Is Christmas Inefficient?

Authored by Jeffrey Tucker via The Mises Institute,

After hundreds of years of attacks on Christmas, economists have finally gotten into the act.

Yale University’s Joel Waldfogel, writing in the American Economic Review, condemns what he calls “The Deadweight Loss of Christmas.” Once you cut through the calculus and graphs, his conclusion is clear: though Christmas generates a $50 billion gift-giving industry, a tenth to a third of that is sheer loss. Why? Because the recipient doesn’t always get what he wants. Given the chance, the recipient would have purchased something else.

All of this follows directly from his underlying theory. In neoclassical economics, the consumer is best off when he chooses, within his means, the highest-rank good or service on his “utility” scale. If he can afford a steak, and he has to settle for a hot dog because the restaurant is out of t-bone, he experiences dead-weight loss. It’s even worse if he has to pay the price of steak and gets a wiener instead.

So it is with gifts. They generate a net loss, this theory says, unless the recipient would have otherwise purchased, with his own cash, precisely what he unwraps. Of course, this is rarely the case. To provide empirical meat to his theory, Professor Waldfogel interviewed students. The students received an average of $438 in gifts, for which these kids reported they would have paid only $313 if they had done the shopping themselves. The gap narrows when the gift is from a friend, and widens when it’s from the family.

Imagine Mr. Waldfogel attending your next Christmas gathering. Aunt Janie gives her nephews soap-on-a-rope, and they all praise her for her generosity and thoughtfulness. The economist then prods the youngsters to ‘fess up that soap-on-a-rope isn’t so great after all, and with the $9.95, they would have bought the newest Spice Girls tape. He declares the gathering a waste and encourages the party to break up in the interest of everyone’s economic welfare.

Professor Waldfogel proposes that we could eliminate these losses, which could be as high as $13 billion per year, by giving money instead of gifts, and letting the recipient spend it as he chooses. But then why not take matters one step further? What is the point of all this shuffling around of cash in the first place? According to neoclassical theory, it would be far better if everyone just clung to his own bank account and spent his own money as he saw fit. Indeed, we’d all be better off economically if Christmas were merely abolished—heck, maybe the Congress should do it—until such time as we all have perfect knowledge of each other’s preferences and are willing to act on them.

Far from being one man’s opinion, this thesis is becoming a classic “extra credit” question on microeconomics tests. Waldfogel is only distinguished for having formalized the model and tested it against his own students’ experience. The conclusion allows economists to presume they are smarter than the mass of the buying public, which persists in the irrational habit of buying things for each other instead of sending money or, even better, just spending it on themselves.

So, what’s wrong with the theory? Plenty. It equates personal utility with dollars spent, the classic conflation of value and price. In fact, a gift is a special kind of good with its own value. For example, we value the soap from the Aunt precisely because of its tie-in with familial affection. Even if the recipient would never have bought it, his personal utility is enhanced by the knowledge that his extended family is thinking about him and cares enough to give.

The source matters. If soap were given by a classmate who complains that you are odoriferously challenged, the “gift” is an insult in disguise. It has negative value. “Rich gifts wax poor when the givers prove unkind,” writes Shakespeare, who seemed to have a more complete view of economics than Professor Waldfogel. Neither is the person who receives a gift purchased under duress likely to be grateful. People on long-term welfare, for example, tend to think of taxpayers as suckers.

A comment later published in the same journal picked up on this. The authors (one from Harvard, one from the University of Miami) also did an empirical test. They used a different method (asking students about prices of specific gifts, not whole bundles), a larger sample of students (209 instead of 78), and asked more detailed questions. The results were the opposite of Waldfogel’s. The authors showed that more than half valued the gift above its retail price, suggesting that Christmas giving actually represents a gain in social welfare.

Moreover, these authors found that gifts asked for were less valued than gifts that were not. This fits with experience: we’re pleased to get what we want, but especially appreciative when we like something we had not expected. Indeed, good gift shoppers think about this ahead of time. They buy someone a tie he would never buy for himself. They buy items the receiver might be too modest or frugal to purchase himself, even if he had the resources.

