A Geek With Guns

Chronicling the depravities of the State.

Archive for the ‘Economics’ Category

What Part of Free Didn’t You Understand?

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Did you know that a majority of apps targeted at children contain ads:

(Reuters Health) – Those cute little apps your child plays with are most likely flooded with ads – some of which are totally age-inappropriate, researchers have found.

A stunning 95 percent of commonly downloaded apps that are marketed to or played by children age five and under contain at least one type of advertising, according to a new report in the Journal of Developmental & Behavioral Pediatrics. And that goes for the apps labeled as educational, too, researchers say.

That’s just terrible… oh:

The researchers scrutinized 135 of the most downloaded free and paid apps in the “age five and under” category in the Google Play app store. Among them were free apps with 5 to 10 million downloads and paid apps with 50,000 to 100,000 downloads.

Emphasis mine.

To once again quote The Moon is a Harsh Mistress, there ain’t no such thing as a free lunch (TANSTAAFL). If you can download an app without paying upfront, the developer is making money in some other way. Advertisements are the quick and easy go to. In app purchases are the more sophisticated method although more difficult to execute because you need to incentivize users to buy your in app purchases. When your target audience is children, in app purchases are even more difficult because parental controls often prevent children from making purchases directly.

Instead of performing a study with an obvious result such as determining how many free apps display ads (almost all of them), a better study would be to learn why people are so foolish as to believe that they can get something for free.

Written by Christopher Burg

November 1st, 2018 at 10:30 am

Apocalyptic Financial Predictions Aren’t Just for Libertarians Anymore

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Apocalyptic financial predictions are a staple of libertarianism. This isn’t without merit. Governments around the world implement financial policies that can lead to nowhere but ruin. However, the mainstream media has always laughed at these libertarian predictions… until now:

Financial experts noted several ominous economic indicators, including skyrocketing student loans and U.S. household debts, that could predict a crash “worse than the Great Depression,” according to a report in the New York Post.

Goldman Sachs predicted that this year’s U.S. fiscal outlook would be “not good,” and that U.S. household debt had been increasing since the 2008 housing crisis led to American taxpayers bailing out the big banks.

In 2018, experts said, a $247 trillion global debt will be the greatest cause of the next cataclysmic financial crash. Additionally, low wages and the U.S. national debt’s steady rise are expected to drag down the economy.

This is from Newsweek of all sources.

Granted, the only reason the mainstream media is jumping onboard of the SS Financial Meltdown is because Trump is in office. If Hillary had won and implemented the same policies that Trump has, the mainstream media would still be laughing at predictions of financial meltdown. Regardless of their reasoning it’s still funny seeing this kind of story appearing.

Written by Christopher Burg

October 17th, 2018 at 10:30 am

Fiscally Conservative

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If you ask most people what one of the major difference between the Republican and Democratic parties is, they will tell you that the Republican Party tends to be more fiscally conservative. The Republican Party is in power now so a wave of fiscal conservation is upon us, right? Not so much:

The U.S. federal budget deficit rose in fiscal 2018 to the highest level in six years as spending climbed, the Trump administration said Monday.

The deficit jumped to $779 billion, $113 billion or 17 percent higher than the previous fiscal period, according to a statement from Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Mick Mulvaney. It was larger than any year since 2012, when it topped $1 trillion. The budget shortfall rose to 3.9 percent of U.S. gross domestic product.

It turns out that neither party is fiscally conservative. And really, why should they be? They’re not spending their own money. They’re not even primarily spending out money. They’re spending the money that they’re printing. Since they can print an infinite amount of money, there is no motivation for them to spend less… at least until the whole financial system collapses due to an irreconcilable misallocations of resources. But that’s a problem for the next generation, right?

Written by Christopher Burg

October 17th, 2018 at 10:00 am

I Want to Alter the Deal

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The Witcher series of games have been phenomenally successful. In fact their success has overshadowed the books that they were based on. Unfortunately for the author, he made a bad deal and now wants to alter the deal:

“I was stupid enough to sell them rights to the whole bunch,” Sapkowski said at the time. “They offered me a percentage of their profits. I said, ‘No, there will be no profit at all — give me all my money right now! The whole amount.’ It was stupid. I was stupid enough to leave everything in their hands because I didn’t believe in their success. But who could foresee their success? I couldn’t.”

Sapkowski has now made a public demand for six percent of the profits obtained for the lifetime of the franchise, which adds up to more than $16 million for The Witcher 3: Wild Hunt alone.

I especially enjoy how he admits that he was initially offered a percentage of the profits and turned the offer down because he didn’t believe that the project would be successful. So even he’s admitting that his failure to capitalized on his novels was entirely his fault.

Higher risks generally come with greater rewards, which makes sense since there needs to be a justification for taking a risk. Sapkowski played it safe and took the low risk/low reward option. Generally speaking, if you can bear the brunt of losing out on a high risk/high reward situation, take it. Sapkowski had income from his books so he may have been able to bear the brunt of not receiving any money on the series if it flopped. If you ever find yourself in a similar position, give the high risk option some serious thought.

