{"id":24930,"date":"2014-03-03T09:42:47","date_gmt":"2014-03-03T14:42:47","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=24930"},"modified":"2014-03-03T09:42:47","modified_gmt":"2014-03-03T14:42:47","slug":"berkshire-and-ukraines-history","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=24930","title":{"rendered":"Berkshire and Ukraine’s history"},"content":{"rendered":"

Berkshire’s profit is up a little — 9.6%. But he missed beating the S&P, which beat him by 14.2 percentage points. I excerpted the chart from Buffett’s annual report, which you can download here.<\/strong><\/a><\/p>\n

\"BerkshireChart1\"<\/a>
\n\"BerkshireChart2\"<\/a><\/p>\n

How a Louis Vuitton bag can explain the higher education bubble<\/strong><\/span>.\u00a0 This\u00a0 piece from the latest The Week<\/em> is fascinating:<\/p>\n

In America, the markets for luxury handbags and college degrees both produce what are called “Veblen goods”<\/strong><\/p>\n

If you happen to have $31,500 lying around, you could buy a Louis Vuitton PM Showgirl handbag. Or you could spend almost exactly the same sum to pay for one year’s worth of tuition (not including room and board) at an average American four-year private college.<\/p>\n

The handbag and the college degree have more in common than you might think. In America, the markets for luxury handbags and higher education both produce what are called “Veblen goods.”<\/p>\n

More than a century ago, the sociologist Thorstein Veblen coined the term “conspicuous consumption” to describe the practice of buying luxury goods in order to display social status. In its purest form, conspicuous consumption involves purchasing expensive goods precisely because they are expensive, which means that the true conspicuous consumer will have what economists call an inverted demand curve.<\/p>\n

Normally, when the price of a good rises, demand for it will fall. Demand for a Veblen good, by contrast, goes up as it becomes more expensive. The purpose of buying it is to display wealth, so the fewer people that can afford to buy a good, the more valuable it becomes to conspicuous consumers.<\/p>\n

Veblen goods are a type of positional good: that is, a good whose value is determined by how much one has of it relative to someone else.<\/p>\n

For example, if two people are hungry, both are better off if they each acquire a piece of bread. But if two people are hungry for social status relative to one another – if each desires a positional good because the other person doesn’t have it – then for both to acquire the same status marker defeats the very purpose of acquiring that type of good.<\/p>\n

The whole point of paying thousands of dollars for a Louis Vuitton bag is that other people can’t. If they could, the bags would instantly lose almost all value in the eyes of those who buy them. Hence, the more such things cost, the more desirable they become.<\/p>\n

In economic terms, higher education is a positional good: It is valuable to have a college degree because other people don’t have one. It is also to a significant extent a Veblen good: Sending one’s children to college, and most especially a prestigious (meaning expensive) college, is a way of signaling social status via the conspicuous consumption of a luxury good.<\/p>\n

All of this helps explain why college tuition has increased three times faster than the cost of living over the past three decades. University administrators have discovered that, to a remarkable degree, the more they charge for what they’re offering, the more people will want to buy it.<\/p>\n

The law school at which I teach provides a particularly striking example of this inversion of the normal laws of supply and demand. The school’s annual tuition increased from less than $5,000 in 1997 to more than $31,000 in 2011. This represented a 348 percent increase in constant, inflation-adjusted dollars. In other words, it was as if a car company – say, Honda – suddenly decided that it would prefer to charge $90,000 for an Accord rather than $20,000.<\/p>\n

Honda probably wouldn’t sell very many $90,000 Accords, but the law school’s applications actually skyrocketed, from 1,846 in 1997 to 3,175 in 2011. Remarkably, the number of applicants increased by 72 percent even though almost exactly the same number of people applied to American law schools in 1997 and 2011.<\/p>\n

In other words, even though demand for admission to law school had not risen (in fact it declined relative to population), and even though law graduates were finding it increasingly difficult to get jobs as lawyers, demand for admission to our law school went through the roof, despite – or perhaps more accurately, because of – the quadrupling of the price of attendance in real terms.<\/p>\n

