Europe's Grandma Crisis - WSJ.com

Europe's Grandma Crisis - WSJ.com

Like most grandparents in Italy, Isidoro and Antonietta Arcidiacone were thrilled to help out when their daughter, Grazia, and her husband started a family 2½ years ago. They got more than they bargained for.

The 67-year-old retired police officer and his wife have taken their daughter's family back into their one-bedroom apartment in Rome. Mr. Arcidiacone takes his two toddler grandsons to the playground and pediatrician. Ms. Arcidiacone makes homemade gnocchi and peels the skin off grapes so the boys don't choke. This summer, the extended family is decamping to the grandparents' native region of Calabria, in southern Italy.

"Mamma and papà are fundamental. We couldn't cope without them," Grazia Arcidiacone, a smiley 36-year-old brunette, said on a Saturday morning as she sat in her parents' kitchen cuddling 14-month-old Francesco.

The Arcidiacones are part of Southern Europe's unheralded social safety net—an army of older family members who are helping younger generations make ends meet during the region's crippling economic crisis. Half of all abuelos, or grandparents, in Spain take care of their grandchildren nearly every day, and 68% of all children under 10 in Italy are looked after by their nonni when not in school or with parents, according to official numbers. By way of comparison, 19% of preschoolers in the U.S. were taken care of primarily by grandparents while their mothers worked in 2010, according to Census Bureau figures.

The Iv-B disconnect puts strains on all forms of V-Bi insurance and safety nets, here the families help to quench the chaos from the GFC. As money becomes scarce for welfare this puts more strain on them causing cracks and fatigue in their relationships like flexing a piece of metal.

Here it isn't just baby sitting. The number of 25-to-34-year-olds living at home with mom and dad in Italy is rising—it was 42% last year, compared with 33% in 1994—and most say they can't afford otherwise. "Until 2009, staying at home was a choice," says Linda Laura Sabbadini, head of social affairs at Italian statistics agency Istat. "Then, staying at home started becoming a necessity."

'Back At Square One': As States Repurpose Welfare Funds, More Families Fall Through Safety Net

'Back At Square One': As States Repurpose Welfare Funds, More Families Fall Through Safety Net

Butler is among the millions of low-income Americans sliding into the ranks of a group experts call "the disconnected" -- people who are both out of work and not receiving welfare. Their desperate straits reflect the extent to which key components of the American social safety net have been substantially reduced in recent years, just as the worst economic downturn since the Great Depression has amplified demand for help.

In an Iv-B economy there can be pressure to weaken V-Bi, also they can become short of money after loans to the Iv-B economy are not repaid after hitting the ceiling. Welfare can be reduced because the insurance nature of it seems to create a moral hazard, this can create a temporary boom as innovations grow. For example forcing some people off welfare might allow some businesses to grow that could not get desperate enough people to work there. However these can be Iv-B weeds as they grow to absorb these new resources, then crash causing people to use up their savings.

In Georgia, as in many states, gaining cash assistance has become increasingly difficult since the landmark welfare reform signed into law by President Clinton in 1996. Nationally, the share of poor families with children that were drawing welfare cash benefits plummeted from 68 percent to 27 percent between 1996 and 2010, according to an analysis of federal data by the Center on Budget and Policy Priorities (CBPP). During the same period, the number of poor families with children grew from 6.2 million to 7.3 million.

Behind these precise data points lie messy stories of frustration over the seeming impossibility of navigating a bewildering welfare system that sometimes seems rigged for rejection; over mounting bills that can't be paid; over plans subject to constant renegotiation in lives ruled by scarcity. Like many states, Georgia does not track what happens to people who are eliminated from its welfare rolls. But in conversations with six women who have tried to gain cash assistance here, this is the picture that emerges: Vexation, fear and deepening trouble.

The Bell Curve book

Chapter 5
Poverty

Who becomes poor? One familiar answer is that people who are unlucky enough to be born to poor parents become poor. There is some truth to this. Whites, the focus of our analyses in the chapters of Part II, who grew up in the worst 5 percent of socioeconomic circumstances are eight times more likely to fall below the poverty line than those growing up in the top 5 percent of socioeconomic circumstances. But low intelligence is a stronger precursor of poverty than low socioeconomic background. Whites with IQs in the bottom 5 percent of the distribution of cognitive ability are fifteen times more likely to be poor than those with IQs in the top 5 percent.

