Thursday, May 14, 2015

**UPDATED** Aiko's Freak Exposure Theorem - "Post to Be" and Its Interesting Results



Despite the laziness that Omarion, Chris Brown and Jhene Aiko exhibit in replacing the term “supposed to” with “post to”, even the laziest songs possess some analytical gems that we must explore in depth. Specifically, we at Raponomics want to explore Ms. Aiko’s “freak exposure” analysis:

If your dude come close to me
He gon' wanna ride off in a ghost with me (I'll make him do it)
I might let your boy chauffeur me
But he gotta eat the booty like groceries
But he gotta get rid of these hoes for me
I might have that nigga selling his soul for me
Ooh, that's how it post to be
If he wants me to expose the freak

Above, Ms. Aiko puts forth an analytical framework that yields some interesting results. Let’s explore her statement in depth. For simplicity, let’s assume Ms. Aiko represents a representative female in her model. Ms. Aiko argues that three conditions must exist in order for her to “expose the freak”.

Condition 1: He must “eat the booty like groceries.” In our model, we will represent this booty-eating variable as b. This is a binary value – either one eats booty or doesn’t eat the booty. There is hardly an in-between for this particular condition.

Condition 2:  He must “get rid of the these hoes from me.” In our model, we will represent this “hoe” variable as h, the number of hoes that the model gentleman has. Unlike b above, one could imagine that the number of hoes could vary, but must be strictly a non-negative number. The reader should keep in mind that the removal of hoes will be represented as “-h”.

Condition 3: He must be willing to “sell his soul for me”. While this is a “fuzzy” condition, let’s assume for purposes of simplicity, that this third condition must be met – a willingness to sell a soul. We will represent the presence of a soul with s. The reader should keep in mind that the sale of the soul will be represented with “-s”.

If we allow f to equal the freak exposure variable, we have the following condition:

b – h - s  f

which is to say in order for Ms. Aiko to affirmatively expose the freak, she must place a higher value on the combination of booty-eating less the presence of hoes less the existence of a soul than exposing the freak. If the above condition is met, we can assume Ms. Aiko is more than willing to expose the freak and at the very least is indifferent between exposing the freak and having her conditions met. Rearranging the above equations, it must hold that:

b f + h + s;

or, eating booty is valued greater than or equal to a freak with a soul, who has hoes. Interestingly enough, the number of hoes does not matter. But keep in mind from above that b can only take on the value 0 or 1. If we assume the gentleman is not a booty-eater (or b=0), it automatically follows from the conditions above that no hoes must exist, Ms. Aiko is not a freak and no soul exists. Empirically, this makes sense. Assuming that the gentleman does eat booty (or b=1), either there is a single hoe, a single soul or a single freak. This is an interesting and powerful result. Ms. Aiko is inherently saying the existence of a soul will make the gentleman eat booty or, in other words, eating booty is completely independent of whether Ms. Aiko is a freak. By definition, if Ms. Aiko finds a man with a soul she believes, by her conditions, he will eat the booty like groceries. Even further – she needs not expose the freak (the condition where f=0). This is a powerful result that comes from Ms. Aiko’s analysis. Let us be clear – we do not purport to test the theoretical power of Ms Aiko’s Freak Exposure Theorem. We simply look to analyze the corollaries of her Theorem. There does exist a duality condition where from the gentleman’s viewpoint:

f b – h - s 


meaning, the gentleman will only enter the transaction if the freak exposure is of greater value to him than eating booty, getting rid of his hoes and losing his soul. We will not explore this side of the duality condition in this post, like its “post to be”, but we hope to tackle this side of this equation in a future post.

**Please note this warning: the conditions are assumed to be additive... Ms. Aiko is not clear. They may very well should be analyzed as multiplicative conditions. We hope to take that approach in an updated post and analyze its results. 

A multiplicative approach:
For the benefit of the reader, we must explore a multiplicative approach. From yesterday’s analysis, let us assume a multiplicative analysis, so from above we now have:

b  * -h * -s ≥ f

which quite literally mean all conditions at a single point of time t  must be met before the freak is exposed. Rearranging, we have
b  * ≥ f / (-h * -s), but our denominator has two negative signs which we can rearrange such that:

b  ≥ f / (h*s).

We assumed for simplicity, b can only take the values of 0 and 1, h  is a non-negative integer and s, for the moment is an unknown. Let examine the case where
b  = f / (hs).

