Attention Economy


Monday, January 30, 2017

Multinational Firms – In Retreat?

The Economist has a couple of interesting pieces on multinational firms:
http://www.economist.com/news/briefing/21715653-biggest-business-idea-past-three-decades-deep-trouble-retreat-global

Geo-Political Uncertainty and Economics

Playing with Economic Matches by Ashoka Mody

The Trump Trade Gives Way to the Reckless Trade

Gideon Rachman of FT notes:
“Britain could defend free-trade far more effectively with the EU’s bulk behind it — and could also start to explore the possibilities for more EU defence co-operation. As it is, Britain has been thrown into the arms of an American president that the UK’s foreign secretary has called a madman.
In the declining years of the British empire, some of its politicians flattered themselves that they could be “Greeks to their Romans” — providing wise and experienced counsel to the new American imperium.
But the Emperor Nero has now taken power in Washington — and the British are having to smile and clap as he sets fires and reaches for his fiddle.”

Sunday, January 29, 2017

2017 Global MBA Rankings

The most prestigious global MBA rankings  - 2017 Financial Times MBA Rankings:
http://rankings.ft.com/businessschoolrankings/global-mba-ranking-2017

Internet Surfing During Class and Grades

It’s true, Internet surfing during class is not so good for grades
https://theconversation.com/its-true-internet-surfing-during-class-is-not-so-good-for-grades-70901

Readings for the Scientifically Curious

How Life (and Death) Spring from Disorder by Philip Ball
“Biological systems don’t defy physical laws, of course — but neither do they seem to be predicted by them. In contrast, they are goal-directed: survive and reproduce. We can say that they have a purpose — or what philosophers have traditionally called a teleology — that guides their behavior….
The teleology and historical contingency of biology, said the evolutionary biologist Ernst Mayr, make it unique among the sciences. Both of these features stem from perhaps biology’s only general guiding principle: evolution. It depends on chance and randomness, but natural selection gives it the appearance of intention and purpose. Animals are drawn to water not by some magnetic attraction, but because of their instinct, their intention, to survive. Legs serve the purpose of, among other things, taking us to the water.
Mayr claimed that these features make biology exceptional — a law unto itself. But recent developments in nonequilibrium physics, complex systems science and information theory are challenging that view.”

A Strange Moment in History

Eliot Cohen’s piece is worth reading: A Clarifying Moment in American History

How America Lost Its Identity by Holger Stark

The Closing of Trump’s America by Roger Cohen

Trump’s Immigration Ban Is Already Harming American Science

Google Recalls Staff to U.S. After Trump Immigration Order
https://www.bloomberg.com/news/articles/2017-01-28/google-recalls-some-staff-to-u-s-after-trump-immigration-order

History Lesson: Smoot-Hawley Tariff Act and the Great Depression

"Those who cannot remember the past are condemned to repeat it." - Santayana

A timely piece from The Guardian:
https://www.theguardian.com/us-news/2017/jan/29/smoot-hawley-tariffs-protectionism-donald-trump

Related:
The great irony of the Mexico tariff is that Americans would pay for it too by Robert Lawrence
http://www.pbs.org/newshour/making-sense/column-great-irony-mexico-tariff-american-consumers-pay/

Texas and NAFTA

International Economics - When Politics Collides with Economics

Der Spiegel on Germany’s growing fears over Trump administration’s protectionist policies:

NAFTA and other trade deals have not gutted American manufacturing — period by J. Bradford DeLong

China’s Big Sticks by Stephen Roach
China’s currency conundrum

Facing Trump, Mexicans Think the Unthinkable: Leaving NAFTA by ELISABETH MALKIN


Related:
https://www.bloomberg.com/view/articles/2017-01-24/trump-s-tpp-withdrawal-is-gift-to-china

Saturday, January 28, 2017

Weekend Readings - Reality TV Presidency, British Hypocrisy

A Reality TV Presidency
Extraordinary piece from the Washington Post
“Trump has shown that his tendency to obsessively consume media — especially cable television — is unchanged in the six days since he has become president. He appears to be making policy decisions via things he watches or reads. (Remember Trump's famous/infamous statement that he got his military information and advice “mostly from the shows.”)
At odds with all of this, however, is the fact that Trump is both deeply proud and hugely image-conscious. Having to read and watch allegedly loyal “aides” casting him as a sort of feckless child constantly in need of guidance wouldn't seem to be the sort of thing that would sit well with him.”

