Economische aanraders: Veren of Lood biedt u op zondag wekelijks een inkijkje in (minstens) 15 belangrijke of informatieve artikelen en interviews die vooral de voorafgaande 7 dagen op economisch terrein verschenen op onafhankelijke sites.

De kop is de link naar het oorspronkelijke artikel, waarvan de samenvatting of de eerste (twee) alinea’s hier gegeven worden. Er zijn in deze rubriek altijd verschillende economische scholen vertegenwoordigd, en we streven er naar die diversiteit te handhaven.

We nemen wekelijks ook een paar extra links op naar artikelen die minder specialistische kennis vereisen. Deze met *** gemerkte artikelen zijn ons inziens ook interessant voor lezers met weinig basiskennis van economie.

——————————————————————————————————
Good Economic Theory Is Always Grounded in the Real World – Frank Shostak
31 juli
In his “Philosophical Origins of Austrian Economics” (Mises Daily, June 17, 2006), David Gordon writes that Eugen von Böhm-Bawerk maintained that concepts employed in economics must originate from reality—they need to be traced to their ultimate source in the real world. If one cannot trace it, the concept should be rejected as meaningless.
Yet, assumptions employed by economists in their models often appear to be detached from the real world altogether. For example, in order to explain the economic crisis in Japan, well-known economist Paul Krugman employed a model that assumes that people are identical and live forever and that output is given. Whilst admitting that these assumptions are not realistic, Krugman nonetheless holds that somehow his model could be useful in offering solutions to the economic crisis in Japan.
——————————————————————————————————
Central bank digital currency for the UK – Lucile Crumpton, Ethan Ilzetzki
26 Juli
Central banks across the world are starting to experiment with digital currencies. This column summarises the findings from a survey of a CfM of experts on the UK economy, who were nearly unanimous in agreeing that a Bank of England-issued digital currency would benefit the British economy. Half of the panel also believed that a digital currency would have limited impact on the UK banking system.
——————————————————————————————————
Why Don’t Billionaires Pay the Same High Tax Rates the Rest of Us Pay? – Charles Hugh Smith
30 juli
The truth is America has lost its way if commoners pay a rate of 40% but its billionaires pay next to nothing.
As with everything else in polarized America, billionaires proclaiming space tourism is the next big thing for humanity neatly divides opinion into two camps: those who laud the initiative, hard work and innovations of the billionaires as examples of the American Can-Do Dream, and those who wished the billionaire space tourists had taken a one-way flight to a distant orbit of blissful silence.
Setting aside that bitter divide, let’s explore another divide: how our two-tier tax system enables billionaires to become billionaires while the rest of us get poorer. Whenever I discuss the taxes of the non-billionaire self-employed, armies of apologists leap to the defense of the status quo with various quibbles: the 0.9% Medicare surcharge only kicks in above $200,000, the cap on Social Security taxes is $142,800, and so on.
Setting aside the quibbles–and recall the tax code with regulatory notes is thousands of pages–let’s deal with the real issue, which is that billionaires and their corporations pay a thin slice of taxes as a percentage of total income/gains if they pay any at all, while self-employed and small business pay extraordinarily high tax rates.
——————————————————————————————————
Carbon taxation and inflation: Evidence from Europe and Canada – Maximilian Konradt, Beatrice Weder di Mauro
29 Juli
Model-based studies on the effect of carbon taxation point to sizeable inflationary effects. This column uses evidence from Canada and Europe over the past three decades to show that carbon taxes changed relative prices but did not increase the overall price level. Instead, they were slightly deflationary. In the case of British Columbia, the driver may have been a fall in household income depressing the prices of non-energy goods, which more than offset rising energy prices. The income compression was most pronounced among the richest households, suggesting that the redistribution scheme achieved its intended aim of favouring low-income households.
——————————————————————————————————
Why Money Printing Doesn’t Generate Economic Growth – David Stockman
30 juli
To understand the Fed’s culpability for the inflationary disaster afflicting the American economy, it is necessary to start with the Big Lie that underlies all of its destructive machinations: the claim that market capitalism gravitates toward cyclical instability, recession and chronic shortfall from its potential Full Employment path.
