Attention Economy


Wednesday, November 30, 2022

India’s Remittance Boom

Inequality and Stock Market Performance

Inequality in Society Drives Stock-Market Performance
https://www.wsj.com/articles/inequality-in-society-drives-stock-market-performance-11669682206
Raise inequality and demand for stocks goes up, and so do prices. The question is whether we are at a turning point in how wealth is shared. 

Tuesday, November 29, 2022

China Adds to Global Economic Uncertainty

Chinese Unrest Over Lockdown Upends Global Economic Outlook
https://www.nytimes.com/2022/11/28/business/economy/china-unrest-global-economy.html
Growing protests in the world’s biggest manufacturing nation add a new element of uncertainty atop the Ukraine war, an energy crisis and inflation. 

How China Lost the Covid War
https://www.nytimes.com/2022/11/28/opinion/china-covid-autocracy-democracy.html
Paul Krugman notes:
“… what we’re seeing in China is the problem with autocratic governments that can’t admit mistakes and won’t accept evidence they don’t like….
Autocrats can act quickly and decisively, but they can also make huge mistakes because nobody can tell them when they’re wrong”.

Xi Broke the Social Contract That Helped China Prosper
https://www.nytimes.com/2022/12/01/opinion/china-covid-protests.html

Avoiding Red Tape

Monday, November 28, 2022

The Cardboard Economy

Entire forests and enormous factories running 24/7 can barely keep up with demand. This is how the cardboard economy works.
https://www.nytimes.com/2022/11/28/magazine/cardboard-international-paper.html 

The Metaverse

Raising the Inflation Target

The Fed Shouldn’t Raise Its Inflation Target
https://www.bloomberg.com/opinion/articles/2022-11-28/the-fed-shouldn-t-raise-its-inflation-target
Changing the objective now would be bad for the economy and for the central bank’s own credibility.

Related:
This squeeze is bad enough without messing with the inflation target
https://www.telegraph.co.uk/business/2023/01/10/squeeze-bad-enough-without-messing-inflation-target/

US Labor Market: A Job-Market Riddle

There’s a Job-Market Riddle at the Heart of the Coming Recession
https://www.bloomberg.com/news/articles/2022-11-28/job-cuts-in-tech-and-banking-don-t-mean-mass-layoffs-in-looming-global-recession
Tech giants and banks are already cutting workers, but many employers seem desperate to keep hiring.
 
The puzzling disconnect between production and employment by VIVEKANAND JAYAKUMAR | The Hill, 09/19/22
https://thehill.com/opinion/finance/3650164-the-puzzling-disconnect-between-production-and-employment/
One of the puzzling economic developments during the first half of 2022 (2022H1) was the sharp disconnect between output and employment growth. Data released so far suggest that the economy shrank during 2022H1. Yet, employment growth was exceedingly robust during 2022H1.
Why are companies adding so many workers if aggregate production is falling? Is the disconnect mostly the result of measurement errors or is something more structural affecting the U.S. economy? How does the output-employment divergence affect the Federal Reserve’s ongoing battle against high inflation?  

Convex Supply Curves

Boehm, Christoph E., and Nitya Pandalai-Nayar. 2022. "Convex Supply Curves." American Economic Review, 112 (12): 3941-69.
https://www.aeaweb.org/articles?id=10.1257/aer.20210811
Abstract
We provide evidence that industries' supply curves are convex. To guide our empirical analysis, we develop a model in which capacity constraints at the firm level generate supply curves that are convex in logs at the industry level. The industry's capacity utilization rate is a sufficient statistic for the supply elasticity. Using data on capacity utilization and three different instruments, we estimate the supply curve and find robust evidence for an economically sizable degree of convexity. The nonlinearity we identify has several macroeconomic implications, including that responses to shocks are state dependent and that the Phillips curve is convex. 

Sunday, November 27, 2022

Xi's Draconian Covid Lockdowns Elicit Protests

After a Deadly Blaze, a Surge of Defiance Against China’s Covid Policies
https://www.nytimes.com/2022/11/27/world/asia/china-covid-protest.html

End of the Remote Work Revolution?