Some items are just gifts and nothing more: fancy soaps, paisley boxer shorts, blankets with school logos, coffee cups printed with witty slogans, and the like. That’s why there can be such things as “gift shops” as distinguished from regular stores. Gifts have a different value because they are altogether different goods. They embody not only themselves but also their meaning. Imagine if someone came to dinner, and instead of bringing a bottle of wine, gave you $15 and told you to spend it on anything you wanted. It’s just not the same.

For his part, Waldfogel responds by accusing the authors of biasing their results. The very nature of their survey questions encouraged students to report “sentimental value” instead of pure “material value.” Going back to the drawing board, and correcting for this and other supposed errors, Waldfogel surveyed another group of students—455 this time—and still found a dead-weight loss, less than before, but a substantial one nonetheless. Christmas is inefficient: that’s his story and he’s sticking to it.

Of course there is no way to decouple one kind of value from another kind of value, since all economic value is ultimately subjective. Surveys can’t reveal what people value; only action in the marketplace does that. What’s deeply odd about this wrangling is that everyone seems to agree that only the value to the recipient should matter. That leaves out the really crucial point of gift giving: that it benefits the giver as well as the receiver.

People feel good in being generous, especially towards family and friends. Giving is an act of charity and liberality, virtues people practice because they’re good for the soul. And even if they aren’t, economists should follow the rule of “demonstrated preference”: if a person gives a gift, it is because he preferred giving the gift to keeping his own money. The action is “utility enhancing” on its own terms. Why? Because it, as opposed to something else, took place. Value is revealed in the preferences people demonstrate voluntarily. A well-chosen gift also reveals something about ourselves: we care enough to make our affections known in a personal way.

Again, the problem of the welfare state presents itself. In its form of “charity,” people do not give voluntarily. So resistant are people to dumping billions of dollars on millions of freeloaders, that the government has to threaten them with fines and jail terms (that’s what taxation is) to get them to fork over this “gift.” No one demonstrates a preference for the welfare state (voting doesn’t count since people are not using their own resources to purchase the services for which they vote). This degree of redistribution has to be imposed. Taxation, in contrast to Christmas, is a clear example of a utility-reducing activity.

But economists of the neoclassical school have rarely bothered with such distinctions. Their theories leave little room for reflection on property rights, individual choice, and the distinction between market exchange and forced redistribution. For them, a mathematically determined standard of efficiency is the only test that matters. Not even an absurd conclusion—for instance, that giving gifts is inefficient—causes them to rethink their core theory.

Economists are hardly alone in this. Skeptics and opponents of the market economy have long had a beef with the idea of giving and charity, especially as it occurs at Christmas.

Perhaps the socialists have long understood something about Christmas that others, even advocates of the market, have overlooked. In the institution of the gift, we find a strong rationale for the establishment and protection of private property and the capitalist economy. In order to give, we must first produce, acquire, own.

G.K. Chesterton, a great defender of Christmas against English Puritans who regarded it as corrupt and pagan, observed that collective ownership would mean the end of voluntary giving. Moreover, he clarified, “giving is not the same as sharing: giving is the opposite of sharing. Sharing is based on the idea that there is no property, or at least no personal property. But giving a thing to another man is as much based on personal property as keeping it to yourself.”

And contrary to the complaints of materialism at Christmas, meaningful gifts can be as elaborate as gold, frankincense, and myrrh, or as humble as two fish and five loaves.

It’s no wonder, then, that history’s dreariest socialists have denounced Christmas. The economic core of its gift giving centers on private property, while its ethical core belies the claim that private property institutionalizes greed.

“There is the greatest pleasure in doing a kindness or service to friends or guests or companions,” wrote Aristotle in The Politics, “which can only be rendered when a man has private property. These advantages are lost by excessive unification of the state…. No one, when men have all things in common, will any longer set an example of liberality or do any liberal action; for liberality consists in the use which is made of property.”

