Morning Ed: Economics {2018.03.05.M}


Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.

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83 Responses

  1. Ec8 [tulip mania]: I don’t really dispute the author’s main point, but this didn’t seem quite right:

    And what of the much-vaunted effect of the plague on tulip mania, supposedly making people with nothing to lose gamble their all? Again, this seems not to have existed. Despite an epidemic going on during 1636, the biggest price rises occurred in January 1637, when plague (mainly a summer disease) was on the wane. Perhaps some people inheriting money had a bit more in their pockets to spend on bulbs.

    I suspect the intervening months between summer and January aren’t really enough to get over the psychological effects of a plague epidemic. That doesn’t mean the epidemic had the effect the traditional story says it did, of course.Report

  2. fillyjonk fillyjonk says:

    Ec1: there is (or was, I haven’t looked recently to see if they are still in business) a company that collected worn-out blue jeans to turn them into insulation. Possibly there’s a similar use for all the cotton or mostly-cotton t-shirts.

    (I will note, as a child of the frugal 1970s: you CAN cut them into strips and crochet them into area rugs, but then again, there are only so many area rugs a person can use.)

    And hey, if we get a trade war? We may all have to be hanging on to the clothes we have now as we see prices skyrocket…maybe there will be a resale market for those shirts.

    Ec5: I have no trouble with looking at it and being uncomfortable: “Oh, she’s a shy person. We can charge her what we want, she won’t complain or say anything.” I shop retail so I DON’T have to haggle over price. Don’t make me have to start haggling over price.Report

  3. Avatar LeeEsq says:

    Ec1: You turn the shirts into rags with scissors and use them to dust.

    Ec3: I have no idea how you mine bit coins or get them. The entire thing seems a bit jaunty. What is happening to Venezuela is very sad. Its basically the crisis of the German economic collapse after World War I in modern times. Countries have less of an incentive to help now though. There is going to be a giant Venezuelan refugee crisis soon.

    Ec5: Before the revolutionary idea of set prices, i.e. everybody pays x amount for a white cotton shirt or a pound of coffee, shopping was done by haggling. Personalized prices seems like a return to practice but without the customer able to bargain a price down.

    Ec8: Paul Krugman once noted “that the wages of sin are death” is a lot more morally compelling to people than “stuff happens” as a message. I suspect that the myth of Tulipmania persisted for this reason. There are people really uncomfortable with the concept of luxury, especially mass luxury. The idea of people spending their hard earned gulders on flowers and having the entire thing crash down is too good a tale for moralists to resist. I also suspect that most people have a different understanding of irrational behavior than economists. To economists spending money on tulips was rational because people found them pretty and they gave pleasure. To non-economists and least non-capitalist economists it was irrational because people don’t need tulips and there are always more worthy causes for money.Report

    • Avatar Damon says:

      “Ec1: You turn the shirts into rags with scissors and use them to dust.”

      Also effective as bore cleaning swabs and final oiling.Report

  4. Avatar Marchmaine says:

    [Ec5] I guess my memoirs might be titled, Tales of an Enterprise Software Clerk: Pricing the Unpriceable.

    Pricing as a concept occupies almost all my working hours, so I probably have too much to say; so I’ll limit myself to this one observation: The minute second instant they figure out a way to automate variable market place pricing that accounts for competition is when my role is eliminated. Competition is the ghost in the algorithm. What I’d be on the lookout for is soft collusion on competition… the reduction in cost of sales would be universally massive.Report

  5. Avatar Aaron David says:

    Ec5 – I have a (very) small business and while I have posted rates for various things, when it comes down to it every one of those things is negotiable. I need a certain volume of customers and I will negotiate and bargain and take offers to keep that level. Some things are loss leaders, as you have to keep the doors open to make money.Report

  6. Avatar Saul Degraw says:

    Ec1: Clothing swag is some of the easiest to produce. The solution might be getting people to go for quality and not quantity but that seems hard. People love fast fashion and it’s abundance.

    Ec3:I still don’t know what problem BitCoin is trying to solve.

