Robinson Crusoe Economics (The Coconut Magnate)

Real business cycle theory

 

In the Robinson Crusoe economy, there is only one individual – Robinson Crusoe himself. He acts both as a producer to maximise profits, as well as consumer to maximise his utility.[5] The possibility of trade can be introduced by adding another person to the economy. This person is Crusoe's friend, Man Friday. Although in the novel he plays the role of Crusoe's servant, in the Robinson Crusoe economy he is considered as another actor with equal decision making abilities as Crusoe. Along with this, conditions of Pareto Efficiency can be analysed by bringing in the concept of the Edgeworth box.[1] The basic assumptions of the Robinson Crusoe economy are as follows:[6] The island is cut off from the rest of the world (and hence cannot trade) There is only a single economic agent (Crusoe himself) All commodities on the island have to be produced or found from existing stocks

Robinson Crusoe Economy

In short, he must (a) choose his goals; (b) learn how to achieve them by using nature-given resources; and then (c) exert his labor energy to transform these resources into more useful shapes and places: i.e., into “capital goods,” and finally into “consumer goods” that he can directly consume. Thus, Crusoe may build himself, out of the given natural raw materials, an axe (capital good) with which to chop down trees, in order to construct a cabin (consumer good). Or he may build a net (capital good) with which to catch fish (consumer good). In each case, he employs his learned technological knowledge to exert his labor effort in transforming land into capital goods and eventually into consumer goods. This process of transformation of land resources constitutes his “production.” In short, Crusoe must produce before he can consume, and so that he may consume. And by this process of production, of transformation, man shapes and alters his nature-given environment to his own ends, instead of, animal-like, being simply determined by that environment.

6.  A CRUSOE SOCIAL PHILOSOPHY

 

Since economics is by definition about human action, the simplest imaginary construction in economics is that of a single, isolated human actor: a "Robinson Crusoe."[3] A key merit of "Crusoe praxeology" is that by simplifying things to the extreme, the praxeologist can get at what is logically necessary about all human action. He can do this by "assuming away" (or "abstracting from") conditions until he gets to a point where assuming away anything more will result in something that can no longer be considered action.

Mises on Action

  In the first essay in Part III of Robinson Crusoe’s Economic Man, Melanie Samson reveals four assumptions economists make when invoking Crusoe:

1. The economic subject is representative and autonomous.
2. The economic subject has freedom of choice.
3. There are no barriers to changing vocations.
4. Individuals in domestic markets model nations in international markets.

In response to these assumptions, Samson points out,

1. Crusoe is particular and has unique biases and aids that reveal his connections and dependency.
2. Race and gender biases heavily shape economic choices all over the world.
3. Changing jobs is far more complex than the Crusoe metaphor implies.
4. Nations are internally fragmented by inequities in labor markets.  

Robinson Crusoe's Economic Man: A Construction and Deconstruction

 

 

The Shady Economist [Part I]

Sometimes a picture really does tell a thousand words. Here’s a chart, based on data from the Philadelphia Fed, showing actual economic results compared to the predictions of professional economists. As you can see, my profession does a wretched job.

Don’t Trust Economists

Eighty years after the Great Depression we still argue about what caused it and why it ended. If economics is a science, it is more like biology than physics. Biologists try to understand the relationships in a complex system. That’s hard enough. But they can’t tell you what will happen with any precision to the population of a particular species of frog if rainfall goes up this year in a particular rain forest. They might not even be able to count the number of frogs right now with any exactness. We have the same problems in economics. The economy is a complex system, our data are imperfect and our models inevitably fail to account for all the interactions. The bottom line is that we should expect less of economists. Economics is a powerful tool, a lens for organizing one’s thinking about the complexity of the world around us. That should be enough. We should be honest about what we know, what we don’t know and what we may never know. Admitting that publicly is the first step toward respectability.

Don’t Trust (Macro) Economists

Perceived and Underlying Inflation Rates (Have You BEEN To The Grocery Store Lately, Trent?)

  

“Inflation is creeping in. Businesses are holding back. People are up against the wall.”

