Posts by Tim Worstal 1389 publicly visible posts • joined 12 Feb 2008
Roughly speaking, roughly you understand, you've just described Walmart. Their integration of what wsa selling at the tills v what they should be shipping from the depots and what they should be ordering from the suppliers was, for decades, well ahead of their competitors.
It may not be true today (no idea) but really Walmart under Sam was an IT business.
Yes, but your knowledge of teh value of your data *to you* is informationally complete, sa is your knowledge of the value of Google's services *to you*. Google also doesn't know what the value of their services are to you, do they?
In fact no seller does. That's why they try things like market segmentation and so on. Because they know there's a consumer surplus out there and they want that cash. But they're not able to identify who is getting a big fat consumer curplus and thus charge them for it.
Efficient and or free markets do not depend upon compete information. Because in just about no market is there that comlete information.
Don't forget: emh doesn't depend upon anyone having perfect information. It depends upon people trading upon the information they do have. The net sum of that trading will be the prices in the market. Thus market prices (might be!) informationally complete while no one individual has perfect information.
This is obviously very close to Hayek's point, that as no one can have perfect information with which to plan the economy then we've only got those markets to crunch through all the information that is available.
"Piketty argues that the present financial system is designed to produce ever greater inequality, and that this is a bad thing;"
Err, no, no he doesn't. He does say that a side ewffect of r>g is that wealth will become more concentrated but he's absolutely certain that's not because of design. Indeed, he seems to think it a natural part of capitalism, one that we've got to insert a design against.
As to hte Worstall Relevancy test, it was you who actually used my name in your question, no?
" Once the initial emergency phase of a disaster is dealt with, the way to fix famine is to give people money. Then, the entrepreneurs will find ways to get them the food."
Absolutely correct. And it doesn't come from Oxfam but from Amartya Sen who won his Nobel in large part for pointing this out. In the modern era famines aren't about lack of supply but a lack of effective demand. The answer is thus to add to that effectuive demand by giving broke people money with which to purchase food.
I wrote my first article about this over a decade ago when George Bush was trying to change the way that the US provides famine relief. Amazingly, Shrub was actually trying to change that system the right way, to providing cash on the ground, not shipping food from the US. I'm not entirely sure but 2004 might well have been before Oxfam's change of heart on this.
As to what this has to do with Piketty, well, that's anyones' guess.
"What each person "produces" is the difference between what they add and how much of that which is thrown away never to be used again."
No, really, it isn't. At least not in the manner that an economist talks about value. Value is simply whatever subjective value a consumer puts on something. And so production is the production of that value.
" If they're digging stuff up out of the ground or growing it, they're maybe a net producer. I say maybe; you can't eat gold or diamonds, they're just pretty."
People value just pretty. Thus producing just pretty creates value.
The same is true of anything else that people value. Produce value and you're, umm, producing value.
"Except corporations are "people" now"
Err, no.
Companies have always been "legal persons". Because that's what a company is, a legal person. Some fiction that can sue and be sued.
A human being on the other hand is a "natural person".
All that malarkey in the US courts about companies being people was in fact a discussion of which rights of being a natural person also apply to legal persons. And it was decided that free speech, and thus the ability to contribute to election expenses, was a right that legal persons did enjoy as did all natural ones.
None of which changes the fact that all taxes are ultimately paid by natural persons. A tax simply must mean that the wallet of some live human being gets lighter. There's no one else out there who could possibly pay taxes.
"This in spades. With a flat population and more efficient tech needing less resources, we could contract the economy whilst improving the standard of living."
Because that's just what economists are predicting. In fact, in one of the economic models that is the start of the entire IPCC process that tells us about global warming they predict that in 2100 global population will be about what it is now (rising to 2050, falling back after) tech marches on and the planet's 6 times richer then than it is now.
That's what we want. And that's the model that assumes more globalisation and capitalism of course....
They've not quite called it illegal yet. They've said we think it might be and can we have some more evidence please?
There's also no problem at all with paying a royalty for brand and technology licensing. The argument is only over how the price was worked out. And, of course, if Amazon has to pay more tax in Lux then it just claims a credit against US tax bills. Moves money around a bit but not much more than that.
"It's not Luxemburg nor the UK that takes a look at Amazon, it's the EU and they should as well have a look at some islands in British waters as the Brits will be the last to do it."
Well, yes, except those islands aren't actually in the EU.
"Shale Oil is economic at >= USD $95/barrel."
The article you link to actually says $60-$80. And it's old numbers too. There's at least one company in the Bakken saying they're fine at $42.
This is rather the point that is being made. Shale is like manufacturing in the sense that we're getting the usual sort of productivity increases that we do get in manufacturing.
"No one who actually knows anything about the economics of fracking can claim that it's not capital intensive. In fact it's the opposite - it requires huge and constant injections of capital, because it's very tough on machinery."
You can drill a fracking well for $5-$10 million. You can't even survey a traditional reserve for that sum.
" I hoped Tim would go into detail, throw some facts and figures around and point out the blindingly obvious hole in the logic that I can't seem to find. Instead all we got was "1.5 trillion lol" and that was pretty much it."
