Economics and International Affairs Blog: January 2023

Tuesday, January 31, 2023

US Monetary Policy - Short-Run and Long-Run Challenges

My take:
As the Federal Reserve prepares for another interest rate hike, volatility lies ahead
https://thehill.com/opinion/finance/3836869-as-the-federal-reserve-prepares-to-hike-interest-rates-again-volatility-lies-ahead/

Fed Debates Whether Wages or Low Unemployment Will Drive Inflation
https://www.wsj.com/articles/fed-debates-whether-wages-or-employment-rate-will-drive-inflation-11674961044

Fed’s Interest-Rate Strategy in 2023 Hinges on How Quickly Rate Increases Slow Economy
https://www.wsj.com/articles/how-quickly-rate-increases-slow-the-economy-could-shape-2023-fed-policy-11675055081

Importance of Work Ethic

America’s Work Ethic Is Under Assault
https://www.washingtonpost.com/business/americas-work-ethic-is-under-assault/2023/01/31/d26de368-a129-11ed-8b47-9863fda8e494_story.html
Adrian Wooldridge:
The work ethic is the most important engine of capitalist civilization. It keeps workers working long after they have satisfied their basic needs, drives entrepreneurs to found new companies and inventors to invent new things, and, in general, generates the surplus that pays for productive investment and social welfare.

Monday, January 30, 2023

Inflation Impact - Urban versus Rural Residents

Rural Americans aren’t included in inflation figures – and for them, the cost of living may be rising faster
https://theconversation.com/rural-americans-arent-included-in-inflation-figures-and-for-them-the-cost-of-living-may-be-rising-faster-197781

State of the American Consumer

The U.S. Consumer Is Starting to Freak Out
https://www.wsj.com/articles/consumer-spending-inflation-economy-11675093472

My take from June 8, 2022:

How resilient are US consumers? We’ll soon find out
https://thehill.com/opinion/finance/3515242-how-resilient-are-us-consumers-well-soon-find-out/

Sunday, January 29, 2023

Lost in the Metaverse

WE’VE LOST THE PLOT
https://www.theatlantic.com/magazine/archive/2023/03/tv-politics-entertainment-metaverse/672773/
MEGAN GARBER notes:
In the future, the writers warned, we will surrender ourselves to our entertainment. We will become so distracted and dazed by our fictions that we’ll lose our sense of what is real. We will make our escapes so comprehensive that we cannot free ourselves from them. The result will be a populace that forgets how to think, how to empathize with one another, even how to govern and be governed.
That future has already arrived. We live our lives, willingly or not, within the metaverse.

In the world’s testing ground for tech, K-pop singers are being spun up out of pixels and doing battle in a virtual universe.
https://www.nytimes.com/2023/01/29/business/metaverse-k-pop-south-korea.html

Saturday, January 28, 2023

Polycrisis

Are we headed toward a “polycrisis”? The buzzword of the moment, explained.
https://www.vox.com/23572710/polycrisis-davos-history-climate-russia-ukraine-inflation

Fractured markets: the big threats to the financial system

A Broken Patent System and the High Cost of Medicine

The U.S. Can Lower Drug Prices Without Sacrificing Innovation
https://www.commonwealthfund.org/blog/2021/us-can-lower-drug-prices-without-sacrificing-innovation

Dark Magic: Drug Companies and The Art of Deception
https://www.forbes.com/sites/robertpearl/2023/09/20/dark-magic-drug-companies-and-the-art-of-deception/

It’s the Patents, Stupid — Why Drugs Cost So Much in the U.S.
https://www.commonwealthfund.org/publications/podcast/2022/feb/its-the-patents-stupid-why-drugs-cost-so-much-in-us

How a Drug Company Made $114 Billion by Gaming the U.S. Patent System
https://www.nytimes.com/2023/01/28/business/humira-abbvie-monopoly.html
AbbVie for years delayed competition for its blockbuster drug Humira, at the expense of patients and taxpayers. The monopoly is about to end.

Pharma’s expensive gaming of the drug patent system is successfully countered by the Medicines Patent Pool, which increases global access and rewards innovation
https://theconversation.com/pharmas-expensive-gaming-of-the-drug-patent-system-is-successfully-countered-by-the-medicines-patent-pool-which-increases-global-access-and-rewards-innovation-189868

Healthcare Expenditure – International Comparison
https://www.commonwealthfund.org/publications/issue-briefs/2023/jan/us-health-care-global-perspective-2022

Intellectual Property Laws: Wolves in Sheep’s Clothing

https://promarket.org/intellectual-property-laws-wolves-sheeps-clothing/
Drug Innovation: When Patents Work (and When They Don’t)
https://www.milkenreview.org/articles/drug-innovation-when-patents-work
Our patent system is broken. And it could be stifling innovation.
https://www.washingtonpost.com/outlook/2021/08/08/our-patent-system-is-broken-it-could-be-stifling-innovation/
Are drug patents worth it? | The Economist
https://www.economist.com/business/2021/05/15/are-drug-patents-worth-it

Tackling Out-of-Control Drug Prices
https://www.milkenreview.org/articles/tackling-out-of-control-drug-prices

Insulin is way too expensive. California has a solution: Make its own.
https://www.vox.com/policy-and-politics/23574178/diabetes-insulin-pen-injection-cost-california

My take:

Health care and higher education: Key drivers of long-term inflation by Vivekanand Jayakumar | The Hill, 01/31/22
https://thehill.com/opinion/finance/591995-health-care-and-higher-education-key-drivers-of-long-term-inflation/
There is a role for well-thought-out fiscal interventions to boost efficiency and competition in the health care sector. Reforming the U.S. patent system and making the federal government a more effective negotiator that can leverage its role as a large-scale purchaser to attain lower pharmaceutical drug prices are low hanging fruit that can be plucked with bipartisan support if the Big Pharma lobby can be kept at bay.

