The Daily View: ‘Longest Depression’, Basic Income, Pinterest

From Huffingtonpost: Future Economists Will Probably Call This Decade the ‘Longest Depression’

Sounds like goalpost moving, where slightly mediocre growth becomes a ‘depression’.

The 2008 recession, while deep and sudden, was narrow, only lasting about 16 months until growth picked up, where it has remained. Hardly a decade.

Also, the authors seem to be cherry picking the bad data (weak wage growth, China, shrinking labor force) and ignoring the good data such as exports, consumer spending, robust S&P 500 profits & earnings, technological innovation, stock market & real estate gains, etc.

Even China is not settled. It’s too early to say there is actually a mess. There is evidence maybe growth is glowing, but it’s far too early to call it a catastrophe, even though the doom and gloom media has been calling it one for the past year. The debate is over 7% GDP growth vs. 5.5%.

Yeah, if you pick the absolutely worst data out of all of the metrics, the economy is going to look worse than it really is. That’s why averages are so important.

From Why America is Not in Decline

Right now, we’re in a Goldilocks economy of modest growth, no stagnation, tame inflation, and no meaningful economic headwinds. Some pundits like Summers and Krugman bemoan how America’s economic growth is too anemic, especially compared to the 40′s and 50′s, and that its best days are behind it, but as I show here and in the graph below, US GDP growth has broken from the pack, since 2008 exceeding pretty much all g-20 nations. Yeah, 2-3% GDP growth ain’t great, but compared to pretty much everywhere else that has either no growth (Japan, UK, France) or high-inflation growth (Turkey, India, Brazil) – it’s pretty good.

And that is especially impressive for an economy as large as America. We’re never going to get back to 40′s era growth, and that’s fine. Law of large numbers and diminishing returns. It’s harder to grow an economy that is 5x larger at the rate it was growing when it was 5x smaller.
Post-2008 GDP growth is pretty much back to the historical average, or at least back to where it was in the late 90′s and 2000′s. Not hyper-speed growth, but certainty not recessionary.

Recent real GDP doesn’t deviate too much from historical performance:

Real US GDP growth is roughly back to where it was between 1997-2007, and no one was complaining about stagnation back then. It seems like the terms ‘depression’ and ‘recession’ have now been redefined by the left to mean ‘economy is not how we want it to be’ – too much wealth inequality and not enough job creation.

Inevitably, the UBI (universal basic income) comes up in any online economics debate. The UBI is a bad idea that refuses to die. When you consider SNAP is being abused to buy drugs, cigarettes, and alcohol, It’s implausible how a UBI without preconditions could work, which is why I propose the high-IQ basic income – or at least drug testing and or mandatory birth control/abstinence or even sterilization, to prevent further abuse of these programs. As to be expected, civil libertarian and other leftist types play the ‘Nazi’ or ‘racism’ card, but when your lifestyle involves public goods and or has externalities, your personal freedom becomes secondary.

EBT Cards Used in Illegal Drug Trade

Attorneys in the case say that the EBT cards are “a common currency for drugs.” The problem according to Sam Adolphsen, chief operating officer for the Maine Department of Health and Human Services, is that “the state cannot deactivate benefits regardless of how many times recipients lose their cards or say they are stolen.”

At FGA we have cataloged plenty of examples of the fraud that plagues America’s welfare system. The use of taxpayer assistance for the purchase of illegal drugs is possibly one of the worst abuses we’ve seen. Unfortunately, “the two crimes increasingly intersect.”
Adolphsen mentioned that “the presence of EBT cards in drug busts has become so commonplace that welfare fraud investigators at DHHS now regularly check the arrest logs in local newspapers for drug crimes and cross-reference suspects to see if they are also receiving state welfare benefits.” When agents from the Maine Drug Enforcement Agency find these cards, “they report that fact back to DHHS so the fraud unit can investigate.”

Entitlement spending is so high that it almost acts like a UBI.

The lowest quintile of households have a negative effective tax rate:

Some estimates are that a UBI would cost $3 trillion vs. $860 billion for social security. But the problem is existing entitlement spending programs won’t just go away with the ratification of a UBI. If people squander their UBI on non-essentials, which is guaranteed to happen as we’ve seen with EBT abuse, the government will have to step in and provide those essential services as they are doing already. Proponents of the UBI make the charitable, unrealistic assumption that the average American is as careful with money as they are. A UBI without preconditions would just compound existing entitlement spending.

From Businessinsider: Insiders say what’s going on inside $11 billion Pinterest — and it’s not all good

Businessinsider is a notorious click-bait aggregator, spinning minutia into hype and ad impressions.

Reminds be of the Uber California court case they hyped last year, that predictably didn’t go anywhere. Businessinsider incorrectly reported that the ruling would affect all California drivers:

It’s left to Judge Edward Chen to decide whether California Uber drivers will be covered by a federal class-action lawsuit that threatens to reclassify the entire state’s Uber-driver workforce as employees of the company.

Even though the judge ruled the driver was an employee, nothing really came of it, as I correctly predicted. The reason is because the ruling only affected the one employee, and Uber has prevailed over similar lawsuits before. Just another example of this blog being right more often than not.

The ruling does not apply beyond Ms. Berwick and could be altered if Uber’s appeal succeeds. Uber has also prevailed in at least five other states in keeping its definition of drivers as independent contractors.

That was seven months ago and Uber didn’t die, much to the disappointment of the left.

Some people so badly want for this to be 2000 all over again they they have to make things up. They have to turn molehills into mountains.

Back to the Pinterest article:

The visual scrapbook platform should be printing money. Its predominantly female audience browses Pinterest’s various boards for inspiration about their next fashion purchases, vacation destination, or on how to decorate a house — and they also act as free brand representatives by “pinning” their favorite products, making them visible to others.

It may come as a surprise to some, but making money is not important. That’s why so many people lost their shirts shorting the ‘unprofitable‘

Rather, it’s the the demonstrated ability to make money, which is more important. Should the time come to turn on the advertising money printing press, Pinterest and Snapchat, like Facebook, should have no difficulty making money. There’s already a huge line of advertisers ready to plow hundreds of millions of dollars into Pinterest ads. Investors are patient, knowing that Pinterest will start printing money when the time is right. But right now, Pinterest is still building the userbase and perfecting their ad platform. Like Facebook, Pinterest’s profit margins will be extremely high, and it would not surprise me if this company is worth $50 billion soon. But right now, Pinterest, like many web successful web 2.0 companies, is more interested in taking its time to build positive user and advertiser experience, than milking every user for every last dime.