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VII-2005: 01 05 11 31 VIII-2005: 01 IX-2005: 29 XI-2005: 01 04 10 19 27

spanish central banker tells socialist subsidisers about real life

“The rise in the oil price is an external disturbance that the Spanish economy must adapt to by accepting the loss of purchasing power that it implies [...] and allowing the relative rise in price of this raw material to drive necessary adjustments in terms of a more efficient use of energy in production and lower domestic consumption," he added.”

the web address for this article is
http://www.abelard.org/news/economics05.php#real_life_271105
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proposed uk id cards - damaging the economy

It is said that the introduction of compulsory identity cards to Britain will cut the immigrant workers problem stone dead and end the black economy that provides labour for construction industries.

However, if laws against illegal working were enforced, of course, that would also lower productivity for the government would end up taking an even higher proportion of productivity and wasting it.

This is one of the many ways socialism ‘works’ to destroy wealth.

The more wealth socialism destroys, the more people rely on the free economy (that is the economy that dogmatists call ‘black’). This process also increases criminality, for criminality becomes increasingly profitable. At the same time, sheep [obedient, conforming citizens] are increasingly ‘scared’ to break the ‘law’.

Thus does corruption spread, rather than be mitigated by ID cards and associated regulations, generating not only central corruption but also local corruption and violent gangs with attendant warfare.

releted material
as long as you have nothing to hide
government white elephants
magnacartaplus.org

the web address for this article is
http://www.abelard.org/news/economics05.php#id_economics_191105

governments and markets

From an Economist review of The Undercover Economist by Tim Harford:

“That said, Mr Harford does not take himself too seriously. He is at his best illuminating the economics of small things. He rehearses some of the familiar arguments in favour of globalisation and mounts a spirited defence of competitive markets, on the grounds that they discover the "truth" about our wants, and how much it costs to meet them. (Taxes, which make some things more costly than they truly are, in order to make other things cheaper, are a kind of "lie", he says, though often a white one.)”

The Undercover Economist: Exposing Why the Rich Are Rich, the Poor Are Poor...
by Tim Hartford
2005 (1 November) Oxford Univ. Press, 0195189779

$17.16 [amazon.com]

the web address for this article is
http://www.abelard.org/news/economics05.php#hartford_101105

brain drain or brain gain?

“As with all debates about the brain drain, theory has run ahead of evidence. The numbers on international flows of people are much patchier than those on cross-border flows of goods or capital. In a recent paper, Mr Stark and his co-authors investigate internal migration instead. The rural villages of Mexico lose many of their brightest sons and daughters to jobs in cities or border towns. Those Mexicans who leave their home villages tend to be better educated than those who stay. But despite this, the example the leavers set (and the job leads they provide) raises the average level of schooling of those left behind. Because they can aspire to a world beyond the village, even if they never reach it, young Mexicans have an added reason to stay in school beyond a ninth year, the authors show.”

the web address for this article is
http://www.abelard.org/news/economics05.php#mexico_041105

the wealth of the west

Directing the sun to shady Austrian valleys...

“The mirrors tilt so they can track the sun's position. The rays are sent through gaps in the mountains to a second bank of 30 mirrors in Rattenberg.

“The reflected sunshine will not be enough to bathe the whole village but it can create 10 hot spots: chosen streets and historical facades, many of which date back to the 15th century. Depressed locals will be able to go on to the high street to tank up with sunlight.”

“ The mirrors will cost about €2million ($3.2 million), funded by the EU and the regional authorities, and should be operating by the first half of 2007.”

How citizens’s Euro ‘donations’ are being spent.
Their altruism is a fine example to us all.

the web address for this article is
http://www.abelard.org/news/economics05.php#euro_mirrors_011105

what would jesus do? rebuild sodom and gomorrah, says george

and what would science advise?

“New Orleans is a doomed city, and even the Mississippi River it depends upon seems to want to abandon it. I'd rather we faced up to that fact now, rather than $200 billion or a trillion dollars down the road.”

includes a couple of pretty maps!

from tas blog

the web address for this article is
http://www.abelard.org/news/economics05.php#new_orleans_290905

corruption and ‘aid’ - the african dance of death Three GoldenYak (tm) award
Recommended reading.

“SPIEGEL: In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags ...

“Shikwati: ... and they flood our markets with that stuff. We can buy these donated clothes cheaply at our so-called Mitumba markets. There are Germans who spend a few dollars to get used Bayern Munich or Werder Bremen jerseys, in other words, clothes that some German kids sent to Africa for a good cause. After buying these jerseys, they auction them off at Ebay and send them back to Germany -- for three times the price. That's insanity ...

