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.

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Why Employment Is Not the Key to Economic Growth – Frank Shostak
8 februari
In December 2021, the US unemployment rate fell to 3.9 percent from 4.2 percent in the month before. The number of unemployed individuals fell by 500,000 to 6.3 million. Many commentators have expressed satisfaction with the decline in unemployment. According to commentators, the fall in unemployment is indicative of a strong economy.
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For most economists the key to economic growth is a strengthening in the labor market. This way of thinking is based on the view that because of the reduction in the number of unemployed, more individuals can afford to increase their expenditure. As a result, economic growth is likely to follow suit. This is based on the view that an increase in demand is going to trigger an increase in supply.
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The Cost of Financialization-Globalization: You Lost $500,000 and Gained $137.- CHarles Hugh Smith
11 februari
Ponder what a clawback of the $50 trillion might entail, and the immense benefits of returning to producing quality goods and services by completely unwinding financialization and globalization.
The happy story that’s been ceaselessly promoted for 45 years is that financialization and globalization have been wunnerful for all of us, boosting wealth and saving a small fortune as the cost of products fell.
This is a remarkable distortion of reality. The fact is your household lost $500,000 in earnings and gained essentially nothing in supposed “cost savings.” The facts are presented in a study by the RAND Corporation: Trends in Income From 1975 to 2018 $50 trillion in earnings has been transferred to the Financial Aristocracy from the bottom 90% of American households over the past 45 years..
B-b-but wait, didn’t we all save a fortune on cheap jeans and TVs? No, you lost on that, too, as every product was crapified by globalization. I discussed the uncounted losses of the U.S. economy being crapified in my post The “Crapification” of the U.S. Economy Is Now Complete.
Let’s start by defining financialization and globalization. Financialization is the reaping of profits not by creating value by producing goods and services but by exploiting credit and leverage to reap unearned profits.
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***Is the Fed really clairvoyant? – John H. Cochrane
11 februari
Fed Pick Raskin Tries to Mollify GOP Critics on Climate Stance is the Bloomberg.com headline.
I previously praised Raskin for the clarity of her statements. Unlike most others in this game, she straightforwardly advocated the Fed starve fossil fuel companies of money in the name of climate. For example
“We must rebuild with an economy where the values of sustainability are explicitly embedded in market valuation,” she wrote. This will require “our financial regulatory bodies to do all they can—which turns out to be a lot—to bring about the adoption of practices and policies that will allocate capital and align portfolios toward sustainable investments that do not depend on carbon and fossil fuels.”
Good. Let’s stop pretending there is some “climate risk” and talk honestly.
As Bloomberg reports, she is furiously backpedaling
“The Federal Reserve does not engage in credit allocation and does not choose the borrowers to whom banks extend credit,” she wrote.
But she did see some potential for the Fed to act, particularly in analyzing the climate risks facing supervised institutions.
Those financial risks “might include disorderly price adjustments in various asset classes; potential disruptions in proper functioning of financial markets; and rapid changes in policy, technology, and consumer preferences that markets have not anticipated.”
This seems like more climate-risk boilerplate.
But the last paragraph here caught my eye, and is the point of this blog post. Read it closely. This is supposed to reassure us? Forget climate. The future head banking regulator thinks the Fed actually has the capacity and mandate to try to foresee and do something about “disorderly price adjustments” in “various asset classes” — that means all over the financial system including stocks — “potential disruptions” and best of all “rapid changes in policy, technology, and consumer preferences that markets have not anticipated”
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IMF surcharges: A lose-lose policy for global recovery – Joseph Stiglitz, Kevin P. Gallagher
7 februari
The IMF has imposed significant surcharges on countries that have had to undertake large borrowings and are unable to pay their debts back quickly. This column argues that these surcharges are pro-cyclical financial penalties imposed on countries precisely at a time when they can least afford them. They worsen potential outcomes for both the borrowing country and its investors, with gains accruing to the IMF at the expense of both. This transfer of resources to the IMF affects not just the level of poverty, health, education, and overall wellbeing in the country in crisis, but also its potential growth.
