You are browsing the archive for 2018 February 05.

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Wall Street Correction, Yes — Bubble, No

February 5, 2018 in Economics

By Steve H. Hanke

Steve H. Hanke

With the Wall Street sell off of last Friday and today’s further plunge, many are playing fast and loose with the term “bubble.” Bubble, although widely bandied about, is a fuzzy term without a solid operational definition. So, if it is little more than a rhetorical device, why is it widely used? According to Peter Garber, the authority on so-called bubbles (read: Dutch tulipmania, the Mississippi Bubble, and the South Sea Bubble), bubble myths are rhetorical weapons used to argue the markets are “crazy” and need to be more severely regulated.

There is no better antidote for all the myth-making associated with bubble rhetoric than Garber’s authoritative Famous First Bubbles: The Fundamentals of Early Manias (The MIT Press, 2001). It is a thin, well-researched volume — one that pops many bubbles, so to speak. And unlike most scholarly work, it is well written, and entertaining.

No less than Alan Greenspan has recently reached into his bag of tricks to pull out the rhetorical bubble. The Maestro made these remarks last week while on Bloomberg Television: “I think there are two bubbles. We have a stock market bubble and we have a bond market bubble…I think [at] the end of the day the bond market bubble will eventually be the critical issue.”

Recall, that it was former Fed Chairman Greenspan who uttered the words “irrational exuberance” during a speech he delivered at the American Enterprise Institute in 1996. The Maestro thought irrationality was driving the market and bubbles were being blown.

But, as Peter Garber concludes in a devastating critique: “Three years later, with the stock market fifty percent higher, in testimony on February 23, 1999, Mr. Greenspan was asked whether he thought there was still irrational exuberance. His reply was ‘That is something you can only know after the fact.’ Thus, he removed all meaningful content from the concept.”

So, is the U.S. stock market in bubble territory (read: priced above a level that can be justified by economic fundamentals)? For that I employ Dr. X’s Bubble Detector — a concept that was conveyed to me in an August 1996 letter by a late Nobel laureate in economics.

So, just what is Dr. X’s bubble detector? It is the wealth-to-income ratio for stocks divided by the same ratio for bonds. The wealth-to-income ratio indicates the length of time it takes for a constant flow of income to “purchase” a given stock of income-producing assets — …read more

Source: OP-EDS

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Fox News Cuts Away from Trump Tax Speech to Report Stock Market Plunge

February 5, 2018 in Blogs

By Eric W. Dolan, Raw Story

Even the president's favorite channel couldn't save him.


The Fox News Channel on Monday surprised viewers by abruptly breaking away from President Donald Trump’s speech on the economy to give some bad news about the stock market.

As Trump was in Ohio to tout the impact of the new Republican tax laws, Fox News cut away from his remarks to report that the Dow was plunging.

“We are interrupting for breaking news,” Fox News anchor Shep Smith said. “There is quite a drop happening on Wall Street. A massive sell-off is happening today.”

Watch video below:

Related Stories

…read more

Source: ALTERNET

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Dehomogenizing Austrian Economics: The Revival of Wieser

February 5, 2018 in Economics

By Joseph T. Salerno

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By: Joseph T. Salerno

To follow up on Peter Klein’s post today, the dehomogenization debate of the last few decades was actually initiated by a radical reinterpretation of the socialist calculation debate of the 1930s published by Israel Kirzner in 1988. Prior to Professor Kirzner’s seminal article, “The Economic Calculation Debate: Lessons for Austrians,” it was widely accepted by both neoclassical and Austrian economists that Hayek (and Lionel Robbins) had diverged from and softened Mises’s position that economic calculation was “impossible” under socialism. My initial articles, cited in Klein’s post, responding to Kirzner’s claims were an attempt to deepen the understanding of the differences in the arguments made by Mises and Hayek by tracing them back to their contrasting approaches to general economic theory. 