Personality based foreign policymaking


Post-Brexit Britain – Foreign Policy Driven by Economic Imperatives
British hypocrisy becomes more obvious:
https://www.theguardian.com/politics/2017/jan/27/theresa-may-new-friends-strongmen-erdogan-trump-brexit

The Strong Dollar Dilemma

Insights from Raoul Pal – The Global Macro Investor

Paul Krugman on the lessons from the early 1980s
http://www.nytimes.com/2017/01/27/opinion/making-the-rust-belt-rustier.html

American Firms – The Big Winners in the Globalization Era

A great read:
America is globalisation’s master, not victim by Philip Delves Broughton
https://www.ft.com/content/9c7bfa42-e479-11e6-9645-c9357a75844a

How Important are (Political) Institutions?

MIT economist Daron Acemoglu on the importance of civil society

Are We There Yet? Time for Checks and Balances on New Institutionalism by Murat Iyigun

Related:
Stephen Walt on American Foreign Policy and the International Order
Roger Cohen: The Closing of Trump’s America
http://www.nytimes.com/2017/01/27/opinion/the-closing-of-trumps-america.html

Digital versus Analog – More Technology is Not Always the Answer

An interesting piece:
Pause! We Can Go Back! By Bill McKibben
“…the most prestigious universities on earth have been busy putting courses on the Web and building MOOCs, “massive open online courses.” Sax misses the scattered successes of these ventures, often courses in computer programming or other technical subjects that aren’t otherwise available in much of the developing world. But he’s right that many of these classes have failed to engage the students who sign up, most of whom drop out.
Even those who stay the course “perform worse, and learn less, than [their] peers who are sitting in a school listening to a teacher talking in front of a blackboard.” Why this is so is relatively easy to figure out: technologists think of teaching as a delivery system for information, one that can and should be profitably streamlined. But actual teaching isn’t about information delivery—it’s a relationship. As one Stanford professor who watched the MOOCs expensively tank puts it, “A teacher has a relationship with a group of students. It is those independent relationships that is the basis of learning. Period.””

Thursday, January 26, 2017

Impact of China’s Capital Curbs

As China attempts to slowdown private capital outflows, global real estate markets take a hit:
“China’s escalating crackdown on capital outflows is sending shudders through property markets around the world.
In London, Chinese citizens who clamored to purchase flats at the city’s tallest apartment tower three months ago are now struggling to transfer their down payments. In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point.
“Everything changed’’ as it became more difficult to send money offshore, said Coco Tan, a broker at Keller Williams in Cupertino, California.”

Tuesday, January 24, 2017

Education, Earnings and Choice of College Majors

Apparently, choice of college major matters more than GPA

Interesting Reports
America’s Divided Recovery: College Haves and Have-Nots

The Economic Value of College Majors

The Birth of Modern Enviromentalism [Must Watch]

American Experience on PBS is one of the best documentary series on TV.

Related:
THE ATOMIC ORIGINS OF CLIMATE SCIENCE by Jill Lepore
http://www.newyorker.com/magazine/2017/01/30/the-atomic-origins-of-climate-science

Asian and European Response to US Protectionism

Debate Surrounding Federal Reserve’s Balance Sheet

Is it time to shrink the Fed’s balance sheet?

US Economic Update from John Williams [President of Federal Reserve Bank of San Francisco]
http://www.frbsf.org/economic-research/files/el2017-02.pdf

Sunday, January 22, 2017

Colleges – Social Mobility Ladders

A timely and important article:
America’s Great Working-Class Colleges by DAVID LEONHARDT
https://www.nytimes.com/2017/01/18/opinion/sunday/americas-great-working-class-colleges.html

The World’s Most Dynamic Cities

JLL’s Global City Momentum Index
“Asia Pacific cities comprise half of the top 30 fastest-changing cities. India has taken over from China as home to some of the world's most dynamic cities. Six Indian cities feature in the CMI Global Top 30, with the country's primary technology hub, Bangalore (1), moving into the top spot for the first time.”

