Aziz on ‘Rentiers’
April 16, 2015, 10:45 am
Filed under: Uncategorized

John Aziz sure picked a strange time to advocate the ‘euthanasia of the rentier’.

In post number one, he reasons that ‘the’ (which?) real risk-free interest rate amounts to pure profit to ‘rentiers’ from capital-scarcity, and thus should be made to go away via monetary policy. Okay I mean I guess. But the weird thing is that however you reckon this rate (he appears to use the 10y CMT nominal rate minus CPI; not sure why he didn’t use the 10y Treasury real yield calculated from TIPS; minor point), it’s pretty much been falling for years and as close to consistently-zero as it’s ever been. So: yay?

Yet Aziz describes this situation thusly:

The general trend is that real interest rates on U.S. government borrowing are overwhelmingly positive, with a few periodical exceptions where real rates on borrowing went a bit negative.

Um, huh? Actually, if you take a longer view using a pre-TIPS calculation that looks similar to Aziz’s, it’d be more accurate to say that real yields have pretty much been falling almost nonstop since the early 1980s. In this view, the ‘best’ time for ‘rentiers’ would have been the post-Carter, Volcker-fueled interest rates of the early Reagan years, the Bush I/Clinton years improved on that and were effectively the same, Bush II then ‘improved’ on Clinton, and now – ever since the The Financial Crisis™ – we’ve had practically the ideal monetary policy. So now Aziz rings the alarm bells about unfair profits to ‘rentiers’?

In fact, based on TIPS yields (which presumably overstate things because they have an illiquidity component in them!), the 5y real yield has pretty much been zero or negative since around 2010. By Aziz’s logic, doesn’t this indicate the ‘rentiers’ have now been ‘euthanized’ too much, and are now due some relief? Don’t we need to bear-flatten the real yield curve to help out the poor, poor ‘rentiers’ and undo the too-much-redistribution that has taken place? If you prefer the 10y real yield it dipped negative in 2011, spent some time in slight positive territory, and is now effectively zero-ish again. Let’s just call that “zero” too.

To even begin to get this capital-scarcity ‘rentier’ profit Aziz speaks of you have to go out and grab the 30-year TIPS at a whopping real yield of sixty-something bps (i.e. 0.60%) – which, historically speaking, is basically…well, zero.

There is a more immediate, practical matter here: even if we go along with Aziz in thinking the monetary authority ought to target real yields and make them all go to zero, can they? Do they know how to do that? The Fed is awfully proud of its QE and how it (supposedly) manipulated the term premium in nominal rates in order to achieve their (ostensible) goals. (Which of course leaves aside the fact that term premia have also come down since QE stopped and Bernanke has no idea why – it’s a “puzzle”.)

But did their oh so deliberate and informed policy actions make real rates go in the direction they wanted? Fed professes to want something like 2% inflation, and after like five years of ‘unconventional’ monetary policy and inventing new tools in their toolkit – hasn’t quite gotten there yet. If “real rates = nominal rates – inflation” then surely manipulating real rates requires manipulating inflation (or at least inflation expectations), and it’s far from obvious the Fed is able to do that to the degree/precision – or even the direction! – that would be required to make this 60bps vanish. In other words, “60bps at the 30y point” lies well within any plausible margin of error and of policy-precision. So what are we even talking about here?

To his credit, Aziz has been made to realize this, writing a followup post in which he abandons the idea of targeting real rates and guiding them to zero with monetary policy. Ok, nevermind.

But his new idea is even more puzzling:

So here’s a different proposal: a new capital gains tax at a variable rate equal to the real risk-free interest rate, with the proceeds going toward business grants for poor people to start new businesses.

What does this mean? The 5y real rate as of yesterday (4/15/15) was published as negative 26bps. Don’t we then have to hand out a capital-gains tax credit? If we prefer 10y then we’re talking about 7bps (0.07%). The current capital-gains tax rate maxes out at 15%, I believe; so after all this talk of ‘rentiers’ unfair profits and the need to ‘euthanize’ them, is Aziz’s grand proposal to increase that rate from 15.00% to 15.07%?

That’s it? That can’t be it.

Now admittedly there’s something that at first glance seems like it could be counter-cyclical about this proposal. Maybe Aziz is taking the long view: sure, there’s no ‘real yield’ to speak of taxing now, but if/when the economy heats up, the real yields would increase, and so the capital-gains tax rate would step up. This would occur at a time when the economy is more healthy, and so the ‘rentiers’ would feel less pain from it. So far, so good.