    Ec9: Wakanda avoided the resource course because it is a fictional country and writers can do anything they want.Report

    • fillyjonk fillyjonk says:

      then again: why do we have to have clothing swag? Quite a few meetings I’ve gone to – ones I paid a registration fee for, no less – had no swag.

      I mean, if they want to commemorate the event, they could sell shirts for those who want them.

      I don’t get a lot of free t-shirts from things. Most of the ones I did, I have turned into pajama tops (which eventually disintegrate, usually faster than a t-shirt worn as a t-shirt; I am a pretty violent sleeper, I guess)Report

      • Avatar Oscar Gordon says:

        I’m surprised swag fashion is still producing items in advance. I wonder how much of a cost differential is needed to go from buying pre-made clothing swag to just buying a bunch of solid color items and having a small silk screen setup, or embroidery machine, and making the swag in a few moments (or taking an order at the start of the event, and doing pickup afterwards)?.Report

        • Avatar Saul Degraw says:

          Don’t know. I do know in SF that swag does seem to have a kind of cache if you are in tech. Everyone either likes showing they are in tech and whom they work for or they are expected to do so as part of the culture.Report

      • Avatar Saul Degraw says:

        Free t-shirts were also pretty big Bar Mitzvah swag back in the day but this might be a limited thing. They are good for rock concerts and jeans and t-shirts seem to be how many like to dress.Report

    • Avatar LeeEsq says:

      Bitcoin is trying to solve the problem that governments control the money supply and many ideologues can’t stand it. It also allows for easier criminal market activity.Report

    • Avatar dragonfrog says:

      Bitcoin, as I understand it, was originally trying to solve some (perceived) shortcomings of online transactions, and digitally paid transactions generally, by making them more cash-like:

      – If you give a vendor your credit card number, that’s basically all they need to charge you whatever they want, whenever they want. Maybe right now they’re honest dealers and only charge you the price you agreed to, but later they get financially desperate; or at some point someone steals their database of customer credit cards. Cryptocurrencies let you give the vendor exactly the agreed-upon price, over the internet, without giving them (or whoever later steals their files) the ability to charge you more later without your active consent.

      – I guess as a vendor there is some risk with credit cards as well, as transactions can be contested or reversed, in part to deal with the above problem. Cash transactions can only be contested by someone willing to take you to small claims court.

      – As noted, one of the markets that is most stubbornly cash-only is illegal goods. So cryptocurrencies let illegal marketplaces happen without being in a physical venue to which cops and/or violent competitors can follow customers, or in a neighbourhood customers would be reluctant to visit.Report

      • Avatar Saul Degraw says:

        The last one is about the only thing I can think of as being what cyrptocurrencies are good for. But as Lee noted, I think a large chunk of it is political theory that I frankly disagree with.Report

        • Avatar Oscar Gordon says:

          Again, one of the original purposes was to allow people in oppressive states a degree of anonymity when making purchases.

          Which, of course, would be illegal in that state, but that does not necessarily mean it would be immoral.Report

          • Avatar Saul Degraw says:

            Obviously depends on the purchase but yes. I don’t deny that. I just lack the sheer intensity of all the speculation (or most Techie-Disruption intensity fwiw) Plus my tendency is towards liberal reform and working within the system to fix it rather than breaking it.Report

            • Avatar Oscar Gordon says:

              That’s fair.

              The blockchain technology still has a lot of potential, even if the currency application is something of a dud.Report

              • Avatar veronica d says:

                @oscar-gordon — My nerdtastic brain sees bitcoin as a clever scheme to monetize entropy. But yeah, blockchain is a cool hack, as long as you think heat is really fucking cool and you want to make tons of it.

                One thing comes from working at companies like Akamai and Google (my most recent two jobs); namely, those who work here see the relationship between computation and heat. Lots of heat. Tons of heat. So much that a big part of our engineering effort is shedding a metric fuckton of heat.

                Blockchain — how to make heat.Report

              • Avatar Oscar Gordon says:

                It’s heat if you run through a Proof of Work verification. That’s not the only way blockchain can be employed.Report

      • Avatar Troublesome Frog says:

        It always seemed to me like the main goal was to give goldbugs their own currency free of the “manipulations” of central banks that would act like commodity money with a hard growth limit.

