We thrive on diversity — diversity of skills, diversity of interests, diversity of lifestyles, diversity of religious and political outlooks, diversity of culinary and artistic tastes, diversity of lifestyles, and, lest we forget, diversity of income. Capitalists need workers and workers need capitalists. A wealthy factory owner won’t stay wealthy for long if here’s nobody to work the assembly lines. A middle-class assembly line worker won’t be middle-class for long if there’s nobody building factories.
I’ll add that I find it problematic that the typical person who’s concerned about income inequality at the household level isn’t concerned about income inequality at the government level. Why isn’t it a problem if some municipal governments are rich and some are poor? Why some county governments are rich and some are poor? Why some state governments are rich and some are poor? Why the federal government is rich and the state governments are poor?
I live in Utah, and it bugs me that my government is so much poorer than the government of California. Why won’t someone tax the government of California and transfer the proceeds to the government of Utah. There’s so many things around here that could be done with the extra dough.
No one makes claims like that because reducing (tax) income diversity between state governments is patently silly. I suggest this exercise is a good filter for thinking about whether schemes to reduce income diversity across households are silly too.
GDP has always been flawed. It’s missing home production, and underground production, and leisure, and the flow of environmental services.
But, our hope has always been that what it’s missing is roughly in proportion to what it measures. If this is true, then GDP is still a good measure of overall value.
Except for consumer surplus. GDP has always missed consumer surplus, And this didn’t seem to matter much … until the internet started turning lots of measurable GDP into not-so-measurable consumer surplus.
Think about a music file that you obtain for something less than its retail price. The value to you is the same, but almost all of that value is now surplus instead of revenue for the music industry. This means GDP actually falls when you pirate a song.
And yet the well-being that GDP is supposed to measure actually goes up when society pirates songs. The reason is that as price falls, we move down along the demand curve. Yes, we’re reducing measurable revenue to the industry, but we’re increasing the triangle of consumer surplus in two dimensions: both the price we would pay but no longer do, and the number of people who find it in their interest to obtain and enjoy the song at the lower price.
N.B. I do recognize that there is a broken window fallacy that’s also involved with pirating music, but that’s not my concern here.
Anyway, I think I’ve got you convinced that there’s something new going on with consumer surplus. Now consider this video. This is a serious short film, and I’m sure the creators thought nothing of what it says for macroeconomics.
Did the two girls get something of value? Yes, I think it’s obvious they did. Does it enter into GDP? Of course not. That’s problem one.
But there’s a second bigger problem. How did they produce that value?
Hmmm. Let’s play macroeconomist. The girls combined labor, capital and technology to create value. What’s the labor? I suppose it’s the girls’ time (posing, clicking, tagging, texting, and harvesting the enjoyment that follows) and the time Kirsten Dunst is actually being photographed.* But what about the rest? The phones and the internet are capital. Now, there’s technology involved in both of those too, but it’s sort of boring for my purposes because it’s extant technology.
But what about Kirsten Dunst? Is there more to her than labor? If so, is she capital or technology? I think she’s a little bit of both, perhaps even quite a bit of both, since she’s a lot more important to producing this bit of value than anything else.
She’s definitely capital in that she’s productive, and her productivity will depreciate if not cared for. A name will help with this idea; how about “Dunstware”. I think it is fair to say that an actress like this would be very concerned about the potentially rapid depreciation of her Dunstware.
But she’s also technology: a productive, non-rivalrous idea, that can be used repeatedly without being consumed. Call this “Dunstfulness”. This picks up the idea that you’re never going to be in a photo with Kirsten Dunst unless she brings her Dunstfulness with her; photoshopping is still possible, but then it’s really a form of technological spillover in which someone can use Dunstfulness without necessarily having permission to do so.
That’s mind blowing. Could you, just a few minutes ago, have conceived of a person’s … personness … as a form of technology?†
It’s get’s better. Dunstfulness is a technology for which there are network externalities that aren’t even based on production. Consider a theorem. Yes, it has network externalities because it can be used repeatedly to create new value. Dunstfulness is better than that: she can repeatedly create value (in the girls’ friends) without be used at all.
So, Dunstfulness is a technology that should be measured with our national wealth. And, it’s capable of helping to produce something valuable that should be measured in our GDP.
Further, our GDP, which does measure all the production values that go into creating Dunstware, and is clearly not going to measure the long-term investment made in creating Dunstfulness. And yet, no doubt, a lot of people along the line involved in that no doubt envisioned their work as an investment in Dunstware or Dunstfulness.
