Comment on a post about comparative advantage in the U.S.

"But when it comes to basic economics, Sanders is totally out to lunch, which I assume he also believes should be free... Would a President Sanders demand that the National Zoo's pandas be returned to China so that two American bears can get those jobs?"

Video: https://www.facebook.com/Reason.Magazine/videos/10153106925809117/?fref=nf

My comment:

I'll try to ignore the subjective critics of this video such as those statements that include the word "embarrassing".

What I find kind of disturbing among many individuals who do not have a proper and deeper understanding of economics is that they believe that the only kind of theories that explain the market are those popularized by the marginalists (A.K.A. the neo-liberal school of thought). As a consequence, in day-to-day discussions they seem to ignore or avoid any other argument that serves as a critic to this school of thought. In the academia, however, there is no consensus of how markets really work. I want to think that this fact is due to the simplicity of marginalistic theories (of course, this only applies if Math is ignore).

The theory being discussed here is the most famous theory of David Ricardo although it's not his most important contribution to the understanding of markets: comparative advantage. This theory relies solely on the increasing amount of goods available due to specialization and availability of resources in a certain market but ignores sustainability and other long-run characteristics.

This theory was applied in Latin America about 100 years ago and brought nothing but stagnation. The idea was the we, latin americans, should be contributing with natural resources to the international markets and avoid industrialization because developed countries would be in charge of manufacture. Although I present this summary with negative connotations, it was a widely accepted belief as it is today with this North American case. 

Thank God my pariente Prebisch got rid of it, and we got the opportunity to develop ourselves.

In North America, this political economy ideology (another branch of economics that most people ignore) goes around consumer sovereignty and "a nation who offers services is wealthy". Although it is true that manufactured goods can find cheaper prices if produced in China, it is also true that this behavior generates negative externalities. Do you deny that part of the inequality, shrinking middle class, price of education, and wage stagnation are not some of the negative externalities of importing from China? 

Some counter-arguments will be that the price of life is decreasing and that we have cheaper goods available. However, the material characteristics of the U.S. have been increasing more rapidly than the decrease in the cost of life and the availability of cheaper goods. That last one I found it the most ridiculous (subjective here) because most of those cheaper goods are of lower quality and their fabrication destroys the environment. 

However, the most interesting counter argument is services. Here's where the knowledge of economics is tested. And this one comes from microeconomics, the only branch of economics that seems to be known. Do most defenders of this ideology know the difference between an oligopolistic market and a market of competition besides the number of players? To understand this difference, we need to analyze the way services are produced. In short, they're more easily produce than manufacture because while manufacture requires an extensive combination of fixed capital, most new services only require an office. 

In other words, it results more easily to enter to the service sector than to the manufacture sector being the service sector more competitive than manufacture. Empiracal economics demonstrates that less competitive sectors offer higher wages. (This is not a case for monopolies, to all those who are thinking in straw men). Also, the pure structure of manufacture offer more jobs. Of course, for business owners the first (sectors) is more defended than the second. We gotta include venture capitalist, the stock markets and etcetera that also are important.

About Karl Marx

http://www.cnn.com/2011/10/29/opinion/gabriel-karl-marx/index.html?eref=mrss_igoogle_cnn

I was reading this piece and remembered your attitude (which represents most libertarian's) towards Karl Marx himself, his ideology and the political discourse around his ideas. Of course, this attitude is mostly rhetorical fallacies used to increase supporters. 

My introduction to marxism has been smoothly but gratifying. It formally started in the U.S. although I had the chance to meet his ideas a few years ago. The best lessons I've had to understand this world come from him. And, despite the violent misconceptions about it, Marxism is not solely upheavals; marxist theory is meant to be an attempt to understand the invisible constraints and idiosyncrasies of the current phase of humanity. It's a constant change towards justice through knowledge, debate and understanding.

La guía de las mejores micheladas de Ayotlán: la más fría, la más exótica y la más elemental

       Amo las micheladas. Cerveza, Clamato, salsa de soya, limón, sal y chile —una fiesta mexicana en la boca. Hay quienes gustan de agregar otros ingredientes, pero a mi me gusta lo simple. Contrario a la cerveza, se ha vuelto tradición servir una michelada en un vaso desechable con un popote clavado en el centro de una tapa de plástico para no derramarla mientras manejas —la irresponsabilidad mexicana, le dicen.

Su sencilla preparación y sabor la hacen la bebida más rápida y sabrosa. Las micheladas van desde medio litro (Tall en Starbucks) hasta colosales vasos de litro y medio (Venti en Starbucks). A pesar de esto, la preparación de una michelada puede ser tan solo tres minutos. Y es que no se requiere un curso extensivo para prepararla. No es un coctel elegante cuyo sabor cambia si la bebida es agitada en lugar de batida. Tampoco es un mojito cuya presentación e ingredientes son importantes. Para hacer una michelada solo es necesario un par de cervezas e ingredientes que se encuentran en cualquier cocina.

Esto, sin embargo, no quiere decir que una buena michelada sea una tarea que no requiera delicadeza. La michelada de un litro comúnmente lleva dos cervezas de vidrio —las normales de 350 mililitros cada una. Solo la cerveza lleva más de la mitad del espacio del vaso. Exactamente quedan 300 mililitros para el resto de los ingredientes. En este pequeño espacio está la clave de una buena michelada. Poco menos Clamato de lo adecuado y la michelada sabe únicamente a cerveza, poco Clamato de más y pierde su sabor de igual manera. La michelada necesita estar en balance con los ingredientes para que, como en los vinos, cuando la bebida pase la boca, la lengua pueda reconocer la mezcla de este popurrí mexicano.

Entonces sí es importante quien hace una michelada. A pesar de ser una rutina simple, quienes preparan micheladas tienen que hacerlo bien.

He tenido la fortuna de probar todas las micheladas en Ayotlán con otras dos personas. Así que, entre dos camaradas y yo, les presentamos lo que consideramos las mejores micheladas de Ayotlán. 

Es importante tomar en cuenta que ésta lista no lleva un orden particular y que no hubo consenso para elegir la mejor michelada —al menos por ahora.