 In the case where b=0, or, there is no booty eaten, then f must by definition equal zero. No freaks exists in the absence of eaten booty. If h*s = 0, we would have an undefined solution. On the other hand, if b = 1 we now have:

1 = f / (hs)

Let’s assume for simplicity, the one must have a soul or not, so it can only take on values of 0 and 1. This is only an assumption for purposes of analysis as we do not purport to know “how much soul” someone can have (eg. reasonable people can disagree whether Justin Timberlake, for example, is “soulful”). We know that it may range anywhere between 0 and 1, but can possibly take any value in between. It is a relative judgment. Again, we simplify our analysis by only considering the case of 0 and 1. In the case where s = 0, we have an undefined solution – a zombie like state if you will. If s = 1 on the other hand, our equation becomes

1 = f/h or, rearranged, f = h.

What a result! Using a multiplicative analysis, Ms Aiko has literally said, assuming the case where a soul exists, and a booty is being eaten, you must have freak exposure and hoes being equal. I will leave it to the reader to reach their own ultimate conclusions, but in our view, if Ms Aiko is the only person around to get her booty eaten, it stands to reason that she must be the source of h. Clearly, this is not the result that Ms. Aiko expects. We implore her to review her theorem and submit a new analytical framework to expose her freak.




Saturday, December 15, 2012

Throwing the Baby Out With the Bathwater: Inefficient Allocation of Incentives In the Tax Market and its Correlation with Increased Foreign Investment in “Pirates” by Rick Ross.

Normally Raponomics does not delve into matters of faith and the spirit. However, every once in a while a spiritual philosopher blends matters of the celestial with the concrete with such adroitness that we would be careless if we did not offer their dissertations a worthy look.

We have found such a spiritual philosopher. We have found such a blend.

William Leonard Roberts II, aka Rick Ross aka Ricky Rozay aka your Favorite Hustla’s Favorite Hustla, (hereinafter referred to as “Ross”) is a man of obvious faith. What makes this theoretician a cut above the rest is, unlike most spiritual philosophers, he understands the explanatory power of economic theory in equal measures. Ross does not cloud persuasive power with rigid dogma. He understands the joint role that belief in a grander scheme has with remaining tethered in the mathematical and economic principles that undoubtedly exist on earth’s surface. In pursuit of these dual lenses for the answers to all great philosophical inquiries, Ross has exerted himself tirelessly to find his rank among the great theorists of our day. His efforts have paid off.

His work ethic is undeniable. One needs to simply peruse his calendar from July of last year to understand his Protestant devotion to the craft.
 


In his third album, Ross proclaimed that his words and his faith were “deeper than rap.” He further elucidated:

I look at the game and the business and all different aspects, it's a lot of great lyricists on the corner that will never properly understand the business and know how to market themselves and get in a position where they can gain capital. I look at all the strategies people use and what made them successful. What made Birdman just as relevant today after selling 50 million records? That intrigues me. To see the class of Jay-Z, his accomplishments and see how he sits backs and accurately makes his moves.
One can truly sense the intellectual curiosity of young Ross in his musings on the paths to greatness. You can also taste the yearning to be recognized. Ross works, to borrow a pun, religiously to be known in the annals of history as one of the greats. In his treatise “Pirates,” Ross may have finally found that groundbreaking work.

Throwing the Baby Out With the Bathwater: Inefficient Allocation of Incentives In the Tax Market and its Correlation with Increased Foreign Investment in “Pirates” by Rick Ross.

Ross is attempting to tackle a very complex and dense issue here. For the lay person, the issue at hand is the government’s role in giving tax breaks and loopholes to large corporations in order to incentivize increased domestic investment. As a background, there is a natural problem that all First World governments face: high levels of Democracy and employee rights also increase market wages. Succinctly, the more power that workers have and the less the government plays a role in setting equilibrium wages, the higher a worker’s wages will become.
The problem presents itself because poorer nations do not have such high market wages, and they typically have governments that set policies to depress wages as well. Therefore, poorer economies can entice large corporations to do business in their countries because employee wages are dramtically lower.

To offset this natural phenomena, First World governments often provide tax incentives to large corporations in order to reduce the comparative advantage of lower wages and persuade these corporations to keep their business in the home country, thus employing more domestic workers. This, in turn, decreases unemployment and increases overall economic stability.

However, as Ross argues persuasively in his dynamic work “Pirates,” the government can overstep its bounds and actually create too many tax breaks ('subsidies"). In essence, when the tax system has so many subsidies, savvy corporate entities can game the system and not pay taxes at all. Further, the governments cannot prevent this because the system has become so complex that they do not have the manpower or the resources to outsmart these savvy entities.

