Economics and International Affairs Blog: October 2017

Tuesday, October 31, 2017

BOE’s Monetary Policy Dilemma

When should Bank of England raise interest rates?

https://www.economist.com/news/leaders/21730648-british-economy-highly-sensitive-increases-interest-rates-bank-england-should

The Cost of Brexit

https://www.nytimes.com/2017/10/31/business/brexit-economic-cost-imports.html

Demographics and Economics

Demographic Shifts in Advanced Economies

https://www.bloomberg.com/view/articles/2017-10-31/rich-nations-need-a-cure-for-the-baby-bust

Economist Noah Smith notes:

“In the U.S., boosting fertility isn't a big priority. The U.S. has a total fertility rate of 1.8 children per woman, which is reasonably close to the replacement rate of 2.1 -- i.e., the rate that leads to long-term population stability. Also, the U.S. tends to be welcoming to immigrants, and (at least, up until now) has been able to attract large numbers of the skilled immigrants who contribute most to fiscal and financial sustainability.”

Monday, October 30, 2017

Choosing the Next Fed Chair

The Candidates for the position of the Chairman of the Federal Reserve Board of Governors

https://www.project-syndicate.org/commentary/next-fed-chair-yellen-successor-by-jeffrey-frankel-2017-10

Trump Drags the Fed Down into the Political Mud

https://www.bloomberg.com/view/articles/2017-10-30/trump-drags-the-fed-down-into-the-political-mud

Kevin Warsh – A Potentially Disastrous Choice

http://www.weeklystandard.com/kevin-warsh-candidate-for-federal-reserve-chair-is-not-even-an-economist/article/2009986#

Ike Brannon notes:

“Recent reports suggest that the contest for the next chair of the Federal Reserve is down to Jay Powell, a current member of the Federal Reserve board, and Kevin Warsh, a member of the board from 2006 to 2011. And the rumor mill suggests that it is Warsh—a former Wall Street denizen whose father-in-law Ronald Lauder is a good friend of Donald Trump—who is the odds-on favorite.
Such a possibility is deeply unsettling: Selecting Warsh as chairman of the Federal Reserve Board could prove to be disastrous both to the economy as well as Trump’s chances for re-election. Put simply, Warsh has demonstrated a fundamental inability (or unwillingness) to understand precisely how monetary policy works in today’s economy, and that the rules we used in the past to gauge inflationary pressures simply do not work like they once did. Having him direct monetary policy would increase the risk and prolong the length of a future recession”.

Friday, October 27, 2017

Profits and Stock Prices

The Utter Dominance of the so-called FANG group of stocks

https://www.bloomberg.com/news/articles/2017-10-27/euphoria-alert-rings-in-nasdaq-as-fang-health-scare-ends-in-bang

Google’s Success

https://www.theatlantic.com/business/archive/2017/10/google-cannot-be-stopped/544202/

For the Bull Market to Keep Going, Dividends Must Accelerate

https://www.bloomberg.com/view/articles/2017-10-27/for-the-bull-market-to-keep-going-dividends-must-accelerate

Redistributive Effects of QE

The Redistributive Effects of QE - How the world’s greatest financial experiment enriched the rich
https://www.newstatesman.com/politics/economy/2017/10/how-world-s-greatest-financial-experiment-enriched-rich

Return of the Gilded Age

https://www.theguardian.com/business/2017/oct/26/worlds-witnessing-a-new-gilded-age-as-billionaires-wealth-swells-to-6tn

https://www.bloomberg.com/news/articles/2017-10-27/bezos-seizes-title-of-world-s-richest-person-after-amazon-soars

Thursday, October 26, 2017

Electric Vehicle Revolution in China

Wednesday, October 25, 2017

Xi Jinping and Modern China

China's Xi Jinping stacks 25-member Politburo with loyalists

http://www.straitstimes.com/asia/east-asia/chinas-xi-stacks-25-member-politburo-with-loyalists

http://www.straitstimes.com/asia/east-asia/chinas-new-leadership-line-up-shows-president-xis-confidence-in-consolidating-power