Except that’s only one side of the equation. The other side is that the proceeds are supposed to go to “business grants for poor people to start new businesses”. But when the economy is bad – and real yields low, presumably – there are no such proceeds. When the economy is good, and the proceeds are flowing in, capital to start new businesses is presumably far easier to get for the aforementioned poor people. So this ‘redistribution’ would only occur precisely at those times it’s least needed. Oops.

I do look forward to the followup post in this series where John Aziz realizes the problem(s) with his second post. Let’s keep this going…it’s interesting, at least.

Jordan Weissman, austerian
April 16, 2015, 7:30 am
Filed under: Uncategorized

Jordan Weissman wants to “ask” [sic] millionaires to pay more taxes. He bemoans that, instead, politicians propose eliminating tax breaks (i.e., stimulus).

In other words, he wants austerity and hates stimulus. Why does Jordan Weissman want austerity when it is bad for the economy and hate stimulus when it is good for the economy? Why does he hate America?

What exactly would this austerity even accomplish? According to Weissman,

At some point, the federal government is going to need more revenue in order to support the social welfare programs that the vast majority of Americans know and love.

But this is simply not true. If these social welfare programs that the vast majority of Americans know and love need funding, and there isn’t enough tax revenue to cover them, the funding can and will just be obtained via debt issuance. As a lefty isn’t Weissman supposed to be just fine with that? What’s the problem? Where’s the giant need to (try to) increase tax revenues? I genuinely don’t understand.

And it’s not at all clear that steeping the wealthy, so to speak, would significantly slow down the economy. I mean, it could. Maybe. Researchers generally do think that a major tax hike would be a sap on growth.

Ok, so it’s not clear that austerity would slow growth, except, that’s what researchers generally think. And Weissman…doesn’t care and just waves that away with a ‘not clear’?

See? Why does he hate America?

Why are people who, tribally, think austerity is awful so attracted to (this particular type of) austerianism that they toss their usual preference out the window?

So this is how The Giver started
March 30, 2015, 9:01 am
Filed under: Uncategorized

Ok my views on abortion and related matters are often wishy-washy, but I do know I have nothing in common with the sort of monstrous ‘experts’ who could decide this:

Killing babies no different from abortion, experts say

The article is a veritable fount of Orwellian, Nazi-esque Newspeak:

The article, published in the Journal of Medical Ethics, says newborn babies are not “actual persons”

Oh. Well in that case.

He said those who made abusive and threatening posts about the study were “fanatics opposed to the very values of a liberal society”.

Interesting right? Don’t want to murder babies, you’re a ‘fanatic’ and opposed to ‘the very values of a liberal society’. What then are those ‘values’, one wonders? And what is this ‘liberal’ thing? Count me out of your version of ‘liberal’.

The moral status of an infant is equivalent to that of a fetus in the sense that both lack those properties that justify the attribution of a right to life to an individual.”

“attribution of a right to life”. Not an inherent, inalienable right to life, but something we ‘attribute’.

Rather than being “actual persons”, newborns were “potential persons”. They explained: “Both a fetus and a newborn certainly are human beings and potential persons, but neither is a ‘person’ in the sense of ‘subject of a moral right to life’.

Proof by semantics. I know I’m convinced

“We take ‘person’ to mean an individual who is capable of

“We take ‘person’ to mean”

Well isn’t that special.

As such they argued it was “not possible to damage a newborn by preventing her from developing the potentiality to become a person in the morally relevant sense”.

Where’s the cutoff, one wonders. Eight months? Eighteen? I suppose ultimately the Supreme Court will tell us.

“what we call ‘after-birth abortion’ (killing a newborn) should be permissible in all the cases where abortion is, including cases where the newborn is not disabled”.

There’s actually a different way to read this – one that undermines the case for abortion itself. Maybe this all just proves that abortion should not be permissible in any cases.

Is this a tongue-in-cheek ‘modest proposal’ designed to show the slippery-slope?

They preferred to use the phrase “after-birth abortion” rather than “infanticide”

I’m sure they did. Who wouldn’t prefer the former phrase to the latter?

“This “debate” has been an example of “witch ethics” – a group of people know who the witch is and seek to burn her. It is one of the most dangerous human tendencies we have. It leads to lynching and genocide.

