Category Archives: wealth

$13 thousand dollars, thanks Republicans

It’s a shame that journalists are allergic to arithmetic.

For example the 50 Billion dollars that Apple won’t pay in taxes thanks to the Republican 2017 Tax bill divided by 125 Million households in the US is $1,200 dollars/household.

Apple was estimated to own 88 Billion before and their PR cheerfully trumpets that they will be paying 38.

Here’s another example.  $2.8 Trillion (total US firms have stashed overseas) times.  Apple’s share of that: $252.3 Billion.  I.e. 9%.     So if all those firms take advantage of the tax cut it’s $1,200/9 * 100.

$13,333  dollars per household.

The ancient global eunuch fad!

a_few_menSo here’s a chart  from an illustration by Sabine Deviche, it’s taken from here.   It covers deep time, the axis on the left is in units of a thousand years.    The interesting bit is the 2nd chart in the middle.   It shows “effective” men (green) and women (purple); where by effective we mean that they managed to pass their genes onto the next generation.

Something happen to the men.

At some point the number of men who managed to pass their genes along declined to a vanishingly small percentage of the total population.

But this didn’t happen to the women.

Most of the men disappeared, at least they didn’t show up at the prom.

“4-8,000 years ago there was an extreme reduction in the number of males who reproduced, but no in the number of females.”

What the hell?

You can see the whole illustration here, and read more here.  The paper is inside a walled garden.  Or maybe you’ll enjoy this headline:

“8,000 Years Ago, 17 Women Reproduced for Every One Man.”

europeThis blog post offers this view, showing the event for various regions.  The women, in rose, always reproduce more dependably. But 15 thousand years ago their effectiveness increases substantially.  And then around six thousand years ago we have this event that reduced the reproductive success for men.

When it happened, how radical it was, and how long it lasted varies from region to region. it’s hard to see how to explain this without blaming social forces: culture, technology, economics.  Fun to make up insta-theories.

Precarious: freedom’s just another word for nothing left to lose

I am watching with great interest the emerging backlash to open systems and sharing economies and I support it.  It’s going to be subtle to assemble a workable framework for this backlash.  Like fire or light or honesty the open/sharing movement has so much good to say for it.  A potent populist appeal is always nice, and it has that too.  But this is not working out well.

 the ‘sharing economy’ has shown itself to be overwhelmingly an anti-regulatory, precariat-creating way of monetizing social interactions. The term has been so exploited by some of the most vile, greedy technolibertarians around that it is time for me to write off more than a decade’s work.

Amen brother.

Welfare Economics

MBA types like to talk about “your business model,” and less so they like to talk about “their business model.”   I like to ask about the model’s effect on the wealth distribution.   It’s a hard question, but generally few businesses actually shift wealth and income in what I’d see as the desirable directions.

With that said here’s a cute B-School chart:

For my purposes think of these two technologies as two business models; i.e. ways of organising the world to create goods for sale to the public.  And for my purposes we can think of the two axis as being rich and poor.   It helps illustrate how the technology has consequences.

That drawing is taken from an interesting post by Steve Randy Waldman, who’s coming at the question I’m interested in from what might be a quite productive angle.  But one way or another this kind of modeling helps to illuminate what I mean when I try to highlight how your business model, standard, technology, ontology, etc. shape in interesting and oft powerful ways the resulting distribution.

Piketty #4: Escape from Groupthink

The important point is mainstream economics has difficulty acknowledging work from such sources because to acknowledge is to legitimize. That creates the strange situation in economics whereby something is not thought or known until the right person says it.”

Isn’t that true in any tribe?  It’s not obvious to me how to distinguish, on a day to day basis, when it’s a bad or a good thing.  Though, the list drawn from Group Think isn’t a bad start.

Thomas Palley is suggesting that the economics profession is undergoing a kind of phase change.  That it is comes to grips with the realization that it’s been making many of the mistakes enumerated on that list: Illusion of invulnerability, collective efforts to rationalize, absence of questioning, belief in the the group’s inherent morality, stereotyped views of enemy leaders, direct pressure on any member …, self-censorship, illusion of unanimity, and self-appointed mindguards.