As the debate evolved, it by no means “sidelined” Wieser, as Stefan Kolev recently lamented, but rather brought to the fore the unique character of Wieser’s thought and his substantial influence on later Austrian economists.   In my article “The Place of Human Action in the Development of Modern Economic Thought,” published in 1999, I argued that Wieser had an enormous influence not only on Joseph Schumpeter, but both directly and through Schumpeter on the most prominent members of the fourth generation of the Austrian school, including Hayek, Gottfried Haberler, Fritz Machlup, and Oskar Morgenstern.  My article elicited a response from Bruce Caldwell, an eminent Hayek scholar, in which he denied that Hayek’s ideas on general equilibrium theory were formulated under the influence of Wieser or Schumpeter.  In my reply to Caldwell, I analyzed the general equilibrium framework of Wieser’s magnum opus, Social Economics, and documented its major influence on Hayek’s economic theory.  A little later, Sam Bostaph published a long and penetrating study of Wieser’s views on economic calculation and how they conflicted with some of Menger’s fundamental ideas and shaped Hayek’s views.   If anything, the debate revived serious scholarly research into Wieser’s work, to which Kolev himself has contributed (see here and here).

Whatever side one takes on the dehomogenization debate, it cannot be denied that the controversy served to highlight the diversity of views that Austrian economists, old and new, have entertained on issues that lay at the heart of economic theory.  For this reason, there will be a session marking the 30th anniversary of the initiation of the debate at the 2018 Austrian Economics Research …read more

Source: MISES INSTITUTE

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4,400-Year-Old Egyptian Tomb Discovered in Ancient Burial Ground

February 5, 2018 in History

By Becky Little

Inside the tomb of an Old Kingdom priestess. (Credit: Mohamed El-Shahed/AFP/Getty Images)

Archaeologists have uncovered a 4,400-year-old Egyptian tomb that they believe belonged to a high-ranking priestess. The Egyptian government revealed the new discovery on February 3, 2018, noting that this tomb on the Giza plateau contains rare wall paintings.

The researchers say this tomb belonged to Hetpet, a priestess for the goddess Hathor. Often depicted as a woman with a cow’s head, Hathor is associated with fertility, music, love, among several other qualities (including drunkenness). They concluded this tomb belonged to Hetpet because it contained a purification basin engraved with her name and titles, reports Agence France-Presse (AFP). In addition, some of the tomb’s paintings depict Hetpet hunting, fishing, or interacting with children.

“The tomb is in very good condition,” said Mostafa Waziri, the secretary general of the Supreme Council of Antiquities, according to the New York Times. “There are colored depictions of traditional scenes: animals grazing, fishing, bird-catching, offerings, sacrifice, soldiers and fruit-gathering.”

Hetpet’s tomb stands in the Saqqara necropolis, a famous burial ground for the Ancient Egyptian capital of Memphis. The necropolis contains many of the tombs of top Egyptian officials during the Old Kingdom’s Fifth Dynasty, which lasted from about 2465 to 2323 B.C.E.

The Antiquities Ministry said that Hetpet’s tomb matches the Fifth Dynasty’s style and architecture. It also contains a rare paintings of a monkey dancing in front of an orchestra, further tying the tomb to the Old Kingdom (this was the era in which Egypt perfected pyramid construction).

“Such scenes are rare … and have only been found previously in the [Old Kingdom] tomb of ‘Ka-Iber,’ where a painting shows a monkey dancing in front of a guitarist not an orchestra,” Waziri told AFP. Ka-Iber’s tomb, too, is located in Saqqara.

Inside the tomb of an Old Kingdom priestess. (Credit: Mohamed El-Shahed/AFP/Getty Images)

Hetpet’s tomb marks the first archaeological discovery of the year for Egypt’s Antiquities Ministry, which plans to continue excavating the site. It follows on the heels of the country’s discovery of a 3,500-year-old tomb in September 2017.