Wait. Would that be bad? Why?

Rather than argue and engage, there is a drive is to silence and, in the extreme, kill, based on their own moral certainty. That is not the sort of society we should live in.”

Dude there’s only one side arguing for any killing under the imprimateur of their PhD’s and Fancy Journals here.

They have to cast Idris Elba as James Bond now
March 30, 2015, 7:20 am
Filed under: Uncategorized

It’s getting to the point where they’re going to have to cast Idris Elba as James Bond simply because now if you express any uncertainty about let alone disagreement with doing so you’re a racist. Only one solution remains then: cast Idris Elba as James Bond.

It’s white to be ‘hip’
March 28, 2015, 8:30 am
Filed under: Uncategorized

I’ve been saying for a while that the ‘hipster’ phenomenon is mostly just a way for white (and, honorary-white) people to build themselves an identifiably-separate and insulated white subculture under the radar, separate and apart from er other-race-influenced subcultures, while immunizing themselves to accusations of being racist or even having a racial footprint at all.

Oh well, looks like the party’s over; folks must’ve caught on.

What subtextually-but-not-overtly-white subculture will white people try to build next, in this never-ending game of cat & mouse? What could even possibly remain to base it on? ‘Indie’ rock, complicated coffee, and lumberjack beards were pretty thin gruel as it was. Some sort of English folk dancing? How long before people figure out how white that is?

Bad Justice
March 24, 2015, 9:57 pm
Filed under: Uncategorized

Fascinating piece at ThinkProgress claiming to identify the Five Worst Supreme Court Justices In American History. I certainly don’t know anything about the number one choice, Stephen Johnson Field; nor would I want to necessarily cast my reputational lot with this Field, who presumably was a racist or other sort of old-fashioned badthinker of some stripe or another. But it’s still worth noting that the author’s fascinating brief against him, consisting largely of opinions that Field wrote, has the interesting property of containing literally no statements that are evidently false or bad.

For example:

“The old Constitution,” Field’s campaign warned in a pamphlet that traced America’s original sin at least as far back as the John Adams administration, “has been buried under the liberal interpretations of Federalist-Republican Congresses and administrations, grasping doubtful powers and making each step towards centralization the sure precedent of another.”

Is this false? Or:

Field’s campaign argued that he was “the proper candidate of the party whose life-giving principle is that of local self-government.”

Is local self-government bad? Or:

When Illinois enacted a law forbidding this price gouging, however, Field responded with an angry dissenting opinion labeling this law “a “bold assertion of absolute power by the State to control at its discretion the property and business of the citizen.”

Which…it wasn’t? Finally, the coup de grace:

Years later, after Congress enacted a modest income tax on upper-income earners, Field complained that it was an “assault upon capital” which “will be but the stepping-stone to others, larger and more sweeping, till our political contests will become a war of the poor against the rich; a war constantly growing in intensity and bitterness.”

And…he was subsequently proven wrong?

Meh, not really. And interestingly, the author doesn’t even attempt to make that case, apparently believing that merely to cite these ‘damning’ quotes suffices to refute them.

This might also place his choice for the #5 worst Supreme Court Justice in some perspective.

Judging Mozeeya
March 10, 2015, 7:06 am
Filed under: Uncategorized

Gene Callahan explains why, in the case of hacker disapproval of Mozilla’s treatment of Brendan Eich, it’s incoherent to ‘use a universal ban on “judgmentalism” to judge those who violate it’. He’s correct. Someone who cites a supposed ‘hacker culture’ that requires ‘you are to be judged by the quality of your work alone’ can’t then consistently judge Mozilla on this non-quality-of-work basis.

Fortunately I’m not part of any ‘hacker culture’ nor do I believe in a ‘universal ban on judgmentalism’. I’m just a consumer free to make up my mind regarding which free-thing-providing companies to patronize with my hard-earned-nothing, and thus free to judge those companies on whatever basis I want. No inconsistency.

In the case of Mozilla, what that means of course is that when this Brandan Eich thing happened I vowed in disgust never to touch a Mozilla product again (side note: for obvious cultural-sensitivity reasons I prefer to pronounce Mozilla so as to rhyme with ‘tortilla’). Now, I forgot about that ‘vow’ in a day or two, of course, but I think I’d made my point. They heard me. Oh, they heard me.


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