I’m surprised that I’m not aware of any literature, say a cookbook, on how groups escape from the group think.  It’s almost the definition of a group is that it exists to maintain focus; and so the best it can do is drift toward a different focus.  Of course the MBA solution to this problem is leaders, layoffs, reorganizations, and manipulation of incentives – all of which are crude.  And the high-tech version of this is particularly brutal – we let the old firms wither and create new firms from scratch.

I have observed situations where a group slowly loses it’s grip on the consensus delusion.  It only keeps going thru the motions.  The self censorship and mind guards continue to do their work, but it becomes more and more half hearted.  In that context when the layoffs come the level of outrage is tempered.  The group members are then envious of those who jumped ship before the boat’s leaks became so apparent.

Piketty #1: inequality comes home

I’m so delighted.  Piketty’s work is just amazing!

Piketty has a nice prologue he uses on many of his talks.  Once, in the 19th century, the distribution of wealth was well inside the Overton window.  Why did it fall out?

He gives us a hypothesis.  The 19th century consensus predictions were apocalyptic (consider Marx) and when these didn’t happen the entire discussion fell out of favor.  Let’s ignore the great depression and the 2nd world war shall we?

Then, early in the 20th century a modicum of research showed a slight decrease in the problem in the US.   That under minded the foundations.  So that the dominate topic: democratic v.s. communist governance could stepped up and toss our hero out the window.  At that point if you raised the topic the discussion immediately became “communism!”

Of course old habits die hard, but I guess the fall of communism allows the question a chance to come back into our discourse.

So three things drove the problem out the window: the failure of the apocalyptic predictions, a small modicum of research/data, and displacement in the discourse by the democracy v.s. communism governance dispute.  It’s fun to flesh this out, but it’s just his prolog.

He uses the prologue to say two things to his audience.  First it given them the license of welcome the discussion back.  And secondly he can promise to behave.  No apocalyptic visions for him!  It’s a nice story arc isn’t it?  It’s the classic: hero cast out of his home later returns having learned a life lesson.  I particularly like the little ploy so common in horror movies of having the dead hand of a monster rise from the grave.

tax day – tax havens

According to this paper it looks like 8% of the world’s wealth resides in tax havens.  If you’re looking to hide your wealth and launder your income in a tax haven the paper provides a nice big picture over view.  For example 60% of the deposits in Swiss bank accounts are held by sham corporations registered in tax havens.  Corporations that exist entirely to shelter wealth from the eyes of their countries tax authorities.

This hidden wealth is large enough to create large anomalies in plant’s economic statistics.  The planet as a whole runs a trade surplus!  Of course maybe we are exporting stuff from another planet.  It has been suggested we could fix the economy via an alien invasion.  I think we may have found our aliens.

The Museum of my Stuff

This morning the New York Times has an article which I presume the editor solicited because it’s tax season.  I wonder what brief he gave the reporter?  I’m guessing: “Find an amusing way the rich avoid paying taxes. Don’t make too many waves.  I don’t want to deal with the backlash.”

So the article describes a niche scheme for avoiding paying sales tax on your out-of-state purchases.   If you move from one state to another the state doesn’t charge you sales tax on your possessions – which seems perfectly reasonable.  On the other hand they want to charge you sales tax on things you buy out-of-state.  So they need rules.  California forgoes the tax after the item is used out-of-state for 30 days.

Rules create games.

The article describes how art buyers avoid the tax by sending their purchases to museums.  I guess that counts as use.

I’m required to mention Leona Hemsley famous statement that “Only the little people pay taxes.” which came out after she was convicted of having her jewelry story ship her purchases to her out of state residence.  But, sadly, she lacked impulse control.  Wanting to enjoy her purchases immediately the store politely arranged to ship empty boxes.

There is a lot of backlash calming and ass covering in the article.  If you thinking: “Yeah!  I should set up a museum that provides more scalable “use tax” laundering service!”  You’ll find some good hints from the one in Portland OR.   You’ll need to set up some good procedures to assure you can manage people shipping random crates to your loading dock.  You might want to require a longer than necessary “exhibition period” so you have some plausible deniability.  But, that said, I can’t see why pretty much any consumer good doesn’t deserve a bit of respectful time on exhibit prior to final delivery.  I’ve noticed that Amazon is good at logistics.

Meanwhile, I wonder if any major news outlet will file a tax season article that actually explains the regressive structure of the tax system?