International Affairs - Important Items

Der Spiegel - Donald Trump and the New World Order
http://www.spiegel.de/international/world/trump-inauguration-signals-new-world-order-a-1130916.html


Turkey’s Switch to an Imperial Presidency
Turkey's New Constitution Would End Its Democracy by Noah Feldman


Ana Palacio (Former Spanish Foreign Minister) wisely notes:
“The top-down, strongman model that seems to be in ascendance today does not portend the future; rather, it is a last gasp from an earlier time – a nostalgic rehash of an obsolete model. Governance has been disaggregated and hybridized by the rise of non-state actors, and we have scarcely begun to consider the far-reaching implications of new technologies such as artificial intelligence. These trends are precursors to a very different international model that has yet to emerge – one that will be distinct from both the nineteenth century’s “balance of power” and the twentieth century’s “community of states.”


A Greek tragedy: how much can one nation take?
https://www.ft.com/content/44478b7e-dd09-11e6-9d7c-be108f1c1dce

America’s Evolving Political Landscape

A great piece from Politico


Saturday, January 21, 2017

Economics in the Real World

The American Debt Trap
Noah Smith notes
“Option value, as any finance professor knows, is important. Debt reduces it. One fundamental reason for this is borrowing constraints -- it isn't so easy to just take out more debt to make monthly payments on existing debt. That means debt forces you to choose a lifestyle that maintains monthly cash flow. Another reason is that debt has an all-or-nothing structure -- if you miss one payment, you’re technically in default. Your credit rating instantly begins to suffer, and you may incur other penalties. That means even a little risk-taking can be intolerable for someone with lots of debt.”


Economic Effects of Environmental Regulations
Do Regulations Really Kill Jobs? By ALANA SEMUELS


Real Estate Supply versus Demand – Global Perspective
https://www.bloomberg.com/gadfly/articles/2017-01-19/keep-saving-hong-kongers

The Travails of Deutsche Bank

How Deutsche Bank Made a $462 Million Loss Disappear

Related:
Der Spiegel’s in-depth look at Germany’s most important bank

DEUTSCHE BANK’S $10-BILLION SCANDAL: How a scheme to help Russians secretly funnel money offshore unraveled by Ed Caesar
http://www.newyorker.com/magazine/2016/08/29/deutsche-banks-10-billion-scandal

Great Britain to Little Britain

New Skill Requirement for Business Leaders

Massaging the massive ego of the American President without necessarily compromising key business objectives appears to be the new skill requirement for US business leaders.

Savvy CEOs Are Learning to Manage Trump by Joe Nocera
https://www.bloomberg.com/view/articles/2017-01-19/savvy-ceos-are-learning-to-manage-trump

Related:
Presidents Have Less Power Over the Economy Than You Might Think by NEIL IRWIN
http://www.nytimes.com/2017/01/17/upshot/presidents-have-less-power-over-the-economy-than-you-might-think.html

Friday, January 20, 2017

Surging Equity Markets – Illusory Gains?

Robert Shiller (Nobel Prize winning economist) notes:
“Speculative markets have always been vulnerable to illusion. But seeing the folly in markets provides no clear advantage in forecasting outcomes, because changes in the force of the illusion are difficult to predict.
In the US, two illusions have been important recently in financial markets. One is the carefully nurtured perception that President-elect Donald Trump is a business genius who can apply his deal-making skills to make America great again.
The other is a naturally occurring illusion: the proximity of Dow 20,000. The Dow Jones Industrial Average has been above 19,000 since November, and countless news stories have focused on its flirtation with the 20,000 barrier – which might be crossed by the time this commentary is published. Whatever happens, Dow 20,000 will still have a psychological impact on markets.”

Declining Trust and Vulnerability of Political Institutions

Declining Trust in Institutions
“For 17 years, Edelman has been asking people around the world about their level of trust in various institutions. Last year, the firm warned of a growing gap between elites, who largely trusted their country’s institutions, and non-elites, who mostly didn’t. Now, as 2017 begins, the firm is declaring that trust, an essential element of functioning societies, is “in crisis” in many countries….
Critically, Edelman has also documented a widening trust gap between what the firm calls “mass populations” and “informed publics,” with the latter group defined as those aged 25 to 64 who have a college degree, regularly read news media, and are in the top 25 percent of household income for their age group in a given country.
This year, the difference in average trust in institutions between these two groups was 15 percentage points, up from nine points in 2012. The gap was greatest in the United States (21 points), the United Kingdom (19 points), and France (18 points). In 20 of the 28 surveyed countries, the majority of the mass population distrusted their institutions; the same can be said for informed publics in just six of those 28 countries.”