El Aguaje (Centro)

Micheladas El Aguaje

Atravesando una cortina de carrizos de un pequeño local decorado al puro estilo revolucionario que canta ¡Viva México!, ¡Viva Villa!, se encuentra una de las mejores micheladas de Ayotlán. A pesar de lo cautivador del establecimiento, El Aguaje no es exactamente para románticos, sino para quienes apetecen de tomarse una cerveza con amigos. Quienes atienden apapchan a los comensales con gustitos mexicanos típicos que van desde duros con chile hasta una rica fruta picada.

Lo que separa a las micheladas de El Aguaje del resto en Ayotlán es su frescura. A pesar de atender a una extensa clientela, quienes preparan las

micheladas conocen bien lo que es “una cerveza bien fría.” Todos los ingredientes, desde el Clamato hasta las botellas de cerveza, son guardadas previamente en el refrigerado para mantener la temperatura de la michelada fría. Además, los limones son de la más alta calidad michoacana: grandes y jugosos. En corto, El Aguaje ofrece las micheladas más frías porque saben como mantener los ingredientes frescos.

Como lo mencione antes, una michelada es un balance. En la michelada del aguaje no hay exceso ni en el jugo de tomate, ni en el resto de los ingredientes que siempre están frescos. Por esta razón, la michelada de El Aguaje es la más fría. 

Si quieres ver una foto panorámica de aquí, presiona o copia el siguiente link:
https://plus.google.com/photos/108987436298286343510/albums/6049789374717840081/6191088556721802258?pid=6191088556721802258&oid=108987436298286343510

Este lugar se encuentra en:

Hidalgo eje Oriente 154, Centro. El segundo local del edificio que se encuentra a contra esquina de la farmacia en la intersección de la avenida Hidalgo y la calle Morelos.

Licorería “La Curvita”

Micheladas Licorería "La Curvita"

Nada relaja más que estar en tu propio hogar. Licorería “La Curvita” es como la segunda casa de muchos. Es lo más cercano a una cantina tradicional en México pues aquí los rostros siempre son los mismas. Aunque es un sitio más frecuentado por hombres que por mujeres, en la Licorería “La Curvita” todos son felices un Sábado de quincena por la tarde tomando una michelada. Un lugar de compadrazgo pues si no somos todos cuñados, primos o amigos en Ayotlán, podemos tener la certeza que somos compadres.

Aquí preparan la michelada ¡bale berga la bida!. En corto, ésta michelada lleva todo lo que lleva una común, pero con un toque chilango. Ya sean camarones, fruta o chamoy —o una combinación de todo— en el tope, quienes atienden aquí son pioneros en estas practicas. Además, cada michelada sustituye el popote de plástico por un palito de tamarindo haciéndolas aun más sabrosas. Quizá no inventaron este tipo de micheladas, pero estoy seguro que estuvieron ahí cuando pasó. 

Como ya resalté anteriormente, las mejores micheladas son un balance. A pesar de que en “La Curvita” se la juega con los tamaños y las decoraciones, se respetan los ingredientes: 70% cerveza, 30% armonía. No tomaría una bebida mala por más llamativa que parezca, pero a ésta michelada le doy el premio de la más exotica.

Si quieres ver una foto panorámica de aquí, presiona o copia el siguiente link:
https://plus.google.com/photos/108987436298286343510/albums/6049789374717840081/6190355816257781250?pid=6190355816257781250&oid=108987436298286343510

Este lugar se encuentra en:

Avenida González Gallo, 222. Como su nombre lo dice, justamente en la curvita de la carretera yendo a Degollado. En frente de la Vesti-plaza. “No hay pierde.”

El Guacamayo.

Micheladas El Guacamayo

La última de las mejores micheladas de Ayotlán se encuentra en un establecimiento poco conocido por los Ayenses, pero aplaudido por sus clientes: El Guacamayo. Este lugar le abre sus puertas a todos quienes, aburridos del trabajo, van ahí para romper la monotonía. El Guacamayo tiene un estilo bonachón, como para motociclistas y gente que goza de lo campechano. Sobran los lugares para sentarse si se sabe buscar —ya sea en “el sillón que siempre ha estado ahí” o simplemente recargarse en la barra y contar unos buenos chistes es aceptable. Definitivamente uno de los puestos más amenos para tomar una michelada.

La michelada de El Guacamayo es como un clásico moderno. Es una muestra de simplicidad para gustos culposos. También es experiencia y detalle al mismo tiempo que exquisites. Servida en un vaso desechable como ya es tradición, ésta michelada no le pide nada a ninguna de las pasadas —es la michelada como Dios la trajo al mundo. “Si tu intención es describir la verdad, hazlo con sencillez y la elegancia déjasela al sastre”.

Siendo la amalgama perfecta de sabores, la michelada de El Guacamayo es el sitio perfecto para empezar este recorrido que también es gastronómico: la más elemental. 

Si quieres ver una foto panorámica de aquí, presiona o copia el siguiente link:
https://plus.google.com/photos/108987436298286343510/albums/6049789374717840081/6190043964205429298?pid=6190043964205429298&oid=108987436298286343510

Este lugar se encuentra en:

Avenida Gonzáles Gallo, SN. Por la carretera que va a Degollado en la salida del pueblo. Justo donde se encuentra la llantera con el mismo nombre. 

Mapa para encontrar el lugar:

#FeelTheBern what's up with socialism and the american way?

This post presents a personal opinion about the environment around Sen. Bernie Sanders and his strife to win the electoral fight.

     Since I live in the U.S., I've perceived a common denominator of the U.S. society: ignorance of what does not produce direct utility.

     Despite that most americans are very hard workers and entrepreneurs, they often oversight the value of education and details. For instance, in international negotiation, american entrepreneurs are considered very paramedic. They like closing deals as soon as possible. Most americans consider as waste of time getting to know the culture of the people they make business with whenever they are the strongest piece of the deal; they simply want to see statistics with higher and higher peaks. On the other hand, american customers love fast tracks, fast past, fast food and anything that starts with the word fast. The fast culture is so rooted in the american life because "time is money".

     They like their ways. In the most conservative spectrum of the american society lays a strong sense of nationalism: "the american way". Most americans may easily turn down any foreign influence to a bucket list of countries to visit. How can they be blamed if they live in the best nation on Earth?

      As a consequence of all this patriotism, anything that does not resemble to their identity is unwanted. Taking driving as example, I once invited a colleague friend of mine to my house to work, and after a few hours, I asked him if he felt like going for some pizza to a place less than quarter of a mile from my home. His answer after I told him that I rather walk than drive was"it's not the way we do things in this country"; he was serious. Another more vile example is Islam. It's common to see astonishment on americans when they see the news talking about muslim men who marry more than one woman. Their family model is entrenched in their set of beliefs that even the gay marriage movement struggled to succeed in the U.S.