From this presumption, there flows an alleged requirement for continuous central bank “stimulus.” Deft action by the central banking arm of the state is purportedly needed to compensate for the inherent prosperity-retarding imperfections of the free market.
——————————————————————————————————
The credit line channel – Daniel Greenwald, John Krainer, Pascal Paul
29 Juli
Aggregate US bank lending to firms tends to expand following adverse macroeconomic shocks, such as the outbreak of COVID-19 or a monetary policy tightening. Based on detailed loan-level supervisory data, this column shows that these responses are almost entirely explained by large firms drawing on their bank credit lines. However, funding stability for large firms may imply that smaller firms face tighter borrowing conditions. The authors show that such a crowding out effect was at play during the COVID-19 crisis and explore the implications of such spillovers within a structural model.
——————————————————————————————————
“Not A Drill”: Infrastructure Bill Could Sink American Crypto Industry – Jeff John Roberts
31 juli
The government aims to partially cover the cost of a massive infrastructure bill by taxing crypto companies… and the entire industry will feel it.
Things just got ugly for crypto in Washington, D.C.
For years, the threat of major regulation has been raised like a hammer, ready to smash the crypto industry. Now, the hammer is ready to drop in the unlikely form of a major infrastructure bill in the U.S. Senate.
——————————————————————————————————
Recession and Recovery: W.H. Hutt’s View – Robert Blumen
29 juli
There is a considerable Austrian literature on the unsustainable boom driven by credit expansion. When the boom ends, a depression begins. The depression is a transitional period of reduced production that lasts until entrepreneurs restructure capital and labor into sustainable uses. During the depression, there is unavoidable unemployment of both people and productive assets. The recovery is marked by an increase in production and the employment of resources that were idle during the bust.
What happens during a depression? Should we expect it to end, or can an economy remain stuck at the bottom? Is “stimulus” required to start the recovery? The British Austrian economist “W.H.” Hutt In The Keynesian Episode: A Reassessment, provided a coherent theory of the downturn and recovery, driven by the market price system. Hutt incorporated the ideas of coordination through entrepreneurial forecasting and Say’s law to answer these critical questions.
——————————————————————————————————
Can G7 Countries Compete With China’s Belt And Road Initiative? – via OilPrice.com,
1 augistus
Following the expansion of Chinese-led projects in many emerging markets over the past decade, the G7 has unveiled its own initiative to support global infrastructure development, dubbed Build Back Better World (B3W). Announced at a G7 meeting in June, the B3W will focus on four main areas: climate, health, digital technology and gender. Its overarching goal is to catalyse hundreds of billions of dollars of infrastructure development in low- and middle-income countries.
Beyond this outline, little information has been released about how the B3W initiative will operate in practice. However, it is clear that it responds to two broad, interconnected aims.
On the one hand, the B3W will constitute “a values-driven, high-standard, and transparent infrastructure partnership”, according to a fact sheet put out by the US government.
It seeks to help narrow the more than $40trn infrastructure gap in the developing world, which has been exacerbated by the Covid-19 pandemic.
On the other hand, the B3W will serve as a counterweight to China’s flagship Belt and Road Initiative (BRI), with the fact sheet highlighting that it will be a means of “strategic competition with China”.
——————————————————————————————————
Socked by 6.4% Inflation, Record Trade Deficit, Inventory Shortages, and Drop in Government Spending, “Real” GDP Jumps Disappointingly – Wolf Richter
29 juli
Inflation ate my homework: All this stimulus, so little to show for.
Economists polled by the Wall Street Journal expected GDP to grow by an annualized rate of 9.1% in the second quarter, from the first quarter. Today the Bureau of Economic Analysis released its GDP estimate, and adjusted for inflation, it grew by an annualized rate of “only” 6.5% in Q2, from Q1, or not annualized by 1.6%.
This was still strong compared to the pre-pandemic years, but the high expectations got knocked down by spiking inflation that has surprised economists to the upside all year long, record trade deficits, sharp declines in inventories, and a drop in government consumption and investment.
——————————————————————————————————
Service offshoring and export experience – Giuseppe Berlingieri, Luca Marcolin, Emanuel Ornelas
28 Juli
Trade in services is important but difficult to measure. This column introduces a new dataset that helps understand the contribution of services to global value chains and their role in the process of exporting goods. Firms with longer experience in exporting goods to a destination tend to source export-related service inputs from there rather than domestically, and do so within the boundaries of the business group rather than at arm’s length.