Let us now enter into the world of "Pirates" and use the words of Ross to further illuminate this complex conundrum.
Hallucination of money, while nigga's stomach just rumble

Ross pivots quickly to the underlying conclusion of his analysis: the government is providing loopholes and tax breaks (See Subsidies) to the “Haves” with the promises that this federal subsidy will be the catalyst for increased domestic investment and consequently improve the lives of the “Have Nots.” Ross avers that this has not occurred, as is evidenced by the phrase “nigga’s stomach just rumble.” Let us see if Ross provides a cure for this ailment.

Nigga living in rubble, within him labelled the rebel
 Any nigga wan' rumble, somebody hand me a shovel
 Gotta silence the lambs, get on my Buffalo Bill
 Stepping off the Sonoma with the black dufflebag filled

This is where Ross’ biblical tradition really shines. Borrowing Liberation Theology, Ross provides a narrative from the perspective of the wealthy corporate decision-maker to highlight the mind state that has created this dilemma. The phrase “any nigga wan’ rumble, somebody hand me a shovel” is a vibrant portrayal of the disparities of power within this struggle. The corporate decision-maker is not troubled by the collective efforts of the working class to challenge the validity of their shifting to foreign investment. The cockiness of the phrase “any nigga wan’ rumble” is made ever so clearly by the curious use of the apostrophe. What is more striking, however, is what the corporate decision-maker seems to be stating about how he purports to combat the efforts of the working class.

Ross deftly displays how the working class, in this instance, is actually inadvertently fighting against itself. When the mythical corporate executive states “hand me a shovel,” he is personifying the average working class American. Thus, the corporate "shovel" is the divide of American working class unity. Essentially, the corporate decision-maker will “silence the lambs” by getting on his “Buffalo Bill” (i.e. aggressively turning the herd against itself) and forcing the working class to fight amongst themselves over the promise of mythical dufflebags full of prosperity.
Historically we have seen this phenomenon play out time and time again. The moment that the workers of the world begin to coalesce behind a common cause, those in power find psychological means to divide this united force. From using race-relations to break up unions, to alienating working class northerners amongst post-reconstruction southerners, the power of psychological distraction to force the “individual” to deviate from the collective interests of his economic strata is uncanny.

Brilliant! Ross outlines where our nation will lead should we continue to follow this path. He has also allowed us to view this problem through the lens of the corporate antagonist. We now only need to hear Ross’ remedies to prevent us from following this path to truly find salvation in this joyous masterpiece.
I'm rolling the dice, four, five, six
 Young nigga, nineteen, four or five bricks
 Praying on you niggas, sinners full of hate
 God forgives and I don't, only hustlers relate

Ah! Ross insinuates to us that he will provide us with his strategy to overcome this dilemma by comparing his forthcoming solution to rolling a 4, 5, 6 in Cee-Lo (a winning combination in a dice game played throughout America). He also insinuates that it will be the youth of America that will be the impetus in implementing his solution. Let us delve deeper.
Product is in demand, profit not far behind
 Got on my mother pearl, she fucking up father time
 Babies be having babies, I'm talking 'bout how I grind
 Niggas thinking its voodoo the way bricks be multiplying

Hmmm. Ross has provided us with the mathematical equation that will help us understand the underlying solutions of his economic theory.
First, Ross provides a basic economic principle that as demand increases, the market participant will also increase his profits if he adjusts the amount of goods he supplies to the market to meet demand.




 
However, he also provides us with a limiting principle: namely that the reason that the we do not see the basic principle outlined above is that the corporate entities are taking the government subsidies (See mother pearl), but not increasing their domestic investment over time (See fucking up father time). Thus, what we see here is that the user costs (production expenses i.e. goods or equipment) are decreasing because of government subsidies, yet the expenditures on domestic labor are not seeing equivalent increases. The above tautology can be seen in the following equation:
A¹ + (G¹ + B¹) – G = (user costs).

Further, the marginal propensity to consume labor (See hire more employees) is not increasing as investment increases. Traditionally, one would see that as investment (in this instance, government subsidies) increases, their would be some sort of proportional increase in employment in the relevant sector.
ΔYw = ΔCw + ΔIw
However, as Ross has plainly stated: the corporations are not being incentivized by the government subsidies and are instead continuing to move their investments overseas.
In a dramatic turn, Ross explicates that the entire system of providing government subsidies to large corporations is creating greater losses to the American labor force than would occur if no system of subsidies existed at all. AHA! Ross is saying that we should do away with the system entirely. Striking! Ross warns that while the idea that not doing anything at all may appear to be a form of "voodoo," he assures us it is not.
Ross argues that “bricks be multiplying” or in this instance, the number of corporations are growing. As one generation leaves (See Babies be having babies), another one replaces it. Ross postulates that the next generation of corporate decision-makers will decide to remain in the country without the government subsidies.