With President Trump, American democracy faces its greatest test by Marilynne Robinson

Brexit Into Trumpland by Philippe Legrain

Power Grab in Turkey - Push to Concentrate Power Nears Climax:
“President Recep Tayyip Erdogan’s campaign to secure sweeping executive authority won approval of Turkey’s parliament early Saturday. Turks will have the final say in a referendum that could be held in early April….
“Turkey’s drift towards authoritarianism will accelerate in 2017. The odds that President Erdogan will be able to achieve a formal, full executive presidency through a referendum on a new constitution are favorable,” Anthony Skinner, a director with U.K.-based forecasting company Verisk Maplecroft, said in a report published earlier this week. “This is partly a by-product of the nationalist fervor Erdogan has drummed up in the aftermath of a failed coup to unseat him in July 2016.””

Is Inclusive Economic Growth Feasible?

Noted growth economist Philippe Aghion on growth and inequality [VIDEO]
https://www.c-span.org/video/?420501-1/philippe-aghion-heather-boushey-discuss-economic-growth-inequality

Globalization and the Global Economy

GMU economist Tyler Cowen – Don't Blame Davos Man for Globalization's Limits
“The wisdom behind globalization isn’t a belief that it will be steered by very wise elites. Rather, most economic processes show elements of convergence, stability and mean-reversion, without anyone planning them. It’s a common metaphor of chaos theory that a single flap of a butterfly’s wings may cause a hurricane on the other side of the world, but in the realm of economics the analogue hardly ever happens. Stability is the norm, and most big events have fairly significant causes.
Or consider illegal immigration, another common complaint among populists. There was a significant influx of undocumented Mexican workers during the George W. Bush administration, in part to staff the construction for the real estate boom and then bubble. Since the Great Recession, that flow of labor has ended, and there has been net negative migration, namely more Mexicans have returned to their home country than have arrived in the U.S. Again, that is an example of a self-reversing process rather than deliberate planning by elites.”

Divided Nation [MUST WATCH]

PBS Frontline Documentary –  Divided States of America
http://www.pbs.org/wgbh/frontline/film/divided-states-of-america/

UPDATE: An Uncertain Future Ahead
John Cassidy of the New Yorker writes:
“On Thursday evening, Jason Furman, the chairman of President Obama’s Council of Economic Advisers, tweeted out a picture of himself leaving his office for the last time, with the message “Turning out the lights.” Whether it was deliberate or not, Furman’s message echoed the words of Lord Edward Grey, the British foreign secretary, who remarked to a friend, in August, 1914, “The lamps are going out all over Europe; we shall not see them lit again in our lifetime.”
Grey’s words, spoken on the eve of the First World War, are sometimes seen as an elegy for a halcyon period of globalization, peace, and prosperity. Listening to Donald Trump’s dark, inward-looking Inaugural Address, on Friday, it was easy to believe that we are at another historical turning point.
Perhaps the trepidation and fear over Trump taking over as President will turn out to have been overdone. Let us hope so. But there can be no doubt that these feelings are genuinely held, and not just in the United States. Around the world, there is still astonishment that such an inexperienced, volatile, and disruptive figure could become America’s President. Indeed, Trump’s elevation has raised foundational questions not just about the future of democracy in this country but about the entire American-led global order that has been in place since the end of the Second World War”

Wednesday, January 18, 2017

Brexit – Facts versus Reality

The Economist makes a great point:
“There is a liberal vision of a post-Brexit future in which Britain escapes the most protectionist features of the EU and opens its economy to the rest of the world. It is one that includes lower taxes, less pettifogging regulation and freer trade. During the referendum campaign it was sometimes talked of as “Singapore on steroids”: a dynamic, open Britain capable of competing not just with other EU countries but with the whole world.
The trouble is that, for all her pleasing rhetoric, Mrs May is not really pursuing this vision. She has set tougher immigration control as her priority. Yet today’s service businesses depend on being able to move people around at short notice, as does high-tech industry.”