     And this common pattern appears in every aspect of their lives such as politics and economics. Despite that most american voters see themselves as liberals and progressives, words like socialism are unfairly marked as "anti-american", so the benefits of an active government are often neglected.

     Among the most conservative and lesser conservative media, socialism is used as an adjective for rhetoric purposes. Obama is considered a socialist, so is obamacare. Hillary Clinton is a socialist for supporting reforms to improve education. Taxes are socialist; regulations are socialist; any kind of government intervention is socialism. In other words, anything that differs from the conservative conception that a rightist politician may support is rapidly tag as socialism to unbalance the debate.

     As foreign influences, americans separate themselves from the word socialism because they believe that the american dream was achieved individually instead of collectively.

     However, most americans don't know that the golden age of the U.S. would be considered as socialism on today's standards. The age between the end of the WWII and the implementation of the economic reforms commonly known as Reaganomics is characterized for a strong government intervention. The U.S. government based on a then-prominent economic doctrine, keynesianism, regulated many aspects of the markets and offered several social services to its citizens. During this period of time, wages raised and economic social mobility was higher than now while unemployment was low.

     This trend of economic welfare exists among other countries and periods of time represented by strong government intervention. Some Latin American governments took a similar path like their american counterparts that happened to be during the same period of time. Latin American governments enacted several economic reforms with the only purpose of promoting the industrialization of their countries. The end result: a huge improvement of the socio-economic conditions of their citizens. On a more current example, the countries that have the highest standards of living in terms of education and social mobility have also a strong government: Denmark, Finland and Sweden for instance.

     Although many americans might not want to accept that this positive improvement what's now known as socialism, they really would like to live in this period.

    Bernie Sanders offers this period back for the americans. He's seeking a 180 degrees change in political economics. He considers himself a Scandinavian socialist. He also knows that the influence of big businesses have favored the rich over the poor, and it has resulted in the decline of the living conditions of the americans despite the grow that GDP has had in the last couple of decades. In essence, Sanders offers a change from a deregulated country to a one that promotes government intervention in similar ways to the golden age.

     However, Sanders' main barrier is cultural rather than political. Americans don't understand what socialism really is because their culture dictates that socialism is anti-american. But, if americans want a prosperous age again, they have look beyond the common knowledge.


References:

[1]. http://economics.csusb.edu/studentsAlumni/Coyote%20Economist%20Spring%202015.pdf

Sí, así es como realmente se vería el cielo de noche si no hubiera contaminación de luz artificial. Es sorprendente.

Rio de Janeiro sin contaminación de luz artificial. Neronexus. Imgur.com [1]

Cuando era niño miraba las estrellas con la misma admiración que lo hago ahora. Desde la azotea de mi casa, buscaba la estrella polar y con suerte me encontraba con uno que otro planeta. Hace 20 años no había tantas, pero eran más que las que puedo contar hoy en día.

De la misma manera que lo hacen a mi, las estrellas han desatado la imaginación humana. Religiones, mitos, leyendas y anhelos vienen de mirar arriba de noche. El cinturón de orion, por ejemplo, ¿sabías que fueron la inspiración para los tres reyes magos? Ese mismo manto de estrellas se ve desde todas partes del mundo. La tierra gira alrededor del sol y sobre su eje. La percepción de las constelaciones y el sol cuentan historias también. No es un misterio que muchas leyendas alrededor del mundo sean similares.

Platon, Aristoteles, Isaac Newton. Todos ellos tuvieron la oportunidad de mirar a las estrellas y desafiar lo establecido. En donde domina la razón, el poder del hombre tiembla.

Como historia humana, las estrellas fueron nuestra primer admiración y hoy muy pocos tienen la dicha de verlas como hace solo 50 años.

Le preguntaba a mis papás como era la noche cuando ellos eran niños: majestuosa. "Se iba la luz por la noche, y mi mamá (mi abuela) nos mandaba a comprar petróleo para las lamparas. Entonces veíamos tantas estrellas que ni podíamos contar."

Esta situación ha cambiado. Hoy en día, desde el mismo lugar donde mi mamá veía una inmensidad iluminada naturalmente, hoy puedo contar estrellas en medio de un manto negro.

Como humanos, hemos hecho grandes avances morales en el cuidado del planeta y la sana convivencia. Hablamos de contaminación ambiental, protegemos los bosques y no tiramos basura para proteger los mares y a quienes lo habitan. México es de los primeros países en vías de desarrollo en comprometerse a reducir las emisiones de CO2. Hablamos del sufrimiento de los animales y nos abstenemos de comer carne. Cuidamos del necesitado y buscamos la manera de establecer sociedad más justas. Hablamos de contaminación auditiva mientras embellecemos nuestras calles y parques.

Sin embargo, hay un tipo de contaminación que pasa desapercibida: contaminación de luz artificial. Este tipo de contaminación es causada por nuestra necesidad de sentirnos seguros. Por nuestros hábitos de consumo que nos llevan a crear "ciudades que nunca duermen". Nuestras comodidades y complejos nos han alejado de una belleza natural que se encargó de forjar quienes somos ahora.

Todo este tipo de iluminación nos lleva a que los cielos se tornen negros en lugar de azules e inspiradores. Calles iluminadas, edificios de colores exhorbitantes, luces neon y lamparas especialmente diseñadas para resaltar monumentos. Todo esto es hermoso, pero nos estamos negando el derecho a la noche con estrellas. Si Platon, Aristoteles e Isaac Newton soñaron y cambiaron el mundo volteando a las estrellas, entonces nos estamos negando este derecho [2].

Es entendible que la luz sea una comodidad que trae más beneficios que externalidades negativas, pero mucho del uso de la luz es desmesurado e innecesario. Por ejemplo, en ciudades grandes con rascacielos para oficinas, pisos enteros mantienen sus luces encendidas por la noche aunque no haya nadie dentro. La publicidad simplemente no tiene un bien utilitario; ¿realmente necesitamos saber donde hay un McDonalds a las 12 de la noche cuando tenemos teléfonos celulares? Incluso mucho del alumbrado publico se desperdicia en calles solitarias. Paulatinamente vamos perdiendo ésta belleza natural.

