Economische aanraders: Veren of Lood biedt u op zondag wekelijks een inkijkje in (minstens) 10 belangrijke of informatieve artikelen en interviews die 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.

Sinds december 2015 nemen we 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.

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“This Is A Crisis Greater Than Any Government Can Handle”: The $400 Trillion Global Retirement Gap – John Mauldin
1 oktober
Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: “That which cannot go on forever, won’t.” Or we could say it differently: An unsustainable trend must eventually stop.
Lately I have focused on the trend in US public pension funds, many of which are woefully underfunded and will never be able to pay workers the promised benefits, at least without dumping a huge and unwelcome bill on taxpayers. And since taxpayers are generally voters, it’s not at all clear they will pay that bill.
Readers outside the US might have felt smug and safe reading those stories. There go those Americans again, spending wildly beyond their means. You are correct that, generally speaking, we are not exactly the thriftiest people on Earth. However, if you live outside the US, your country may be more like ours than you think. Today we’ll look at some data that will show you what I mean. This week the spotlight will be on Europe.
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Global value chains and the US missing exports – Yuqing Xing
28 september
The last few decades have seen the US running its largest ever trade deficit. This column uses the case of Apple to demonstrate that the failure of trade statistics to capture flows of intellectual property embedded in exports explains a significant share of this deficit. Reforming trade statistics by including the value added of intellectual property embedded in products manufactured abroad is an essential step towards a better understanding of how trade benefits all countries involved, in particular countries specialising in exporting intangible intellectual property.
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Debt-Slave Industry Frets over Impact of Mass Credit Freezes – Wolf Rochter
30 september
Their doom-and-gloom scenario: Consumers suddenly becoming prudent.
“Let’s face it, 143 million frauds won’t be perpetrated right away; it will take some time to filter through,” Steve Bowman, chief credit and risk officer at GM Financial, the auto-lending subsidiary of General Motors, told Reuters.
He was talking about the consequences of the Equifax hack during which the most crucial personal data, including Social Security numbers, of 143 million American consumers along with equivalent data of Canadian and British consumers, had been stolen. These consumers have all at once become very vulnerable to all kinds of fraud, including identity theft – where a fraudster borrows money in their name.
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How firm productivity impacts the optimal inflation rate: Evidence from the US – Klaus Adam, Henning Weber
26 september
The productivity of many firms evolves over time, which impacts the optimal inflation rate, that is, the rate of price increase with the least distortionary effect on relative goods prices. This column presents estimates for the US that suggest that, due to firm-level productivity changes, the optimal inflation rate has dropped from somewhat over 2% in the mid-1980s to a current level of roughly 1%.
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Jared Bernstein Shows the Costs of Not Understanding Sovereign Currencies – William K. Black
27 september
UMKC has just hosted a well-attended conference on Modern Monetary Theory (MMT) and job guarantee (JG) programs in which the federal government would provide the funds for employer of last resort programs. In conjunction, MMT and JG allow full employment to become the norm. MMT is based on reality, it explains how the monetary system in a nation with a sovereign currency actually functions. Most monetary theory taught in conventional economic classes is a fiction arising from carryovers from the era of the gold standard in which nations lacked a sovereign currency.
Jared Bernstein has just published an op ed in the New York Times entitled “Do Republicans Really Care About the Deficit.” Republican elites, of course, have not really cared about federal budget deficits for decades. That is a good thing that Democrats should embrace in a bipartisan spirit. Bernstein, of course, is correct that the Republicans are hypocrites about federal budget deficits, pretending to care about them when the Democrats hold power and displaying their lack of any real care when Republicans hold power and the context is tax cuts for the wealthy.
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Health Care Policy Isn’t so Hard – John H. Cochrane
25 september
Last July, as the last Republican Obamacare bill was imploding, Greg Mankiw wrote “Why Health Care Policy is So Hard” in the New York Times. For once, I think Greg got it wrong. Health care policy isn’t hard at all, at least as a matter of economics. (Politics, and ideological politics, is another question, but not Greg’s question nor mine.)
There are some important underlying themes uniting how Greg’s piece goes wrong (in my opinion)
A little bit of economic education can be a dangerous thing
While most opinionated people and most “policymakers” are blissfully unaware of any economics, a little bit of economics education can sometimes mislead. Economics is full of pretty fairy tales, passed on through the decades or even centuries. The day after one sees the beautiful tale of the natural monopoly, or the externality, or the public good, then like a two-year-old with a hammer to whom everything looks like a nail, one starts to see natural monopolies, externalities and public goods all over the place. Wait a moment. Just because it’s in the textbook — even Greg’s textbook — doesn’t mean every single industry and case fits.