French response to Theresa May
https://www.theguardian.com/commentisfree/2017/jan/18/europe-loser-brexit-britain

Climate Change and Scientific Evidence

How 2016 Became Earth’s Hottest Year on Record – NYTIMES
http://www.nytimes.com/interactive/2017/01/18/science/earth/2016-hottest-year-on-record.html

U.S. scientists officially declare 2016 the hottest year on record. That makes three in a row – Washington Post

Politics and Business

Business Euphoria Over Trump Gives Way to Caution, Confusion – NYTIMES

Political Donations and Lobbying – Legalized Corruption?
https://www.washingtonpost.com/blogs/erik-wemple/wp/2017/01/18/in-retraction-request-to-cnn-trump-team-confirms-cnn-story/

Tuesday, January 17, 2017

AI and Robotics - The Fourth Industrial Revolution

The Fourth Industrial Revolution

Mining 24 Hours a Day with Robots

In 2017, China Is Doubling Down on AI
https://www.technologyreview.com/s/603378/in-2017-china-is-doubling-down-on-ai/

Tariffs on Imports - A Dumb Idea

Tariffs – An Arbitrary and Regressive Tax
http://voxeu.org/article/us-tariffs-are-arbitrary-and-regressive-tax

Politics, Economics and Freedom

The economic peril of aggrieved nationalism by Martin Wolf [MUST READ]
Wolf notes:
“Perhaps the greatest contribution of economics is the idea that societies will gain more from seeking to trade with one another than trying to conquer one another. Moreover, the richer their partners, the greater the opportunities for mutually enriching commerce. The wise relationship between states, therefore, is one of co-operation, not war, and trade, not isolation. This brilliant idea happens to be correct. But it is also counter-intuitive, even disturbing. It means that one might gain more from foreigners than fellow citizens. It erodes a sense of belonging to the imagined tribe.”

A Warning to Trump From Friedrich Hayek by Cass Sunstein
Cass Sunstein notes:
“One of Hayek’s enduring achievements was to clarify the importance of government neutrality and forbearance, not through anything like laissez-faire, but by avoiding commands in favor of clear, general, stable, predictable rules on which the private sector can rely. A Dealmaker-in-Chief might turn out, in practice, to be a Commander-in-Chief in precisely the sense that Hayek deplored.”


What Not to Do – Lessons from Poland and Hungary

The Five Lessons of Populist Rule by SÅ‚awomir Sierakowski

A Whiff of Corruption in Orbán's Hungary – Der Spiegel
http://www.spiegel.de/international/europe/a-whiff-of-corruption-in-orban-s-hungary-a-1129713.html

UK - Hard Brexit Ahead?

Max Brexit
http://www.economist.com/blogs/bagehot/2017/01/countdown-2019


Is UK headed for a ‘Hard Brexit’?


Monday, January 16, 2017

Economic Fundamentals and Long-Run Economic Growth

An excellent piece by Morgan Stanley’s Ruchir Sharma:
“Donald Trump says he can bring back the economic growth of the Reagan era. But economic forces won’t let him.”

Related:
FT’s Martin Wolf - The risks that threaten global growth
https://www.ft.com/content/00b89fbe-ce8c-11e6-b8ce-b9c03770f8b1

A Revealing Look at a President’s Reading Habits

Obama’s Secret to Surviving the White House Years: Books by MICHIKO KAKUTANI
https://www.nytimes.com/2017/01/16/books/obamas-secret-to-surviving-the-white-house-years-books.html

The Obama Economic Legacy – A Mixed Bag

Robert Samuelson’s appraisal of the Obama Presidency:

US’s flawed economic recovery divides Trump and Obama supporters [FT]

Jason Furman, Chairman of White House’s Council of Economic Advisers on the Obama Years
https://www.whitehouse.gov/sites/whitehouse.gov/files/documents/CEA%20Exit%20Memo.pdf

Why Europe Will Come Together

Europeans will rally around the EU project in the face of criticism from Trump:

Related:
Putin's revenge by KRISTINA SPOHR AND DAVID REYNOLDS
http://www.newstatesman.com/world/2017/01/putins-revenge

Global Economic Conditions – Update

IMF World Economic Outlook – Jan 2017 Update:
After a lackluster outturn in 2016, economic activity is projected to pick up pace in 2017 and 2018, especially in emerging market and developing economies. However, there is a wide dispersion of possible outcomes around the projections, given uncertainty surrounding the policy stance of the incoming U.S. administration and its global ramifications.”


World Bank’s Global Economic Prospects – Jan 2017 Highlights
http://pubdocs.worldbank.org/en/255181481727526594/Global-Economic-Prospects-January-2017-Highlights-Chapter-1.pdf

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Nobel Laureate Angus Deaton on “Getting past the globalization bogeyman

Sunday, January 15, 2017

Is America Still an Attractive Destination for FDI?

A timely piece from The Economist:
Populism, economic concentration and regulation are some of the reasons foreign bosses are souring on the land of the free”


The US has the highest liability cost amongst advanced economies:
According to an US Chamber - Institute for Legal Reform study:
“U.S. liability costs are four times higher than those of the least costly European countries in our study – Belgium, the Netherlands and Portugal.”


