Really?

This is interesting news don\’t you think?

The bull runs of the 1980s and 1990s, and the first half of this decade, with their epoch-making transfer of wealth to the richest 1% of the population, have distracted attention from the actual long-term weakening of advanced capitalist economies. Economic performance in the US, western Europe and Japan has, by virtually every standard indicator – output, investment, employment and wages – deteriorated, decade by decade, business cycle by business cycle, since the early 70s.

1) There\’s been no transfer of wealth. There\’s been a differential allocation of the new wealth created, yes, but not an actual transfer.

2) Err, output, investment and wages are all lower than they were in the early 1970s? It is to laugh.

The years since the current cycle began in early 2001 have been the worst of all – in the US, growth of GDP and jobs has been the slowest since the end of the 1940s, and real hourly wages for about 80% of the workforce have languished at about their 1979 level.

I would love to see where that wages number comes from, really, I would. I have a sneaking suspicion that he\’s looking at "real hourly wages of all employees". Which, given that there\’s been a huge structural change in the workfoce since thn, with part-timers and women flooding into it, is really not a very enlightening number.

The rest of it reads rather like the coming of the Marxist Gotterdamerung. Falling profitability…corporations oppressing the workers….wouldn\’t be surprised to see the reserve army of the unemployed turn up along with the progessive immiseration of the working classes.

Sigh, I thought we\’d rather given up on that failed analysis?

 

The European Union Military

Ooooh, Yes!

Defence is a vital driver of European integration today. The EU must become a true defence community: only then can it become a fully developed international actor.

What an excellent idea!

The EU faces new threats: not only transnational terrorism, but the proliferation of weapons of mass destruction and failed states.

Failed states….

Yes, like Transdnestria perhaps? Invade the place and sort it out. Great idea, don\’t you think? Why we could divide the world up into spheres of influence as well. You know, Russia deals with this bit, China that, the US we\’ll tell to stay home as they are the global hegemon and the EU deals with our bit.

It\’s not like we\’ve ever tried anything so gorgeously progressive before now is it? Russia taking care of Slavic interests in the Balkans, talks about who gets to influence Morrocco, what to do with the failing state of the Ottoman Empire, should the ethnic groupings of the Finns, the Letts, be semi-independent or directly ruled…

Actually, we have tried this before and it brought us World War One. What an excellent path for us to go down!

One Difference Between Men and Women

I thought everyone knew this?

The profs measured the intelligence of 2,500 brothers and sisters and pronounced that males show a greater propensity for being both geniuses and morons than their female siblings.

Agreed, saying it is what got Larry Summers into so much trouble at Harvard but then it being something which the Harvard faculty insists it is impermissible to say bolsters rather than reduces the likelihood of its being true.

The distribution of attributes (whether it be height, intelligence, speed, strength, whatever) in males is wider than it is in females. Longer tails to the distribution if you like.

The most interesting (entirely unproven I might add) explanation for this came from a female biologist back when Summers was in all that trouble. It\’s exactly to do with the XX and XY. Y is such a truncated little thing that if there\’s a problem (read mutation?) with the sole X then there\’s no other copy of a gene to cover for it. Women, having two X\’s, are more likely (for a lack of a functioning gene in both X\’s is less likely than in just one) to have another copy of a gene that can take over. Thus, women are more likely to be "average", men more likely to be at the extremes of a distribution.*

Summers\’ problem was that he then mused that perhaps (and it very much was a perhaps) this explained the gender imbalance amongst Ivy League professors, especially in the hard sciences, where the people are drawn from the third and fouth standard deviations from the mean. Because there are more men in that pool. I don\’t think he would have got into so much trouble if he\’d pointed to the other end of the distribution, the population of those in homes for the feeble minded.

* Please note, I\’m absolutely certain that this will read wrongly to anyone who actually knows about this area of biology but the general gist should be clear.

 

Warren Jeffs Rape Conviction

I\’m really not sure here, really not sure:

Warren Jeffs, the polygamous sect leader, faces the prospect of life imprisonment after he was found guilty of rape charges stemming from his role in the arranged marriage of a 14-year-old girl to her older cousin.

That he\’s a manipulative scumbag I am sure of, that he\’s no more a prophet than I am similarly. However:

Prosecutors accused Jeffs of forcing Elissa Wall, then 14, to marry and have sex with her first cousin, Allen Steed, 19. Lawyers for the sect leader had argued that Jeffs would not have known that rape would be committed after the marriage…..Under Utah law, a 14-year-old can consent to sex. But sex is not considered consensual if a person under 18 is enticed by someone at least three years older.

