Mercury Rising 鳯女

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Archive for August 5th, 2011

The return of slavery

Posted by Charles II on August 5, 2011

One of the reasons I used to refuse to invest in China, and now do so only selectively, is that they use some prison labor. Prison labor, unless it’s done at a competitive wage, is a form of slavery. So, to be consistent, I should divest from the US. Mike Elk and Bob Sloan, The Nation (via t/o):

The breaded chicken patty your child bites into at school may have been made by a worker earning twenty cents an hour, not in a faraway country, but by a member of an invisible American workforce: prisoners. At the Union Correctional Facility, a maximum security prison in Florida, inmates from a nearby lower-security prison manufacture tons of processed beef, chicken and pork for Prison Rehabilitative Industries and Diversified Enterprises (PRIDE), a privately held non-profit corporation that operates the state’s forty-one work programs. In addition to processed food, PRIDE’s website reveals an array of products for sale through contracts with private companies, from eyeglasses to office furniture…

Although a wide variety of goods have long been produced by state and federal prisoners for the US government—license plates are the classic example, with more recent contracts including everything from guided missile parts to the solar panels powering government buildings—prison labor for the private sector was legally barred for years, to avoid unfair competition with private companies. But this has changed thanks to the American Legislative Exchange Council (ALEC)…

So: incarcerate people at a cost of $50,000 per year to the taxpayers, make them work at jobs that would pay $7.25 an hour for $0.25/hr. Labor costs being about half of all costs, and figuring a markup to generate a margin of 50% without nearly free labor, that means that one prisoner working 2000 hours per year generates profit of $42,000 for PRIDE, while costing the taxpayers $50,000 minus whatever taxes they are able to get PRIDE to pay (maybe $5,000 if they’re lucky). We pay $45,000. PRIDE makes $42,000. And they are able to drive down the cost of labor to the minimum, or even drive legitimate companies out of business.

It would, of course, be cheaper not to lock up the guy in the first place. But if we just had prisoners do the same services at market rates for a state-administered program, the state would receive a profit of ca. $28,000 and would collect some taxes from the prisoner, making the cost of incarceration roughly $20,000. And that’s assuming that overhead is roughly the same for a state-administered enterprise than for private enterprise. Usually the reverse is true.

What PRIDE is doing is state socialism, folks. The state pays a state-approved company to do something that could be done much more cheaply in other ways. The alternative, a state-administered program, is democracy. Democracy pays a real wage, not a slave wage.


Posted in corporatists, corruption, crimes, stupid | 5 Comments »

The triumph of voodoo

Posted by Charles II on August 5, 2011

A couple of days ago, I posted in comments:

Adding, 8/3: For those who believe in voodoo, markets at noon are below resistance, at about 1240 (S&P). Next line of resistance is ca. 1180, which would be a ca. 12% drop from recent highs. The 50% retracement would be at 1025 and the 33% retracement at 1140.

The bounce today occurred at ca. 1170. In other words, if you bet on the line of resistance at 1180, you would have made money. Now, whether this is a pause before renewed selling or a genuine bottom will not be clear for days. At the moment (2:40PM Eastern), the pattern looks like it has hit a line of short-term resistance around 1210, and there’s dead air. People are waiting to decide whether to hold over the weekend or to play it safe.

Please understand: there’s no real news to support a movement in either direction. The jobs report is not as bad as feared, but weak. In fact, whatever good news came in this jobs report was at the expense of the next. Italy may be planning to try to get the ECB to back it by enacting “reforms” (cuts), which will further weaken European growth, and hence further damage the equity markets, though possibly preventing even worse damage. The mood is nowhere near gloomy enough to call this a selling climax or capitulation. It’s still seen as a buying opportunity.

My guess is a sag into the close, ending near neutral ( ca. 1202opening was at 1200.28). And then real news will determine Monday’s open. But that’s purely a crapshoot. Technicals work, but only because there are so many people who believe in voodoo.
Added: Sagged from 1210 to 1199.35, to close down 0.72. I don’t know how one could call it closer than that.

Posted in stock market | Comments Off on The triumph of voodoo

Friday Cat Blogging

Posted by MEC on August 5, 2011

Posted in Alexander the Great, Friday Cat Blogging | 1 Comment »

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