Related:
Worker Quality and the US Manufacturing Sector - An insightful piece from Reuters:
“James L. Brown tried to hire a dozen workers for his metal foundry here. Half of them flunked the drug test. Those results are typical, says the president of Bremen Castings Inc, a family-owned employer of 350 workers who make parts for trucks and other equipment. Drug problems are one factor contributing to a labor shortage that delayed filling orders earlier this year. "We’ve become a recruiting company,” Brown said of the relentless struggle to maintain a strong workforce.
Bremen Castings illustrates the central tension in U.S. manufacturing: Plant managers complain of a talent shortage, while workers see too few acceptable jobs.”

The Problem of Low-Skilled Men in Advanced Economies
The Economist has an excellent essay on a massive economic and social problem in advanced economies
“Technology and trade mean that rich countries have less use than they once did for workers who mainly offer muscle. A mechanical digger can replace dozens of men with spades; a Chinese steelworker is cheaper than an American. Men still dominate risky occupations such as roofer and taxi-driver, and jobs that require long stints away from home, such as trucker and oil-rig worker. And, other things being equal, dirty, dangerous and inconvenient jobs pay better than safe, clean ones. But the real money is in brain work, and here many men are lagging behind. Women outnumber them on university campuses in every region bar South Asia and sub-Saharan Africa. In the OECD men earn only 42% of degrees. Teenage boys in rich countries are 50% more likely than girls to flunk all three basic subjects in school: maths, reading and science.”

Astronomy in the Ancient World

Aryabhata and the Quest to Determine Earth’s Circumference:
http://www.livemint.com/Sundayapp/8wRiLexg1N2IOXjeK2BKcL/How-Aryabhata-got-the-earths-circumference-right-millenia-a.html

Fake News and Prophecies – History Lesson

An interesting piece form The Atlantic Monthly:
https://www.theatlantic.com/politics/archive/2016/12/before-fake-news-came-false-prophecy/511700/ 
“But stories that gain popularity by presenting readers’ fantasies and nightmares as current events are hardly new. In medieval Britain, national and local political action was guided by prophecy. Prophecies were invoked by rebel leaders, appropriated by ruling elites, and, ultimately, censored by a government fearful of their disruptive potential. Prophecy’s effectiveness in shaping medieval politics offers a rejoinder to those who suggest that fake news and other political falsehoods can be ignored, or laughed off. Prophecy, like fake news, worked as persuasive writing because it told people what they wanted to believe or spoke to their darkest fears.”

Globalization and TV Set Manufacturing Industry – A Great Case Study

The origin of your TV set is a simple lesson in the dangers of ignoring globalization
https://qz.com/863121/the-origin-of-your-tv-set-is-a-simple-lesson-in-the-dangers-of-ignoring-globalization/

Related:
Politicians cannot bring back old-fashioned factory jobsThe Economist

Saturday, January 14, 2017

Time – Perspectives from Science and Science Fiction [Highly Recommended]

A great read:
“There is a strain of physicist that likes to think of the world as settled, inevitable, its path fully determined by the grinding of the gears of natural law. Einstein and his heirs model the universe as a four-dimensional space-time continuum—the “block universe”—in which past and future are merely different places, like left and right. Even before Einstein, a deterministic view of physics goes all the way back to Newton. His laws operated like clockwork and gave astronomers the power of foresight. If scientists say the moon will totally eclipse the sun in New York on April 8, 2024, beginning at 12:38 PM, you can bank on it. If they can’t tell you whether the sun will be obscured by a rainstorm, a strict Newtonian would say that’s only because they don’t yet have enough data or enough computing power. And if they can’t tell you whether you’ll be alive to see the eclipse, well, maybe they haven’t discovered all the laws yet.
As Richard Feynman put it, “Physicists like to think that all you have to do is say, ‘These are the conditions, now what happens next?’” Meanwhile, other physicists have learned about chaos and quantum uncertainty, but in the determinist’s view chance does not take charge. What we call accidents are only artifacts of incomplete knowledge. And there’s no room for choice. Free will, the determinist will tell you, is only an illusion, if admittedly a persistent one.”

