US versus Other Advanced Economies
https://www.bloomberg.com/view/articles/2017-07-31/the-u-s-is-the-sick-man-of-the-developed-world
Monday, July 31, 2017
India Update
India-China Border Dispute
Fascinating Interview with Sadanand Dhume - A
conservative’s take on India
Economics of Aadhaar
http://www.livemint.com/Home-Page/s22gUzxOULwQxqukfcBMiM/The-economics-of-Aadhaar.htmlGood Corporations and Shareholders
Related:
Milton Friedman was wrong
“In a new Stigler Center paper, Harvard Professor and
Nobel laureate Oliver Hart and University of Chicago Booth School of Business
Professor Luigi Zingales (Faculty Director of the Stigler Center and one of the
editors of this blog) take a novel perspective to this question. While agreeing
with Friedman’s premise that managers should care only about shareholders’
interest, Hart and Zingales reject the view that shareholders only care about
money. A company’s ultimate shareholders are ordinary people who, in addition
to caring about money, are also concerned about a myriad of ethical and social
issues: They purchase electric cars to lower their carbon footprint, they buy
free-range chicken or a fair trade coffee because they view this as the
ethical—albeit more expensive—choice. They are, in other words, prosocial in
their day-to-day life—at least to some effect. “If consumers and owners of
private companies take social factors into account and internalize
externalities in their own behavior, why would they not want the public
companies they invest in to do the same?” Hart and Zingales ask.”Sunday, July 30, 2017
China's Expansionist Agenda
China’s conduct and the logic of power by Harsh Pant
Pant rightly notes:
“Indian policymakers too have been part of this vacuous thinking for the past two decades. They got carried away by the propaganda which often managed to put China and India in the same league, assuming that being peers would somehow preclude any overt hostility. They also got carried away when their Chinese interlocutors assured them of their benign intentions and how there was enough space for both China and India to rise. Then came the biggest charade of all—Brics (Brazil, Russia, India, China, South Africa). From an investment banker’s catchy phrase for his clients, it was converted into a geopolitical grouping. New Delhi entered into it with its eyes closed, only to be bamboozled by Chinese attempts to convert it into an extension of its own economic superiority.”
Related:
http://www.livemint.com/Opinion/osChX68DikQsfrUSnxXQKL/Why-India-needs-to-be-aggressive-against-China-in-Doklam-sta.html
https://www.project-syndicate.org/commentary/china-weaponization-of-trade-by-brahma-chellaney-2017-07
https://www.nytimes.com/2017/07/26/world/asia/dolam-plateau-china-india-bhutan.html
https://www.project-syndicate.org/commentary/china-weaponization-of-trade-by-brahma-chellaney-2017-07
https://www.nytimes.com/2017/07/26/world/asia/dolam-plateau-china-india-bhutan.html
Friday, July 28, 2017
Tampa Bay – Case Study in Climate Change Risk
Fascinating and Scary Report from Washington Post
https://www.washingtonpost.com/graphics/2017/health/environment/tampa-bay-climate-change/Thursday, July 27, 2017
Social Behavior and Demographic Shifts
Fundamental Demographic Shifts
http://www.economist.com/news/international/21725553-more-adults-are-not-having-children-much-less-worrying-it-appears-rise
Demographic Shifts and the Higher Education Bubble
Demographic Shifts and the Higher Education Bubble
China and PPP Exchange Rates
PPP
Is China manipulating its currency? The Big Mac and Mini Mac indexes
disagree.
http://www.pbs.org/newshour/making-sense/china-manipulating-currency-big-mac-mini-mac-indexes-disagree/
http://www.pbs.org/newshour/making-sense/china-manipulating-currency-big-mac-mini-mac-indexes-disagree/
Wednesday, July 26, 2017
ECB – Euro Savior?
Five-year anniversary of Mario Draghi’s famous “whatever it
takes” pledge:
“FIVE years ago, Mario
Draghi, head of the European Central Bank, pledged to do “whatever it takes” to
save the euro. At the time, many people were predicting that the euro zone
would break up. But Mr Draghi pulled off the trick; no countries have left the
single currency. Borrowing costs have come down and even Greece has been able
to tap the markets.”