Friday, January 27, 2023

Has the AI Revolution Started?

Big Tech was moving cautiously on AI. Then came ChatGPT.
https://www.washingtonpost.com/technology/2023/01/27/chatgpt-google-meta/

Microsoft is beating Google at its own game

https://www.vox.com/recode/2023/1/26/23571710/microsoft-open-ai-chatgpt-google

Meta Embraces AI as Facebook, Instagram Help Drive a Rebound

https://www.wsj.com/articles/meta-ai-facebook-instagram-reels-ad-targeting-11674829286

University of Texas Will Offer Large-Scale Online Master’s Degree in A.I.
https://www.nytimes.com/2023/01/26/technology/ai-masters-degree-texas.html
Amid a boom in new tools like ChatGPT, the Austin campus plans to train thousands of students in sought-after skills in artificial intelligence.

Rural Discontentment

Can anything be done to assuage rural rage?
https://www.nytimes.com/2023/01/26/opinion/rural-voters-economy.html
Paul Krugman:
The answer will depend on two things: whether it’s possible to improve rural lives and restore rural communities, and whether the voters in these communities will give politicians credit for any improvements that do take place.

The Resentment Fueling the Republican Party Is Not Coming from the Suburbs
https://www.nytimes.com/2023/01/25/opinion/rural-voters-republican-realignment.html

Africa Update

Africa is less democratic and safe than a decade ago, study says
https://www.washingtonpost.com/world/2023/01/27/africa-democracy-safety-decline-coup/

China-Africa trade soars on spike in commodity prices
https://asia.nikkei.com/Economy/Trade/China-Africa-trade-soars-on-spike-in-commodity-prices
Two-way commerce dwarfs that between U.S. and continent

A Reduction in Work Hours

High-Earning Men Are Cutting Back on Their Working Hours
https://www.wsj.com/articles/high-earning-men-are-cutting-back-on-their-working-hours-11674697563
American workers have cut the number of hours they spend in their jobs since 2019, but no group has dialed back its time on the clock more than young, high-earning men whose jobs typically demand long hours.
The top-earning 10% of men in the U.S. labor market logged 77 fewer work hours in 2022, on average, than those in the same earnings group in 2019, according to a new study of federal data by the economics department at Washington University in St. Louis. That translates to 1.5 hours less time on the job each workweek, or a 3% reduction in hours. Over the same three-year period, the top-earning 10% of women cut back time at work by 29 hours, which translates to about half an hour less work each week, or a 1% reduction.

Where Are the Workers? From Great Resignation to Quiet Quitting
https://www.nber.org/system/files/working_papers/w30833/w30833.pdf

Thursday, January 26, 2023

US GDP Update

Gross Domestic Product, Fourth Quarter and Year 2022 (Advance Estimate)
https://www.bea.gov/news/2023/gross-domestic-product-fourth-quarter-and-year-2022-advance-estimate

Consumer Spending Slid Again in December

https://www.nytimes.com/2023/01/27/business/economy/consumer-spending-december.html

Britain is Broken

Britain’s Cautionary Tale of Self-Destruction
https://www.nytimes.com/2023/01/25/opinion/uk-economic-decline-nhs.html

'Dangerous' London Bridge rush-hour stampede blamed on rail bosses
https://www.telegraph.co.uk/news/2023/01/26/dangerous-london-bridge-rush-hour-stampede-blamed-rail-bosses/

In U.K. Cost-of-Living Crisis, Some Workers Struggle to Feed Children
https://www.nytimes.com/2023/01/25/world/europe/uk-cost-of-living-children.html

The Tories’ missed opportunities to stem the soaring cost of Britain’s debt
https://www.telegraph.co.uk/business/2023/01/25/tories-missed-opportunities-stem-soaring-cost-britains-debt/

Britain is on the brink of becoming an economic basket case
https://www.telegraph.co.uk/business/2023/01/25/britain-brink-becoming-economic-basket-case/

The ‘British disease’ is back – and it will be very hard to cure
https://www.telegraph.co.uk/business/2023/01/20/strikers-home-workers-blame-britains-sky-high-inflation/

Is life in the UK really as bad as the numbers suggest? Yes, it is by Tim Harford
https://www.ft.com/content/ef830f78-75ee-4b91-a48e-04defa0f96d4
The past 15 years have been a disappointment on a scale we could hardly have imagined

After 13 years of Conservative mismanagement, Britain feels broken
https://www.telegraph.co.uk/politics/2023/01/21/13-years-conservative-mismanagement-britain-feels-broken/

Wednesday, January 25, 2023

Climate Change and Trade Wars

Climate Change May Usher in a New Era of Trade Wars
https://www.nytimes.com/2023/01/25/business/economy/climate-change-global-trade.html

US Seeks Domestic Lithium Source

Job Market for Remote Workers Is Shrinking

The Job Market for Remote Workers Is Shrinking
https://www.wsj.com/articles/the-job-market-for-remote-workers-is-shrinking-11674526943
Remote job opportunities are dwindling as fewer employers feel the need to lure talent with the promise of working from home

Academic Preparation and College Enrollment Gaps

College enrollment gaps: How academic preparation influences opportunity
https://www.brookings.edu/blog/up-front/2023/01/23/college-enrollment-gaps-how-academic-preparation-influences-opportunity/
Public discussions about inequality in access to college often center around admissions and cost. While these issues are important, our findings suggest that policymakers should also pay careful attention to disparities in academic preparation earlier in students’ educational careers, which are important determinants of college enrollment. Closing academic preparation gaps is particularly important to address gaps in college enrollment by race and gender.

