Rebane's Ruminations
November 2026
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  • George Rebane

    DollarPile With the worldwide economic downturn that is being amplified by the mavens in Sacramento, there is a lot of interest and attention paid to local economies.  Here we are trying hard to keep existing businesses (by buying locally) and at the same time attract more firms or cash importers to our community.  In this piece I attempt to give a working understanding of the ‘output multiplier’ which summarizes the economic effect on a (local) economy from the arrival of an imported dollar.  (A more general discussion of multipliers is available in this short pdf Download EconMultipliers.)

    It’s long been known that every dollar that comes into a local economy produces more than just a dollar’s worth of benefit to the community before it leaks back out.  This benefit is calculated using the so-called ‘Output Multiplier’ or simply ‘multiplier’ which is just a number like 1.83. 

    The total benefit of an imported dollar is then equal to the multiplier in dollars – for example $1.00 * 1.83 = $1.83.  It’s as if the multiplied dollar amount was actually making the rounds in the local economy.  The reasoning behind such a multiplier is easy to understand.  Say, a retired person living here gets a check from a pension plan or an investment account.  Depending on her lifestyle, she may spend 60% (the retention factor) of her check in the community and the remaining 40% (the leakage factor) for expenses that are outside the community – for example state and federal taxes, online shopping, a big box store in the next county, and so on.

    If we now assume that she’s a pretty typical spender, then we see that the 60% of the cash that stayed in the county will be spent in such a way that 60% (or 0.6 * 0.6 = 0.36 = 36%) of that cash also stays in the community, and so on until all the money leaks back out of the local economy.  The question now is, what is the sum of all the diminishing pieces or percentages of that imported dollar that benefit the local economy – that is the multiplier number that we seek.

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  • George Rebane

    NevCounty Small counties across the state are going through hard times.  Nevada County is both blessed by its geographic location and burdened by its political location.  In today’s WSJ California Congressman Devin Nunes writes in ‘California’s Gold Rush has been Reversed’ (this link will be open to non-subscribers tomorrow) that “entrepreneurs are fleeing heavy taxes in the state”, and goes on to say

    After more than 150 years of being a destination, California is becoming a place entrepreneurs, investment capital and the hardy workers who made it a global leader in agriculture, technological innovation and scientific research are fleeing. This exodus is the marker of something deeper than a national recession. It’s a sign that the attempts by state leaders to spend their way back to prosperity are killing California.

    Today the annual net outflow of Californians is north of 135,000 a year.  And these are not only chicken farmers frustrated with the state’s new large cage regulations; these are the people who start small and high-tech businesses from which grow national icons employing thousands.  To this Nunes says

    Consequently, Idaho, Utah and Wyoming all have unemployment rates around 5% at a time when California is suffering an unemployment rate of 9%. Californians are moving east and creating jobs in their new home states.

    Over the past few years, we’ve witnessed the state government’s response to the capital and entrepreneur flight out of our state: Taxes remain high, and lawmakers employ all the tricks in the book to produce “balanced” budgets from shifting expenses around to borrowing ever larger sums of money.

    And the malfeasance in Sacramento directly impacts Nevada County which last November declared its switch from historically conservative to a newly minted liberal county – our Peters have petered out and the Pauls are taking over (see Peter-Paul Principle).

    Economic Development season is coming back into vogue locally, new business development issues are on our minds as county businesses are shutting down and/or moving, and new start-ups continue being put through the wringer (see piece on NC Media watch about the Idaho-Maryland Mine).

    Without much amplification, the following summarize my thoughts about Nevada County economic development.

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  • From the CSAC press release  – "SACRAMENTO – Many California counties will be unable to continue providing state and federally required services for California residents as the budget stalemate continues and the state ultimately runs out of cash."

    Nevada County senior executives are giving up pay increases to help the county weather the current financial storm.  County Executive Officer Rick Haffey informs the Board of Supervisors, "I have been approached by the appointed department heads representing 19 positions who have volunteered to forgo their 3% raise July 1 as a contribution to maintaining the County’s fiscal health. I have accepted their offer and accepted your Clerk of the Board’s offer as well. This group has approached the Elected Officials and thus far the Auditor – Controller, Clerk-Recorder, District Attorney, Sheriff, and Treasurer–Tax Collector have agreed. We will be bringing the necessary resolutions to you to make this change. I would like to thank all for making this contribution for the County’s well being."

