vineri, 2 ianuarie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Income Inequality Author Turns Down Prestigious Award; Can you Solve a Problem When You Don't Know the Cause?

Posted: 02 Jan 2015 11:52 AM PST

French economist Thomas Piketty, author of the surprise best-selling Capital in the 21st Century turned down France's top award, the Legion D'Honneur.

"I do not think it is the government's role to decide who is honourable", said Piketty.

Nobel Prize-winning economist Paul Krugman called it "the most important economics book of the year - and maybe of the decade".

Krugman likely says that because he believes in Piketty's socialist solutions to income inequality.

Thomas Piketty's Capital Review

Piketty's book is a massive 696-page slog. Fortunately, Harvard Business Review offers this synopsis: Piketty's "Capital," in a Lot Less than 696 Pages.
The argument. Capital (which by Piketty's definition is pretty much the same thing as wealth) has tended over time to grow faster than the overall economy. Income from capital is invariably much less evenly distributed than labor income. Together these amount to a powerful force for increasing inequality.

The method. Piketty does not offer his own theory of what drives economic growth, or what the optimal ratio of capital to labor income might be. In fact, a recurring theme of his book is that the theory-first approach of modern economics is a dead-end.

The evidence. The richest source of data for the book is France, thanks to the country's long tradition of excellent record-keeping and an estate tax that was enacted a couple of years after the 1789 Revolution. What the French numbers show is that the ratio of capital to income remained steady at about seven-to-one for centuries, plummeted around the start of World War I, and began recovering after World War II.

Piketty argues that the U.S. should consider a return to a "confiscatory" (his word) 80% top marginal tax rate even though it wouldn't bring in much money (he basically agrees with Arthur Laffer on that), well, that provokes some thoughts, doesn't it?
Everything You Need to Know

The Guardian offers an Everything You Need to Know synopsis of the surprise bestseller. I piece together some paragraphs out of order below to make rebuttals easier.
That capitalism is unfair has been said before. But it is the way Thomas Piketty says it – subtly but with relentless logic – that has sent rightwing economics into a frenzy, both here and in the US.

Piketty's argument is that, in an economy where the rate of return on capital outstrips the rate of growth, inherited wealth will always grow faster than earned wealth. So the fact that rich kids can swan aimlessly from gap year to internship to a job at father's bank/ministry/TV network – while the poor kids sweat into their barista uniforms – is not an accident: it is the system working normally.

If you get slow growth alongside better financial returns, then inherited wealth will, on average, "dominate wealth amassed from a lifetime's labour by a wide margin", says Piketty. Wealth will concentrate to levels incompatible with democracy, let alone social justice. Capitalism, in short, automatically creates levels of inequality that are unsustainable. The rising wealth of the 1% is neither a blip, nor rhetoric.

If he is right, the implications for capitalism are utterly negative: we face a low-growth capitalism, combined with high levels of inequality and low levels of social mobility. If you are not born into wealth to start with, life, for even for the best educated, will be like Jane Eyre without Mr Rochester.
Mish Comment: Already his thesis is suspect. One need only look at the developers of Google, Microsoft, and countless other extremely successful individuals who became the world's wealthiest by their actions, not their inheritance. Piketty attempts to explain this away later, but for now let's continue with the Guardian.
To understand why the mainstream finds this proposition so annoying, you have to understand that "distribution" – the polite name for inequality – was thought to be a closed subject. Simon Kuznets, the Belarussian émigré who became a major figure in American economics, used the available data to show that, while societies become more unequal in the first stages of industrialisation, inequality subsides as they achieve maturity. This "Kuznets Curve" had been accepted by most parts of the economics profession until Piketty and his collaborators produced the evidence that it is false.

In fact, the curve goes in exactly the opposite direction: capitalism started out unequal, flattened inequality for much of the 20th century, but is now headed back towards Dickensian levels of inequality worldwide.