As for intellectuals—economists no less—who have failed to understand this simple truth, it’s staggering to think of the dead-weight loss their ideas have imposed on society.

American Purchases Of "Stuff They Don"t Need" Hits 17 Year High

Anyone who has been paying attention to the New York Fed’s Quarterly Report on Household Debt and Credit is probably aware that Americans are drowning in debt...

...Aggregate household debt climbed $116 billion during the third quarter to $12.96 trillion, edging past its previous peak from Q3 2008. But even as millennials struggle to pay down an insurmountable pile of student debt...

...CNBC is reporting that holiday spending this season is on track to hit a 12-year high, according to an annual survey of consumer spending habits. Keep in mind, that survey was taken before Comcast, Boeing, Fifth-Third Bank and AT&T announced they would be handing out last-minute holiday bonuses to rank-and-file employees...

But as both debt and holiday-related spending rise in tandem (suggesting that the former is being utilized to finance the latter), one Bloomberg columnist has estimated that, instead of paying down debt, one-fifth of consumer spending in Q3 went to items that people don’t really need...

Back in the 1950s, the economist John Kenneth Galbraith made a bleak argument about modern capitalism: Advertising can create artificial wants -- say, for the latest gadget or skin cream -- that spur ever-greater consumption without actually making people better off. As a result, economies can grow without improving the lot of humanity.

 

Whether or not he’s right -- it remains a matter of debate -- the idea raises an interesting empirical question: How much of what we consume is related to wants rather than needs?

 

This isn’t easy to answer using even the most detailed data on consumer spending, because many categories could go either way. A car, for example, could be pure transportation or a Ferrari. That said, a number of categories -- such as gambling, hairdressers and recreational vehicles -- are pretty clearly nonessential. Following them consistently over time can give at least a sense of trend.

 

So how are we doing? In the third quarter of this year, nonessential items (of my own subjective selection 1) accounted for almost 18.5 percent of total U.S. consumer spending. That’s the highest share since June 2000.

According to the column’s author, Mark Whitehouse, this nonessential spending has reached its highest level in 17 years...

Whitehouse does list one interesting caveat: Because he calculates the value of nonessential goods in nominal dollars, the overall spending on nonessential items may have been constant in real terms...

...Of course, anyone who has sat through one of the Federal Reserve’s press conferences this year understands that inflation has been receding - not advancing - this year. Which means, if anything, 17% is a lowball figure.

To be sure, spending on life’s little luxuries is still far below its post-WWII peak (according to Whitehouse, conspircuous consumption in the US peaked in 1959)...

...But the fact that this subset of discretionary household spending is still growing, even as household debt rockets to all-time highs, is indicative of how consumers are burning the fiscal candle at both ends...
 

How GDP Became A Joke, In One Chart

For all the rhetoric about above-trend US growth, one month ago UBS shattered the narrative of surging GDP by showing just one chart, which revealed that excluding contributions from energy investment, which are about to hit a brick wall now that the price of oil has peaked and is reverting lower once again, US growth for the past 2 years has been slowing.

On the other hand, things get even more complicated thank to a chart released yesterday by UBS" global chief economist Paul Donovan who makes a point we have repeatedly underscored over the past decade, namely that economic data is largely worthless, and any instant snapshot reveals more about the political and "goalseeking" climate of the agency releasing the "data" than about the underlying economy itself.

As Donovan shows, here are the no less than 6 answers one gets to the question of "how fast was the US growing at the start of 2015?."

By way of context, recall that this was the quarter when the US was blanketed by deep snow, and when every "expert" was rushing to convince those who bothered to listen that the economy would suffer a sharp slowdown as a result of the weather and nothing but the weather (and yes, that included UBS). And when the number was first reported, that was indeed the case: with Q1 2015 GDP reportedly growing only 0.2%. The problem is that within just over a year, that 0.2% initial GDP print turned to -0.7%, before subsequently surging to 2% and ultimately 3.2%!

