Author: Administrator

Banksters vs. Patent Holders

The Capitol Hill site Roll Call reports that a proposed bill would make it harder for holders of “business process patents” to sue banks which they claim are infringing.  Frankly I do not understand the details, what a “government review of the patent’s validity” means, since I thought patent examiners review all applications before a patent is granted.  An opposing lobbyist is quoted as saying “This is nothing less than an earmark for big banks disguised as a new government program.”  One presumes that bank lobbyists have something equally cogent to say, but somehow that didn’t get into the article.

Unfortunately, it seems very unlikely that both sides could lose this one.

Heartland podcast seeks government action

Heartland Institute publications and web pages usually position it as anti-government, or at least pro-less-government-than-we-have-now.  But their podcasts are a bit less controlled, sometimes just providing an interesting take on something we might not have thought about (There was a great one about “how much does the Burning Man Festival have to pay for insurance?” that seems to have disappeared from Heartland’s site).

Now we have one insisting that the government needs to break the Google monopoly and vigorously enforce “privacy” laws against Google. The mp3 of this interview with Scott Cleland, author of Search and Destroy: Why You Can’t Trust Google Inc is here.

Cleland seems to want government to protect us from the threat that Google is.  I agree that Google can be a threat, as they really do want to organize all the information about all of us, and seem to be pretty good at it. But I think the real threat will happen when Google and Government merge.  Until then, we are probably best advised to use the good cheap or free alternatives to Google’s services, and to work without signing in to Google to the extent possible.

My own experience with Google Adsense, btw, occurred when trying to buy some traffic to the Henry George School web site.  People concerned about “poverty” might be interested in us, so I tried that keyword.  The problem was that most of the news articles Google coded as “poverty” were about crime and criminals.  So I excluded some words, I think it was “gun”, “police,” and a couple others.  Adsense failed to recognize these exclusions.  On one of the google discussion groups I found other people who have experienced similar problems.  Eventually, Google said something to the effect of “if you want to keep advertising with us you’ll have to pay more money per hit.”  I guess we would have had to pay enough to justify having a Google Human get involved, and that was too expensive, so the project was put aside.  The dollar cost was modest but the benefit was more modest.

The limits of Econned

Over the years, Naked Capitalism has provided a fine, if discouraging, play-by-play of the worsening corruption of our financial and governmental powers.  Dense daily posts, plus links to relevant news stories, supported by thoughtful and knowledgable commenters, makes it one of the few sites I really ought to read daily. (Cute animal pictures are a bonus.)

When chief blogger Yves Smith published Econned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, I was anxious to read it. Which I finally did over the last couple of weeks. Continue reading The limits of Econned

Excess returns to Congress

Some may say excess never left Congress, but I am referring to something a bit different.  “Excess returns” is the phrase used to describe an investment result which is above average for the kind of investment made.  And according to a report from Barron’s Randall W. Forsyth, a new study shows that U. S. Senators achieve an excess return of 10.7% per year in their personal investments.  For members of the House of Representatives, the excess is 6.8%.  Forsyth points out that any professional investment manager who achived this result on a consistent basis would be quite phenomenal.  He concludes that

Members of Congress used inside information gleaned from their positions of power to enrich themselves in the stock market.

He is probably right, and I would be the last to accuse Congress of honesty, but there is another possible explanation.  Maybe Congressmen are just cleverer than the rest of us, and in particular are more difficult to deceive.  Congress itself is evidence that the broad public is easily fooled.

In this regard, I recall stumbling a few months ago on a link to the personal investment statements that Congressmen and some other federal officials file. (Curious that I did not bookmark it and can’t seem to locate it right now.) I picked a Congressman who I thought might be honest, Ron Paul, and looked up his statement.  Dr. Paul seemed to have most of his money in precious metals, I don’t recall the extent to which it might have  been bullion, mining stocks, or related investments.  Of course this strategy would have done very well over the past couple of years. Paul is associated with the idea that U. S. dollars should be backed with gold.  I don’t think he considers this realistic in the near term, but of course if it ever happened the effect would be to push the price of gold higher as bullion would be accumulated to “back” the money.  But does Paul endorse gold-backed money in order to increase the value of his investments?  Or does he invest in gold  because he expects its value to increase?  I’m pretty sure it is the latter.  Of course this kind of logic would apply only to honest Congressmen, so I suppose we could consider Ron Paul to be an outlier.

According to Forsyth, the source study, by Alan J. Ziobrowski of Georgia State University, James W. Boyd of Lindenwood University, Ping Cheng of Florida Atlantic University and Brigitte J. Ziobrowski of August[a] State University appeared May 25 in the Journal “Business and Politics” and covers the years 1985-2001.