“Those who live in ivory towers and pontificate about the ‘real’ economy while being totally removed from it should really experience how the 99 percent live.”

“If you believe the BS stats, you are in the minority. Consumers KNOW differently. Core CPI, etc. What a pile of cowdung!”

Inflation is Quiet, So Why are People Still Feeling its Pain?

 

Economists use adjusted measures of inflation, such as the seasonally adjusted, core, and 16 percent trimmed mean indexes, because they are looking for underlying trends that are relevant to the formulation of economic policy. Changes caused by seasonal factors, and changes like the price of oil, which are determined in world markets, are not highly relevant to policy making. Consumers, on the other hand, look at price changes as they happen in the real world, without seasonal adjustment. Far from ignoring prices that change more than usual, they may give them exaggerated importance. For that reason, the rate of inflation as perceived by consumers is often higher than inflation as measured by economists.

U.S. Inflation Data: Seasonally Adjusted CPI Shows Zero Change For April

And, yes, I have BEEN to the grocery store recently.... :)

Small Arms Ammunition Mfg (Producer Price Index Industry Data) 2004-2012

I keep hearing about rising ammo prices...So I decided to look for myself... Series Id: PCU332992332992 Industry: Small arms ammunition mfg Product: Small arms ammunition mfg Base Date: 198506 Producer Price Indexes @ BLS

The Shit Hits The Fan Fund 2.011 (The Quest for Low Beta)

I've been waiting for this mini crash to start a new fund...:)
My goal, as always, is to outperform the S & P 500

Inflation Falls: Is the Economy Saved or Doomed?

Inflation in June fell for the first time in a more than a year. The Consumer Price Index (CPI), which is the government's most widely watched gauge of what the things average Americans buy cost, fell 0.2% last month. The drop was mostly driven by a fall in gas prices, which were down nearly 7% alone in June. The question is whether this is a good sign for the recovery, or another sign that we are headed for a double dip. Are we at the end of the soft patch, or the beginning of a worse patch?

Inflation Falls: Is the Economy Saved or Doomed?

The Consumer Price Index for All Urban Consumers (CPI-U) decreased
 0.2 percent in June on a seasonally adjusted basis, the U.S. Bureau
 of Labor Statistics reported today. Over the last 12 months, the all
 items index increased 3.6 percent before seasonal adjustment.

In contrast, the index for all items less food and
energy increased 0.3 percent for the second consecutive month.

Consumer Price Index - June 2011 

Stop The Presses!! (The Myth Of The Exploding US Money Supply)

So yes, the US government is running a massive $1.5T deficit, however, by any metric of money supply we can see that this is barely offsetting the continued de-leveraging that is occurring across the US economy. We are certain to see higher rates of inflation in 2011 (especially if oil prices surge higher), however, it is not an accurate portrayal of reality to conclude that the USA is “printing money” uncontrollably and flooding the world with dollars that will lead to hyperinflation. That is simply not the case and the data speaks for itself. At best, we are barely printing enough to offset the destruction of de-leveraging….

The Myth Of The Exploding US Money Supply

Gold Lords (He Who Has The Gun Gives The Orders)

Convert all the drug organizations to gold mining firms. Sounds good to me :)

Guerrillas and their paramilitary adversaries have long been involved in mining, often using it and related businesses like cattle ranching to launder money and to extract extortion payments. But military intelligence officials and residents here say that new factors, like the success of American-financed coca eradication projects and the price of gold, have pushed rivals in Colombia’s long drug war to focus elsewhere.

In Colombia, New Gold Rush Fuels Old Conflict

Gold Lords

Dart-throwing Chimpanzees (On Economic Forecasting)

There was one significant factor in greater prediction success, however, and that was cognitive style: “foxes” who know a little about many things do better than “hedgehogs” who know a lot about one area of expertise. Low scorers, Tetlock wrote, were “thinkers who ‘know one big thing,’ aggressively extend the explanatory reach of that one big thing into new domains, display bristly impatience with those who ‘do not get it,’ and express considerable confidence that they are already pretty proficient forecasters.” High scorers in the study were “thinkers who know many small things (tricks of their trade), are skeptical of grand schemes, see explanation and prediction not as deductive exercises but rather as exercises in flexible ‘ad hocery’ that require stitching together diverse sources of information, and are rather diffident about their own forecasting prowess.”