Related:
https://www.chronicle.com/article/want-to-close-racial-gaps-in-college-enrollment-improve-academic-preparation-a-new-study-says
Racial and gender-based disparities in college-going rates disappear when students receive similar levels of academic preparation in high school, according to a new study by the Brookings Institution. The findings highlight a potential path forward for college leaders who are eager for solutions to their enrollment problems.

Tuesday, January 24, 2023

Law and Antitrust Economics – Big Tech Edition

U.S. Accuses Google of Abusing Monopoly in Ad Technology
https://www.nytimes.com/2023/01/24/technology/google-ads-lawsuit.html

Big Tech as an Unnatural Monopoly
https://www.milkenreview.org/articles/big-tech-as-an-unnatural-monopoly

Background Reading:
Amazon’s Antitrust Paradox by Lina Khan [Yale Law Journal]
https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.pdf
How Robert Bork Fathered the New Gilded Age
https://promarket.org/how-robert-bork-fathered-the-new-gilded-age/
Freiburg and Chicago: How the Two Worlds of Neoliberalism Drifted Apart Over Market Power and Monopolies
https://www.promarket.org/2021/06/27/freiburg-and-chicago-how-the-two-worlds-of-neoliberalism-drifted-apart-over-market-power-and-monopolies/

Delusional Elites

Our brave new world, according to Davos
https://www.telegraph.co.uk/business/2023/01/24/brave-new-world-according-davos/
AMBROSE EVANS-PRITCHARD:
On the global economy, I learned that the Davos fraternity overwhelmingly believes in a soft-landing and a painless immaculate disinflation. “The complacency this year is stunning,” said Harvard professor Ken Rogoff, an expert on debt cycles and a former US chess grandmaster, accustomed to looking more that one move ahead.
The optimism has not reached the surreal levels of January 2008, which must go down in history as the acme of financial self-delusion, but it is strangely blind to obvious dangers.

Monday, January 23, 2023

Bursting of the Latest Tech Bubble

For Tech Companies, Years of Easy Money Yield to Hard Times
https://www.nytimes.com/2023/01/23/technology/tech-interest-rates-layoffs.html
Rock-bottom rates were the secret engine fueling $1 billion start-ups and virtual attempts to conquer the physical world. But in 2023, reality bites.

Related:
My take from Feb 2021: Have misguided policies led to recent asset bubbles and boom-bust cycles?
https://thehill.com/opinion/finance/538921-have-misguided-policies-led-to-recent-asset-bubbles-and-boom-bust-cycles/

Digital Nomad Visas

Want to work from Spain? Apply for a new digital nomad visa.
https://www.washingtonpost.com/travel/tips/spain-remote-work-visa-digital-nomad/

"Digital nomad" visas pave the way for moving abroad
https://www.axios.com/2023/01/21/digital-nomad-visas-pandemic

Politics and Higher Education - New College of Florida

After Gov. Ron DeSantis appointed six new trustees at New College of Florida, faculty, students and alumni see themselves as unwitting conscripts in a politicized battle over education.
https://www.washingtonpost.com/education/2023/01/23/new-college-florida-desantis-conservatives/

Quants and Modern Finance

Wall Street Quants Shouldn't Confuse Luck with Skill
https://www.bloomberg.com/opinion/articles/2023-01-23/personal-wealth-wall-street-quants-shouldn-t-confuse-luck-with-skill
Aaron Brown notes:
Johannes Kepler is remembered for his seminal contributions to astronomy. However, like most 16th-century astronomers, he supported himself in part by making astrological predictions. His mentor, Michael Mäestlin, taught him to always prophesy disaster. If something bad happens, you’re celebrated for being right. If not, you’re celebrated for preventing catastrophe. Making optimistic predictions either makes you look foolish if bad things happen or be forgotten if nothing bad happens.

Cooling Inflation - What Comes Next?

Inflation Is Cooling, Leaving America Asking: What Comes Next?
https://www.nytimes.com/2023/01/23/business/economy/inflation-turning-point.html
After six months of declines, inflation seems to be turning a corner. But the road back to normal is an uncertain one.

Can India Drive Global Growth?

The Global Economy Needs a New Powerhouse. India Is Stepping Up
https://www.bloomberg.com/news/features/2023-01-23/india-s-1-4-billion-population-could-become-world-economy-s-new-growth-engine

Sunday, January 22, 2023

Ageing Planet - The Big Picture

Ageing planet: the new demographic timebomb
https://www.theguardian.com/world/2023/jan/22/ageing-planet-the-new-demographic-timebomb
And in a world facing climate catastrophe and a worrying fall in biodiversity, that is a much better way to address the challenges of ageing populations in some areas, than unfettered population growth that is dangerous for both us and the planet.
“We are in transition across the 21st century and need to adjust to this age-structural transition, rather than fight it,” Harper said. “So that every generation, every cohort, more or less replaces itself.”

The Upside of Population Decline
https://www.project-syndicate.org/commentary/benefits-of-declining-human-population-by-adair-turner-2021-06
A pervasive conventional bias assumes that population decline must be a bad thing. But in a world where technology enables us to automate ever more jobs, the far bigger problem is too many potential workers, not too few.

Why China’s declining population growth may be good news

https://www.scmp.com/comment/opinion/article/3136885/why-chinas-declining-population-growth-may-be-good-news

A pervasive conventional bias assumes that population decline must be a bad thing. But while absolute economic growth is bound to fall as populations stabilise and then decline, it is income per capita which matters for prosperity and economic opportunity. And if educated women are unwilling to produce babies to make economic nationalists feel good, that is a highly desirable development.