Written by Christopher Burg

October 5th, 2018 at 10:00 am

Creating Jobs

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If you ask an advocate of tariffs what punishing consumers is supposed to accomplish, amongst other things they will claim that tariffs create domestic jobs. That ignorance is based on the belief that foreign companies don’t employ people domestically but since we live in a global economy, a lot of foreign companies hire domestic employees. So tariffs often destroy jobs rather than create them:

Alibaba’s founder and chairman Jack Ma says the Chinese mega e-commerce company no longer has plans to create 1 million jobs in the US, citing the ongoing trade conflict as the reason Alibaba is retracting its promise to Donald Trump. A new round of tariffs between the US and China will make mutual trade more difficult.

Who would have guessed that alienating one of the largest economies on Earth would have consequences?

Written by Christopher Burg

September 20th, 2018 at 10:00 am

Buying Less for More

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The Trump administration has decided to devalue your dollars even more by placing additional tariffs on Chinese goods:

The US is imposing new tariffs on $200bn (£150bn) of Chinese goods as it escalates its trade war with Beijing.

These will apply to almost 6,000 items, marking the biggest round of US tariffs so far.

Handbags, rice and textiles will be included, but some items expected to be targeted such as smart watches and high chairs have been excluded.

The Chinese commerce ministry said it had no choice but to retaliate but is yet to detail what action it will take.

The US taxes will take effect from 24 September, starting at 10% and increasing to 25% from the start of next year unless the two countries agree a deal.

The upside of trade wars is that they don’t start out as shooting wars. The downside of trade wars is that they’re a war on consumers. Every tariff means that consumers are stuck paying more for less. A bag of rice that costs $5.00 can suddenly cost $6.25 for no reason other than where it was produced. A cell phone that costs $500 can suddenly cost $625. What makes tariffs a real gut punch though is that since they’re usually calculated by the price of a good, they increase as inflation causes prices to increase. If that $500 cell pone begins to cost $600 due to inflation, the cost with the tariff tax included will be $750.

The only winner in a trade war is the government because it pockets the tariffs.

Written by Christopher Burg

September 18th, 2018 at 10:00 am

Domestic Tariffs

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Tariffs are in the news after Trump decided that the playing field between the bureaucratically choked United States and the rest of the world needed leveling. But what about domestic tariffs? The states that make up the United States aren’t supposed to implement tariffs against each other but thanks to the Supreme Court they now can:

If an internet retailer in Pasadena, CA sells a good or service to a resident of Washington, D.C., simple logic dictates that the transaction not be sales-taxed in Washington, D.C. It shouldn’t because the business isn’t in Washington. It’s on the other side of the country, and there the business will pay Pasadena taxes. So when judges and politicians talk about the importance of levying sales taxes on outside vendors, what they’re really saying is that they want government to dip its hands into our pockets twice.

Stating the obvious, the internet sales tax isn’t about leveling the tax playing field as much as it’s yet another grab of the economy by politicians. “Grab of the economy” is an apt phrase simply because politicians don’t tax away our dollars to stare lovingly at them; rather they take our dollars for what they can be exchanged for. The more tax dollars that politicians collect, the greater their ability to be size buyers of cars, trucks, land, buildings, and most economy-suffocating of all, human labor. Having decided they’re not collecting enough of what we earn, and plainly averse to competing with other locales when it comes to keeping taxes down, gluttonous local governments naturally love the idea of using internet commerce as another way to take.

About all this, let’s make no mistake about what these tax-thirsty governments are doing. Much like businesses that seek protection from competition, they’re seeking protection from lower-tax cities, states and countries. To be very clear, they’re seeking tariff-protection. Let’s call them domestic protectionists.

The reason the issue of online sales taxes arose is because politicians in tax heavy states were losing out to states with less burdensome taxes. Online retailers can operate anywhere in the world, which means many operate in states with relatively low sales tax. For example, an online retailer could headquarter in Montana, which has no sales tax and sell to somebody living in Minnesota, which has an absurdly high 6.875 percent sales tax. The person in Minnesota will be encouraged to purchase from the online retailer over a local sellers because the local seller will charge an addition 6.875 percent on top of the cost of the good or service. This arrangement upsets the politicians in Minnesota because they lose the opportunity to pocket some of the buyer’s money. If Minnesota can force the retailer in Montana to collect sales tax for it, it wins (and, of course, retailers throughout the country lose because they have to become experts on Minnesota sales tax laws along with the sales tax laws of their own state).

A lot of people believe that arrangement sounds fair (funny enough, they’re often the same people who are currently bitching about federal tariffs). But the alternative, states with high sales taxes having to lower their taxes in order to compete with states with low sales taxes, would be far fairer to consumers, especially poorer consumers to whom an additional 6.875 percent isn’t chump change.

