Economics and International Affairs Blog: February 2024

Thursday, February 29, 2024

Inflation Measurement and Related Controversies

Rent is driving inflation. But there’s something off in the data.
https://www.washingtonpost.com/business/2024/03/03/rent-cpi-housing-fed/

Housing Costs Are Running Hot, but Is the Data Missing a Cooling Trend?
https://www.nytimes.com/2024/02/26/business/economy/housing-inflation-fed.html
Pandemic disruptions may have muddled the measurement of home prices in inflation data. That could complicate the Fed’s course on interest rates.

One Says 2.4%, Another Says 3.1%. Which Inflation Metric Is Right?
https://www.wsj.com/economy/central-banking/one-says-2-4-another-says-3-1-which-inflation-metric-is-right-5fbc6634

Core PCE Inflation Spike in Jan 2024
https://twitter.com/jasonfurman/status/1763200764598505874
Related:
https://finance.yahoo.com/news/feds-preferred-inflation-gauge-logs-lowest-annual-rise-since-march-2021-133219019.html

Auto Insurance Spike Hampers the Inflation Fight
https://www.nytimes.com/2024/02/29/business/economy/auto-insurance-inflation.html
Costlier vehicles and repairs are pushing premiums higher even as the increase in U.S. consumer prices is tapering overall.

Has Japan Finally Exited the Deflation Trap?

Japan Is Back. Is Inflation the Reason?
https://www.wsj.com/economy/japan-is-back-is-the-defeat-of-deflation-the-reason-c253b006

Ignore Left-Wing Nonsense Regarding Indian Politics

With approval rating of 78%, PM Modi most popular global leader
http://timesofindia.indiatimes.com/articleshow/107902214.cms

Modi’s Audacious Plan for India
https://www.wsj.com/articles/modis-audacious-plan-for-india-hindu-nationalism-modernization-econ-growth-70673ee0
The leader harnesses nationalism and faith to spur modernization and economic growth.

Inside Narendra Modi’s battle to win over the south

https://www.economist.com/asia/2024/02/29/inside-narendra-modis-battle-to-win-over-the-south

Can the BJP woo the country’s richer, better-educated states?

Narendra Modi Won’t Turn India into a Theocracy
https://www.wsj.com/articles/activist-warnings-aside-modi-wont-be-indias-hindu-ayatollah-election-wont-theocracy-825178e3

India’s Governance Deficit: A Contrarian View
https://americanaffairsjournal.org/2023/08/indias-governance-deficit-a-contrarian-view/
Indians, particularly the educated youth and middle classes, became increasingly aware of, and disillusioned by, their country’s lackluster economic performance (especially when compared to their erstwhile peer, the People’s Republic of China). They saw that their globally celebrated political system was only superficially liberal and procedurally democratic. The incongruities between what the “liberals and secularists” espoused and the actual outcomes only magnified their skepticism and contempt for the political establishment. With a populace now less quiescent and no longer willing to passively accept the narrative of the self-serving “secular” political class, impatience for change became palpable.

The Return of Geopolitical Conflicts and Economic Competition

The World May Be Entering a Much Bloodier Era
https://www.nytimes.com/2024/02/28/opinion/international-world/coups-climate-change-africa-sahel.html
War is on the rise everywhere. When the International Institute for Strategic Studies in London published its authoritative Armed Conflict Survey in early December, it counted 183 conflicts globally in 2023 — higher than had been recorded in 30 years. The most remarkable episode of this harrowing new era of global violence is an astounding spate of military takeovers in what has come to be known as the coup belt, stretching uninterrupted across Africa’s Sahel from the Atlantic Ocean to the Red Sea: six countries enduring 11 coup attempts, eight of them successful, since just 2020.

Global Economic Fragmentation

https://vivekjayakumar.blogspot.com/2024/02/chinas-approach-to-global-trade.html

Is Cooperation Feasible?

Insights from Game Theory: Prisoner’s Dilemma and Game Theory

Related: Evolution of Cooperation

http://www-personal.umich.edu/~axe/research/Axelrod%20and%20Hamilton%20EC%201981.pdf

Financial Economics – A Good Introduction

Public Debt Surge and Fiscal Space

World at risk of permanently higher taxes as borrowing hits $11.5 trillion
https://www.telegraph.co.uk/business/2024/02/28/world-risk-permanently-higher-taxes-borrowing-hits-trillion/
Global debt soars as governments fail to bring their finances under control

The hard Budget choices facing a cash-strapped UK
https://www.ft.com/content/da59ba85-ecd2-4c9a-81f5-4b72966b5b5d
Many Conservative politicians want the government to announce new tax cuts next week, but public services are under extreme pressure after years of spending restraint

Wednesday, February 28, 2024

China's Private Sector Lacks Confidence

Why Is China Stalling Out?
https://www.project-syndicate.org/commentary/china-private-sector-losing-confidence-unemployment-high-investment-waning-by-catherine-tai-and-renee-luo-2024-02
A mere decade ago, many observers anticipated that private businesses would soon be able to thrive in China. But that hope has been shattered, confronting the regime with a choice between abandoning its ideology-led approach and accepting a prolonged period of economic underperformance and stagnation.