        And that’s working out pretty much as expected, so in that sense, they got exactly what they wanted.Report

      • Avatar Mike Schilling says:

        That makes sense if bitcoin is backed by something of real value. Bitcoin being valuable in itself is still a weird delusion.Report

        • Avatar Oscar Gordon says:

          I find it helps to think of Crypto Currency as a way to make a currency exchange without having to tell your bank what currency you are exchanging to.Report

        • Avatar dragonfrog says:

          Are “real” currencies really backed by anything these days? I’m pretty sure it’s been a while since I could go exchange my Canadian dollars at a fixed ratio for ounces of gold or square feet of Canadian public lands or whatnot.

          I mean, there’s a central bank that has a limited ability to influence inflation, but ultimately my money is only worth what everyone agrees to pretend it’s worth. Same as Bitcoins.

          Canadian dollars just have the advantage of being used by enough people in stable enough ways that they’re boringly predictable, unlike Bitcoins or Zimbabwean dollars.Report

          • Avatar Oscar Gordon says:

            I’ll have you know my rainy day cache of Zimbabwean dollars hasn’t been worth the paper they’re printed on in a very, very long time. If that isn’t stability, I don’t know what is.Report

          • Avatar Chip Daniels says:

            The value of a government backed currency is just that, “backed by government”.
            It is backed by the power of the government to extract wealth from the economy it controls.

            Even if every single person on the world decided tomorrow to refuse to honor US dollars, the federal, state and local governments could demand their tax payments be made in tangible goods like wheat, oil, and machinery.

            Of course that is wildly impractical, which is one reason currency was invented in the first place.

            But currencies do have a very real tangible value.Report

            • Avatar dragonfrog says:

              That can be a liability too, right? When the government of Zimbabwe can’t properly support its operations by extracting wealth from the Zimbabwean economy through taxation, it does through through inflation, diluting the value of Zimbabwean dollars in circulation rather than reeling them in out of circulation.

              So people lose confidence in the currency, so they do as much business and hold as much wealth as they can in some other currency, so the government one gets further diluted, so the government has to further dilute it to keep the lights on etc. etc.Report

  7. Avatar Kolohe says:

    Ec8 –

    When the crash came, it was not because of naive and uninformed people entering the market, but probably through fears of oversupply and the unsustainability of the great price rise in the first five weeks of 1637.

    This is still a textbook bubble. it’s magnitude and legacy may have been exagerated, she has me convinced there, but ‘an unsustainable great price rise’ is a bubble by definition.Report

  8. Avatar North says:

    Ec9: To heck with the resource curse; can we talk about succession? Wakanda’s STEM tech seems extremely advanced but their social/political technology appears to be only one step or so up from hitting each other over the head with rocks. I understand it’s based on a comic and the movie needs a plot but a political system that is an absolute or near absolute monarchy with succession going to the successor who’s best at physical combat and (maybe) with an exception for charismatic heirs? That is a terrible system, I mean what the fish kind of leaders are we selecting for in this scenario?Report

    • Avatar Jesse says:

      I mean, the beginning of the movie basically put forth the idea that there hadn’t been a true fight for succession in years and it’d become a ceremony, especially when M’Baku mentions later that none of Wakanda’s past leaders had been to the Jabari homeland in centuries.Report

      • Avatar North says:

        They were pretty practiced with their ring of spears procedure (which, talk about stacking the deck in favor of certain fighting styles, wtf?) for me to buy that it was uncommon. Also when M’Baku challenged I got the vibe that everyone was rolling their eyes and going “And the Jabari challenge again”.Report

    • Avatar Saul Degraw says:

      @north @jesse

      Black Panther is a movie about a guy in a super special suit with super special nails/claws and he beats up bad guys. Even thinking about the existence of superheroes for a second would throw our universe into chaos. The entire economics of the world must be a mess. How do you deal with the insurance costs in any decent sized city? How do you deal with the fact that a superheroes are basically figurative gods and some of them are literal gods.