——————————————————————————————————
Save, Invest, Speculate, Trade, Or Gamble? – Doug Casey
31 juli
For some time, I’ve been saying that the economy is in the “eye of the storm” and that when it emerged, the weather would be far rougher than in 2008. The trillions of currency units created since 2007, combined with artificially suppressed interest rates, have papered over the situation. But only temporarily. When the economy goes into the trailing edge of the hurricane, the storm will be much different, much worse, and much longer lasting than what we experienced in 2008 and 2009.
In some ways, the immediate and direct effects of this money creation appear beneficial. For instance, by not only averting a sharp complete collapse of financial markets and the banking system, but by taking the stock market to unprecedented highs. It’s allowed individuals and governments to borrow more, and live even further above their means. It may even create what’s known as a “crack-up boom”.
——————————————————————————————————
Trade and innovation – Marc Melitz, Stephen Redding
28 Juli
International trade is a key determinant of firm profitability and survival, so it is natural to expect it to influence both incentives to innovate and the rate of creative destruction. This column highlights four key mechanisms through which international trade affects endogenous innovation and growth: market size, competition, comparative advantage, and knowledge spillovers. Each of these mechanisms offers potential static and dynamic welfare gains. Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research.
——————————————————————————————————
<strong>Why Friedman Was Wrong about Booms and Busts – Frank Shostak
27 juli
In his attempt at explaining what business cycles are all about, Milton Friedman held that the economy’s output is bumping along the ceiling of maximum feasible output except that every now and then it is plucked down by a cyclical contraction. He attributed this contraction to various shocks.
He was of the view that economic contractions involve declines in the economy’s output below its full potential ceiling or maximum level.
Friedman held that similarly to a guitar string the harder the economy is plucked down the stronger it should come back.
In the Friedman’s plucking model, a large contraction in output follows by a large business expansion. A mild contraction, by a mild expansion.1
Following the plucking model Friedman had also concluded that there appears to be no systematic connection between the magnitude of an economic expansion and the extent of the following economic contraction.
——————————————————————————————————
***My Thoughts on Selling a Successful Family Business – John E. McNellis
31 juli
Rushing down a mountain can kill you, rushing to sell a business can cost you a fortune.
Thirty-eight years ago, friends went on a day hike near Yosemite. The couple took the wrong fork up a dry creek bed and, instead of the picnic spot they sought, soon found themselves bouldering ever higher against a steepening slope. Finally, the alarmed woman insisted they stop and await help. Embarrassed by his faulty wayfinding, her boyfriend ignored her pleas, and started down the mountain. He fell to his death within minutes. She spent two nights shivering in the wilderness awaiting a helicopter rescue.
Only 15% of Mount Everest’s 212 climbing deaths between 1921 and 2006 occurred on the way up. Almost all happened on the descent. British Medical Journal 2008
No better metaphor for business exists than mountain climbing. Both are challenging, exhausting and, on occasion—say, cresting a ridge—exhilarating. And if you don’t pause every so often to smell the edelweiss, to admire how far you’ve come, you’ll miss the magic of both endeavors.
——————————————————————————————————
Dollars and exports: The effects of currency strength on international trade – Valentina Bruno, Hyun Song Shin
27 Juli
The strength of the US dollar in currency markets has drawn the attention of researchers, policymakers, and businesses for decades. This column examines the effects of the dollar on international trade, with a particular focus on exports. A strong dollar dampens trade volumes through the financial channel, outweighing any improvement in trade competitiveness. Trade activity is strong when the dollar is weak, but global trade suffers when the dollar is strong.
——————————————————————————————————
***Jan Tinbergen, Pioneer of Central Planning – Joakim Book
26 juli
Once in a blue moon, the Austrian school attracts the attention of serious scholars outside of its tradition. In the months after Janek Wasserman at University of Alabama published The Marginal Revolutionaries in 2019, lots of Austrians revisited the old masters and the fin-de-siécle Vienna from which they stemmed: they found lots to like and even more to dislike, but it was still a contribution from which we could learn a thing or two.