A personal opinion is that the prosecutors were looking for something, anything, to get him on. As has been noted elsewhere, Steed hasn\’t been charged with anything, so we\’ve got someone possibly getting life in prison for "enticement to rape" while the actual rapist (because if there was enticement which someone was guilty of means there was someone doing the actual raping, surely?) isn\’t charged.

Alisher Usmanov and Parliamentary Privilege

It woud appear that something interesting is in the air.

Our Man in the Eurocracy tells us that Tom Wise will repeat the Alisher Usmanov allegations under Parliamentary Privilege tonight..

That means that all and any media outlets will then be at liberty to repeat them without fear of any libel or defamation laws.

That\’ll be interesting, won\’t it?

Alert me when there\’s a transcript will you folks?

Missing the Point

Everyone\’s favourite accountant, Richard Murphy, is at it again. Not seeing the wood for the trees.

Now suppose you have debt of $2 billion on your balance sheet, but your rating goes down because it is perceived that you are a risker organisation. The price people will now pay for your debt (and remember, debt is traded) has fallen. Let’s suppose the fall is 5%. That reduces the value of your debt to $1.9 billion. In accounting terms under IFRS this has to be reflected in your balance sheet. The fair value of a liability (what you owe) has fallen. Liabilities are credits on your balance sheet. So you debit your liability account with $100 million. This cuts the value of the debt.

But now you have the job of ‘losing’ the credit in your accounts because in accountancy there is an immutable rule that for every debit there must be a credit. You can’t, of course, put it back on the balance sheet. You’ve just taken it off that. And it’s not cash so it can’t appear in the cash flow. And nor is it a reserves movement because it is a result of current activity. So there’s only one place left to put it, which is in the profit and loss account.

There’s one problem though. On the balance sheet this credit represented a sum owing to someone else. It was a debt. By and large debt is seen as a negative in accounting even though it is a credit because it owed. In the profit and loss account though credits are quite different. Credits are good things in the profit and loss account. They are sales or cost reductions. And that’s exactly how this credit of $100 million behaves when it hits the profit and loss account. It goes straight to the bottom line and increases the profit for the period.

Now, yes, it does indeed seem a little odd, that a deteriorating credit rating should lead to an increase in profits. But that is in fact what has actually happened, isn\’t it? You really have made a profit if you sell something for $1 and buy it back for 90 cents.

But even if that isn\’t enough, look at what\’s happening over on the other side, to those who have bought that debt. They are also marking it to market. And they really have made a loss: what they bought for $1 is now worth 90 cents. Now that number really does have to go into their P&L doesn\’t it? Most especially if they\’re, umm, a bank that trades debt instruments. Sauces for geese and ganders sort of thing.

So, if those who make a loss have to report it, how can those who profit not have to?

 

 

 

 

Acupuncture Works!

Indeed it does:

Acupuncture works better than conventional treatments in reducing lower back pain, according to researchers in Germany.

But, here\’s the kicker:

But so does fake acupuncture, where the needles are inserted shallowly and in the wrong places.

In more detail:

The results suggest that both acupuncture and sham acupuncture act as powerful versions of the placebo effect, providing relief from symptoms as a result of the convictions that they engender in patients.

A team led by Michael Haake, of the University of Regensburg, recruited 1,162 patients aged between 18 and 86 who had suffered lower back pain for an average of eight years. They were divided into three equal groups, and treated either with genuine acupuncture, with the needles inserted in precisely specified places and to a predetermined depth, with fake acupuncture, or with antiinflammatory drugs, painkillers and physiotherapy.

Success was measured as a one-third improvement in pain, or a 12 per cent improvement in mobility.

After six months, almost half of those on true acupuncture (47.6 per cent) and 44.2 per cent of those on sham acupuncture had met these criteria, while only 27.4 per cent of those treated conventionally had. This suggests, say the authors in Archives of Internal Medicine, that acupuncture, however incompetently it may be applied, is about twice as effective as conventional therapy.

My take on it? If you stick pins in people who are complaining then eventually some of them will stop complaining.

The Ten Percent Party

This is fascinating. I really think that Lynsey Hanley is on to something here:

It\’s daft to expect that it might, given that there has never been a party of the truly poor, but it set me thinking what such a party might look like.

The annual conference of – let\’s call it – the Ten Per Cent party (10% being roughly the percentage of the population termed the "core poor") would need to be sponsored by Special Brew, for one thing. Nothing like being permanently drunk to take your mind off the fact that, in the last 30 years, you\’ve become increasingly likely to be isolated in areas of concentrated poverty and where your likelihood of being murdered has shot up, while everyone else has been getting "richer", "more confident", and safer.