La escala de Bortle mide la cantidad de iluminación de un lugar y su efecto
en la visualización de las estrellas. [3]

El primer paso para recuperar la noche es tomar conciencia. Volver a amar las estrellas como se hizo anteriormente. Darle una oportunidad a soñar en diferentes formas de vida e historias. Es por eso que te invito a que salgas de tu casa y mires el cielo. Negro, ¿huh? ¿Por qué no sales de la ciudad y te alejas de toda esa iluminación artificial a la que estás acostumbrado? Dale una checada a este mapa que te muestra desde donde se pueden ver mejor las estrellas: https://djlorenz.github.io/astronomy/lp2006/overlay/dark.html [4].

Las estrellas están ahí, pero nosotros las hemos cubierto con un manto de iluminación excesiva. Lo que anteriormente nos hizo soñar y dar pasos adelante se nos ha sido arrebatado por prejuicios y consumo sin control. ¿Cuánta luz es necesaria para sentirnos seguros? ¿Realmente necesitamos esa luz encendida? ¿Cuánta iluminación es necesaria? Nos estamos negando el derecho a la noche con estrellas.

Referencias:
[1]. http://imgur.com/gallery/Yrb9S
[2]. Nocturne es un podcast dedicado a mostrar que es lo que pasa mientras duermas, cuando la oscuridad se roba las calles. En el episodio 7 (The Vanishing Dark), Vanessa Lowe, la productora y narradora, expone el problema de la contaminación de luz artificial en las sociedades modernas: http://www.nocturnepodcast.org/ep-7-the-vanishing-dark/
[3]. https://en.wikipedia.org/wiki/Bortle_scale
[4]. Light Pollution Atlas 2006: http://djlorenz.github.io/astronomy/lp2006/

Wages, supply and demand, and economists.

This is a thought after reading Paul Krugman's Liberal and Wages on on the Wall Street Journal:

Classical economists claim that raising minimum wages bring adverse outcomes such as unemployment and job market discrimination based solely upon an obsolete economic model known as supply a demand. 

Economic research has proven the contrary:

Artificially raising minimum wages do not bring unemployment. All the contrary, it brings more employment at the same time that forces employers to innovate and optimize their resources

According to this same conservative ideology, an increase of productivity should bring higher wages. However, the last few decades had proven the contrary again. The U.S. has experienced a huge increase of productivity while wages for workers have been stagnated. In other words, all the new wealth created by the U.S. has been going to the top. As a result, "the rich gets richer while the poor gets poorer": increasing inequality.

Rightist politicians are afraid to talk academically about this problem because they know their arguments are based only on tea-party-like dogmatism, american dream cliches and Marco Rubio arguments. In other words, their arguments are nothing more than bullshit. 

"Many economists used to think of the labor market as being pretty much like the market for anything else, with the prices of different kinds of labor — that is, wage rates — fully determined by supply and demand. So if wages for many workers have stagnated or declined, it must be because demand for their services is falling."

Reference:

[1] http://www.nytimes.com/2015/07/17/opinion/paul-krugman-liberals-and-wages.html?smid=fb-nytopinion&smtyp=cur&_r=1

Is ideology important in Economics?

The study of economics has been monopolized in the last decades. A current tradition dominates the decision-making of most rightist and leftist politicians in the U.S. and the teaching of economics. Some basic and fundamental laws steer the markets and lead them to positive outcomes. Economics claims to be a science.

I'm afraid of the latter. If economics is considered a science, there will not be debates about the validity of economic theories, and the application of these theories will be considered the only truth. This, in the same way as biology and mathematics, will lead to apply theories as tools with out considering their epistemology.

Some students of economics, and myself once, think that there should not be debate about the history of economic analysis, or that identifying each school of thought is unnecessary; "we should focus on the application instead of ideological debates". If this happens, if we do not consider ideological debates in our analysis, we may be considering mistaken conceptions about the functionality of markets.

Supply and demand is prevalent among student of economics and trained economists. It is a very simple idea that embodies almost any kind of action in a society. If there's more supply than demand, we have excess of supply then price falls. If there's more demand than supply, we have excess of demand then price raises.

On this path of thought, economists and almost everybody apply this kind of analysis to real life events. The acquisition of a new car, flirting somebody, and even hipsters devaluate fashion tendencies when "they become too mainstream": it's supply and demand, dude.

Yes, I'm simplifying. However, I've heard these commentaries among economists and muggles other professionals.

We stopped questioning our habits of thought to offer a simple question to everything. In the same way as religion, it is very comfortable to explain everything in God-terms than trying to find reliable explanations. "Have faith and markets will self-regulate." Like it happened in the 1930's.

On supply and demand terms, no ugly man would have a beautiful girlfriend. This is because ssuming ceteris paribus and that the only changing variable is beauty (the economy is study that way), there would not exist couples in which the woman is insanely beautiful (like you ;) ) and the man is close to a skinny Shrek (like me). However, the world is full of these inconsistencies that it results incorrect  to assume that beauty is the only variable to consider.

We cannot simplify as much as the study of relationships in the same way as we cannot simplify the study of economics.

In the real life, all people take personal decisions based on multiple variables and create all posible scenarios although the outcome can be different to any of those scenarios.

Let's assume that simplifying the decision-making in life is an ideology, would you make the decision of choosing a parter based solely on beauty? Then, ideology matters in personal life.

Hence, up there, where everything happens, where the big discussions take place and decisions about the future of millions are made everyday, is ideology important?

Let me share with you this video before proceeding:

Yes, I know this videos oversimplifies how Walmart operates everywhere in the U.S. and other countries. But the issue I want you to focus is the following: this video assumes that the increase on wages will lead to higher prices, not higher unemployment. Actually, multiple studies suggest that this is what really happens [1].

This assumption is different to what the neoclassical tradition suggests. Neoclassical economists claim that an artificial increase on wage (floor ceilings) will lead to a situation of unemployment. This comes from the idea of supply and demand for labor. High prices of labor will lead to less demand for labor and viceversa.

Does it make sense? Of course, we have heard that so many times that somehow it has become a habit of thought already in the same way as stopping in red.

In contrast, the keynesian tradition assumes that nominal salaries are not as important to determine employment. What matters before hiring is the expectation of entrepreneurs. If entrepreneurs believe that they're having a good year, the will hire as much employees as needed to produce what they expect they're going to sell. Entrepreneurs are good with these calculation, they may hire you to do so.

