Why protest only against Wal-Mart? The fact that many people choose to work for that company at wages that protestors consider to be too low means that every other company in the world also refuses to offer these workers (with their current skills) higher-paying jobs. Indeed, Wal-Mart clearly bests these other companies – and bests also non-profit employers such as government – at making attractive offers to its workers.
Friday, September 6, 2013
We should praise Wal-Mart!!
Here's Don Boudreaux making perfect sense. His opening paragraph:
Wednesday, September 4, 2013
Crony columnists...
I sat down this morning to the usual NY Times and Washington Post opinion pages and, as usual, my pulse quickened as I read the words of those who would have their readers believe such things as: there's a certain class of politician who has no respect for working people, that emerging market problems are all about deregulation, and that McDonald's can easily maintain its present labor force---and, presumably, its hiring pace---while doubling the cost of its labor. I.e., same old stuff, different day.
While each of these probably deserves its own essay---not that I haven't essayed on these topics already---for today I'll simply condense my thoughts to a single paragraph for each:
Republican politicians care little for people who work for a living: If I were to rank all of the ridiculous pieces of propaganda I might expose myself to in the course of this day, this one I suspect would take the top spot---I mean working people vote, right? Not that Republican politicians---via all manner of subsidies for their cronies---don't do real harm to the working class (they indeed do), but proffering the notion that they literally set out to do so, however, is just dirty politicking---particularly when their accuser doesn't call out the other side as well. Seriously, one could just as easily point the accusing finger at the left: One could---with equal ridiculousness---say that Democratic politicians who lobby for a hike in the minimum wage despise workers. For---asstudies commonsense suggests---a hike in low-skilled labor costs will destroy job opportunities for low-skilled laborers. Oh, and I have to add that Democrats push every bit as hard for subsidies to their cronies as do Republicans.
Emerging markets' present pain is primarily the result of financial deregulation: Huh?? The economist who makes this claim (same one who made the above claim btw) has been an outspoken critic of those who predicted that the present Fed's policies would lead to asset bubbles and generally high inflation. I think he's desperately trying to get in front of the fact that while inflation (excluding certain items) in the developed world has remained low, recipients of mass inflows of QE-spawned liquidity have indeed seen inflation rise (a 4-year high for Indonesia). Might we say that the U.S. hasn't seen the inflation many thought QE would spark because a lot of money migrated---as money does---to where it could yield better returns? Might we say, therefore, that we have exported the inflation to other parts of the world? Yes, indeed, we might. And now, with tapering on the horizon, all that money is fleeing those emerging nations in droves. Which is, therefore, doing a real number on their currencies and markets. The fact that Krugman won't even entertain this logic (that emerging markets are suffering withdrawals from a QE high)---for it entirely contradicts his position---while predictable, is, nonetheless, disgusting.
Investor note: The fact that emerging nations were the destinations of the developed world's liquidity speaks to the potential of those economies going forward (potential that---in my view---patient, long-term, strong-stomached, individual investors should exploit). The fact that there had been more flow to those nations than they could presently utilize efficiently---which led to an exodus at the first hint of taper---speaks more to the inherent risk of rampant money creation than it does to the prospects for developing economies.
McDonalds can afford to double its labor cost while conducting business as usual: Some assertions simply aren't worthy of a response.
I guess I shouldn't complain, this stuff is my material. But you know, in all honesty, there's nothing I'd love more than to have nothing of the above nature to write about. It is downright discouraging to read the stuff of presumably intelligent columnists with huge audiences when it's replete with half-truths and utter political sophistry. It has to be pure cronyism. A guy like Paul Krugman can make himself the world's most quoted happy hour economist by picking a side. His condemnation of Republican policymakers for their political calculations while defending the equally dirty left makes for robust book sales and lucrative speaking engagements---yet it makes the man himself, well, dirty. Same goes for the popularpundits personalities on the right---the Limbaughs and the Hannitys. I know, I just touched a few nerves, but you gotta work with me here folks. If you truly believe your side in Washington is virtuous, if you truly believe that their every move isn't first and foremost politically measured, well, I'm afraid you're fooling yourself. If you owe your allegiance to a political party, it would surely be better served if you would focus your attention on its transgressions---if you would call your own party out when you find its leaders catering to their supporters (which always, in myriad forms, occurs at the expense of the taxpayer), if you would hold the men and women you vote for to a higher standard...
