It is widely believed that consumer spending accounts for approximately two-thirds of the economy. A few of us dispute that claim.
Reader Gary writes "You had made the comment more than once that manufacturing is really a much larger part of GDP than is frequently quoted. I could not find how you got there, but ZeroHedge has a nice Pie Chart that shows what you have stated."
One thing that we cannot stress often enough is that the manufacturing sector is far more important to the economy than its contribution to GDP would suggest. Since GDP fails to count all business spending on intermediate goods, it simply ignores the bulk of the economy's production structure. However, this is precisely the part of the economy where the most activity actually takes place. The reality becomes clear when looking at gross output per industry: consumer spending at most amounts to 35-40% of economic activity. Manufacturing is in fact the largest sector of the economy in terms of output.
Sure enough, in GDP accounting, consumption is the largest component. However, this is (luckily) far from the economic reality. Naturally, it is not possible to consume oneself to prosperity. The ability to consume more is the result of growing prosperity, not its cause. But this is the kind of deranged economic reasoning that is par for the course for today: let's put the cart before the horse!
In addition to what Tenebrarum states, please note that government transfer payments including Medicaid, Medicare, disability payments, and SNAP (previously called food stamps), all contribute to GDP.
Nothing is "produced" by those transfer payments. They are not even funded. As a result, national debt rises every year. And that debt adds to GDP.
Real GDP is constantly overstated because it's obscured by a cloud that hides monetary inflation and ignores both debt and bubbles.
Robots and artificial Intelligence will destroy 5.1 million jobs by 2020 says a study on the "Future of Jobs".
Crowdsourcing was one of the big factors noted in the study.
My comment last Friday was "I suspect crowdsourcing is one of those things with huge potential that never really flies because there is no money in it for anyone."
More accurately, I should have said "no net money for anyone but the promoters".
This weekend, readers emailed a series of article on a cwowdsourcing that I had not seen.
The gist of the story is one of Zano, a drone-maker that sought to raise $190,000 to put a prototype into production. The company raised millions but the drones could not fly.
Said one person involved: "I unpacked my Zano and tried to fly it indoors, as I guess most people did. It really didn't go very well at all, banging into the wall. So I took it down to a local park and tried to fly it there. After 10 or 15 seconds, it would just go off and do its own thing, zipping off sideways until it got out of range. Basically, it was just awful. The video was pretty poor quality too."
The promotional videos displayed smooth, professional shots.
"As [with] any commercial video, people are going to edit out the takes that aren't as good."
The article notes "UK market analyst firm Juniper Research predicts that that investments made in technology via crowdfunding platforms will increase sevenfold from an estimated $1.1 billion last year to $8.2 billion by 2020. If we want a democratic, open, freely accessible alternative to banks and venture capitalists, then we will have to accept occasional failures like Zano along with runaway successes like Pebble, Oculus Rift, and Veronica Mars."
Media.Com concludes with some sobering bullet points ...
Financial pressures led the creators to ship Zano units that they knew were not ready, and additionally to favour pre-order customers in the hope of receiving additional revenues.
The liquidation is proceeding in a professional manner, but is unlikely to result in any refund, however small, to any Kickstarter backer.
I do not believe that the creators possessed the technical or commercial competencies necessary to deliver the Zano as specified in the original campaign.
Kickstarter, and other crowdfunding platforms, should reconsider the way that they deal with projects involving complex hardware, massive overfunding, or large sums of money. There should be better mechanisms to identify weak projects before they fund, as well as new processes to provide mentorship, support and expert advice to newly-funded projects.
I confess. I never heard of "Exploding Kittens" or anything else the crowds are funding.
"Exploding Kittens is a highly strategic kitty-powered version of Russian Roulette. Players take turns drawing cards until someone draws an exploding kitten and loses the game. The deck is made up of cards that let you avoid exploding by peeking at cards before you draw, forcing your opponent to draw multiple cards, or shuffling the deck," wrote the creators in the official webpage. "So if you're into card games or laser beams or weaponized enchiladas, please help us make this game a reality. We think you'll love it as much as we do," they added.
