Saturday, April 18, 2015

Risk and Return

I believe, bailing out the taxi medallion moguls such as Evgeny Freidman is ridiculous. The first thing that I noticed was his Russian name, so looking at his biography showed he in fact was. That was not surprising at all considering that this is background helped him rise in business, but it means he is lucky at being able to rip off his drivers rather than good at business. He even paid $1.2 million in fines and restitution for ripping off his drivers. Now, it almost appears like he is trying to extort money from New York City taxpayers because he took too much of a risk investing so much into taxi medallions. He does know a bit about the taxi business, but a YouTube video of his shows his business strategy was based upon overpaying for medallions to outbid everyone. He would then lower his monthly payments by extending the length of the financing terms. He was able to pay for the loans with the large revenues he was generating and he didn’t even pay for claims insurance for three years to defer the payments until later by being self-insured. Payment deferrals helped him rise and even his gas hoarding that helped him during Hurricane Irene allowed him to price gauge during that time, and that was another way he was lucky. I do think it was a great idea for him to bring hybrids into the taxi business in New York City, but his luck appears to have run out. With the medallions dropping in value he should look for ways to diversify to lower his diversifiable risk on his assets. I don’t know how much he understands about finance, but he did mention in the video how many were losing on the financial bubbles when he was making money without realizing that the taxi medallions may have been a bubble. He even said his business is recession-proof because he does better during recessions, but my problem with that statement is not that he may be doing better during recessions but rather him saying that the business he is in is recession-proof. That statement shows that he fails to understand finance fundamentals because there is no such thing when his returns are so high. One of the most important concepts in finance is the relationship between risk and return because it's an axiom that flows through finance, but he fails to understand that his business has risks with statements that claim his business is recession-proof. That is essentially him claiming that he can get great returns and not bear the risk. That is absolutely nonsense. If you wish the get the great returns you must bear the risk. You cannot just bear the risk, and then demand the taxpayers bail you oil when the business begins to go down under. I would recommend him to look towards diversifying to reduce his risk because right now he would likely need capital preservation rather than growth unless he wants to risk everything to possibly make huge returns. I can continue about this much longer explaining all the fallacies, but rather I’ll just say that he should absolutely not be bailed out under any circumstances. If you wish to get the great returns you must bear the great risk that comes with it and that is what finance is about, so hearing his attempts to extort the taxpayers shows just how much of a desperate state he is now. Maybe just sell the medallions while they’ll still worth something or risk losing everything. That risk is something he is unwilling to bear, but that’s his problem. If he gets bailed out that will be crony capitalism at its finest.

Monday, April 13, 2015

The Daily Grind

I think this evidence (the article for the week) for Americans working longer hours is accurate: and theorize that the driving cause is twofold- culture, and basic economics.

Firstly culture. I like Davids' article on cultural motives at play here. In America, advertising has become incessant, blatant, and boring with its overt advances on the consumer in attempts to raise product appeal. Many ppl/families are buying into the ideal of having an expensive mortgage, high car payments, college debt, as well as many other forms of debt. The avg American spends many hours laboring simply to pay the bills one is pressured into believing are necessary. Working to have these 'things' is the ideal and it shows in the hours we work, but the vicious cycle of work following debt is continuous with such a lifestyle.
  1. The average American household with at least one credit card has nearly $15,950 in credit-card debt (in 2012), according to, and the average interest rate runs in the mid- to high teens at any given time.
  2. Avg student debt is a bit over $30k end of 2014
Not saying that debt/materialism is a sole factor, but it certainly seems to be a factor

Now for some basic economic theory.

Notice that even by general standards, German, Italian, and French tax burden is currently much higher than the US. These are some of the major countries studied in the article. I also referenced govt spending against GDP. Governments have so many sources of revenue from which they bleed an economy of profit that I like to look at the aggregate of spending by said govt.
 The bulk of taxation in many advanced countries with a large government is actually wasted economic profit and a stifling of opportunity.
Since the drain of the govt collective on overall economic profit is higher, as well as regulation of the variety and means to profit, the incentive to work would follow to be lower, as reported in the article. 