Reality and the Real World Economics Review Blog

Somehow the “mainstream” didn’t anticipate the 2008 global financial crisis until it actually happened, yet a few analysts did issue warnings.  So it seemed like a good idea for the Real World Economics Review Blog to organize a contest and award a prize to “the economist who first and most cogently warned the world of the coming Global Financial Collapse.” Yet somehow they couldn’t allow even the nomination of the guy who predicted it first and most accurately (pdf).  We are fortunate that Mason Gaffney has reviewed the record and documented what happened.

What bitcoin illustrates about fiat money

The value of bitcoin seems to have surged to over $7, from less than one dollar a couple of months ago.  This is a far faster increase than the price of gold, or silver, or other “hard” assets.

Bitcoin was invented by Satoshi Nakamoto, who must be a skilled and innovative programmer.  Anyone can generate bitcoins by setting their computer to solve specific mathematical problems.  As more bitcoins are generated, the difficulty of the problems increases.  Relatively few vendors currently accept bitcoins, but several dealers are willing to trade dollars for them.  And the reason their value has increased must be that people are willing to pay more dollars than previously.

Why pay more dollars?  One reason is that the total number of bitcoins is limited, so presumably they cannot suffer the kind of inflation that often occurs with paper currency. (Could that rule change? Yes, just as some new major deposit of gold or silver might be discovered.)  Another reason, of course, could be that people are just learning about bitcoins, and seeing the trend, expect it to continue.  Also, bitcoins give some indication of being truly anonymous, secure money.

Now, if I was a skilled programmer, I could invent my own bitcoin-ish system, and generate my own coins.  But unless someone is willing to accept my coins in exchange for something people want, they’ll have no value.  Perhaps Satoshi Nakamoto is not only skilled, but also charismatic.

Bitcoins have intrinsic value in the sense that it takes a lot of work (done by the computer) in order to generate one, much as it takes a lot of work to discover, mine and refine precious metals. But, whereas I could use precious metals to make jewelry or tableware, I can’t think of anything that anyone could do with a bitcoin, other than spend it or save it.

So it seems to me that bitcoin shows that fiat money could work quite well, provided that the proper amount of it is issued.  If bitcoin’s deflationary trend continues, it might be a good investment but would lose usefulness as actual currency.  I think the most likely outcome will be, either, a decision to produce more bitcoins (however that might be made), or the creation of other alternative currencies operating in parallel.

Interesting times.

New horizons in corporate subsidies

I thought it was a scandal when, years ago,  businesses were given subsidies– free money– in exchange for doing the community the favor of employing people.  I thought it was a bigger scandal when retailers were allowed to retain sales taxes, paid by their customers, to pay for capital equipment used in their business. I thought it was about the biggest possible scandal when Continue reading New horizons in corporate subsidies

Hong Kong’s “citizens dividend”

I have previously discussed Hong Kong’s land tenure system, under which the land is publicly owned, but improvement owners have security of tenure in exchange for paying significant land rent.  One result is that most working people don’t have to pay any sales or income taxes.  Another is that land is efficiently used.

But there are a couple of concerns:

  • Since Hong Kong doesn’t collect all the economic rent, speculation can still drive up the cost of housing as well as any activity which uses land (and they all do).
  • Wealthy mainland residents are moving to Hong Kong to take advantage of the increased liberties which HK residents get, further driving up costs for local people.

Now we read that every HK has declared a sort of citizens’ dividend, every permanent resident will get HK$6,000 (US$773, currently).  Bloomberg calls it a “handout,” but I think “share of economic rent” might be more appropriate.  Opponents of the move say it will be inflationary, and certainly it could lead to higher economic rent, with speculation driving land costs even higher. Of course, if people expected the government to collect all the economic rent, speculation would not occur. While the cost of living might still increase, giving an equal dividend to every resident would tend to flatten the income distribution, helping the poor much more than the wealthy.

 

Another way the poor and their land are separated

Andrew Kahrl‘s talk this afternoon at APA was “The Plight of Black Coastal Landowners in the Sunbelt South and Its Lessons for Post–Housing Bubble America.”

He used examples from New Hanover County (NC) and Virginia Beach (VA).  A hundred years ago, coastal land wasn’t really good for farming, and folks were aware of the danger of storms, so it tended to be cheap. Poor black farmers wanted to own their own land, and this was what they could get.  Continue reading Another way the poor and their land are separated