Expect More Beanie Babies
Maybe the crowds can identify popular games in advance, maybe not. But when it comes to serious applications, any expectation that crowdsourcing will be a disruptive force seems silly.
The crowds also brought us Beanie Babies and Pet Rocks. Expect more of the same.
"A frolicsome giant panda called Tian Tian appeared to be capturing the bulk of the online attention as videos and other images emerged of animals at the National Zoo in Washington, D.C., as they encountered Saturday's accumulating snowfall."
Just in time for the blizzard that dumped more than 2 feet of snow across the mid-Atlantic, kids and adults took their sleds to Capitol Hill, legally, for the first time in more than 140 years.
In a provision from December's spending bill, Capitol Police will halt their enforcement of the sledding ban as long as conditions are safe.
Hundreds of people took advantage of the newly changed policy during the record-breaking blizzard on Saturday. The Hill was quickly populated with sleds, inflatable mattresses, inner tubes and other creative forms of transport.
"It took an act of Congress, but children are finally welcome to sled down on #CapitolHill," Speaker of the House Paul Ryan tweeted on Saturday.
Best Thing From Congress in Years
Is sledding on Capitol hill the best thing Congress has done in years? I struggle to come up with anything better.
Following a December election that has left Spanish politics deeply fragmented, People's Party (PP) leader, Prime Minister Mariano Rajoy's has been unable to secure the majority coalition he needs to rule.
Unless someone has a majority, it is the role of the king, otherwise a largely ceremonial role, to see if anyone can build a coalition. First chance goes to the party receiving the most votes.
Here's a sequence of events with brief translations and a couple of comments from reader Bran who lives in Spain. The clips are from last Friday through today. Links are in Spanish.
Rajoy declines the offer by the king to try to form a government. However the news is later tempered with his words "I haven't renounced the right to be chosen, it is that right now I don't have the votes". Friday - http://politica.elpais.com/politica/2016/01/22/actualidad/1453478212_032444.html
During the round of meetings with the king, Iglesias (leader of Podemos) announced without any warning that he would seek to form a coalition with PSOE based on proportional representation of power in the government with Sanchez as president and himself as vice president and ministers also proportionally assigned. Iglesias includes IU (left) as part of the tripartite and asks for a Catalan referendum. Apparently Sanchez was only informed of the offer when he went to meet the king. Friday - http://politica.elpais.com/politica/2016/01/22/actualidad/1453461680_098827.html
Sanchez's first reaction was a cautious welcome, saying "Voters would not understand if I and Podemos did not understand each other". He says he will hold talks with Podemos over the weekend. However Iglesias carried on his overt approach by tweeting his position with statements like "the historic possibility that he (Sanchez) will become president is a smile from destiny that he should be thankful." Friday - http://politica.elpais.com/politica/2016/01/22/actualidad/1453464023_797332.html
Reactions of the regional heads and ex-heads of the PSOE, including previous party leader Rubalcaba was not favorable. Rubalcaba stated "It is the first time I have heard an offer of accord to form a Government while gravely insulting the party with which you hope to govern with." There is even a new hash tag #Respetoal PSOE "Respect PSOE" Friday - http://politica.elpais.com/politica/2016/01/22/actualidad/1453496560_129777.html?rel=cx_articulo#cxrecs_s
Message from Bran on Saturday: "Hello Mish, I'll keep posting through the politics but if you are thinking of writing on it, be careful not to be caught off guard. There are more twists and turns than we might imagine.