1.5 trillion lol was really a comment on hte point that they don't seem to have thought it through.
However, you can indeed piece together something from the rest of he piece.
Transactions taxes are a bad idea because:
1) Bad efficacy, too easy to dodge.
2) Bad efficiency, they have higher deadweight costs than other taxes.
3) Bad equity. As we can't track the incidence we don't know who is really carrying the burden. so we've no idea whether the rich are paying a higher portion of their income than the poor.
823 billion dollars
Err, 82 billion dollars. it's 0.7%, or x0.007.
"2) Efficiency. This one is my favorite. If the transaction tax was levied at every sale, from every till, every credit card or paypal transaction and every bank transfer and then instantly pushed into the state's bank account, much goodness could arise."
That's not the meaning of efficiency we're using. Rather, we want to know how much of other stuff would levying the tax in this manner screw up.
"On Jan 2 2015, the NYSE had a total trade volume of 33,253,336,431 USD.
Taxed at 0.7 %, that would collect 2,327,733,550 USD in tax for just ONE DAY (YES, 2.3 BEELION dollars). I think this will help cover the shortfall nicely, but someone else should check because I am getting RSI now."
The EU estimated that a Tobin Tax of 0.1% (and 0.01% on derivatives) would shrink the economy by something like 1%. So we've just decided to reduce the collective incomes of all americans by 7% just by and only by, applying this tax to hte NYSE.
It's not a great recommendation for it.
Severance tax can also be called resource tax, or resource rent tax. And yes, entirely right that there should be whacking great taxes on such things. I make that argument somewhere around here actually on the spectrum auctions. The value of something simply existing (oil, copper, spectrum) should be entirely taxed away while the value added to that something should remain private profit.
"Here's the point: landlords won't be paying LVT, their tenants will, right?"
What Landlords pay it.
I'm willing to pay £x amount to rent this house. That's the market price or whatever. Now government taxes that house. I'm not willing to pay more to rent it. Thus it's the landlord that pays that tax.
Seriously, the incidence of a property tax is upon the property owner, not the renter. Just like stamp duty on a house is on the seller, not the buyer, even though the buyer hands of the cheque.
"Notice that, as part of 1, government inspectors would have to be given access to your house every year to assess its value."
why?
The important word in LVT is "land". It's a tax on the value of the plot of land, not what is built upon it. 100 m2 of Mayfair pay the same tax whether there's 50 flats on it or one mansion.
My one and only peer reviewed paper is on exactly this subject, the desirability or not of an FTT.
No is the short answer.
A version of the long answer is here.
http://www.iea.org.uk/in-the-media/press-release/financial-transactions-tax-proposals-must-be-rejected
That was also evidence to the House of Lords on the point. And their report agreed with me (bonus point, someone actually submitted a blog post of mine as evidence to that same committee. Bit weird but....)
I deliberately try to avoid this very conversation in the piece.
A rough estimate of average deadweight costs is 30 % or so. Every £100 we raise in taxation destroys £30 of economic activity.
Hmm. Well, I'm certainly convinced that the value of a criminal justice system is higher than 30% of the amount of money we spend on it. So, that would be justified spending.
I'm deeply unconvinced that the value of spending £100 on diversity advisors is greater than £130.
Some things government does are very definitely worth the costs of raising the tax to pay for it. Others not so much: but as I do say in the piece, that's an argument for another day.
....container weights (in fact, all transport weights) are calculated as volume weights. For a 40 ft container, about 65 m3 volume, and maximum weight 30 tonnes (not quite accurate but good enough). Water has a density of one (as in one m3 water is one tonne).
So, you can pack a container with 63 m3 of something as long as that doesn't weigh more than 30 tonnes. Or, the other way around, if density is lower than 0.5 then you can have the volume, above a density of 0.5 then the weight becomes the restriction. Beans are denser than water so the restriction is the weight, not the volume.
"That of course depends on having a competitive market."
Sure. A point I make often enough elsewhere too. Capitalism, as just capitalism, pretty much stinks. It's those competitive markets that ameliorate it so much that it actually works.
I also run the same point back the other way. Socialism without markets also pretty much stinks as a system. But socialism (ie, worker coops and all that Mondragon etc sorta stuff) in free and competitive markets works just fine. It's the markets that are much more important than who owns the productive assets (and that is the prime difference between capitalism and socialism, who owns those productive assets).
"Possibly followed with an implication that, because *this* example has worked so well, we shouldn't to *anything* to try to alleviate poverty since the Free Market will do that so well for itself."
Eh? So the person who advocates the best anti-poverty measure we humans have ever come up with, that sorta vaguely capitalist, free market, with welfare components, mixed economy sorta thing, is the person who is advocating doing nothing about poverty?
What?
I hate to have to be the one to break this to you. But the efficient markets hypothesis, and this paper you present here, are about whether *financial* markets are informationally efficient. They're nothing at all to do with whether markets as a whole are efficient at balancing supply and demand.
You're conflating two entirely different discussions of "efficiency".