While each of these probably deserves its own essay---not that I haven't essayed on these topics already---for today I'll simply condense my thoughts to a single paragraph for each:
Republican politicians care little for people who work for a living: If I were to rank all of the ridiculous pieces of propaganda I might expose myself to in the course of this day, this one I suspect would take the top spot---I mean working people vote, right? Not that Republican politicians---via all manner of subsidies for their cronies---don't do real harm to the working class (they indeed do), but proffering the notion that they literally set out to do so, however, is just dirty politicking---particularly when their accuser doesn't call out the other side as well. Seriously, one could just as easily point the accusing finger at the left: One could---with equal ridiculousness---say that Democratic politicians who lobby for a hike in the minimum wage despise workers. For---as
Emerging markets' present pain is primarily the result of financial deregulation: Huh?? The economist who makes this claim (same one who made the above claim btw) has been an outspoken critic of those who predicted that the present Fed's policies would lead to asset bubbles and generally high inflation. I think he's desperately trying to get in front of the fact that while inflation (excluding certain items) in the developed world has remained low, recipients of mass inflows of QE-spawned liquidity have indeed seen inflation rise (a 4-year high for Indonesia). Might we say that the U.S. hasn't seen the inflation many thought QE would spark because a lot of money migrated---as money does---to where it could yield better returns? Might we say, therefore, that we have exported the inflation to other parts of the world? Yes, indeed, we might. And now, with tapering on the horizon, all that money is fleeing those emerging nations in droves. Which is, therefore, doing a real number on their currencies and markets. The fact that Krugman won't even entertain this logic (that emerging markets are suffering withdrawals from a QE high)---for it entirely contradicts his position---while predictable, is, nonetheless, disgusting.
Investor note: The fact that emerging nations were the destinations of the developed world's liquidity speaks to the potential of those economies going forward (potential that---in my view---patient, long-term, strong-stomached, individual investors should exploit). The fact that there had been more flow to those nations than they could presently utilize efficiently---which led to an exodus at the first hint of taper---speaks more to the inherent risk of rampant money creation than it does to the prospects for developing economies.
McDonalds can afford to double its labor cost while conducting business as usual: Some assertions simply aren't worthy of a response.
I guess I shouldn't complain, this stuff is my material. But you know, in all honesty, there's nothing I'd love more than to have nothing of the above nature to write about. It is downright discouraging to read the stuff of presumably intelligent columnists with huge audiences when it's replete with half-truths and utter political sophistry. It has to be pure cronyism. A guy like Paul Krugman can make himself the world's most quoted happy hour economist by picking a side. His condemnation of Republican policymakers for their political calculations while defending the equally dirty left makes for robust book sales and lucrative speaking engagements---yet it makes the man himself, well, dirty. Same goes for the popular
Today's TV Segment (video)
This morning Zara and I discussed the very sad subject of Syria, as well as the usual (QE, budget, debt ceiling).
Click here to view...
Click here to view...
Tuesday, September 3, 2013
Is good news good news again?
Hey, good news was good news today! Well, it was for a few minutes anyway. Early on the Dow was ahead 120+ points. Why? My pat answer is always the most accurate possible: That, for their own reasons, folks came to market with cash, and shareholders, for their own reasons, weren't interested in selling at last Friday's prices. But of course that sort of bottom line won't sell squat. What does sell would be the following: Over the weekend there were no explosions in Syria, China reported surprising growth in manufacturing, the same for Europe, and---as of this morning's report---the same for the U.S.
In terms of the good news/bad news debate: The global manufacturing picture clearly provides some cover for the Fed to begin tapering QE later this month, which, to this point---according to the media---has been the main catalyst for the recent decline in stock prices. The fact that, this morning, (relatively) good economic news may have sparked a rally suggests that the market may have at last resigned itself to the inevitable taper. The fact that the Dow gave up a hundred points upon the report that John Boehner agrees with the President on military action in Syria supports that notion as well---in that a Syrian conflict, should it go weeks or months (rather than days), injects uncertainty that could keep the QE taper on hold until things settle down.