Its chief spokesperson would have to know what it\’s like to have avoided most of secondary school without anyone noticing, and to enter adulthood without being able to spell, count, or communicate effectively. They would have to have raised their family in sub-standard accommodation. They\’d need to know what it\’s like to live in an area where they are in constant danger of attack from peers and neighbours. A criminal record, though by no means a universal characteristic of absolute poverty, would confer further authenticity.

It\’s a very reasonable set of rules that. Stay sober, stay out of jail and don\’t rely upon the State supplied sink estate for your housing nor the State supplied educational system for your literacy and numeracy and you won\’t be part of the bottom 10%.

More than reasonable in fact, eminently sensible. It\’s just odd to see it in The Guardian.

Sex Discrimination

Really? This counts?

A couple of years ago, I advised a high flying professional who was being subject to overt sex discrimination at work. Not only was she told not to use her married name at work, on the basis that a switch from using her maiden name would demonstrate a lack of commitment to her job, but it transpired that the rest of her team had run a sweep stake on how soon she would leave work (to have children etc) after marrying. Fed up with this nonsense, she consequently resigned and there followed a substantial out of court settlement in her favour.

The nasty people are talking behind my back so giveme some money? That\’s sex discrimination these days?

We also get the classic statistical lie:

Women working full-time are still paid on average 17 per cent per cent less an hour than men (38 per cent less if they work part-time)

No, not true. Women, on average, who work part time. get paid 38% per hour less than men who work full time. Men who work part time also getpaid less per hour than men who work full time. In the private sector, the difference between male and female part time pay is around 11%.

Up To a Point

Headline at CiF:

Republicans in the US Senate are prepared to use all its powers to block a resurgence of liberalism

The only problem with this is that no one, no one at all in the US Senate, is actually proposing anything liberal. You\’ve got cultural Statists on one side and economic Statists on the other. There are no liberals there.

 

The Sandwich Generation

Horrible, absolutely disgraceful, don\’t you think?

A generation of men and women are struggling to care for children, grandchildren, ailing parents and hold down a job at the same time, according to a new report.

It\’s all the fault of this liberal capitalism thing you know. No, really, it is, another thing that can be put at the feet of the disgusting scramble for profit, a result of the devil take the hindmost, what\’s in it for me. way that our society is organised.

For the first time in history, people are regularly living long enough to see their great grandchildren. And people are complaining?

Jack Straw: We Made a Mistake

Well, yes you did Jackie Laddie:

The Justice Minister, Jack Straw, became the most senior Labour minister last night to speak out against the decriminalisation of cannabis.

He told Channel Four News that he was against downgrading it to a class C drug.

"I was always against it, let me say, I can disclose this now, reducing the categorisation of cannabis from B to C, I thought that was an error," he said.

The only sensible or moral thing anyone could do with this, as with other drugs, is some form of controlled legalization. There\’s that moral point, which is that the only justification for limiting a person\’s freedom is to limit harm to others: harm to him is not such a justification. Sensible comes in because the harms that are caused by drugs are, if not solely caused by their illegality, most certainly amplified by it. But  Jack says he wants to put cannabis back up to a Class B drug, with a possible 5 year jail sentence for possession. Why?

"Why I want to upgrade cannabis and make it more a drug that people worry about is that we don\’t want to send out a message – just like with alcohol – to teenagers that we accept these things."

It\’s certainly an interesting message to send to teenagers: we\’re blithering idiots with no concept of freedom or liberty and we\’ll make law according to ill found prejudice, not any cost benefit analysis nor attention to facts.

As I\’ve pointed out earlier, the recorded rise in psychosis from the stronger versions of cannabis (and there\’s a great deal of doubt about whether this figure is well founded, but it is the one everyone is using) is some 450 cases a year. Depending upon who you believe there are some 2-8 million regular cannabis users in the country. So upgrading to Class B is in effect threatening 20 million man years of jail time to prevent 450 cases a year of psychosis. It is to laugh.

Monday morning

So it\’s Monday morning, yes, there\’s a definite whiff of a hangover in the air (that third bottle of port after the barbie last night went down all too well) and I\’ve got some horrible, ghastly, work I need to do this arvo. I need cheering up.

Yes, that\’s better.

Much, much, better.

Explaining the Great Compression

The Great Compression is the extreme fall in income inequality that happened in the late 1930s, early 1940s in the US. The one that has largely reversed in recent decades (although I would prefer it if the people complaining about said reversal were willing to note that the earlier inequality was driven by returns to financial capital and the current by returns to human capital). Various explanations for all of this are put forward but I have to admit that I like Tyler Cowen\’s:

Crush the incomes at the top and then make the fat cats pay much higher wages to protect the world and become a superpower.  Impose wage and price controls as well.  See how long it takes before these distributional effects — which don\’t exactly match the distribution of economic talent– reverse themselves in the aggregate.