Egypt’s archaeological wonders were an huge economic draw for …read more

Source: HISTORY

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Six Unsung Heroines of the Civil Rights Movement

February 5, 2018 in History

By Hadley Meares

Brandeis University professor Dr. Pauli Murray, 1970. (Credit: AP Photo)

While their stories may not be widely known, countless dedicated, courageous women were key organizers and activists in the fight for Civil Rights. Without these women, the struggle for equality would have never been waged. “Women have been the backbone of the whole civil rights movement,” activist Coretta Scott King asserted in the magazine New Lady in 1966. Here are a few of their stories.

Rev. Dr. Pauli Murray (1910–1985)

Brandeis University professor Dr. Pauli Murray, 1970. (Credit: AP Photo)

The Draftswoman of Civil Rights Victories

The writings of The Rev. Dr. Anna Pauline “Pauli” Murray were a cornerstone of Brown v. Board of Education of Topeka, the 1954 Supreme Court case that ended school segregation, but the lawyer, Episcopal priest, pioneering civil rights activist and co-founder of the National Organization for Women wouldn’t be made aware of that extraordinary accomplishment until a decade after the fact.

In 1944, Murray was the only woman enrolled at Howard Law School—and at the top of her class. While discussing Jim Crow laws, Murray had an idea. Why not challenge the “separate” in “separate but equal” legal doctrine, (Plessy v. Ferguson) and argue that segregation was unconstitutional? This theory became the basis of her 1950 book, States’ Laws on Race and Color, which NAACP attorney Thurgood Marshall called the “bible” of Brown v. Board of Education.

In 1965, Murray and Mary O. Eastwood co-authored the essay “Jane Crow and the Law,” which argued that the Equal Protection Clause in the 14th Amendment should be applied to sex discrimination as well. In 1971, a young lawyer named Ruth Bader Ginsburg successfully argued this point in Reed v. Reed in front of the Supreme Court. Murray was named as a co-author on the brief.

Murray died in 1985, and in the decades since, public awareness of her many contributors has only continued to grow. Murray was sainted by the Episcopal Church in 2012, a residential college at Yale was named in her honor in 2017, and she has become an LGBTQ icon, thanks, in part, to the progressive approach to gender fluidity that she personally expressed throughout her life. Despite all this, as she wrote in the essay “The Liberation of Black Women” in 1970: “If anyone should ask a Negro woman in America what has been her greatest achievement, her …read more

Source: HISTORY

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Why Is the U.S. Lagging Way Behind Other Countries in Closing the Gender Pay Gap?

February 5, 2018 in Blogs

By Liz Posner, AlterNet

The U.S. has lessons to learn from Iceland, Slovenia and Rwanda.


Economists estimate that at the current rate of progress, American men and women will earn equal income in another 200 years. Considering the past century has already hosted three separate feminist movements that successfully granted women the right to vote, passed Roe v. Wade and established women's right to work, today's feminists will demand we work a little quicker than that. It’s hard to fathom waiting another two centuries for equal pay. Dozens of other countries are already beating us in the global race to financial equity, so it certainly is possible. The U.S. has crucial lessons to learn from these nations.

The gender pay gap is not just a problem in the U.S., where women make 76 cents to a man's dollar (the pay gap is even wider for women of color). Globally, the problem is dire. As World Economic Forum writes, “At the current rate of change, and given the continued widening of the economic gender gap already observed last year, it will now not be closed for another 217 years.”

In its annual study of the countries with the widest and smallest gender pay gaps, WEF recognized the countries that have made the most progress toward equal pay. 2017’s list of most equitable countries lists the following among the top 10:

  1. Iceland
  2. Norway
  3. Finland
  4. Rwanda
  5. Sweden
  6. Nicaragua
  7. Slovenia
  8. Ireland
  9. New Zealand
  10. Philippines

By comparison, the United States ranks #49. So what are the takeaways from this year's list?