IQ can mask a lot of other problems as well, for example poor people might have poor nutrition that restricts intelligence, also a lack of motivation to think in terms of symbolic IQ tests because of education problems. IQ tests have a more subtle problem in that they fall on a normal curve, the questions are selected for this. They then test for random ability, the questions are usually independent of each other so solving one doesn't help a person to solve the next one. However Iv-B thinking is more in roots and branches where it is more important to think in chains. For example a programmer might have high random intelligence (RI) which helps him to do each part of a program, however he might have low chaotic intelligence (CI) which helps him to make chains of programming code that might have to be thousands of lines long to work. Many programmers have this problem, they manage to complete a course at school but cannot code on large projects. This chaotic intelligence or CI is innovative or counter innovative, B people who are inventors might use this to build new ideas from older ones like the roots of a plant looks for new nutrients. A farmer or miner might have this chaotic intelligence where he can pursue a goal tactically discarding ideas that don't work until he finds a new system that works.

Random intelligence or RI is more suited to team players because each piece of a team job is independent of the others but tending towards a conventional or normal outcome. A union worker might have this RI where he can work as a plumber for example in building a house, then a carpenter, an electrician, a tiler, a concreter, etc also work as teams to fit their work in with the plumber to build a new house. These homes tend to be highly normalized, the RI of the workers is towards doing a normal job so the whole property is resistant to collapse. CI or chaotic intelligence would be like one person building a whole house, if they made some critical mistakes then the whole property might collapse, they would have more chance however of coming up with a new house design.

This is probably why so many talented programmers have been found since the rise of computing, many of them amateurs, often also those with poor grades or little desire to do schoolwork of the kind that denotes high IQ scores. To create a CIQ or chaotic intelligence quotient is beyond the scope of this article, but basically questions need to build on each other like IV branches or B roots. A person doing the test might solve one part which leads to one or more other parts as branches that are more difficult. At some point he might fail to go to higher branches. This is like many games where people can excel even when poor students with this CIQ, they might complete levels that get harder such as in warcraft and continue to go higher. Instead CIQ might be like B, a person might have to be tested in research by looking for information, like treasures in some games that unlock new parts of the game. The allows the roots structure to grow, it might measure for example a person's ability to innovate or invent something new while Iv CIQ would measure a person's ability to exploit new ideas as counter innovations.   

How does each of these causes of poverty look when the other is held constant? Or to put it another way: If you have to choose, is it better to be born smart or rich? The answer is unequivocally "smart." A white youth reared in a home in which the parent or parents were chronically unemployed, worked at only the most menial of jobs, and had not gotten past ninth grade, but of just average intelligence—an IQ of 100—has nearly a 90 percent chance of being out of poverty by his or her early 30s. Conversely, a white youth born to a solid middle-class family but with an IQ equivalently below average faces a much higher risk of poverty, despite his more fortunate background.

When the picture is complicated by adding the effects of sex, marital status, and years of education, intelligence remains more important than any of them, with marital status running a close second. Among people who are both smart and well educated, the risk of poverty approaches zero. But it should also be noted that young white adults who marry are seldom in poverty, even if they are below average in intelligence or education. Even in these more complicated analyses, low IQ continues to be a much stronger precursor of poverty than the socioeconomic circumstances in which people grow up.

Failed states

failed-states-2012.jpg (967×535)

This gives an indication of Roy and Biv societies, critical and in danger would be Roy, the borderline as on the G and Gb fence, and stable and most stable as Biv.

Economist's View: 'Important Reasons to Challenge Professor Mankiw'

Economist's View: 'Important Reasons to Challenge Professor Mankiw'

This captures an essential point (see here too):

Stepping back from these particulars, the larger point is that most government transfers take the form of social insurance against risks related to health, unemployment and poverty. As with private insurance, people shouldn’t expect the premiums they pay to equal the benefits they receive. What they should expect — and appreciate — is reduced risk of an economic shock that could turn their lives upside down.