Written by Christopher Burg

July 24th, 2018 at 11:00 am

How Tariffs Work

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People who subscribe to mercantilism tend to favor internal trading over external trading. If external trading is to occur, they prefer that their nation only export goods while the other nations of the world only import goods. But that ideal is difficult to realize because people in one nation are often interested in the goods and services provided by people of other nations and that interest leads to mutual trade. How can a mercantilist thwart this mutual trade? By imposing artificial barriers on international economic activity. While there are many such barriers that can be raised, the most popular barrier today is the tariff. The Mercantilists imagine that implementing tariffs means that its people will develop a preference for domestic products over foreign products while foreigners will still prefer importing the goods of their nation. Nobody likes an unfair deal so in actuality all that happens is that the nation implementing the tariffs is bypassed:

The European Union and Japan have signed one of the world’s biggest free trade deals, covering nearly a third of the world’s GDP and 600 million people.

One of the biggest EU exports to Japan is dairy goods, while cars are one of Japan’s biggest exports.

The move contrasts sharply with actions by the US Trump administration, which has introduced steep import tariffs.

If the United States won’t play fair, then it won’t get to play at all.

The current administration is playing a stupid game. It’s trying to develop domestic economic activity by artificially raising the price of imported goods even though the United States doesn’t have the experience or capacity to manufacture many imported goods on a scale that can satisfy demands. The result of this game is that consumers in the United States will be forced to pay more for their goods while the rest of the world bypasses the United States.

Written by Christopher Burg

July 17th, 2018 at 10:00 am

Unsurprising Results

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What happens when your government decides to place additions taxes in the form of tariffs on imported materials that your business relies on? You face the possibility of going out of business:

Steel tariffs could force the nation’s largest nail manufacturer to close or move to Mexico.

The Mid-Continent Nail plant in Poplar Bluff, Missouri, laid off 60 of its 500 workers last week because of increased steel costs. The company blames the 25% tariff on imported steel. Orders for nails plunged 50% after the company raised its prices to deal with higher steel costs.

The company is in danger of shutting production by Labor Day unless the Commerce Department grants it an exclusion from paying the tariffs, company spokesman James Glassman told CNN’s Poppy Harlow.

Shocking, I know.

This isn’t the first business to announced difficulties due to Trump’s new tariffs. Harley Davidson announced that it will move at least some production outside of the United States to get around the new tariffs. More dominoes are likely to fall as well.

“But, Chris, why don’t these unpatriotic companies buy American steel instead,” you ask? Because America doesn’t produce a whole lot of steel and what steel it does produce costs more than imported steel. “Well these tariffs will cause domestic steel production to increase, right?” Not so much. Profit is only one reason for the lack of domestic production. There is also a terrible amount of red tape strangling steel production. The environmental regulations on mining raw materials are many and when those regulations are finally dealt with the refineries get to deal with a bunch of additional environmental regulations. Labor is another factor. American labor isn’t cheap, especially when employers are required to pay Social Security, Medicare, disability, and other mandatory benefits for each employee they hire. Then there is the simple fact that a lot of Americans don’t want a job working in mines or refining metals.

Domestic manufacturers import foreign steel because it’s cheaper but foreign steel is cheaper due to many factors. While the recently implemented tariffs are likely to encourage some increase in domestic steel production, the additional steel probably won’t be enough to satisfy domestic needs and will almost certainly be more expensive than foreign steel, which means domestic manufacturers will still have to move outside of the country if they want to keep their prices at a level to which consumers have become accustomed.

Written by Christopher Burg

June 27th, 2018 at 10:00 am

Somebody Pilfered the Lock Box

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The Ponzi schemes that is Social Security is, not surprisingly, facing some financial issues. Apparently somebody has pilfered the lock box because the program is going to be dipping into its reserves:

Medicare’s finances were downgraded in a new report from the program’s trustees Tuesday, while the projection for Social Security’s stayed the same as last year.

Medicare’s hospital insurance fund will be depleted in 2026, said the trustees who oversee the benefit program in an annual report. That is three years earlier than projected last year.

This year, like last year, Social Security’s trustees said the program’s two trust funds would be depleted in 2034.

For the first time since 1982, Social Security has to dip into the trust fund to pay for the program this year.

This shouldn’t surprise anybody. The entire idea behind Social Security, forcing employees to put money into a government account so they can withdraw from it when they reach an arbitrarily defined age (which continues to increase), is impossible to maintain with a deflationary currency. An employee who puts a dollar into an account in 1960 will only withdraw $0.12 worth of purchasing power in 2018. Under these conditions either the amount of money available to retirees has to be increased, which will deplete the account quickly, or the retiree cannot be given the same purchasing power that they deposited (which, in effect, means their purchasing power was stolen from them).

But inflation isn’t the only issue facing Social Security. Ponzi schemes require a constantly increasing number of participants. With the birth rate declining rapidly in the United States, there aren’t going to be as many workers as there once were so the number of people paying into Social Security will diminish while the number of people extracting from Social Security will increase.

The bottom line is, regardless of what politicians claim, Social Security is doomed.

Written by Christopher Burg

June 6th, 2018 at 10:00 am