      This is what I don’t get about the current demand of hardcore analysis for popcorn movies. These movies aren’t high art and all aspects of them defy sense and logic. But everyone seems to want to do hardcore analysis of them for political, social, and economic truths.

      Black Panther is not the Burmese Harp, Tokyo Story, Love in the Afternoon, or Two or Three Things I know About Her.Report

      • Avatar LeeEsq says:

        Like its frequently pointed out, using mutants as stand-ins for various persecuted minority groups doesn’t work because the Anti-Mutant side has a real valid point. Why would humans be safe with somebody like Storm or Magneto running about? Mutants with morals are destructive enough. The immoral ones are like living with the Greek gods at their worse. Wanting to get rid of mutants is the sane and rational position for humans in the Marvel universe because of their sheer power.Report

      • Avatar North says:

        The movies are just a fun excuse to discuss those concepts and it’s certainly fun to point out plot holes. Black Panther had a pretty solid overarching narrative and an amazing up close presence/personality/asthetic but the mid range stuff was pretty wobbly.Report

        • Avatar Saul Degraw says:

          Maybe my brain is just different but discussing plot holes usually annoys me more than feels fun. But I’ve noticed this split recently, I guess I am just old school here but I differentiate between film that goes into the worthy of analysis and just popcorn fun.

          Marvel movies are just popcorn fun.

          I’ve noticed that people with artsy tastes/educations tend to make my distinction.Report

          • Avatar Maribou says:

            I’ve noticed that people with artsy tastes/educations tend to make my distinction.

            In part that’s because if they *don’t*, you discount them as not having artsy tastes/educations.

            Check your confirmation bias, mate.Report

          • Avatar James K says:


            Black Panther actually addresses some heavy themes, such as the nature of revenge and justice for past wrongs (both personal and institutional). In particular, it considers the “White Man’s Burden” with the white men taken out, and debates the merits of imperialism, vs isolationism vs offer aid to less developed countries.

            From an economist’s standpoint though the Resource Curse is a real problem. By rights Wakanda should be a disaster area politically.Report

      • Avatar Stillwater says:

        Black Panther is a movie about a guy in a super special suit with super special nails/claws and he beats up bad guys.

        I don’t think you’ve seen it, but if you do pay attention to the dynamic where BP fights against members of his own tribe who want to use Wakanda’s power to beat up the other tribe’s bad guys (which is potentially everyone in that other tribe!). It’s pretty interesting stuff for a stupid comic book movie.Report

        • Avatar Mike Schilling says:

          But it remains true that virtue triumphs because the good guy punches harder than the bad guy does.

          Anyway, the real super power in the movie is Martin Freeman’s ability to do American accents.Report

          • Avatar Maribou says:

            @mike-schilling I don’t think you’re right but it’s pretty hard to explain why without spoilers and I don’t remember the darn spoiler tag. Doh.Report

    • Avatar LeeEsq says:

      Nearly all fictional monarchies depict the monarch as more powerful and unconstrained as anything in real life. How many fantasy novels have adventurers that have to deal with guilds, city councils, and estates general? The rules of parliamentary procedure and trying to convince a few hundred skeptical politicians to get the budget for big adventure against the super villain isn’t that exciting.Report

      • Avatar North says:

        Oh yes, there’s definitely a narrative problem in that the things that make democracies good government make them pretty lousy subjects for dramatic narrative.Report

      • Avatar Jason says:

        “How many fantasy novels have adventurers that have to deal with guilds, city councils, and estates general?”

        The Name of the Wind does. It’s pretty good.Report

        • Avatar Maribou says:

          @jason So does Game of Thrones, for that matter, although in the typically heightened fashion it performs such things.Report

          • Avatar Jason says:

            Yeah, but Name is at a smaller scale and doesn’t spend pages discussing feasts (and I like GoT). I would argue that in Name the economics, guilds, etc, are more important than the fighting about kings in GoT.Report

            • Avatar Maribou says:

              @jason I suppose. But I remember a lot of stuff in GoT talking about various council factions, getting the city watch on board, Littlefinger having power because he controlled this member of the small council or that member of the small council… etc etc etc. That had not much at all to do with kings except in that it built or destroyed power bases.

