Monday, October 3, 2022

UK Government's Embarrassing Policy U-Turn


MY TAKE: Will the UK's Economic Gamble Pay Off?
https://thehill.com/opinion/finance/3664758-will-the-uks-economic-gamble-pay-off/

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Growing Risk of Financial Instability


Global Financial Stability Considerations for Monetary Policy in a High-Inflation Environment
https://www.federalreserve.gov/newsevents/speech/files/brainard20220930a.pdf
Fed Vice Chair Lael Brainard notes:
It will take some time for the global tightening to have its full effect in many sectors. While the effect on financial conditions tends to be immediate or even anticipatory, the effects on activity and price setting in different sectors may occur with a lag, with highly interest-sensitive sectors such as housing adjusting quickly and less rate-sensitive sectors such as consumer spending on services adjusting more slowly.
In addition to the domestic effects from domestic tightening, there are cross-border effects of tightening through both trade and financial channels. U.S. monetary policy tightening reduces U.S. demand for foreign products, thus amplifying the effects of monetary tightening by foreign central banks. The same is true in reverse: Tightening in large jurisdictions abroad amplifies U.S. tightening by damping foreign demand for U.S. products.
Tightening in financial conditions similarly spills over to financial conditions elsewhere, which amplifies the tightening effects. These spillovers across jurisdictions are present for decreases in the size of the central bank balance sheet as well as for increases in the policy rate. 

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System Justification

University of Hypocrisy
https://www.theatlantic.com/ideas/archive/2022/10/college-admissions-wealth-ivy-league-meritocracy/671618/
Evan Mandery notes:
System justification is the idea that people tend to defend not only their individual actions but also the social, economic, and political systems to which they belong—even if these systems work to their detriment.
This is the opposite of what economists and political scientists normally argue happens. Consider how people react to income inequality. The leading rational-choice model holds that as income inequality increases, more voters will support redistributive tax policies and vote accordingly. Son Hing’s research suggests that the opposite is true. As inequality rises, people become less accurate in their estimates of how much inequality exists. More important, they adjust their perception of what they think is fair. Indeed, survey data show that as the wage gap between low- and high-wage earners exploded in the United States from 1987 to 1999, people widened their judgment of what difference was appropriate. This sets in motion a vicious cycle. The more inequality exists, the more likely people are to believe that society operates meritocratically.
People tend to fall prey to the “just-world hypothesis,” a bias toward believing that the world operates fairly. “It’s hard to have no sense of control,” Son Hing told me, “and to believe that the odds are stacked against you.” So when something bad happens to someone, we tend to search for explanations about why they deserved their fate. 

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Saturday, October 1, 2022

AI and the Future of Jobs

Software Robots Are Gaining Ground in White-Collar Office World
https://www.bloomberg.com/news/articles/2022-09-29/software-robots-are-gaining-ground-in-white-collar-office-world
 
Will Tesla's Optimus robot become a reality?
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The Political and Economic Challenges Posed by Unskilled Immigration

The return of unskilled migration will do nothing to solve the productivity crisis
https://www.telegraph.co.uk/business/2022/10/01/return-unskilled-migration-will-do-nothing-solve-productivity/
 
Italy and Sweden show why Biden must fix the immigration system
https://www.washingtonpost.com/opinions/2022/09/29/immigration-italy-sweden-meloni-biden-zakaria/
The administration must find a way to demonstrate that it is taking control of the border. Or else, the populist right will keep gaining ground. 

Related:

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Hypocrisy and Wokeness at Western Universities

Shame should not be heritable
https://www.spectator.co.uk/article/shame-should-not-be-heritable
Lionel Shriver notes:
As Cambridge is not the only academic institution undergoing this handwringing self-examination, maybe it’s worth asking exactly what good the posturing exercise has accomplished. The same number of Africans were sold into forced labour as ever. The same suffering and injustice simply sit there in the past, as irretrievably and immutably as before.
The primary benefit of discovering the university has a smudge in its drawers is that its administrators get to feel better about themselves. That is, they get to feel better about themselves for feeling worse about themselves. But given that their predecessors spent that blood money long ago, we might sensibly question whether reports like this ever make the modern-day staff and faculty genuinely feel bad. I’ve never thought the whole concept of ‘liberal guilt’ quite stands up to scrutiny… But ‘liberal guilt’ is a pleasure – a bundle of self-congratulation, preening sanctimony and moral superiority. ...
We don’t emphasise this enough lately, but historical shame is not and should not be heritable. It’s hard enough taking responsibility for the lousy things we all do in the here and now without also taking on the sins of total strangers in the unalterable past.

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US Economy and Equity Markets

U.S. economy stumbles into final stretch of 2022 facing new pressures
https://www.washingtonpost.com/business/2022/10/01/economy-stock-markets-recession/ 

U.S. Economy Weaker Than Thought in Year’s First Half, by One Measure
https://www.nytimes.com/2022/09/29/business/economy/economy-gross-domestic-product.html

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