Lastly, I like how the author of the article includes an in depth look at ways to correct our social security program at at the end of the article(8,9,10,11). His suggested methods are realistic, and better than what we currently have. Though granted, with the massive problems our current system is facing, that is not difficult to do.

Sunday, April 12, 2015

Live to Work or Work to Live

I would say that Americans work more than Europeans because of economic and cultural reasons. I believe that Europeans place more value on enjoying their time than Americans, and that might be tied to the work ethic. The paper clearly shows that workers in the U.S. are more productive than in Europe. Maybe there are many in America that want to achieve the American Dream, while in Europe leisure might be the European alternative to maximize utility. I personally prefer the European way of work because who in their sane mind would want to work more? It’s possible that the U.S. tax structure creates more incentive to work longer hours than in Europe, while in Europe the higher taxation may mean there is less reason for an individual to work. Working long hours does not seem to make much sense to me because there are so many other things that can be done in life. When I hear people say they work like 6 days a week with 10 or 12 hours shifts, to me, those people seem crazy. Why would someone want that life? Yes, they make money, but money is not the most important thing in life. Maybe it’s greed or maybe even the workaholic work ethic (if that’s even a thing), but working long seems absolutely ridiculous. I don’t understand how someone would want to spend their entire life making their boss rich. If you have a business then working longer hours makes sense, but doing that for someone else just seems ridiculous unless that person has a very large household to support. There is someone that told me about how she worked very long hours in the Soviet Union and had like four hours of sleep because of that for many years. She did make significantly more money than nearly everyone else, but she today she talks about how it ruined her health and how it wasn’t really worth it. It took many years to realize that, and what really made the point across to her when Ukraine denied her of all pensions she worked many years for. Maybe it’s my European mentality (my family is from there), but working your entire life does not sound like something I would want to do because for me working is to live not living is to work.

Saturday, April 11, 2015

Why work so hard?

In fact, why work at all? The reality is that productivity is necessary for survival; if no one produced, no one would live. If we produce a little extra past what is necessary for survival, then we can save it and ensure we will always have something to live on. Working hard is just a means of saving more for the future. There is no scenario in which people become less productive and have a better capacity to provide for their futures. Working hard just makes good economic sense.

Tuesday, April 7, 2015

Who has a 'free' market?

   I find it revealing that the development of Chidamide in China, even with ''China’s cumbersome rules for drug approval'' was estimated to be 10 times cheaper than to develop in the US, according to Dr Lu. The article brought up this point on multiple occasions. If the US has major problems in regards to the expense of healthcare, perhaps multiple solutions could be evaluated by Congress, instead of recent developments?
   I find the research on cancer and biomedicine to be fascinating, and there are multiple recent trail blazing developments in the field in regards to curing cancer by 'highlighting' so the immune system can fight and easily subsume cancer cells.

Bypass by Google

Brian, all you have to do is google search A New Cancer Drug, Made In China, and you can find the exact article (first result, for me)  but it will bypass the wall street page interupt. My link was identical, which is probably how the problem came to be. Speaking of bypassing, the only reason this post is in 'post format' instead of a reply to your post is because I cannot write comments on existing posts for some reason. Admin problem, I think.

Monday, April 6, 2015

The economics of the Wall Street journal

I went to the link and for me to read the article you must subscribe or log in. Who ever can read the full article maybe you could post it to the board?