So, for the moment, good news is good news and bad news is bad news. The next test of that opinion will come with this Friday's employment number, and over the next few weeks as Washington wrestles over the budget and the debt ceiling.
Now, all that said, I'll bring it home by repeating the point I made over the weekend:
In terms of the good news/bad news debate: The global manufacturing picture clearly provides some cover for the Fed to begin tapering QE later this month, which, to this point---according to the media---has been the main catalyst for the recent decline in stock prices. The fact that, this morning, (relatively) good economic news may have sparked a rally suggests that the market may have at last resigned itself to the inevitable taper. The fact that the Dow gave up a hundred points upon the report that John Boehner agrees with the President on military action in Syria supports that notion as well---in that a Syrian conflict, should it go weeks or months (rather than days), injects uncertainty that could keep the QE taper on hold until things settle down.
So, for the moment, good news is good news and bad news is bad news. The next test of that opinion will come with this Friday's employment number, and over the next few weeks as Washington wrestles over the budget and the debt ceiling.
Now, all that said, I'll bring it home by repeating the point I made over the weekend:
As for you, if you’re truly a long-term investor employing strategic asset allocation, all of the above is utterly meaningless. If overconfidence meets with surprise and a bear market ensues, you’ll rebalance your way into cheaper stocks. If there’s no earth-shattering event(s) and the market continues its ascent, you’ll rebalance your way out at higher levels. Either way you have a plan. How wonderful it is to have a plan!
Sunday, September 1, 2013
The Poverty Industry
“Our ideas are sticky. And we tend to stick to our theories. Good idea then to delay one's theories, for once they’re made they’re very difficult to let go of.” Nasim Taleb
A few years ago a dear friend, who happens to be a passionate "progressive", told me of an interview with an African economist who had made a compelling case for the halting of aid to the continent. The argument that the donation of "mountains of clothes" has virtually destroyed Nigeria's textile industry, that the countries that have received the most aid are in the worst shape, and that huge bureaucracies teach Africans "to be beggars, and not to be independent"---resonated with my friend.
I thought to myself at last an opening! She just stepped herself right into the real-world logic that when one is handed life's "necessities", one's odds of elevating oneself much above "subsistence" are surely compromised. So I say (words to the effect [it was a few years ago]) "my friend, for once you and I are on the same page. Now, please---keeping what you just shared in mind---think about the impact of aid right here at home. Think about our huge welfare industry. Wouldn't that same logic apply here? Won't you now agree that our ever-growing "safety net" has become a snare, trapping the unwitting prey of the vote-seeking American politician? That our intense aversion to pain---ours to human suffering (and I am in no way advocating for an abrupt ending of aid to individuals [I would, however, advocate for an abrupt ending of aid to institutions] in need), our politician's to losing an election---is what keeps us mired in a slow-growing economy (add corporate welfare), keeps us subservient to a fast-growing government, and, worst of all, perpetuates poverty?"
Well, alas, my eloquent plea did not resonate---not in the least---with my dear friend. Her reply; "Hmm... I'm finally beginning to understand why you people think the way you do." Oh well, I tried.
While reflecting upon the above conversation, I thought I'd try to locate the interview in question. I believe I did, and it is indeed telling. Please read it in its entirety, and, just for the moment, see if you can't suspend your preconceptions with regard to international aid, and consider how the Kenyan economist's logic might---in some dimension---apply to the "aid" industry here at home. Here are a couple of snippets:
Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa's problems.
Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They're in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria's textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.
And, lastly, here's a post from May 2012 where I ask you to consider Who Has Skin in the Poverty Game?
Short-term worriers should be worried - OR - How wonderful it is to have a plan...
The U.S. government runs out of money the end of this month if Congress doesn't act (it will). We'll conk our heads on the debt ceiling by Halloween if Congress doesn't act (it will). Emerging market currencies are taking the kinds of hits we haven't seen since the '90s. Syria---who knows? And to top it all off it's September---the historically worst month for stocks.
So shouldn't we be very short-term nervous? Well, before I answer, I have to say that if you're truly a long-term investor, you should never be short-term nervous---but of course we have to live in the real world, the world where self-proclaimed long-term investors often become short-term nervous. Okay, so if one is short-term nervous, does one have cause? Unequivocally yes, but not for the reasons cited above: short-term worriers should be worried because there doesn't seem to be that much short-term worry out there (I'll explain in a minute).