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Glass half full or half empty: Reviewing the dispute about the effects of the euro on the synchronisation of business cycles – Nauro Campos, Jarko Fidrmuc, Iikka Korhonen
26 september
The debate about the future of the Economic and Monetary Union entails a careful examination of the costs and benefits of the European single currency. This column takes stock of the empirical evidence on the euro’s effects on business cycle synchronisation. We find that synchronisation across European countries increased by 50% after 1999 (the year the euro was introduced) and that this increase was more pronounced in euro area countries.
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Stagnation Is Not Just the New Normal–It’s Official Policy – Charle Hugh Smith
28 september
Japan is a global leader in how to gracefully manage stagnation.
Although our leadership is too polite to say it out loud, they’ve embraced stagnation as the new quasi-official policy. The reason is tragi-comically obvious: any real reform would threaten the income streams gushing into untouchably powerful self-serving elites and fiefdoms.
In our pay-to-play centralized form of governance, any reform that threatens the skims, privileges and perquisites of existing elites and fiefdoms is immediately squashed, co-opted or watered down.
So the power structure of the status quo has embraced stagnation as a comfortable (except to those on the margins) and controllable descent that avoids the unpleasantness and uncertainty of crisis. We all know that humans quickly habituate to gradual changes in circumstances, and that if the changes are gradual enough, we have difficulty even noticing the erosion.
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***Corporate Mirage: Debt out the Wazoo, Sales Languish, Stocks Soar – Wolf Richter
24 september
What the phenomenon of cheap credit has accomplished.
You’d think that corporate debt would grow in proportion to total sales, as this additional debt is used to fund investments in productive activities that create more sales and contribute to the economy, and that higher sales, and presumably higher earnings would create a proportionate increase in the value of the company, and thus in its stock price, and that they all go up together, not in lockstep but over time more or less at the same rate.
But that relationship between debt, sales, and share prices has gone completely out of whack.
First things first: Debt at nonfinancial companies – this excludes banks and nonbank lenders such as mortgage lenders – has soared. To get a feel for just how much, I have pulled the data on three major components of corporate debt:
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Yellen: The Economy May Be Weaker than We Thought – Ryan McMaken
28 september
Janet Yellen this week cast doubt on the Fed’s announced plan to continue Fed rate hikes and reverse its years of “unconventional” monetary policy.
“My colleagues and I may have misjudged the strength of the labor market,” Yellen announced on Tuesday, adding that they’d also misjudged “the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation.”
Yellen also “noted that the labor market, which historically has been closely linked to inflation, may not be as tight as the low unemployment rate suggests.”
In other words, Fed economists are concerned by the fact they’ve been unable to achieve their arbitrary 2% price-inflation objective, which they believe indicates a healthy level of economic activity. Moreover, they’re concerned the low unemployment rate — which can be deceptive since it can show a “tight” market even in the presence of unemployed discouraged workers and involuntary part-timers — is not telling the whole story.
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***The US Cities with the Biggest Housing Bubbles – Wolf Richter
26 september
Extraordinary asset price inflation in all its beauty.
The term “housing bubble” to describe the housing market that peaked in 2006 and imploded with spectacular effects has been gradually fading out of use. The current theme is that years of asset price inflation have “healed” the housing market, and that the crazy peak of Housing Bubble 1 is now just some sort of normal base. Oh my…
The S&P CoreLogic Case-Shiller National Home Price Index for July was released today. The not-seasonally-adjusted index jumped 6% year-over-year, by far outrunning growth in wages and household incomes, which it has done for years. The index has surpassed by 5% the crazy peak (I mean, the normal base) in July 2006:
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Carbon Taxes and Economic Growth – Robert P. Murphy
26 eptember
In a recent series of posts (here and here), I amplified some of Oren Cass’s strongest criticisms of the typical case for a US carbon tax. Seeing an opportunity for a zinger, Josiah Neeley at R Street put up a post entitled, “Prominent carbon tax skeptic admits it could increase economic growth.” Although I appreciate being dubbed “prominent,” as we’ll see the R Street post is wrong in both title and in substance. Neeley is referring to my discussion of a capital tax cut offsetting the damage of a carbon tax, but that of course is far from saying a carbon tax could increase economic growth. Beyond that, Neeley’s advice to me to advocate politically impossible outcomes is also dubious.
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Investment and growth in advanced economies: Selected takeaways from the ECB’s Sintra Forum – Vítor Constâncio, Philipp Hartmann, Peter McAdam
29 september
The European Central Bank’s 2017 Sintra Forum on Central Banking built a bridge from the currently strengthening recovery in Europe to longer-term growth issues for, and structural change in, advanced economies. In this column the organisers highlight some of the main points from the discussions, including what the sources of weak productivity and investment are and what type of economic polarisation tendencies the new growth model seems to be associated with.
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