An even wider attempt was made by Erwin Dekker of Rotterdam’s Erasmus University when he published his PhD thesis with Cambridge University Press: the result was The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered, which occupied me in greatly when it came out a few years ago. In it, Dekker makes a rather convincing case that the scholars of Vienna—of which the Austrian economists were but a few—were students not narrowly of economics but of civilization. Markets, prices, and property were as essential to civilizations flourishing as culture or language or law. They wanted to depict and uncover its secrets, repeatedly “marvelling at the workings of the market” and the cultural civilization that surrounded them.
——————————————————————————————————
***If Coal Is Dead, Then Why Are Ships So Full Of It? – Greg Miller
26 juli
Amid all the talk of global warming, climate change-induced catastrophes, decarbonization and green finance, the global trade in “dirty” coal is enjoying an ironic renaissance. Bulk ships are busy transporting coal to Asia — and to eco-conscious Europe — boosting freight income for some of the very shipowners who publicly tout their environmental bona fides to investors.
“Turns out the news of the demise of coal has been greatly exaggerated,” said Stifel analyst Ben Nolan in a new client note. “Despite an unseemly carbon footprint, coal demand is actually accelerating this year.”
Freight rates buoyed by coal
Coal is transported aboard larger bulkers known as Capesizes (ships with a capacity of around 180,000 deadweight tons or DWT), as well as on sub-Cape vessels such as Panamaxes (65,000-90,000 DWT) and Supramaxes (45,000-60,000 DWT).
——————————————————————————————————
Fed’s Lowest Lowball Inflation Measure “Core PCE” Spikes Further. Highest 3-Month Rate since 1982 – Wolf Richter
30 juli
“Way above target”: Fed Chair Jerome Powell.
As push came to shove toward the end of the FOMC press conference on Wednesday, Fed Chair Jerome Powell, fidgeting on the hotseat of inflation and struggling with “transitory” and “temporary,” admitted that the recent rate of inflation was “not moderately above” the Fed’s inflation target but “way above target.” Today, the inflation measure that the Fed uses for this inflation target, annual “core PCE,” spiked further.
The Fed uses the “core PCE” inflation measure because it is the lowest lowball inflation measure that the US government provides. It excludes food and energy, which can be volatile, and it is structured differently than the Consumer Price Index, and it is nearly always below “core CPI.”
——————————————————————————————————
Shrinkflation, Inflation’s Sneaky Cousin, Is on the Rise – Klajdi Bregu
26 juli
Inflation has been on the rise for the past year and in the last few months it has accelerated. In June 2021, inflation, measured by the Consumer Price Index (CPI), hit the highest level since 2008. By inflation, economists refer to the increase in the general level of prices, which means that prices on average are increasing. The Bureau of Labor and Statistics (BLS) has a basket of goods and services that it tracks and uses to create a measure of the CPI. While inflation is the topic of the day in the news media and everyday conversations, many have not heard about its sneaky cousin, shrinkflation.
——————————————————————————————————
Krugman’s Delusion: The Difference Of Theory Versus Reality – Lance Roberts
30 juli
In a recent interview with Business Insider, Paul Krugman’s delusion was evident as the difference between economic theory and reality was on full display.
However, such is always the difference between economists who spent their lives in the “ivory towers” of academia instead of those who created businesses, jobs, and prosperity.
While many economists attempt to make economic theory a science, it is still a function of human psychology and behaviors. For example, the theory is that if the price of beef rises too much, consumers will switch to chicken. However, in practice, individuals often make other choices instead.
Most economists, Krugman included, believe the economy is about to come roaring back to life with economic growth rates that will surpass anything seen in this current century. Such may well indeed be the case momentarily as massive stimulus and spending flow through the system. However, what happens then?
——————————————————————————————————
***Long-term effects of the Inca Road – Ana Paula Franco, Sebastian Galiani, Pablo Lavado
29 Juli
Historical institutions can have long-lasting effects on societies and economies. The Inca Road has been a linchpin of the colonial economy in the New World, but its impact on current development has not been studied in great depth. This column examines the impact of the road on today’s educational, development, and labour outcomes. Proximity to the Inca Road increased the average level of educational attainment and decreased stunting among children by 5%. It boosted average hourly wages by 20% and reduced informality by six percentage points. Moreover, these effects were around 40% greater among women.