Meanwhile, arguments that stable or falling populations threaten per capita growth are hugely overstated and, in some cases, plain wrong.

China wants more babies. Women want the right to say no.
https://www.washingtonpost.com/world/2023/01/23/china-population-decline-women-babies/

Please hold the panic about world population decline. It’s a non-problem.
https://www.washingtonpost.com/opinions/2021/06/07/please-hold-panic-about-world-population-decline-its-non-problem/

Related:
https://vivekjayakumar.blogspot.com/2019/02/demographic-shifts-and-future-of-mankind.html

Common Currency for Latin America?

Brazil and Argentina to start preparations for a common currency
https://www.reuters.com/markets/currencies/brazil-argentina-begin-preparations-common-currency-ft-2023-01-22/
https://www.ft.com/content/5347d263-7f24-4966-8da4-79485d1287b4

$31 Trillion in Debt

How the U.S. Government Amassed $31 Trillion in Debt
https://www.nytimes.com/2023/01/22/business/economy/federal-debt-history.html
Two decades of tax cuts, recession responses and bipartisan spending fueled more borrowing — contributing $25 trillion to the total and setting the stage for another federal showdown.

Saturday, January 21, 2023

China’s Global Mega-Projects Run into Problems

China’s Global Mega-Projects Are Falling Apart
https://www.wsj.com/articles/china-global-mega-projects-infrastructure-falling-apart-11674166180

Bitcoin versus Gold

Ban crypto and its parasitic thievery before it is too late
https://www.telegraph.co.uk/business/2023/01/21/ban-crypto-parasitic-thievery-late/

Bitcoin is a ‘hyped-up fraud’, says JP Morgan chief
https://www.telegraph.co.uk/business/2023/01/19/bitcoin-hyped-up-fraud-says-jp-morgan-chief/

Is Bitcoin Replacing Gold? Maybe It’s Exactly the Opposite.
https://www.nytimes.com/2023/01/20/opinion/bitcoin-gold-inflation.html

My take from May 2021:
Digital gold: Is Bitcoin the future of money?
https://thehill.com/opinion/finance/554998-is-bitcoin-the-future-of-money/
Meanwhile, Bitcoin has no intrinsic value and its supply is inelastic. It is not recognized as legal tender by major governments and no central bank will provide a backstop to cryptocurrency-oriented institutions. Furthermore, cryptocurrencies are unlikely to play the role of a widely accepted medium of exchange or act as a unit of account given their tremendous day-to-day volatility. The fact that significant market turbulence can be generated by random tweets from a celebrity entrepreneur highlights the inaptness of using Bitcoin or other cryptocurrencies for undertaking day-to-day transactions.
Costly and energy-intensive mining and transaction verification processes also reduce the attractiveness of cryptocurrencies like Bitcoin. Furthermore, Bitcoin’s popularity among those involved in illegal activities will generate regulatory scrutiny and negate its anonymity advantage. Looking ahead, state-supported central bank digital currencies are more likely to become the future of money.
If not the future of money, can we make a case for Bitcoin as digital gold? Proponents argue that since Bitcoin, by design, is limited to a maximum of 21 million units, it can act as a stable store of value. Given its short history and its intangible nature, it is unclear that Bitcoin offers a true alternative to traditional gold. Gold has a long history as a medium of exchange, and the yellow metal has impressive physical properties that have caused humans to value it highly for thousands of years. Even today, many societies widely use gold for jewelry and ceremonial purposes. Additionally, from a financial standpoint, Bitcoin is currently too correlated with risky assets to act as an effective inflation hedge.
At present, Bitcoin and other cryptocurrencies appear to primarily function as speculative assets whose fluctuating valuations may be driven by financial mania or a form of contagious narrative. Central bank liquidity injections, massive fiscal transfers, rise of a new generation of retail investors utilizing online platforms (like Reddit) to coordinate their actions and the emergence of zero-commission online trading platforms (like Robinhood) have created a speculative frenzy.

Friday, January 20, 2023

Fed Speak

Staying the Course to Bring Inflation Down – Vice Chair Lael Brainard
https://www.federalreserve.gov/newsevents/speech/files/brainard20230119a.pdf

Shifting Gears: Rebalance and Realignment in the Economy – NYFED President John C. Williams
https://www.newyorkfed.org/newsevents/speeches/2023/wil230119

Thoughts on Inflation in a Supply-Constrained Economy – Governor Lisa D. Cook
https://www.federalreserve.gov/newsevents/speech/files/cook20230106a.pdf

INDIA: Demand for High Quality Education Far Exceeds Supply

The Intense Struggle to Get into Top Universities in India
https://www.nytimes.com/2023/01/18/magazine/india-cram-schools-kota.html
“There are two types of students in Kota — rankers and bankers,” Amit Gupta, a coaching-center biology instructor, told me. “One ranker will attract thousands of bankers. This is our modus operandi. We are in the business of selling dreams.” By Gupta’s definition, rankers are students with the potential to get into elite colleges, while bankers, who are in the majority, are students whose ambitions outrank their capacities. “A ranker was always going to get selected,” Gupta told me. “If he gets good teachers, his rank may improve, but he was already capable of selection. The business model of the coaching industry relies on the banker. We show him a dream — ‘You can also become an I.I.T.-ian or a doctor’ — even though we know all along that he would never be selected because there are just not enough seats.”