Hmmm, this is an interesting proposition. Let us see if Ross explains why the next generation of corporate entities will have a greater aversion to bringing their businesses overseas in pursuit of larger profits.
Affiliated with wealth, associated with death
 Self-made millionaire, snatch a triple beam off the shelf
 Straight Grim Reaper, Air Jordans walking the streets
 Blackberry boss -- one call, ya put to sleep

Interesting! Ross argues that the future generations of corporate entities will have a greater disincentive towards bringing their business overseas because the overall American economy is beginning to decline (See associated with death & Straight Grim Reaper). While corporations can drive up profits overseas, they still rely on the infrastructure, technological knowledge and transportation capabilities that is generated by American workers. Ross argues that the situation has become dire and the next generation of corporate entities will need to invest in America to ensure that their very infrastructure will have the capabilities to even send their business overseas in the next 50 years. Essentially, in the boom and bust cycles of all economies there comes times where the pursuit of wealth is paused, briefly, to contribute to the overall health of the ailing national economy. Ross believes that we are at that moment.
Should Ross be accurate in his propositions, we may find that the time to change tax policy is right now. By abandoning subsidies all together, Ross argues we will create a new generation of nationally invested corporate entities beholden to the overall strength of their mother country. Ross’ proposition is dire, but it is clear. Let us see if Ross has the ear of policy makers in Washington and whether the “Rozay Corrollary” finds its way into the annals of economic theory.

Argument Presentation: A.

Tuesday, November 20, 2012

Labor Market Allocation and Market Valuation - Determining Value in Opaque Markets - It's Good by Lil' Wayne, Jadakiss and Drake



Darkseid has shifted our view to an important market that has been much discussed within the past few years: the labor market. I thank him for his timely posts on Labor Equilibrium and Trickle Down policies. Please, if you haven’t, I would ask that you digest his posts closely and carefully. Now, every once in a while, the “masters” of the rap universe, philosophers in their own right, release a song that clearly outlines the pitfalls of understanding the labor market as it is traditionally modeled in economic theory. While I may be very bold in saying this – this is that song.







First, let’s examine the players in this philosophical tirade. Jadakiss, known as Jason Phillips to his parents, is arguably a legend. Lil’Wayne, or Dwayne M. Carter, has been making a name for himself over the past few years. Finally, Drake (his middle name), or Aubrey Graham, under the tutelage of Lil’ Wayne has entered the discipline with a force unseen in history. Now, let us examine the arguments in “It’s Good.”

You who are rich and whose troubles are few,
May come around to see my point of view, What price the crown of a King on his throne, When you're chained in the dark all alone....


What an introduction! “You who are rich and your troubles are few.” Clearly, the authors begin with the premise that the economic positions of those who are “rich”, undefined in this thesis, have few troubles. We can agree that the rich (we’ll define it based on net worth) would have the resources available to pay for unexpected problems that may arise. But clearly, the authors have picked out only the set of economic actors who are rich and meet the condition "troubles are few." We assume it allows them the resources to purchase other goods. The authors continue that those sets of economic actors will come to see the “price of a King on his throne, when [they] are chained in the dark all alone.” We will come to see what this means in a bit.

Jadakiss begins his argument:


I’m as real as they come, I follow the rules
I’m still in the hood but I probably should move
Made enough money, I don’t fuck around
I just felt they needed me, so I stuck around

We need to deconstruct the economic meaning behind this first verse. Under normal economic consumer theory, as consumer income grows, they begin to substitute away from inferior goods to normal goods. Specifically, they switch to luxury goods, a good whose demand increases more than proportionally as income rises (elasticity greater than 1). Jadakiss should under normal consumer theory consume more “house” in a higher cost neighborhood. He sees the externalities associated with his leaving the hood as an implicit cost, thereby extending this “new” consumer theory to include the externalities of consuming luxury goods on the “hood’s” need for Jadakiss to continue to reside there.

Feds got my man, shit is real son
Cause my god son just became my real son
Think life is a game but all you get is a turn
You live and you learn, either you freeze or you burn
Kush in the air, I’m pushing the gears
Love turned into hate, hate turned into fear


Jadakiss presents a fatalistic vision of capitalism  Economic actors are faced with a single choice or decision point and must learn from that single choice. He does not go on about whether opportunities will present themselves again, so we are left to guess what he believes about choices after the single decision point.  