One of the most compelling chapters is Piketty's discussion of the near-universal rise of what he calls the "social state". The relentless growth in the proportion of national income consumed by the state, spent on universal services, pensions and benefits, he argues, is an irreversible feature of modern capitalism. He notes that redistribution has become a question of "rights to" things – healthcare and pensions – rather than simply a problem of taxation rates. His solution is a specific, progressive tax on private wealth: an exceptional tax on capital, possibly combined with the overt use of inflation.
Piketty's Solution

  • Global Wealth Tax
  • 15% tax on capital
  • 80% tax on incomes above $500,000

Piketty in Three Minutes

Here is a very interesting video that offers still more perspectives.



link if video does not play: Piketty in Three Minutes

Can you Solve a Problem When You Don't Know the Cause?

France is in a horrific state because of excessive taxation and government interference in the free markets, yet Piketty asks for more of the above.

Ironically, Piketty wants an 80% confiscatory tax rate even though he agrees with Laffer it would not bring in much money. How stupid is that?

Confusing Symptoms of Problems with Problems

Piketty proposes solutions to economic problems even though he does not know what drives economic growth. He also confuses symptoms of problems with the problem.

Rising income inequality is a symptom of government interference in the free markets, of increasing government percentage of GDP growth, and of inane central bank inflation policies.

It's no wonder that Krugman, also a socialist, calls Piketty's work the best of the decade.

I have a simple question: If confiscatory taxes, big government, and "save the local bookstore mentality" solved problems, why isn't France the economic shining light of the world?

Law of Bad Ideas

My question is simple isn't it?

Yet economists would rather deal with mathematical nonsense than answer simple questions. And in another irony, Pikkety says "theory-first approach of modern economics is a dead-end" while proposing his own inane theories about how to fix problems!

For further discussion, please see ...

August 26, 2013: Income Inequality Explained: Why Wages Don't, Won't, and Can't Keep Up With Productivity

March 13, 2014: Democrat Sponsored "Income Inequality"; Law of Bad Ideas, Yet Again

October 17, 2014: Irony of the Day: Yellen Moans About Income Inequality; Seven Things That Cause Inequality

Will Piketty or Krugman address my rebuttal? Of course not. It does not meet their socialist agenda.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Damn Cool Pics

Damn Cool Pics


People That Overdid it on New Years Eve

Posted: 02 Jan 2015 05:05 PM PST

























Mum Shields Her Adult Son From Seeing Boobs On TV, And Becomes An Internet Meme

Posted: 02 Jan 2015 09:20 AM PST

This mother was being all motherly as she was watching TV with her son. A scene came on TV that featured boobs on display so she decided to cover it up. The problem is her son is 22 years old and gay. Now the jokes on her as she's become an Internet sensation over night.






















via reddit

Discuss: Can You Disavow out of Penguin? - Whiteboard Friday

Discuss: Can You Disavow out of Penguin? - Whiteboard Friday


Discuss: Can You Disavow out of Penguin? - Whiteboard Friday

Posted: 01 Jan 2015 04:17 PM PST

Posted by josh_bachynski

Penguin is back at the forefront of many marketers' minds now that the third iteration of the algorithm update has been released, and a rumor has begun circulating that you can weasel your way out of a Penguin penalty by simply submitting a disavow file. In today's Whiteboard Friday, Josh Bachynski breaks down that argument and starts a realistic discussion to find the answer. While we (and, as you'll see, Josh) don't have definitive answers, we hope you'll join in with your thoughts in the comments!

For reference, here's a still of this week's whiteboard!

Can You Disavow Out of Penguin Whiteboard

Video transcription

Hi. Welcome to Whiteboard Friday, and I'm your guest host for this week, Josh Bachynski. This week I'd like to talk about whether or not it is true that you can disavow your way out of the dreaded Penguin algorithm.

So there is a hypothesis going around the SEO community that it is possible that you can just use a disavow file to get out of Penguin. Now, for those of you who don't know, the disavow file is a feature that Google implemented a couple years ago where you can upload your spammy links into a file, very similar to robots.txt, and they will apparently remove those links out of your link graph or have them not count against you or something along those lines.

