The story of the Pilgrims and the Mayflower taught to every American child in every American school is less than half of the actual story. Obviously there are a lot of day to day details left out, but the most striking of the omissions is the fact that the endeavor was a for-profit business. The corporate side of this story is told in the first chapter of Americana: A 400-Year History of American...
McKinsey latest report on the pandemic response in Africa includes this very interesting chart of the size of the government responses to the pandemic as a percentage of GDP: It is interesting as South Korea and Italy both spent very little, with vastly different outcomes. It is interesting as if there is any correlation here, it is that the smaller the outbreak, the less spent on stimulus. Thus...
The coronavirus pandemic is laying bare quite a lot of the normally hidden features of our modern capitalism system. And the government reactions to the economic shutdown is demonstrating that we don’t actually live in an capitalistic system, but something of a hybrid with the incentives and rewards of capitalism (when times are good) but the downside cost of socialism (when the economy...
APRIL 2020 – As I write this, we are a few days from the projected peak day of death from the pandemic here in the United States. With that “light at the end the tunnel” economists are starting to predict what comes next for the economy. McKinstry this week published a prediction. TL;DR: U.S. GDP drops by 8%-13% in 2020. Personally I don’t understand how 15%+ unemployment...
What comes next from the global pandemic? Unfortunately, it looks like we’re headed to massive unemployment. At least the 25% of the Great Depression. Possibly more, if the lock downs continue for 6 or 9 months. From today’s Seattle Times, the following chart shows the number of jobs at risk in King County (where Seattle and Bellevue are located), Snohomish (the northern suburbs, and...
Now that the governments of the world are woken up to the emergency at hand and finally telling their citizens to stay home, it’s time to focus on how to ensure those citizens stay fed for the coming months. So far, the plans out of Washington DC are not the right answer. Paid sick leave, yes. Payroll taxes and airline bailouts, no. Payroll taxes only work if there are payrolls being paid...
After finishing The Big Short book I had to re-watch the movie. This time not only was I watching for signs of purposeful fraud vs. emergent fraud, but trying to tease out the difference between incompetence, fraud, and something else that is something between ignorance and stupidity and folly. A real world example of this showed up in my life a week ago. I’m the Treasurer of my homeowner...
Halfway through reading The Big Short, I’m stuck wondering how after trillions of dollars of damage to the financial system, not only did no one go to jail, but no one was even brought in front of a jury. I think I figured out why. To explain, I have to go back to Adam Smith and The Wealth of Nations. Smith’s core argument is that the amazingly efficient system later dubbed Capitalism...
More and more of my work with startups is over in the so-called emerging markets. These are countries not known for being well run nor known for have an efficient and successful way of collecting taxes. That said, a lot of taxes go unpaid here in the U.S. too. One lesson on how to fix this problem comes from Taiwan, one of the Asian Tigers, four success stories in global economics that will...
One of my hobbies is reading books on economics. (People do call me Luni after all). What I’ve learned from all this reading is that some economists can explain how an economy actually works, but have very odd, very wrong ideas on how should work. Case in point today is The Production of Money by Ann Pettifor. The book explains how central banks don’t actually print money, that...