Iceland has made the top 10 list consistently for the past several years. But it's not sitting comfortably at the top: Iceland's government says its work striving for equal pay isn’t done. A new law in the country requires all companies with 25 employees or more to file for government certification of their equal pay policies, which involves an audit. Companies that skip the certification will receive a fine. Dagny Aradottir Pind, a board member of the Icelandic Women’s Rights Association, told PRI, “it puts some [burden] on employers, but the results should be that the system of managing pay should be settled in …read more

Source: ALTERNET

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What the FBI/FISA Memo Really Tells Us About Our Government

February 5, 2018 in Economics

By Ron Paul

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By: Ron Paul

The release of the House Intelligence Committee’s memo on the FBI’s abuse of the FISA process set off a partisan firestorm. The Democrats warned us beforehand that declassifying the memo would be the end the world as we know it. It was reckless to allow Americans to see this classified material, they said. Agents in the field could be harmed, sources and methods would be compromised, they claimed.

Republicans who had seen the memo claimed that it was far worse than Watergate. They said that mass firings would begin immediately after it became public. They said that the criminality of US government agencies exposed by the memo would shock Americans.

Then it was released and the world did not end. FBI agents have thus far not been fired. Seeing “classified” material did not terrify us, but rather it demonstrated clearly that information is kept from us by claiming it is “classified.”

In the end, both sides got it wrong. Here’s what the memo really shows us:

First, the memo demonstrates that there is a “deep state” that does not want things like elections to threaten its existence. Candidate Trump’s repeated promises to get along with Russia and to re-assess NATO so many years after the end of the Cold War were threatening to a Washington that depends on creating enemies to sustain the fear needed to justify a trillion dollar yearly military budget.

Imagine if candidate Trump had kept his campaign promises when he became President. Without the “Russia threat” and without the “China threat” and without the need to dump billions into NATO, we might actually have reaped a “peace dividend” more than a quarter century after the end of the Cold War. That would have starved the war-promoting military-industrial complex and its network of pro-war “think tanks” that populate the Washington Beltway area.

Second, the memo shows us that neither Republicans nor Democrats really care that much about surveillance abuse when average Americans are the victims. It is clear that the FISA abuse detailed in the memo was well known to Republicans like House Intelligence Committee Chairman Devin Nunes before the memo was actually released. It was likely also well known by Democrats in the House. But both parties suppressed this evidence of FBI abuse of the FISA process until after the FISA Amendments Act could be re-authorized. They didn’t want Americans to know how corrupt the surveillance system really …read more

Source: MISES INSTITUTE

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How the Patent-Troll Wright Brothers Fought to Stifle Innovation

February 5, 2018 in Economics

By Chris Calton

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By: Chris Calton

The standard justification for patent protection is that without this government-granted monopoly, innovations will come to an abrupt halt. People only innovate with the expectation that they will make money, and this form of economic protectionism is therefore necessary in a capitalist economy.

So say the great expositors of crony capitalism, anyway.

But when one begins to study the history of technology, the patent demonstrates quite clearly that such protection is a roadblock to innovation, rather than the driver of it. I can cite numerous examples of this (firearms, television, etc.), but I believe the most telling history is that of the airplane.

According to our textbook histories, the Wright brothers are hailed as the inventors of the airplane. To say that this is an exaggeration is generous. Orville and Wilbur Wright offered an important innovation that served as a step toward sustained flight – namely, they developed a system for controlling the airplane by twisting the wings of a plane – but after taking aircrafts a step forward, the brothers spent most of their career making sure that no other innovations could follow. This is because what standard histories call “the invention of the airplane” is really just the government grant of a patent.

The patented technology was important, but it still required serious improvement before the airplane could become a viable means of transportation. But with their patent in hand, the inventive brilliance of these two men transferred from designing new machines to developing legal strategies to prevent anybody else from improving on their innovations. Time magazine refers to the Wright brothers as “patent trolls.”

Most of the great innovations in flight did not come from the Wright brothers but, instead, came from their greatest competitor, Glenn Curtiss. Although the Wright brothers were the first to make a successful controlled flight, they refused to demonstrate this ability to the public. Instead, they patented their technology and guarded their innovation jealously, all while Glenn Curtis was busy innovating publicly and with no great fear of people “stealing” his ideas.

