Richard S Stone - Comments

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Peter Schiff Defends His Forecasts And Rails Against College Propaganda
5 years ago

The sky is falling? This place is terrible...But we can't seem to find a better one. What to do?

The Best Argument For The Minimum Wage Is Not Good Enough
5 years ago

I think you perhaps misunderstood my post, because The Wealth of Nations is quite clear, and persuasive, that employers WILL conspire to force down the pay of workers AND that wages MUST be enough to allow the workers/employees to support themselves and their families on the wages. Although the WoN is often cited by "business" types as support for the "invisible hand" etc., as if it is a book in favor of ruthless businessmen, in reality it is far more nuanced and quite explicit regarding the "pernicious" effect of profits and excessive profits.

Another point is that the idea of graphs and the mathematical approach favored by "Business" and "Economist" practitioners and wannabes was completely avoided by Adam Smith. The idea of maximizing profits is implicit in the book, of course, but it is not presented as an entirely good thing at all, it is presented as a factor in how people will behave.

These mechanistic arguments generally used to refute the need for an utility of the minimum wage are in some ways antithetical to the book. It is a very liberal book, and worth reading.

The Best Argument For The Minimum Wage Is Not Good Enough
5 years ago

I had not thought of it in that way, but yes.

The Best Argument For The Minimum Wage Is Not Good Enough
5 years ago

How long has it been since you read Adam Smith? Too long, I would say.

World Trade Is Falling
5 years ago

This could be the vengeance of excessive reliance on "private" capital to increase or perfect the benefits of modern life ("Don't worry, the 'market' will solve all the problems."): this chart shows over-capacity, in terms of industrial production and consumption. Meanwhile, infrastructure, created by "public" funds, languishes, as the so-called captains of industry retreat to their walled and guarded compounds. This also reflects a version of the tragedy of the commons. And at some point wage arbitrage is unavailing. There is a proper mix of public and private spending, and purchasing. We can't count on the private sector to do all the work here.

Four Strategies Businesses Will Use To Cope With Higher Minimum Wages
5 years ago

Have you read Adam Smith? He wrote a book called The Wealth of Nations that was published about 250 years ago. One of his big points is that profits can be excessive, and that excess profits, although undefined in a mathematical sense, were pernicious, in terms of the economy as a whole.

Thus one way to consider this is that Smith had a good point, and that the current profits made on the backs of the employees are, and have been for some time, excessive. He also proposed that wages had to be sufficient to feed and house, and cover all the reasonable living expenses of the workers.

Alternatively, one can take action as you describe it. But are those actions truly going to be "profitable?" One might argue that you really did need that full workforce, and your profits have been excessive.

Smith made the point that higher wages are far less expensive to the economy as a whole than excess profits.

Richard

Here Comes The Next Trillion-Dollar Bailout
5 years ago

Oh please. This might be true if the entire (public pension) debt was unfunded, but it is not. It might be true if there were no mechanisms to deal with excessive public pensions, but there are. It might be true if simple default were not an option, but it is.

It might also be true if no one ever learned from the current Greek/German and recently past mortgage debacles, but they do.

And it might be true if all these debts came due at once, and in full, but the don't, and won't.

But of course, none of this matters if you are preaching to the converted, or to the choir, who will believe anything you have to say, anything that has even a shred of truth in it.

The problem with all this dreary gloom is that there are real problems in the world, which need to be resolved, and there is a real but not cataclysmic (impending doom) problem with under-funded public pensions. Overstating the size of the problem and mischaracterizing the nature of the problem is not particularly helpful in terms of having a proper and sensible discussion.

The Only Thing Growing Is Debt
5 years ago

Things go up, things go down: this is in the order of measuring a coastline: the smaller the unit of measurement, in this case by time, the longer the coastline appears to be. What matters to most sensible people is the yearly trend. Now, if we are talking about hair-trigger investors...well then, that is something else. Could this change be part of an important move? Yes. Is it? Possibly not.

Greece Requests 3-Year ESM Bailout, Promises Reform, Warns On "Austerity Laboratory"; Another "Final" Chance; Majority Believe Grexit
5 years ago

Yes, exactly. There is a way out of this mess, and it keeps Greece in the EU, but that way out would obviously require the Germans and the EU Banks to agree to lose a bunch of money immediately, up front...But that immediate solution differs only a little from what is going to happen quickly afterward anyway if and when Greece actually goes (back) to its own currency.

My argument on this is that both sides share the blame here, and someone, or some group, made a good fee from arranging these poorly considered loans, and some group in the EU benefitted when the loans were made. When the loans were made they were made based not just on the promise to pay, but almost certainly based on a promise to "reform" the Greek economic situation. Which didn't work out as planned. But things frequently do not work out as planned. To some extent that is the meaning of life. But this is not entirely about blame and responsibility, really, but about ending pointless suffering and trying to deal thoughtfully with reality.

For that matter, as much as I am in favor of the EU, I am not so much in favor of the Euro, which to me looks a lot like the German Mark in disguise. And being on that currency looks a lot like agreeing to have your country run by Germany. As much as we might think that would probably be a good thing for Greece, in some ways, apparently the Greeks don't entirely agree?

For that matter, Greece may not even belong in the Euro, because it is simply not some manufacturing economy: It is rural, somewhat backward, scenic place. Which for a long time has had a history of poor governance.

Graccident – The Gray Swan Strikes
5 years ago

Well, not really. The problem is somewhat in the nature of taxation (external restrictions and control) without representation, coupled with some very poor decisions made many years ago, sort of like the Detroit automakers (and Detroit the city) and their excessive pensions to workers. Of course by the time the problem was unresolvable all the responsible management had retired to luxurious homes or died. Leaving the current and mainly innocent management to deal with the resulting mess. But in that case the legal Bankruptcy framework was in existence AND everyone, meaning the creditors, knew there was simply not enough money to pay everyone.

Here, now, it is not the current management of the country, or of even the very recent past, that has failed, it is a failure from long ago. The money loaned has been spent. On the other hand, the EU benefitted from both the money being spent AND from the idea (or concept) of a "united" Europe and the Euro, which Germany and the northern countries control. Is Greece benefitting from being in the EU now, today?

And is austerity the answer? I do not believe it is. Greece needs to grow its economy in order to (once again?) be prosperous. Is there any evidence that austerity policies generally or quickly lead to growth? None that I know of. So to the extent that austerity is proposed as a solution to the problem the EU is indulging in a fantasy of its own. Instead, this drama appears to be based on disciplining Greece, as if it were a disobedient child, having spent all its allowance on candy. We can see this as a drama between parent and child, with the EU management acting as the sad but stern parent, bound by duty to reprimand the child and correct improper behavior. But why did this so smart "parent" give out the allowance in advance anyway, knowing the inevitable outcome?

Greece needs to exit the EU and resolve its internal affairs, or not, free from the help of Germany and the rest of the EU. The EU needs to take its trivial losses and move on.

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