Monday, April 11, 2011

Consumer-Based Economy

. . The Internet is awash with complaints and vague suggestions on how we can improve our lives, yet none suggest that we must first create the social mechanisms we need to be able to attain those objectives.
. . This missing social mechanism is a Consumer-Based Economy that will enable working consumers to place with industry long-term consumer orders for everything they desire and to pay for everything with their labor.
. . Without such an economic system, not even the rich can order anything they really want - certainly nothing as grand as an ideal city populated with select neighbors.
. . This is regrettable since all we need are special bank accounts which balance the monetary value of each depositor's long-term industrial orders with the monetary value of their weekly paychecks which they earn working on the long-term contracts awarded to them by those industries in which their consumer orders have created jobs.
. . Placing and managing the details of these long-term orders, and the subsequent distribution of the resulting labor contracts, would be the job of professional Family Agents operating in a hierarchy of local and regional Consumer Congresses.
. . Working consumers would start this process by sending select Family Agents to Neighborhood Congresses with general instructions on what they want from local and regional industries.
. . These professional Family Agents would meet to combine their anonymous family consumer orders and to place as many as possible with local industries, retailers, and service businesses, some of which may need to be newly created.
. . Those orders that could not be fulfilled locally would be sent with select Neighborhood Agents to a Consumer Congress at the city level.
. . At these City Congresses, Neighborhood Agents would combine their consumer orders to see what could be placed with existing or newly sponsored city businesses. Those orders that could not be fulfilled here would be sent with City Agents to State and Regional Consumer Congresses to repeat this process at these and higher national and international levels.
. . All Consumer orders would all be placed with maximum acceptable prices as specified by the ordering consumers. Those orders that could not be produced within these maximum levels would be cancelled.
. . The jobs created would be distributed among represented workers according to their stated preferences for various types of labor. Since their consumer orders will create many different types of jobs, few of which they would like to perform except under attractive circumstances, exchanges of these jobs will be distributed in amounts dictated by The Principle of Fair Labor Exchange.
. . Thus a rational consumer-based economy will provide consumers not only with everything they desire, it will also provide them with Guaranteed Lifetime Self-Employment in their preferred occupations, at maximum fair wages, working on approved projects ordered by themselves, their families and neighbors, most of whom will be their women, rather than strange male employers.
. . Since Defense and Government are consumer services just like any other, these Consumer Congresses will act as official Civilian Authorities that will direct, supervise, and control all legitimate state, national, and local governments, their soldiers and police, in partnership with whatever self-proclaimed military congresses exist at that time.

. . Among the many items that organized consumers will be able to order in a Consumer-Based Economy is a Defined Language administered by a Language Academy. The Definary that this Academy will produce will enable people to comprehend fully the meaning of the many abstract words they use daily, and to quickly recognize those false applications proffered by perverts and landlords.
. . These abstract concepts will never be defined in any banker-based economy. Evidence is the official Oxford and Cambridge University dictionaries. After four centuries of operation under dozens of editors, publishers, and supporting landlord governments, these books still contain not one definition for any of the abstract concepts they list. In fact, these silly university books cannot define even the word "Definition"! To this day, these university professors staunchly refuse to define any abstract word even when offered this opportunity by language experts. Instead they prefer that their dictionaries remain mere references books for correct spelling and pronunciation, while serving their primary function as landlord propaganda media for the dissemination of false ideas under the guise of surveying "common word usage", a survey that strangely never includes true meanings.