Rajoy, having resigned his candidature, but still offering it, launches straight into the offensive from his self-declared position of opposition, labeling Sanchez "mortgaged and undignified" for hypothetical agreements with Podemos politica. Saturday - http://politica.elpais.com/politica/2016/01/23/actualidad/1453545112_869649.html
Sanchez refuses to pick up the gauntlet, broadcasting that he will not present himself as candidate for now because that right still belongs to Rajoy because PP has the most seats. Sanchez also smacked down Podemos in the process, saying his own candidacy won't be launched by blackmail. The actual word Sanchez used is "chantaje", which means "story telling leverage", a bit lighter than blackmail. Saturday - http://politica.elpais.com/politica/2016/01/23/actualidad/1453553795_291625.html
PP says Podemos offer to align with PSOE "causes terror in Europe". Saturday - http://ecodiario.eleconomista.es/politica/noticias/7299394/01/16/El-PP-asegura-que-la-oferta-de-Gobierno-de-Pablo-Iglesias-ha-causado-terror-en-Europa.html
Sanchez now says he will attempt to form a government if the king asks him to. Saturday - http://politica.elpais.com/politica/2016/01/23/actualidad/1453553795_291625.html
Rajoy says that PSOE/Podemos coalition will not be able to govern because he will use the PP majority in the senate to block it. Saturday - http://ecodiario.eleconomista.es/politica/noticias/7299046/01/16/Rajoy-amenaza-a-la-union-PSOEPodemos-No-podran-gobernar-tenemos-la-mayoria-en-el-Senado.html
Yanis Varoufakis, former finance minister of Greece says the troika will tie the hands of a PSOE/Podemos government. Saturday - http://www.eleconomista.es/economia/noticias/7299442/01/16/Varoufakis-advierte-que-la-Troika-ataria-las-manos-de-un-Gobierno-PSOEPodemos.html
Bran comment on Sunday: "All sorts of covert and overt activity is taking place. For now, all the political leaders reject coalitions that can reach a majority. We will have to see how the PSOE/Podemos relationship pans out, because they will still need to pick up additional seats from fringe parties to reach a majority."
The anti-austerity Podemos party on Friday made an audacious move towards breaking Spain's post-election political logjam, proposing a three-way coalition government with the Socialists and the United Left party.
"If the PSOE [the Spanish Socialist party] wants it, there can be a government of change," Pablo Iglesias, the Podemos leader, told a news conference in Madrid.
He was speaking after meeting Felipe VI, the Spanish monarch, whose constitutional role includes proposing the next head of government to parliament.
Another complication is that the Socialists, Podemos and the United Left would still not hold a majority in parliament. The three parties together control 161 seats in the 350-seat parliament, meaning they would be 15 votes short of an absolute majority.
To win the premiership and pass future legislation, they would need either the support or the abstention of smaller regional parties, including the two parties that support Catalan independence from Spain. For the Socialists, a party that prides itself on its staunch defence of Spanish unity, it would be a deeply uncomfortable situation.
The proposal made by Mr Iglesias marks the first concrete offer to create a left-of-centre government coalition since Spain went to the polls in December. The election produced a deeply fragmented parliament that leaves neither the right nor the left an obvious path towards a stable majority.
Mr Rajoy, the leader of the conservative Popular party, has proposed a centrist alliance between his own party, the Socialists and the centrist Ciudadanos party. The Socialists have so far rejected the prime minister's offer.
Problems Facing Leftist Coalition
PSOE insists Catalonia stay united with Spain
Podemos is open to Catalan elections
The third group of fringe parties needed to form a coalition demand Catalonia independence
Spanish Government About to Fall
The most likely possibilities are a new election (if no one can achieve a majority), or an unstable coalition of leftist parties.
Barring an unlikely last minute miracle, the government of Mariano Rajoy is over. New elections are in the cards immediately, or a bit down the road after an unstable coalition of some sort falls apart.
Sometimes I'll get a great idea for a post while out walking or showering or generally not in front of a keyboard. Not just great ideas, but fabulous ones.
And then, after rehearsing the keywords over and over so I don't forget before I write it down, I forget.
And that post, the post I didn't write, the post that never saw the light of day--that's the best post ever.
I think most dreams work this way.
The thing is, an unwritten post is no post at all. It's merely a little bit of gossamer on wings of hope. Doesn't count.
