Administrator – Page 25 – The Menace of Privilege

Dangerous checks, no balances

I always knew that those checks sent by the credit card companies were dangerous. You pay a cash advance fee, and interest; it’s extremely unlikely that you couldn’t get better rates elsewhere if you urgently need cash. Now I have received from Discover Card some unilateral revisions to the Cardmember “Agreement:”

We will charge you a Returned Discover Card Check Fee each time we decline to honor a Discover Card cash advance check, balance transfer check, promotional purchase check, or other promotional check. The amount of this fee is $25, except [if we have already done this to you within the past six months] it will be $35.

So, any time they want, if I try to use one of those checks, they can pick up an easy $25 or more. Probably put something nasty on my credit report, too.

Banksters as parasites

At the Monetary Reform Conference a couple weeks ago, Michael Hudson asserted that banksters, like biological parasites, change the way the host thinks, to better suit the parasite’s needs. I wouldn’t question this regarding banksters, but I doubted the biological fact. Then I encountered the October 9 episode of Radio National’s All in the Mind. Mice infected by toxoplasma lose their fear of cats. Fish infected by trematodes behave in ways to attract predator birds, etc.

The site includes a transcript, audio, and (scroll way down to) an extensive bibliography.

We Institutionalize Kleptocracy

That’s how Yves Smith describes the probable outcome of the latest bunch of mortgage finance scandals. We already know that lenders lied, brokers lied, consumers were instructed to lie, and the whole house of cards was built on perpetually-rising land prices. In recent weeks, and especially the past couple of days, we are learning that the back office lied too, nobody bothered to process much of the paperwork, it was easier to just forge documents as needed, and for many parcels it will be difficult or impossible for tell who really owns the mortgage (which likely will never be repaid anyway as it far exceeds what the property could be sold for).

The solution? Smith (and others) expect the federal authorities to move in, Continue reading We Institutionalize Kleptocracy

Regional currencies– displacing dollar?

Learned a few interesting things at the Monetary Reform Conference where I spent Friday and Saturday. One speaker made a sort of offhand remark about the Sucre, new Latin American regional currency, which was not familiar to me. Turns out this is a real and significant thing, whereby a currency is created for use in international trade, where the dollar would heretofore have been used. Cuba, Bolivia, Venezuela, and Ecuador are currently involved; the best description seems to be here. Claimed advantages include cheaper transaction costs and reduced exchange rate risks.

I recall that the Sucre used to be the name of Ecuador’s currency, but apparently that was replaced by U S dollars in 2000. Why Ecuador would find it advantageous to use the new Sucre for international exchanges isn’t clear, but perhaps they are looking to get away from dollars.

Medallion prices now posted by Chicago Dispatcher

Now that Chicago Dispatcher is posting Chicago taxi medallion sales prices in a defined area of their web site, it may no longer be useful to post any of them here. (Chicago Dispatcher’s print edition was the source for all recent reports I posted, but posting of the information on the web wasn’t consistent.) They continue to calculate an “average” monthly price; unfortunately it seems to be a mean or mode, not a median. At last report (pdf), this figure was $183,000, indicating little change in recent months.

Ideas come from the community

In his 2003 book Copyrights and Copywrongs: The Rise of Intellectual Property and How it Threatens Creativity, Siva Vaidhyanathan notes that creative works always build on previous (often traditional and/or public domain) creative works, and that creativity will become nearly impossible if writers (or those who “own” their output) are permitted to exercise absolute monopolies over use of their products. Potential remedies include shorter and looser copyright terms, placing works into the public domain, licensing them as open source, or using another of the Creative Commons licenses.

Michele Baldrin and David K. Levine, in Against Intellectual Monopoly, provide numerous historical examples of patents retarding, rather than promoting innovation, and note the finding (p. 92, regarding the software industry) that patents were not an encouragement to research and development, but rather a substitute for them.

Now, in Where Ideas Come From (in Wired Oct ’10) Kevin Kelly and Steven Johnson sort of combine these two ideas by asserting that innovations are not the products of individuals, but of communities.