. . Among the most important of these defined concepts will be the words Economy, City, and Religion.
. . The instinctive abstract word "Economy" will be noted as a "Scientific System of Exchange of the Future Labor Created by Advance Consumer Orders". This definition excludes Bartering of Existing Items, such as previously manufactured products for standard mediums of exchange, such as gold, silver, paper currencies, and wampum. This definition would deny the claim that the primitive Market Bartering practices of Capitalism qualifies as an economic system. It would also deny the claim of Socialists, Communists, Fascists, and New Dealers that Slavery qualifies an economic system. This clarification would encourage civilized people to form Consumer-Based economies as a matter of principle.
. . The abstract word "City" would be defined as a "Whole, Resident Owned, Sovereign Organic Civic Entity". This definition would deny the claim of landlords that their sprawling, fragmented, urban slave-labor concentration camps qualify as Cities. This definition would result in educated people deleting the word "City" from misnamed landlord urbs such as the New York Urb on Manhattan Island.
. . The definition of another instinctive concept would define Religion as a "Collection of God's Laws", with "God" defined as the "Creator of Man", not any "Materializer of the Universe", or some individual, or comic book character, or fanciful Lord of this planet, or that certain landlord novels or history books are "the Word of God". This clarification would lead good people to establish true religions with true moral codes and real moral agendas that would eventually create the suprahuman civilizations that would create a Heaven on Earth as divinely intended.
. . Other important definitions would include Morality, Republic, and Justice, and the contrary concepts of Crime, Dictatorship, and Tyranny. These definitions would lead to the disbanding of elective dictatorships that pose as republics, and the formation of mutually defensive leagues of sovereign Cities.
. . Civilized folk interested in forming local Consumer-Based Economies are advised to begin discussing the prospect with family, friends, colleagues, and neighbors. When enough interest is evidenced, groups should seek assistance and leadership from sympathetic local mayors and city councilmen, then register their ideas and contact data in a Blogger.com Blog with a name that begins with "Consumer-Agency-" followed by a dash and the postal code or name of the area that they wish to serve or be served by. Then other local groups with Blogs beginning with "Consumer-" should be contacted to discuss their common interests in forming local Consumer Congresses that will promote and create consumer-based economies. Compatible groups located should be listed in individual blogs. Further advertising can be inserted free in regional Usenet articles and in local newspapers, telephone books, Internet chat groups, and in flyers distributed door-to-door and car-to-car under the windshield wipers of cars parked at shopping malls, apartments, offices, colleges, medical buildings, streets, and other public and private parking lots, or person-to-person in clubs and churches.
. . Practical tasks can then be performed by committees to produce educational brochures and convenient consumer and worker questionnaires.
. . Ideas on what consumers should order and why can be found at sites with architectural renderings of futuristic cities such as www.TheVenusProject.com and in the Book, "The Octahedron, The Symbol of Man, Blueprint For Civilization", available from Amazon.com in electronic format readable on computers and on Kindle Book readers.

. . The most important section of this revolutionary new book, the part that describes a Consumer-Based Economy and its advantages over primitive banker-based Capitalism and Socialism, has already been published in the United States Congressional Record and in the prestigious and influential national monthly magazine of the Illinois Bankers Association.
. . This, the first new economic concept ever proposed, was submitted to the United States House of Representatives by Congressman Carlos Morehead as a sure way to end ALL of America's chronic age-old economic problems, from inflation and unemployment, economic depressions and business recessions, stock-market crashes and business failures, to home foreclosures and larcenous crimes such as robbery, theft, embezzlement, graft, bribery, debt evasion, fraud, and counterfeiting.
. . This is the most important book ever written. It is the first book that clearly defines all crucial abstract human concepts available nowhere else. It shows how easily an advanced global civilization can be created through a scientific, moneyless, full-employment, direct-labor-exchange economy that will fulfill all consumer desires, beginning with the design and construction of a global league of ideal, self-sufficient, energy-efficient, resident-owned, sovereign corporate garden cities.
. . This is also the world's first GOOD book since it deals only with life as it SHOULD be, not as it IS, as do all traditional publisher-approved books.
. . Although its unpadded pages are few, this book contains more definitions than the Oxford and Cambridge Dictionaries, more morals than the Koran, more religion than the Bible, more utopian Ideals than Thomas Moore's "Utopia", more Economic Theory than the combined works of Karl Marx, Adam Smith, Milton Friedman, John Maynard Keynes, the Federal Reserve Banks, and the London School of Economics. It contains more Laws than the Library of Congress, more Psychology and Philosophy than college texts, more Esoteric Revelations than Theosophy, and more Libertarian ideals than the Libertarian Election Parties. It offers more sound investment advice than the New York Stock Exchange, more practical Green Advice than the Sierra Club, and more true reforms than the Zeitgeist Movement. Its Calendar traces the Sun's position more accurately than the calendars contrived by Christians, Muslims, Jews, Hindus, Sikhs, Bahai, Iranians, and Chinese. It corrects the errors of traditional Astrology. And its explanations of the religious symbolism of the Sphinx and the Nordic Seven Day Week have no parallel.
. . This is indeed a modern classic whose publication will mark the end of the Age of Barbarism and Superstition and the beginning of the Age of Civilization at Year One on the Calendar of Civilization.
. . This book is obviously in a class of its own, since Amazon.com lists no Book Category on the topic of "Civilization".
. . This and all the other revolutionary new proposals must now be presented to those hundreds of millions of citizens who must now implement these reforms if they are ever to avoid suffering and their eventual rapidly approaching self-extinction and instead thrive and enjoy the extraordinary benefits of the new advanced suprahuman world civilization that they will personally create for themselves.

