Wisconsin Recall Effort

Wisconsin's political civil war may soon bring a shift in the state Senate as recall efforts target 8 Republican senators. It is possible that the state senate will soon be democrat controlled allowing Democrats to essentially block all of Walker's new legislation. An even more worrying turn for Walker is that if the election were held today Walker would lose to Barrett by double digits showing hes clearly lost support among independents. It's clear now to the Republican party that Walker's recent hard won victory was Pyhrric and will result most likely in the strongest backlash the state party has ever seen. Worse for the republicans all of the gains Walker has made in the past few months will no doubt will be undone within 2 years as a new administration takes power. But stranger things have happened in the past in Wisconsin politics with political dualism making Wisconsin a difficult bronco to tame, like Qaddafi he might just hold on to power until the end of his natural term.   

Michael Moore on Wisconsin Union Busting

Many in fact a majority of Americans don't like Michael Moore's opinions all that much but that doesn't at all mean that he's wrong, in fact many of his ideas have solid foundations in economics. A major problem today is the heterogeneity of news media in other words, people choose what they want to hear think of FOX NEWS or MSNBC. These reinforce ones thinking and leads to a breakdown in individual thinking.

Keynesian Economics

A very good description of the two competing economic theories for times of recession. There is is something to say for both theories but there is good reason that Keynes rains supreme it's because most economists believe his theory is correct, for it takes in the variable of the animal spirit or rather what is captured by game theory and the Cournot-Nash equilibrium.

The Recession

Several years ago I helped apply the Great Recession term to our current economic predicament, now however it seems that my worst fears were realized, in fact exceeded my fears in many ways. In the mean time I've finished my M.B.A. with a focus on global strategy and lived for some time in Europe where I can say they put the party in hard economic times. Still when we look at the good old U.S. we are in a bad situation although not equally, in fact corporate profits are higher than ever. Indeed many companies have just learned that they don't need you to make profit, they need a few dozen Chinese but they don't need you. This is the first time in American history where the bargaining power of the worker has been reduced to virtually nothing. This might be an exaggeration but as a worker you are not going to be demanding a raise from your boss unless you are a CEO of a bailed out company. The truth of the matter is that companies are turning a profit because they don't need you anymore, in fact they have just cut about 15% of America out of their tiny (and I mean tiny) share of the pie and realized their profits are just fine. Well what does this mean, it means that companies aren't increasing production because there is no demand and have learned to make money from the demand which already existed. Is it a waste of talent? Does it reduce the well being of America? Well yes, and no capitalism demands inefficiency. In fact capitalism is probably just as inefficient as communism in many respects. Consider that a huge portion of the economy is based simply on marketing, consider how much more productive we would be if no company had to advertise and people simply produced products which benefited the material wealth of the common man. Well the company directed to produce the good in question would get complacent and not innovate at the same rate also a bad outcome. Still we understand due to game theory that unless people are forced to choose the optimal path people will always choose what best benefits them and as a result there is a loss of wealth. Well those unemployed and underemployed in this economy represent the loss of wealth. Companies know if they were all hired with each company taking their share of workers demand would increase to where the extra costs of the workers will be satisfied with a greater overall demand for their goods. But heres the problem all companies have to do it in tandem for them to benefit otherwise another company will benefit from your new employees buying power while your company suffers additional cost without additional revenue. This is where Keynesian economics comes into play whereby the government artificially creates demand by stimulating the economy employing all (some) workers and the increase demand will sustain itself after the stimulant money is used. This theory was successfully implemented during WW2 where the economy recovered from the depression only when demand was great enough to make hiring a necessity. Now we don't have the political will to do this kind of spending which means unemployment will only slowly return to its 'natural level over the course of several years. High unemployment is thus an inevitable result of the boom and bust cycles of capitalism but due to game theory communism has just as nasty side effects, the solution, well there isn't one, there never was. One thing is for absolute certain the stimulus wasn't big enough and since the small one was too little too late people have written off stimulus as a viable means to economic recovery. Theoretically due to game theory stimulus is the only means out of the crisis since businesses wont blink first. But the political will of the people (masses with pitchforks) is for austerity because they mistakenly believe macroeconomics is the same as their personal finances (dag nabbit if I can't go out and spend more than I earn how can that big ole' goermint do it). The definition of conservatism is to not to change the definition of insanity is doing the same thing over again expecting a different result. Still there will be no Keynesian stimulus, rather a simple old fashioned long laissez-faire recession which will hurt the poor who vote for the conservatives who in turn do the same things which dont employ those who voted for them.