The great mismatch: Remote jobs are in demand, but positions are drying up
https://www.washingtonpost.com/business/2022/11/27/remote-jobs-economy/ 

Living Alone

As Gen X and Boomers Age, They Confront Living Alone
https://www.nytimes.com/2022/11/27/us/living-alone-aging.html
More older Americans are living by themselves than ever before. That shift presents issues on housing, health care and personal finance. 

Economic and Policy Challenges Facing UK

How Britain’s economic woes stack up against Europe’s – a close look at the figures
https://www.theguardian.com/business/2022/nov/19/britain-economic-woes-europe-figures-uk-inflation
No-growth Britain is poorer than we think, but it’s not too late to change
https://www.telegraph.co.uk/news/2022/11/20/no-growth-britain-poorer-think-not-late-change/ 


The migration system is broken and too few are honest enough to admit it
https://www.telegraph.co.uk/news/2022/11/01/migration-system-broken-honest-enough-admit/
 
High taxes and ‘no future’ spark fears of mass exodus of young Britons
https://www.telegraph.co.uk/business/2022/11/27/high-taxes-no-future-spark-fears-mass-exodus-young-britons/
Scores of highly skilled workers may soon wonder if they would be better off elsewhere 

Should the better-off pay more for everything?
https://www.spectator.co.uk/article/should-the-betteroff-pay-more-for-everything/
Lionel Shriver notes:
Britons take this profoundly socialist tax structure for granted. Yet when I tell my American compatriots that the British start confiscating about half your earnings above $59,000 – less than Americans’ average personal annual income of $66,755, currently taxed federally at 22 per cent – their jaws hit the floor. US brackets are much more graduated (10, 12, 22, 24, 32, 35, and 37 per cent), and that top band only kicks in at income of more than half a million bucks – or about £450,000. Now, hold the envy; federal income tax doesn’t include state and local (between zero and 16 per cent) or property, Social Security and Medicare taxes. Still, in the UK we also pile on National Insurance, council tax, stamp duty, a stonking 20 per cent sales tax, and the highest air passenger duty in the world. 

Saturday, November 26, 2022

History Lesson: Long-Run Economic Growth

Boom and Bust: Why It’s Hard to Predict Economic Growth
https://www.foreignaffairs.com/reviews/boom-and-bust 

Men in Trouble

Why Men Are Hard to Help
https://www.nationalaffairs.com/storage/app/uploads/public/632/4eb/0a1/6324eb0a150de498119695.pdf
 
The Crisis of Men and Boys 
https://www.nytimes.com/2022/09/29/opinion/crisis-men-masculinity.html
David Brooks:
If you’ve been paying attention to the social trends, you probably have some inkling that boys and men are struggling, in the U.S. and across the globe.
They are struggling in the classroom. American girls are 14 percentage points more likely to be “school ready” than boys at age 5, controlling for parental characteristics. By high school, two-thirds of the students in the top 10 percent of the class, ranked by G.P.A., are girls, while roughly two-thirds of the students at the lowest decile are boys. In 2020, at the 16 top American law schools, not a single one of the flagship law reviews had a man as editor in chief.

Men Without Work in the Post-Pandemic Era 
 

Will American Consumers Keep Spending?

Retailers may see more red after Black Friday as consumers say they plan to pull back on spending – acting as if the US were already in a recession
https://theconversation.com/retailers-may-see-more-red-after-black-friday-as-consumers-say-they-plan-to-pull-back-on-spending-acting-as-if-the-us-were-already-in-a-recession-194978 

Retailers Push Sales, and Normalcy, but Economic Uncertainty Looms
https://www.nytimes.com/2022/11/25/business/black-friday-shopping.html

My Take from June 8, 2022:

Does Everyone Need a College Degree?

Employers Rethink Need for College Degrees in Tight Labor Market
https://www.wsj.com/articles/employers-rethink-need-for-college-degrees-in-tight-labor-market-11669432133
Google, Delta Air Lines and IBM have reduced requirements for some positions 



My take (from Jan 2022): Is the US higher education bubble about to burst?
There appears to be a growing skill-mismatch between the degrees pursued by students and those actually sought by employers. Additionally, U.S. productivity growth has remained subdued even as the share of workers with college degrees has risen. Various structural factors have also affected the returns to college education in recent decades.
The sustained high demand for college education resulting from misaligned incentives, misguided policies and societal pressures has led to a U.S. higher education sector that is characterized by runaway expenses, administrative bloat and less-than-ideal admissions policies. It may be time to burst the higher education bubble.