However, the hypothesis is -- and Google has confirmed this both by John Mueller and Matt Cutts -- that apparently if someone sends you bad links or you make bad links, however the link showed up, you can just disavow those links, you can put them in your disavow file, and this will help you get out of the Penguin algorithm.

So this is the hypothesis, and not only does Google claim this is the case, but many SEOs claim this is the case as well. In fact, they go so far as to claim to have succeeded doing this for themselves or for clients, that they have just taken links and put them in the disavow file and those clients, on a Penguin refresh, have been saved from the terrible Penguin.

It would be a large problem if this was not the case, because, as I mentioned, it is possible for people to simply buy a Fiverr blast -- I don't want to list off too many options to give you negative SEO ideas -- but you could imagine scenarios where it's pretty easy to build these spammy links pointing at sites and possibly get Google to notice them and then to milk those sites when Penguin 3 comes around or Penguin 4, the next iteration of Penguin.

It would be very good if the disavow file worked. Personally, I'd like the disavow file to work if I could prove that it did. It is a problem, in a lot of ways, that it's not, which I'll get to in a second.

However, if this is true, then there should be no recovery with link loss. For example, if this is true, that you can just disavow your way out of Penguin, then we should be able to find sites that escape on the Penguin date, but have deleted no links or we can tell have had no link loss whatsoever. That way, we can know that it was just a disavow file and not some combination of either deleting links on the disavow file or something else entirely. So if that is the case, that this hypothesis is true, then we can use a scientific method to determine that we should be able to find exemplars of the hypothesis.

On the last Penguin 3, when it was released October 18th, for those people who claimed that they recovered and claim they did it only from a disavow file, I asked them to send me examples. I said, "Fine. Send me your URL, and I'd like to check it." I tested over 12 sites altogether who claimed to have both recovered from Penguin on that date and to only use the disavow file or claimed to only use disavow file to do so.

However, I found something rather striking, that every single one that I checked, they all had link loss. In either Majestic or Ahrefs or using the Moz tools, I found that they all had links that they lost a few months prior to the release of Penguin.

Now whether they deleted the links and just lied to me, or whether they forgot they deleted the links, or whether the links just dropped off the link graph because, of course, web pages on the Internet change. For all we know, these could have been just scraper sites scraping them, giving them links that they didn't even want, and those sites just disappear. However the links were lost, the links were lost.

So, what does that tell us? Well, unfortunately, it tells us that I cannot confirm the hypothesis. After 12 tries, the hypothesis that you can just use the disavow file to escape Penguin, I was not able to confirm that hypothesis. The examples, the evidence that people sent me trying to prove this hypothesis proved to be false. So I say myth busted or at the very least myth not confirmed. I was not able to confirm it after 12 plus tries to do so.

At best, all I can say after doing the testing and, of course, I just want to add this note in now, if anybody out there, anybody seeing this video claims to have recovered from Penguin and just done it solely from the disavow file and they didn't delete any links and they didn't lose any links, please, by all means, send it to me, because as I said, it'd be lovely. It'd be wonderful if that's the way it worked, because then if someone is sending you a negative SEO attack, all you have to do is watch your backlinks on a daily basis and throw in there any ones that seems suspect.

But as I said, I could not confirm that's the way it works. At best, all I can confirm is that deletion of links or loss of links still apparently has to be required in some way, and then two, this experiment, of course, has absolutely no bearing whatsoever on the manual penalty process, which I won't even get into, which the disavow file may or may not help with. I'm not talking about that for this Whiteboard Friday.

The question then you'll ask me is, "Josh, why, why, why, oh why, do people perpetuate this myth?" Well, I'm afraid there is a number of plausible reasons why they might perpetuate this myth, both Google and other SEOs. One is because it's easy. An SEO who knows half of what they're doing can get a list of links and put them in a disavow file and give them to a client in about five minutes to upload. In fact, there are programs that will do it for you very quickly. Are they selling snake oil? I don't know, but I could not prove that the disavow file helped in any way, shape, or form for trying to get out of Penguin.

