Economics + Update

Once again it has been a couple of weeks since I wrote. It took me about three weeks but I finally settled in to Buenos Aires now.

Surprisingly, my Spanish came back quite quickly. My very basic Spanish is okay, but I really need to work on fluidity and vocabulary. I found a new teacher, this time she suits me very well and I think it will be a big help. My biggest hurdle is that I just don’t really want to go out and talk to a lot of people. And there is a limit to how much fluency one can gain when one is only speaking with shopkeepers and taxi drivers. I have found that studying just one news article and one chapter of a book each day works surprisingly well.

 The LOCK

The LOCK

 The Key

The Key

I will say that there is something I noticed this particular visit. I don’t know exactly how this came about, but it appears that the vast majority of door and gate locks, at least in Buenos Aires, are all exactly the same model. I’m really not kidding. What brought it home to me was that in my innumerable rambles around the neighborhood, I actually saw a door lock that was a Yale type lock. And it just seems so out of place. All the other locks that I’ve seen are this small horizontal oval, with the two-sided key (pictures of both shown.). I’ll have to look into that and try to figure out why or how it came about that there is such uniformity in the keys and locks in this country. I think if I was to do an actual count it would have to be north of 90% of the locks are this type.

I am finally more or less comfortable in my new apartment. It is an apartment that was not being terribly well-maintained, and is full of junk from the owner, but I have managed to clean it up at least to the point where I am fairly OKwith it. I think, however I will try another place next time that’s a couple of blocks away. My main worry is that once it gets really cold here, and Argentina is supposed to have a fairly cold winter this year, I may have to buy a couple of space heaters to supplement the radiant floor heating. And blankets to wrap around my feet. But, I’ll cross that bridge when I come to it.

Now for some controversial stuff.

I have been concentrating on only two courses since I’ve been here, Spanish, and Economics. Given that I’m living in Argentina, a country which is very obviously suffering from a hangover of badly implemented socialist schemes, the economics course is particularly germane. I am finding economics and history extraordinarily interesting fields to delve into.

Economics I am finding to be fascinating (and inextricably intertwined with history). It is such a complex field with a plethora of variables. As the professor said, economics is not about money. It is about people. I am an ‘Adam Smithian’ in outlook (Wealth of Nations – 1776). But even so, this is subject matter where the more I study, the less I appear to know (or have ever known).

During the Cold War, the primary methodology for information transmission was radio and television as broadcast though the air (for those of you who can remember that). There was an interesting anecdote about a deep valley in East Germany close to Dresden that was referred to as the Valley of the Clueless (Tal der Ahnungslosen). The reason being that of course they were in what is known as ‘radio shadow’ and they couldn’t get the information being beamed through the air from the West. I feel, after studying just basic economics and barely scratching the surface, that this name could well be applied to Washington D.C. these days. Seemingly, they are clueless about basic history and economic theory. 😊

Although it is a topic of much conversation in the world today, income inequality is something that I’m looking at quite a bit. I am not a socialist, not by any stretch of the imagination and there is something about the way this topic is constantly discussed that puts me on edge. I feel like there is something that is just not being said or addressed when it comes to this. Once again, the act of writing, has helped perhaps to clarify what I’m thinking about. I can see that I’m probably going get myself in trouble with what I say next. No matter what that is.

The thing that I see about these discussions on income inequality is that there are seemingly two underlying assumptions. The first is the concept, wonderful in its idealism, that all people are equal. And then the second assumption is that the people at the higher end of the income range are somehow bad because they have more income. I refer people to an index I discovered called the Gini index, which is a measure of income inequality by country. It ranges from 0 – 100 with a higher number indicating more inequality.

https://en.wikipedia.org/wiki/Gini_coefficient [Deeply mathematical discussion]

United States = 45 (2007)

Sweden = 24.9 (2013) – Lowest in the world I believe

UK = 32.4 (2012)

Germany = 27 (2006)

Philippines = 46 (2012)

Thailand = 48.4 (2011)

South Africa =62.5 (2012) Close to Highest

https://www.investopedia.com/terms/g/gini-index.asp [Interesting color-coded map – well worth looking at]

I don’t know what the answers are, but I know for sure that there are people who don’t wish to work hard. I have seen it in several countries that shall remain nameless, and it is possible that I speak with the arrogance of the educated, but it is nonetheless true. And although the details would be long and tortuous to relate, I am personally aware of numerous attempts in several countries, by various different employers and industries, that have utterly failed to motivate people to work harder and be more productive. And it includes many of the measures mentioned in the course that I am taking such as giving a high level of pay, worker education, bonus incentives, guarantees of employability, and even partaking in a share of the profits of the enterprise. None of these measures worked. This has left me with an extremely jaundiced view that not everybody seems to be created equal. And if there are people who just simply do not wish to work (or work hard), it is very difficult, nay impossible, for anyone to convince me that I should part with some of my hard-earned money in order to support them.

And yet – if you don’t have people and companies that make and save a lot of money, then there is know way to have funds for investment into new companies, research, technology, enterprises, etc.

And as long as you have people that don’t want to work, or don’t want to work hard, then you are going to have this gap.

But … here is a link that shows, contrary to the outcry of the liberals, that income inequality, is, in fact, shrinking. http://www.businessinsider.com/income-inequality-is-shrinking-fast-data-shows-2015-6

There are indeed countries where a socialist state approach seems to have done a relatively good job when viewed at a high level (income inequality). Sweden, Germany, England all seem to exhibit some very positive aspects to the way society functions. If I am not mistaken, however, all three of those countries seem to have a nominal tax rate north of 40% with Sweden being very close to 60%.

But some of their good points are:

Sweden – Peaceful, prosperous, high standard of living, little political upheaval (comparatively speaking)

Germany – Excellent healthcare system, free education, extremely productive work force, extremely high-quality goods (I looked up weaknesses of the German health care system. Biggest weakness is huge scams being run by Russian organized crime to siphon money out for fraudulent mobile care at home charges)

England – National Health Care system (for all its faults) does provide OK universal health care and due to the education system, doctors don’t graduate and enter the work force with obscene amounts of debt

I don’t say that taxes are bad. The idea of paying taxes is not actually abhorrent to me. But, on the other hand, giving that money to governments which are patently full of bumbling incompetence exacerbated by greed and corruption is something that … irks me.

Now of course you never going to find any government that seems to do anything that well, but I would submit, at least looking at some surface economic data, that countries like Norway haven’t done that bad of a job. Anecdotally, I have a British friend, who has now been living in Norway for quite some years, and although they have a nominal 38% tax rate, he is quite happy to live there and pay that. Why? Because in Norway one gets a considerable amount of benefit from paying those taxes. There is excellent infrastructure, education, and healthcare. The government works well and efficiently. Of course, the population is only 5.3 million and they don’t spend their time policing an ungrateful world. And they had a government that intelligently invested profits from the North Sea natural gas bonanza.

I have one friend who has doubtless forgotten more about economics than I will ever know. I’m sure there are glaring errors in some of my data and assumptions and he will be happy to point them out to me. 😊 But I will leave it here for now and continue next week.

It is certainly an enormously complex field and I’m glad I started looking at it.