Sighing for paradise to come - The Economist, June 4, 2016
- Our June 3 show, A Check for Everyone? The Basic Income Idea, discussed Charles Murray’s “The Plan”—to pay everyone from the age of 21 $10,000 per year.
- The Economist is against this idea, saying it’s “an answer to a problem that has not yet materialized.”
- Thomas Sowell and George Gilder are also against it.
- The oft-cited study by Oxford that 47% jobs are going to be automated is too gloomy.
- The Basic Income could encourage the first-world to shut off immigrants, or create second-class citizens if they allow immigration but don’t let them participate in a Basic Income program.
- The costs are too high, and the risk of tax avoidance/evasion is also troubling.
- It could also be alienating, socially corrosive, and create individuals with no purpose in their lives.
“How the FAA Shot down “Uber for Planes”, FEE, June 2, 2016, by Jared Meyer
- Jared Meyer is a Fellow at Manhattan Institute
- Boston to Martha’s Vineyard cost $70 using the Flytenow app (by comparison, $1,000 for a charter)
- FAA ruled Flytenow was a “common carrier, subject to the same regulations as major airlines
- Private pilots simply can’t comply with this many regulations
- Nothing new. It’s still legal to find people to share flights with on bulletin boards or telephone calls
- FAA worries an app will go beyond friends and acquaintances
- FAA said it’s permissible to advertise on Facebook if you had a few friends, but not a thousand
- Not possible to know legal from illegal
- Existing law, pilots can’t profit, only recoup costs
- Founders of Flytenow say it’s not Uber, it’s more like carpooling for aviation
- It’s legal in the EU
- Not rationally related to safety, as Captain Sully couldn’t share, so it has nothing to do with pilot qualifications or safety
- FAA was pressured by private charters and airlines
- Flytenow has filed a Petition for Certiorari to US Supreme Court
- Mark Sanford (R-SC) proposed an amendment to an FAA reauthorization bill, awaiting floor vote
- We shouldn’t have to ask for permission to innovation—permissionless innovation!
The Structure of Production: New Revised Edition, Mark Skousen, 2015
- Cato Podcast with Mark Skousen, George Gilder, Steve Forbes
- April 25, 2014, the Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce announced a new data series as part of the U.S. national income accounts, and the BEA began reporting “Gross Output by Industry”
- Government now recognizes the critical importance of Gross Output (GO).
- GO measures spending throughout the entire production process, not just final output like Gross Domestic Product (GDP)
- GO measure total sales volume at all stages of production, includes all business-to-business (B2B) transactions that GDP leaves out
- In the third quarter of 2014, GO hit $31.3 trillion, almost twice the size of GDP, which was $17.6 trillion. GDP measures the “use” economy, GO measures the “make economy”
- GDP is comprised of consumer spending, government spending, investment, and net exports, with the first two of these being the biggest contributors
- GDP overemphasizes consumer and government spending as the driving force behind the economy because it ignores supply-side benefits of saving, business investment, and technological advances.
- GDP shows Household spending generates more than two-thirds of total economic output, latest U.S. data on GDP, $17.6 trillion, consumer spending $12 trillion (68%), government spending at $3.2 trillion (18%), Private investment $2.9 trillion (16%), (Net exports at -2 percent.)
- The GO statistic, by contrast, shows consumers less than 40 percent ($31.3 trillion), while spending by business is $16.6 trillion, more than 50 percent of economic activity
- Consumer spending is largely the effect, not the cause, of prosperity
- GO is over $23 trillion in 2014. GO is significantly more sensitive to the business cycle than GDP. In 2008–2009, nominal GDP fell only 2 percent, GO fell by 6 percent and B2B spending collapsed by 10 percent
- BEA’s measure of GO does not include all sales at the wholesale and retail level.
- Wholesale and retail trade figures are included in GO only as “net” or value added
- Skousen believes this is a serious omission, comprising more than $7 trillion dollars in business spending in 2014
- We need to include gross wholesale and retail trade figures. They are legitimate B2B transactions that deserve to be counted
- Skousen created his own aggregate statistic, Gross Domestic Expenditures (GDE), which includes gross sales at the wholesale and retail level and is therefore significantly larger
- GDE in 2014 is over $37.5 trillion, 25 percent higher than GO and 120 percent more than GDP.
- Consumer spending actually represents only about 31 percent of the U.S. economy using the GDE statistic
- The adoption of Gross Output is the most significant advance in national income accounting since World War II.
- GO is a reflection of Say’s law (supply creates demand), a supply-side statistic, while GDP is a symbol of Keynes’s law, a demand-side number
- Gross output [GO] is the natural measure of the production sector, while net output [GDP] is appropriate as a measure of welfare. Both are required in a complete system of accounts
$1B stakes on the menu The Economist, May 21, 2016
- Berkshire purchase $1 billion in Apple shares, disclosed May 16, 2016
- Buffett, 85, likes mature firms, ignorant about technology
- Investment in IBM has cost him
- Buffet made his purchase weeks after Carl Icahn, 80, sold a $5 billion stake in Apple
- “The sight of two octogenarians grappling over the firm’s fate does not enhance its aura as a temple of innovation”
- Apple stock is cheap trading at 11x earnings (29 for Alphabet and 72 for Facebook)
- Apple invested $1B in Didi Chuxing, China’s Uber to curry favor with China’s government
- It needs to do so with India!
- There was recently an Indian ministerial decision deeming Apple’s products are not “cutting-edge” that kyboshed plans to open Apple stores in the country
- There’s a law that states products made outside India have to be 30% sourced domestically, and Apple didn’t qualify for an exemption to this rule for being “state of the art”
New obsession: The Broadway play Hamilton
We need a better capitalism or how a third way = third world
It did pass, but we didn’t know it when we pre-recorded this show on 6/23/16.
Ron favored Brexit but predicted it would lose—time to eat crow! www.predict.org got it wrong, too, as did most of the polls.
Here’s an excellent recap by a historian of an interview Margaret Thatcher gave to Forbes back in 1992, which is prescient.