Sure, the Dow's off 5% from its recent peak, but that's nothing in the historical scheme of things. The major indices have taken 10% hits on average once every 12 months. Therefore, given that---historically speaking---we're way overdue, wouldn't you think that all of the above would easily send the market into double-digit-down territory?
The thing is, when it comes to Congress, everyone "knows" it will kick the can. When it comes to emerging markets, everyone "knows" the pain is close to running its course. When it comes to Syria, everyone "knows" that no one wants this to turn into another Iraq. And when it comes to September, everyone who played the "worst month" card (sold in late August) in 2012, 2010, 2009, 2007 (I'll stop there) got burned as history's worst month delivered nice gains for the long-term investors who didn't succumb to short-term worries.
So why should we be worried about a lack of worry? Because, my friends, worry---other people's that is---is very healthy for the market. Worry keeps people very liquid, while a lack of worry keeps them fully invested. And if Congress doesn't, and the emerging market pain isn't, and if Syria escalates, those short-termers who entered the month sanguine can turn hysterical in a heartbeat.
All that said, the data suggest that, despite the apparent sanguineness, cash levels remain quite healthy. It'll be interesting to see how all that money that fled the bond market recently (stock funds have posted net outflows recently as well) treats the next correction in stock prices---lots of folks (and hedge funds) have missed out on the latest bull market (it's been dubbed history's most hated). The question is, will they view the next sizable selloff as their signal to jump in in hopes of catching up?
As for you, if you're truly a long-term investor employing strategic asset allocation, all of the above is utterly meaningless. If overconfidence meets with surprise and a bear market ensues, you'll rebalance your way into cheaper stocks. If there's no earth-shattering event(s) and the market continues its ascent, you'll rebalance your way out at higher levels. Either way you have a plan. How wonderful it is to have a plan!
So shouldn't we be very short-term nervous? Well, before I answer, I have to say that if you're truly a long-term investor, you should never be short-term nervous---but of course we have to live in the real world, the world where self-proclaimed long-term investors often become short-term nervous. Okay, so if one is short-term nervous, does one have cause? Unequivocally yes, but not for the reasons cited above: short-term worriers should be worried because there doesn't seem to be that much short-term worry out there (I'll explain in a minute).
Sure, the Dow's off 5% from its recent peak, but that's nothing in the historical scheme of things. The major indices have taken 10% hits on average once every 12 months. Therefore, given that---historically speaking---we're way overdue, wouldn't you think that all of the above would easily send the market into double-digit-down territory?
The thing is, when it comes to Congress, everyone "knows" it will kick the can. When it comes to emerging markets, everyone "knows" the pain is close to running its course. When it comes to Syria, everyone "knows" that no one wants this to turn into another Iraq. And when it comes to September, everyone who played the "worst month" card (sold in late August) in 2012, 2010, 2009, 2007 (I'll stop there) got burned as history's worst month delivered nice gains for the long-term investors who didn't succumb to short-term worries.
So why should we be worried about a lack of worry? Because, my friends, worry---other people's that is---is very healthy for the market. Worry keeps people very liquid, while a lack of worry keeps them fully invested. And if Congress doesn't, and the emerging market pain isn't, and if Syria escalates, those short-termers who entered the month sanguine can turn hysterical in a heartbeat.
All that said, the data suggest that, despite the apparent sanguineness, cash levels remain quite healthy. It'll be interesting to see how all that money that fled the bond market recently (stock funds have posted net outflows recently as well) treats the next correction in stock prices---lots of folks (and hedge funds) have missed out on the latest bull market (it's been dubbed history's most hated). The question is, will they view the next sizable selloff as their signal to jump in in hopes of catching up?
As for you, if you're truly a long-term investor employing strategic asset allocation, all of the above is utterly meaningless. If overconfidence meets with surprise and a bear market ensues, you'll rebalance your way into cheaper stocks. If there's no earth-shattering event(s) and the market continues its ascent, you'll rebalance your way out at higher levels. Either way you have a plan. How wonderful it is to have a plan!
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