Related:
Causes of the Productivity Slowdown
Interesting NYTIMES piece:
Related:
Is Productivity Growth Becoming Irrelevant?
https://www.project-syndicate.org/print/productivity-growth-becoming-irrelevant-by-adair-turner-2017-07
https://www.project-syndicate.org/print/productivity-growth-becoming-irrelevant-by-adair-turner-2017-07
Tuesday, July 25, 2017
China's Economic Resilience
Stephen Roach on China's economic resilience
https://www.project-syndicate.org/commentary/china-economic-resilience-by-stephen-s--roach-2017-07
Related:
https://www.bloomberg.com/view/articles/2017-07-25/china-did-stimulus-the-wrong-way
https://www.project-syndicate.org/commentary/china-economic-resilience-by-stephen-s--roach-2017-07
Related:
https://www.bloomberg.com/view/articles/2017-07-25/china-did-stimulus-the-wrong-way
Financial Conditions and Monetary Policy
Economist Tim Duy on Fed's monetary policy options:
https://www.bloomberg.com/view/articles/2017-07-25/easier-financial-conditions-will-keep-the-fed-on-track
https://www.bloomberg.com/view/articles/2017-07-25/easier-financial-conditions-will-keep-the-fed-on-track
Monday, July 24, 2017
Germany's Trade and Current Account Surplus
Hans-Werner Sinn on Germany’s Current Account Surplus
https://www.project-syndicate.org/commentary/reducing-germanys-current-account-surplus-by-hans-werner-sinn-2017-07The Politics of Germany’s External Surplus
Politics, Public Goods and Fiscal Policy
Healthcare, Politics and Fiscal Policy
Robert Samuelson notes
“If we learned
anything from the bitter debate over the Affordable Care Act (Obamacare) —
which seems doubtful — it is that we cannot discuss health care in a way that
is at once compassionate and rational. This is a significant failure, because
providing and financing health care have become, over the past half-century,
the principal activity of the federal government.”
Related: Why Obamacare Survived by Jeffrey
Frankel
https://www.project-syndicate.org/commentary/why-repeal-and-replace-obamacare-failed-by-jeffrey-frankel-2017-07
Why deficits might be with us forever by
Robert Samuelson
Robert Samuelson wisely observes:
“There is a giant mismatch between what Americans want
from government and what they’ll pay for with taxes.”
Democracy and
Economic Policies
Noah Smith’s interesting column on fiscal policies
https://www.bloomberg.com/view/articles/2017-07-21/be-clear-eyed-about-democracy-s-weaknessesSaturday, July 22, 2017
Japan's Demographic Headache
The Mystery of Why Japanese People Are
Having So Few Babies
https://www.theatlantic.com/business/archive/2017/07/japan-mystery-low-birth-rate/534291/
The Atlantic piece notes:
“But there’s
another, simpler explanation for the country’s low birth rate, one that has
implications for the U.S.: Japan’s birth rate may be falling because there are
fewer good opportunities for young people, and especially men, in the country’s
economy. In a country where men are still widely expected to be breadwinners
and support families, a lack of good jobs may be creating a class of men who
don’t marry and have children because they—and their potential partners—know
they can’t afford to.”
Thursday, July 20, 2017
Economics of Education
The Economist on
education technology
The cost (to universities) of supporting various majors:
http://review.chicagobooth.edu/economics/2017/article/cost-engineering-degree-college-not-student
“Engineering degrees, for example, tend to provide high financial returns to graduates and also cost universities a lot to produce, according to research by Yale’s Joseph G. Altonji and Chicago Booth’s Seth Zimmerman. Other majors, such as business and computer science, have relatively low costs for schools while offering relatively high future salaries for graduates. Understanding the typical costs and outcomes for different majors could give additional guidance to public universities that are weighing how to maximize their budgets, given shrinking funding from state governments.”
“Engineering degrees, for example, tend to provide high financial returns to graduates and also cost universities a lot to produce, according to research by Yale’s Joseph G. Altonji and Chicago Booth’s Seth Zimmerman. Other majors, such as business and computer science, have relatively low costs for schools while offering relatively high future salaries for graduates. Understanding the typical costs and outcomes for different majors could give additional guidance to public universities that are weighing how to maximize their budgets, given shrinking funding from state governments.”