Does it make sense? Entrepreneurs doing calculations on their costs and expectation to find profit?

According to this ideology, salaries are not as important when hiring like in the neoclassical tradition. What matters is expectations to the future.

Actually, this is closer to what really happens and some people avoid this idea for considering supply and demand.

For politicians using the theoretical frame of Keynes, they can advocate for higher wages.

For politicians using the theoretical frame of the Neoclassicals, they will not advocate for higher wages.

Then, ideology matters in the study of economics. Even so, we still teach economics as it is only supply and demand. People stop questioning the validity of theories and make decisions based on these ideas because they believe they are the only truth. They even vote for politicians who accept these conceptions and avoid politicians who question!!

Of course, I'm not claiming that Keynes is correct on everything he said or that the neoclassical tradition is incorrect completely. If you assume this from my writing, then you have a serious problem comprehension. The issue is that you have to question what you're told.


Endnotes:

[1] For the sake of this discussion (ideology matters), I will simplify: Walmart is, for instance, operating already with all employees it needs. Walmart would not close a store if its production costs raises unless it is for a considerable amount.

References:


YouTube video: https://www.youtube.com/watch?v=vAcaeLmybCY

An Economics Interpretation of 3 Doors Down's Song "Duck and Run"

By far, Duck and Run is one of my favorite songs to include in every playlists I create on any streaming application. The song is somehow catching, and it is not boring. However, what I find most catching is the part that reads "I won't duck and run". Yeah! I know it is the title and the most repeated phrase. But, what is the real meaning of this phrase?

I googled "meaning of duck and run lyrics" just to find out that some people's interpretation vary a lot to what I think it represents. These interpretations come from love to friendship, from rebellion to education, and from psychology to environment. It's a metaphor, so it can have different meanings from each perspective.

I'm an economist and this is my interpretation:

I based my interpretation on individualism and collectivism.

To this world, I'm unimportant
Just because I have nothing to give.
So you call this, you're free country.
Tell me why it cost so much to live.

Maybe the part that leads you to think  that it is about rebellion is "So you call this, you're free country. Tell me why it cost so much to live." Of course, I'm not denying that's true. But I find it to specific to try to interpret. I'll focus on he first two lines then.

Who's "she" and why "she's" unimportant? "she's somebody who has nothing to give. These lines refer to the fact that the more you have to spend, the more value you have as a person. This is something that has been institutionalized (Veblen's definition of institution, please) in this society. "She" wants to be heard? Yes, "she" does. But, "she" finds this difficult because just those with the economic power to be heard are heard.

This song starts to be understood as a critic to the dominant ideology of individualism in the U.S.

All my work and endless measures,
never seem to get me very far:
Walk a mile just to move an inch.
Now even though I'm trying so damn hard.
I'm trying so hard.

This part is about social mobility. Social mobility, in short, is the capability of an individual to move from a specific social layer to an upper one. In the U.S., social mobility has decreased drastically. This including the idea that inequality has sharpened: the rich gets richer while the poor gets poorer.

"Walk a mile just to move an inch". First, this part expresses the whole paragraph, which is very repetitive. Even though "she" tries hard to move upward in this society, the social estructure of it drags "her" back. This social estructure of course is the reduction on the social wage; or all social spending from the government.

Now, my final examination is in the second line of the following strophe:

This world can turn me down, but I won't turn away.
And I won't duck and run 'cause I'm not built that way.
When everything is gone, there's nothing there to fear.
This world cannot bring me down, no 'cause I'm already here. Oh no!

"And I won't duck and run 'cause I'm not built that way". Isn't this beautiful!? At least I love it. It embodies the part of the song about rebellion against the ideology of individualism. Some people define "duck and run" very different to what I do. This is my definition. "Duck", when you prepare to run while "run" of course, it means "start to run". The whole idea of this is that this ideology (individualism) makes you believe that you have to be prepared to compete against others.

However, "I'm not built that way". Aren't we social creatures? Aren't we able to help others? Aren't societies created in the beginning to be collective instead of individualistic? That's the meaning of that second line in that strophe. We're social creatures who help others, not individuals who act separately from others. Capitalism is about that. Free markets are about that. Socialism is also about that. All the latter is about collectivism, not about individualism.

This song tries to make listeners change the idea that we act individually. No folks, we're social creatures.

On Donald Trump's statment: isn't it racist?

I came from a post on Facebook that claims that Donald Trump's statement is not racist. I posted this below and then my comment.

Woodrow Johnston's post on Facebook [June 30th, 2015]:

I'm going to probably get crap for this but I have read Donald Trump's transcript from his announcement speech and I don't see anything racist towards Hispanics, Mexicans, or anyone else. I'm Hispanic American myself, so if anyone should be offended, shouldn't I be? Univision and NBC have dropped Trump and a bunch of people are posting on Facebook that he is a racist. 

I just want to add, Donald Trump isn't even who I am voting for, so if anything I can objectively say this.

My response:

The weirdest thing I found with this guy is that libertarians, somehow, do not discredit his statements despite the clear fact that he's far beyond from being a libertarian than Woodrow from being a communist. To be fair, why don't you hate this guy as much as you hate Obama? In government-intervention-terms, he's more mercantilist than Obama. 

Another issue just for the record: he knows nothing. I found many issues that I've personally researched for essays and he states them as facts when they're just myths; like the one that says that Keynes is a socialist.

I truly respect everybody's opinion. However, in economics and other research-oriented disciplines, opinions do not lead to conclusions. But I do care about what this guy Trump claims. 

We live in a democracy (or at least something close to it) in which what people think really matters. In addition, I find this topic a very interesting point for debate because there's several misconceptions: immigration destroys jobs, immigration brings problems from countries, immigrants live on welfare. My personal research have led me to conclude that the last instances are entirely misconceptions.

Nonetheless, since there's a huge gap in education among North Americans, the general public in the lowest percentiles would not be able to read any of my essays or understand others that are far better than mine. These essays lead to the conclusion I already stated: misconceptions on immigration. For the common people, it's better to persuade them with arguments fox-news-like than real research. Who's not going to "see the news at seven o'clock because what's in your refrigerator can be killing you." It's better than: the real salary of white and blue collar workers in the U.S. has been stagnated due to the mechanization of alienation and the lack of social spending from government. 