Two, there is another reason why Google might possibly -- I'm just putting it out there for your consideration -- perpetuate the myth -- as far as I can tell it's a myth -- that the disavow file will help you escape from Penguin is because you're feeding their machine learning. Every link you put in there, it's entirely possible they can run through their algorithms, which Matt Cutts has admitted, at SMX Advanced 2013, they might just think of doing at some point in future, so they can tell what these badder spammy links are.

And finally, propaganda. People are very afraid of negative SEO, with good reason. Whether or not it works or not, it definitely is a scary concept, and so it would be very reassuring for Google to tell people that, "Hey, we have this nifty disavow file. So if you get scared, if you see some suspect links pointing to you, all you have to do is put them in your disavow file, and you don't have to worry about it at all whatsoever."

However, I'd love that to be true, but I was not able to prove that being the case. So I'm going to say that I think the myth is busted. If anybody has any counter evidence to send to me, by all means I am all ears to look at it. All I need to do is plug it into a Majestic SEO or Ahrefs and see if there are any deleted links before the last Penguin release and say, "No, you lost links, and so we cannot say that it is the disavow alone."

To confirm that hypothesis, I would have to see no links lost in Majestic and no links lost in Ahrefs whatsoever, and, of course, I'd have to see an uptick on a declared Penguin date for me to say, "Well, jeez, the evidence looks like they have released on Penguin, and they had no deleted links." Then I'll take your word for it that you submitted a disavow file, because, of course, I can't see that. Only the site owner can see that, or you can give me your login whatever. You can trust me.

Until that time, I'm saying the myth is busted. The disavow file alone does not help you escape from Penguin, maybe in combination with deleting links, I'm not sure. I'm saying the disavow file is, unfortunately, the opiate of the masses. It is a safe myth we believe in because it makes us feel warm and snuggly at night. But I'm afraid that, after scientific testing, I cannot prove that that is case.

I've come away from that with two more suggestions that I would recommend. One, I would stop paying for it. I would stop buying it. I would stop paying people to simply make you a disavow file and upload it. I would tell SEOs to stop selling that as a service alone. Of course, in conjunction with other services, fine. But that as a tactic alone, that's not going to do anything at all, because the evidence, so far that I've seen, doesn't suggest that it will.

Furthermore, a more general point, it might be a good idea to think about stop selling and stop buying from-the-hip SEO, where SEOs are selling services based merely on hearsay and as much as we can, in our industry, triangle more for science based SEO or data based SEO.

If anyone recommends any service to you or any suggestion or any SEO tactic to you, the first question you should ask is, "Where did you come by this information? Do you have any data to prove that this is a good thing to do?"

That is my Whiteboard Friday for this week. If you have any questions at all or you want to e-mail me, yell at me, contradict me by all means, or please send me more sites I can test that may have sites that didn't delete any links, but did see an uptick on Penguin. By all means, join in the comments below, or e-mail me at JoshBachynski@gmail.com with that or any other questions. With that, I bid you adieu, and we'll see you again next time. Bye-bye.

Video transcription by Speechpad.com


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Seth's Blog : Unprepared

Unprepared

Is there anything worse we can say about you and your work? "You are unprepared."

But the word "unprepared" means two things, not just one. There is the unprepared of the quiz at school, of forgetting your lines, of showing up to a gunfight with a knife… this is the unprepared of the industrial world, the unprepared of being an industrial cog in an industrial system, a cog that is out-of-whack, disconnected and poorly maintained.

What about the other kind, though?

We are unprepared to do something for the first time, always.

We are unprepared to create a new kind of beauty, to connect with another human in a way that we’ve never connected before.

We are unprepared for our first bestseller, or for a massive failure unlike any we’ve ever seen before. We are unprepared to fall in love, and to be loved.

We are unprepared for the reaction when we surprise and delight someone, and unprepared, we must be unprepared, for the next breakthrough. 

We've been so terrified into the importance of preparation, it's spilled over into that other realm, the realm of life where we have no choice but to be unprepared.

If you demand that everything that happens be something you are adequately prepared for, I wonder if you’ve chosen never to leap in ways that we need you to leap. Once we embrace this chasm, then for the things for which we can never be prepared, we are of course, always prepared.

       

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