Technology and Productivity – A Fresh Perspective

How time-saving technology destroys our productivity by Rory Sutherland
“Why has IT contributed so little to productivity? To understand this, it might help to understand that people in any organisation have two motivations. One is to create genuine economic value; the other is to generate a protective carapace of bullshit to protect their continued employment. When push comes to shove, people in jobs where productivity is hard to measure (i.e. most modern jobs) will always focus more on the latter.”

Critique of Friedman’s Permanent Income Hypothesis

New research summarized by Noah Smith:
“Friedman’s theory says that people’s consumption isn’t affected by how much they earn day-to-day. Instead, what they care about is how much they expect to earn during a lifetime. …
Unfortunately, intuition based on incorrect theories can lead us astray. Economists have known for a while that this theory doesn’t fit the facts. When people get a windfall, they tend to spend some of it immediately. So economists have tried to patch up Friedman’s theory, using a couple of plausible fixes. People might respond to temporary income changes because they’re unable to borrow -- if you want to spend more, but you’ve maxed out your credit cards and your home-equity credit line, a windfall from the government might free you from the tyranny of the bank. Lots of economists view credit constraints as a simple, minimally invasive way to save Friedman’s basic idea.
But as economists get better and better data, they’re finding that even this modification isn’t enough. A new study by Peter Ganong and Pascal Noel shows that consumer behavior is more short term than almost any mainstream model predicts.”

Related:
The Curse of Econ 101 by James Kwak


Friday, January 13, 2017

Cash versus Cashless - The Debate Continues

Should We Trash Cash? By JOHN LANCHESTER
“Economists lament the ways that physical currency enables tax avoidance and crime. But for most people, cash offers an increasingly rare form of freedom.”

Update:
Rogoff on the benefits of a cashless economy:
https://www.bloomberg.com/news/articles/2017-01-15/cutting-cash-would-be-a-boon-for-the-world-s-poor-rogoff-says

China’s Economic Prospects

Cornell University economist Eswar Prasad on China’s long-term growth prospects:
http://www.pbs.org/newshour/making-sense/column-chinas-economy-house-cards/

Related:
Asia Infrastructure Investment Bank (AIIB) Chief - Profile
http://www.nytimes.com/2017/01/13/world/asia/china-aiib-jin-liqun.html

Thursday, January 12, 2017

Economics and Politics

Chicago economist Luigi Zingales on the distinction between ‘Pro-Market’ policies and ‘Pro-Business’ policies

“A pro-business policy favors existing companies at the expense of future generations. A pro-market policy favors conditions that allow all businesses to thrive without any favoritism. A pro-business policy defends domestic enterprises with favorable rates and treatment. A pro-market policy opens the domestic market to international competition because doing so would not only benefit consumers, but would also benefit the companies themselves in the long term, which will have to learn to be competitive on the market, rather than prosper thanks to protection and state aid. A pro-business policy turns a blind eye (often two) when companies pollute, evade, and defraud consumers. A pro-market policy seeks to reduce the tax and regulatory burden, but ensures that laws are applied equally to all.”

Technology, Automation and Politics - An interesting read:
Related:

Prominent economists debate the challenges facing the incoming Trump administration - VIDEO
https://www.aeaweb.org/webcasts/2017/president.php

Tuesday, January 10, 2017

2017 Ely Lecture – MIT Economist Esther Duflo

The Economist as Plumber by Esther Duflo
https://www.aeaweb.org/webcasts/2017/ely.php

Economics of North American Auto Manufacturing Industry

A useful piece from Bloomberg:
“Cheaper labor is only one reason Mexico has seen a surge in new-car production. While the country’s low wages have been the big attraction, one of its key advantages is that it has trade agreements with 44 countries, giving automakers access to half the global car market tariff-free. The U.S. has similar trade deals with just 20 countries, which make up 9 percent of global car sales, according to the Center for Automotive Research in Ann Arbor, Michigan.”