Financial Flimflam: Why Economic Experts' Predictions Fail

“If the professional economists can’t predict economies and professional forecasters can’t predict markets, then what chance does the amateur investor have? You know the answer already, which brings me to my own ‘cocktail party’ theory of market forecasting, developed over the years of standing in the middle of living rooms, near punch bowls, listing to what the nearest ten people said about stocks.


In the first stage of an upward market – one that has been down awhile and that nobody expects to rise again – people aren’t talking about stocks. In fact, if they lumber up to ask me what I do for a living, and I answer, ‘I manage an equity mutual fund,’ they nod politely and wander away. If they don’t wander away, then they quickly change the subject to the Celtics game, the upcoming elections, or the weather. Soon they are talking to a nearby dentist about plaque. When ten people would rather talk to a dentist about plaque than to the manager of an equity mutual fund about stocks, it’s likely the market is about to turn up.


In stage two, after I’ve confessed what I do for a living, the new acquaintances linger a bit longer – perhaps long enough to tell me how risky the stock market is – before they move over to talk to the dentist. The cocktail party talk is still more about plaque than about stocks. The market is up 15 percent from stage one, but few are paying attention.


In stage three, with the market up 30 percent from stage one, a crowd of interested parties ignores the dentist and circles around me all evening. A succession of enthusiastic individuals takes me aside to ask what stocks they should buy. Even the dentist is asking me what stocks he should buy. Everybody at the party has put money into one issue or another, and they’re all discussing what’s happened.


In stage four, once again they’re crowded around me – but this time it’s to tell me what stocks I should buy. Even the dentist has three or four tips, and in the next few days I look up his recommendations in the newspaper and they’ve all gone up. When the neighbors tell me what to buy, and then I wish I had taken their advice, it’s a sure sign that the market has reached a top and is due for a tumble.”

Peter Lynch, One Up On Wall Street

Even if they did, they would shy away from forecasting. The main advantage that academic economists’ have over professional forecasters may be their greater awareness of established relationships between factors. What is hardest to forecast, though, are turning points – when the old relationships break down. While there may be some factors that signal turning points – a run-up in short-term leverage and asset prices, for example, often presages a bust – they are not infallible predictors of trouble to come.

Why Did Economists Not Spot the Crisis?

The actual year-end 10-year yield was 31% higher than the average of the economists' estimates made less than three months earlier.

An Economic Forecasting Fiasco: What Pro Economists Predicted For QE2 And Treasury Yields

The truth is that our knowledge of the complex system called the economy is woefully inadequate and may always remain that way. We ask too much of economics. Even our best attempts to measure the job impact of the stimulus spending make this clear. In November of 2010, the CBO estimated that the stimulus had created between 1.4 and 3.6 million jobs. Not a very precise estimate.

Congressional Testimony on the Stimulus 

The discussion largely centers around the weak version which says that, while market prices may not always be a great guide to real economic forces, their movements are not systematically predictable. At every moment, prices reflect all the forecasts of all the market participants who, between them, have access to all potential information and ways of utilizing it. A price moves only when new information arises. But to be truly new, this information has to be unpredictable—otherwise it is simply an inference from information that already exists. Because the information is unpredictable, so is its effect on prices. The randomness of price movements in turn implies that no one can outperform the market in betting on where they will go.


I have no problem with this. The fallacy arises when this argument is invoked to deny the possibility that economists can identify bubbles in real time. If you’re so smart you can spot a bubble, why aren’t you rich? If people could spot bubbles with any predictability, then the EMH would be wrong—but we know it’s right.

Why the Efficient Market Hypothesis (Weak Version) Says Nothing about the Ability to Identify Bubbles 

One way to interpret this is that the economics profession was not fully accounting for the economy’s human element, an element that can’t be reduced to mathematical analysis.


