Economics @ ITT

Conspicuous Consumption: A(nother) Cautionary Tale

Posted in economics, environment by ittecon on January 27, 2014

Unfettered capitalism is a road to extinction, and, sadly, not just a metaphor.

At first the frenetic pace of the killing didn’t matter: there were so many seals.  On one island alone, Amasa Delano estimated, there were “two to three millions of them” when New Englanders first arrived to make “a business of killing seals.”“If many of them were killed in a night,” wrote one observer, “they would not be missed in the morning.”  It did indeed seem as if you could kill every one in sight one day, then start afresh the next.  Within just a few years, though, Amasa and his fellow sealers had taken so many seal skins to China that Canton’s warehouses couldn’t hold them.  They began to pile up on the docks, rotting in the rain, and their market price crashed.

To make up the margin, sealers further accelerated the pace of the killing — until there was nothing left to kill.  In this way, oversupply and extinction went hand in hand.  In the process, cooperation among sealers gave way to bloody battles over thinning rookeries.  Previously, it only took a few weeks and a handful of men to fill a ship’s hold with skins.  As those rookeries began to disappear, however, more and more men were needed to find and kill the required number of seals and they were often left on desolate islands for two- or three-year stretches, living alone in miserable huts in dreary weather, wondering if their ships were ever going to return for them.

“On island after island, coast after coast,” one historian wrote, “the seals had been destroyed to the last available pup, on the supposition that if sealer Tom did not kill every seal in sight, sealer Dick or sealer Harry would not be so squeamish.”  By 1804, on the very island where Amasa estimated that there had been millions of seals, there were more sailors than prey.  Two years later, there were no seals at all.

via Noam Chomsky is right: It’s the so-called serious who devastate the planet and cause the wars – Salon.com.

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We’re Addicted to Economic Growth and It Will Be the Death of Us

Posted in economics by ittecon on October 7, 2013

I think the American people right now have been so focused, and will continue to be focused on our economy and jobs and growth, that if the message is somehow were going to ignore jobs and growth simply to address climate change, I don’t think anybody is going to go for that. I wont go for that.

via Were Addicted to Economic Growth and It Will Be the Death of Us | Alternet.

California car dealers go crying to DMV about Tesla Motors’ website

Posted in economics, Regulation by ittecon on September 26, 2013

Auto dealers have been dealing with disruption just about as well as any other legacy industry has. Instead of attempting to compete, dealers have chosen to respond to Tesla’s refusal to cut them in on the middleman action by throwing up as many regulatory roadblocks as possible. Sadly, this antagonistic attitude toward both their competition and the car-buying public somehow makes sense to them, and they seem very willing to bury both the upstart and their last remaining shreds of goodwill at the same time.

California car dealers go crying to DMV about Tesla Motors’ website | The Raw Story.

Somebody Stole 7 Milliseconds From the Fed

Posted in economics by ittecon on September 25, 2013

Last Wednesday, the Fed announced that it would not be tapering its bond buying program. This news was released at precisely 2 pm in Washington “as measured by the national atomic clock.” It takes 7 milliseconds for this information to get to Chicago. However, several huge orders that were based on the Feds decision were placed on Chicago exchanges 2-3 milliseconds after 2 pm. How did this happen?

via Somebody Stole 7 Milliseconds From the Federal Reserve | Mother Jones.

Crack Addicts Make Surprisingly Rational Decisions

Posted in economics by ittecon on September 18, 2013

And now for something completely different. File this under Economics of Crime or The Marketing of Poor Social Policy.

“There is a belief, for example, that crack cocaine is so addictive it only took one hit to get hooked, and that it is impossible to use heroin without becoming addicted,” he said. “There was another belief that methamphetamine users are cognitively impaired. All of these are myths that have have been perpetuated primarily by law enforcement, and law enforcement deals with a limited, select group of people—people who are, in many cases, behaving badly.”

Hart’s work to understand addiction and addicts tackles common misconceptions about several forms of drug addiction and addicts. He conducted similar studies around methamphetamine addicts in the past, as the Times article points out, and “found that when he raised the alternative reward to $20, every single addict, of meth and crack alike, chose the cash. They knew they wouldn’t receive it until the experiment ended weeks later, but they were still willing to pass up an immediate high.”

via Crack Addicts Make Surprisingly Rational Decisions, Fascinating Study Reveals | Alternet.

Fabulous Fab from Goldman Sachs guilty of $1 billion fraud

Posted in economics by ittecon on August 2, 2013

Let’s keep this going and apply the death penalty to these criminal corporations.

A New York jury has found former Goldman Sachs trader Fabrice Tourre liable for fraud in a complex mortgage deal that cost investors $1 billion.

via Fabulous Fab from Goldman Sachs guilty of $1 billion fraud | Eideard.

The Revolving Door of Wall Street

Posted in economics by ittecon on July 24, 2013

When he left his role as Wall Street’s top federal enforcer, Robert S. Khuzami began a long courtship with a who’s who of the legal world.

The calls rolled in from financial giants like Visa and Bridgewater, and from white-shoe law firms, like WilmerHale. Some offered outsize paydays, others promised an office not only in New York but also in Washington, where his family lives. They all wanted the benefit of his experience as a terrorism prosecutor and enforcement chief at the Securities and Exchange Commission.

Six months later, lawyers briefed on the matter say, Mr. Khuzami has accepted a job that pays more than $5 million a year at Kirkland & Ellis, one of the nation’s biggest corporate law firms. In doing so, he is following the quintessential Washington script: an influential government insider becoming a paid advocate for industries he once policed.

via A Legal Bane of Wall Street Switches Sides – NYTimes.com.

Why Should Taxpayers Give Big Banks $83 Billion a Year?

Posted in economics by ittecon on June 21, 2013

The top five banks—JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc.—account for $64 billion of the total [US government tax] subsidy [of $83 billion], an amount roughly equal to their typical annual profits see tables for data on individual banks. In other words, the banks occupying the commanding heights of the U.S. financial industry—with almost $9 trillion in assets, more than half the size of the U.S. economy—would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

via Why Should Taxpayers Give Big Banks $83 Billion a Year? – Bloomberg.

Beware of Economic Nonsense Trotted Out by Profit-Seeking Corporations

Posted in economics by ittecon on May 29, 2013

Consumer benefits may sometimes exceed such costs. But, as we’ve painfully learned over the years (the Wall Street meltdown, the BP oil spill in the Gulf, consumer injuries and deaths from unsafe products, worker injuries and deaths from unsafe working conditions, climate change brought on by carbon dioxide emissions, and, yes, manipulation of the tax laws – need I go on?), the social costs may also exceed consumer benefits.

via Beware of Economic Nonsense Trotted Out by Profit-Seeking Corporations and Their Stooges | Alternet.

We’re living in an Ayn Rand economy

Posted in economics, Taxation by ittecon on May 18, 2013

Ayn Rand’s philosophy suggests that average working people are “takers.” In reality, those in the best position to make money take all they can get, with no scruples about their working-class victims, because taking, in the minds of the rich, serves as a model for success. The strategy involves tax avoidance, in numerous forms.

via We’re living in an Ayn Rand economy – Salon.com.