Race and Economic Outcomes

Disparity Doesn’t Necessarily Imply Racism
https://www.wsj.com/articles/disparity-doesnt-necessarily-imply-racism-skills-wages-black-white-afqt-research-discrimination-jim-crow-grandmother-11669383926
Harvard economist Roland Fryer notes:
He pointed out how far I was straying from our Euler equations. How on any subject other than race, I would have never given in to such sloppy thinking. The double identity—a classically trained economist taught to tease out causal relationships and a black Southern boy taught that discrimination is ubiquitous—had lived seamlessly inside me until that moment. Messrs. Neal and Johnson, as it turns out, aren’t bigots, and their conclusions have stood the test of time and my attempts to disprove them. I extended their analysis to unemployment, teen pregnancy, incarceration and other outcomes—all of which follow the same pattern. Moreover, the relationship between skills and wages has been confirmed by study after study, even when using different data and methods. Kevin Lang, an economist at Boston University, corrects important issues in Messrs. Neal and Johnson’s work but finds the same relationship between AFQT scores and wages. Taken together, an honest review of the evidence suggests that current racial inequities are more a result of differences in skill than differences in treatment of those with the same skill. 

Friday, November 25, 2022

Life Advice from Charlie Munger

Charlie Munger’s advice:
The first rule of a happy life is low expectations. That’s one you can easily arrange. And if you have unrealistic expectations, you’re going to be miserable all your life."
https://www.yahoo.com/now/charlie-munger-rule-happy-life-141605326.html 


INSPIRATIONAL QUOTE:
The proper function of man is to live, not to exist. I shall not waste my days in trying to prolong them. I shall use my time.” 
― Jack London

RELATED:

Globally, lower-income people feel a stronger connection

https://anderson-review.ucla.edu/as-income-rises-link-between-meaning-and-happiness-weakens/

Financial Resources Impact the Relationship Between Meaning and Happiness

Toxic Politics

China's Housing Market

Wednesday, November 23, 2022

Elite Economics Grad Programs

Subjective Evaluations and Stratification in Graduate Education
https://www.nber.org/system/files/working_papers/w30677/w30677.pdf
ABSTRACT:
We introduce a model of the admissions process based upon standard agency theory and explore its implications with economics PhD admissions data from 2013-2019. We show that a subjective score that aggregates subjective ratings and recommendation letter features plays a more important role in determining admissions than an objective score based upon graduate record exam (GRE) scores. Subjective evaluations by references who write multiple letters are not only more influential than those of references who write one letter, but they are also more informative. Since multiple-letter references are also more highly ranked economists, this implies that there is a constraint on the supply of high-quality references. Moreover, we find that both the subjective and objective scores are correlated with job placement at a top economics department after the completion of the PhD. These indicators of individual achievement have a smaller effect than an undergraduate degree from an Ivy Plus school (i.e., Ivy League + Stanford, MIT, Duke, and Chicago). In the self-selected pool of applicants, Ivy Plus graduates are twice as likely to be admitted to a top 10 graduate program and are much more likely to obtain an assistant professor position at a top 10 program upon PhD completion. Given that Ivy Plus students must pass a stringent selection process to gain admission to their undergraduate program, we cannot reject the hypothesis that admission committees use information efficiently and fairly. However, this also implies that there may be a return to attending a selective undergraduate program in order to be pooled with highly skilled individuals. 

China and the Middle-Income Trap

China GDP: avoiding ‘middle-income trap’ is key in 2023, and 5 per cent economic growth possible, Beijing adviser says
https://www.scmp.com/economy/china-economy/article/3200752/china-gdp-avoiding-middle-income-trap-key-2023-and-5-cent-economic-growth-possible-beijing-adviser
 
China may soon become a high-income country | The Economist
https://www.economist.com/finance-and-economics/2022/02/05/china-may-soon-become-a-high-income-country
 
The Middle-Income Trap: Myth or Reality?
https://documents1.worldbank.org/curated/en/965511468194956837/pdf/104230-BRI-Policy-1.pdf
Related:
https://www.economist.com/special-report/2017/10/05/the-middle-income-trap-has-little-evidence-going-for-it
 