Here is the sarcastic take of UBS" own chief economist on this GDP travesty, which is even more sarcastic  - and ironic - considering his entire job is to predict the exact number associated with said travesty:

Economic data is not very precise. Economists are trying to hit a target that is moving rapidly. Economic data is being revised more often, and the revisions are larger than in the past. The following chart shows annualized US GDP growth in the first quarter of 2015.

 

Growth was initially reported very weak, below consensus and barely moving. Then the data was revised to show the US economy was shrinking – and shrinking a lot (the number was –0.7% annualized). Then it was revised to show the economy was shrinking a bit. Then it was revised to show the economy was growing, but a long way below trend growth.

 

The growth number was then revised to be basically in line with trend growth. Now, US growth at the start of 2015 is thought to be 3.2%.

 

So which number in the range of –0.7% to 3.2% is the economist supposed to be forecasting? An economist predicting 3.2% growth when the data was first released would have been ridiculed. According to the latest information we have, that economist would have been right.

In other words, that terrible weather which at the time was used to justify why the economy ground to a halt - when in reality it was all a function of China"s credit impulse crashing - would eventually serve as a the catalyst to grow the economy at a pace that has been recorded on just a handful of occasions in the past decade.

No wonder then economists - especially those who work at the Fed but all of them really - their predictions and their analyses have become the butt of all jokes; and by implication, no wonder traders and algos no longer respond to economic "data."

The Economist Magazine Remains Confused On Zimbabwe Inflation

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Economist magazine remains confused. The November 4th issue of The Economist carried reportage on the ever-more acute economic disaster that grips Zimbabwe: “Surviving under Mugabe: Zimbabwe’s Deepening Crisis.” While the broad outlines of this reportage are correct, one reported “fact” in particular is simply wrong -- a real howler that any good fact checker should have flagged as an error to be corrected. The Economist writes: “…hyperinflation that peaked at 500,000,000,000%.” Well, that’s a big number. But, it is way off – way too low. The actual peak of Zimbabwe’s hyperinflation episode generated an annual rate of inflation of 89,700,000,000,000,000,000,000%— a figure I and my team at Johns Hopkins estimated, and one that is widely recognized in the scholarly literature on hyperinflation. The Economist error, which they have repeated again and again, is huge: 89.7 sextillion percent is 179 billion times greater than the figure presented as a “fact” by The Economist. 

I pointed this out most recently in my Forbes Column of November 14th. In “response,” The Economist had this to say about Zimbabwe’s hyperinflation: “Inflation reached 500 billion percent, according to the IMF, or 89.7 sextillion percent, according to Steve Hanke of Johns Hopkins University. (Measuring hyperinflation is hard.)”

The Economist should receive an “E” for effort, but remains confused and in error; the magazine is comparing apples to oranges. The 500 billion percent figure from the IMF is for the end of September. My 89.7 sextillion percent figure is for the peak, which occurred on November 14th. This November date is a month-and-a-half later than the September date, on which the IMF made its estimate. 

The Economist claims that the IMF estimate and mine are comparable numbers. What nonsense — a simple oranges vs. apples problem. Moreover, The Economist’s claim that “measuring hyperinflation is hard,” is unfounded. After suitable study and preparation, measuring hyperinflation accurately is actually rather straightforward. At present, my team at Johns Hopkins calculates Venezuela’s and Zimbabwe’s annual inflation rates each morning. 

God is Dead

From the Slope of Hope blog:

That"s something I"ve got in common with Private Pyle: he wants to be different. For whatever reason, I"m a contrarian to the core. Indeed, one of the appeals of messing around with personal computers back in 1980 was that practically nobody else was doing it (in case you hadn"t noticed, the unusualness of microcomputers vanishes decades ago, so that aspect of the appeal is likewise gone).