Monday, April 4, 2011

Indonesian Economic

The Indonesian Economy and the Role of Forestry

Indonesian forestry plays an important role in increasing economic development partly through foreign exchange earnings, job and business opportunities, as well as acceleration of development for remote regions. In the 1980's decade, forest-related employment accounted for about 5.4% of the total labour force (MoF, 1991). In this period, the forestry sector contributed an average 16% of total foreign exchange earnings annually and 27% of non-oil export earnings. These figures were relatively sustained at least until 1994, when foreign exchange from forestry sector was about US$4.2 billion.
During the last two years (1995-1996) the forestry sector contributed an average 3.85% of total gross domestic product (GDP) which in 1995 was about Rp. 454,514.1 billion, and in 1996 had increased to Rp, 532,630.8 billion. Both these GDP figures decrease slightly when calculated on non-oil basis, namely Rp. 417,705.8 billion (1995) and Rp. 490,316.6 billion (1996). In this two-year period, the growth rate of the total GDP is about 18.91% (1995) and 17.19% (1996), while for non-oil-based, the GDP growth rate is respectively 19.79% and 17.38%1. In the same period, the corresponding GDP growth rate for the forestry sector was about 7.15% (1995) and 6.67% (1996).2
1 The basis for GDP growth estimation reported here appears to differ from that generally used by the Asian Development Bank, the estimates of which suggest GDP growth at 8.1 % in 1995 and 7.9% in 1996. 2 1996 Statistical Year Book of Indonesia. Central Bureau of Statistic (data was recalculated).
Indonesia's population growth rate is decreasing; in 1992 the population was about 184.49 million and it just reached 196.81 million in 1996. A study by Capricorn Consult Inc. projected that the population will become 211.20 million by the year 2000. The average annual growth rate of population during this period (1992-1996) is around 1.6% (Table 1). Compared to the 1980's decade rate of around 2.12%, this reduced figure shows a good achievement by Indonesia in managing her population, mainly through success of family planning programmes. Average per capita income of Indonesian has grown from US$80 in 1967 to US$650 in 1990 and to US$1,155 in 19963 although following recent turmoil, the latest data (1998) indicate that average per capita income has decreased to US$6104 based on assumptions that economic growth is zero, inflation rate is 20%, population growth rate is 1.6%, while exchange rate is US$1.00 to Rp. 5000.
3 Calculated on the basis of 1 US$=Rp. 2400, before monetary crisis of 1997-98.
4 KOMPAS Daily, Tuesday February 17, 1998 p. 2.
Table 1 - Indonesian Population 1992-1996 (million)
Source: Central Bureau of Statistic, 1996 except for the year 2000 cited from Capricorn Indonesia Consult Inc.
MoF believes that sustainable development of wood and non-wood forest products can provide 6 millions to 8 millions job opportunities by the year 2000. Should industrial growth be uncontrolled, however, resource sustainability would be seriously affected in the longer-term. Hence, it is also realised to be extremely important to Indonesia to manage its forest resource in such way as to ensure resource sustainability over time. To accommodate this idea, MoF has also committed itself to implementing sustainable forest management (SFM) scheme encouraged by International Tropical Timber Organisation (ITTO), under which Indonesia intends to attain sustainability in terms of economic, ecological and social functions of forests. The recent economic turmoil, however, will result in more and more uncertainty in predicting the achievement of all goals and commitments in the future. The turmoil also requires that Indonesians work harder and harder for a better future.

Global Manufacturing Slips Back Slightly In March

Evidence which would enable us to assess the full economic impact of the Japanese earthquake and tsunami is still hard to come by. There is a lot of talk of supply chain disruptions, but little in the way of detailed evidence to back up assertions of the more anecdotal kind. Even the latest set of manufacturing PMI data has decidedly left the jury out on the topic.Evidently in Japan there was a

Saturday, April 2, 2011

Good Morning,

Headline Employment numbers are 216,000 supposed jobs added in March, and the rate fell to 8.8 laughable percent. Equities are higher, the dollar is spiking higher, the Yen is making a large move lower, oil has jumped to a new high above $107 a barrel, gold and silver are lower, while most food commodities are higher after large gains yesterday (corn and oats are up considerably).

There was a small movement in the McClelland Oscillator yesterday meaning that today’s move can be expected to be large.