I think my point is clear here. 

Trump is aiming to the Fox News audience instead of the educated and well informed audience. That's why he uses raw statements and conservative cliches. The mind turns blue to the familiar while red to the unfamiliar. The red requires at least a bit of mind processes to become blue while the blue is more digestible.

Blue statements like:

"When do we beat Mexico at the border? They’re laughing at us, at our stupidity. And now they are beating us economically. They are not our friend, believe me. But they’re killing us economically."

Analyzing the latter, one confirms that this statement comes from the claim that each politician spreads during campaigns: the country is wrong; you can be better; you can be worse. 

I'm salvation: "I will be the greatest jobs president that God ever created. I tell you that." God is also blue in this country.

Now, the point: Racism.

I don't want you to forget the following:

Racism: the belief that all members of each race possess characteristics or abilities specific to that race, especially so as to distinguish it as inferior or superior to another race or races.

- prejudice, discrimination, or antagonism directed against someone of a different race based on the belief that one's own race is superior.

"When Mexico sends its people, they’re not sending their best. They’re not sending you. They’re not sending you. They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people."

People may assume that when he states [twice] that "they're not sending you" is because he's being fair. It would be a mistake to assume that he's as stupid as his character in the apprentice [or his public life], but he's smart; or at least he has a smart team. 

Republicans have been telling since 2012 that if they want to touch the white throne again, they gotta keep the latinos on mind; or at least those who vote. It would be a mistake to push aside latinos who vote since he's unable constitutionally to push them back to their countries. He needs them and wants to state that while keeping the fox news voters on his side too. Then, the problem becomes only "the mexican [as he puts it] illegal immigration".

The discrimination is not only racial, now. It becomes racial and estructural. The problem are those who come to this country illegally because "they’re bringing crime. They’re rapists." He's creating antagonism directed to someone's legal status and race. 

Isn't that discrimination according to the definition? Or just because he assumes that some immigrants are good that does not turn a prejudice? "Some" means "a bit from the portion". Hence, isn't he staying that the majority of illegal immigrants fall on that category? Believing that the majority of illegal immigrants are rapist is not a prejudice?

The Wealthies 1% in U.S. Contribute With 45% of Income Tax

I'm writing about something that I consider is going to create waves for a very long time: The Wall Street's article on federal income tax.

According to a report by Tax Policy Center,   the wealthiest 1% in U.S contribute with 45% of Income Tax; but, they earn about 17% of the total income. On the other hand, the bottom two fifths earn about 14% of the income (it does not only include pay checks) and receive money when filling their taxes by several tax credits. It seems very progressive.

Since the government is mostly financed by the wealthiest 20%, should they control it? Or should they pay less taxes? I'm leaving aside any argument about inequality so far.

If we account the argument of inequality, due to the structure of progressive taxation, is the government better off having a very unequal population? In other words, if minimum wage increases and money is moved from the top brackets to the bottom brackets, will the government collect less taxes?

So far, I have only addressed the issue of federal income tax. It seems very progressive and can be exposed as a victory of our tax system. However, it only includes the burden by the federal income tax but not all kind of taxes.

This other burden is exposed in another article by The Wall Street Journal title The One Tax Graph You Really Need to Know.

Take someone who makes $4 million dollars a year and someone who makes $40,000 a year. The person making $4 million dollars, assuming he's not doing some Romney-esque planning, is paying a 35 percent tax on most of that money. The person making $40,000 is probably paying no income tax at all. So that makes the system look really unfair to the rich guy.

That's the basic analysis of the 47 percent line. And it's a basic analysis that serves a purpose: It makes further tax cuts for the rich sound more reasonable.

But what if we did the same thing for the payroll tax? Remember, the payroll tax only applies to first $110,100 or so, our rich friends is only paying payroll taxes on 2.7 percent of his income. The guy making $40,000? He's paying payroll taxes on every dollar of his income. Now who's not getting a fair shake?

We are facing a very unfair situation for the bottom percentiles. Furthermore, if we combine all the taxes, the burden for each fifth of earners does not seem as progressive as it is in the federal income tax. Actually, it seems regressive once we are facing to the top percentiles.

My take away is that in matter of taxes and income, we, as a society, still have much to do. I'm very eager for seeing the further arguments to these realities.

Mainstream Economists and the Price for Labor

Mainstream economics has had many theoretical and practical mistakes: Giffen goods and its reluctance to suppose all markets are perfectly competitive; they also overvalue ceteris paribus. However, the most prominent is the price of labor.

In mainstream economics, the price of labor (Salary) is assigned by the market forces: the invisible hand. On one side, labor supply is found in the hands of the workers. How many workers are willing to work for a certain payment. It, thus, creates a positive slopped curve of labor supply. On the other hand, employers decided how many workers to hire at each salary, and this creates a negative slopped curve of labor demand. One can equal these two functions and "magically" we find the salary for each worker in each profession. But, reality is different.

I do not pretend to discredit this theory, not even diminish its influence when setting salaries, but it is important to notice that salary is not in function of solely two variables. In the real world, even arbitrary facts define salary. For instance, the huge gap between the salaries of men workers and women workers. Even merit is not always the main variable to select a CEO. What about nepotism, blackmailing and opportunism? They play an important role in assigning salaries too.

Another important case that discredits this classical theory of price of labor is the role of unions. I do not pretend to play politics here, but unions exert some sort of pressure in employers to achieve higher salaries of their members.

This brings me to the most recent victory of unions. Walmart decided to inquire the minimum wage of thousands of its employers; from 9 dollars to 10 dollars per hour. Although a dollar increase seems insignificant considering that California is going to rise its minimum wage during this year, the importance isn't the increase per se, but is meaning. This proofs that salaries are assigned by something else than an invisible hand. Unions, employers and people now know that salaries can be higher, and it is on their hands to change it.

Paul Krugman wrote for the New York Times an article title "the visible hand". It is basically what I've been writing here but more logical and with more authority. I hope you enjoy his article:

http://www.nytimes.com/2015/03/02/opinion/paul-krugman-walmarts-visible-hand.html?_r=0

Why did God choose Moses? An introvert case for leadership.

I started reading a book recommended by a very good friend. The book is called Quiet by Susan Cain. This book, in short, explains how the introvert world interacts with the world of the speech. Who we are and how we got into a space of shyness, reflexion and analysis.