Escaping the Middle-Income Trap: Innovate or Perish
https://www.adb.org/sites/default/files/publication/231951/adbi-wp685.pdf 

Prestige Stasis

AMLO's Mexico

Tuesday, November 22, 2022

An Important Lesson in Statistics

People don’t mate randomly – but the flawed assumption that they do is an essential part of many studies linking genes to diseases and traits
https://theconversation.com/people-dont-mate-randomly-but-the-flawed-assumption-that-they-do-is-an-essential-part-of-many-studies-linking-genes-to-diseases-and-traits-194793
Border and Zaitlen note:
The idea that correlation does not imply causation is a fundamental caveat in epidemiological research. A classic example involves a hypothetical link between ice cream sales and drownings – instead of increased ice cream consumption causing more people to drown, it’s plausible that a third variable, summer weather, is driving up an appetite for ice cream and swimming, and hence opportunities to drown.
But what about correlations involving genes? How can researchers be sure that a particular trait or disease is truly genetically linked, and not caused by something else?
We are statistical geneticists who study the genetic and nongenetic factors that influence human variation. In our recently published research, we found that the genetic links between traits found in many studies might not be connected by genes at all. Instead, many are a result of how humans mate. 

Education - Quality versus Quantity

Why Alabama and West Virginia suddenly have amazing high-school graduation rates
https://www.washingtonpost.com/business/2022/11/18/alabama-west-virginia-graduation/
Sure, students may lose specific knowledge if they are quietly passed in a home economics course they were about to fail, or allowed to make up a failed English class with an easy credit-recovery program. But their lost knowledge in those subjects may be less important than the knowledge they gain in other subjects simply by staying in school.
“Even if there was some relaxation of standards where they’re giving D’s instead of F’s, that’s keeping kids in school longer,” Harris said. “There’s more class time — they’re taking more courses as a result.”
Those courses may be producing a more skilled workforce and a more informed electorate — even if high school diplomas are a little bit easier to come by. 

Why Have College Completion Rates Increased? An Analysis of Rising Grades
https://www.nber.org/papers/w28710
ABSTRACT
College completion rates declined from the 1970s to the 1990s. We document that this trend has reversed--since the 1990s, college completion rates have increased. We investigate the reasons for the increase in college graduation rates. Collectively, student characteristics, institutional resources, and institution attended do not explain much of the change. However, we show that grade inflation can explain much of the change in graduation rates. We show that GPA is a strong predictor of graduation rates and that GPAs have been rising since the 1990s. We also find that in national survey data and rich administrative data from 9 large public universities increases in college GPAs cannot be explained by student demographics, preparation, and school factors. Further, we find that at a public liberal arts college, grades have increased over time conditional on final exam performance.

Improving the Quality of Education
https://www.insidehighered.com/views/2017/09/21/how-improve-quality-higher-education-essay
Derek Bok notes:
The vast difference between how well seniors think they can perform and their actual proficiencies (according to tests of basic skills and employer evaluations) suggests that many colleges are failing to give students an adequate account of their progress. Grade inflation may also contribute to excessive confidence, suggesting a need to work to restore appropriate standards, although that alone is unlikely to solve the problem. Better feedback on student papers and exams will be even more important in order to give undergraduates a more accurate sense of how much progress they’ve made and what more they need to accomplish before they graduate.


--
My take:
Next step - politicians and 'enlightened thinkers' will suggest that everyone should be entitled to a college degree. As it is, many colleges are desperate to maintain their enrollment levels, and administrators are perfectly willing to lower admissions standards and ease graduation requirements. Meanwhile, external pressure and incentive structure force faculty to reduce academic rigor and inflate grades.
We should just give everyone a bachelor's degree at birth - we will automatically have a highly skilled workforce 😏. Why create any sort of barriers/hurdles or challenges? I guess 'pursuit of happiness' now means avoiding adversity at all costs.


