The Economic Cost of War and Conflict

New IMF study indicates that the Middle East has paid an extraordinary economic price due to recent and ongoing conflicts:

https://blog-imfdirect.imf.org/2016/09/16/the-calculus-of-conflict-in-the-middle-east/

Full report:

http://www.imf.org/external/pubs/ft/sdn/2016/sdn1608.pdf
Summary: In recent decades, the Middle East and North Africa region (MENA) has experienced more frequent and severe conflicts than in any other region of the world, exacting a devastating human toll. The region now faces unprecedented challenges, including the emergence of violent non-state actors, significant destruction, and a refugee crisis bigger than any since World War II. This paper raises awareness of the economic costs of conflicts on the countries directly involved and on their neighbors. It argues that appropriate macroeconomic policies can help mitigate the impact of conflicts in the short term, and that fostering higher and more inclusive growth can help address some of the root causes of conflicts over the long term. The paper also highlights the crucial role of external partners, including the IMF, in helping MENA countries tackle these challenges.

The American Dream – History Lesson

An insightful piece worth reading – Two American Dreams by Ben Fountain

https://www.theguardian.com/us-news/2016/sep/17/american-dream-divided-nation-equal-opportunity-trump-clinton-campaign

Fountain notes:

“Upward mobility is indispensable to the American Dream, the notion that people can rise from working to middle class, and middle to upper and even higher on the model of a (fictional) Horatio Alger or an (actual) Andrew Carnegie. Upward mobility across classes peaked in the US in the late 19th century. Most of the gains of the 20th century were achieved en masse; it wasn’t so much a phenomenon of great numbers of people rising from one class to the next as it was standards of living rising sharply for all classes. You didn’t have to be exceptional to rise. Opportunity was sufficiently broad that hard work and steadiness would do, along with tacit buy-in to the social contract, allegiance to the system proceeding on the assumption that the system was basically fair.

The biggest gains occurred in the post-second world war era of the GI Bill, affordable higher education, strong labor unions, and a progressive tax code. Between the late 1940s and early 1970s, median household income in the US doubled. Income inequality reached historic lows. The average CEO salary was approximately 30 times that of the lowest-paid employee, compared with today’s gold-plated multiple of 370. The top tax bracket ranged in the neighborhood of 70% to 90%. Granted, there were far fewer billionaires in those days. Somehow the nation survived.”

Meanwhile,

American media has lost all credibility during this election cycle:
https://www.washingtonpost.com/lifestyle/style/its-time-for-tv-news-to-stop-playing-the-stooge-for-donald-trump/2016/09/16/bc66812e-7c28-11e6-ac8e-cf8e0dd91dc7_story.html

Sink Hole in Florida Poses Threat to Drinking Water

Wastewater leaks into state’s main aquifer:

https://www.theguardian.com/us-news/2016/sep/17/florida-sinkhole-wastewater-leak-drinking-water

“More than 200m gallons of contaminated wastewater from a fertilizer plant in central Florida leaked into one of the state’s main underground sources of drinking water after a huge sinkhole opened up beneath a storage pond, a phosphate company said on Friday.”

Economic Development – Interesting Items

Economic Potential of Africa

https://www.project-syndicate.org/commentary/africa-economic-potential-by-donald-kaberuka-and-acha-leke-2016-09

Urbanization Challenges in Africa

http://www.economist.com/news/middle-east-and-africa/21707214-all-over-world-people-escape-poverty-moving-cities-why-does-not

World Bank’s growing irrelevance is fueled by an anachronistic leadership system –

https://www.project-syndicate.org/commentary/world-bank-presidency-jim-yong-kim-by-devesh-kapur-2016-09

History Lesson – Long-Term Bonds

A fascinating piece from Stephen Mihm:

https://www.bloomberg.com/view/articles/2016-09-15/the-perils-of-the-ultra-long-view-on-bonds

“In some cases, maturity dates on corporate debt reached so far into the future as to make them de facto perpetual bonds. The West Shore Railroad of New York issued a $1,000 bond that matured in the year 2361, which just happened to be the year its lease to the New York Central and Hudson Railroad Company expired.

And then there was the Elmira and Williamsport Railroad Company, which issued bonds in the year 1863 that it promised to repay in full on Oct. 1, 2862, or 999 years later. But the railroad only lasted a little over a century, closing down in 1972.  Investors who had bet on the long haul got stiffed.”

Canada – A Role Model for Immigration Reform

How Canada Got Immigration Right by JONATHAN TEPPERMAN

http://www.wsj.com/articles/how-canada-got-immigration-right-1474033169

Tepperman notes –

“The U.S. could learn from its northern neighbor’s system, which selects immigrants able to make material contributions and embraces multiculturalism”

Bayer-Monsanto Merger – The Demise of Industrial Competition

An egregious example of the ever-increasing concentration of industrial power is provided by the proposed Bayer-Monsanto megamerger:

http://www.dw.com/en/what-the-bayer-monsanto-merger-means-for-food-farmers-and-the-environment/a-19296103

Capitalism cannot thrive in the absence of competition. The more we restrict competition, the farther we shift away from genuine capitalism.