The relatively few professional economists who warned of the current crisis were people, it seems, who not only read the scholarly economics literature, but also brought into play more personal judgment: intuitive comparisons with past historical episodes; conclusions about speculative trading, price bubbles, and the stability of confidence; evaluations of the moral purposes of economic actors; and impressions that complacency had set in, lulling watchdogs to sleep.

 A People’s Economics 

The This American Life  program reported that massive and sophisticated computer modelling of economic forecasts results in not particularly high levels of accuracy. There is too much chaos in the world – chaotic randomness, including national and global political events – for modelling to be that effective in increasing forecasting accuracy.

Also, the program reported that the forecasters find it very difficult to admit that their forecasts are wrong – their egos get in the way when they need to revise their forecasts.

Witches, ghouls and economic forecasting 

Economic forecasting delusions

Forecasters collectively have tended to make the largest
errors during periods that included either turning points
in the business cycle or significant shifts in the trend rate
of growth of labor productivity. Large changes in oil
prices—apart from their role in precipitating business
cycles—also cause errors in forecasts of inflation.

CBO’s Economic Forecasting Record: 2010 Update 

The result? More often than not, the dart board beats the traditional, technical analysis methods of trading stocks! One group of dart-board investors beat the S&P 500 without fail for 12 consecutive years, and realized an impressive 23.4 return on their dart board stock selections

Astrology and the Stock Market: “Astro Investing” 

And sailors will soon again be able to afford a stripper in every port! (U.S. Inflation Goals 1933 Style)

1942 OWI Poster

The purpose should also be to keep wages at a point stabilized with today's cost of living. Both must be regulated at the same time; and neither one of them can or should be regulated without the other.


At the same time that farm prices are stabilized, I will stabilize wages.


That is plain justice -- and plain common sense.

Fireside Chat 22: On Inflation and Food Prices (September 7, 1942)
Franklin Delano Roosevelt

Contrast with:

A 10-minute short film produced by the MGM studio to be played in movie theaters across the country. Pete Smith explains (with graphs!) how FDR’s inflationary policies are going to help the economy.

“And sailors will soon again be able to afford a stripper in every port! . . . What inflation has done before it will do again! . . . What a man! And what a leader! Yowzer! Happy days are here again!”

Misunderstanding Inflation through the Years


Inflation in 1933 (explained by MGM Studio)

Ezra Pound On Economics

"In our time, the curse is monetary illiteracy, just as inability to read plain print was the curse of earlier centuries."
— Ezra Pound

$8133.64 Per Sq. Foot (Carpinteria Love)

• 3485 Padaro Ln
  CARPINTERIA, CA 93013
• MLS #
  10-3344
• Price
  $5,295,000
• Status
  Active
• Square Footage
  651
• Lot Size
  20,909
• Bedrooms
  3
• Bathrooms
  1
• Half Bathrooms
  1
• Year Built
  1935
• Property Type
  Home/Estate
• Style
  Cal. Cottage
• Contruction
  Single Story
• Exterior
  Wood Siding
• Interior
  Wood
• Roof
  Composition
• Foundation
  Raised

Do you think they will throw in a Weber BBQ for that price??

Adorable 100 year old Padaro Lane beach cottage sits above the sand in Santa Barbara's premiere ocean front enclave. On nearly one half acre with almost 100 feet of beachfront one can enjoy it as it is or take advantage of plans designed by Neumann, Mendro, Andrulaitis Architects for a stunning two story beach home with expansive views all the way down to Serena Cove.

3485 Padaro Ln, Carpinteria


Village Properties

Life < 100 Items??

Inspired by books and blog entries about living simply, Ms. Strobel and her husband, Logan Smith, both 31, began donating some of their belongings to charity. As the months passed, out went stacks of sweaters, shoes, books, pots and pans, even the television after a trial separation during which it was relegated to a closet. Eventually, they got rid of their cars, too. Emboldened by a Web site that challenges consumers to live with just 100 personal items, Ms. Strobel winnowed down her wardrobe and toiletries to precisely that number.

But Will It Make You Happy?