Xi Jinping and the Continuing Rise of China

https://www.nytimes.com/2017/10/13/sunday-review/xi-jinping-china.html

Xi Jinping – The World’s Most Powerful Leader
https://www.economist.com/news/briefing/21730138-contradicting-deng-xiaoping-mr-xi-has-concentrated-vast-power-his-own-hands-xi-jinping-has

US Economy - Structural Changes and Future Jobs

UPDATE:

Why Nerds and Nurses Are Taking Over the U.S. Economy

https://www.theatlantic.com/business/archive/2017/10/the-future-of-jobs-polarized-unequal-and-health-care/543915/

A Peek at Future Jobs

https://www.nytimes.com/2017/10/24/business/economy/future-jobs.html

Tuesday, October 24, 2017

Demographics, Immigration and the Welfare State [Must Read]

A brilliant piece from Derek Thompson - The Doom Loop of Modern Liberalism

https://www.theatlantic.com/business/archive/2017/10/immigration-modern-liberalism/543744/

“Rich countries tend to redistribute wealth from the rich few to the less-rich multitude. But when that multitude suddenly includes minorities who are seen as outsiders, the white majority can turn resentful and take back their egalitarian promises. Take, for example, the Twin Cities of Minnesota. They were once revered for their liberal local policies—like corporate-tax redistribution from rich areas to poor neighborhoods and low-income housing construction near business districts. But since the 1980s, as the metro area attracted more nonwhite immigrants, the metro has become deeply segregated by income and race and affordable-housing construction has backtracked. Or take Finland, that renowned “Santa Claus State” of cradle-to-grave social services, where the welfare state is being “systematically dismantled.” The far right has emerged in the last few decades, just as foreign-born population has suddenly grown.”

The New Populism Isn't About Economics by Tyler Cowen

https://www.bloomberg.com/view/articles/2017-10-23/the-new-populism-isn-t-about-economics

Related:
Nativism in American History
https://www.bloomberg.com/view/articles/2017-10-25/america-replays-past-episodes-of-nativism

Extraordinary Moment in American Politics

An extraordinary moment in US politics:

Student Research and the VW Dieselgate Scandal

Fascinating read:

The Three Students Who Uncovered 'Dieselgate' – Der Spiegel Report

http://www.spiegel.de/international/business/the-three-students-who-discovered-dieselgate-a-1173686.html

“The diesel emissions scandal has already cost Volkswagen 25 billion euros, and no end is it sight. But how did it start? In a corrugated iron shack in the forests of West Virginia, discovered by a trio of university students.”

Beijing Consensus vs. Washington Consensus

Interesting items

China vs. the Washington Consensus by ADAIR TURNER

https://www.project-syndicate.org/commentary/china-versus-washington-consensus-by-adair-turner-2017-10

Empowering China’s New Miracle Workers by MICHAEL SPENCE
https://www.project-syndicate.org/commentary/china-19th-national-party-congress-new-generation-by-michael-spence-2017-10

Related:

To Grow Stronger, China Has to Grow More Slowly

https://www.nytimes.com/2017/10/25/opinion/china-economy-slow-growth.html

China’s AI Awakening [MIT Technology Review report]

https://www.technologyreview.com/s/609038/chinas-ai-awakening/

Sunday, October 22, 2017

Rethinking the Push For a ‘Cashless Society’

An interesting and timely piece by Ohio State University economist Jay L. Zagorsky:

https://theconversation.com/in-defense-of-cash-why-we-should-bring-back-the-500-note-and-other-big-bills-85880

“Many countries around the world are steadily shifting away from cash. Canada, the United Kingdom and Sweden have already largely embraced a cashless society. The U.S. is also steadily making the move, with people holding smaller amounts of cash.

However, the recent string of natural disasters and security breaches at major financial entities exposes a huge flaw in this trend: When the power goes out, telephone lines shut down or account information is stolen, it is impossible to use ATMs, credit or debit cards or mobile payments – no matter how rich you are.”