Democracy in Africa
Interesting piece:
https://www.economist.com/news/international/21725286-it-still-hard-dislodge-incumbent-who-determined-cheat-new-methods-and
Related:
Why Kenya’s upcoming elections should worry
the world
https://www.washingtonpost.com/news/global-opinions/wp/2017/07/21/why-kenyas-upcoming-election-should-worry-the-world/Public Choice Theories and US Politics
A new book - Democracy in Chains - by Duke
University historian Nancy MacLean has generated a tremendous amount of controversy
regarding the legacy of Nobel prize winning economist James Buchanan:
http://www.chronicle.com/article/Nancy-MacLean-Responds-to-Her/240699/
https://www.theatlantic.com/magazine/archive/2017/07/the-architect-of-the-radical-right/528672/
https://www.theatlantic.com/magazine/archive/2017/07/the-architect-of-the-radical-right/528672/
James Buchanan’s Nobel Prize Lecture:
International Power Dynamics
Fascinating report from The
Hague Centre for Strategic Studies (HCSS):
Related:
China’s Increasing Assertiveness
http://www.livemint.com/Politics/9dZUQBf1SKDYCmEmJEFyqM/Growing-economic-clout-driving-Chinese-assertiveness.html
http://www.livemint.com/Politics/9dZUQBf1SKDYCmEmJEFyqM/Growing-economic-clout-driving-Chinese-assertiveness.html
Wednesday, July 19, 2017
Tuesday, July 18, 2017
Taxes, Welfare Programs, Cultural Values and the Economy
International Comparisons
Why Canada Is Able to Do Things Better
Scandinavian Welfare System
How Can Scandinavians Tax So Much? By
Henrik Jacobsen Kleven
Cambridge University Economist Ha-Joon Chang makes an
interesting point regarding taxes:
“If tax really were a pure burden, all rich
individuals and companies would move to Paraguay or Bulgaria, where the top
rate of income tax is 10%. Of course, this does not happen because, in those
countries, in return for low tax you get poor public services. Conversely, most
rich Swedes don’t go into tax exile because of their 60% top income tax rate,
because they get a good welfare state and excellent education in return.
Japanese and German companies don’t move out of their countries in droves
despite some of the highest corporate income tax rates in the world (31% and
30% respectively) because they get good infrastructure, well-educated workers,
strong public support for research and development, and well-functioning
administrative and legal systems.
Low tax is not in itself a virtue. The question should
be whether the government is providing services of satisfactory quality, given
the tax receipts, not what the level of tax is.”
Insights from Psychology and Behavioral Economics on
Taxation and Welfare Programs
Excellent piece on Laffer Curve, Income
Effects and Substitution Effects
Cultural/Social Factors – Working Class versus
the Poor
Are people poor because they are lazy?
Taxes and the Macroeconomy
How sales taxes could boost economic growth
http://review.chicagobooth.edu/economics/2017/article/how-sales-taxes-could-boost-economic-growthInflation Dynamics, Unemployment and Monetary Policy
US Inflation Dynamics
Natural Rate of Unemployment, NAIRU and Monetary Policy
Persistently low inflation creates a dilemma for the Fed
https://www.bloomberg.com/news/articles/2017-07-14/fed-models-say-go-but-data-say-no-as-inflation-consensus-frays
Monetary policy normalization
Monday, July 17, 2017
Saturday, July 15, 2017
Thursday, July 13, 2017
Africa - Economic Development
Rwanda – An Interesting Case Study in Economic Development
The Economist on
Rwanda:
Colonialism and Africa
Africa’s Water Supply Constraint
Wednesday, July 12, 2017
Ode to China's Megacities
Tyler Cowen on China's Megacities
https://www.bloomberg.com/view/articles/2017-07-12/10-chinese-megacities-to-see-before-you-die
https://www.bloomberg.com/view/articles/2017-07-12/10-chinese-megacities-to-see-before-you-die
Central Banks and Financial Stability
Interesting read: Central Banks' Focus on Financial Stability
Has Unintended Consequences
https://www.bloomberg.com/view/articles/2017-07-11/central-banks-focus-on-financial-stability-has-unintended-consequences
https://www.bloomberg.com/view/articles/2017-07-11/central-banks-focus-on-financial-stability-has-unintended-consequences
1997 Asian Financial Crisis – Twentieth Anniversary
Berkeley economist Barry Eichengreen considers the legacy of
the 1997 Asian Financial Crisis
https://www.project-syndicate.org/commentary/asia-crisis-20-years-later-by-barry-eichengreen-2017-07
https://www.project-syndicate.org/commentary/asia-crisis-20-years-later-by-barry-eichengreen-2017-07
Tuesday, July 11, 2017
Hubris and Economics
HOW ECONOMICS BECAME A RELIGION by
John Rapley
“Yet if history
teaches anything, it’s that whenever economists feel certain that they have
found the holy grail of endless peace and prosperity, the end of the present
regime is nigh. On the eve of the 1929 Wall Street crash, the American
economist Irving Fisher advised people to go out and buy shares; in the 1960s,
Keynesian economists said there would never be another recession because they
had perfected the tools of demand management.