The 2010 Social Networking Map

2010 Social Networking Map

I Have A Dream (Economics: A Good Choice of Major for Future CEOs)

 Economics: A Good Choice of Major for Future CEOs

Patricia M. Flynn
Bentley University - Department of Economics

Michael A. Quinn
Bentley University - Department of Economics


November 28, 2006


Abstract:     
It is often suggested that Economics is a good major for individuals interested in becoming business leaders. Despite this widespread assertion, little research has been conducted on this topic. Using the Standard and Poor (S&P) 500 companies, this paper examines the validity of such a claim. We find evidence that Economics is a good choice of major for those aspiring to become a CEO. Economics ranked third with 9% of the CEOs of the S&P 500 companies in 2004 being undergraduate Economics majors, behind Business Administration and Engineering majors, each of which accounted for 20% of the CEOs. When adjusting for size of the pool of graduates, those with undergraduate degrees in Economics are shown to have had a greater likelihood of becoming an S&P 500 CEO than any other major. That is, the share of graduates who were Economics majors who were CEOs in 2004 was greater than that for any other major, including Business Administration and Engineering. The findings also show that a higher percentage of CEOs who were Economics majors subsequently completed a graduate degree - often an MBA - than did their counterparts with Business Administration and Engineering degrees. The paper demonstrates that while women now comprise over half of all bachelors and masters degrees awarded, they remain a minority in terms of undergraduate degrees awarded in Economics and in MBA degrees conferred. Economics programs may try to appeal to more women students as a stepping stone to becoming a CEO, especially as women continue to account for less than 2 percent of the S&P 500 CEOs.
Keywords: undergraduate major, CEO, economics degrees, gender mix of students
JEL Classifications: A2
Working Paper Series 


Economics: A Good Choice of Major for Future CEOs

McChronic (The Branding of Buddah)

Will Stateline California have a bunch of weed shops at the border. Kids make the run from NEV to CA to get their herb?
How about Cheech's Crunch Chronic Brownies (98% trans fatty oil free)?
Motel 420? They could have a bong in each room. You can have it cleaned every other day by the maid. Or you can request daily cleanings.
High Times Resorts presents Cannabis Hills Country Club. Scheduled opening date of April 20, 2011. Beautiful 18 hole golf course nestled in rolling, cannabis groves with stunning coastal views.
They can call the sports bar, The 420th Hole. And have bong cleaners at each hole.

In a not-too-distant future, I can even imagine frequenting, for example, a HIGH TIMES Café or a NORML Healing Center. Given the right partners and conducive legal circumstances, it hardly seems a stretch of one’s imagination to see this happening relatively soon in California, where citizens will vote this November on a marijuana-legalization ballot initiative.

Branded Buds

These 420 resorts will include cannabis gardens with hundreds of different strains, accommodations, restaurants, tours of the local areas, including legal cultivation models and 420 educational programs, with other traditional tourist attractions and events.

The ‘King of Pot' plans ganja tourism in N. California

With this in mind, Print contacted four firms: Lust, a graphic design practice in Amsterdam established by Thomas Castro, Jeroen Barendse, and Dimitri Nieuwenhuizen; the New York office of Base, which worked with its branches in Europe; the Oslo firm Strømme Throndsen, winner of the 2009 Award for Design Excellence for its flour packaging; and The Heads of State, a two-man operation run by Jason Kernevich and Dustin Summers in Philadelphia.


The brief was simple: What would a legal pack of marijuana cigarettes look like?

Building a Better Baggie

YAK edibles is launching a broad line of eight products, including; YAK Brownie, YAK Fudge, YAK Mini Cookies, YAK Greenie, YAK Sensi Star (cookie in star shape), YAK Haute Chocolate (instant hot chocolate drink), YAK Mocha Juana (instant coffee drink) and their best selling YAK Cannabis Extract Capsules.

YAK Greenie
Available in Sativa or Indica
Price: $15.00
Package contains 1 cookie
with 800mg. of cannabis flowers


This is the strongest of the Yak edible line. It is made primarily for patients with severe pain and spasticity, conditions requiring substantial amounts of cannabis medicine. Each Greenie contains the equivalent of eight of the Yak single-dose capsules.

