A Connected Approach

One of the recurring themes of Barataria is that nearly everything in our life can be evaluated based on how it is connected.  This works for analyzing political and economic power, but it also charts the course of ideas and products.  If our political system isn’t working properly, Barataria would argue that it isn’t connected properly to the society it purports to govern or to new ideas that will help it to change.

I’ve expounded on the subject in many different ways, sometimes without using the same words, as a way of thinking this out in public.  Many of you have responded with insightful comments and a few questions on the side – what is that guy going on about?  I’d like to nail this down into a simple, direct statement.  This is an old work, about five years old, but it is something I want to revist to help make sense of our changing world.

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Catching Up on Old Stories

It’s the end of the month, and the end of a holiday week. What better time to catch up on a few old stories with new updates?

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What is Software Worth?

When is the value of something not its true value? When you’re adding up Gross Domestic Product (GDP) of course. That may sound ridiculous, given that the rise and occasional fall of GDP is the yardstick by which we measure how we’re doin’ as an economy. Isn’t it just the sum total of all the goods and services that we produce?

The short answer is “no”, but the long answer is “yes”. It depends a lot on what you mean by “goods” or “service” or “produce”. If that sounds like a huge amount of fudge for something so important, you may want to just enjoy the chocolate induced coma for a bit. Because some goods, like computers and software, have been falling in price but increasing in potential and quality dramatically for a while. Hardware is “hedonically adjusted” to take care of this, but software isn’t. And that difference might be extremely important.

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Betting on Low Interest

When will the Fed raise interest rates? If you ask investors, the answer is “Not this year”. Bets have been placed on bond futures which imply that the Fed Funds Rate will be no higher than a quarter of a percent at the end of the year – hardly any rise at all.

But if you ask the Fed, it’s going to come soon. Why doesn’t anyone believe them?

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Productivity Panic!

Last week the Bureau of Labor Statistics (BLS) announced labor productivity declined for the second straight quarter. It’s a worrisome figure for many reasons, the most important being that this is usually the signal of an upcoming recession. Headlines in the financial world were quick to fret that this is the first back-to-back decline since 2006, a strong signal in advance of the big recession in 2007.

Should we be worried? This is never a good sign, but the situation is very different. There are very good reasons why there is a decline in productivity and they all have the potential for signaling a recession ahead. But it also may be the last gasp of the bizarro economy where good news comes to us in the form of bad news, at least at first.

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