China From Above

Monday night I watched an episode of China From Above subtitled Dynamic Coast on the Smithsonian Channel. It was fascinating.

There were aerial views of the big cities with rising populations along the east and south coast.

Part of the episode was about fishermen on icy Chagan Lake. They caught fish from under ice using a huge net, catching several tons of fish in one haul. They have been doing this for many generations.

Part of it was about erecting offshore wind turbines for power generation.

I recommend watching the series. The whole episode of Dynamic Coast is online here, but it seems you have to be a subscriber to a streaming service or have cable TV service including the Smithsonian Channel to get online access. As a Spectrum cable TV subscriber, I am able to see it and two episodes from Season 1. 

Mass shootings

There was an article in yesterday's print edition of the Cleveland Plain-Dealer about mass shootings written by John Lott. When I looked for it on the Plain Dealer website moments ago, it wasn't there. Maybe it will appear later. Anyway, it repeated the article I did find here. It is about left-wing liberals' biased claims about mass shootings.

Of course, mass shootings are tragic. So are the biased claims.

Bohemian Rhapsody

My wife and I saw the movie Bohemian Rhapsody on Nov. 17. We enjoyed it very much. The main character in the movie is Freddie Mercury, the band Queen's lead vocalist. I thought the movie was a little long in the part before Queen's performance at Live Aid. The part showing their Live Aid performance was terrific.

A philosophy professor, and an acquaintance many years ago, wrote a blog-post about the movie, which is here. He enjoyed it as much as I did, maybe more, but his thoughts about the experience of seeing it were very different from mine. I made some comments to his blog-post.

There are some videos on YouTube showing Queen's performance at LiveAid. One of them, this one, has a comical introduction for Queen.

Amazon HQ2 & HQ3 #3

Yesterday at a Thanksgiving celebration I asked a guy who works in information technology about Amazon HQ2 and HQ3, assuming there has been office buzz about it where he works. Part of his reply was that Amazon employees have bought residential real estate near the future new location(s). He didn't say how long ago this started.

So this morning I did a Google search {"Amazon employees" bought "real estate"}. There were lots of hits. Examples:  BoingBoing    Wall Street Journal (pay-walled)

The stories are mostly about Long Island City (HQ3).

Amazon HQ2 & HQ3 #2

This post will be about the reported tax breaks that Virginia and New York will give to Amazon. On Wikipedia there is heavy criticism of the tax breaks. One professor calls the tax breaks overly generous. Another professor says that Amazon's search for other locations was a ruse and a con. It was done to solicit bids from places that they never intended to move to solely to gain tax breaks. However, none of the critics quantify the overly generous tax breaks that they allege.

To take a "stab" at it I did some rough calculations comparing (a) the extra income taxes that Virginia and New York will collect assuming 25,000 employees at both HQ2 and HQ3 to (b) the reported tax breaks.  My calculations say that it will take nearly 4 years for Virginia and nearly 6 years for New York to recoup the tax breaks via income taxes. Call these "number of years to recoup" (Y). Such simple assumptions likely under-estimate Y.

Complications

The above assumed all the new Amazon employees will come from out-of-state, and they will all be added immediately. Both are obviously false. So let's assume that only half of the employees will come from out-of-state and the average number of employees over the first several years will be about half of the numbers shown above. Adjusting for both of these factors implies that Y will be nearly 16 years for Virginia and nearly 24 years for New York!

Arguably Y could be reduced some for favorable side effects like income to local businesses and rents. On the other hand, there will be unfavorable side effects. The presence of HQ2 and HQ3 will increase other costs to local people for things such as paying more for teachers, food, rent, infrastructure, and so forth. These are, of course, very difficult to quantify. But if the net effects were to reduce Y 1/8th, the result is still nearly 14 years for Virginia and nearly 21 years for New York! I'm inclined to agree with the professors.

I am confident that not many people in the general public do the above kind of analysis. Therefore, politicians can hand out tax breaks to Amazon or whoever, and most people in the affected community will swallow whole whatever the politicians say about it being a great deal for the local economy. Even if some of the people are skeptical about how good a deal it is for the community, there is little or nothing they can do once the tax breaks have been finalized.

Amazon HQ2 & HQ3 #1

According to several news stories Amazon is near announcing its new headquarters. That's two of them, not one as first announced. They are being called HQ2 and HQ3. HQ1, as I'll here call it, will remain in Seattle. HQ2 will be in Crystal City, VA very near Washington, D.C. and Reagan Airport. HQ3 will be in Queens, NY, near LaGuardia Airport but not far from JFK Airport. Some stories say HQ3 will be in Long Island City, which is not on Long Island but adjacent to Queens.

The following story compares real estate prices and more in the two new locations and Seattle.
How Amazon’s HQ2 and HQ3 locations compare with Seattle and the U.S. overall

I don't know how close HQ2 will be to the Crystal City Metro station, but I bet it will allow many to do a brief walk between them. Also, the Crystal City Metro station is only one stop away from the Reagan Airport Metro station (link).

Expected tax breaks for Amazon -- $573 million from Virginia and $1.525 billion from New York (link).

Perfect Competition #3

In this post I will add some points about equilibrium and perfect competition not in Richardson’s book.

A securities market, such as for common stocks, comes closest to meeting the criteria for perfect competition. There are numerous participants. Public information is widely available. What is traded is homogeneous. The trade is impersonal and and momentary. Neither trader has any control over the character of the stock. Neither trader has any control over the aggregate supply of, nor demand for, the stock. However, other markets are much different in every way mentioned. Obviously a model of a securities market does not reduce the workings of a market economy as a whole to its essentials.

Austrian economists  have pointed out the flaws of the perfect competition model. For example: "Contrary to the perfect competition model, what gives rise to a greater competitive environment is not a large number of participants in a particular market but rather a large variety of competitive products" (link). Also see here with its entertaining narrative about shopping for turkey.

Austrian economist Ludwig von Mises’ fictitious evenly rotating economy is like the stationary state economy described in Perfect Competition #1. An equilibrium of unchanging prices and products and repeating volumes of production and consumption each time period are essential features. Mises says the unchanging evenly rotating economy leaves no room for the entrepreneurial function. See more here.

Economists often write as if an equilibrium is expressible as a set of linear equations assumed to have a solution. For example, see here. However:
1. Getting an exact solution for a set of linear equations in mathematics requires that the independent (input) variables be truly independent.
2. Producers in a market economy are very inter-dependent via supply channels and as competitors.

Accordingly, that seems to turn any solution to a set of linear equations alleged to depict a market economy, or even a small part of one, to be little more than wishful thinking. There are trial-and-error methods of finding a best fit solution to a set of linear equations. Genetic algorithms are probably the main kind. However, the degree of a solution’s fit may be very poor.

P.S. I recently saw a Wall Street Journal article that suggested inter-dependency (link with paywall). The price of Apple stock fell 5% one day after one of its suppliers, Lumentum, cut its earnings and revenue outlook. The article doesn’t explain why. I presumed that many investors assumed Lumentum’s act signaled a cut in Apple’s earnings and revenue outlook, and hence the price drop. Related stories found after seeing the WSJ article: Bloomberg, MotleyFool.