UK has a similar problem:
The great university con: how the British degree lost its value
https://www.newstatesman.com/politics/education/2019/08/great-university-con-how-british-degree-lost-its-value
“According to Professor Fenton of Goldsmiths, “Students come to us now with an entirely different mindset. They want to know what you want to hear in order to get a First.” Students, she says, turn up expecting to find “bite-sized chunks of knowledge that you put in certain boxes. It’s that learnt process of gaming an A* [at A-level]. That’s the complete opposite to what a university education is.” Or rather, was. “That’s what changed,” she says. “Students have been shackled in the way they learn.” …
“Ideas that students readily understood ten to 15 years ago, they struggle to understand today,” Peter Dorey, professor of British politics at the University of Cardiff, told the Commons inquiry in 2009. “Many of them are semi-literate.” Dorey described seminars in which students sat listlessly, waiting to be told how to “pass our exams”. “They will brazenly admit to having read nothing,” he told the hearing.”

A World Cup Shocker

The Downside of Consumerism

The case for buying less — and how to actually do it
https://www.vox.com/even-better/23449185/buying-less-stuff-holidays-inflation-marie-kondo
Buying fewer unnecessary items is good for the planet, your wallet, and your brain. 

Monday, November 21, 2022

Earnings and Stock Prices

The Doomsday Glacier

Qatar's World Cup

Qatar’s migrant labor system is bigger than the World Cup
https://www.vox.com/world/2022/11/26/23468456/qatar-migrant-labor-world-cup-kafala

The tournament in Qatar is a moral debacle that will also rivet much of humanity’s attention for the next month.
https://www.newyorker.com/culture/culture-desk/its-going-to-be-a-weird-world-cup
Related:
Qatar Can’t Hide Its Abuses by Calling Criticism Racist
https://foreignpolicy.com/2022/11/25/qatar-cant-hide-its-abuses-by-calling-criticism-racist/
Migrant workers have suffered for years under the Gulf nation’s kafala system and deserve compensation.

The Gulf is partying while it can

Fed’s Aggressive Rate Hikes

Related:

China Buys Gold

Netherlands - A Food Exporter

Cutting-edge tech made this tiny country a major exporter of food
https://www.washingtonpost.com/business/interactive/2022/netherlands-agriculture-technology/ 

The Uncertain Future of US Higher Education

The incredible shrinking future of college
https://www.vox.com/the-highlight/23428166/college-enrollment-population-education-crash
Some parts of the country are already experiencing an enrollment bust, mainly because of internal migration. According to the census, 327,000 people moved to the Northeast (which includes Pennsylvania) from elsewhere in the United States in 2018-19, while 565,000 moved out, for a net loss of 238,000 people.
By contrast, the South (which includes Texas and Florida) saw a net increase of 263,000 internal migrants, and another 447,000 people arrived from abroad, more than twice the number for the Northeast.
 
A Promising New Way to Fill the Skills Gap
https://www.barrons.com/articles/education-skills-microcredentials-51668696502
As companies across the nation struggle to find workers with the skills they need, a vital initiative is gaining popularity. Millions of Americans are obtaining short-term certifications that they’ve acquired validating specific skill sets that are linked with a job, like those needed to be a medical assistant, website developer, or cybersecurity analyst. These microcredentials are an area of tangible promise for the nation’s workforce-development and economic problems.
 
Challenges Facing US Higher Education System
https://vivekjayakumar.blogspot.com/2022/08/challenges-facing-us-higher-education.html

MY TAKE:
Health care and higher education: Key drivers of long-term inflation
https://thehill.com/opinion/finance/591995-health-care-and-higher-education-key-drivers-of-long-term-inflation
Is the US higher education bubble about to burst?
https://thehill.com/opinion/education/590971-will-the-us-higher-education-bubble-finally-burst
Does US higher education need fundamental reforms to survive and thrive? [with B. Kench]
https://thehill.com/opinion/education/534350-does-us-higher-education-need-fundamental-reforms-to-survive-and-thrive 

Medicare vs Medicare Advantage

Which to Choose: Medicare or Medicare Advantage?
https://www.nytimes.com/explain/2022/11/20/health/medicare-open-enrollment
 
Beneficiary Experience, Affordability, Utilization, and Quality in Medicare Advantage and Traditional Medicare: A Review of the Literature
https://www.kff.org/medicare/report/beneficiary-experience-affordability-utilization-and-quality-in-medicare-advantage-and-traditional-medicare-a-review-of-the-literature/ 