This contrarian view of the world extends to the "cover curse", a theory to which I strongly subscribe. Any bold declaration made by a prominent publication seems to invariably mark an inflection point. There"s this cover, for instance, which came out immediately before the demise and near-bankruptcy of Apple:

This cover from The Economist (itself quite famous for its covers being so often dead wrong) when oil was $10 per barrel and was about to explode hundreds of percent higher.

This homoerotic image of the strength of the US dollar, just before it commenced its very steady slide promptly at the start of 2017:

Barron"s decided Facebook was a lousy stock, just before it started a gargantuan run up to "blue chip" stock status, almost exactly to the day......

And, perhaps the most famous of all, Business Week decided just before 1980 began that stocks were doomed, after which time literally trillions of dollars of new wealth were created.

So, time and again, newspapers and magazines get it wrong - - but plenty of other media does too. This book, for instance, was all about the coast-to-coast millionaires in the United States, and it came out June 2007, precisely at the apex of the housing bubble.

So with mountains of other anecdotal evidence, it would seem that only a fool would declare loudly, on a public stage, anything definitive, since major announcements from prominent publications or thought leaders so often represent the collective consciousness at the point that it"s utterly saturated with some particular notion. Even though they say that no one rings a bell at the top, if you look historically at major turning points, there were always bells ringing - - just in a contrarian, hidden form.

Thus, when Trump was elected, inaugurated, and soon thereafter started bragging about the stock market, it seemed like a major reversal signal. After all, this is the President of the United States, and he"s crowing to the world about a stock market for which he gives himself full credit. So that"s bound to be some kind of peak, right? Surely after a tweet like that, the gods above will shame the man, just like they"ve embarrassed anyone showing hubris since the times of the ancient Greeks. Right?

.......Right?........

And yet there they are. Tweet after tweet, month after month, about high after high. And yet the market just keeps going higher..........which, let"s face it, is just going to egg the man on even more. It"s one thing for an old biddy like Yellen to yammer on about no more crises in her lifetime. But the POTUS is another matter altogether.

It really wasn"t that long ago that acts of hubris, either in the form of cover stories or political braggadocio, were met with swift reprisal from the universe. The biggest question facing us today - - far greater than where interest rates are going, or what the dollar is going to do, or even whether Kim is ever going to launch any of those missiles he"s so proud of - - is whether market forces...........normal market forces..............are gone for good. They might just be, and if so, hubris is not only back in style, but it"s going to be here to stay for a long, long time.

The Economist Claims: Sending 1.2 Billion Unskilled Africans To Europe Will Increase World GDP

Via GEFIRA,

The Economist ran a couple of articles promoting migration as good for the global economy.

 Professor Bryan Caplan argued that labour is the world’s most valuable commodity and its value depends on location. If borders were open, a world of free movement would be $78 trillion richer. Mexican labourers can expect to earn 150% more in the West. Unskilled Nigerians make even 1,000% more in Germany than in Africa. The value of an unskilled worker is so much higher in Europe that a Nigerian can make 1000 times as much in Germany, adding 1000 times more to global GDP. Because Western societies are more structured and organised than the Mexican or Nigerian, the unskilled worker can be more productive in a factory in Germany or a farm in the USA than in Africa. A taxi ride in Berlin is much more expensive and thus valued much higher than a taxi ride in Lagos, while the amount of work, driving a car for a while, is the same.

If The Economist expounds Professor Bryan Caplan’s view correctly, then the argument is plain idiotic. The Economist confuses countries with companies that are profit-oriented, and where people are disposable resources. Yet, countries are communities, and citizens do not usually expect their governments to merely maximize GDP. History teaches us that migration causes social unrest, disrupts social cohesion and ultimately the stability of the recipient nation. And even if we set aside these social or national considerations, the Economist’s reasoning is still false.

The whole argument breaks down on social security and the massive world oversupply of unskilled labour. Social security determines the minimum price of labour .

If there is abundance of unskilled workers, governments step in and buy or take out of the market the oversupply of labourers for a minimum price called social welfare. Thus, social security does not differ from setting a minimum price for milk. The consequence of a minimum milk price is that farmers will produce more milk than can be consumed. The surplus is then bought by the authorities and ultimately destroyed, or a milk production quota is imposed.

