New Scientist reports on two studies released last week that seem to indicate that the real problem in human population isn't really overpopulation and overuse of the world's resources- but rather mere politics. The two studies, commissioned during last year's incredible world wide inflation in food prices, show that certain areas of the world are extremely underdeveloped.
The recent increases in health care costs look a lot like what happens in a market when an oligarchy or monopoly raises barriers of entry to squeeze out competition. The reason for this may be accidental- they might all be using the best scientific statistics possible to set prices, thus making all their prices close to the same. But the end result is the same- increased cost to consumer due to a lack of choice, resulting in incredible profits being returned to stockholders, who then reward C-level executives with outlandish compensation packages.
So far, the reasoning is sound. But the solution seems to be novel: Add a low-cost/low-value public option to cover those who can't get insurance otherwise or for whom the low-cost option is sufficient, to add competition to the marketplace.
The BLS reports today that January lost 598,000 jobs in the United States, pushing U3 to 7.6%. This isn't a very scary figure, which is why they report it in the news. U6 is much scarier- 13.9%. But I contend that neither of these tell the real story from a "the economy should provide first level Maslow needs to the people" point of view.
Instead, I propose that the real story is answered by the question, what is the ratio of dependents (non-labor people) to workers (people with jobs). This includes, of course, sole-income investors (those who rely on dividends from investment as their sole source of income), stay-at-home parents, the disabled and sick, and children all as dependents. It also includes all the unemployed as dependents, if you don't have income from a job then you're living off of the income of other people in one form or another for the most part.
Investors are so nervous they're willing to accept the same return from government debt that they'd get from burying money in a coffee can — zero.
Hmm, suddenly apparently the financial equivalent of a mattress doesn't seem so bad; in fact, in trading at times T-bills hit a slightly negative rate.
A bit of micro economic data I'm just reporting on from my (Catholic) Knights of Columbus Men's Club meeting last night. I find it pretty telling that the recession is beginning to hit main street.
Our St. Vincent De Paul food bank served 256 families in July, 358 families in August, 425 families in September, 468 families in October, and 458 families in November. In the first 3 days of December, we served 100 families already.
Robert Rubin, Anne Mulcahy, Richard Parsons, William Daley, Laura Tyson, Penny Pritzker, Warrent Buffet, William Donaldson, Rahm Emanuel, and James Johnson have all been picked for Obama's cabinet.
This is going to be a bit short on math. I haven't taken the time to generate a lot of graphs, and this is my own idea, no economist of note is backing me up on this. But this still makes sense three days after I wrote it, so I'm posting it to see if it makes sense to anybody else.
This will be a long blog post, perhaps more of a mini-pamphlet or book. As I write this, the United States, indeed the world, stands at the brink of the Depression of 2008. Governments around the world are activating mechanisms invented 80 years ago in an effort to halt the slide. Banks are failing, depositor’s insurance is being activated, huge buyouts are happening every single day.
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