English-language networks bring a better quality of life

Per-capita income vs. English Proficiency Index score, showing rising impact of English-language networks

EF EPI
score

37.6-
48.4

48.8-
52.3
52.8-
57.3
58.1-
62.1

63.2-
72.2

English
skill

Very
low

Low Moderate High

Very
high

Where English skills are very high (where EF EPI Scores are 63.2 or higher), per-capita income jumps above the trend line, or well above.

English-language networks open up research

English serves as a bridge that connects employees across countries and cultures, weaving networks for innovation.

By a wide margin, researchers in the United States publish the most scientific papers every year, and the United Kingdom ranks third in publication numbers, after China. However,… Chinese research accounts for only 4% of global citations in science publications, compared to 30% for the U.S. and 8% for the U.K. …Chinese research is less integrated into the global knowledge economy.

English skills allow innovators to read primary scientific research, form international collaborations, bring in talent from overseas, and participate in conferences. English proficiency expands the number of connections innovators can make with the ideas and people they need to generate original work.

English-language networks open up business

English spread as a language of international trade and diplomacy first under the British Empire, and then during the postwar economic expansion of the United States.

An increasing number of companies headquartered in non-English-speaking countries (e.g., Rakuten, Renault, and Samsung) have adopted English as their corporate language.

Networks bring better salaries and quality of life

An improvement in English proficiency is tied to a rise in salaries… In many countries, higher English proficiency correlates with a lower unemployment rate among young people.

The Human Development Index measures education attainment, life expectancy, literacy, and standards of living. …all High and Very High Proficiency countries are rated “Very High Human Development” on the HDI.

…English is a core skill today. …it should be taught and tested at a level equivalent to native language reading and math skills.

EF EPI methodology

The data for this sixth edition was calculated using results from 950,000 test takers who completed three different EF English tests in 2015. Two tests are open to any Internet user for free. The third is an online placement test used by EF during the enrollment process for English courses.[1]


  1. EF EPI: EF English Proficiency Index. 6th ed., Education First, 2016.

Ellis Island mass immigration let in people who were ready to work, but still looking

The Immigrant's Track Through Ellis Island

The Immigrant’s Track Through Ellis Island
A. Immigrants landed from barges enter by these stairs.
B. Surgeon examines health tickets.
C. Surgeon examines head and body.
D. Surgeon examines eyes. Suspects go to left for further examination.
E. Female inspector looking for prostitutes.
F. Group enters and sits in pen corresponding to ticket letter or number.
G. Inspector examines on twenty-two questions.
H. Into special inquiry court.
I. Stamping railroad ticket orders.
J. Money exchange and telegraph office.
K. To railroad pen.
L. To New York pen.
M. To the ferry and New York.
N. Telegraph office.[1]

Armed, on the one hand, with the Public Charge Law of 1882, which excluded those who seemed like invalids or paupers and, on the other hand, with the Anti-Contract Labor Law of 1885, which excluded those who seemed like they came with a promise of work, federal administrators quickly assumed the task of erecting an elaborate inspection apparatus for individuals seeking to enter the United States.

These two contradictory laws, developed in different historical circumstances, operated with equal legal force on Ellis Island, as inspectors selectively admitted immigrants who seemed able-bodied and defenseless.

“To get the fullest grasp,” Brandenburg explained in his book, “we must become immigrants ourselves and re-enter our own country as strangers and aliens.” Disguised as “Italian,” then, this peculiarly self-reflexive journalist convincingly documented aspects of passing through Ellis Island.

Much of the legal work of Ellis Island occurred aboard the ships that took immigrants across the Atlantic. On board, Brandenburg recounted how federal law required ships’ manifests to match precisely the name of every immigrant who appeared before inspection or the United States authorities would “exact a fine of $200.”

Likewise, immigrants began rehearsing the federal inspection process on the ships. Not only did those who had already been to the United States tell stories about inspection to others on board, but prior to sailing some had prepared written rehearsals that they consulted in transit: “I saw more than one man with a little slip of notes in his hand carefully rehearsing his group in all that they were to say when they came up for examination.”‘

At first, inspectors thought the two “were dagoes all right,” but they grew suspicious at Brandenburg’s wife who, as one inspector claimed, was “the first woman I have ever seen in the steerage with such well-kept finger-nails.” Clean finger-nails drew attention, because they upset the inspector’s expectations of Italians as dirty people, and so her fingers suggested that she was perhaps trying to attract attention – the kind of attention allegedly sought by prostitutes.

On Ellis Island itself, the couple experienced little trouble passing through immigration controls: “Our papers were all straight, we were correctly entered on the manifest, and had abundant money, had been passed by the doctors, and were properly destined to New York, and so were passed in less than one minute.”

Brandenburg’s account reveals how inspection effectively encouraged each immigrant to appear meek, yet able-bodied in front of inspectors enforcing contradictory laws. In other words, inspection favored those who appeared defenseless and duty-minded.[2]


  1. Brandenburg, Broughton. Imported Americans: The Story of the Experiences of a Disguised American & His Wife Studying the Immigration Question. Stokes, 1904. pp. page facing 227, 227.
  2. Anthes, Louis. “The Island of Duty: The Practice of Immigration Law on Ellis Island.” New York University Review of Law & Social Change 24 (1998): 563-600.

