Links 12 November 2019

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Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Latest posts by Unconventional Economist (see all)

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  1. Wage theft isn’t one of the crimes most prosecutors and politicians refer to when they talk about getting “tough on crime,” but it represents a massive chunk of all theft committed in the U.S. A 2017 study by the Economic Policy Institute (EPI) found that in the ten most populous states, an estimated 2.4 million people lose a combined $8 billion in income every year to theft by their employers. That’s nearly half as much as all other property theft combined last year—$16.4 billion according to the FBI. And again, EPI’s findings are only for ten states. According to the institute, the typical worker victimized by minimum-wage violations is underpaid by $64 per week, totaling $3,300 per year. If its figures are representative of a national phenomenon, then EPI estimates that the yearly total for American wage theft is closer to $15 billion.

    https://www.gq.com/story/wage-theft

    But investors and the market love it – !!!!!!

      • There is nothing – lucid – about whats been going on under neoliberalism let alone its historical roots. Having to parse chapter and verse ad-hoc assemblage of antiquarian musings used to flesh out a tilted ideological narrative, which then is used to establish a framework of acceptable debate of all things Human, then claim property rights of it in perpetuity does not condense in to reader friendly or simplistic blog posts. Reducing complexity to abstraction is the hallmark of the mainstream economist, Grandin like production facilities insure this outcome and vindicated by booby prizes and Milgram treatment by the MSM E.g. always love it when a MSM talking head evoke the term “economists said”.

        When that happens to me I always ask which school …. the looks I get … shezzz … heretic is the gaze I get …

    • when a teenager steals his second chocolate bar from a shop he gets prison time
      when a shop owners steals 50 chocolate bars every week, for years from his mother he doesn’t get any prison time even if he does that to thousands of employees over years

      We’re all equal before the law, just laws are not equal

  2. Thailand rice exporters back ban on three toxic chemicals – Bangkok Post. I heard a farmer say recently that if glyphosate (RoundUp) is banned, then food production will decline 50%.

    • Interested PartyMEMBER

      “I heard a farmer say recently that if glyphosate (RoundUp) is banned, then food production will decline 50%.”
      His food production maybe. Plenty of evidence that things grow without poisons.

      I reckon he’s talking his own book.

        • Interested PartyMEMBER

          Sure, no till does do that. You don’t require poison to do that though. It’s embedded in the process for convenience/profitability sake only.

          • I think there may be another use here that is relevant. Gly and paraquat are used as “dessicators” on crops to hasten seed ripening and therefore harvest – this is the time that residues could enter grain.

          • Interested PartyMEMBER

            yeah…that’s the convenience angle I mentioned above.
            Best not look at how many ag products employ this technique.

            Go around them….just buy organic. We do.

          • Be very careful of organic wheat products because mycotoxins – would not buy them on this account.

          • Interested PartyMEMBER

            Aware of them…..also aware of fear-mongering from big ag and big chem.
            It comes down to this for us…..if something like that takes us out…then we died with our ethics intact rather than selling out to the toxic profiteers….with their create the problem/disease—-supply the solution/medication business model.

            Looked at through that lens….we are nothing but cattle to them. I refuse to live in that pen.

            edit to add….
            There is just as much, if not more, risk from water pH and heavy metal mobilisation.

  3. Lebanese Banks in Panic Mode – Clients With Guns Demanding Money Withdrawal

    And that is why I don’t trust having my wealth tied to a bank account.

  4. Apparently RBA believes in fairytales and Economic models
    https://www.smh.com.au/business/markets/weaker-dollar-prescribed-as-tonic-for-sluggish-economy-20191111-p539j5.html
    SO this new wonderful Martin model predicts that simply lowering the Aussie Dollar will make the world a wonderful place. All kinds of magic will occur if the Aussie just falls by 5%.
    Seriously what are these guys smoking?
    Rationally if a 5% fall in the Aussie was going to produce all these wonderful Macro Economic benefits than surely the 25% we have already seen over the last couple of years would already have the Aussie economy humming along quite nicely.
    Maybe the magic happens at the Margin, maybe the model has us sitting on the verge of greatness but we just need to be pushed over the edge. Maybe if the RBA can just push us off the edge of this cliff than Australians will remember that they actually know how to fly.
    Hmmm why am I not buying this story?
    Maybe I’ve spent a little too much time playing with models like Martin and I know that the assumptions underlying this model are now false.
    Honestly What is this magic Inflation machine and why does it care about relative currency valuations?
    Is labour allocation really a direct function of Exchange rates?
    Is Global product demand in any way related to the local Aussie cost of labour?
    For me it is frankly embarrassing just how bad some of the predictions of this Martian Model (sorry Martin Model) actually are (and that coming form a guy that lives and breathes models).
    I know that the underlying theory behind Martin is heavily based on the newer Fed models and seem to draw particularly on the work of Jesús Fernández-Villaverde (https://www.nber.org/papers/w14677.pdf) with a lesser measure of our own Robert Kohn (https://econpapers.repec.org/RAS/pko171.htm)
    But what does all this mean?
    What are the underlying assumptions of this “Bayesian Inference Engine” ?
    I suspect that assumption number One is that the world is a better place when Labour is Productively deployed and therefore the true function of Capital is to be the invisible hand which organizes labour.
    Great narrative, but what if it’s not true? what if Capital availability and Capital pricing actually play no direct role in labour deployment ( or more correctly no longer play a role) ? Where does that leave us with the rest of this Model when the main assumption, on which it is built, proves to be wrong?

    • Hmmm why am I not buying this story?

      maybe instead of loudly screaming you should just buy some YANK and let them do whatever they want

      • I assume by YANK you mean this
        https://www.betashares.com.au/files/collateral/pds/YANK-pds.pdf
        I am already primarily invested in US dollar derivatives but that said, I don’t believe the US is immune to the fundamental changes that are happening in the Labour/Capital balance equation, however the US is definitely trailing Australia in this regard.
        In a strange sort of way Australia is the canary in the coal mine. Our economy is at least 20 years ahead of the US in the shift away from Industrial and towards Service Economies.
        This means that the problems with this new system of Aussie human capital deployment wont be solved by peeking over the neighbours fence to see what’s working for him. Basically we’re on our own, now don’t get me wrong we need to be using tools like DSGE to better understand what’s really happening.
        Like : Why is Labour being deployed where it is (and when it is) if it is not the invisible hand of capital which is guiding “efficient” labour deployment? if not the labour/capital balance than what is the driving force?
        If this economic fundamental premise is dead than we’ve got a lot more work to do than just tweaking someone else’s Econometirc model …we’re back trying to understand why our collective Labour is deployed at all….why is the individual selling his labour and more importantly why is the society buying this labour?