How much can taxes curb inequality?

How much can taxes curb inequality?

Posted by Dylan Matthews on August 6, 2012 at 4:11 pm

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The Wall Street Journal’s David Wessel has an excellent piece Monday on what academic research tells us about taxes and inequality in the United States. The short version: Inequality has exploded in the past three decades. Taxes, meanwhile, have gotten more progressive — though not enough to counteract that increase in inequality.

The rise of the Iv-B economy occurs from innovations, these are increasing because of computerization creating more booms and busts as well as winners and losers. Putting a brake on this runs the risk of collapsing the growth of some causing stagnation, it is more important to have strong I-O policing to reduce wealth inequality from fraud and predatory speculation. For example much of this inequality cam from the run up to the GFC from financial speculation rather than legitimate businesses.

I’ve made the graph below to illustrate that latter fact. The red line shows how much taxes and transfers (such as food stamps) have done to reduce inequality between 1979 and 2009. The data comes from table nine here. The blue line, meanwhile, shows how much more progressive taxes and transfers would have had to be in order to maintain 1979 levels of economic equality.

In 2009, taxes and transfers reduced inequality by 26.4 percent, around the same amount as the 24.8 percent reduction in 1979. But the tax code actually has to become more and more progressive every year to prevent inequality from growing. Taxes and transfers needed to reduce inequality by 38.2 percent in 2009 to keep it down to 1979 levels.

The Revolt against TED « NYU Development Research Institute

The Revolt against TED « NYU Development Research Institute

That solving any of their favorite global problems would require political solutions—if only to ensure that nobody’s rights and interests are violated or overlooked in the process— is not something that the TED elite, with its aversion to conventional instruments of power and its inebriated can-do attitude, likes to hear. ….TED’s techno-humanitarians—{are nother} brigade of what the Nigerian-American writer Teju Cole has dubbed “The White Savior Industrial Complex.”

TED can act as a V elite that brings together ideas to cooperate and synthesize new ones, this is like the V leaves of a tree that feed the R prey, like the poor people of the world. The V wealthy often give money and ideas like this. 

Forgotten people

dlib.nyu.edu/undercover/sites/dlib.nyu.edu.undercover/files/documents/uploads/editors/NYWorldTeleSun_1961Oct10_pg1_1.pdf

They work as R-B, sometimes R nomads and sometimes settling as B, they are in danger from Oy criminals and also from being cheated by Iv agents. 

Empirics and Psychology: Eight of the World’s Top Young Economists Discuss Where Their Field Is Going | Power Games | Big Think

Empirics and Psychology: Eight of the World’s Top Young Economists Discuss Where Their Field Is Going | Power Games | Big Think

Why are developing countries poor?  In terms of impact on mankind globally, this strikes me as probably the biggest and most important current economic question.  I think the answer is complex and linked to a combination of factors around history, geography, luck, etc.  I am personally working on management practices: people in developing countries are poor because wages are low, and wages are low because firms are very unproductive, and firms seem to be unproductive in large part because of bad management.  An Indian worker makes in one week what an average U.S. worker makes in a half a day.  One big factor seems to be that factories in India are frankly very badly managed: equipment is not looked after, materials are wasted, theft is common because inventory is not monitored, defects keep occurring, etc.  In a recent project with the World Bank, we found in randomized experiments that giving simple management advice to Indian factories increased productivity by 20%, and I suspect that a number like 200% would be possible in the longer run. 

A global iv-B economy is highly competitive, if some companies and countries fall behind then they can fall to a floor of near bankruptcy while others rise to a ceiling of extreme wealth. This happens in other competitive fields, for example champion artists and sportsmen might get much more money for only small differences in performance. Products only a few percent higher in price for the same quality might crash, in a V-Bi economy products might normalize with few differences in quality and share the wealth more equally but creating more stagnation.