“SPIEGEL: ... and hopefully an exception.

“Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They're in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria's textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.”

And plenty more in similar vein.

the web address for this article is
http://www.abelard.org/news/economics05.php#africa_aid_corruption_010805

capitalists get richer because of communist cheap labour

At last, a fairly sober review article on Chinese effects on global markets.

The article also suggests that the ‘good’ deflation (of prices) emanating from Chinese cheap labour is not being passed through to consumers/workers.

“The flip side is that profits are grabbing a bigger slice of the cake (see chart 4). Last year, America's after-tax profits rose to their highest as a proportion of GDP for 75 years; the shares of profit in the euro area and Japan are also close to their highest for at least 25 years. This is exactly what economic theory would predict. China's emergence into the world economy has made labour relatively abundant and capital relatively scarce, and so the relative return to capital has risen. It is ironic that western capitalists can thank the world's biggest communist country for their good fortune.

“China's main impact on the world economy is to change relative prices and incomes. Not only are the prices of the goods that China exports falling; the prices of the goods that it imports are rising, notably oil and other raw materials. China is already the world's biggest consumer of many commodities, such as aluminium, steel, copper and coal, and the second-biggest consumer of oil, so changes in Chinese demand have a big impact on world prices.

“China has accounted for one-third of the increase in global oil demand since 2000 and so must bear some of the blame for higher oil prices. Likewise, if China's economy stumbles, then so will oil prices. However, with China's oil consumption per person still only one-fifteenth of that in America, it is inevitable that China's energy demands will grow over the years in step with its income.

“There is currently only one car for every 70 people in China, against one car for every two Americans. That implies a huge increase in oil demand, which could keep prices high for the foreseeable future, because of scarce global spare capacity. China's consumption per person of raw materials, such as copper and aluminium, is also still low, so rising demand will continue to support commodity prices.”

the web address for this article is
http://www.abelard.org/news/economics05.php#cheap_labour_310705

comments on nuclear power with added market fundamentalism

Recommended quick reading.

“Scientists are also lending their support. Sir David King, Tony Blair's chief scientist, recently argued that one further generation of nuclear power stations is needed (in Britain at least) to buy time, in order to keep down emissions of carbon dioxide, the chief greenhouse gas, while new carbon-free non-nuclear technologies are developed. He thinks that renewable sources of energy are not currently up to the task: "We need another generation of nuclear-fission stations." Others agree. The World Nuclear Association, an industry body, dismisses its green rivals in a recent report: "the potential scope for renewables contributing to the electricity supply is very much less because the sources, particularly solar and wind, are diffuse, intermittent and unreliable.”

“ In many power markets today, nuclear electricity is the cheapest you can buy. Entergy's deregulated nuclear plants produced 13% of its revenues but a quarter of its profits last year. It costs German utilities perhaps 1.5 (American) cents per kW-hour to make nuclear electricity, estimates Vincent Gilles of UBS, an investment bank, but they can sell it for three times that amount once credits from Europe's carbon-trading scheme are included. In contrast, it costs 3.1-3.8 cents to produce power from natural gas in Germany and 3.8-4.4 cents to produce it from coal. In America, where there is no mandatory carbon regulation (and hence no penalty on fossil fuels), nuclear power has less of an edge: coal power costs about 2 cents per kW-hour on average today, gas-fired power costs about 5.7 cents, while nuclear cranks out electricity at 1.7 cents or so.”

the web address for this article is
http://www.abelard.org/news/economics05.php#nuclear_pricing_110705

economy and sustainability

“If there's a core concept that animates the people who come to Bioneers, it is sustainability. Whether the subject is overpumping aquifers for crop irrigation, fertilizing Mississippi River basin farms with chemicals whose runoff destroys marine habitat, or "jumpstarting" local economies via mining or oil-drilling projects whose extractive natures prefigure their own ends, this weekend's participants cohere around the maxim that the only economic activities that are truly economical are those that are sustainable over the long run. The failing of the modern marketplace is that it has a way of allowing select businesses to externalize some, or even most, of their costs. Thus, breadbasket farmers stay in the black partly because they don't bear the true cost of pumping water, which is done with fossil fuels whose supplies are secured at the U.S. military's expense. Agribusiness ventures in Missouri don't shoulder the downstream cost of fertilizer runoff; thatdebit is borne by the Louisiana fishery in the form of a New Jersey-sized anoxic "dead zone" blighting the Gulf of Mexico. Power plants don't foot the medical bills of citizens whose communities they pollute. The bottom-line argument is that economic and environmental sustainability are one and the same, and that a society that consumes more than it conserves is living on borrowed time. It's safe to say that the Bioneer crowd shares in the fear expressed by Øystein Dahle, a retired executive vice president for Exxon in Norway: "Socialism collapsed because it did not allow the market to tell the economic truth. Capitalism may collapse because it does not allow the market to tell the ecological truth."