              I am now also thinking about how much of this there is in Ankh Moporkh, and feeling sad about Sir Pterry…. *sigh*Report

              • Avatar Mike Schilling says:

                Vetinari is, as he often reminds people, a tyrant. Carrot can get things out of him via subtle reminders about the power of being the true king. Other than that, the only way to get around Vetinari is to overthrow him, and that never works for long.Report

              • Avatar Maribou says:

                @mike-schilling Oh yes, definitely. I was thinking about the machinations taking place at the sub-Vetinari levels.Report

              • Avatar Mike Schilling says:

                Yes. The rise of the Watch is a good example of that.Report

    • Avatar Jaybird says:

      If you have a bad king, you can solve that problem with a somewhat doctored glass of wine.

      If you have a bad democracy? How in the hell do you fix a bad democracy?Report

      • Avatar North says:

        An election?Report

        • Avatar Jaybird says:

          That’s how you change the leader.Report

          • Avatar North says:

            Leadership, but yes and presumably they could reform the system to address the “bad”, I suppose you’d have to unpack what constitutes a “bad” democracy.Report

          • Avatar dragonfrog says:

            Poisoned wine is also how you change a bad king not a bad monarchy.Report

            • Avatar Jaybird says:

              Fair enough. But, again, we’re talking about within the context of Wakanda’s horrible system.

              When Killmonger was deposed and the deposer took his throne back, were the problems with Wakanda’s system addressed? Mitigated?Report

              • Avatar North says:

                Not really but that whole midlevel point is very badly constructed. Wakanda is, canonically, the oldest nation on the planet possessing a monarchy/tribal system that stretches back to the exodus of humanity from Africa. Succession apparently operates by: the oldest child inherits but any relative or tribal head can challenge for the throne whereupon the new ruler is determined by prowess by a very specific manner (close quarter waterfall fighting) of physical combat.
                Now our knowledge of history says that a sociopolitical entity wouldn’t last a century under that system, let alone all of human history. It selects for good fighters, not good rulers and, as the movie demonstrates, it’s horribly unstable. Some disgruntled cousin can apparently ponce in, kill the king then declare war on the whole fishing world! As Monty Python snarked “Strange women lying in ponds distributing swords is no basis for a system of government.” I’ll add my gay proviso: hot shirtless men brawling in waterfall arenas is no basis for a system of government.

                But that’s a mid-level complaint. Wakanda is a comic book nation in a comic book world and if Wakanda had a parliament that looked at Killmonger and said “Dude, you’re crazy, we’re sticking to our isolation policy until/unless you can convince the foreign affairs committee to mark up your war resolution and then bring it to the general body for an affirmative vote” that would have… uh… not been much of a movie.Report

              • Avatar veronica d says:

                I’ll add my gay proviso: hot shirtless men brawling in waterfall arenas is no basis for a system of government.

                I’m sure you’re right, but dammit it would be fun while it lasted.Report

              • Avatar North says:

                My dear lady on that we are in total agreement!Report

              • Avatar dragonfrog says:

                It’s funny because just about every monarch and despot, no matter how much they got where they are by being good at killing people (wholesale or retail), immediately goes to work establishing that they’re in charge for other reasons – divine right / apostolic succession / personal divine ancestry, being good at governing, etc.

                Because different rulers may have different goals – some may want their grandchildren to rule an empire on which the sun never sets, others may really be looking forward to retirement after their constitutionally mandated 8 years – but they are united in not wanting someone to murder them for the throne.

                So even if they got where they are by killing the last guy, they always try to pull that particular ladder up behind them.

                The system in Wakanda, then, relies on centuries of totally incompetent leadership.Report

              • Avatar Chip Daniels says:

                Its funny when we read European history, how the medieval kings were what we would today think of as 3rd World warlords, brutally shooting their way into power and slaughtering the opposition.