What’s the secret behind India’s IIT, which produced Twitter chief Parag Agrawal and other tech titans?
https://www.scmp.com/week-asia/economics/article/3160906/whats-secret-behind-indias-iit-which-produced-twitter-chief

Can India’s plan to allow foreign university campuses help retain local talent, benefit education system?
https://www.scmp.com/week-asia/lifestyle-culture/article/3206922/can-indias-plan-allow-foreign-university-campuses-help-retain-local-talent-benefit-education-system

A Few Successful Private Universities:
INDIAN SCHOOL OF BUSINESS
https://www.isb.edu/en.html
ASHOKA UNIVERSITY
https://www.ashoka.edu.in/
AZIM PREMJI UNIVERSITY
https://azimpremjiuniversity.edu.in/

The Allure of Indian Tech Centers

Price Levels and Inflation - Levels versus Rate of Change

Consumer Prices Plateau as Inflation Slows to Prepandemic Levels
https://www.wsj.com/articles/consumer-prices-plateau-as-inflation-slows-to-prepandemic-levels-11674200099

Wages are still growing rapidly. The Fed wants them to slow down.
https://www.vox.com/policy-and-politics/2023/1/19/23550856/wage-growth-inflation-federal-reserve

Gen Z - Struggling to Save

In Their 20s, Struggling to Save and Tired of Being Lectured About It
https://www.nytimes.com/2023/01/20/business/saving-money-inflation-economy.html
Young people want to save for their futures, but balancing priorities has proved challenging during a time of economic instability.

Tech Layoffs Gather Steam

Tech Layoffs Shock Young Workers. The Older People? Not So Much.

https://www.nytimes.com/2023/01/20/technology/tech-layoffs-millennials-gen-x.html

https://www.yahoo.com/news/tech-layoffs-shock-young-workers-191628840.html

Microsoft layoffs suggest broader pain to come for the economy
https://www.washingtonpost.com/technology/2023/01/18/microsoft-layoffs-tech-industry/

The empty threat of a white-collar recession
https://www.vox.com/the-goods/2023/1/19/23561276/tech-layoffs-finance-microsoft-amazon-goldman-white-collar-recession
“For tech and finance in particular, many of the layoffs we’re seeing are coming from companies that were trying to ride a shift from the pandemic. You have tech companies that overhired during the pandemic because they misread pandemic-era shifts as long-term structural change,” said Daniel Zhao, lead economist at Glassdoor. “You have the Pelotons of the world who maybe didn’t think that people would go back to gyms in person as opposed to working out from home.”
Some of the layoffs are renormalization of the economy as we’re unwinding the effects of the pandemic, or companies downscaling after getting out a little over their skis in terms of headcount.

Google to Cut 12,000 Jobs in 6% Slash to Global Workforce
https://www.bloomberg.com/news/articles/2023-01-20/google-cutting-12-000-jobs-in-6-slash-to-global-workforce

Microsoft, Amazon Set to Erase 28,000 Jobs as Tech Slump Deepens
https://www.bloomberg.com/news/articles/2023-01-18/microsoft-to-eliminate-10-000-jobs-or-5-of-workforce-as-tech-slump-deepens

Microsoft Plans 10,000 Job Cuts, to Take $1.2 Billion Charge
https://www.bloomberg.com/news/articles/2023-01-18/microsoft-to-eliminate-10-000-jobs-or-5-of-workforce-as-tech-slump-deepens
Related:
https://www.wsj.com/articles/microsoft-lays-off-10-000-as-slowdown-hits-software-business-11674051698

What Tech Job Cuts Say About Silicon Valley—and the Rest of the Economy
https://www.bloomberg.com/news/articles/2023-01-18/what-2022-tech-layoffs-say-about-silicon-valley-the-economy

Related:
https://www.bloomberg.com/news/newsletters/2023-01-18/why-are-tech-companies-laying-off-so-many-people

Vietnam's Growth Model

How Vietnam is learning from the ‘extravagance and consequences’ of China’s industrialization
https://www.scmp.com/economy/global-economy/article/3207429/how-vietnam-learning-extravagance-and-consequences-chinas-industrialisation

Generative AI and White-Collar Work

How ChatGPT Will Destabilize White-Collar Work
https://www.theatlantic.com/ideas/archive/2023/01/chatgpt-ai-economy-automation-jobs/672767/
No technology in modern memory has caused mass job loss among highly educated workers. Will generative AI be an exception?

Thursday, January 19, 2023

History Lesson: China’s Cultural Revolution

A tragedy pushed to the shadows: the truth about China’s Cultural Revolution
https://www.theguardian.com/world/2023/jan/19/tragedy-pushed-to-the-shadows-truth-about-china-cultural-revolution
It is impossible to understand China without understanding this decade of horror, and the ways in which it scarred the entire nation.

Impact of Remote Work

Downtown lunch spots that rely on catering to white-collar professionals are rethinking their business model as more employees work from home.
https://www.nytimes.com/2023/01/19/business/remote-work-office-sweetgreen.html

Wednesday, January 18, 2023

The Rise of Middle East Sovereign Wealth Funds

The New Bankers to the World Aren’t on Wall Street
https://www.bloomberg.com/graphics/2023-middle-east-wealth-funds-with-more-money-than-uk-gdp-become-world-bankers/
Middle East sovereign funds spent almost $89 billion globally last year, with deal makers using their wealth to diversify their economies and win geopolitical influence

Government Interventions and Energy Market Volatility

Global economy 2023: how governments could make the energy crisis worse this year
https://theconversation.com/global-economy-2023-how-governments-could-make-the-energy-crisis-worse-this-year-196986

Equity Markets - Global Portfolio Diversification

That Giant Sucking Sound Is the Exit from US Stocks
https://www.bloomberg.com/opinion/articles/2023-01-18/us-stocks-china-and-weaker-dollar-show-investors-to-the-exits
About turn. The US and its stock market have led the rest of the planet ever since going into the financial crisis in 2008. Now, with startling swiftness, big investors believe the trend is at last about to reverse.

