Well…it has been kind of a weird day today and I seem to be running late for everything…it may have been working on the car and ordering the new exhaust…yeah…that’s it…but, that’s not what I want to talk about…was just sitting here today thinking about the crap economics that the repubs have been pushing for the past 40 years and the fact that the results are in…that anywhere the tea party asses have been in control have seen their economies and budgets busted by the idiot “faith” that tax cuts will lead to a growing economy and that budget cuts will do the same….not in Kansas, not in Louisiana, not in Michigan…nowhere. In Kansas, the economy is so bad that they can’t even afford to educate their children after the tax cuts to the rich and business…here in Michigan, the love of austerity and tax cuts (only to business) has led to the poisoning of an entire city and cities that are going bankrupt with cuts in state funding…and, after Bobby Jindal got done with Louisiana, a dem had to come in and try to fix the cratered economy and education system. But, the only thing that repubs will learn from this is that they didn’t cut taxes or spending enough…if they had only cut taxes for the rich completely, it would have worked…a delusion that is killing this country…but, the idiots keep getting re elected so maybe the people deserve this crap….geez…
Tag Archives: economics
Some thoughts on Netflix…
Well…with all of the turmoil that is going on with Netflix and the giant mistakes they have made over the past few months, I thought a few comment on their management might be in order. As you know, the stock has been in free fall since the ceo, Reed Hastings, made the stupid decision to raise prices almost 60% and split the company into two parts, losing almost 8 billion dollars in shareholder value in the process. What I don’t understand is the lack of economic understanding of the market they operate in and the utter hubris of their decision making. If you know anything about economics and how markets operate, you know that in the early days of Netflix they were operating as consumers of marginal output…that is they were the only purchasers of content that the providers had already paid for as an addition to the normal channels like HBO and Starz, giving the content suppliers marginal revenue that standard economic theory says should be taken at any cost. And, until competitors come into the market, Netflix got a bargain on this content that they then built their streaming services around. But, what they missed is the fact that as more channels are available for content providers, the price will rise as marginal demand for the product increases. That is exactly what happened in this case and this was compounded by the fact that the supply side of the equation changed as well, limiting the amount of price increases that the market will bear. So, in every possible part of the economic equation, Reed and his cronies got it wrong and they are now paying for it by the company’s valuation plunging by almost 75%….it just looks like a karmic payback for trying to screw the customers that made them successful….couldn’t have happened to a worse bunch…
It’s a lack of demand, stupid…
Well…I had to laugh the other day when the repubs continued to push tax cuts as the only way to create jobs here in the US….and you’ve heard me talk about how boneheaded that is considering the excess capacity that exists in the economy. Corporations will not add one job when there is no demand for the products that that job will create…and lowering taxes, even to zero, will do nothing to create that demand. What is the mechanism that tax cuts use to create jobs? I’ve never heard that described by any of the repub idiots out there…but they don’t believe in the science of economics any more than they believe in the science of evolution so why should anyone be surprised? I still think that the lack of demand in this economy is the direct result of the collusion between the repubs and business to cut the real wages of working people by making them compete with overseas workers that earn a dollar an hour and by the union bashing that is one of the central tenets of the repub philosophy. I’ll ask the same question I’ve asked many times before…”who is going to buy your 40 thousand dollar Suburban when everyone is making minimum wage?” Geez….
The economic know nothings win….
Well…it looks like the economic know nothings in the congress have won and we are headed back into recession with the trillions of dollars in cuts that are included in the bill… the repubs keep saying that these cuts will stimulate the economy but it has never happened in the history of modern economies and I guess it just like everything else with those guys; the have faith that they are right and that’s all they need. As I’ve said before and as every econ 101 student knows, demand is what drives economies to expand and this bill will lower demand from both the government and individuals…it’s what I learned in my masters program…you can’t cut your way to growth…and this slack recovery is the direct cause of business squeezing their workers to the point that it’s hard to make ends meet on two incomes nowadays; it used to be that you could do it on one…this gutting of the middle class has reached a tipping point that I think will doom us to a permanent recession or stagnation…you reap what you sow…
Now, all that’s left to do is wait until the crash hits and vote these nuts out of office and repair this damage…
No politics right now…
Well…okay, I will have a little bit of a political commentary…I have never seen so much backpedaling happening since the last time I went to the circus…I should feel bad for Paul Ryan when even members of his own party are running away from his budget plan but I don’t…I have absolutely no feeling but contempt for these radical idiots who think a mid-term election win that is fueled by their base gives them a “mandate” to impose not just radical but stupid economic policies on the rest of us. This whole austerity nonsense is starting to show up in a marked slowdown in the economy and higher unemployment just when we should be putting our foot on the gas to ensure that the recovery doesn’t falter….and I would rather listen to a Nobel winning economist like Paul Krugman who has been taking these idiots to task….you can’t cut your way to prosperity, but that is becoming the accepted wisdom from the repubs….what “wisdom” they have which is not much…
Okay….it was political…but I didn’t mean it to be that way….I will be back with just some musings later….the trail is looking really cool and I have to tell you about that…
An inconvenient truth…
Well…yeah, I know, I stole that from Al Gore but it does describe the situation here in Michigan where the misguided repubs are betting the future of job growth on tax cuts for business while raising taxes on everyone else. This idea came from a couple of columns I read this morning and caused some of the econ 101 memories to come back to the top of my head. One of the articles was by Brian O’Connor in the Detroit News…yeah, I know, with an article going against the repubs line, where is he going to go to work next? The article dealt with the repubs claim that tax cuts for business will cause the cost of labor to decrease so business will hire more people, and he used the example of a conversation with the owner of one his favorite pizza places; when asked the question, the owner wanted to know what corporation would be buying the extra pizzas he needs to sell to justify hiring new employees and expanding his business. With tax increases on everyone else, the first thing to go in discretionary spending is eating out, and without an increase in demand for his pizzas, no amount of tax cuts will make him hire even one more person.
This points to the inconvenient truth that the repubs don’t want anyone to think about…with tax cuts for business and increases for everyone else, demand is going to fall and no business is going to hire in the face of decreasing demand….gov Snyder might have made millions selling off Gateway, but he and his administration are acting like the truths of economics can be trumped by belief….a recipe for disaster for our state and country….geez…
All deficits are not created equal
Well…the latest rant from the righties is that Bush’s deficits were nowhere near as large or bad as the one’s that have come from the Obama administration. What most people of both right and left fail to realize is what I think is the core distinction between the two: The Bush deficits were done by the choice of his administration to give tax cuts when we were fighting two wars. On the other hand, the Obama deficits are, to some extent, inherited from the Bushies, but mostly are a result of the economics that anyone learns in econ 101: in the midst of a severe recession, one of the best ways to stimulate the economy and help end that recession is for the government to deficit spend. Is the problem that deficit spending will help keep the middle class working? It’s been clear for a long time that the Repubs don’t really care what happens to the middle class…and yet so many of them keep believing the lies they are being fed and keep voting for the same people that gave us Enron, Blackwater, and how many other instances of looting from our society. Geez…