“ Remembering that his grandfather had welcomed the animals onto the paddies two generations before, Furuno decided to give it a try, uncertain of what to expect.

“To his delight, he found that the ducks ate the insects that feasted on his rice, which meant that he no longer needed to buy insecticide. In time, he realized that since he was no longer using insecticide, he might be able to raise fish when the paddies were flooded. With a bit of trial and error, his plan worked. And brought another benefit: The fish feasted on his azola, a lilypadlike water plant that ordinarily spread across his paddies and suffocated the water beneath. Now the pesky vegetation was under control. Furuno could stop buying herbicide. He could replant the fig trees that had once grown around the perimeter of his fields. But it was even better than that - azola is rich in nitrogen, which now made its way through the fish's digestive tracts and back into the soil. Furuno could quit using fertilizer. Through a series of what you might call natural accidents, he'd gone organic. He'd also gone from a one-crop farmer to a seller of rice, duck meat, duck eggs, fish, vegetables, and figs. The financial stability - and fun - was back in farming again.

the web address for this article is
http://www.abelard.org/news/economics05.php#sustainability_050705

major insurance conglomerate wants clear policy on reducing co²

Those over concerned about President Bush’s apparently cavalier attitude should take note.

“Faber said Allianz hoped business and economic forces in the United States would push the White House to adopt what he called "a more reasonable attitude". ”

“ They should also work with industrial clients to develop insurance products supportive of low-carbon technology.”

“ Allianz is Europe's second-largest insurer by market capitalisation and its investment arm Allianz Global Investors manages more than $1 trillion in investments.”

the web address for this article is
http://www.abelard.org/news/economics05.php#co2_insurance_010705

trade deficits and protectionism for the infants’ class


"I buy more from my grocer than he buys from me, and I bet it's the same
with you and your grocer. That means we have a trade deficit with our
grocers. Does our perpetual grocer trade deficit portend doom? If we
heeded some pundits and politicians who are talking about our national
trade deficit, we might think so. But do we have a trade deficit in the
first place? Let's look at it."

the web address for this article is
http://www.abelard.org/news/economics05.php#trade_deficits_310505

alan greenspan - speech on current us fossil fuel energy situation Four and a half GoldenYak (tm) award

Remarks/speech by Chairman Alan Greenspan Before the Economic Club of New York, New York, New York.May 20, 2005
“To be sure, world oil supplies and productive capacity continue to expand.”

Alan Greenspan’s is the most brilliant summary of the present fossil fuel situation I have yet seen. Only in the last 3 paragraphs does he start to drift a little. This is probably part of the idiotic/unsane Western habit of believing that any address has to end with ‘a conclusion’, a grave error of Western education. (Those comments save Greenspan from a full 5 GoldenYak award!)

At least I can rest assured that the US administration is continuing to do the job for which it is paid.

In the meanwhile that administration is already cautiously moving forward with nuclear power.

I can but hope Tony Bliar in the UK does not get cold feet. It is probably the most important decision that Tony Bliar has to make in this parliament.

the web address for this article is
http://www.abelard.org/news/economics05.php#greenspan_220505

sane article by stein on outsourcing

Thoughtful. Recommended reading.

“Here's a prediction: Europe's dependence on immigration will in the end prove far more catastrophic than America's dependence on oil. The immigrants will run out long before the oil does. And the demographic disaster will be exacerbated by a continent-wide version of 'white flight' - the abandonment of socially dysfunctional, economically moribund American cities in the Seventies by a frustrated middle class. Not all Dutchmen or Belgians will wish to follow their compatriots down the Eurinal of history. And, just as you can be a US tax accountant in Bangalore, in the age of the sovereign individual there's no reason why a Dutch accountant can't do tax returns for his Dutch clients from New Zealand or the Bahamas.”

the web address for this article is
http://www.abelard.org/news/economics05.php#outsourcing_160405

pressure increases on bank cartels - peer-to-peer lending

“[...] You can lend up to £25,000 through Zopa and your money is divided among 50 borrowers (who have already been screened to ensure they have good credit ratings) to minimise risks of default.”