The claim that higher education is to a great extent both a positional good and a form of conspicuous consumption scandalizes the industry’s cheerleaders, who continue to lobby for policies designed to ensure that, within another decade, a large majority of adult Americans have college degrees.<\/p>\n

This makes about as much sense as lobbying the government to enact policies that will ensure most Americans own Louis Vuitton handbags.<\/p>\n

While we are unlikely to conclude that owning luxury handbags causes higher earnings, rather than vice versa, many people continue to make a very similar mistake regarding college degrees.<\/p>\n

It’s probably time to break the Ukraine up.<\/strong><\/span> Just as they broke Czechoslovakia into two countries. They did that one without shedding one human life. They did it because they realized they were different countries with different aspirations. Ukraine is even more bleeding obvious.<\/p>\n

\"ukraine1\"<\/a><\/p>\n

\"Ukraine2\"<\/a><\/p>\n

Ukraine’s history is fascinating. The place has been invaded and genocided more than virtually any other country.<\/p>\n

Why some of the them still love Russian beats me.\u00a0 From Wikipedia:<\/p>\n

The (forced) industrialisation (when Russian controlled Ukraine) had a heavy cost for the peasantry, demographically a backbone of the Ukrainian nation. To satisfy the state’s need for increased food supplies and to finance industrialisation, Stalin instituted a programme of collectivisation of agriculture as the state combined the peasants’ lands and animals into collective farms and enforced the policies by the regular troops and secret police. Those who resisted were arrested and deported and the increased production quotas were placed on the peasantry. The collectivisation had a devastating effect on agricultural productivity. As the members of the collective farms were not allowed to receive any grain until sometimes unrealistic quotas were met, starvation in the Soviet Union became more common. In 1932-33, millions starved to death in a famine known as Holodomor or “Great Famine”. Scholars are divided as to whether this famine fits the definition of genocide, but the Ukrainian parliament and other countries recognise it as such.<\/p>\n

The famine claimed up to 10 million Ukrainian lives as peasants’ food stocks were forcibly removed by the Soviet government by the NKVD secret police. Some explanations for the causes for the excess deaths in rural areas of Ukraine and Kazakhstan during 1931-34 has been given by dividing the causes into three groups: objective non-policy-related factors, like the drought of 1931 and poor weather in 1932; inadvertent result of policies with other objectives, like rapid industrialisation, socialisation of livestock and neglected crop rotation patterns; and deaths caused intentionally by a starvation policy. The Communist leadership perceived famine not as a humanitarian catastrophe but as a means of class struggle and used starvation as a punishment tool to force peasants into collective farms. It was largely the same groups of individuals who were responsible for the mass killing operations during the civil war, collectivisation, and the Great Terror. These groups were associated with Efim Georgievich Evdokimov (1891-1939) and operated in Ukraine during the civil war, in the North Caucasus in the 1920s, and in the Secret Operational Division within General State Political Administration (OGPU) in 1929-31. Evdokimov transferred into Communist Party administration in 1934, when he became Party secretary for North Caucasus Krai. But he appears to have continued advising Joseph Stalin and Nikolai Yezhov on security matters, and the latter relied on Evdokimov’s former colleagues to carry out the mass killing operations that are known as the Great Terror in 1937-38.<\/p>\n

Today Russia is a key trading partner, selling them natural gas and transporting natural gas to Europe through Ukraine and buying lots of tanks and other military stuff from Ukraine, made in places like Kharkiv, which seems to be a nice town:<\/p>\n

\"Kharkiv2\"<\/a> \"kharkiv\"<\/a><\/p>\n

Ukraine has about 44 million people and is physically the biggest country in Europe. If it causes our stocks to drop, I’ll be in buying.<\/p>\n

The best description of Obamacare so far<\/strong><\/span> — whether you like it or not. This is still funny.<\/p>\n

Remember when Nancy Pelosi said: “We have to pass it, to find out what’s in it.”<\/p>\n

A physician called into a radio show and said: “That’s the definition of a stool sample”.<\/p>\n

\"HarryNewton\"<\/a>
\nHarry Newton who made it to La Quinta, California where we have clear blue skies and 70 degree windless weather. This place is paradise. It’s also three hours behind which means I have to struggle out of bed at 3:30 AM and pretend to be brilliant.<\/p>\n