In the first two decades of the twentieth century, Curtiss developed several innovations in flight – far surpassing the Wright brothers’ wing-warping novelty. In fact, to circumvent their patent, he developed his own system of controlling flight that is the predecessor to the modern technology: the aileron.

The Wright brothers claimed that the aileron – what was then referred to as …read more

Source: MISES INSTITUTE

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The Pentagon Can't Account for Several Hundred Million Dollars It Spent

February 5, 2018 in Blogs

By Jacob Sugarman, AlterNet

An internal audit exposes the Defense Department's disastrous book-keeping.


In December, Donald Trump signed a $700 billion defense bill into law, ramping up the size and strength of the U.S. military. The $80 billion spending increase alone is enough to finance tuition-free public colleges and universities. The budget also comfortably covers the nearly $1 billion that one of the Pentagon's leading agencies can't seem to account for.

According to a new report from Politico, the Defense Logistics Agency has failed to produce documentation for $800 million worth of construction projects. And that's just what we know of. As an internal audit from the multinational accounting firm Ernst & Young reveals, the Department of Defense's financial book-keeping is “so weak that its leaders and oversight bodies have no reliable way to track the huge sums it's responsible for.”

The DLA employs as many as 25,000 and processes upwards of 100,000 budget requests from the Army, Navy, Air Force, and Marine Corps each day. Politico notes that the agency is a one-stop shop for orders ranging from poultry and pharmaceuticals to precious metals and aircraft parts.

Given its enormity, one might assume the DLA would be subject to strict oversight. In fact, just the opposite is true. Not only are the financial records for the agency incomplete, but the Department of Defense itself has never undergone a full audit, despite commanding as much as $2.2 trillion in assets.

“DLA is the first of its size and complexity in the Department of Defense to undergo an audit so we did not anticipate achieving a 'clean' audit opinion in the initial cycles,” an agency spokesman said in a statement. “The key is to use auditor feedback to focus our remediation efforts and corrective action plans, and maximize the value from the audits. That’s what we’re doing now.”

Ultimately, the DLA's accounting (or lack thereof) reflects a larger culture of profligacy across the U.S. military. By the Pentagon's own internal analysis, the Defense Department blew as much as $125 billion on “administrative waste” in 2015—a report it had buried for fear Congress might slash its budget. But …read more

Source: ALTERNET

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Amazon Sparks Worries With Patent on Worker-Tracking Wristband

February 5, 2018 in Blogs

By Julia Conley, Common Dreams

Patent designs detail how wristbands would vibrate if wearer moves hand “incorrectly” when completing warehouse work.


Privacy advocates and labor groups raised concern Thursday over retail giant Amazon's newly-secured patents for a wristband that could be worn by warehouse employees, keeping track of where workers hands go while they're packing delivery boxes.

In the latest productivity-minded move by a company that's notorious for enacting stringent policies to ensure that workers meet targets, Amazon's designs outline a wristband that would vibrate when the wearer's hand moved incorrectly.

According to patent documents, obtained by GeekWire, the bracelet could be used to direct a worker to the correct inventory while packing products into delivery boxes:

Existing approaches for keeping track of where inventory items are stored…may require the inventory system worker to perform time consuming acts beyond placing the inventory item into an inventory bin and retrieving the inventory item from the inventory bid… Accordingly, improved approaches for keeping track of where an inventory item is stored are of interest.

Amazon has not announced plans to introduce the wristbands in warehouses at this point, but the news of the patents comes after several other measures the company has taken to track its employees.

In order to hit targets for packaging and delivering orders, warehouse workers are reportedly subjected to timed bathroom breaks and electronic timers to monitor how many boxes they pack per hour during their 55-hour workweeks.

In 2016, a BBC study also found that delivery workers were routinely speeding and falling asleep at the wheel in order to meet delivery goals.

Critics argue that by introducing the wristbands in its warehouses, Amazon would be forcing employees to work as dexterous robots the company doesn't yet have.

“For Amazon, I believe technologies like this are largely a stop-gap measure until robots can take over more of the work. Currently, workers need to do the picking of …read more

Source: ALTERNET