Fractured Politics and Public Debt Explosion

US Has Overspent Because of Its Fractured Politics, Rajan Says
https://www.bloomberg.com/news/articles/2023-01-18/us-has-overspent-because-of-its-fractured-politics-rajan-says
Public borrowings in the US and elsewhere have swelled because of overspending partly fueled by fractured politics, said former International Monetary Fund Chief Economist Raghuram Rajan.
“The size of the debt has gone up tremendously,” he told a panel at the World Economic Forum in Davos. “Part of the problem that’s going on is clearly there is a fractured political consensus in many industrial countries — I mean, that is part of the reason the US overspent. Every constituency got a share of the spending, simply because they couldn’t make choices.”

The Government Debt Threat Keeps Mounting
https://www.wsj.com/articles/the-debt-threat-keeps-mounting-gdp-congress-entitlements-balanced-budget-biden-social-security-11673988017

Tuesday, January 17, 2023

Global Economy - Premature Optimism?

Don’t be fooled by the new mood of economic optimism
https://www.telegraph.co.uk/business/2023/01/17/dont-fooled-new-mood-economic-optimism/

Economists in WSJ Survey Still See Recession This Year Despite Easing Inflation
https://www.wsj.com/articles/despite-easing-price-pressures-economists-in-wsj-survey-still-see-recession-this-year-11673723571

Central banks risk setting off a financial earthquake with constant rate rises, warns ex-IMF economist
https://www.telegraph.co.uk/business/2023/01/16/central-banks-risk-setting-financial-earthquake-constant-rate/

China's Demographic and Growth Challenges

A Shrinking, Aging China May Have Backed Itself into a Corner
https://www.nytimes.com/2023/01/18/world/asia/china-population-politics.html
The Problem(s) With China’s Population Drop
https://www.nytimes.com/2023/01/17/opinion/china-population-economy.html

China’s Population Falls, Heralding a Demographic Crisis

https://www.nytimes.com/2023/01/16/business/china-birth-rate.html
China’s Population Declined in 2022 for First Time in Decades
https://www.wsj.com/articles/chinas-population-declined-in-2022-for-first-time-in-decades-11673921036
China’s population falls in historic shift
https://www.ft.com/content/00b48183-0854-4513-a388-f5ef1cb86cb6

China unveils new plan for wider robot use from manufacturing to agriculture, as population shrinks
https://www.scmp.com/tech/policy/article/3207622/china-unveils-new-plan-wider-robot-use-manufacturing-agriculture-population-shrinks

China’s Economy Stumbled Last Year with Covid Lockdowns Hobbling Growth
https://www.nytimes.com/2023/01/16/business/china-gdp-fourth-quarter-2022.html

China’s economy slows sharply with GDP growth among worst on record

https://www.theguardian.com/world/2023/jan/17/chinas-economy-slows-sharply-with-gdp-growth-close-to-lowest-level-in-45-years
Related:
https://www.reuters.com/world/china/chinas-economy-slows-sharply-q4-2022-growth-one-worst-record-2023-01-17/

Can India Emerge as a Rival to China?

https://www.wsj.com/articles/can-india-emerge-as-a-rival-to-china-manufacturing-population-it-investment-trade-youth-regulatory-reform-11673895652

Can China still become the world’s largest economy?

Monday, January 16, 2023

Profile of Emi Nakamura

Peter J. Walker profiles Berkeley’s Emi Nakamura, who delves into details to answer big questions
https://www.imf.org/-/media/Files/Publications/Fandd/Article/2022/December/people-in-economics.ashx

Jón Steinsson interview: Forward guidance, the state of macro, and how the economy is like a rumbling volcano
https://www.minneapolisfed.org/article/2022/jon-steinsson-interview-forward-guidance-the-state-of-macro-and-how-the-economy-is-like-a-rumbling-volcano

Thought-Provoking Items

Between Institutions and Networks by Arnold Kling
https://www.nationalaffairs.com/publications/detail/between-institutions-and-networks
American institutions are in decline, and some commentators argue that a network model of cooperative action might replace them. But institutions and networks have different aims, as well as distinct strengths and weaknesses. By defining and evaluating both, we can come to a better understanding of their best uses, the tensions between them, and how they might complement each other.

From Spontaneous Order to Ordered Spontaneity by Jonathan Rauch
https://www.nationalaffairs.com/publications/detail/from-spontaneous-order-to-ordered-spontaneity
Three decades ago, with the West recently victorious in the Cold War and liberalism triumphant, it was natural to assume that liberal social systems are largely self-ordering. But just about every social and political development since then has shown us that they are anything but. It's a lesson that defenders of the liberal order must internalize.

European Manufacturers Face Headwinds

Is this the end of Made in Europe?
https://www.politico.eu/article/end-made-in-europe-manufacturing-industry-struggle/

Croatia Adopts the Euro

Eurozone gains new member and top student: Croatia
https://www.politico.eu/article/eurozone-gains-new-member-and-top-student-croatia/

Why Croatia Sees Joining the Euro as Path to Security
https://www.washingtonpost.com/business/why-croatia-sees-joining-the-euro-as-path-to-security/2023/01/02/50bda118-8a7d-11ed-b86a-2e3a77336b8e_story.html
Croatia, the European Union’s newest member, adopted the euro as its currency on Jan. 1, making it the 20th country to join the euro area.