Payday lenders use courts to create modern debtors' prison : Stltoday

Payday lenders use courts to create modern debtors' prison : Stltoday

So here's the state of Illinois, which slow-pays its vendors, which has $85 billion in pension obligations it cannot meet and which last wee…

Psychology can be crucial when trimming debt

If you've decided you want to get rid of your debts but are having trouble doing it, that might be because you haven't prepared your brain for it.

Wakita Shaw's troubles started with a $425 payday loan, the kind of high-interest, short-term debt that seldom ends well for the borrower.
But most of them don't end up in jail. So Shaw was surprised in May of last year to hear that the St. Louis County police were looking for her. She and her mother went to the police station.
They arrested her on the spot.
They told her the bail was $1,250. "And I couldn't use a bail bondsman to get out,” Shaw recalled.
The Bill of Rights in the Missouri constitution declares that “no person shall be imprisoned for debt, except for nonpayment of fines and penalties imposed by law.” Still, people do go to jail over private debt. It's a regular occurrence in metro St. Louis, on both sides of the Mississippi River.
Here's how it happens: A creditor gets a civil judgment against the debtor. Then the creditor's lawyer calls the debtor to an “examination” in civil court, where they are asked about bank accounts and other assets the creditor might seize.
If the debtor doesn't show, the creditor asks the court for a “body attachment.” That's an order to arrest the debtor and hold him or her until a court hearing, or until the debtor posts bond.
The practice draws fire from legal aid attorneys and some politicians. They call it modern-day debtors prison, a way to squeeze money out of people with little legal knowledge.

A deceptive Iv-B economy because of weak I-O policing.

Monetary Cranks Delay Reform in Cranked-Up Welfare States by Michael Heller - Project Syndicate

Monetary Cranks Delay Reform in Cranked-Up Welfare States by Michael Heller - Project Syndicate

“The welfare state evens out people’s chances in life, and it serves as career insurance against sheer bad luck … 

As Bi it normalizes people's chances not by reducing bad luck but by reducing chaos. 

The welfare state compensates and appeases those who lose out to technological progress and to the expanding division of labour and world trade. 

By normalizing outcomes it narrows the gap between winners and losers both of which can hit a ceiling and floor and collapse as in the GFC. 

It helps people with low productivity and prevents them from having to resort to fraud, theft, and other criminality. 

Low productivity is some people is averaged out by their joining a union, fraud and theft occurs more with secretive and deceptive R-B people. 

It insures people against economic risks in a manner and to an extent that private insurance could not possibly provide, and thus benefits everyone …

Government insurance in more Ro while unemployment insurance funded by wage contributions is more Bi. 

 Yet just as there can be too little state insurance, resulting in an inadequate social safety net, there can be an over-provision of insurance protection, resulting in moral hazard … Germany today suffers a moral-hazard problem with respect to unemployment benefits and wage supplements”.

Moral hazard does not arise from providing insurance but from not policing it adequately for fraud.

Milken Institute | Newsroom | Currency of Ideas - Egypt's Costly Free Lunch

Milken Institute | Newsroom | Currency of Ideas - Egypt's Costly Free Lunch

Back up for a moment. You may not have noticed, but the Egyptian economy responded very well to market-opening reforms begun in the early 1990s that attracted massive amounts of foreign capital. Real income per capita has nearly tripled, to a respectable $6,300. The catch: the growth dislocated the lives of millions of Egyptians, eliminating the security of many government workers, sucking the rural poor into crowded urban slums, and creating a wealthy elite of insiders who made no effort to hide their (sometimes ill-gotten) gains.

Often these reforms can turn a Roy economy into Biv too quickly, where g public property is still more efficient than Gb private property.  it can also be an Iv-B economy that creates a boom then a bust with extreme winners and losers.

No democratic government will succeed in the long run unless it reduces official corruption, controls military patronage spending, lays out the welcome mat for new businesses, and reforms the antiquated education system.

A weak I-O police can be a symptom of the problem as much as a cause, if the countries has dissimilar groups then some might become enough of a majority to corrupt the justice system to favor them instead of being neutral. 


 But the immediate problem is managing the runaway food and energy subsidies that are now equivalent to about 10 percent of GDP.