Financial crisis of 2007 was like every crisis: a systemic run

Financial crisis of 2007 is predicted by model in graph of S&P 500 index price vs. date.

Financial crisis data and model estimations

dots – S&P 500 index data
dashed vertical line – last time in calibration data
smooth curves – estimations using various time windows
grey zone – 80% confidence interval
inset – probability density function [1]

The financial crisis was a panic and a run on demand deposits

…the basic economic structure of our financial crisis was the same as that of the panics and runs on demand deposits that we have seen many times before.

The run defines the event as a crisis. People lost a lot of money in the 2000 tech stock bust. But there was no run, there was no crisis, and only a mild recession. Our financial system and economy could easily have handled the decline in home values and mortgage-backed security (MBS) values—which might also have been a lot smaller—had there not been a run.

The central task for a regulatory response, then, should be to eliminate runs.

Runs come from contracts with promises that people can’t keep 

Runs are a pathology of specific contracts, such as deposits and overnight debt, issued by specific kinds of intermediaries. Among other features, run-prone contracts promise fixed values and first-come first-served payment. There was no run in the tech stock bust because tech companies were funded by stock, and stock does not have these run-prone features.

The central regulatory response to our crisis should therefore be to repair, where possible, run-prone contracts and to curtail severely those contracts that cannot be repaired.

When they failed, Bear Stearns and Lehman Brothers were financing portfolios of mortgage-backed securities with overnight debt at 30:1 leverage. For every thirty dollars of investment, every single day, they had to borrow a new twenty-nine dollars to pay back yesterday’s lenders. It is not a surprise that this scheme fell apart.

Instead of micromanaging the people, just eliminate the run-prone contracts

It is a surprise that our policy response consists of enhanced risk supervision, timid increases in bank capital ratios, fancier risk weighting, macroprudential risk regulation, security-price manipulation, a new resolution process in place of bankruptcy, tens of thousands of pages of regulations, and tens of thousands of new regulators.

Wouldn’t it be simpler and more effective to sharply reduce run-prone funding, at least by intermediaries likely to spark runs?[2]


  1. Sornette, Didier, and Ryan Woodard. “Financial bubbles, real estate bubbles, derivative bubbles, and the financial and economic crisis.” Econophysics Approaches to Large-Scale Business Data and Financial Crisis, Springer Japan, 2010, pp. 101-148. p. 137.
  2. Cochrane, John H. “Toward a Run-free Financial System.” Across the Great Divide: New Perspectives on the Financial Crisis, edited by Martin Neil Baily and John B. Taylor, Hoover Institution Press, 2014, pp. 197-250.

Trade agreements are legalized plunder

Cartoon illustrates that trade agreements yield plunder by getting the government. involved.
[1]

The proper function of government is to protect life, liberty, property and contract rights… …the real reason why totally free and unrestricted trade is good is because it is the only trade policy that does not violate individual rights. …a proper position to take is that a trade policy should be implemented or adopted if it does not violate anyone’s rights.

When government goes beyond… basic functions of protecting life, liberty and property, it becomes a redistributive state. In order to give something to some individuals or groups, it must first take something from others because governments have no resources of their own. Frederic Bastiat… had the following view of what determines whether a law is good or bad:

“See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law – which may be an isolated case – is not abolished immediately, it will spread, multiply, and develop into a system.”

Such laws constitute legal plunder for Bastiat because they allow some individuals to use the force of government to rob others.

Trade laws like NAFTA, GATT and the others do the same. NAFTA, GATT and the other trade agreements that are hundreds or even thousands of pages long are not really about free trade. They are about how the plunder gained from protectionism is to be divvied up. They go into great detail describing which special interest is protected for how long. Farmers, the steel industry, the auto industry, the textile industry and countless other special interest groups all receive special deals in many of these so-called “free” trade agreements. These free trade laws have developed into the systems that Bastiat warned us about.

NAFTA, GATT and all other trade agreements are fatally flawed…

If NAFTA were a true free trade agreement, it would only require one sentence… something like this: “As of January 1, 1994, all trade exclusively involving Mexico, the United States and/or Canada will be treated the same as trade involving New Jersey and Kansas.” But NAFTA (and the numerous other trade agreements that could be named) do not have such language.

If a trade agreement would violate anyone’s contract or property rights, the policy should not be adopted.

…if an existing trade policy violates anyone’s contract or property rights, it should be abolished immediately. [2]


  1. Hughey, Jason. “When Government Steals From Us.” DebatetheState, 14 Oct. 2013, www.debatethestate.com/tag/plunder/. Accessed 30 Nov. 2014.
  2. McGee, Robert W. “The Fatal Flaw in NAFTA, GATT and All Other Trade Agreements.” Northwestern Journal of International Law & Business 14.3 (1994): 549-565.