Corralling Big Tech

Can Big Tech Get Bigger? Microsoft Presses Governments to Say Yes.
https://www.nytimes.com/2022/11/21/technology/microsoft-activision-deal.html

My take from 2020: Big Tech and the antitrust debate

Housing Inflation


Saudi Arabia's Oil Obsession

Inside the Saudi Strategy to Keep the World Hooked on Oil
https://www.nytimes.com/2022/11/21/climate/saudi-arabia-aramco-oil-solar-climate.html
The kingdom is working to keep fossil fuels at the center of the world economy for decades to come by lobbying, funding research and using its diplomatic muscle to obstruct climate action. 

Sunday, November 20, 2022

The Desire to Quit

‘Let it rot’ or ‘the big quit’ … eventually it’s reality that bites
https://www.scmp.com/comment/article/3200313/let-it-rot-or-big-quit-eventually-its-reality-bites
Alex Lo notes:
And you can share your most insignificant moments as lived experiences such as eating your instant noodles with an egg this morning on social media. You think the world is at your fingertip.
At least for those who live in an urbanised setting with online connectivity, life has never been easier in the history of the human race. That gives you the illusions of freedom and autonomy. And mainstream social media – for which your data and usage are their revenue sources – are happy to propagate those myths.
Unfortunately, even at this point in human history with its unprecedented abundance, most of us still need to work to make a living. Unless you are very lucky or possess highly unique and bankable skills, the second you step back into the workplace, the harsh reality sinks in. It’s drudgery, tedium and highly repetitive work. It’s not spiritually rewarding. You are just a cog and nobody cares what you ate this morning.
I can understand why many people can’t accept the dichotomy between their two planes of existence. When they look at their smartphones, they are at the centre of the social universe. But all around them at work, they are just more cogs in the machine. No wonder so many want to quit. 

Messi's Last World Cup

La Última Copa/The Last Cup
https://www.npr.org/podcasts/510367/the-last-cup
What's it like to be one of the world's biggest soccer stars and doubted by many in your home country? That's the question Lionel Messi faces in The Last Cup. Not only is this year's World Cup his last chance to bring home the coveted trophy – it's his last chance for vindication. Hosted by Argentine journalist Jasmine Garsd, The Last Cup is much more than a sports story. It's a tale of immigration and race, of capitalism and class, of belonging and identity. A story for anyone who's ever felt like an outsider in their own home. 

Sports Betting in America

Cigars, Booze, Money: How a Lobbying Blitz Made Sports Betting Ubiquitous
https://www.nytimes.com/2022/11/20/business/sports-betting-lobbying-kansas.html
 
How Colleges and Sports-Betting Companies ‘Caesarized’ Campus Life
https://www.nytimes.com/2022/11/20/business/caesars-sports-betting-universities-colleges.html 

History/Foreign Affairs: US-Iran Relationship

Saturday, November 19, 2022

The Worst Corporate Merger

Was This $100 Billion Deal the Worst Merger Ever?
https://www.nytimes.com/2022/11/19/business/media/att-time-warner-deal.html
At Time Warner, executives saw AT&T as just a “big phone company from Texas.” At AT&T, they thought Hollywood would play by their rules. That combination led to strategic miscalculation unrivaled in recent corporate history. 

Friday, November 18, 2022

Emerging Markets and the Global Economy

13 Ways to Invest in India, the World's Fastest-Growing Major Economy
https://www.barrons.com/articles/india-fastest-growing-major-economy-invest-roundtable-51668801706

Tech Job Losses


Silicon Valley layoffs aren’t just a cost-cutting measure. They’re a culture reset.
https://www.vox.com/recode/2022/11/17/23463164/silicon-valley-layoffs-tech-boom-over

Why the ax is swinging in Silicon Valley

US tech layoffs: India workers face painful exit from the US
https://www.bbc.com/news/world-asia-india-63658535


Modern Day Slavery

Migrant workers recount abuse while building stadiums for World Cup in Qatar

The Power of Simple Inventions

Struck by the power of the simple invention
Dr Dilip Mahalanabis changed the world. So why did we not hear more about it?
https://www.ft.com/content/3b38f61f-f924-4527-bec4-898a54ce98b2
Tim Harford notes:
Mahalanabis demonstrated that ORT could work at scale and without the need for highly trained medical professionals. His ideas were then taken up by BRAC, a local relief organisation, which mastered the process of teaching ordinary Bangladeshis to mix and administer the oral rehydration solution to anyone who needed it. The simplicity of the treatment was deceptive. ORT is widely reckoned to have saved 50 million people over the past half century.