In her second chapter, Cain uses my favorite book in the Bible the characteristic of an introvert leader: Exodus. I'll use a paragraph by Rabbi Elliot J. Cosgrove that best describe what Cain says. Blessed are the introverts:

Probably the most noteworthy example, the leadership model by which all future Jewish leaders are measured, occurs with the introduction of the hero of this week’s parashah and the rest of the Torah – Moses. Moses is the classic introvert. Best as I can tell, prior to the Burning Bush, there is only one line of dialogue attributed to him, significantly, when he witnesses two Israelites quarreling and he asks “Why do you strike your brother?” (Exodus 2:13) At the Burning Bush itself, time after time, God calls Moses to leadership, and each and every time Moses balks and demurs. Despite every divine assurance, Moses claims Lo ish d’varim anokhi, “I am not a man of words, I am heavy of speech and heavy of tongue.” (Ex. 4:10) From this verse the rabbis famously assign Moses a speech impediment, with years of afterschool speech therapy not covered by the Egyptian insurance system. But more simply, I think Moses was simply telling God, “I don’t have the gift of gab, I don’t schmooze, I am better one-on-one … in other words – I am an introvert!” And, in what I think is one of the most thunderous divine responses of all, God booms: “Who has made man’s mouth? Who makes one deaf or mute or seeing or blind? Is it not I the Lord?” (Ex. 4:11) As with all of God’s rhetorical questions, the point is rather clear. God is telling Moses, “I know exactly what your strengths and weaknesses are, I know exactly what you and every member of humanity are capable of – the choice of you as leader isn’t an accident or a mix-up. Rather it is just the opposite, it is your very introverted nature that makes you my choice for the task at hand!”(Source: http://pasyn.org/resources/sermons/blessed-are-introverts)

In other words, "people followed Moses because his words were thoughtful, not because he spoke them well (Cain, 2012 page 61).

What makes a good leader?


Book: http://www.amazon.com/Quiet-Power-Introverts-World-Talking/dp/0307352153/ref=sr_1_1?ie=UTF8&qid=1425580756&sr=8-1&keywords=quiet

How much money there is?

I cannot tell you exactly how much money there is in the world, but I can give you an acceptable estimation.

M1 is a figures that shows the total money supply in U.S. dollars figures. Let's be careful here, it only shows that money in circulation (paper and coins) and checkable deposits (bank accounts and financial institution accounts). In other words, all available money to be used.

So, the figure as for 2015-02-16 is 2,986.2 billion dollars.

(Source: http://research.stlouisfed.org/fred2/series/M1/)

In fact, it's a lot of money. However, if you're familiar with figures like the current GDP you may think there's something wrong. I would address some misconceptions:

• GDP is the total market value of the goods and services domestically produced. That means, what people are willing to pay.
• Money runs through a circular flow. This means that a dollar spend today in burgers, tomorrow can be spent in a home. It's the same dollar. In other words, a dollar can purchased many things in several transactions.
• The Federal Reserve has an important influence in the total money supply through different tools that manipulate rate of interest. It can decrease the money supply or increase. 
• Why do they not solve my financial problems? Although it may be easy to think that printing money can be a solution to poverty, money cannot be printed because it causes inflation.

M1 is the must useful figure to know how much money there is...

Más sobre la ideologia en economía y su importancia en la toma de desiciones políticas

El homólogo norteamericano de los trabajadores fuera de nomina en México son los trabajadores independientes. Los empleadores usan distintas ambigüedades y diferentes significados de la palabra "empleado" para aumentar sus ganancias a expensas de sus trabajadores. Un caso personal pasó en una empresa en la que trabajé. Un grupo de "trabajadores independientes" tenían jornadas de hasta 14 horas diarias y con pocos días de descanso. El empleador escribía el contrato, los proyectos y los salarios mientras que los "trabajadores independientes" se limitaban a obedecer. Esta empresa ya fue demandada y yo acabó de firmar un documento en el que autorizo a que usen mis datos para que la demanda proceda. 

Bajo el marco teórico de los marginalistas, los trabajadores independientes forman parte de los más sano del libre mercado. Según esta tradición, la falta de beneficios y salarios bajos, así como las jornadas largas y las pésimas condiciones se deben a una reducción de la demanda laboral. Entonces, para mejorar sus condiciones laborales, la demanda de sus servicios necesita subir y/o la productividad aumentar. 

Usando como referencia estas teorías utilitarias, el aumento en la productividad de las últimos décadas y la cercanía de la tasa de desempleo al NAIRU deberían de mejorar las condiciones laborales, pero no ha pasado. Los salarios reales siguen estancados desde los 80. Esto se debe principalmente a la rapidez con que la tecnología se desarrolla, la falta de presencia sindical y políticas macroeconómicas de corte neoliberal. 

Esto ha creado un debate entre varios economistas, ¿los salarios están en función del desarrollo económico de un país como Alfred Marshall enseñó?, o ¿son parte de una serie de presiones sociales, culturales y políticas como los new-keynesians afirman? Bajo el marco teórico de los marginalistas, la protección de los salarios resulta "outrageous". Pero, usando su anti-tesis, la protección de los salarios es necesaria. 

Aqui es cuando insisto que la ideología económica y la teoría sí importan en las políticas publicas del país. A pesar de que me considero más practico que seguidor de alguna ideología, muchos políticos, académicos y votantes hacen análisis basados en estas ideologías.

Referencia:

[1] http://inthesetimes.com/working/entry/18224/independent-contractor-laws-department-of-labor

Política Económica como un Enfoque alternativo al estudio de la economía de Latinoamérica

“Con el petróleo ocurre, como ocurre con el café o con la carne, que los países ricos ganan mucho más por tomarse el trabajo de consumirlo, que los países pobres por producirlo” (Las Venas Abiertas de Latinoamérica de Eduardo Galeano).

En tiempos de la guerra fría, el gobierno de los Estados Unidos uso una controversial táctica para llenar sus campos de batalla en Vietnam y la peninsula de Corea: military draft [1]. En pocas palabras, esto consistió en obligar a los jóvenes mayores de 18 años y capaces fisicamente de combatir a participar en una guerra ideológica. Esto trajo un profundo descontento de una porción importante de la población el cual no solo motivo el movimiento hippie, sino también llevó a que muchos estudiantes se cuestionara los cimientos en los que esa nación estaba construida: la libertad de mercado.