Moroccans and Turks in the Netherlands are labour migrants.

The Netherlands has no historical relation with either Turkey or Morocco. There is no colonial relationship whatsoever between these two countries and the Netherlands or another shared history.

In the most productive group aged 30-35 more than 30% of the Moroccans and 22% of the Turks receive social security benefit, but only 11% native Dutch.

The labour participation for Moroccan men aged 25-35 is a shocking 60%, whereas for the native Dutch it is about 90%. In the age group 50-55, nearly 50% of Moroccans and Turks receive social security while only 16% Dutch.

Labour migrants are a drain on the indigenous population rather than a relief.

It is clear that the Dutch labour market has a massive oversupply of unskilled third-world workers. Apart from social security, there are also intangible costs such as an increase in crime, and especially terrorism, both related to North African migrants.

Africa has 1.2 billion people that will double in the next 25 years, of which huge numbers are about to join European labour force in the coming decades. At the same time the highly educated and skilled western populations will decline, reducing the demand for unskilled labour even further. There is no chance that Europe can afford to keep its social welfare without enforcing a quota on migrants. And even if social security is dropped altogether, the European labour market will reach a situation where there are so many labourers that they become as worthless as they are in Nigeria. For the unskilled European working class it is tantamount to suicide to vote open borders advocates into office.

Interestingly enough, The Economist implicitly stated that Africans are not able to utilise their labour force themselves. Bringing the African population under European supervision failed during the very brief period of colonisation of Africa, and now the Economist wants to bring the Africans under European supervision by using open borders policy and moving the African population to Europe.

Does the Economist really suggest that white Europeans are the only ones who can solve Africa’s problems?

Finnish Politician Tells Women 'Be Patriotic, Have More Babies' As Birth Rates Crashes To 150 Year Lows

For years, the Japanese government has been desperately trying to encourage its citizenry to have more sex to combat the collapsing demographics the nation faces, trying guilt (blasting their "sexual apathy") and punishment (imposing a "handsome tax" to make lief more even for ugly men), to no avail.

Now it appears Finland is suffering a similar fate. As Bloomberg reports, Finland, a first-rate place in which to be a mother, has registered the lowest number of newborns in nearly 150 years.

The birth rate has been falling steadily since the start of the decade, and there"s little to suggest a reversal in the trend.

Demographics are a concern across the developed world, of course. But they are particularly problematic for countries with a generous welfare state, since they endanger its long-term survival.

For Heidi Schauman, the statistics are "frightening."

"They show how fast our society is changing, and we don"t have solutions ready to stop the development," the Aktia Bank chief economist said in a telephone interview in Helsinki.

"We have a large public sector and the system needs taxpayers in the future."

As Bloomberg notes, that"s a surprisingly low level, given the efforts made by the state to support parenthood.

Perhaps nothing illustrates those better than Finland"s famous baby-boxes.

Introduced in 1937, containers full of baby clothes and care products are delivered to expectant mothers, with the cardboard boxes doubling up as a makeshift cot.

The idea behind the maternity packages was prompted by concerns over high infant mortality rates in low-income families.

The starter kits were eventually extended to all families.

Offering generous parental leave and one of the best education system in the world doesn"t seem to be working either.

Reversing the modern idea that it"s ok not to have kids is impracticable. Opening the doors to immigrants is a political no-go area (Prime Minister Juha Sipila"s center-right government relies on the support of nationalist lawmakers).

The leader of the opposition Social Democrats, Antti Rinne, caused a stir in August when he urged women to fulfill their patriotic duty and have more babies.

"The discussion has revolved around gender equality and the employment of women, with the issue of natality sent to the background," she said.

What Finland really needs is a political program that treasures the family and increases the value of parenthood, the economist argued.