——————————————————————————————————
Why Progressives Will Never Accept Market-Based Medical Care – William L. Anderson
27 juli
A recent article on this page highlighted a stunning situation in which a surgery clinic in Oklahoma City was able to offer outpatient procedures at less than one-tenth of what local hospitals were charging to third-party payment systems such as insurance companies and Medicare. This was a significant article in many ways, in that it presented what truly is a shocking picture of what really happens in the medical care systems in this country.
At the same time, I was not surprised that Dr. G. Keith Smith’s clinic was able both to offer high-quality services at prices that are within the reach of most Americans and do it in an economical and convenient manner. After all, a free market economy has done the same with nearly all other privately offered goods and services for centuries and medical care should be no exception.
——————————————————————————————————
The effect of macroeconomic uncertainty on household spending – Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko, Geoff Kenny, Michael Weber
31 Juli
The former chair of the US Council of Economic Advisers, Christina Romer, observed that “uncertainty has almost surely contributed to a decline in spending,” while discussing the Great Recession. This column provides direct causal evidence from a randomised control trial implemented on a large sample of European households that the “almost surely” can be safely dropped. Higher uncertainty makes households spend less on average.
——————————————————————————————————
Toilet Paper Rolls Are Getting Smaller. Blame the Fed – Doug French
30 juli
A term has been coined for product sellers who shrink their packages, and thus, the amount of product in those packages, keeping the package price the same: shrinkflation. Anyone with a bit of good sense or economics training knows this is another form of price inflation, caused by what used to be the dictionary meaning of inflation; an increase in the supply of money.
For example, while the average American behind continues to widen, toilet paper has narrowed. A friend’s mother busted out a ruler to confirm her theory. Last year John Hebbe of Fairfax, Virginia, provided photographic proof to the Washington Post: an old roll was 4.5 inches wide, a new roll, 3.75 inches. Of course the new rolls are fatter, for now, causing annoyance with home owners with toilet paper dispensers with the roller too close to the wall to accommodate the fatter rolls.
——————————————————————————————————
***People Sure Are Driving a Lot, Gasoline Consumption Hits Record, But Flying & Mass Transit Lag Way Behind – Wolf Richter
25 juli
The miracles of the new economy.
Gasoline consumption set a new all-time record for a one-week period during the first week in July, at just over 10 million barrels per day, a figure never seen before, up 3.0% from the same week in 2019, and up 15% from the same week in 2020, according to EIA data. This is just gasoline and does not include diesel.
People are still not flying as much as they did before, and they’re barely using mass transit, but they’re sure driving a lot, particularly for a holiday week as in early July:
The chart also shows the long-term near-stagnation of gasoline consumption: The first time that gasoline consumption reached 9.7 million barrels per day –within 3% of the record in July 2021 – was over the Independence Day week in 2005. Before the Pandemic, gasoline consumption was roughly where it had been a decade earlier, after having recovered from the trough following the Great Recession.
——————————————————————————————————
***Cuba: The Dictatorship and the “Blockade” Lie – Daniel Lacalle
28 juli
Cuba is a dictatorship that uses terror and propaganda to repress its people. It locks citizens up, strips them of the most basic human rights, silences them, and confronts families using extortion and threats. The regime’s constant practices of illegal detention, the personal ruin of political dissidents, and limitation of fundamental rights have nothing to do with any blockade or embargo but everything to do with the totalitarian Communist dictatorship.
All the propaganda that whitewashes the Cuban dictatorship is based on two lies: the nonexistent “blockade” and the allegedly excellent “public health.”
Cuba only suffers from one blockade: that of the dictatorship against its people, which limits imports of food, medicine, use of the internet, and freedom to travel. We have seen the evidence this week, when the regime “temporarily lifted” the limitation on imports of food and medicine.
Dismantling the lie of the so-called excellent Cuban public services is easy. You just have to go to Cuba to see it.
——————————————————————————————————

Disclaimer: De VoL-redactie selecteert deze artikelen op interessante inzichten, of naar wij denken nuttige informatie. Wij kunnen echter geen enkele aansprakelijkheid aanvaarden voor de gevolgen van beslissingen die op grond hiervan door lezers zijn genomen, zakelijk zomin als privé.

Eerdere afleveringen van dit wekelijkse overzicht vindt u hier.Economische aanraders