Simply targeting the funds to those truly in need would go a long way toward fixing the problem. About one-third of the money pays for food, mostly in the form of lower prices for bread sold to everybody, rich and poor. The other two-thirds is in subsidies for gasoline, natural gas and butane for cooking, little of which raises the living standards of the poor; the rest goes to industry and the middle-class.

But efficient targeting is more easily proposed than done. Subsidized bread is widely viewed as a birth right. And it’s hard to imagine the Muslim Brotherhood-led government risking an outbreak of urban discontent that gave the military an excuse to reassert power. Gasoline and cooking gas are almost as problematic -- Jordan just rescinded an increase in gasoline prices after mobs hit the streets (led, ironically, by the Muslim Brotherhood).

R-B people live chaotically on the edge, often subsidies are meant  to normalize the costs so Bi-Ro people don't protest. This underlying chaos can lead to Ro protests as in the Arab Spring.

If the subsidy system is to crack, the first fissures will probably be in the delivery of cheap natural gas, most of which is used by business. Indeed, the interim government floated a plan back in Julyfor raising the price of natural gas sold to heavy industry. That’s a credible beginning (if the government follows through), and one that could pacify the IMF (and foreign investors) for a while. To save really big bucks, though, gasoline would have to take a hit, and perhaps food down the road.

Laura D'Andrea Tyson: Income Inequality and Educational Opportunity - NYTimes.com

Laura D'Andrea Tyson: Income Inequality and Educational Opportunity - NYTimes.com

According to the most recent census report, about one-quarter of children under the age of 6 live in poverty. Recent research shows that early childhood poverty has negative effects on brain development. At the age of 3, children in poverty have smaller vocabularies than their peers and a harder time sorting and organizing information and planning ahead.

Children in poor families are also less likely to have access to early-childhood education programs. Such programs have a proven record of raising future educational attainment levels, especially for poor children. Sadly, many states are slashing such programs, despite the fact that the funds dedicated to them earn an annual real rate of return of 10 percent or higher.

R-B people are usually chaotic so investment getting them off the floor can lead to dramatic growth and returns on investment. There is no equilibrium for them so they tend to either succeed or fail badly. 

Disparities in educational achievement among children from different income groups increase with age. Such gaps are larger in fifth grade than they are in kindergarten, and they continue to grow as children move through primary and secondary school.

As a result of residential segregation, children from low-income families are more likely to have classmates with low achievement levels and behavioral problems than children from affluent families. Poor children are also disproportionately situated in schools that often find it difficult to attract and retain skilled teachers. And as the Chicago teachers’ strike reminds us, poor children are often hungry, depending on their schools rather than their homes for breakfast and lunch.

Some communities are more Bi-Ro and act as teams to help their weaker members, this can overcome some of these problems bringing them up to a normal level around the center of their normal curve. 

The United States is caught in a vicious cycle largely of its own making. Rising income inequality is breeding more inequality in educational opportunity, which results in greater inequality in educational attainment. That, in turn, undermines the intergenerational mobility upon which Americans have always prided themselves and perpetuates income inequality from generation to generation.

An Iv-B economy creates extreme winners and losers, the winners when they crash might bump repeatedly against the ceiling like the 1% did after the GFC, the poor bump against the floor repeatedly rising a little then crashing into extreme poverty and crime. This underclass becomes more nomadic as R.

This dynamic all but guarantees a permanent underclass. Indeed, the process is already under way: An American child’s future income is already more dependent on his or her parents’ income than a child born in most other developed countries.

Greek Prime Minister Warns of Societal Collapse Like Weimar Germany; Citizens Storm Defense Ministry; Merkel Takes Gamble on Visiting Greece

http://globaleconomicanalysis.blogspot.com.au/2012/10/greek-citizens-storm-defense-ministry.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29&utm_content=Google+Feedfetcher


Antonis Samaras says Greece's democracy is in danger, comparing situation to Germany's pre-war Weimar Republic

Resources are so scarce that the country is becoming Roy, so government owned resources will become more efficient. 

Greece is teetering on the edge of collapse with its society at risk of disintegrating unless the country's near-empty public coffers are shored up with urgent financial aid, the country's prime minister has warned.