* Can we even use the word “photographed” for what happens in the video?
Shooting fish out of a barrel: what’s not to like?
This actually is a serious contraption, meant to help with the transportation of live fish over distances. I didn’t know such a thing was needed, but after watching the video, I can see that it is.
I particularly like when the salmon is almost ready to come out of the tube, and the tube shakes like it’s vomiting. It reminded me of some scenes of the the aliens’ craft in Spielberg’s version of War of the Worlds.
FWIW: Whooshh, the company that makes this initially developed the technology for collecting fruit that can bruise. They have cool videos of that too.
Cool research. A team of 7 researchers, using 3 databases of individuals who are culturally important through history, plotted the migration of those individuals to determine cultural centers.
They visualize this for America:
That really gives meaning to the idea of flyover states. But, pause it and look around a bit. Check out the importance of:
Cincinnati and Louisville in the early to mid 19th century.
How about the Erie Canal being traced out.
The absence of much at all across the Black Belt of the deep South.
San Francisco popping out of nowhere in the 1850’s (before, and everyone forgets about this, not really thriving well after that).
The necklace of cities along the Union Pacific route, through Kansas City, Denver, and Salt Lake City.
The way Salt Lake City and the west coast attract people who bypassed the east coast completely.
The outsized attraction of New Orleans in the early 20th century (as its primacy as a port faded)
The development of the triangle in Texas as oil boomed.
The huge migration to Los Angeles starting in the 1920’s.
And towards the end, the influx of people into Florida.
And for Europe:
During its heydey, notice how the Roman Empire is actually fairly tenuous across the west: everyone’s in Rome in a way they’ve never been in New York.
But as the Empire fades, the centers of western European cultural start popping up before (and during) the barbarian invasions.
The Dark Ages are pretty dark, but there’s clustering across the region we still associate with medieval history: from the Ile de France, arcing northeast towards the low countries, and then back southeast across the central Rhine valley.
In the 12th century, look for Seville and Cordoba popping up under the Moors in Spain. Paris gets brighter at the same time.
Not much going on in northern Italy, until the bright lights come on in the 14th and 15th centuries.
Check out Amsterdam in the 17th century.
I found Vienna quieter than I expected in the 17th and 18th centuries. But look at the lights of Budapest, Prague, and Cracow.
St. Petersburg pops out of nowhere after its founding in the early 18th century.
By 1900, Germany has bright lights … everywhere.
And look at England … whole bunches of people leaving to go to America. Look closely, and you can see some of them coming from Germany in the 1930’s.
You can also see many eastern Europeans heading in the direction of Moscow in the mid 20th century.
Unfortunately, politically these solutions do not seem possible at this juncture. Note that because of the way the comparative dynamics work, the efficacy of each of these solutions diminishes as we move into the future.
This is ridiculous. Consider the two largest items.
The biggest is indexing payments to the CPI minus 1%. Macroeconomists know that the CPI overstates price inflation, by something in the range of 1%. So, we’ve already been giving seniors a gift every month by indexing to just the CPI.
To draw an analogy, this is like having your parents pay for your gas, and every time the price per gallon goes up by a nickel, they give you a dime to cover it. Last I checked, keeping the change as a habit, and then bitching about it if your parents threaten to ask for it back is something most of outgrew a long time ago.
The second biggest is raising the retirement age immediately (to compensate for it not being raised earlier), and then indexing it to increasing life expectancy in the future. Without doing this, with every passing month we’re offering new retirees funding for a longer expected retirement with each passing month … without them having contributed extra to the system with a longer career.
An analogy for this might be giving a football team 5 downs, or a baseball hitter 4 strikes … after the game has started. Again, excepting things like the Colorado Buffaloes 1990 co-championship, this is something that most people would find unacceptable in others.
If you don’t know how horizontal drilling and fracking work, watch this video.
This is the only YouTube video I’ve ever seen where the dislikes are nearly as high as the likes (as I write this, they’re running about 60/40 with the likes in the lead).
And yet this is an educational video. Apparently it’s OK to dislike educational videos if they’re about subjects you don’t like, or are put out by corporations from industries you don’t like. And yes, I know the point of a like or dislike is to tell people what you like or dislike — I’m just pointing out that this sentiment is about as deep as not liking a book about birds because gannets wet their nests.
That’s f***ed up: would people react the same way to, say, Schindler’s List?
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