Globalization - Not Dead but Evolving

Globalization Isn’t Dead. But It’s Changing.
https://www.wsj.com/articles/globalization-changing-markets-trade-11673627929
Multinational companies still want cheap and efficient markets, but they also want safety. That’s why they’re rerouting the pathways of global trade and finance.

The Death of Globalization? You Won’t Find It in New Orleans.
https://www.nytimes.com/2023/01/20/business/economy/globalization-new-orleans.html
The city that was once the world’s gateway to America is betting it can win in a new and different era of global integration.

AI Chatbots and University Education

Alarmed by A.I. Chatbots, Universities Start Revamping How They Teach
https://www.nytimes.com/2023/01/16/technology/chatgpt-artificial-intelligence-universities.html
With the rise of the popular new chatbot ChatGPT, colleges are restructuring some courses and taking preventive measures.

Will AI Make Creative Workers Redundant?
https://www.wsj.com/articles/will-ai-make-creative-workers-redundant-machine-learning-artificial-intelligence-technology-human-art-11673303015

Sunday, January 15, 2023

Apple's Shifting Supply Chain

Tech war: Apple looks to India, Vietnam as iPhone maker’s supply chain comes under the spotlight in US-China decoupling
https://www.scmp.com/tech/big-tech/article/3206759/tech-war-apple-looks-india-vietnam-iphone-makers-supply-chain-comes-under-spotlight-us-china

Political Strife in Brazil

The root causes of Brazil’s violent protest, explained by an expert
https://www.vox.com/world/2023/1/10/23548292/root-causes-brazils-violent-protest

Global Impact of China's Reopening

China’s Reopening Is a Mixed Blessing for Emerging-Market Assets
https://www.bloomberg.com/news/articles/2023-01-15/china-s-reopening-is-a-mixed-blessing-for-emerging-market-assets

China’s rapid reopening will stir the global economy
https://www.ft.com/content/cb5365eb-0b52-45ac-9870-923878aeb910

The Xi nobody saw coming
https://www.ft.com/content/f6c47c54-b928-46ee-aa63-fb903e74b2e6

Friday, January 13, 2023

Trade and Protectionism

America is leading a dangerous global slide towards subsidies, export controls and protectionism
https://www.economist.com/leaders/2023/01/12/the-destructive-new-logic-that-threatens-globalisation

Globalization, already slowing, is suffering a new assault
https://www.economist.com/briefing/2023/01/12/globalisation-already-slowing-is-suffering-a-new-assault

Warnings from history for a new era of industrial policy
https://www.economist.com/finance-and-economics/2023/01/11/warnings-from-history-for-a-new-era-of-industrial-policy

Taiwan Seeks High-Skilled Foreign Workers

Taiwan visa terms to change, with eye on luring foreign talent to stay competitive in Asia
https://www.scmp.com/economy/china-economy/article/3206766/taiwan-visa-terms-change-eye-luring-foreign-talent-stay-competitive-asia

America - Still on the Right Track?

Despite Everything You Think You Know, America Is on the Right Track
https://www.theatlantic.com/ideas/archive/2023/01/american-optimism-productivity-innovation-rise/672714/

Lessons from the 1973 Energy Crisis

The Job Search Process

Job interviews are a nightmare — and only getting worse
https://www.vox.com/the-goods/2023/1/12/23546379/job-interviewing-applying-exhausting-tests-employment
Employers are constantly finding new hoops for candidates to jump through.

G-7 versus G-20

Together, Japan and India can bridge rift between G-7 and G-20
https://asia.nikkei.com/Opinion/Together-Japan-and-India-can-bridge-rift-between-G-7-and-G-20

California - Weather Extremes

Suddenly, California Has Too Much Water
https://www.theatlantic.com/science/archive/2023/01/california-storms-drought-flooding-climate-extremes/672697/

In a Drought, California Is Watching Water Wash Out to Sea
https://www.nytimes.com/2023/01/13/us/california-drought-storms-water-storage.html

Academic Freedom Matters

Academic Freedom Is Not a Matter of Opinion
https://www.theatlantic.com/newsletters/archive/2023/01/hamline-university-adjunct-professor-freedom/672713/

Related:
https://www.nytimes.com/2023/01/08/us/hamline-university-islam-prophet-muhammad.html

Thursday, January 12, 2023

Exodus of Millionaires from UK

Exodus of millionaires as Britain ‘loses its shine’
https://www.telegraph.co.uk/tax/news/repeated-tax-raids-driving-ultra-wealthy-britain-costing-us/

Powell on Fed's Mandate

Central Bank Independence and the Mandate - Evolving Views
https://www.federalreserve.gov/newsevents/speech/files/powell20230110a.pdf
Jerome Powell:
But without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals. We are not, and will not be, a "climate policymaker."

https://www.nytimes.com/2023/01/10/business/economy/powell-fed-climate.html

Where Are the Workers?

Where Are the Workers? From Great Resignation to Quiet Quitting
https://www.nber.org/system/files/working_papers/w30833/w30833.pdf
Abstract
To better understand the tight post-pandemic labor market in the US, we decompose the decline in aggregate hours worked into the extensive (fewer people working) and the intensive margin changes (workers working fewer hours). Although the pre-existing trend of lower labor force participation especially by young men without a bachelor's degree accounts for some of the decline in aggregate hours, the intensive margin accounts for more than half of the decline between 2019 and 2022. The decline in hours among workers was larger for men than women. Among men, the decline was larger for those with a bachelor's degree than those with less education, for prime-age workers than older workers, and also for those who already worked long hours and had high earnings. Workers' hours reduction can explain why the labor market is even tighter than what is expected at the current levels of unemployment and labor force participation.