The result of Iv-B economics is some countries hit the floor when V-Bi savings and insurance are exhausted.

Almost three years after the eruption of Europe's debt drama in Athens, the economic crisis engulfing the nation has become so severe that democracy itself is now imperiled, Antonis Samaras said.

Often in Roy they become dictatorships because a vote can become a negative sum game, the people vote for whatever will reduce their losses rather than for long term benefits. When people are poor crime rises and so the O police become more important than I civil police, people will commit more crimes to prevent starvation and disaster even though they forgo some benefits such as a clean credit history or criminal record. 

Resorting to highly unusual language for a man who weighs his words carefully, the 61-year-old politician evoked the rise of the neo-Nazi Golden Dawn party to highlight the threat that Greece faces, explaining that society "is threatened by growing unemployment, as happened to Germany at the end of the Weimar Republic".

Mounting anti-austerity rage before a new round of sweeping EU-IMF-mandated austerity measures appears to have caught the government off-guard, with officials voicing fears over the ability of Samaras's fragile coalition to survive

OpEdNews - Article: Transcript Exclusive Chris Hedges Interview; The Template for Harvesting America, Sacrifice Zones and Blood

OpEdNews - Article: Transcript Exclusive Chris Hedges Interview; The Template for Harvesting America, Sacrifice Zones and Blood



Chris Hedges: Well, that comes at the end of the book, which is an attempt that both Joe and I made to describe a system that has been seized by political paralysis, and is dominated by [a] narrow corporate elite that no longer responds to the needs of citizens.

After a color imbalance there can be a collapse that moves up the colors from B to V and R to Y, the last stage is where Y in poor countries and V in wealthy countries as the elite or most wealthy still have most of their assets but others have lost much of theirs. For example in the Roy animal kingdom Y predators might lions might still be ok while other animals are starving and dying ina  drought. In a Biv plant kingdom the V leaves might have enough resources to make flowers and seeds as the trees are dying. 

 It attempts to illustrate, by going into the poorest pockets of the country, that the formal mechanisms of power that once made incremental and peaceful reform no longer work, and that the only solution we have is civil disobedience.

This is the disconnect caused by weak I-O policing, caused in turn partially by Y-V having most of the funds left to pay them.

 But that comes after detailing the conditions that people are living, in places like Camden, New Jersey, which per capita is the poorest city in the United States; Pine Ridge, South Dakota has the second poorest county in the country; The average life expectancy for a male on Pine Ridge is 48--that is the lowest in the western hemisphere, outside of Haiti; The coal fields of southern West Virginia; the produce fields where largely undocumented workers, without any kind of legal protection, organizing power or rights, pick the nation's produce.

These are R and B people, R like nomadic pickers being ripped off by predatory Y-V capitalism.  

And by the time you get there, I think, hopefully the reader has seen what happens when individuals in communities are forced to kneel before the dictates of the marketplace.

Not the marketplace but the team power of Y-V against R-B divided and conquered individuals.

How Could Greece and Argentina – The New 'Debt Colonies' – Be Set Free? | Op-Eds & Columns

How Could Greece and Argentina – The New 'Debt Colonies' – Be Set Free? | Op-Eds & Columns