  • George Rebane

    TwoPresidents It turns out we really can have two Presidents at a time.  As President-elect Obama was holding his next news conference and giving a “very important speech” exhorting Congress to pass his economic stimulus package (more on that insanity below) before he gets sworn in, the BBC World observed sagely that “Obama knows the meaning of audacity.”

    [update 9jan09 – “It was a remarkable speech for someone who isn’t president yet and hasn’t revealed the details of his economic rescue plan,” ABC’s Jake Tapper reports. “The most pointed criticism of the plan came from Democrats who objected to Obama’s plans to cut taxes for businesses and for middle class families.”]

    Leading economists from both sides of the political spectrum now publicly agree that last spring’s stimulus package, during which we all received our checks from the government, didn’t work.  And moreover, such checks to the consumers don’t do anything to help end the financial crisis, but do help us along the road to hyper-inflation.  Nevertheless, the sheep do understand money in hand, and while not spending immediately, they will vote accordingly.  So politics again trumps prudence.  It’s hard to decide whether these politicians are evil or just idiots.

    Most “persons of information” – a delightful and apropos early 19th century descriptor – are aware that the journalism and news reporting industry is undergoing a massive change in its structure, delivery of its product, and credibility of its content.  A local media professional sent me this report in which the author makes a case for dying newspapers to just quit flogging their dead pulp editions.  And George Friedman of Stratfor re-examines the Watergate affair (‘The Death of Deep Throat and the Crisis of Journalism’), and a side of the story that journalists have either buried or failed to understand.  The Watergate saga had an equally significant side in what the Washington Post editor Ben Bradlee, and the dynamic duo of Bernstein and Woodward chose not to reveal about Deep Throat who turned out to be the recently departed Mark Felt, operational head of the FBI at the time and a disgruntled government employee.  The bottom line here is that at the highest and most prestigious levels of an industry that loves to trot out its ‘code of ethics’ at the drop of a hat, a higher value was placed on protecting a juicy source than revealing that a sinister attack was being waged against the Presidency by one of its own agencies.  In short, the Washington Post was “burying a story to get a story”.

    [update 9jan09] Seattle Post-Intelligencer is put up for sale – “Hearst Corp. put Seattle’s oldest newspaper, the Seattle Post-Intelligencer, up for sale on Friday and said that if it can’t find a buyer in the next 60 days the paper would likely close or continue to exist only online.”  

  • George Rebane

    [This post is really a focused continuation of topics raised by James Currier in the comments to ‘Obama, you gotta love him!’.  For now I will simply characterize James as an educated, left-leaning, successful capitalist, although he may correct me as he has in the past 😉  His views are important to those of us on the conservative cum libertarian side, because they represent what has emerged as the dominant mindset of the intellectual left and also many of those whom our President-elect is appointing to high office in his upcoming administration.  To understand these perspectives may help us anticipate and understand what Barack Obama intends for us in the coming months and years.  And to those of us predisposed and already anointed as critics-in-waiting of everything from inside the Beltway, we should prepare ourselves with this knowledge so that our future tirades may contain more light than their inevitable heat.]

    WorldMap 

    Regarding world changes:  Here it seems to me we may be confusing prediction of change with the actual change or the ‘change event’.  I disagree wholeheartedly with the notion that the Berlin Wall’s fall and 9/11 did not embody a ‘world change’.  Yes, many people predicted the fall of communism, as did many predict the conflict between the US and Japan.  (In 1935 Will Durant predicted the inevitability of that conflict in his first volume of Story of Civilization.)  But when 7 Dec 1941 arrived, the world did indeed change with the US entry into both theaters of WW2, and we are living with the strong echoes of that entry to this day.  Things would have been different had we not unequivocally thrown our weight on the side of the Allies.
     
    With regard to the “common knowledge that they (USSR) were done” in 1980, nothing could be further from the truth.  The cold war had two crisis periods where the likelihood of WW3 peaked.  The first was very public and occurred when Krushcev tested Kennedy and Johnson in the early 1960s (lasting longer than the Cuban missile crisis).  Overshadowed in the public eye by the oil crises, the second occurred during the latter part of the Carter presidency in the late 1970s.   Many reputable analysts and historians persuasively argue that the second crisis was the more dangerous of the two, precisely because the USSR was economically weaker and saw a weak American president as fortunate coincidence during which to roll the tanks through Fulda Gap.  (I was in a position to witness both of these crises from the ‘inside’.)  Most educated people on the right had known for decades that the USSR would end either ‘hard’ (WW3 with civilization in tatters), or ‘soft’ with its economy in tatters and an internal putsch.  It was always their call during which time we wanted to present them with the MAD outcome for the ‘hard’ alternative, while waiting for the inevitable ‘soft’ resolution to realize.  This strategy was common knowledge in the educated world.

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  • George Rebane

    WindPalms Somebody once said that politics is the art of the possible.  To get elected, you pick a constituency or two that you can lie to with a straight face.  Push all their hot buttons, it doesn’t matter what you say as long as they’re part of the base that will get you to 51%.  If you have any, keep your real beliefs a secret.  No one needs to know, because once you’re in you can let your beliefs be pliant and twist in the winds of expediancy.  Constant and unbending principles are for fools and losers.  Let them go back home and blog or start a talk show.

    The WSJ just announced that Obama and his Democratic acolytes are busily crafting an economic recovery plan that may yet get support from both sides of the aisle.

    President-elect Barack Obama and congressional Democrats are crafting a plan to offer as much as $310 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

    The size of the proposed tax cuts — which would account for about 40% of a stimulus package that could reach $775 billion over two years — is greater than many on both sides of the aisle in Congress had anticipated, and may make it easier to win over Republicans who have stressed that any initiative should rely relatively heavily on tax cuts rather than spending.

    We have a new leader, and you gotta love him!

  • George Rebane

    Ratchet Our liberties continue to be ratcheted downward.  Our daily round, as it were, is taking place in an ever smaller corral.  As RR readers know, this is one of the national issue threads that I am compelled to track in these posts.  A recent ratchet click is reported on the CABPRO Report in ‘OHV Use on Public Lands Threatened: Overview of the 2005 Travel Management Rule’.  And on the same blog Assemblyman Dan Logue argues in ‘Decentralize California’ for the decentralization of power in California that may be seen as an effort to undo some of these ratchet clicks.  No one expects that to happen because it is only through a strong centralized government that wealth can be forcefully redistributed.  The Peter-Paul Principle simply will not allow the return of local control.  Nevertheless, it is good that we remind ourselves now and then of what kind of pussies we have become.

    Editor Jeff Pelline strafed NC Media Watch again and took Russ Steele to task for discussing the decline of “pulp newspapers” (fighting words for Jeff) and how our beloved Onion should make an effort to save itself.  Russ and I have been strong proponents of that newspaper transforming itself to THE community’s online source for information and ecommerce.  We both want the Onion to revert back to The Union and survive for another 150 years.  So it is with ongoing amazement we witness the kind of dialogue that the current editor of the paper carries on with its critics.  Jeff’s response to Russ’ critique was the usual personal attack (“… put your money where your (big) mouth is …” in the comment thread here.  I, for one, would like to see Jeff give a solid and sober response to the question of The Union’s survival while the country echoes with the slamming doors of newspapers shutting down.  As examples of the kind of responses that would speak well of our newspaper’s management and help resolve the community’s concern, I offer –

    1. The Union is a going and growing concern in the Swift Communications family.  The rumors of its imminent demise are greatly exaggerated.
    2. The Union is currently not profitable but has a plan to soon return to profitability through its print and online operations, and Swift has pledged to support the newspaper through the execution of its current plan forward.
    3. These are difficult times for all newspapers across the land and made doubly so by the current economic downturn.  We at The Union are working with our parent Swift Communications to come up with a plan that will continue this newspaper’s historical legacy of which we are the current custodians.  We ask for your support and ideas in these difficult times.

    It’s worth a try.

    Speaking of the economy, Cato recently published ‘How Did We Get into This Financial Mess?’ by Lawrence White, F.A. Hayek Professor of Economic History at the University of Missouri.  It’s short, to the point, and worth a read.  Here is its Executive Summary and link to the paper.

     

  • George Rebane

    CupExtended Can’t figure out who to thank for the $500K FEMA grant the county got from the Feds.  An appropriate thank you note should go either to the good people of Ohio or The People’s Republic of China because, heaven knows, we don’t have that kind of money here in California to take care of our needs (and Sacramento is making sure we’ll have even less tomorrow).  They must know that by next month our state might start papering the walls with IOUs.  But what a bunch of kind people, wherever they may live, to send all this cash to an out-of-the-way rural county in the western mountains.  The county announced yesterday –

    Department of Public Works Receives $500,000 FEMA Grant: The Department of Public Works (DPW) has been approved for a FEMA 07 grant. The grant was initially not approved but Nevada County’s Office of Emergency Services appealed, and the grant has now been approved. This will give our Department of Public Works approximately $500,000 to do brush fuel reduction mitigation along County roads thus reducing fire hazards. The initial meeting with FEMA and DPW staff will be held on January 15th. Facilities Manager, Tom Coburn, will attend for OES. The Department of Public Works is responsible for the administration of the grant. Great job, OES staff in submitting the appeal!

    I guess this kind of grit and compunction in grant writing gives a whole new meaning to ‘can do’ and self-reliance.  When we extend the cup from Nevada County, we just won’t take no for an answer.  Makes you walk a little taller.  Modern times.

    And now for the latest updates from “Bailout Nation”

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  • George Rebane

    ChinaWarships A modern Chinese naval squadron is now operating off the coast of Africa, the first such projection of power since the 1400s.  Stratfor reports that these ships also completed their first at-sea replenishment as they joined the international effort to suppress piracy off the coast of Somalia.  Along with Russia and India, China is spending its considerable resources in building up its military to accompany and protect its world worldwide reach for natural resources and trading partners.  To do otherwise would be sheer idiocy, and the Chinese are not idiots.

    In this environment one of our country’s famous pop spiritual leaders has it all figured out as reported by the left-wing truthout.org.  Mr. Chopra has written an open letter to our president-elect outlining that our country follow nine steps to bring peace and prosperity to the world.

        1. Scale out arms dealing and make it illegal by the year 2020.
        2. Write into every defense contract a requirement for a peacetime project.
        3. Subsidize conversion of military companies to peaceful uses with tax incentives and direct funding.
        4. Convert military bases to housing for the poor.
        5. Phase out all foreign military bases.
        6. Require military personnel to devote part of their time to rebuilding infrastructure.
        7. Call a moratorium on future weapons technologies.
        8. Reduce armaments like destroyers and submarines that have no use against terrorism and were intended to defend against a superpower enemy that no longer exists.
        9. Fully fund social services and take the balance out of the defense and homeland security budgets.
        These are just the beginning. We don’t lack creativity in coping with change. Without a conversion of our present war economy to a peace economy, the high profits of the military-industrial complex ensures that it will never end.

    In the large I’m not sure what all this letter demonstrates.  One can reasonably argue that perhaps meditation does not clarify the mind in all the claimed dimensions.  In any case we should renew our gratitude and respect for the Founders, and the role they foresaw for the church in the country’s governance.

    [4jan09 update]  Good intentions are no insurance against a sophomoric understanding of what is going on in the world.  As wannabe and former world powers take a measure of the upcoming American leadership, they are all beginning to make their moves.  Here is Russia’s latest move – ‘Russia wants warships stationed around the world’. 

  • George Rebane

    EmotivMinsky Controlling complex things with just thought has now been demonstrated by the company Emotiv Systems.  I featured this revolutionary human-machine interface in the 15aug08 Singularity Signpost  (please read for background) to give RR readers a heads up (pun intended) on the rapidity with which exotic technologies are being brought to fruition as we approach the Singularity.  Emotiv has announced that it will start supplying this interface to developers of products ranging from computer games to vehicles and everything in between.

    The non-invasive brain interface is now a reality.  A machine can learn what your multi-point EEG is when you are thinking of complex controls like ‘rotate clockwise’, ‘go forward’, ‘close the file’, ‘make it disappear’, etc.  Soon people will be dreaming up all kinds of things and situations where an individual (able bodied or disabled) can control any computer-mediated thing, device, or process by thought alone, or thought augmented by facial expressions.  I suspect that it will not be too long until we can also get rid of the funny looking head piece, but as with anything this new, we first have go through the crawl-walk-run process.

    To see what I’m describing here, please look at this video presented by Fora.tv (not a bad site to put in your Favorites if you’re interested in where Mankind is going).  The 20 minute video is a bit long, but you’ll be astounded when a founder of Emotiv, Tan Le, demonstrates the beta version of the system with the recently departed AI legend Marvin Minsky as a subject.

    For a more detailed look at Emotiv and its current plans and products, you can visit its website here.   Those of you afflicted with capitalistic tendencies will no doubt muster an inner smile when you realize that a venture-funded private company beat the Army Research Organization undertaking a similar project.  The applications of this kind of interface to military systems should be obvious.  One can hope that Emotiv’s IPO will be soon, and that they will not first be gobbled up by a Google or Microsoft.

    Finally, the tone of my last post notwithstanding, I do wish everyone a healthy and rewarding 2009, and hereby affirm that in this regard I have petitioned the Highest Authority that this will indeed come to pass.

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8 comments on Imported Dollar Multipliers and Local Economies (14jan09 update)