Sunday, April 5, 2015

Keep Up the Great Work

I really liked the article and how it tells about the leaps made by China. I believe that the company describe in the article is doing a lot to benefit people because allowing people to get a drug at a low cost is very exciting to hear. There is so much potential in China, so hearing that some of that potential is being realized is great news, especially when the costs of innovating there can be several times lower in some cases. I do realize that there are some problems that were pointed out by the article, but the nature of starting something new. Over time there might be more and more scientists deciding to work in China rather than anywhere else because the progress made there leaves people like in awe. Biotechnology is very important, so all countries should try their best to create drugs that can help people and increase the competition in the market be because that way the consumers are the big winners, along with the pharmaceutical companies. Great things like what was described by the article take time to develop, so I expect to hear much more great news coming from China in regard to pharmaceuticals if the course for growth and innovation is continued. A country with a population of over 1.3 billion has lots of potential for future growth, and it’s great to hear that over 600 million people were lifted out of poverty there since the early 1980’s. The explosive growth in the Chinese economy is what I love to hear because that is what I would love to see happen in many other countries whose economies are lagging. All I can say is that I hope China will keep up the great work!

Wednesday, April 1, 2015

What is there to gain?

In reading the articles it seemed there is  no reason as to why these countries are seeking to make the buying or selling of sex illegal. That is of course, outside the alleged increase of "sex slaves". Notably, these people are said to come from poor economic backgrounds and they see sex as a viable option for them to support themselves out of their country. Their poor economic background does not necessitate that they are trafficked. Rather, it demonstrates this profession is something they are able to do and the compensation appropriate for their time.

Also, it is worth mentioning, rather questioning, what does the government gain by making buying or selling of sex illegal? Is there a substitute product that the buerocrats have their hand in? Are they earning a profit from porn or strip clubs that may be more lucrative?

Sunday, March 29, 2015

Can We Decide Ourselves?

Prostitution is a very complex matter because of not only how old the profession is, but also because of nobody knows what should be done about it. Trying to look at the consequences is one approach, and hopefully the direction society moves in causes more positive than negative consequences. That hope is nothing more than a hope because I do now know what should be done. I believe the market should take care of the issue, but even that is difficult to verity. I could say the market should decide who should murder who, but that is ridiculous. Allowing individuals to all decide if they should go to a prostitute sounds well on the surface because I am not sure how prostitutes should be protected. Protecting someone from rape is very important, and I do now know whether prostitutes offer consent or compliance when a client is provided services. Simply legalizing prostitution overnight is a solution because shock therapy-like solutions bring disastrous results. Thus, if the country is going to legalize the service then it should occur gradually, and hopefully state by state. The United States is beautiful because each state can decide the matter for itself, which allows for important issued to happen over time rather than overnight. As a result, I believe that every state should decide whether it should legalize prostitution. States differ significantly, so it’s very likely if states were given more freedom on deciding what to do with legalizing prostitution then it’s more likely it would legal in more places and quicker. Ultimately, whether or not prostitution should be legalized comes down to voting. I favor the legalization because to me it does not make sense why it was illegal in the first place. It almost seems that not allowing someone to have sex for money means that they do not have full power over their own body, which is a ridiculous notion to me. Everyone should decide what’s best for themselves and bodies. Why should someone tell other people that they cannot have direct control over their own bodies? Why does someone have the 'right' to decide these things for us? 

Think Bigger round 2

I apologize for my earlier draft of this post, as I was writing quickly, and have thought over the issue since.
   Prostitution is a nice, inflammatory subject which is sure to raise plenty of lively debate. But in the end, it boils down to whether or not a society will make it legal. All too often, it seems people over simplify their perspective. One side claims prostitution is wrong; enough said, criminalize it. Another says ppl should be free to enter any voluntary contract- end of story, legalize it.

  I have this to say to many proponents of legalization of prostitution on grounds that it is economical or voluntary. You are playing with ideological fire. I keep hearing this argument on multiple issues, and this is worrisome to me. As a free society, we do not make laws - force applied to the direction of human behavior- based solely on what is economical. Classic examples spring to mind of nations, ours included, that have done this on other issues, and I am sure you get my drift. My point is this. The virtues, rights, and qualities that allow a man to function as a free member of society are not a result of the free market. Neither are they a result of the law. Our desire to have a free market is but one color of the bigger picture; a result of what people believe it is to be human.  To roughly paraphrase Frederic Bastiat, our desire to have law is a Natural extension of a persons' right to their life, and their faculties are an extension of their individual life, and their property is an extension of their faculties put to hard work.
    On one hand people want to make money. People do not want to worry about their car being stolen or gang wars. Parents want a positive, safe, environment for their children. Education. People want basic, virtuous standards of conduct embedded into society so that it is more than merely an environment conducive to making money. And prostitution is a moral issue. So it is important to people. And they want to make laws about it. After all, if a society commits horrendous crimes against others, does the material wealth they accumulate even factor into the equation? How can we justify crime based on material gain? Once you throw out right and wrong, you must throw out all law, as its existence as a function of human rights is contradictory to your beliefs.