The baby boxes that are delivered to expectant mothers contain all sorts of goodies. They include bodysuits, leggings, mittens, bra pads, talcum powder, lubricant, a hairbrush and a bath thermometer.

One suggestion is to leave out the condoms.

Mapping The World's Most Liveable Cities

If you want to move to one of the world"s most liveable cities, pack your bags and book flights to Australia or Canada...

You will find more statistics at Statista

As Statista"s Niall McCarthy notes, The Economist assessed 140 major cities worldwide on stability, healthcare, culture and environment, education, and infrastructure, declaring Melbourne the most liveable city in 2017 for the seventh year running. Australia"s second most populous city scored 97.5 out of 100. Vienna, the Austrian capital, came second and three Canadian cities rounded off the top five - Vancouver, Toronto and Calgary.

As well as those three Canadian cities, a total of three in Australia made the top-10 list (Adelaide and Perth as well as top-placed Melbourne). Interestingly, U.S. cities are notably absent from the top of The Economist"s list with Auckland, Helsinki and Hamburg all boasting high liveability scores.

The Syrian capital of Damascus was at the very bottom of the ranking with a score of 30.2, along with Lagos in Nigeria (36.0) and Tripoli in Libya (36.6).

The Cost Of Light Through The Ages

"Could all historians (and economists) please just turn their attention away for a short moment?! " asks Der Spiegel"s Guido Mingels, as he reflects on the evolution in the costs of making light work through the ages (spoiler alert - it appears deflation is a "good" thing).

Let"s talk straight: All man had achieved before 1800 isn"t really worth mentioning. Easy peasy stuff. For thousands of years nothing really happened.

These days, you visit a museum and are expected to marvel at an ancient plow or a knight"s armor, when back then they didn"t even have electric lighting. No switch, anywhere!

The history of artificial lighting accompanies and enlightens the Anthropocene, as some call the times from the year 1800 onwards, when mankind started showing off what its real capabilities were. Without light in the coal pits and in the factories, which from then on could be lit at all times, the industrial revolution would have had to have been postponed.

The costs for the production of light, one of the most important enablers of progress, have dropped in a way that is hardly imaginable. The environmental economists Roger Fouquet and Peter Pearson have retraced this development for England.

You will find more statistics at Statista

One hour of light (referred to as the quantity of light shed by a 100 watt bulb in one hour) cost 3200 times as much in 1800 in England than it does today, amounting to 130 euros back then (or a little more than 150 dollars).

In 1900, it still cost 4 euros (close to 5 dollars).

In the year 2000, we arrived at a cost of 4 euro cents (5 U.S. cents).

You can also put this into relation with the amount of time that an average worker needed to labor during different ages in order to earn enough for the 100 watt bulb to glow for an hour - just like the economist William Nordhaus has done in one of his classic essays.

The people of Babylon, in 1750 B.C., who used sesame oil to light the lamps, had to work for 400 hours to produce the said amount of light.

Around 1800, using talcum candles, 50 hours needed to be invested.

Using a gas lamp in the late 19th century, 3 hours were due.

Using an energy saving bulb today, you will have to work for the blink of an eye - a second.

*  *  *

The chart and text were first published by German journalist and author Guido Mingels. It is available as a book here. As always, our charts are free to use and share, just quote DER SPIEGEL/Statista as the source and include a backlink to the graphic"s URL (this page).

Baltimore Chaos - Ceasefire In "Violence-Plagued" City Starts Today

Via StockBoardAsset.com,

A ceasefire between Baltimore “gang leaders, drug dealers and others linked to the violence” has been agreed on and will come into effect on Friday.

This is an act of desperation from a community that is currently experiencing a homicide rate doubled of Chicago’s and a murder count higher than NYC. The ceasefire aims to stop the killings for at-least 72-hours, starting on August 04-06.

The slogan selected by organizers gets right to the point: “Nobody kill anybody”.

Violent crime in Baltimore has flourished over the past few years, due to the “Ferguson Effect”, along with the death of “Freddie Gray” that triggered Baltimore’s April 2015 riots.

