readjustment?

In the end, my guess is that it’s the later. Technological breakthroughs and refinements bring both increases in productivity, as well as new market opportunities. This runs on an increasing, exponential rate, and has for, well, effectively ever. It’s these advances that ultimately force economies to trudge onward and upward. Remember that capitalism isn’t a zero sum game. It’s just a matter of when the log jam breaks free, and what kind of pain we feel while all this growth is bottled up. That’s the question that no one knows the answer to.