Ever since the G7 intervened in the currency markets to keep a lid on the Yen, the Yen has been falling and overnight into this morning has fallen considerably. The markets have correlated to this action, with markets rising as the Yen falls, and visa versa. The amount of money added by the Japanese and other nations was huge – amounting to more hot money with nothing better to do than to jack up the cost of living for humans on the planet. The response has been for the moronic central bankers to meet any and all hiccups with massive money printing. Thus everything “grows” in terms of dollars… except your wages, of course. The hot money accumulates around the globe just like cesium 137, only with a much shorter half-life requiring never ending and larger infusions to keep the appearance of “growth” continuing.

As if sky high oil prices in the face of falling demand and record inventories wasn’t enough, Hershey’s just announced that they are raising their candy prices 9.7% across the board! Oh the humanity! That’s it, I’m taking to the streets! In all seriousness, think about that – it is a huge jump and is absolutely reflective of the central banker’s policies.

More and more people are waking up to the horrid reality in Japan. Articles suggesting that the world’s largest concrete pumpers are enroute to Japan from Germany and the U.S. have led people to believe that they may be finally planning on building a sarcophagus. Yet, on the other hand, other experts believe that it won’t be possible to build one until the fuel is cooled and that may take years if not decades! While we don’t have enough information to know for sure, it is my belief that some type of containment MUST be accomplished soon. The situation is DIRE and very difficult – here’s another update from Arnie Gunderson that you must see regarding the fuel pool of reactor 4:
Oil and Gas are finite fossil fuels from the geological past that are inevitably subject to depletion. Eventually we must run out, but what matters more is the inevitable peak of production when growth gives way to decline. The wider implications of this historic discontinuity are colossal.

Colin Campbell, author of the highly acclaimed 'The Coming Oil Crisis', is a leading member of the growing number of experts whose models of depletion show that the world will reach peak within about ten years. After peak comes increasing scarcity, as production can no longer meet demand. The implications for Mankind are huge, opening an entirely new world.
Understanding depletion is not difficult, but public data on production and reserves are very unreliable. Perhaps the greatest contribution of the book is to present more realistic estimates and definitions than are available elsewhere.

Friday, April 1, 2011

David Brooks and Malcolm Gadwall wrong about I.Q, Income and Wealth

In his book "The Social Animal", reviewed here, David brooks writes:

"Once you get past some pretty obvious correlations (smart people make better mathematicians), there is a very loose relationship between IQ and life outcomes."

Brooks further cites a study claiming that there is "no correlation between accumulating large wealth and high IQ."

Both claims are wrong. The result Brooks cites is after "controlling" for education and income. But education and income are themselves functions of I.Q, so you shouldn't control for them if the question you want to answer is how I.Q effects life outcomes.

I have not seen this graphed online, so let's visualize the relationship between an estimate of I.Q and income and wealth so you can see for yourself. The source is NLYS79, a dataset which tracks a representative sample of the U.S population. Intelligence is approximated by the military when the individuals in the sample were mostly teenagers, while income and wealth data is for the same guys in their 40s. The sample is restricted to non-Hispanic white men.

For this group the lowest decile is people with I.Q below 84, and the highest decile above 116, which is not a very high cutoff. So keep in mind that we are not talking about only super-geniuses, in which case the results would be even stronger. Also remember that the middle of the distribution have very similar I.Q scores, the 5th decile is around 101-104, and the 6th decile around 104-108.

As you can see Americans men lucky enough to be born either with genes or a home environment that facilitates high I.Q earn more and accumulate more wealth.

The strong link between I.Q and earnings is well known by labor economists, but perhaps not by the affluent and high-I.Q readers of the New York Times. Obviously most of it goes through education. As technological development makes I.Q more valuable and unskilled labor less valuable, this disparity is increasing.

Another common claim of Brooks and of Malcolm Gladwell is that I.Q may matter, but only until around 130, after which it becomes meaningless. This is also wrong. Many previous samples have had too few observations to make reliable inference about the effect of I.Q above 130. Of course not having sufficient data hardly justifies Gladwell confidently claiming that I.Q above 130 is irrelevant even for scientists in technical fields (which I and others who are not smart enough to handle advanced mathematics could have told you from personal experience was a bizarre theory). After all, 130 is not that high, around the mean for a Harvard or SSE student.

This recent paper by Heckman, Gensowski and Savelyev studies the life outcomes of the Terman sample, which entirely consists of American men with I.Q above 135 (in some cases far above 135). They find that I.Q has a significant effects on earnings and educational outcomes, also for those above the 135 I.Q threshold. Another Malcolm Gladwell myth busted.

There are some policy implications from this realization. One is that smart and successful people shouldn't congratulate themselves so much. They didn't so much "earn" their talent than were lucky in the gene/environment lottery. If you are born healthy, with high I.Q genes and with educated parents and a good home environment you are expected to earn more than a more disadvantaged child who exerts the exact amount of effort through life.