It’s amazing that the myth of the lone genius has persisted for so long, since simultaneous invention has always been the norm, not the exception … [T]here’s a related myth, that innovation comes primarily from the profit motive… If you look at history, it comes from creating environments where [people’s] ideas can connect.”

And they tie this into another kind of property rights:

One reason we have this great explosion of innovation in wireless right now is that the U S deregulated [allowed unlicensed use of parts of the] spectrum. Before that, spectrum was something too precious to be wasted…But when you deregulate– and say, OK, now waste it– you get Wi-Fi.

All in all, a very Georgist article, the authors of which have also written what I hope are very Georgist books (both coming out next month):

Steven Johnson, Where Good Ideas Come From

Kevin Kelly What Technology Wants

Theories are easy; facts are hard

Georgists say that we understand the cause of the global financial crisis, and we saw it coming. So if we’re so smart, why ain’t we rich? Well, some of us are, but for most of us it’s a matter of data and calibration. If we had detailed data on land prices and land rents, and a few other robust variables, properly and consistently defined, for a couple hundred years, we might make some real and pretty quick money from the theory that we do understand quite well.Or maybe not.

The above is suggested by a somewhat related post at Falkenblog.

Most people think facts are easy, and theory is hard, but actually I think it is the reverse. Theory, once you understand it, is trivial, yet important facts are very elusive, often at the bottom of most major disagreements.

And, from one of the comments:

Economics is not Physics. Economists do not collect data then develop theories like physicists. Economics is closer to Ethics in form and methodology…

Let’s you and him pay to maintain my land value

Chicago Metropolis 2020 has issued a new report about Illinois transportation. (Right now, the report is on their front page; I don’t see a permanent link.) Their stated objectives are things I support, including better and more attractive public transportation as well as a more efficient freight system. They acknowledge that coordination and planning need to be improved, and that good transportation is an important component of a strong economy.

They also point out that much of the current system is in bad shape, and that billions of dollars would be required to bring it up to a reasonable standard. They quote estimates of $45 billion over ten years to refurbish and expand Chicagoland public transportation, and $171 billion over 30 years for transit and highways statewide. They propose to pay for this using an increased motor fuel tax, increased and more market-sensitive tolling, and innovative financing techniques (about which more is below). They do not claim that these sources would be fully adequate to the “need.” (My own opinion of fuel taxes is that, yes, they ought to be increased, but whatever amount is raised should be devoted to the budget of the military, who spend a lot of money attempting to maintain petroleum supplies. ) Continue reading Let’s you and him pay to maintain my land value

If pain and suffering don’t matter…

…we could reduce medical costs by 2.4%. That’s the finding of a new Harvard study as reported in today’s Tribune.

The analysis included payments made to plaintiffs, administrative costs such as attorney fees and the costs of doctors’ lost work time. It also included the costs of “defensive medicine,” in which doctors perform or order extra tests and procedures to protect themselves legally.

I don’t know about you, but my medical insurance costs go up by more than 2.4% every year. I am happy to pay an extra 2.4% to give medical staff some incentive not to screw up, and so that if they do screw up I have some possibility of receiving compensation.

Those who really want to cut the cost of medical care will look at monopoly interests such as licensing and patents, and the way that government subsidies increase costs. They’ll find many multiples of a 2.4% savings.

Taking risk for modest returns

As interest rates on “safe” bonds and CD’s decline, those with cash to invest may look to riskier options in order to generate significant return. M P McQueen in the WSJ identifies possibilities including cellphone towers, self-storage facilities, parking lots, and offcampus student housing.

The article notes some cases of > 100% returns, but what’s scary is the indication that an ordinary investor with reasonable luck is told to expect returns more in the range of 7% – 10%. Does that compensate for the risk involved? Or is everyone still counting on selling out at a profit several years down the road?

Of course another option is peer-to-peer lending, such as Lending Club or Prosper, who claim returns in the same range. There’s still plenty of risk, but a modest investor can diversify by participating in a hundred or more loans. Liquidity is limited, but at least in the case of Lending Club loans can be bought and sold (no guarantees about the price, however).