Is There a Future for Crypto?

Inflation, Taxes, and Wealth Transfer

What The IRS Inflation Adjustment Really Means
https://www.taxpolicycenter.org/taxvox/what-irs-inflation-adjustment-really-means
 
The IRS just changed its tax brackets. Here's the impact on your taxes.
https://www.cbsnews.com/news/tax-bracket-irs-inflation-adjustment-tax-brackets-for-2023/
 
Inflation Is a Wealth Transfer from Creditors to Debtors
https://www.stlouisfed.org/publications/regional-economist/2022/aug/impact-inflation-wealth-transfer-effect
Massive reductions in the purchasing power of demand, time and savings deposits can hurt account holders, but others likely benefit. For example, unexpected higher inflation transfers purchasing power from the holder of a time deposit to the commercial bank at which the deposit is held. (Unexpected lower inflation, of course, does the opposite.) However, while higher inflation does erode the real value of nominal assets, such as demand deposits, it also lowers the real value of nominal liabilities, such as mortgages. So, borrowers directly benefit from unexpected inflation because they can pay back their loans in depreciated money. In the same way, lenders lose out.

The Social Security COLA Will Ease the Sting of Inflation
https://www.nytimes.com/2022/10/13/your-money/social-security-cola-inflation.html
The cost-of-living adjustment will be 8.7 percent next year, bringing relief to retirees and others who rely largely on the payments.

Thursday, November 17, 2022

Unions and Labor Bargaining Power

European Economic Challenges

Stagnant French Jobless Rate Tests Macron Employment Goal
https://www.bloomberg.com/news/articles/2022-11-15/stagnant-french-jobless-rate-tests-macron-employment-goal-chart
 
Facing Recession, U.K. Outlines Billions in Tax Increases and Spending Cuts
https://www.nytimes.com/2022/11/17/world/europe/uk-budget-tax-recession-economy.html
 
A New Source of Economic Anxiety in Britain: Soaring Mortgage Rates
https://www.nytimes.com/2022/11/17/business/uk-mortgage-rates-economy.html 

Wednesday, November 16, 2022

Rise of China’s Universities

The Rise of China’s Universities
https://www.chronicle.com/article/the-rise-of-chinas-universities
No nation has a more successful record of promoting talent to serve state and society. 

Central Banks and the Lender of Last Resort Function

FTX’s founder was called a modern-day J.P. Morgan. The analogy still works.
https://www.nytimes.com/2022/11/12/business/dealbook/ftx-bankman-fried-central-banks.html
Roger Lowenstein notes:
Morgan earned his reputation as a private rescuer in 1907, when a bank run struck the trusts (banklike associations) in New York City and then spread to traditional banks. Morgan assembled the city’s leading financiers to lend emergency funds and ease the panic.
His heroism slowed the bleeding — but some banks failed, many suspended withdrawals and scores resorted to dispensing homemade certificates in lieu of money. As each bank hoarded reserves to save itself, the stock market plunged 40 percent and the country suffered a severe recession.
Morgan’s inadequacy made plain that the United States, already an industrial powerhouse, could not depend on the benevolence of a single financier. Precisely for this reason, Nelson Aldrich, a powerful senator with close ties to Morgan, led a mission to Europe in 1908 to study the workings of the central banks in England, France and Germany.
Two years later, a group of bankers, including a senior partner of Morgan’s, the president of its rival National City Bank, and the central banking crusader Paul Warburg, gathered at Morgan’s exclusive club on Jekyll Island, off the coast of Georgia. Meeting in secret, they plotted the outline of what Americans had resisted since Andrew Jackson’s day — a central bank. The Federal Reserve was born three years later, in 1913. 



