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Obey

Obey

There has recently been some discussion on the web regarding the lessons to be learned from Plato's Republic and the story  of Gyges' ring that motivates Plato's long psycho-political ruminations.

The discussion was started by an Op-ed in the New York Times by a philosopher and a political scientist entitled The Moral Hazard of Drones. The authors use the allegory of a lowly farmer given what amount to superpowers to kick off an argument about what a moral society ought to do with drone technology that now allows it to kill anyone anywhere with impunity. And there is nothing wrong with using that allegory in different ways, but there is a much larger issue that it can illuminate, and that Plato used it to illuminate. That is what I'm going to try to lay out here.

President Obama has a new campaign ad out in which he personally presents the stark choice voters face in November. On the one hand the GOP want to extend all of the Bush tax cuts. On the other Obama and the democrats want to let a few of the Bush tax cuts expire, and Obama says that they will use the extra revenue to invest in education, manufacturing and 'home-grown American energy'.

At the end of the ad he says "Sometimes politics can seem small, but the choice you face? It couldn't be bigger."

So just how big is this choice?

David Dayen over at FDL has a piece up casting a positive light on Geithner's role in the manipulation of the benchmark LIBOR lending rate by major banks. He highlights the parts of the Fed's doc dump that show Geithner's concern about the banks distorting LIBOR for their own gain. That is, however, far from the most interesting aspect to his role in the scandal.

The most interesting of the docs I've seen so far (via FT Alphaville) is the transcript, dated April 11, 2008, of an exchange between Fabiolo Ravazzolo of the New York Fed's Markets Group (FR) and a trader at Barclays Bank (BB). After a little personal banter, the banker starts to explain that Barclays has a bit of trouble borrowing from other banks.

 

The following is a very tentative guide to religious belief and experience written by a religious idiot for other religious idiots, i.e. people – like me – for whom God is not an important part of their lives, and who have difficulty in understanding what it means for others to have God “in their lives”.

I’ve long felt the “debate” between Atheists and Theists – in particular the New Atheists and their religious adversaries – is entirely wrong-headed. Atheists overwhelmingly don’t seem to understand religious attitudes, and argue about the existence of God as though it were a scientific enquiry like the search for the Higgs Boson. They look at God as a theoretical entity, something whose existence is to be *inferred* from the evidence, and in turn serves to explain and predict the immediately accessible world around us. And, as such, this entity seems to come up short.

That whole perspective on religious belief – belief “in God” – and the ‘debate’ it issues in seems to me to leave us with something like a fight between two bald men over a comb. Neither actually has any use for proving or disproving the existence of such a theoretical entity. Because for religious people he is not ‘theoretical’ in the first place. Their God is a very different kind of thing, and their belief in him a very different kind of attitude. So it seemed like Atheists – or at least those who are religious idiots like myself – might benefit from seeing this ‘debate’ from another angle, and hopefully engage in a more constructive dialogue with their religious brethren.

The rationale offered by the Supreme Court in upholding the insurance mandate provisions of the health care reform law known as Obamacare hinged on regarding the mandate, and its related penalties for not buying insurance, as functionally equivalent to a tax.

The law does not depend on the mandate to contain health care costs. That can be done by liberalizing trade of prescription drugs and other measures. It does not depend on the mandate to avoid the problem of free-riders. That  is already done by narrowing the window during which one can enter the insurance market every year.

The law depends on the mandate because a good chunk of the revenue to pay for subsidized private-label insurance comes from fines – or, as SCOTUS would have it, taxes – paid by those households too poor to pay for insurance under the new program.

How much are the mandate provisions expected to raise in federal revenue? According to the non-partisan CBO (see table 2 here) the mandate-related penalties for those too poor to afford insurance will amount to 54 billion dollars over the 2012-2022 period.

It is, in other words, a way of implementing a highly regressive tax to fund the coverage expansion. And it is, as such, a highly unfair way to pay for that program: it takes from low-income families who will be denied medical insurance to help other low-income families pay for theirs.

All of which leaves me perplexed as to why progressives, and democrats more generally, are celebrating the fact that SCOTUS ruled in favor of these provisions. Surely the 54 billion in revenues can be collected in some other, fairer, way.

(And just to put the new 54 billion dollar tax on low-income families in context: the tax on big banks implemented to recover TARP-related losses is estimated by Treasury to collect in all 41 billion dollars.

Surely bankers deserve to bear the burden of mitigating the poverty-inducing effects of their actions rather than low-income households whose financial troubles, and consequent lack of health insurance, are largely caused by the bankers’ malfeasance and fraud)

 

Crossposted at MyFDL)

Steve Perlstein seems to have taken on the role of mouthpiece for the left-of-center Washington consensus in his last op-ed, in which he declares the current "recovery" not only sustainable, but so robust in fact that it is now time to start making serious budget cuts. Among other things, he slams the disgruntled left for being irrational in its belief that the stimulus was insufficient and that depression conditions persist.


