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Showing posts from December, 2018

YouTube is (Economically) Illiterate

In yet another hypnotic  YouTube video , a channel with more than 350,000 subscribers parrots nonsense about the nature of money. In the following paragraphs, I will dispel some of these popular myths by adding clarity and historical context for improved understanding.  For starters, we will focus on the reported symbiosis between China and the United States. In characterizing this international dynamic, the speaker commits a common accounting mistake: "We send money to China in exchange for goods and services, but get very little back." Indeed, the United States' trade deficit with China means the precise opposite of this.  It doesn't even require an economist to point this out, as the ubiquity of  Made in China nearly speaks for itself, rooted in China's status as the world's greatest exporter to the United States.   In its most recent report on balance of trade, the month of October, the United States even posted its highest monthly trade defici

The Economics of Vintage Luxury: The Wristwatch Phenomenon

“After the electric light goes into general use, none but the extravagant will burn tallow candles.” This prophetic proclamation by American inventor and businessman Thomas Edison, printed by the New York Herald on January 4, 1880, aptly characterizes the modern market for mechanical and automatic watches, which serve today as extravagant showcases of wealth, or pretense thereof. Just as with the tallow candles of old, the mechanical watch returns its wearer to a treasured past, full of sacred ideals and aspirational grandeur. A great many, however, confuse the end retail price for an expression of quality, rather than one reflective of the voracious demand for recapturing the former. This is the very subject of this writing, to disentangle fact from fiction, and to expose the real causes of the costs incurred. Despite the illogical rumblings of the luxury watch community, the retail price is dictated not by intrinsic or utility value, nor exclusively by the cost of producti

The Total War on Poverty

In the history of combat, total war has been defined as the unrestricted use of weaponry, territory and combatants to achieve a political end, with a complete disregard for existing law. The War on Poverty, officially introduced in the United States by then-President Lyndon B. Johnson in his 1964 State of the Union address, takes the same appearance, deviating only by tools, actors and optics. In total, the two forms of combat tend to exclusively serve special interests at grave economic and personal cost borne by others who bear virtually no influence over their operation, who stand to derive little to no benefit. As Prussian general and military theorist Carl von Clausewitz promulgated, "War is the continuation of politics with other means." The War on Poverty is scarcely any different, but its effects are far more insidious. The mission to "end poverty" is always a false face for bureaucratic aggrandizement. The only way to produce this desirable end i