Profit means satisfied customers and investors

Revenue, taxes, expenses, and profit are graphed vs. production rate, and break-even point and shut-down point are identified.
Profit is net income after taxes.
(FIT is corporate federal income tax.) [1]

Profits… resulting from the relationships of costs to prices, not only tell us which goods it is most economical to make, but which are the most economical ways to make them.

…profits… put constant and unremitting pressure on the head of every competitive business to introduce further economies and efficiencies…

…the prospect of profits decides what articles will be made, and in what quantities—and what articles will not be made at all. If there is no profit in making an article, it is a sign that the labor and capital devoted to its production are misdirected: the value of the resources that must be used up in making the article is greater than the value of the article itself.

…profits… guide and channel the factors of production so as to apportion the relative output of thousands of different commodities in accordance with demand.

The total profits of General Motors… are taken as if they were typical rather than exceptional.

Profits actually do not bulk large in our total economy. The net income of incorporated business in the fifteen years from 1929 to 1943, to take an illustrative figure, averaged less than 5 per cent of the total national income.

…what government officials would undoubtedly regard as “excessive” or “unreasonable” profits… would not only cause every firm in that line to expand its production to the utmost, and to reinvest its profits in more machinery and more employment; it would also attract new investors and producers from everywhere, until production in that line was great enough to meet demand, and the profits in it again fell to the general average level.

Few people are acquainted with the mortality rates for business concerns. They do not know… that “should conditions of business averaging the experience of the last fifty years prevail, about seven of each ten grocery stores opening today will survive into their second year; only four of the ten may expect to celebrate their fourth birthday.”

…any individual placing venture capital runs a risk not only of earning no return but of losing his whole principal.

…over a long period of years, after allowance is made for all losses, for a minimum “riskless” interest on invested capital, and for an imputed “reasonable” wage value of the services of people who run their own business, no net profit at all may be left over, and that there may even be a net loss. …optimism and self-confidence too often lead… into ventures that do not or cannot succeed.[2]


  1. Couper, James Riley. Process engineering economics. Marcel Dekker, 2003. p. 256.
  2. Hazlitt, Henry. Economics in one lesson. Harper & Brothers, 1946. pp. 168-172.

Energy use is all for consumers and their governments

Energy use flowchart shows that energy use is all directly or indirectly for consumers or governments.

Consumer and non-consumer energy use [1]

“If we have available energy, we may maintain life and produce every material requisite necessary. That is why the flow of energy should be the primary concern of economics…”[2]

The energy contents of the dollar and rouble are shown from 1900 to 2000.

The `energy content’ of money units [3]

The flow of energy is the primary concern of what has been come to be known as energy analysis… An important aspect of energy analysis is the determination of the total (direct and indirect) energy required for the production of economic or environmental goods and services. This total has been termed the embodied energy.

For example, the energy embodied in an automobile includes the energy consumed directly in the manufacturing plant plus all the energy consumed indirectly to produce the other inputs of auto manufacturing, such as glass, steel, labor, and capital.

Dollar value is graphed vs. energy use for all sectors in the economy.

Energy use vs. dollar value
in various direct and indirect energy-using sectors [2]

Most Americans think of energy use in terms of big-ticket items such as gasoline, heating oil, and natural gas. But a great deal of the energy we use is indirect, embedded in the things we buy.

…it is hard for consumers to change their direct energy use radically or quickly. Houses and cars are expensive, depreciating, long-lasting assets. Household energy efficiency modifications can be costly, unsightly, inconvenient, or all of the above.

Pondering the difficulties involved in cutting back on energy use led us to an offshoot of the energy literature pertaining to indirect energy use—that is, the energy embedded in virtually everything we buy.

An example of this is the manufacturing and sale of a simple cotton t-shirt. Energy is required to grow and harvest the cotton; transport it to a factory; make, package, and transport the chemicals used to bleach, dye, or condition the cotton; run the machines on which the t-shirt is processed; create packaging materials; ship the t-shirt to the store; and keep the heat and lights on in the store.

Indirect energy use in different sectors is tabulated as a percent of total indirect energy use.

Those who want to reduce their energy consumption but are unable or unwilling to forego the roomier house or car can cut down on discretionary medical purchases; minimize pharmaceutical waste; cut back on air travel; and replace high-energy foods (beef and refined grain products) with lower-energy foods such as poultry, legumes, and fresh fruits and vegetables.[4]


  1. Bin, Shui, and Hadi Dowlatabadi. “Consumer lifestyle approach to US energy use and the related CO2 emissions.” Energy policy 33.2 (2005): 197-208.
  2. Costanza, Robert. “Embodied energy and economic valuation.” Science 210.4475 (1980): 1219-1224.
  3. Beaudreau, Bernard C., and Vladimir N. Pokrovskii. “On the energy content of a money unit.” Physica A: Statistical Mechanics and its Applications 389.13 (2010): 2597-2606.
  4. Green, Kenneth P., and Aparna Mathur. “Measuring and Reducing Americans’ Indirect Energy Use.” AEI Energy and Environment Outlook (2008).