According to the Economist, Baltimore may see more than 400 murders this year. This would indicate 2017 will be the deadliest year ever on record.

August homicides are already in full-swing leading up to the ceasefire.

Yearly data projects many more months of violent crime for the city.

Mapping out the 208 homicides across Baltimore City looks like battleship.

If nothing else comes from the ceasefire, such gestures were a first step in helping residents feel that they were regaining control of neighborhoods, said Cassandra Crifasi, deputy director of the Johns Hopkins-Baltimore Collaborative for Violence Reduction.

“Even if it ends up being only one day without a shooting, that’s going to be good for the city,” Crifasi said.

Conclusion

It’s highly unlikely that Baltimore “gang leaders, drug dealers and others linked to the violence”  will take a 72-hour loss in profits and give up their corner where drugs are peddled from.

Baltimore is a chaotic war zone and it’s time we start treating it like one.

Homicides In Baltimore Top 200, Expected To Break Record

Via StockBoardAsset.com,

A 23-year old man was killed Wednesday afternoon in a double shooting on Baltimore’s 1200 block of Greenmount Avenue topping the city’s 200th homicide. So far, 30 homicides have been reported for the month of July with the expectation of further acceleration into the latter summer months.

The Economist seems to think Baltimore “may see more than 400 murders this year”. This is based on their figures from Jan’17 through May’17 homicides extrapolated by summer seasonal trends. Nevertheless, this would indicate Baltimore is headed for a record breaking year in terms of homicide count.

Earlier this year, Baltimore’s mayor was basically begging the Federal Government for help as her city’s murder rate spiraled ‘out of control’. Per CBS Baltimore: 

“I’m calling on all the assistance we can possibly get because I can’t imagine going into our summer months with our crime rate where it is today, what that’s going to look like by the end of the summer,” says Mayor Catherine Pugh.   “Murder is out of control,” says Pugh.   “We are looking for all the help that we can get,” she says.

Meanwhile, Baltimore’s public safety expert Rob Weinhold isn’t sure the Federal Government alone will solve Baltimore’s descent into chaos. Here’s what he had to say:

“I don’t think relying on federal resources is a new strategy at all, in fact, I think the devil is in the detail. You can talk about the FBI and that’s fine, but I’d actually like to see more emphasis on drug enforcement administration, ATF, and the Marshall service to get these folks who are wanted on warrants off the street,”

All eyes on Baltimore as per CBS:  “Baltimore’s murder rate more than doubles Chicago’s, which has gained international attention for its violence”. Don’t be shocked if Trump’s next tweet on America’s inner cities targets Baltimore….

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Video emerges from Baltimore’s 200th homicide scene with anger in the streets.

Joe LaVorgna Has Left Deutsche Bank

Two years after correctly abandoning his long-held bullish perspective on the US economy"s growth prospects, Deutsche Bank"s chief economist Joe LaVorgna has reportedly left the bank, "planning to work elsewhere in financial services."

Some may recall, that back in 2013, we noted that when it comes to forecasting the future, even one Groundhog Phil has a success rate of 71%, or over a standard deviation more accurate compared to Joe "Coin Toss" LaVorgna"s 51%.

LaVorgna had long been optimistic about U.S. economic expansion. About two years ago he changed his view by correctly predicting a deceleration in gross domestic product growth. After Donald Trump was elected president of the U.S., the economist said the new leader was a “game changer” and that if the tax rate were lowered, stocks in the S&P 500 would rally.

Bloomberg reports that he left the German lender last week and is planning to work elsewhere in financial services, said one of the people, who asked not to be identified discussing personnel matters. Peter Hooper who worked alongside LaVorgna, will continue to handle duties tied to economic forecasts and analysis, said another person.

LaVorgna has worked at Deutsche Bank for about two decades, joining from Lehman Brothers Holdings Inc., according to Financial Industry Regulatory Authority records. A spokeswoman for Deutsche Bank declined to comment.