                But after a few centuries, their coups and usurpations become settled tradition.Report

      • Avatar Marchmaine says:

        If I follow your logic, I might have been watching Jersey Shore wrong.

        If the original owners manual is to be believed, Democracy is already the broken form… we can either reform into Polity… which is a Laws based Constitutional form of Rule by the Many that requires the exercise of certain (but not all) virtues by its citizens; else the next logical step is Plutocracy/Oligarchy… which makes me wonder why you think we’re only at a failed democracy?Report

        • Avatar Jaybird says:

          Oh, I was only talking in theory. You know, like about Wakanda.Report

          • Avatar Marchmaine says:

            Oh, sorry, haven’t seen BP yet so can’t fix their pretend problems… I’ll bookmark for when its out on cable.Report

            • Avatar Jaybird says:

              I saw Black Panther yesterday and I’m seeing Death Wish tomorrow and I’ll probably have an essay up about both of them by Thursday.

              SO SEE IT WHILE YOU CAN.

              (Black Panther was pretty good. Worth seeing if you find superhero movies worth seeing.)Report

              • Avatar Marchmaine says:

                I’m ok to have them spoiled.

                I don’t think I understand the Death Wish cultural phenomenon yet.. but based on the redband clip you posted I’m not sure a Tarantino Dirty Harry(?) is something I’d voluntarily go see. I’ll just wait for the memes.Report

              • Avatar Kolohe says:

                Death Wish made sense when there were 1500 murders in NYC a year and the number was trending upward.

                Death Wish makes no sense when there are fewer than 300 murders in NYC a year.Report

              • Avatar Marchmaine says:

                Right; I understand billboards are the appropriate response now.Report

              • Avatar Chip Daniels says:

                Pitch Meeting, somewhere in Hollywood:
                OK, are you ready for this?

                Death Wish, updated for the Trump era. A vigilante gets fed up with liberal courts letting killers walk free, and decides to take matters into her own hands and exact justice on the cops that shot her husband.

                @marchmaine: JinxReport

              • Avatar Marchmaine says:

                Yes, but with yours I felt like I was there.Report

              • Avatar Slade the Leveller says:

                The new Death Wish is set in Chicago, home of the most restrictive (sic) gun laws on the face of the planet™.Report

              • Avatar Morat20 says:

                And surrounded by some of the laxest.Report

              • Avatar Oscar Gordon says:

                It’s not surrounded by Montana or Wyoming.Report

              • Avatar Jaybird says:

                If we got Canada and Mexico on board with Prohibition, it might have worked.Report

              • Avatar Maribou says:

                @oscar-gordon “Some of the laxest gun laws in states where predators aren’t likely to be bigger than people”Report

              • Avatar Oscar Gordon says:

                Let me try this another way…

                If your polity’s social/regulatory policy is failing because another polity is either actively working against it, or just passively not supporting it, then your policy is the problem, not your neighbors. And making excuses for the failure of a policy based upon the actions or in-actions of another polity is letting your politicians off the hook for not addressing the actual issue the policy is supposed to be controlling. That, or your politicians aren’t being honest regarding what the policy is supposed to be doing.

                I mean, making excuses for Chicago’s violence by saying other states have lax gun policies is akin to North Korea or Iran complaining that they can’t properly regulate the voices of their populations because other countries have lax speech policies on the internet.Report

              • Avatar Maribou says:

                @oscar-gordon Did you think I was disagreeing with you? I wasn’t disagreeing with you.Report

              • Avatar Oscar Gordon says:

                Oh, well then, my apologies if I came off as snippy.Report

  9. Avatar Chip Daniels says:

    Most of the article revolves around privatized school, and how the outside private companies have had to pump massive investment money in, with no payoff yet, plus prices have risen.

    Comparing this with the story of the WV teacher’s strike, my takeaway is that we gotta pay for the good stuff. There doesn’t appear to be some magic that delivers good universal schooling on the cheap.Report

  10. Avatar Slade the Leveller says:

    Ec7: “But I suspect he is right about the politics, at least in highly corrupt countries like Italy and the US.”

    Yikes, but, sadly, probably not too far off the mark.Report