The 2008 crash was
no different. Five years earlier, on 4 January 2003, the Nobel laureate Robert
Lucas had delivered a triumphal presidential address to the American Economics
Association. Reminding his colleagues that macroeconomics had been born in the
depression precisely to try to prevent another such disaster ever recurring, he
declared that he and his colleagues had reached their own end of history:
“Macroeconomics in this original sense has succeeded,” he instructed the
conclave. “Its central problem of depression prevention has been solved.””
Updates:
Noah Smith on critics of economics
Paul Krugman on economic theories that were true in the past but are no longer relevant
https://krugman.blogs.nytimes.com/2017/07/10/formerly-true-theories-wonkish-and-self-indulgent/
The Economics of Single-Payer Health Care
Cornell Economist Robert Frank on Single-Payer Health
Care
https://www.nytimes.com/2017/07/07/upshot/why-single-payer-health-care-saves-money.html
Related –
https://www.nytimes.com/2017/07/11/opinion/health-reform-bipartisan-.htmlSaturday, July 8, 2017
Science and Inequality Perception
A thought-provoking piece
Related research paper –
Why people prefer unequal societies by Christina Starmans, Mark
Sheskin and Paul Bloom
Abstract
There is immense
concern about economic inequality, both among the scholarly community and in
the general public, and many insist that equality is an important social goal. However, when people are asked about the ideal distribution of
wealth in their country, they actually prefer unequal societies. We suggest
that these two phenomena can be reconciled by noticing that, despite
appearances to the contrary, there is no evidence that people are bothered by
economic inequality itself. Rather, they are bothered by something that is
often confounded with inequality: economic unfairness. Drawing upon laboratory
studies, cross-cultural research, and experiments with babies and young
children, we argue that humans naturally favour fair distributions, not equal
ones, and that when fairness and equality clash, people prefer fair inequality
over unfair equality. Both psychological research and decisions by policymakers
would benefit from more clearly distinguishing inequality from unfairness.
International Affairs – Interesting Developments
France lures post-Brexit London banks and finance to Paris
http://www.dw.com/en/france-lures-post-brexit-london-banks-and-finance-to-paris/a-39606564
Germany’s Newest Intellectual Antihero
Why the G-20 Matters
Once Dominant, the United States Finds Itself Isolated at
G-20
Related:
Turkey Against the World
http://www.spiegel.de/international/europe/g-20-erdogan-and-merkel-with-plenty-to-discuss-a-1156320.html
Andhra Pradesh – India’s Best Administered State?
http://www.livemint.com/Politics/ZzAXntmInHn4zblKOIR0nN/Inside-Chandrababu-Naidus-plan-to-make-Andhra-Pradesh-a-sun.htmlFriday, July 7, 2017
Slow US Economic Growth
Structural challenges facing the US economy
https://www.bloomberg.com/view/articles/2017-07-07/america-is-struggling-with-economic-rot
Hopes of ‘Trump Bump’ for U.S. Economy Shrink as Growth
Forecasts Fade
My short article on US growth prospects –
Thursday, July 6, 2017
China’s GDP Growth Rate Estimates
On the measuring and mis-measuring of Chinese growth
http://voxeu.org/article/measuring-and-mis-measuring-chinese-growth
http://voxeu.org/article/measuring-and-mis-measuring-chinese-growth
The Seattle Minimum Wage Debate
The Economist on
the minimum wage controversy
How a Rising
Minimum Wage Affects Jobs in Seattle by NOAM SCHEIBER
Interesting Report from CENTER ON WAGE AND
EMPLOYMENT DYNAMICS (Cal – Berkeley)
Hollywood and Economics
Hollywood Has a Bad-Movie Problem
China Won't Save
the Blockbuster
https://www.bloomberg.com/view/articles/2017-06-29/china-won-t-save-hollywood-s-schlocky-blockbustersConnecticut’s Economic Woes
An interesting case study:
What on Earth Is Wrong with Connecticut?
By DEREK THOMPSON
https://www.theatlantic.com/business/archive/2017/07/connecticut-tax-inequality-cities/532623/
Related:
https://www.bloomberg.com/news/articles/2017-07-07/in-america-s-richest-state-the-capital-flirts-with-bankruptcyUS Healthcare – Economic and Political Issues
The World
Doesn't Mooch Off U.S. Health-Care Research
How Did Health Care Get to Be Such a Mess?