“[...] In recent years, however, there has been a swing towards other peer-to-peer sites such as Betfair and BitTorrent (the film and music swapping site which alone accounts for 30% of all the data traffic on the web).

“There is no practical reason why the principle of matching people wanting to have a bet with each other (Betfair) or wanting to lend money to one another (Zopa) should not be applied to other services.” [quoted from guardian.co.uk]

From the Zopa website:

Remember that this is advertising from the company. All investments should be treated with care and be made solely on your own judgment. We at abelard.org have no direct knowledge of this company and its products.

“Zopa is the first lending and borrowing exchange. What we do is very simple: we put people who want to lend in touch with credit-worthy people who want to borrow. And because there’s no middle man – the borrower just pays a 1% exchange fee to Zopa upfront – both benefit.”

“ You can borrow from £1000 to £15000 in multiples of £500.”

“ Increasingly, people want to make their own choices, especially when it comes to their finances. They don’t want a faceless corporation or a frosty institution to dictate what they can and can’t do. Zopa allows lenders and borrowers to do just this.

“Successful lenders and borrowers should get a great deal as Zopa cuts out the traditional middlemen – the banks, building societies and finance companies.

[...]

“Zopa is also transparent: it's clear to everyone what is going on and what the rates are that day.”

“ Zopa is a term taken from business theory. It stands for Zone of Possible Agreement and is the overlap between one person’s bottom line (the lowest they’re prepared to get for something) and another person’s top line (the most they’re prepared to give for something). It’s the way people negotiate all sorts of stuff - buying a car, getting a mortgage - even a teenager negotiating with parents about staying out late. If there’s no Zopa, there’s no deal.”

This article has a good discussion on Zopa

However, comparing Zopa with bank loans is highly misleading. Banks work on fractional banking and do not have the real assets to back the loans, the Zopa system does. This, in my view, is the crux of why Zopa cannot easily compete with the banks, not because of weaknesses in the Zopa system.

That is why Zopa increases pressure on the cartels, but it is not yet adequate competition. It is only when the web forces serious private banking that this sort of system will ‘come into its own’. In my view, the pieces are gradually being assembled and I am watching the developments closely and with interest.

I regard Zopa as another step in building independence.

related material
moneybookers, a non-goldbased value transfer system

the web address for this article is
http://www.abelard.org/news/economics05.php#zopa_250305

how socialist brown makes fecklessness pay

page 1 page 2

“But the second factor is even more insidious. Thanks to the generosity of Gordon Brown's ever-expanding welfare state, it now pays parents financially to have their children diagnosed as having ADHD. With that label, the child is now officially classified as 'disabled' under the present social security system. And so the way is opened to a cornucopia of taxpayer-funded benefits. The family with an ADHD child can claim a weekly Disability Living Allowance, worth a maximum of £99.85, plus a carer's allowance of up to £44.35 per week, and the disabled child tax credit, now standing at £2,285 per year. If the family is on income support - and, inevitably, many ADHD children are brought up in jobless households - the parents can also claim a disability premium worth up to £42.49 per week, plus a carer's entitlement of £25.55 a week, a reduction of 50 per cent in the TV licence fee, and grants from the social fund which can help with basic household goods.”

related material
ritalin - a briefing document

the web address for this article is
http://www.abelard.org/news/economics05.php#adhd_pensions_260205

ah, someone who can think in straight lines about pensions

A good starter primer for understanding basic realistic economics without the voodoo.
Well linked.

“Krugman writes as if the condition of the Social Security trust fund is an indicator of the health of the system. I think that most economists focus instead on the ratio of workers to retirees. As Social Security is designed, the higher the ratio of workers to retirees, the lower the tax rate must be to meet the obligations of the system. That key ratio is going to fall over the course of this century. Given a choice, I think most economists would rather see a future with a higher ratio of workers to retirees than more assets in the trust fund.

“Krugman points out that "quite moderate projections of economic growth push the exhaustion date into the indefinite future." The way I would put this is that although the expectation is that the decline in the worker-to-retiree ratio will create pressure to either cut benefits or raise taxes for Social Security, there are "good news" scenarios under which the pain can be avoided, as well as "bad news" scenarios under which the pain is worse. A lot depends on what I call The Great Race between Moore's Law and Medicare.”

the web address for this article is
http://www.abelard.org/news/economics05.php#pensions_130405


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the address for this document is http://www.abelard.org/news/economics05.php

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