Lots of Thoughts on GameStop

I’ve got a number of thoughts on GameStop and the markets that I’m going to list here in no particular order.

1. I’m very skeptical of the claim that this bull raid was caused by small Robinhood investors. This was a huge move in the price of GameStop and others and it just doesn’t seem plausible that it was caused by a bunch of Reddit goofballs investing $100 through Robinhood. To move the price that much you need people with a lot of money involved. One of the /r/WallStreetBets investors claimed to have invested $6 million of his (presumably much larger) portfolio in GameStop. What’s that a portfolio over $50-$100 million? A real “everyday guy”. If you could take a peak behind the trades I’d bet you’d find a lot of people like this along with large institutions.

How Much Money Makes You Rich?

I’m under the belief that the average person grossly underestimates how much money would qualify someone as “rich” and this usually leads them to support policies that would tax the hell out of people who and not rich and are just trying to achieve their dreams. For example, many people would say if your net worth is over $1 million you are rich. Is this true? Hardly. Let’s work through an example.

Every year HGTV runs a “Dream Home” giveaway sweepstakes. This year they are giving away a home in Rhode Island. Take a look:

Biden’s Tax Hikes and The Double Taxation of Profits

I’m writing this post because the tax treatment of business income is so convoluted that very few people understand it. I’m tempted to speculate that this is done on purpose so as to maximize opportunities for demagoguery and make it easy to agitate for higher taxes. For example, billionaire Warren Buffet has long claimed that he pays a lower tax rate than his secretary which he presents as evidence that taxes need to be raised. As we’ll see, this claim is almost certainly false, but it’s the complexity of the tax system that makes it so easy to make this claim and make it seem plausible.

The Economic Illiteracy of Marxism

Bizarrely, Marxism is somewhat popular among the Millennial and Gen Z crowd. Personally I find it remarkable because Marxism is so easy to debunk, yet it still remains popular. A testament to human irrationality.

What’s so wrong with it? Let’s find out.

Marx believed one of his major contributions to our economic understanding was to point out that business owners take a profit (captain obvious). By taking a profit, he claimed, business owners are exploiting workers since the workers are not being paid the full value of their labor.

Freedom Means People Doing Stuff that Sucks

The U.S. Supreme Court has recently ruled that the anti-discrimination laws passed by Congress also bans discrimination against LGBTQ people. This is one of these posts where I know I’m risking serious disapprobation, but here goes.

First, I will admit it doesn’t make much sense to have a law that applies only to race or gender, but not sexual orientation, or religion or any other attribute. So the court’s ruling is at least consistent.

But more generally what we’re talking about here is the government overriding freedom of association. And not just in the LGBTQ case but in all cases.

In the case of freedom of speech you’ve heard the expression, often attributed (somewhat incorrectly) to Voltaire: “I disapprove of what you say, but I will defend to the death your right to say it.”

Nozick’s Tale of the Slave

It’s time for some libertarian wonkery! My friend Jeremy posted a link to renowned Harvard philosopher Robert Nozick’s Tale of the Slave on Facebook and I guess most of his Facebook friends are not libertarians as it stirred up a bunch of controversy.

If you haven’t read it I’d recommend doing so. It’s only about a two minute read. But nonetheless I will summarize it here.

Nozick starts by describing a typical case of slavery and then in subsequent steps modifies the terms of the slavery to be slightly less bad than the previous step. After a handful of modifications he ends up at representative democracy and asks “At which step did this become no longer a tale of a slave?”.

The intuitive response you’re supposed to have is that it never really stopped being a tale of a slave. The only difference is a matter of degree. This is reminiscent of an arguement made by the great 19th century abolitionist Lysander Spooner who wrote:

Thoughts on Scott Sumner, Inflation, and Wage/Price Stickiness

Way back in 2012 Scott Sumner wrote a blog post where he denied there are such things as distribution effects of money printing. To me this is an extraordinary claim. In this blog post I give my reasons why I think this view is completely wrong, but more importantly I’ll discuss this in the context of Sumner’s long standing policy proposal of 4% annual increases in NGDP and provide some thoughts most people might not have considered.

First, distribution effects. Scott is advocating the standard textbook view that with inflation “prices go up, but income/wages go up by the same amount so nobody is worse off”. This strikes me as a demonstration of what you can go wrong when only looking at aggregate data like “wages” and “prices” without looking under the hood at relative wage and price changes.

Why Property Rights?

Economist Bryan Caplan debated another socialist recently on capitalism vs. socialism. He posted his opening statement here. In that blog post he linked to his previous debates on socialism and I noticed he debated Elizabeth Bruenig two years ago. That name is familiar to me (or actually not that familiar because she got married and changed her last name) because years ago I engaged her in a debate in the comments section of her blog (if I recall correctly). Unfortunately, she blocked me ¯\_(ツ)_/¯. She was coming at socialism from a Christian perspective and it lead me to write this blog post: Was Jesus A Socialist?

Why Raising Taxes on the Rich *is* Crazy

I raged so hard when I read this post from MarketWatch entitled: Why raising taxes on the rich isn’t so crazy. The core of the argument boils down to this ― Redistribution would improve economic growth

Because middle- and low-income families spend a greater portion of their incomes than the very rich do, so more money would recycle through the economy.

People on the left wing love to cling to the belief that consumer spending drives economic growth. But it’s just plain wrong. In this post we’re going to review some basic economics as well as some mainstream macro. Note that I don’t fully endorse the mainstream view on macroeconomics, but it’s not that far off and certainly doesn’t suggest wealth redistribution will cause growth.

No, Wages Have Not Been Stagnant Since the Sixties

Did you know the wages for the average worker have not risen since 1964?! This is the spectacular claim that is often circulated by people with left wing political leanings. And it’s not exactly a made up claim, the data reported by the U.S. Government’s Bureau of Labor Statistics shows as much: