Thursday, November 13, 2008

21 Economic Models explained with Cows - 2008 update

Some concepts are much easier understood when clear and simple examples are provided.

You have 2 cows.
You give one to your neighbour.
You have 2 cows.
The State takes both and gives you some milk.


You have 2 cows.
The State takes both and sells you some milk.

You have 2 cows.
The State takes both and shoots you.


You have 2 cows.
The State takes both, shoots one, milks the other, and then throws the milk away...


You have two cows.
You sell one and buy a bull.
Your herd multiplies, and the economy grows.
You sell them and retire on the income.

You have two giraffes.
The government requires you to take harmonica lessons

You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyse why the cow has dropped dead.

You have two cows.
You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank,  then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
The annual report says the company owns eight cows, with an option on one more.
You sell one cow to buy a new president of the United States, leaving you with nine cows.
No balance sheet provided with the release.
The public then buys your bull.

You have two cows.
You go on strike, organise a riot, and block the roads, because you want three cows.

You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
You then create a clever cow cartoon image called 'Cowkimon' and market it worldwide.

You have two cows.
You re-engineer them so they live for 100 years, eat once a month, and milk themselves.

You have two cows, but you don't know where they are.
You decide to have lunch.

You have two cows.
You count them and learn you have five cows.
You count them again and learn you have 42 cows.
You count them again and learn you have 2 cows.
You stop counting cows and open another bottle of vodka.

You have 5000 cows. None of them belong to you.
You charge the owners for storing them.

You have two cows.
You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.

You have two cows.
You worship them.

You have two cows.
Both are mad.

Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the **** out of you and invade your country.
You still have no cows, but at least now you are part of Democracy....

You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.


You have two cows.
The one on the left looks very attractive

Tip of the hat to Mark B. in B.C. for this lesson

The Cuckoo Clock Result

The Republican Governor's Conference in going on Miami.
That's the good news.  They have the opportunity timing to address the issues that the election highlighted, while still fresh in everyone's mind.

The bad news is that because it's so recent, nobody really understands what elements really drove the results, and what the results may ultimately portend for the GOP.  As a result, the fight is on!

The conflict within the GOP is a rather welcome, and overdue, event.  Arguments and conflict can produce great things.  In the meantime it’s like watching a good street fight.  The Republicans and Conservatives are going through an inevitable, and much needed, painful process of introspection, assessment, challenge, disagreement, fights, culling and ultimately, a new agreed definition.

I heard someone recently refer to Orson Wells’ character Harry Lime’s famous line comparing Italy and Switzerland in the film “The Third Man”:  

"You know what the fellow said—in Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced  Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace—and what did that produce? The cuckoo clock."

Here's a sample of the comments coming out of the Conference"

"We have to match our actions with our rhetoric," said Louisiana Gov. Bobby Jindal, touted early as a vice-presidential contender this year. He said years of excessive spending, and the recent conviction of Alaska GOP Sen. Ted Stevens on seven felony counts for failing to report more than $250,000 in gifts, did little to win over voters.
"Let's be candid, it was a pretty sweeping victory [for the Democrats]. They fired us with cause," said Gov. Jindal, who is 37 years old and the youngest Republican governor in history.
At the meeting, Minnesota Gov. Tim Pawlenty, a vice-presidential short-lister this year, rattled off regions of the country where he felt the party is in trouble. He suggested that the defeat of Republican Sen. John Sununu in New Hampshire represented the final rout for the party in New England. He said the party is no longer competitive in the Far West and many Atlantic states, and is losing ground in the Great Lakes region.
"The Republican Party is going to need a lot more than just a comb-over in my opinion," Gov. Pawlenty said. "Ronald Reagan was president a long time ago."
The Minnesota governor said the party could make a comeback when 36 gubernatorial seats are up for grabs in 2010. Currently, a slight majority of those seats are held by Democrats.
Two trains of thought appeared to be emerging over the best strategy to pursue. The first, championed by Florida Gov. Charlie Crist, was that Republicans need to broaden their voter base. 
Other attendees pushed for a return to conservative roots. South Carolina Gov. Mark Sanford compared the Republican Party to a corporate brand that has become tarnished. His own tenure has been marked by intraparty struggles. In 2004, the Republican-dominated legislature overrode his veto on more than 100 spending bills.
"I think first find the message, and then stick to the knitting," Gov. Sanford said. He cited results of a recent poll showing that only 17% of voters identified Republicans with cutting taxes for the middle class, and suggested the party isn't implementing its tax-cutting mission.
More to come.  Sarah Palin addresses the Conference today, and I'm sure that there will be many interested and attentive ears.

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