How Could Greece and Argentina – The New 'Debt Colonies' – Be Set Free? Ha-Joon Chang The Guardian Unlimited, November 25, 2012 See article on original website Colonialism is back. Well, at least according to leading politicians of the two most famous debtor nations. Commenting on the EU's inability to deliver its end of the bargain despite the savage spending cuts Greece had delivered, Alexis Tsipras, the leader of the opposition Syriza party, said last week that his country was becoming a "debt colony". A couple of days later, Hernán Lorenzino, Argentina's economy minister, used the term "judicial colonialism" to denounce the U.S. court ruling that his country has to pay in full a group of "vulture funds" that had held out from the debt restructuring that followed the country's 2002 default. While their language was deliberately incendiary, these two politicians were making extremely important points. Tsipras was asking why most burdens of adjustment for bad loans have to fall on the debtor country and, within them, mostly on its weaker members. And he is right. As they say, it takes two to tango, so those who condemn Greece for imprudent borrowing should also condemn the imprudent lenders that made it possible. In an Iv-B boom some countries will eventually collapse much worse than others, some will also win. this is like a poker game where winners and losers are separated in the booms and busts of the hands played. Some can experience damage hitting the floor after a free fall in their economy like Greece, others can have damage from hitting the ceiling like the US did in their real estate market when it could not rise any further. The ceiling hit caused the momentum of purchases to falter and subprime borrowers to default. The floor hit caused the momentum of selloffs to stop, for example people taking their money out of the country and then finding there is no way to get the rest out. When this bleeds much of the country dry it hits the floor so the rest of people's money can lose value too. Vulture funds are like Oy vultures in the Roy animal kingdom looking to attack R countries with few allies able to stand together as a team. In this negative sum game all are trying to minimize costs and losses, the vultures are reducing losses on bonds purchased while the countries are reducing losses from the debt overhang. In Iv-B both sides can be imprudent, however both engage in the equivalent of poker bluffs or Chinese Whispers where rumors are believed because they go around with further misinformation constantly added if people think it will give them a competitive advantage. With so much secrecy there is little other information, those who miss getting on the boom might still experience poverty from the bust so there is no easy way to not participate. Often the best way is to buy into a bubble and try to get out early as it collapses.

Bruce Bartlett: A Conservative Case for the Welfare State - NYTimes.com

Bruce Bartlett: A Conservative Case for the Welfare State - NYTimes.com


In the 40th anniversary edition of his book, “Capitalism and Freedom,” Milton Friedman advised conservatives to use crises as opportunities to advance their agenda. “Only a crisis – actual or perceived – produces real change,” he contended.

Iv-B economies have two crises, one when hitting the ceiling and one when hitting the floor. This causes a change in direction of momentum in that society.

Thus Republicans are now using the fiscal impasse to try to raise the age for Medicare and reduce Social Security benefits by changing the index used to adjust them for inflation. They know that such programs will be easier to abolish in the future if the number of people who qualify can be reduced and benefits are cut so that privatization becomes more attractive

The Iv part of the V-Iv Republicans are libertarians and so profit from the chaos of reducing V-Bi insurance in society.

This is foolish and reactionary.

Iv is counter innovation or counter revolutionary by nature, they react rather than act.

Moreover, there are sound reasons why a conservative would support a welfare state. Historically, it has been conservatives like the 19th century chancellor of Germany, Otto von Bismarck, who established the welfare state in Europe. They did so because masses of poor people create social instability and become breeding grounds for radical movements.

V governments and industry often do better with V-Bi where Bi unions and social insurance create stability at the risk of stagnation. B people can become R revolutionaries and terrorists as a lack of insurance makes them act alone. 

In postwar Europe, conservative parties were the principal supporters of welfare-state policies in order to counter efforts by socialists and communists to abolish capitalism altogether.

Bi insurance is based on randomness and the normal curve, it quenches the chaos of collapses in capitalism caused by low wages.

The welfare state was devised to shave off the rough edges of capitalism and make it sustainable. Indeed, the conservative icon Winston Churchill was among the founders of the British welfare state.

American conservatives, being far more libertarian than their continental counterparts, reject the welfare state for both moral and efficiency reasons. It creates unhappiness, they believe, and inevitably becomes bloated, undermining incentives and economic growth.

It can become bloated and stagnant when Iv-B growth is lost, incentives are weakened when people have to be more normal and conventional. However this is caused by weak I-O policing creating a disconnect between the two.

One problem with this conservative view is its lack of an empirical foundation. Research by Peter H. Lindert of the University of California, Davis, shows clearly that the welfare state is not incompatible with growth while providing a superior quality of life to many of those left to sink or swim in America

The Hidden Prosperity of the Poor - NYTimes.com

The Hidden Prosperity of the Poor

By THOMAS B. EDSALL

A concept promulgated by the right — the notion of the hidden prosperity of the poor — underpins the conservative take on the ongoing debate over rising inequality.

The political right uses this concept to undermine the argument made by liberals that the increasingly unequal distribution of income poses a danger to the social fabric as well as to the American economy.