If it ain't right, I don’t sign the deal
Shoot me in the watch, I got time to kill
Gasoline, propane, ain't no salary cap in the dope game
Ain't no collective bargaining on cocaine
So in other words nigga, do your thing

Wow! What a claim! “Ain’t no salary cap in the dope game, ain’t no collective bargaining on cocaine, so in other words nigga, do your thing.” Jadakiss makes the claim that there is no salary cap in the “dope game.” This seems to be a fundamental misunderstanding of the labor market and a gross misallocation of resources. By advertising that the “dope game” has unlimited earning potential, Jadakiss clearly avoids speaking of the associated costs such as potential prison time and loss of inventory. What can he possibly be thinking? Further, the sale of “dope” is a market based on commission, not salary. Jadakiss clearly does not understand the mechanisms of this market. Further there is no “collective bargaining” on cocaine. He is correct, insofar as there are no set hours, benefits, etc. when selling cocaine. Sellers in that market serve as independent contractors and there earnings are limited to the inventory available at the time. Jadakiss cannot think that there is an unlimited inventory of cocaine available for sale. If that were the case, in a competitive labor market, participants will come into the market until it is no longer lucrative to enter the cocaine market. Clearly, Jadakiss is has not expressed the true costs of selling cocaine. Distortions in the labor market will continue our current pattern of high unemployment. Jadakiss is not doing anyone any favors.  

[Drake]
Mind in one place, heart in another
Please pardon my brother
He’s just angry at you niggas who don't have your heart in your rap shit
And got too fuckin comfy, cause we still fuckin hungry
Young Money, got the munchies
Drake explains his take on the labor market. He believes the participants in the “rap” labor force have had decreasing productivity (“don’t have your heart in your rap shit”). They (Young Money) on the other hand are willing to spend more time and resources in order to on order to produce a high quality product. Let’s be clear, this is not a tangible product they are producing. This continues along Darkseid’s deconstruction of Pusha-T’s post-industrial America. He argued in his thesis :

“However, this theory rests on the assumption that each individual that is being added to the business is contributing to the production. It appears from Pusha T's strenuous research that this is no longer the case. He is bravely pointing out a significant market inefficiency.” -  
"Economies of Scale?", Darkseid, Nov.19 

Clearly Drake agrees – the rappers who have been added to the rap game have not contributed to “good” production. There are too many players in the rap game who are producing a poor product (see the earlier post on Soulja Boy) and thereby wasting precious resources. This is yet another call for the reallocation of labor resources, but unfortunately he does not make it clear that the Jadakiss theorem is wrong on its face.

[Lil Wayne]
Swimmin’ in the money, Imma need some fuckin goggles
Its better to give, but we don't give a fuck about ‘em
I just came home, shit then got real hoe
Lil Weezy-ana, the boot nigga, steal toe
I ain't workin with a full deck but I deal hoe
I just touched down, kick the motherfuckin field goal
Talkin ’bout baby money? I got your baby money
Kidnap your bitch, get that ‘how much you love your lady’ money


Finally, Lil’ Wayne weighs in. He first makes a normative claim that it is “better to give”, but refines his argument saying that “giving a fuck about them” is not something he is willing to do. This can only mean the costs of doing so are too high for Mr. Carter – he would rather spend resources elsewhere. But Mr. Carter exploits the market in the two final lines above – “Talkin ’bout baby money? I got your baby money, Kidnap your bitch, get that ‘how much you love your lady’ money” Mr. Carter is making an amazing claim here – that he can value the price of a human life! He simply needs to kidnap the subject and figure out the markets willingness to pay. What an interesting experiment. Mr. Carter may be on to something. He has proposed a solution to a vexing question – what is the value of a human life? Mr. Carter seems to propose a natural experiment – kidnap said person, then figure what is the market’s willingness to pay is! Everyone must have some value, and Mr. Carter proposes that he will find that value.

The blistering overview, while full of some market fallacies, is interesting in its presentation and presents some important research questions that we believe should be followed up.
Argument Presentation: A-

"Who will save your soul?" Replacing Social Ethics with Trickle Down Policies, But at What Cost? in "Pain" by Fabolous.


While on the topic of treatises, I would be dilatory in my approach if I did not review an exposition of one of the most vitriolic debates in the recent election: "Trickle Down Economics." To the unitiated, Trickle Down Economics is based on the premise that within an economy, giving money (in the form of tax breaks and other subsidies) to the top earners of the nation will stimulate increased investment by those top earners into the broader economy. According to this rationale, the economy as a whole will grow and job numbers will increase as these top earners are provided with more capital. This concept has created much heated debate in economic circles.

