The Hot Mess Just Doesn’t Compute Anymore

4 06 2017

Philadelphia

In the old days, two things were true:

(1) I had to walk 20 miles each way back and forth to and from school every day, uphill both ways, through a foot of snow the whole way, wearing tattered boots, and dodging carnivorous dinosaurs.

(2) Economists had these terms, “normal goods” and “inferior goods.”  A normal good was a product or service, the demand for which grew as GDP or national income rose, and fell as fell.  An inferior good, “inferior” in economic terms, not a moral judgment, was a product or service that did the opposite:  The demand for those fell as GDP or national income rose, and rose as fell.

So, here I sit, stumped, trying to figure out how both “normal” retailers and “inferior” retailers are falling on hard times.  We know about the struggles of the mainstream mall store anchors, Sears, Macy’s, J.C. Penney, Dillard’s.  But now, we find out that “inferior” Payless Shoe Source and Family Dollar are closing a bunch of stores.  The latter is an interesting case, and points to the paradox of all this.  As one could have predicted, FD grew like weeds during the Great Recession, as one would expect an inferior goods retailer to do during a recession.  If the economy is getting better, then it’s also predictable the FD would be doing worse.  But the normal goods stores are also doing worse.  Except for Wal-Martinez, and that’s largely because of its ubiquity.

So, what’s going on?  Does it point to some strange happenings in the economy?  Is the normal/inferior paradigm obsolete?  Or is it all Amazon?





Behold the Power of Blogmeister

20 04 2017

San Francisco

Me, May 26, 2015:

I happen to think the left’s real silent goal with higher urban-specific minimum wages is to drive NAMs out of cities, because NAMs tend to low wage jobs whose wages are less than the proposed or implemented urban minimum wages.

Me, July 23, 2015:

A better way of saying that is that if the urban minimum wage is higher than the wage equilibrium for fast feeders, then the fast feeders can’t operate in the urban area.  If the fast feeders aren’t there, the NAMs that work there and the NAMs that eat there suddenly don’t think the urban area is such a dope place to beez, fo’ real, mo shizzle.  So they leave the cities, using their Affirmatively Furthering Fair Housing Section 8 voucher, plant themselves in a suburban apartment complex close to their 365BellCurve salt licks.  They’re lovin’ it.

American Interest, yesterday:

Local minimum wage hikes cause restaurants to leave or shut down and deter new ones from entering, according to a new Harvard Business School study of the San Francisco Bay Area restaurant industry that contradicts the orthodox liberal view that steeply raising the cost of unskilled labor will not affect jobs or hiring.

More interesting, though, are the study’s findings about which restaurants are forced to leave by the higher wage floors. The authors compared rates of departure of restaurants across different Yelp ratings, and found that the policy hit low and mid-quality restaurants much harder than top-tier restaurants. “Our point estimates suggest that a $1 increase in the minimum wage leads to an approximate 14 percent increase in the likelihood of exit for the median 3.5-star restaurant but the impact falls to zero for five-star restaurants.”

Not quite total vindication, but close enough for government work.

The only difference is that AI author thinks that this is an accident and thinks that min-wage advocates would think it a bug, while I think it is deliberate and by design, that the policy architects both knew this and wanted this, and they think it a feature.





This Will Be On the Test

17 01 2017

Your Blogmeister’s Hotel Room

“The asteroid is worth $10 quintillion.”

The race to the gold star stars…NOW.  Considering what this rock is made of, “race to the gold star” is apropos.

And this is not an open-book test, so no cheating by reading the article or my Minds page.





We Were Told There Would Be No Math

31 07 2016

Seattle

Deceptive headline.

Because Seattle’s min-wage isn’t even up to $15 yet.  It’s being stair-stepped up to $15 over time.  In April 2015, it was raised to $10 or $11, depending, and this research proving that the min-wage increase hasn’t negatively affected employment rates was done based on that particular wage floor, even though it saw another stair-step increase on January 1.  It won’t be for another four and a half years until it reaches its final destination of $15.

The reason it hasn’t been deleterious is that Seattle is a fairly expensive city, and $10 or $11 isn’t much anyway.  As you can read, the average or median (it is not stated which) hourly wage for a “low wage worker” before the first stair step was $9.96, so it’s not as if the new floor was much above the equilibrium.

Another issue is that the study depends on the researchers comparing the real Seattle to a “synthetic Seattle” based on nearby suburban Seattle zip codes that had comparable characteristics.  My brain is a bit frozen at the minute, but if I let it unfreeze and gave it some thought, I could come up with some methodological problems with that.

Or, maybe we’ll find out that this research was purely political pseudo-science meant to peddle an ulterior agenda.





In Other AFFH News

12 07 2016

USA

Accompanies this.

They should know that, to the urban politicians pushing a higher minimum wage, this is a feature, not a bug.

 





German Moral Miracle

14 06 2016

Berlin

German government 10-year bonds are in negative rate territory.

You mean to tell me all those racists and xenophobes in the bond market don’t think that all those Syrians and others that the Merkel government is importing will have made the German economy a roaring dynamo by 2026?  I don’t get it, they told us they were all engineers and geniuses.





Illiquid

6 06 2016

Palo Alto, California

Bloomberg profiles the fall of Theranos and Elizabeth Holmes suddenly going from a multibillionaire to flat broke, at least on paper.

From there, you’ll read something I’ve told you here in this space through the years:  Much of the wealth of the extremely rich is illusory because of its liquidity and therefore its volatility.  Mark Zuckerberg only has $51 billion because he has x number of shares of Facebook multiplied by the current per-share market price of Facebook stock.  If people quit being that fond of FB stock, then Mark Zuckerberg isn’t worth $51 billion anymore.  This is why Zuck is so thrown in to the cheap labor immigration agenda, because he needs his labor expenses at FB to stay as low as possible in order to impress the investors and the mutual funds executives, to keep FB’s stock value high.

The problem with Elizabeth Holmes is just as you read in the link to Steve Sailer’s article about her and her company:  Too many important men drank the SJW “we need a uterus in SV” kool-aid, and that created a bubble around her which was bound to pop sooner or later.  And let’s not even talk about how Michael Bloomberg got to be worth $45 billion.

But then the article ends with more normal people, and ends like this:

There’s a lesson here for normal people. The one highly illiquid asset that many middle-class people pour a huge percent of their wealth into is their house. Houses are time-consuming and expensive to sell, and if you borrow against your house you’ll have to pay interest on the loan. So houses are illiquid. This implies that many middle-class homeowners are very under-diversified because they have so much of their personal wealth tied up in residential real estate.

In other words, your house is a little bit like Elizabeth Holmes’ stock in her own company. On paper it might be worth a lot, and much of that does reflect real value. But if your local housing market crashes, your net worth is in big trouble. I think more people should consider that before making the decision to buy instead of rent.

My bet is that the author of this article and perhaps a few sympathetic-to-“normal people” editors at Bloomberg are trying to dog whistle to “normal people” not to tie too much up in an owned house, because the Federal government is about to cram jam some AFFH apartment complexes full of black ghetto formerly urban Section 8/AFFH clients in your subdivision.