Ingredients:
Active Ingredients: 750 mg. each of medicinal cannabis flowers
Sativa: Active ingredients: Prime flowers of Blue Dream, Super Silver Haze and Pineapple Thai
Indica: Prime flowers of Grandaddy Purple and Purple Kush.

Other ingredients: Cannabis flowers, organic sugar, organic butter, organic flour, organic eggs, chocolate chips, organic raisins, organic vanilla, baking soda, Himalayan pink salt.

YAK Edibles

The Hershey Co. has sued Affolter, 40, for giving his forbidden marijuana munchies names like Stoney Rancher, Rasta Reese’s and Keef Kat. Each came in packaging similar to Hershey’s Jolly Rancher, Reese’s Peanut Butter Cups and Kit Kat candies.
Hershey’s suit, filed earlier this month in U.S. District Court in San Jose, accuses Affolter of trademark infringement, trademark dilution and unfair competition. The company is seeking $100,000 in damages.

 Hershey Vs. Pot Dealer in Trademark Suit

The more I think of it. If the Regulate, Control and Tax Cannabis Act of 2010 passes, it's gonna create a lot of of new jobs,spur entrepreneurship, and infuse capital into California...............

What Is The Underground Economy?

The Underground Economy in One Page

The government's "war on drugs" has been both a tremendous triumph and an abysmal failure. Drug warriors have been very successful. We have all seen media images of police stings involving massive amounts of money, drugs, and firearms. However, this has had no impact in local markets. Illegal drugs are available just about everywhere and at prices that have fallen in real terms over time. The amount of pot that could be bought for $10 at a local high school in 1980, for example, is likely the same quantity that could be obtained for $10 today.

Underground Economy @ Wikipedia

Off the Books: The Underground Economy of the Urban Poor by Sudhir Alladi Venkatesh

In Search of Respect: Selling Crack in El Barrio (Structural Analysis in the Social Sciences) by Philippe Bourgois

Policing for Profit (The Economics of Civil Asset Forfeiture Laws)

In most states and under federal law, law enforcement can keep some or all of the proceeds from civil forfeitures. This incentive has led to concern that civil forfeiture encourages policing for profit, as agencies pursue forfeitures to boost their budgets at the expense of other policing priorities.

Policing for Profit @ Cato

Policing for Profit: The Abuse of Civil Asset Forfeiture

Forfeiture Endangers American Rights

The Asset Forfeiture and Money Laundering Section provides centralized management for the Department's asset forfeiture program to ensure its integrity and maximize its law enforcement potential, while also providing managerial direction to the Department's components in prosecuting money laundering. The Section initiates, coordinates, and reviews legislative and policy proposals impacting on the asset forfeiture program and money laundering enforcement agencies.

The Asset Forfeiture and Money Laundering Section

Jesse "The Body" Ventura, Milton Friedman and Trent (Fiscally Conservative, Socially Liberal?)

For the record..I am Fiscally Conservative AND Socially Liberal.

'

The world is complicated, and an electorate so diverse in geography, race, class and beliefs can’t be shoehorned into two fixed templates. There is no particular reason why all advocates of fiscal restraint should also oppose abortion rights, or why supporters of a progressive tax code should necessarily favor restrictions on gun ownership.

Fiscally Conservative, Socially Liberal?

Party purges

And In This Corner!! Weighing In At 270 lbs....(Weight Classes for Prisons Revisited)

As discussed earlier in this section, a victim of prison rape is often much smaller and weaker than the perpetrator of the violence. Therefore, while prior violence should certainly be taken into account, the classification system should incorporate the strength and size of the inmate as well. This Note encourages prison officials to continue to use degree of violence as a factor but within that violence classification, to check each inmate for height and weight, and classify each according to a sliding scale, the details of which will be discussed later in this section.

Weight Classes for Prisons Revisited
Bryan Caplan

Beyond the Border: A Comparative
Look at Prison Rape in the United
States and Canada
PHILIP ELLENBOGEN