Taiwan's post-bubble recovery holds lessons for China
https://asia.nikkei.com/Opinion/Taiwan-s-post-bubble-recovery-holds-lessons-for-China

History Lesson: US Policy Errors in Iraq

Why Authoritarians Like Saddam Hussein Confound U.S. Presidents
https://www.nytimes.com/2024/02/28/opinion/saddam-hussein-cia-iraq.html
America committed its worst foreign policy mistake of the post-Cold War era when it invaded Iraq in 2003 to disarm Saddam Hussein of his supposed weapons of mass destruction. The war that followed exacted an appalling price in Iraqi and American lives and resources, and it also empowered Iran, energizing regional proxy conflicts that have entrapped Washington in the Middle East, as the Biden administration has rediscovered painfully.

Blowing Bubbles

Bitcoin Surges Past $60,000 With Enthusiasts Eyeing Record Highs
https://www.bloomberg.com/news/articles/2024-02-28/bitcoin-surges-to-60-000-with-enthusiasts-eyeing-record-highs

Capital Group says ‘gentle bubble’ is forming in US tech stocks
https://finance.yahoo.com/news/capital-group-says-gentle-bubble-004629339.html

Waller and Logan

The Fed Governor Who Proved Larry Summers Wrong
https://www.wsj.com/economy/central-banking/the-fed-contrarian-who-saw-the-soft-landing-coming-9a4f1b9f
Influence of Christopher Waller, a Trump appointee, rises as he challenges economic orthodoxy

Lorie Logan Makes Waves on Wall Street from Her Perch at the Dallas Fed
https://www.bloomberg.com/news/articles/2024-02-28/dallas-fed-president-lorie-logan-talks-balance-sheet-in-bloomberg-interview

Tuesday, February 27, 2024

Doing Business in Emerging Markets - The Case of India

Really Cool Chart: India’s FDI Inflows Over the Last 20+ Years
https://www.visualcapitalist.com/indias-fdi-inflows/

Disney to Step Back from India in Mega-Deal with Reliance Industries
https://www.nytimes.com/2024/02/28/business/disney-reliance-industries.html
Mukesh Ambani’s Reliance Industries will control what is left of Disney’s grasp at India’s burgeoning media market.

Walmart shifts to India from China for cheaper imports
https://www.nbcnews.com/business/business-news/walmart-shifts-india-china-cheaper-imports-rcna127195
The retailer is importing goods from toys and electronics to bicycles, pharmaceuticals, packaged food, dry grains and pasta from India to the U.S.

What’s at the Heart of Walmart’s Future Retail Strategy?
https://analyticsindiamag.com/whats-at-the-heart-of-walmarts-future-retail-strategy/
… Walmart CTO Suresh Kumar said that India is Walmart’s tech backbone and its Global Tech centre located in India is even bigger than that in the US.

Walmart Aims For $10 Bn in Annual Exports From India
https://youtu.be/44NruNarRN4

Related:

How to succeed—and fail—as a foreign business in India
https://www.economist.com/business/2023/11/30/how-to-succeed-and-fail-as-a-foreign-business-in-india
India’s growing internet economy roars towards a trillion
https://www.bain.com/insights/e-conomy-india-2023/
The state of grocery retail in India
https://www.mckinsey.com/industries/retail/our-insights/the-state-of-grocery-retail-in-india

Government Distrust Hampers Economic Development

How Distrust of Government by Marginalized People Fuels Conflict in Africa
https://www.imf.org/en/Blogs/Articles/2024/01/25/how-distrust-of-government-by-marginalized-people-fuels-conflict-in-africa
Improving people’s relationships with state institutions and ensuring access to services can foster conditions for greater peace and social cohesion in sub-Saharan Africa

US Home Prices Hit New Record High

Home prices hit a new all-time high in December, says Case-Shiller
https://www.marketwatch.com/story/home-prices-hit-a-new-all-time-high-in-december-case-shiller-says-e3f10c11
Home prices in the 20 biggest U.S. metros rose for the 11th month in a row and hit a record high amid a persistent shortage of resale homes for sale.

Capitalism, Politics, and Society

Why We Risk a Cartoon Version of Capitalism
https://www.wsj.com/finance/investing/why-we-risk-a-cartoon-version-of-capitalism-83d8e7d4
Private-sector investors are so ineffective at overseeing companies that state-run funds feel the need to step in

The problem with America’s politico-entertainment complex
https://www.ft.com/content/61829797-170b-4194-8579-35b9b8f71887

The Mystery of White Rural Rage
https://www.nytimes.com/2024/02/26/opinion/white-rural-voters.html
Paul Krugman:
Will technological progress lead to mass unemployment? People have been asking that question for two centuries, and the actual answer has always ended up being no. Technology eliminates some jobs, but it has always generated enough new jobs to offset these losses, and there’s every reason to believe that it will continue to do so for the foreseeable future.
But progress isn’t painless. Business types and some economists may talk glowingly about the virtues of “creative destruction,” but the process can be devastating, economically and socially, for those who find themselves on the destruction side of the equation. This is especially true when technological change undermines not just individual workers but also whole communities. This isn’t a hypothetical proposition. It’s a big part of what has happened to rural America.