It goes without question that the rap community would have a dramatic departure from the typical discourse on the subject. For one, rap represents a larger percentage of impoverished individuals. Secondly, it also contains a higher percentage of blacks, who have been denied the levels of wealth that could coalesce the community around supporting any policy involving financial incentives to the wealthy.

It is thus no suprise that one of the oldest and most astute philosophers from the rap community, Fabolous, has devised a provocative critique of the very machinations justifying government subsidies for top earners. With that, let us begin.


I’m old enough to know better, young enough to not give a fuck
Rather hold my head high and die than live and duck
If you’re cool being taken down and giving up
Your lifestyle’s a blow job, the way you’re living sucks!
I done felt pain, waited but no help came

My oh My, what an intro! Summoning the spirits of "Occupy Wall Street," Fabolous postulates in very serious terms about the divide between the rich and the poor. The anger in his call to arms almost obscures the true reality: Fabolous has lived for several years trying to survive in a system that promises social mobility, however he has not realized the opportunity of the American dream. The final phrase, "I done felt pain, waited but no help came" is an effortless personification of the American ideal of generational progress. There is an undeniable subtext of pain in this passage; a longing to fit within the traditional confines of economic mobility, but finding oneself outside of the box.

Fabolous is not actually looking for help, but rather simply stating that he was willing to work within the confines of sacrificing immediate reward for the future of himself and his next generation. It appears, from the tone of the language, that Fabolous no longer believes in this ideal. He equates waiting for the social engines to drive generational growth as akin to lying down. Further, in perhaps his first turn to hyperbole Fabolous analogizes living under the previous paradigm of American exceptionalism and social darwinism is equivalent to waiting patiently for the promise of human ejaculate.

You ever been dying of thirst and smelt rain
Ever been told “go to hell” and felt flames
The water’s to your neck and only gets deeper
Its all down hill and it only gets steeper

Gotta get over it, be a hurdle leaper

The feeling of hopelessness in this passage is visceral. The pure poetry of this prose echoes the muted moans of countless proletariat in ways that only Fabolous can deliver. We can see here the true vortex of Fabolous' argument: there is an undeniable negative externality associated with "trickle down" economics.

This is not an externality that one can quantify or display conveniently in graph form. Fabolous challenges us to go the streets and see the "children left behind" by the unfulfilled promise of a new economy for them. Fabolous summons John Maynard Keynes without the academic glamour and glitz; he has seen that increased income for the rich does not translate into equivalent rises in GDP or income equality. He knows it, feels it and can display it in ways that conjure up images of Yeats in his prime.

The main question to this point is will Fabolous' observations and feelings measure up to empirical evidence. Let us first begin by unpacking the basic economic models that will be used in this analysis.

"When businesses are optimistic about the future and invest in building and retooling, the economy booms, all of us make more money and we put some of it in banks, 401(k)s, stocks, and so on. That is, saving grows to match investment. When companies are glum, the process runs in reverse, and savings shrink to equal investment. This leads to the “paradox of thrift”: if people try to save too much, businesses will see less consumer spending, will invest less, and total savings will end up diminishing rather than growing as the economy spirals downward. A number of Keynes’s followers added the next logical step: shifting money from the high-saving rich to the high-spending rest of us, and not the other way around, will spur investment and growth." - Chris Tilly

The above passage competently portrays the fallacy of providing monetary incentives to the rich: there is no guarantee they will not just place that money into savings and stifle the economy instead.

Further, the empirical evidence garnered by the Congressional Budget Office ("CBO") reverberates the angry cries of Fabolous and Mr. Tilly's theories. In fact, the CBO found that the lack of growth in the middle and lower class staggering.


This data is only confirmed when you look at the income disparity in America as compared to the rest of the world. In terms of inequality, America is bedfellows with the unflattering likes of Cameroon, Madagascar, Rwanda, Uganda and Ecuador.



It appears that Fabolous is on to something. Let us move forward in his masterpiece to determine if his initial vigor is matched throughout. One can only hope that Fabolous remains strong in his ability to transform the complex economic phenomenons of the world into digestible portrayals of human frailty.


It cost to be the boss, and it ain't get no cheaper
But there’s a man above that we all under bro
No bread truck but he work wonders though!
After you wake up, everything is wonderful
You can overcome anything you undergo

In this stanza, Fabolous calls for all of us under the auspices of Trickle Down Economics to "Wake Up!" We are all under a class of top earners in respect to power, education and opportunity, however Fabolous posits that true power is derived from human capital in numbers. He proclaims that once the workers of the world unite and support Keynesian elected officials everything will be wonderful. Fantastic! Fabolous has pivoted, without any reduction in intellectual velocity, from a discussion of the intersection between economics and humanism to a charged examination of the untapped power of voter participation.