Related:
Dangers of Mixing Politics and Business - A timely piece from Daniel J. Mitchell
https://www.cato.org/publications/commentary/will-trump-turn-bully-pulpit-rhetoric-policy

Monday, January 9, 2017

Future of the European Union

Oxford’s Timothy Garton Ash reviews recent publications on Europe:
http://www.nybooks.com/articles/2017/01/19/is-europe-disintegrating/

Books reviewed include:
Europe Since 1989: A History by Philipp Ther, translated from the German by Charlotte Hughes-Kreutzmüller
The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz
Europe Entrapped by Claus Offe
The Euro Trap: On Bursting Bubbles, Budgets, and Beliefs by Hans-Werner Sinn
La fin du rêve européen by François Heisbourg
What Is Populism? by Jan-Werner Müller

UPDATE:
Brexit Confusion - Theresa May’s government appears to be lacking any clear strategy on Brexit:

Fiscal Deficits and Underlying Macroeconomic Conditions

Paul Krugman has an interesting column on when to be concerned about government budget deficits:
http://www.nytimes.com/2017/01/09/opinion/deficits-matter-again.html

US labor market is getting closer to full employment and sharp wage increases suggest that the economy is no longer in need of life support or further stimulus:
http://blogs.wsj.com/economics/2017/01/06/the-december-jobs-report-in-seven-charts/
http://blogs.wsj.com/economics/2017/01/06/economists-react-to-the-december-jobs-report-very-close-to-full-employment/

Harvard economist Larry Summers on the Republican tax cut plans:
https://www.washingtonpost.com/opinions/trump-and-ryan-are-right-to-tackle-corporate-taxes-but-their-approach-would-do-harm/2017/01/08/e7abd204-d429-11e6-9cb0-54ab630851e8_story.html

The Search for the Ninth Planet

A great segment from CBS 60 Minutes:
http://www.cbsnews.com/news/60-minutes-cal-tech-astronomer-hunts-for-planet-nine/

Pluto's planetary status was revoked a few years back and now there is an ongoing search to identify an actual ninth planet in our Solar System. The CBS report suggests that astronomers may be close to finding the ninth planet.

Sunday, January 8, 2017

Information and Foreign Policy

A fascinating look at information warfare in the 21st century and the frayed ties between Russia and the West:
https://www.washingtonpost.com/opinions/global-opinions/we-know-what-russia-did-but-what-trump-really-needs-to-understand-is-why/2017/01/05/ef57febe-d37b-11e6-9cb0-54ab630851e8_story.html

Genetics and Future of Medicine

A great FT interview of Siddhartha Mukherjee (Pulitzer prize winning author, cancer geneticist, stem cell biologist, physician and assistant professor of medicine at Columbia University)
“It’s tempting to think, as science continues to unlock the secrets of our existence, that DNA has become the new religion. “I think there’s certainly a trope in popular culture that DNA determines everything,” says Mukherjee, as he extracts a grilled prawn from its shell. “That, somehow or other, once we decipher genes, we’ll all of a sudden decode a human being. And it’s really worthwhile reminding ourselves that’s not true.” Why not? “We know [from twin studies] that even things that share a powerful genetic determinant are only manifest 50 per cent or 60 per cent of the time in the other twin. So there’s clearly something [else], whether it be chance, whether it be the environment. Or something that triggers a chain of reactions that change our genetic behaviour.””

Japan – Nearly Eradicates Gun Violence

BBC piece – How Japan has almost eradicated gun crime
“Japan has one of the lowest rates of gun crime in the world. In 2014 there were just six gun deaths, compared to 33,599 in the US. What is the secret?”

US Income Inequality - New Findings

An excellent piece:
http://www.nytimes.com/interactive/2016/12/16/business/economy/nine-new-findings-about-income-inequality-piketty.html

Modern Manufacturing and Mining

High Value Manufacturing in the US:

Robots in Mining
https://www.technologyreview.com/s/603170/mining-24-hours-a-day-with-robots/

Thursday, January 5, 2017

Gradual Shift to Global Disorder

FT’s Martin Wolf - The long and painful journey to world disorder

Piketty on the Great British Economist Anthony Atkinson

Atkinson’s contributions to economics were immense:
Piketty notes:
“Atkinson’s most important and profound work has to do with the historical and empirical analysis of inequality, carried out within a theoretical frame that he deploys with impeccable mastery and utilizes with caution and moderation. With his distinctive approach, at once historical, empirical, and theoretical; with his extreme rigor and his unquestioned probity; with his ethical reconciliation of his roles as researcher in the social sciences and citizen of, respectively, the United Kingdom, Europe, and the world, Atkinson has himself for decades been a model for generations of students and young researchers.
Together with Simon Kuznets, Atkinson single-handedly originated a new discipline within the social sciences and political economy: the study of historical trends in the distribution of income and wealth.”

Productivity Guru

WSJ profile of Federal Reserve Bank of San Francisco economist John Fernald:
http://www.wsj.com/articles/the-feds-point-man-on-productivity-1483614002

China-UK Rail Link