But is he right? Let us look at the evidence: is the recovery really that strong, and can it last without major government action?

In a small piece of local news, yesterday the Swiss Union of Unions (L'Union Syndicale Suisse) delivered the requisite number of signatures to bring their proposal to raise the minimum wage, from the current 2,200 CHF to 4,000 CHF per month, to a national referendum vote. This is currently equivalent to an annual income of over $50,000*, but note that the exchange rate has been fluctuating wildly the last couple of years.

THe new law would put the floor for wages at CHF 22 per hour. It is worth mentioning that few in reality make less than CHF 18 per hour even with the formal floor presently at CHF 2,200. 'Informal' workers, like undeclared maids, make at least CHF 20 an hour, and usually more, but the new law would serve to protect immigrant workers from exploitation by their employers as sometimes still happens.

This 'initiative populaire', as they're called here, isn't necessarily likely to pass since some of the eastern rural cantons are very conservative - in the American sense - but it is likely to force the government to put forward some compromise alternative. In any case I just found it to be a useful counterpoint to the trend visible in the EU and in the US where the elites seem to be successfully bringing down worker wages and generally (and outrageously) winning the argument in saying that the main economic problem of our time is that workers are paid too much.

p.s. KGB - see, this would have been something I'd have rather put up in a news links section...

*(It is maybe also worth noting that workers pay their own health insurance and unemployment insurance out of their wages, but retirement income insurance operates much like Social Security in the US, with contributions split between workers and employers).

In a post yesterday attacking Matt Yglesias' idea of expanding Social Security Salmon concludes as follows:

By radically expanding Social Security, you would be making it riskier, at exactly a point in time at which it’s generating negative real returns. And that can’t be sensible. Right now, thankfully, there’s an enormous amount of demand for Treasury securities coming from all over the world. Let’s embrace that demand, and use it to fund our present expenditures. But let’s not kid ourselves that Treasury bonds are a smart investment over a retirement-style time horizon. (My bold)

He is claiming that expanding Social Security is a bad idea because (i) it is only invested in Treasury bonds, whereas private pension funds are more diversified, i.e. in stocks, and (ii) Treasury bonds are - according to Salmon - obviously bad long term investments. In other words he is trotting out that old horseshit meme about the 'equity premium'. Another zombie lie that just won't die, it seems.

So let us look at how that 'equity premium has fared over the last 40 years, i.e. the full life-time investment horizon of baby boomers about to retire, shall we?

Wednesday, 21 December 2011 06:56

A Merry Christmas for the EuroBanks

The Euroland elites are celebrating the smashing success of the ECB offering of 3 year loans at 1 percent interest to any and all European banks. Almost 500 billion euros in loans were extended to the long-suffering banks, cash-strapped after handing over hundreds of billions in bonuses to their hardworking staff.

Now that talented staff have to spend all of five seconds deciding how to invest the 500 billion. After three seconds they notice the 6 percent interest rate earned on Italian five-year bonds and the 4 percent interest on three-year Greek and Spanish bonds. After four seconds they buy those bonds and thereby lock in 60 billion Euros in profits over the next three years, as they pocket the difference between the 1% interest paid to the ECB and the 5% (avg.) earned on the bonds bought (4% of 500 billion x 3 years). After five seconds the bank managers are busy transferring those 60 billion to the bonus pool.

60 billion euros for five seconds of work. 60 billion transferred directly from Greek, Spanish and Italian tax payers to the bankers. Frankly, it's as hard as taking candy from babies.

Why not just extend the 1% loans directly to the sovereigns? Why not cut out this useless middleman?

Don't be silly, 1% loans are strictly for the hard-working, talented 1%. You know ... the job creators.

Thank God for independent central banks, eh?

Friday, 25 November 2011 11:13

Where the Streets have no Name

I had no idea where we were. The streets had changed names so often, from the time of provincial autonomy, to the decade of Milosevic’s repression, to the war, to the NATO-led liberation, that people had given up on street names altogether, and now found their way around by using landmarks, statues of the kids fallen during the war, or the neon corporate logos, though these were themselves so fleeting with all the buildings torn down or built up every year. The intense construction activity left everything coated with a thin film of dust. This town, this society, was indeterminacy incarnate.

http://www.agef-saar.de/AGEF_NETWORK/AGEF_PRISHTINA/Images2/20030318_168_q.jpg(Prishtina University Library, the pride of the Kosovar architectural heritage)

We were sitting in the corner booth at the back of a smoky Montenegran-owned bar. A privileged spot it seems. We knew the owner – the brother in law of a colleague of a friend. But it wasn’t necessarily comfortable. Legs were splayed wide or squeezed up against the next chair since the table was too low, or rather, too thick to fit one’s legs under. The table-top was an eight inch thick slab of oak, like these people had a deep appreciation for solidity. As people walk in, they notice the books on the back wall above our heads, and laugh, as if to say, who the hell puts up a Serbian language book collection as decoration in the center of Prishtina? Not necessarily mad, but definitely a screwy move apparently.

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