"Worsthall fails to consider that mobile phones in poor countries will not work well if there are multiple carriers"
Actually, it works the other way around. The same research shows that the more carriers there are the higher the market penetration, thus the more GDP growth there is.
Could be. Although a lot of the US doesn't think so. Most large US companies are actually self-insuring. They use an insurance company to run the system but they're actually carrying the risk themselves (ie, there's no insurance fund backing up the health care payments, just company revenues). You'll note from the piece itself that I'm not exactly a fan of the US system. But as far as risk pools go 50k, 100k people seems to be large enough if companies of that size are self-insuring.
That doesn't mean that health care provision makes sense on such a scale. You'd never be able to support the more advanced (and rare) treatments on such a scale. But as a risk pool it does seem to work for some value of "work".
What smear campaign? And what in buggery does Farage have to do with this? Sure, I'm a suporter of UKIP. And?
Does a journo who supports the Labour Party have to defend everything Milipede says? A Tory can only discuss health care within the confines of whatever Cameron has been saying this week?
Blimey......
And one to which there's no very good answer.
Unless, well, what if we just accept that 2.5 million people or whatever is the right size for an efficient health care system? Meaning that one trying to voer 65 million (the NHS) or 300 million (the US) needs to be broken down into smaller and more efficient units?
I don't say that's correct, only that it's a possible implication of Singapore being efficient just because it is a small system.
Well, in a medical care system that provides life long care fat people actually save the system money. The obese (and smokers and topers) die younger and the savings from a reduced number of years of health care are greater than the treatment costs of their being fat puffing boozers.
A strange but true fact that. And this is true purely on health care costs, without even considering any extra taxes that might be paid by various of these habits.
To some economists, yes. Because GDP measures economic activity, value added. What it does not measure is wealth, so it doesn't measure wealth destroyed: it just measures the value added as we try to reconstitute that wealth the storm destroyed.
A well known problem with GDP: noted by Simon Kuznets, the guy who invented the concept in hte first place. GDP ain't perfect and it is only what it is.
" Is most of the usage actually fb & cat videos?"
To an economist that is wealth.
People like FB and cat videos. People can now have more FB and cat videos. People now have more of what they want to have. People are richer.
This is true of anything. If people had all the goods and services they desired (unlikely, but stay with me for the thought experiment) and they also liked leisure, and we worked out a way that they could still have all of those goods and services but they needed to work one hour less a week to get them then they''re richer. By whatever that value of one hour of extra leisure is to them.
The economists' idea of "wealth" is a very wide one.
"What he doesn't say is that, rather than the so-called "Trickle Down""
I've said absolutely nothing at all about any "trickle down" effect. That being where Steve-o goes and buys a new yacht with his billions and thus provides a living to a few carpenters.
I talked about the consumer surplus that comes from innovation. The benefits that you and I get from using some new thing that an entrepreneur has managed to put together and produce.
And it's that second that Mazzucato is ignoring which is why I pick her up on it.
There are definitely parallels between QE and what the Russians have done. Creation of more M0 in order to increase M4 for example. The point being the difference in what people are trying to do. With QE, we've noted that we're at risk of general deflation. This is bad. So, let's print lots more M0 in order to have a bit more inflation. We'd like to have 2% or so (that's the BoE target). That's what we're actually trying to do.
Russia has what, 10% inflation? QE, more base money, isn't the right solution there. But they're doing it anyway. Tsk.
The cure for what ails you does depend quite a bit on what it is that ails you.
It's much easier to keep all of this straight if we make the simple distinction between money and credit. Also known in monetary circles as base money and then money (which is where some of the confusion comes from, but the distinction is the same in both cases.)
Money, or base money, is what is created by the central bank. Coins and note,s yes, but also some electronic money. Credit, or money (in the other definition) is what is created by the FRB system, the banks etc.
Yet another set of definitions is to use M0, M1, M2 and so on. M0 is purely that central bank money creation. M4 is all of that plus all of the credit creation by the FRB system.
And the important point for us here, talking about Russia and Rosneft, is that creation of more base money, more M0, is much more inflationary than creation of more M3 or M4 (bank credit etc). I won't bore you with technical details as to why this is so but it is (OK, because the multiplier of how much more more money and credit can be created on the back of it is much higher).
And that's what has really been done. Some bank credit (which would be in M3 or M4, but not in M2 or lower) has been replaced by the issuance of new currency, M0. This is also monetisation of debt and is highly inflationary, comparatively. Go too far with this (and "too far" is a flavour, to taste) and you get Zimbabwe.
The making oil from nuclear power one is about reducing the logistics tail needed to get avgas to a carrier. Once you figure that in (I've seen a figures, no idea how true it is, of $35 a gallon at the point of use once you add it all up) it's economic. Just.
The spending of a couple of tens of billions of FX reserves, the forcing exporters to convert balances, tax time (Russian taxes must be paid in roubles, are paid just before Dec 25th, leading to more people buying roubles to pay taxes) ....there's all sorts of things a government can do in the short term. The real question is what happens when they can't afford to do those things any more?
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