By CHRISTY FORD CHAPIN
When Cutting Access to Health Care, There’s a Price
to Pay by EDUARDO PORTER
Related:
http://vivekjayakumar.blogspot.com/2017/04/why-is-healthcare-so-expensive-in.htmlWednesday, July 5, 2017
Tensions in the Himalayas
India confronts China’s attempt at land grab in Bhutan:
Brahma Chellaney notes:
“More broadly, by
waging stealth wars to accomplish political and military objectives, China is
turning into a principle source of strategic instability in Asia. The stealth
wars include constructing a dispute and then setting in motion a jurisdictional
creep through a steady increase in the frequency and duration of Chinese
incursions — all with the intent of either establishing military control over a
coveted area or pressuring the opponent to cut a deal on its terms.”Related:
https://www.project-syndicate.org/commentary/countering-china-himalayan-land-grabs-by-brahma-chellaney-2017-06
Tuesday, July 4, 2017
Consumer Confidence and Economic Performance
Confidence Boomed After the Election. The
Economy Hasn’t. By NEIL IRWIN
https://www.nytimes.com/2017/07/04/upshot/confidence-boomed-after-the-election-the-economy-hasnt.htmlThe Americanization of the English Language
An entertaining read: Review of That’s the Way It
Crumbles: The American Conquest of English by Matthew Engel
https://www.theguardian.com/books/2017/jul/03/thats-way-it-crumbles-american-conquest-english-matthew-engel-reviewMonday, July 3, 2017
America’s Complicated Political Future
America’s Future Is Texas by Lawrence Wright
Local Councils versus State Governments - Political Divide
Related:
https://www.wsj.com/articles/divided-america-standsthen-and-now-1498851654
https://www.washingtonpost.com/news/speaking-of-science/wp/2017/07/01/new-florida-law-lets-any-resident-challenge-whats-taught-in-science-classes/
https://www.washingtonpost.com/news/speaking-of-science/wp/2017/07/01/new-florida-law-lets-any-resident-challenge-whats-taught-in-science-classes/
Fiscal Policy Experiments – Kansas versus California
Kansas or California? By LAURA TYSON & LENNY MENDONCA
LAURA TYSON & LENNY MENDONCA note:
“Countless
international, national, and state comparisons have demonstrated overwhelmingly
that trickle-down economics is a regressive fantasy. The latest evidence of
this comes from Kansas, where tax cuts signed by Governor Sam Brownback in 2012
have utterly failed to deliver growth.
Before making the same
costly mistake, Trump should take a lesson from California – a progressive
state that he loves to hate. California raised taxes for top earners in 2012
and has since enjoyed one of the strongest growth rates in the country. And
now, California is significantly expanding its earned income tax credit,
CalEITC, building on the proven record of the federal earned income tax credit
(EITC).”
Stock Market Update
What Stock Investors Need to Know, and Why by Mohamed A.
El-Erian
https://www.bloomberg.com/view/articles/2017-07-03/what-stock-investors-need-to-know-and-why
https://www.bloomberg.com/view/articles/2017-07-03/what-stock-investors-need-to-know-and-why
Zillow Learns a PR Lesson
How Zillow Became an Internet Villain by Megan McArdle
McArdle notes:
“I’ve now been writing for the web for 16 years, and yet, I am still capable of wonder at the vast opportunities this technology offers to make a fool of yourself. In the old days, fools were made on a local, artisanal basis, strictly for the entertainment of the neighbors. Now, thanks to the miracle of electronic communications, with a few keystrokes, we can become fools to the world.”
“I’ve now been writing for the web for 16 years, and yet, I am still capable of wonder at the vast opportunities this technology offers to make a fool of yourself. In the old days, fools were made on a local, artisanal basis, strictly for the entertainment of the neighbors. Now, thanks to the miracle of electronic communications, with a few keystrokes, we can become fools to the world.”
Trade, Technology and Jobs
Oh! What a Lovely Trade War by Paul
Krugman
Robocalypse Now? Central Bankers Argue
Whether Automation Will Kill Jobs
A New Kind of Tech Job Emphasizes Skills, Not a
College Degree
https://www.nytimes.com/2017/06/28/technology/tech-jobs-skills-college-degree.htmlSunday, July 2, 2017
Hong Kong versus Singapore
Hong Kong versus Singapore – Which is the better choice
for expats?
https://www.bloomberg.com/news/articles/2017-06-28/hong-kong-or-singapore-salaries-cost-of-living-and-housingHow Norway Avoided the Oil Resource Curse
Norway - a country that managed to largely avoid the
resource curse
http://www.livemint.com/Sundayapp/oKIjPcRSOZUqFxrDATXS8O/The-devils-excrement-how-Norway-warded-off-the-oil-curse.html
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