Unlike libertarians, Conservatives believe that those who were the recipients of good fortunate have a moral obligations towards the rest of society, in particular to the people who do their best but just have less marketable skills.

Another is that the left is wrong about the market allocating income mainly based on chance, connections or "power". In fact, earnings are strongly linked to intelligence, which indicates that they are linked to productivity, just as economic theory predicts. Poor people are on average less productive than rich people, a claim which may sound obvious (almost tautological) to an economist but which outrages a lot of people on the left.

Denying the link between productivity and earnings is very important for the modern left, as their entire source of outrage is based on the view that the capitalist system "exploits" the poor. More likely, because of the modern welfare state and because of the growing importance of human capital, more resources are transferred from the productive rich to the poor than vice-versa. There is so little demand in the labor market for unskilled people that the poor in industrialized countries increasingly don't even work full time.

The fact that the rich don't exploit the poor doesn't mean the rich shouldn't help the poor. But it's one thing to claim you are rich because you are stealing from poor people, and another to believe you have an obligation to help all members of society due to randomly having being granted more valued skills. Fairness perceptions are not only a function of the type of distribution we desire, but to an even greater extent a function of the process we believe creates inequality.

I suppose David Brooks and Gladwell give an inaccurate impression about I.Q and income/wealth in order to make their readers feel warm and fuzzy. But that is not an accurate depiction of the world we live in, we live in a much harsher and more unfair reality.

Sunday, March 27, 2011

The "Mystery" of Child Poverty in Sweden.

Yesterday Håkan Juholt, the new leaders of the Social Democratic party, gave his opening speech to the party congress where he outlined the future direction of policies.

Juholts chief identified social problem and number one priority was child poverty. He stated:

"We will not be a country where several hundred thousand children live in child-poverty. It is a shame for Sweden...It only belongs in [conservative leader] Reinfeldt's Sweden, not in Social Democratic Sweden".

Child poverty is measured by non-profit group "Rädda Barnen", and is defined as either children in families who receive welfare ("socialbidrag") because they are below the poverty norm defined by the state, or children in families who live below the poverty norm but for various reasons do not receive welfare. I would therefore have been counted among the sample of poor children between 1989-1999 when we lived on welfare.

It is therefore a reasonable measure that approximates absolute child poverty (although welfare payments and these minimum norms increase slightly over time in real terms).

The standard critique of the right is that these measures are relative poverty which can give misleading results. For example with relative poverty the poverty rate could bizarrely rise even if when the real income of the poor increases, just as long as the real income of the rich increases even faster. However this critique is not valid here, since the measure is closer to absolute poverty. This is incidentally also true of the American poverty rate, which contrary to perception among many libertarians measures absolute poverty, not relative poverty.

First, let's note that child poverty has declined. In 1997 there were 432.000 poor children in Sweden, and in 2008 the number was 220.000 (so Juholt was technically wrong when he said "several" hundred thousand, but let's not be picky). In percentage terms child poverty went from 22.3% to 11.5%.

But Sweden has experienced rapid income growth in the last decade and a half. So why isn't child poverty declining more? Surely it must be due to the heartless neo-liberal policies of the right!

I think this graph can give us some a hint of what's going on.

In 2008 the child poverty rate of Native Swedish children was only one third of what is was in 1997, a massive reduction from 243.000 to 78.000. The only reason Sweden's' total child poverty rate has not declined more is that during these years politicians to the right and the left brought several hundred thousand poor immigrants to Sweden to swell the ranks of the impoverished. While first and second generation immigrants constituted 44% of the poor children in 1997, they were 65% of all poor children in Sweden in 2008.

Only 5% of native Swedish children live in poverty. For immigrant children with both parents born outside of the Sweden, the child poverty rate is 39%, a miserable number which may shock and should dishearten liberal Americans. The Swedish model appeared to produce amazing results as long as the country was completely homogeneous and full of Swedes. But the much admired welfare state was unable to deal with even moderate levels of ethic diversity (still far below the levels of the United States) without a collapse in social outcomes.

Demographic change, not economic policy, is what is preventing child poverty from declining (if it were the fault of economic policy the child poverty rate of ordinary Swedes would not have declined so much).

The leader of the Social Democrats said "Child poverty shall be combated every day and with all available means!"

One fool-proof method would be slowing the importation of tens of thousands of more poor people every year until he has solved child poverty among Swedes and immigrants already here. I am guessing however that this is not among theoretically possible "available means" in Mr. Juholt's universe.