Yet, it seems so natural. Alas, the driving force of any economic idea is, of course, the ability for policy makers to institute and sustain it. Fabolous incites the fires of change through a two-tiered polemic of political and economic solidarity for the working class. We can only hope that the remaining verses are as astoundingly illuminating as the previous.

Dreams of splurging riches, pretty but curvy missus
Chef to serve the dishes, driver to swerve the ditches

I’m just another kid on the curb with wishes
And the streets is tough, on the verge of viscious
So I sold weed and crack, merged the business
That white girl helped a nigga, Fergalicious
But getting money bring jealousy and verbal disses
So when you killing shit watch out for the murder witness

Ah, Fabolous takes a moment from educating the masses to portray the pitfalls of failing to come together in solidarity. He cites jealousy, envy and stress as mitigating factors shrinking the natural fervor to improve ones own position. The old phrase "crabs in a barrel dragging each other down" comes to mind. Obviously, Fabolous is aware of the uphill battle he faces in igniting the masses behind his cause, but if you pay close attention to the tone of his passage you can uncover a muted optimism. Let us peruse the phrase "So I sold weed and crack, merged the business, that white girl helped a nigga, Fergalicious."

Knowing Fabolous' depth and complexity, it goes without saying that he is not literally referring to giving up on the traditional economy and selling drugs. No, no, no, he is merely calling for the great economic thinkers of the Marxist tradition to eschew notions of neo-liberal capitalist success and uncover a new course, nary a new zeitgeist for a united proletariat to cheerfully follow. His dedication to double-entendre warms my soul!

Cause soon as a nigga could the sooner a nigga will
And I don’t owe these niggas nothing
Put that in a nigga will


Alas, we are not disappointed in the outro. He contends that the sooner we get together, the sooner the economic utopia becomes reality. I sit here in peace thinking that one day my children might live in this beautiful picture that Faboulous has painted for our academic senses. Furthermore, his devotion walks up to and even embraces potential death, as Fabolous is willing to devote everything in his capacity to fight for those currently experiencing the disparities in income and opportunity. Even if they do not think they are willing to fight themselves. Bravo, Fabulous your grace in literature can only be matched by the purity of your heart.

In the great words of Mr. Schumpeter, "[w]e fight for and against not men and things as they are, but
for and against the caricatures we make of them."

Nobody understands this more than Fabolous.

Argument Presentation: A++

Monday, November 19, 2012

Economies of Scale? A critique on Assessing Labor Equilibrium in Today's post-industrial American Economy in "Exodus 23:1" by Pusha T.

Pusha T - "Exodus 23:1"



Welcome back Raponomics! To piggyback on Keynes previous post, I would like to touch on a very important economic idea in our current times. I am of course talking about the dramatic decrease in the production of real goods in today's economy. America has lost its comparative advantage in the manufacturing of goods: other economies, such as China, Malaysia and Brazil, have lower reservation wages, lower production costs and a large pool of employees who are willing to do low-skilled manufacturing work.

Long gone are the days of American factories producing real goods that could be purchased in a market and provide a discernible value to the consumer. Today we find that most of what we produce in today's economy is academic: speculation, providing training, advice and non-essential goods. The success of an average business in today's economy relies more on marketing than functionality, salesmanship than substance and spits in the face of traditional economic models of efficiency.

So, in today's world does the old addage: "more workers equal more efficiency" still ring true? Does adding to the labor increase the quality of our goods and decrease its cost in the market like it did during the auto boom of the 1930's? Many intellectuals, including Richard Posner, are continuously questioning this idea, painting a dismal future for the American economy and their ability to compete against the Tiger Economies and survive in the 21st century.

Other economists are not so pessimistic. Most notably, the great orator and economist, Pusha T, has recently published a treatise that provides a new idea; namely that there is no cause for alarm because the returns to economies of scale have been severely overstated in foreign economies due to changing economic realities.

Let us unearth the arguments that Pusha T presents in his oeuvre "Exodus 23:1."

Beef is best served like steak well done
Get a gun in your face, bitch nigga
Beef will have you praying to God
Move your kids, have you hiding your mom
Beef is when you hide behind them other niggas
But they ain't killers they ain't pullin them triggers, fuck niggas
Beef will have you keying our cars
Heartbroke, yours don't look like ours 

Pusha T, in Alligherian fashion, begins his discussion by outlining what the stakes are in this modern economic struggle. The way in which he paints our future appears to be grisly and pessimistic. He follows a prevalent paradigm: it has been long held that there is a direct correlation between poverty and crime, thus it should also follow that increased poverty will in turn increase misery and suffering.  Pusha T seeks to demonstrate the long term effects of an unsustainable economy in his Dickensian portrayal of the decline of moral conduct in an economy with low employment numbers.