Distributional Effects of International Trade

Tuesday, November 15, 2022

FTX Bankruptcy Fallout

Embattled Crypto Exchange FTX Files for Bankruptcy
https://www.nytimes.com/2022/11/11/business/ftx-bankruptcy.html
 
Crypto’s fallen king told the venture capitalists he was an idiot – but they didn’t listen
https://www.telegraph.co.uk/business/2022/11/11/cryptos-fallen-king-told-venture-capitalists-idiot-didnt-listen/ 

Eight Billion and Counting

The planet’s population is soon expected to peak. What comes next will be unrecognizable


8 billion people: Four ways climate change and population growth combine to threaten public health, with global consequences
https://theconversation.com/8-billion-people-four-ways-climate-change-and-population-growth-combine-to-threaten-public-health-with-global-consequences-193077 

Monday, November 14, 2022

Mounting Economic and Geopolitical Risks

Challenges Facing Gen Z

Covid, technology and the economy have made new college graduates an angsty bunch, but now is the time they should be taking more risk, not less.
https://www.washingtonpost.com/business/gen-z-really-does-have-it-harder-than-millennials/2022/11/14/fc833ae8-6413-11ed-b08c-3ce222607059_story.html
Vassar College psychology professor Abigail Baird explained that taking risks as a teenager is an important part of brain development. Testing limits and experiencing setbacks trains your brain to cope with risks and bad outcomes when you get older. If you miss out on this experience, taking risks will be harder as you age. 

Saturday, November 12, 2022

Economic Growth and Sustainability - Herman Daly's Pioneering Contributions

The inconvenient truth of Herman Daly: There is no economy without environment
https://theconversation.com/the-inconvenient-truth-of-herman-daly-there-is-no-economy-without-environment-193848
Herman Daly, 84, Who Challenged the Economic Gospel of Growth, Dies
https://www.nytimes.com/2022/11/08/business/economy/herman-daly-dead.html
 
This Pioneering Economist Says Our Obsession with Growth Must End
https://www.nytimes.com/interactive/2022/07/18/magazine/herman-daly-interview.html

Crime and Policing – An Interesting Case Study

The Bike Thieves of Burlington, Vermont
https://www.nytimes.com/2022/11/12/business/burlington-police-stolen-bikes.html
A hunt for stolen goods has put citizens and business owners in the center of a debate about policing and a growing, sometimes violent, problem with crime. 

Residencies for Sale

Friday, November 11, 2022

Blast From the Past - Getting Things Mostly Right

Will the Fed’s recasting of its monetary policy strategy help the US economy? BY VIVEKANAND JAYAKUMAR | The Hill - 09/01/20
https://thehill.com/opinion/finance/514624-will-the-feds-recasting-of-its-monetary-policy-strategy-help-the-us-economy/
What I wrote in September 2020:
Financial market distortions, new asset bubbles and worsening of the wealth gap may be the ultimate result of the Fed’s well-intentioned but misguided policy actions.

The pros and cons of running the economy hot by VIVEKANAND JAYAKUMAR | The Hill - 02/01/21
https://thehill.com/opinion/finance/536691-the-pros-and-cons-of-running-the-economy-hot/
What I wrote in February 2021:
As a consequence of running a hot economy, if the U.S. ends up with higher-than-expected inflation, it could lead to a sudden spike in market interest rates and a rapid deflation of asset prices. In an economic environment characterized by record levels of public and non-financial corporate debt, such a shock would prove to be quite debilitating for the U.S. economy.   

Have misguided policies led to recent asset bubbles and boom-bust cycles? BY VIVEKANAND JAYAKUMAR | The Hill - 02/16/21
https://thehill.com/opinion/finance/538921-have-misguided-policies-led-to-recent-asset-bubbles-and-boom-bust-cycles/
What I wrote in February 2021:
An added risk in the current cycle is that surging asset prices combined with unprecedented fiscal and monetary largesse may finally cause inflation to emerge from its long dormancy. Standard inflation measures often fail to properly account for early signs of pricing pressures. By having overcommitted to its easy policy stance, the Federal Reserve will find it hard to change direction in the future without creating significant financial market upheaval.

It’s time to ease up on the stimulus accelerator by VIVEKANAND JAYAKUMAR | The Hill - 08/03/21
https://thehill.com/opinion/finance/566130-its-time-to-ease-up-on-the-stimulus-accelerator/