Economic Growth - Theory versus Reality

The Poland/Malaysia model
https://noahpinion.substack.com/p/the-polandmalaysia-model

Correction in Rental Housing?

Rental Housing Is Suddenly Headed Toward a Hard Landing
https://www.washingtonpost.com/business/rental-housing-is-suddenly-headed-toward-a-hard-landing/2023/01/09/2876cbe2-901a-11ed-90f8-53661ac5d9b9_story.html

Minibubbles in US Banking

Minibubbles in US Banking Are Popping with Costs in the Billions
https://www.bloomberg.com/news/articles/2023-01-12/minibubbles-in-us-banking-are-popping-with-costs-in-the-billions

Slowdown in Scientific and Technological Progress

Why is science slowing down?
https://www.vox.com/future-perfect/2023/1/11/23549993/science-research-progress-studies-disruption-technology-artificial-intelligence-biotechnology

Related:
https://vivekjayakumar.blogspot.com/2022/05/technology-and-productivity-same-old.html
https://vivekjayakumar.blogspot.com/2022/05/long-run-economic-growth-and-development.html

US Inflation Cools Down

Inflation slowed further in December, the sixth month in a row
https://www.washingtonpost.com/business/2023/01/12/cpi-report-december-inflation/

Inflation Is Slowing, Good News for American Consumers and the Fed
https://www.nytimes.com/2023/01/12/business/inflation-gas-discounts.html

US Inflation Cools Again, Putting Fed on Track to Downshift
https://www.bloomberg.com/news/articles/2023-01-12/us-inflation-cools-again-giving-fed-room-to-downshift-on-rates

CPI Checks Most of Powell’s Boxes. Now What?
https://www.washingtonpost.com/business/cpi-checks-most-of-powells-boxes-now-what/2023/01/12/7590b048-929d-11ed-90f8-53661ac5d9b9_story.html

Macro Issues:
Is 2% Inflation in View? Be Careful What You Wish For
https://www.bloomberg.com/opinion/articles/2023-01-12/inflation-at-2-risks-going-too-far-too-fast

A Soft Landing Won’t Mean the Economy Is Safe
https://www.washingtonpost.com/business/a-soft-landing-wont-mean-the-economy-is-safe/2023/01/12/f3a9ec52-9274-11ed-90f8-53661ac5d9b9_story.html

Social Security's Outmoded Approach

Social Security denies disability benefits based on list with jobs from 1977
https://www.washingtonpost.com/politics/2022/12/27/social-security-job-titles-disabled-applicants-obsolete/
Despite spending at least $250 million to modernize its vocational system, the agency still relies on 45-year-old job titles to deny thousands of claims a year.

China Turns Pro-Business

From Disciplinarian to Cheerleader: Why China Is Changing Its Tone on Business
https://www.nytimes.com/2023/01/12/business/china-economy.html
With the economy in a fragile state, Chinese officials are starting to use more business-friendly language, and also to back their words with action.

‘Buy Now, Pay Later’ Bubble Bursts

The ‘Buy Now, Pay Later’ Bubble Is About to Burst
https://www.theatlantic.com/culture/archive/2023/01/buy-now-pay-later-affirm-afterpay-credit-card-debt/672686/
Many Gen Zers have rejected traditional credit in favor of new-age layaway programs, which are riskier than they may seem.

Wednesday, January 4, 2023

Tech Jobs - Beyond Big Tech

As Silicon Valley Retrenches, a Tech Talent Shift Accelerates
https://www.nytimes.com/2022/12/29/business/silicon-valley-tech-talent-mainstream-industries.html
Most tech jobs are now in mainstream industries like health care, banking and retail, which are increasingly in need of workers with digital skills.

College Success and the True Meaning of Higher Education

The Key to Success in College Is So Simple, It’s Almost Never Mentioned
https://www.nytimes.com/2023/01/03/opinion/college-learning-students-success.html
One of the most important factors in Ms. Zurek Small’s success seems almost too obvious to mention but, in fact, deserves far more attention and discussion: a simple willingness to learn. In more than 20 years of college teaching, I have seen that students who are open to new knowledge will learn. Students who aren’t won’t. But this attitude is not fixed. The paradoxical union of intellectual humility and ambition is something that every student can (with help from teachers, counselors and parents) and should cultivate. It’s what makes learning possible.

Related:

College students who work more hours are less likely to graduate
https://theconversation.com/college-students-who-work-more-hours-are-less-likely-to-graduate-196183

Grade Inflation at Harvard:
https://www.thecrimson.com/article/2022/10/3/barton-grade-inflation/

US Labor Supply: Short-Term and Long-Term Concerns

America’s slowing population growth is here to stay
https://www.ft.com/content/8c151cc8-811a-416c-b4ac-f22c2d2e80a3

Retirees Are One Reason the Fed Has Given Up on a Big Worker Rebound
https://www.nytimes.com/2022/12/27/business/economy/labor-shortage-retirees-boomers.html

Global Shifts

‘OK, Mexico, Save Me’: After China, This Is Where Globalization May Lead
https://www.nytimes.com/2023/01/01/business/mexico-china-us-trade.html

U.S. Pours Money into Chips, but Even Soaring Spending Has Limits
https://www.nytimes.com/2023/01/01/technology/us-chip-making-china-invest.html

The new world order and the rise of the middle powers
https://www.ft.com/content/188a742a-d452-4a0a-8a65-9f530706fdc7

Russia’s War Could Make It India’s World
https://www.nytimes.com/2022/12/31/world/asia/india-ukraine-russia.html

Attention Economy