However, Legal right and wrong only means people have rights, and violating them is wrong. This is the extent of the authority of the law. Moral Responsibility is the job of parenting, as it differs from family to family. Then, upon being an adult, it is the freedom of the individual to pursue as he/she best sees fit. It is not a function of law whatsoever.
   MY view is that no woman should have to sell her body for money. I have no respect of character for any man who would shamelessly admit to having appropriated a prostitute. But I also think any woman, who finds herself in such straits that she turns to prostitution for food for herself or her children, should not then be further punished for attempting to survive. This, too, reeks of insanity. I realize people do make mistakes and live through hard times. They should have the opportunity to move on from that of their own volition.

    I simply do not see prostitution as something that should be approved of by any decent society; along with murder, adultery, ect. Yet, I can find no grounds for making a voluntary contract between two parties, that do not affect the freedoms of others, or the clearly and simply defined inviolable rights of the parties involved, to be illegal. Therefore, I must conclude that prostitution, despite my moral convictions, is beyond the proper reach and authority of the law.
    I take comfort that prostitution will be scarce in a virtuous society, and it would be blatant hypocrisy to ''outlaw'' it in a degenerate and evil society.

    Aaron Russo was a very successful and colorful businessman in the entertainment and movie industry, who passed away in 2007. But before he died, he said the following words --  
    ''I believe that a person has the ability to mold their character like a sculptor molds a piece of clay. There's an old saying that "a leopard never changes its spots" — I don't believe that. I believe people have the total ability to mold their character into what they choose to be in their life, what their ideals are. And that's what I try to do with my life. I am not the same person today as I was thirty years ago. I've changed a lot. Because I wanted to be something better than I was before. And my philosophy is that you have to like yourself, you have to be a decent person, with character and integrity and honor. And that's what's important. '' --
     I agree with Aaron. that is how ppl should live; passing their values on to their children. And it is a persons' privilege to define those morals. The only purpose of the law is to defend basic rights, not guide and define the lives of those around us as we see fit, against their free wishes and desires.

A final word for all you who argue for legality based on the merits of free market. We do not have a free market in America. We are a socialist state of controlled interests under the facade of capitalism. If we did have free market, and opportunity was exponentially increased in all productive facets of the market, I propose to you that prostitution - illegal or not - would be very, very scarce.


Free market economists will agree that, while there is a demand and a supply for transactions that involve sex, that the market will find the most efficient way of providing opportunities for those transactions.

The problem that we think certain things are very important that people don't really believe are that important. For example, we might want to reduce the spread of STDs, where most solicitors of prostitutes might not. The market might develop two different markets; one for high-end (STD free) and one for low-end (potentially infected) prostitutes. I do not know how this market will form or if this is even the form this market will take, but I do know that the free market will result in whatever markets are best for the trading of sex and money.

While we push our values into the equation (sex is bad and should not be performed, STDs are bad and should be limited, prostitution is bad and devalues women, etc.) we will ultimately need a government to enforce our values onto the rest of the population, who may not agree with our values. But you're not perfect, and most likely your values suck for everyone else who might try to apply them in their life. It would be better if we didn't try to attach some of our own values to this scenario, and instead allowed for individuals to decide what is important for them.

Ultimately, the free market will provide the most efficient means of transacting sex for money if allowed to, and many of the "problems" we would find with the free market is that it would allow individuals to act against our arbitrary value system.