At an Iowa rally earlier today, Donald Trump made the arrogant claim "I could stand in the middle of 5th Avenue and shoot somebody and I wouldn't lose voters".
CNN reported Trump refused to clarify what he meant.
Donald Trump boasted Saturday that support for his presidential campaign would not decline even if he shot someone in the middle of a crowded street.
"I could stand in the middle of 5th Avenue and shoot somebody and I wouldn't lose voters," Trump said at a campaign rally here.
After the event, Trump declined to answer when asked by CNN to clarify his comments.
Teflon Trump
At what point does making arrogant, seemingly idiotic statements matter?
No doubt his campaign is working on damage control now.
Here's the likely explanation: "Trump was obviously referring to being attacked and responding in kind."
Reaction So Far - Positive
Then again, perhaps Trump can just brush it off. NPR has this Report on Trump.
NPR's Don Gonyea reports that so far, the reaction to Trump's remarks has followed a familiar pattern.
"His audiences love it. His opponents try to use it against him — but so far, to no avail," Gonyea reports. "I talked to some of his supporters and they say, 'Yeah, sometimes he makes me cringe, but I still like him and I still think he's the right thing for America.' "
One supporter, who spoke to ABC News, said he found Trump's point clear — but mentioned Trump could have articulated it differently.
"He probably could've worded it a little bit better," campaign volunteer Brandon Fokkema said.
Former New York Mayor, billionaire Michael Bloomberg, is fed up with Donald Trump, the republicans in general, Bernie Sanders, and Hillary Clinton's shift to the left to fight Sanders.
Mr. Bloomberg, 73 years old, has long contemplated a run at the White House. But the unlikely rise and continued strength of Donald Trump, along with polls suggesting Hillary Clinton's campaign may be flagging, have driven the billionaire businessman closer than ever before to entering the race, a close adviser said Saturday.
Eyeing a potential opening for the first time, Mr. Bloomberg has retained a consultant to help him run on the independent ballot in state primaries. He has commissioned polls to test his path to victory. And he has directed the close circle of advisers who worked for him as mayor and have remained by his side over the past two years since he left office to begin mapping out a blueprint for a run, one adviser said.
That adviser said the former mayor has been upset by what he sees as extremist rhetoric from Republicans in the race, as well as a leftward turn from Mrs. Clinton, who is fending off an unexpectedly strong challenge in the Democratic primary from the more liberal Vermont Sen. Bernie Sanders.
If he runs, Mr. Bloomberg is likely to face hurdles with voters, especially those outside the Northeast, where he is better known. A recent poll by Morning Consult showed Mr. Bloomberg receiving 13% support from voters, Democrat Hillary Clinton getting 36% and Republican Donald Trump 37%. The same poll found that 43% of voters either hadn't heard of Mr. Bloomberg or had no opinion. Morning Consult said the poll was conducted from Jan. 14 to Jan. 17 among a sample of 4,060 registered voters around the country.
Longest of Longshots
Should he choose to run, Bloomberg would be the longest of longshots. But, he has a lot of money to waste.
Should he choose to do so, would it help or hurt Trump?
This is a choice, a huge one in the life of the freelancer, the entrepreneur or anyone who seeks to engage with the marketplace.
The customer buys (or doesn't buy) what you make.
The client asks you to make something.
The customer has the power to choose, but the client has the power to define, insist and spec.
There is a large number of potential customers, and you make for them before you know precisely who they are.
There are just a relative handful of clients, though, and your work happens after you find them.
If a customer doesn't like what's on offer, she can come back tomorrow. If the client doesn't like what you deliver, she might leave forever.
You can do great work for either.
But don't confuse them.
Choose your customers. Choose your clients.
And most of all, choose which category you're serving.
[Worth noting: Software and the internet let us disrupt a market by transforming clients into customers and customers into clients. People who used to have to take what was an offer can now get a customized version almost as easily. And people who used to pay extra for the bespoke version can now have the convenience and economy of merely buying what's on offer.]
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