President Obama forcefully articulated the case from the left in anaddress on Dec. 6, 2011 at Osawatomie High School in Kansas:

This kind of gaping inequality gives lie to the promise that’s at the very heart of America: that this is a place where you can make it if you try. We tell people — we tell our kids — that in this country, even if you’re born with nothing, work hard and you can get into the middle class. We tell them that your children will have a chance to do even better than you do. That’s why immigrants from around the world historically have flocked to our shores.

The conservative counterargument – that life for the poor and the middle class is better than it seems – goes like this: Even with stagnant or modestly growing incomes, the poor and middle class benefit from the fact that a stable or declining share of income is now required for basic necessities, leaving more money for discretionary spending. According to this theory, consumption inequality – the disparity between the amount of money spent on goods and services by the rich, the middle class and the poor — remains relatively unchanged, even while income inequality worsens.

The Iv-B economy can cause some prices to rise in bubbles to a ceiling, also other prices to fall to a floor. For example many electronic goods fall virtually to the cost of production and then this downward momentum causes some companies to crash chaotically and go bankrupt. Farming can also have this problem, with cyclical booms and busts hitting this low floor of prices can regularly send them broke and needing to be supported by Bi cooperatives. 

It is also a Biv attitude, that all people are gaining from transactions so everyone must be getting wealthier, or a rising tide lifts all boats. However some areas can be Roy where resources are scarce, this can also be because resources tend to flow to the wealthier Y-Oy areas which are predatory.

Why poor people pay more bribes than rich people | Felix Salmon

Why poor people pay more bribes than rich people | Felix Salmon

Why poor people pay more bribes than rich people

By Felix Salmon

FEBRUARY 18, 2013

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BRIBES | DEVELOMENT | ECONOMICS

Azam Ahmed has a report from Kabul’s ‘Car Guantánamo’ today:

Behind these walls are thousands of cars, trucks, vans, motorcycles and even bicycles, lined up in vehicular purgatory after falling afoul of the Kabul traffic police. Things that have landed cars in the slammer: illegal left turns, parking violations, involvement in fender-benders and, perhaps most egregious, failure to pay a bribe.

“I’ve been waiting two months to get my van back,” said Sayed Wahid, whose quest to reclaim it, after it was impounded for an expired international permit, propelled him on an exhausting odyssey through no fewer than six different government agencies…

In November, Mr. Wahid had driven his van from Kunduz down to Kabul when he was pulled over at a checkpoint in the capital. His license and car tags were clean, but a permit to cross international borders, though not needed for that specific trip, had expired.

For a moment, he said, he considered bribing the officer. He has regretted every day for the past two months his decision not to.

Ahmed explains that when it comes to Kabul’s traffic police, “the rules are unevenly applied, punitive to those who can least afford it, and mostly irrelevant to those with money and power.”

Here the I-O police have a right wing bias to Iv-Oy, then secret bribes are like commissions to a salesmen. Bi-Ro communities get fragmented but can often come together in demonstrations and protests. Y-V teams profit most with the police becoming their agents in many cases. Oy crimes are poorly policed, the Y mafia might bribe the O police to look the other way. The poor are like prey and so they pay more than those who are Y-Oy predatory in a Roy country.

The point here is that it’s the poor, like Sayed Wahid, who are hit hardest by Kabul’s endemic corruption. Either they do the sensible thing, and pay a bribe they can ill afford, or else they’re at real risk of losing their livelihood. Meanwhile, the rich and powerful aren’t even asked to pay bribes: the police know better than to try this stunt on someone who could easily get them fired. It’s safe to solicit a bribe from a guy from Kunduz in a van; you’d have to be much braver to try it with a man in a suit driving a Mercedes.

It’s not that the rich don’t pay bribes at all; of course they do. But in general when the rich pay bribes, they tend to get even richer. That’s the deal: that’s business.

The rich pay commissions to the police for profit, when I is biased to the right they might pay civil fines for criminal fraud which are like commissions or bribes that go to I pay rises.

When the poor pay bribes, by contrast, it’s a deadweight loss: it’s just money disappearing into the pockets of a corrupt official, never to be seen again.