I admire this humanistic approach. To draw his readers in, Pusha T seeks to create a tangible picture of the raw data and projections in narrative form. Let us see how he follows this literary technique.

Contract all fucked up
I guess that means you all fucked up

You signed to one nigga that signed to another nigga
That's signed to three niggas, now that's bad luck

Damn that shit even the odds now


Here Pusha T unleashes a scathing critique on employment practices. He scoffs at the fact that many businesses are merely there to own other companies and do not produce any actual wealth themselves. From this we are given a pointed question: "if your wealth producing capacity is being used to support other companies, then are you actually becoming more efficient by the expansion of your business?" This is a very poignant assessment when one considers the old understandings of business expansion.

Traditionally, when one expands a business by employing more individuals you see a measurable increase in production and efficiency. It acts as the driving force for moving towards full employment. Increased production and efficiency is the incentive structure that causes owners to employ more individuals and thus grow the economy.

However, this theory rests on the assumption that each individual that is being added to the business is contributing to the production. It appears from Pusha T's strenuous research that this is no longer the case. He is bravely pointing out a significant market inefficiency. As Pusha aptly states "now thats bad luck." What has driven the original nigga to be associated with so many companies? Why is he increasing the wealth of others with no seeming contribution on the part of these beneficiaries?

Could it be that because our economy produces less real goods but continues to maintain similar population numbers that there are not enough real jobs out there? That in order to reach full employment we must accept inherent inefficiencies and free riders? Perhaps this is why Pusha T is not as concerned as other economists regarding the recent rise of smaller economies in the manufacturing market. Pusha insinuates that the increased employment numbers are not indicators of actual growth, but instead the Chinas, Malaysias and Brazils of the world are merely artificially increasing their growth at an unsustainable rate.

Conversely, Pusha T praises America for not falling into this same trap. While the American economy appears to be failing to compete in today's global market, Pusha is unfazed. He believes that our current fall is laying the foundation for a new economic model that will provide truly sustainable growth in the future.

It shows in the homes I done tried that
That's why you'll never be my neighbors
Smile as you waving but we know you niggas hate us

Fuck you playing games for?
Don't be scared get everything you came for

They got you talking that big shit
Little do you know we don't miss shit

Them niggas using you as a pawn
You see they never loaded they guns

Now you out here all by yourself
Ask Steve Jobs' wealth don't buy health


This is where Pusha T really brings it home! He issues a challenge and a referendum to the artificial growth of the Tiger economies. One phrase deserves reiterating:

It shows in the homes I done tried thatThat's why you'll never be my neighborsSmile as you waving but we know you niggas hate usFuck you playing games for?

Pusha T analogizes sustainable economic growth with purchasing a home. To illustrate, in order to purchase a home you must either have: (1) all the capital up front; or (2) a down payment and enough future income to support your mortgage payments. If an individual is artificially inflating his income, then he may be able to make the down payment on the home, but he will not be able keep up with his mortgage payments down the road. We have seen this phenomenon play out very clearly in the most recent housing crisis. He rebukes China's standing in the global economy as a mere "Emperor's New Clothes" cautionary tale. While China believes their new found growth is sustainable, it is merely an invisible cloak that cannot disguise the real truth: the Tiger model will ultimately collapse.

Pusha T then engages in a very aggressive undressing of the idea of the modern economy fallacy. He seems to offer a Nostradamus like prediction, we will see a precipitous fall of the rising economies in the future. The phrase "them niggas using you as a pawn" harkens back to the idea that artificial growth is really a government tactic designed to legitimize regimes and appease the people. Pusha indicates that the people are being bamboozled by the false promise of future growth. They are pawns in this game and their national sacrifice is not being rewarded with sound economic policy.


In his last two phrases Pusha all but comes out and warns the foreign economic engines that death is certain. One cannot help but to be optimistic given Pusha T's diagnosis of current economic trends. I give Kudos to his argument style as well as his deviation from the current fear-mongering in economic scholarship. I believe Pusha T has hit on an important issue here that demands more research. Let us hope that Pusha is not done addressing the fallacies of the current booms and busts in the modern economy, and that this is merely an introduction in a long line of treatises on the subject.

Argument Presentation: B+