Esta descontenta juventud exigió a varias facultades de economía que si su “ciencia” iba a ser la base de la toma de desiciones políticas, esta también debería de explicar conflictos sociales como las guerras, el racismo, la pobreza en el mundo, la desigualdad, etc. Tomaron varias universidades exigiendo un cambio de curricula en donde el estudio económico fuera interdisciplinario y más humano. Este movimiento no fue único en los Estados Unidos, varios jóvenes mexicanos hicieron lo propio. Uno de los casos más recordados es la matanza en Tlatelolco en el 68.

De esta manera nació la economía política. Una corriente heterodoxa a la Universidad de Chicago que aborda las problemáticas sociales desde la perspectiva económica. 

Para explicar el enorme bache de desarrollo que hay entre naciones de Latino America y Estados Unidos, uno puede usar enfoques diferentes al de la oferta y demanda, la ventaja comparativa y asumir que la libertad es una panacea. De esta manera nos encontramos con economistas latinoamericanos como el argentino Raúl Prebisch quien propone la idea de que la industrialización de las naciones sudamericanas resultaría imposible en sus tiempos debido a la estructura económica de estas naciones. Países como Brasil y Argentina, son usados únicamente para la extracción de materia prima para los países desarrollados [2].

A pesar de que esta teoría fue muy bien aceptada y sirvió para construir las bases para economías latinas más dinámicas y diversificadas, la economía política toma un rol más activo. En journals como Union For Radical Political Economics se pueden ver los tintes subversivos de esta corriente [3]. Asumen que la libertad de mercados es una herramienta imperialista (norteamericana) usada para explotar a Latinoamérica e impedir su desarrollo para mantenerlos dependientes a los países ya desarrollados.

En contraste, las corrientes del pensamiento dominantes, como el neoliberalismo, asumen que la libertad de los mercados traerá de facto desarrollo económico, bienestar y prosperidad a Latinoamérica.

Esto se aleja bastante de la realidad que países como Chile experimentaron.

La experiencia de Estados Unidos con la libertad económica no es ni poco similar a la que Chile vivió. Estados Unidos abrazó la libertad económica en un contexto internacional en donde todos los países se encontraban relativamente en la misma linea en la carrera por la industrialización. Más importante, no existían corporaciones transnacionales con los recursos para establecerse fuera de sus países. Estados Unidos abraza la doctrina de laissez-faire en un contexto en la que todos sus ciudadanos parten relativamente en las mismas condiciones. Las ganancias, los recursos naturales (en lo general) y la mano de obra crearon enormes efectos ripple [4] que desarrollaron al país de una manera muy rápida. Esto sin contar el enorme territorio virgen con el que los nuevos norteamericanos contaban, y la enorme cantidad de inmigrantes y esclavos que representaban mano de obra barata.

En este caso la libertad de mercado sí funciono. 

En Chile, a pesar de que la libertad de mercado puso a este país en una situación envidiable en Latinoamérica recientemente, esto fue después de muchos conflictos y ni siquiera puede ser considerado un éxito de los chicago boys [5]. Al menos no si usamos a Estados Unidos como ejemplo.

Chile sí está siendo saqueado, sí es por compañías extranjeras, sí son las mismas compañías que promueven la libertad como panacea. 

En el contexto en el que Chile abordó la libertad de mercado antes y después del dictador Pinochet, ya había corporaciones internacionales que tenían la infraestructura financiera para imponerse como monopolios en Chile y otros países alrededor del mundo. Estas empresas usan su poder económico para saciar sus deseos naturales de ganancias. Entran al país, destruyen la competencia, reducen los salarios, se llevan las ganancias y principalmente los recursos naturales que pueden ser el motor más importante de crecimiento del país: cobre. Igualmente importante, estas empresa violan la soberanía de Chile y derrocan presidentes democráticamente electos para imponer dictaduras militares cuando sus intereses se ven amenazados. 

Es de esta manera como se debe de abordar también el estudio económico de la region: política económica. Estudiar estos conflictos también es estudiar economía pero fuera de las corrientes utilitarias [6]. Los hábitos de consumo sí son parte de la transculturación mientras que la desigualdad en Chile sí es parte de la búsqueda desmedida de ganancias. Consumo y búsqueda de ganancias forman parte del area de estudio de la economía.

Es por eso que recomiendo a quienes quieran estudiar la economía en Latinoamérica, que se hagan de libros como Confesiones de un Gángster Económico de Jhon Perkins. Este libro describe como la influencia de corporaciones extranjeras termina corrompiendo a políticos de países no desarrollados como Ecuador y Panamá.

A continuación dejo un fragmento del libro:

Los gángsteres económicos (Economic Hit Men, EHM) son profesionales generosamente pagados que estafan billones de dólares a países de todo el mundo. Canalizan el dinero del Banco Mundial, de la Agencia Internacional para el Desarrollo (USAID) y de otras organizaciones internacionales de «ayuda» hacia las arcas de las grandes corporaciones y los bolsillos del puñado de familias ricas que controla los recursos naturales del planeta. Entre sus instrumentos figuran los dictámenes financieros fraudulentos, las elecciones amañadas, los sobornos, las extorsiones, las trampas sexuales y el asesinato. Ese juego es tan antiguo como los imperios, pero adquiere nuevas y terroríficas dimensiones en nuestra era de la globalización.
Yo lo sé bien, porque yo he sido un gángster económico. 

Footnotes para complementar:

[1]  What was a military draft in peacetime? http://www.history.com/this-day-in-history/truman-issues-peacetime-draft

[2]  Prebisch y los términos de intercambio: https://www.youtube.com/watch?v=sqUQQX1dTx8

[3] Journal Union For Radical Political Economics: http://urpe.org

[4]  Los efectos ripple, o también conocidos como los efectos multiplicadores, son la teoría macroeconómica que explica como un dólar tiene un efecto multiplicador en los ingresos cuando este es gastado dentro de una sociedad. En otras palabras, cada nuevo dólar que se creaba en esos tiempos en Estados Unidos era una y otra vez gastado dentro del país, creando empleos y desarrollo, porque no se gastaría fácilmente fuera del país. 

[5] Origenes del neoliberalismo “los chicago boys” https://www.youtube.com/watch?v=VDRBaw3DrdI

[6] Corrientes económicas nacidas de las ideas de Jeremy Bentham. Un claro ejemplo es la tradición neoclásica.