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The Growing Pile of Public Debt Shows that Inflation Is Here to Stay – Mihai Macovei
9 februari
After more than a decade of subdued consumer price inflation despite gigantic monetary and fiscal stimuli, last year’s surge in consumer prices took most central banks by surprise. First, they tried to dismiss it as “transitory” and caused by pandemic-related supply bottlenecks. Within a few months, when wages started rising strongly, Fed chairman Jerome Powell had to admit that “factors pushing inflation upward will linger well into next year.” He is now claiming that the Fed will take appropriate action to address the inflation problem, but the rhetoric is hardly convincing. Both the Federal Reserve and the European Central Bank (ECB) seem to take only baby steps toward ending quantitative easing and raising interest rates, being unwilling to risk a recession in order to tame inflation.
Hiking interest rates will most likely burst the current stock market, real estate, and corporate debt bubbles, revealing the malinvestments stoked by the growth stimuli. The Fed is well aware of this risk because this is exactly what happened in 2019, when financial markets plunged after four interest rate raises in 2018. Instead of continuing the normalization of monetary policy, the Fed lost its nerve and promptly reversed course. That is why many analysts doubt the Fed’s determination to counter the inflation head-on now. Another obstacle to weeding out inflation is the large stock of public debt accumulated since the global financial crisis (GFC) and a worrying relaxation of public spending even in previously frugal economies. Moreover, this trend is backed by growing calls for fiscal laxity among mainstream pundits.
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Teleworking is here to stay and may raise productivity if implemented appropriately – Pawel Adrjan, Gabriele Ciminelli, Chiara Criscuolo, Peter Gal, Alexandre Judes, Giuseppe Nicoletti, Michael Koelle, Timo Leidecker, Francesco Losma, Cyrille Schwellnus, Tara Sinclair
10 februari
The COVID-19 pandemic triggered a surge in teleworking, raising questions about its persistence as well as its impact on firm performance and worker wellbeing. Leveraging real-time online job postings data from Indeed and a recent OECD survey of managers and workers, this column argues that teleworking is here to stay – for most workers in a hybrid mode with two or three working days per week at home. A majority of managers and workers value teleworking positively but emphasise the need for adaptive measures, such as the coordination of schedules and investment in ICT hardware, software, and skills.
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The Collapse of the EV SPACs: Retail Investors Got Fleeced Swiftly and Spectacularly – Wolf Richter
12 februari
Four stocks collapsed by over 90% from highs. Others not far behind. SPAC-hype-boom leaves trail of SEC & DOJ investigations and class-action lawsuits.
The SPAC hype-boom that started taking off in 2020, along with a whole bunch of other ridiculous wealth-transfer schemes, has been imploding more broadly, not limited to EV SPACs. These Special Purpose Acquisition Companies raised tons of money, often involving celebrities that hyped this crap in the social media so that the dumbest retail investors would swallow it hook, line, and sinker. After the SPAC started trading publicly, they bought startups at huge valuations. The merger caused the start-up to be the publicly traded company. Insiders made a killing in this process no matter what happened.
This scheme of going public via SPAC dodges many of the disclosure requirements and other requirements that classic IPOs are subject to. Soon, a number of these companies were being investigated by the SEC and the Department of Justice. And the fleecing of retail investors has been swift and spectacular.
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What Would Mises Have Thought of “Special Economic Zones”? – Thibault Serlet
7 februari
In response to the argument in favor of closing loopholes, Ludwig von Mises once noted that “capitalism breathes through those loopholes.”
In many ways, special economic zones (SEZs) are the ultimate loophole. But, like all loopholes, they benefit the politically connected few who know how to take advantage of them as opposed to the masses.
SEZs are geographically limited areas that governments have granted increased economic freedom to in order to attract foreign investment. They were most famously used in China, India, and the United Arab Emirates, but exist in more than seventy countries worldwide.
SEZs make it cheaper to do business in countries with centrally planned economies by removing the most onerous barriers to entry for businesses located in the zones. These include everything from tax breaks to special business visas.
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Surging inflation in the UK – Ethan Ilzetzki
10 februari
Consumer prices in the UK rose by 5.4% (year-on-year) in December 2021, the highest annual rate of inflation since the UK adopted an inflation target in 1992. The January CfM survey asked a panel of experts on the UK economy to evaluate the causes and prospects of the current inflation surge. The panel was nearly unanimous in thinking it was caused by supply side factors that are mostly global in nature (commodity prices, supply chain disruptions) and fall outside government control. The majority of the panel believes that inflation will not persist beyond 2022.
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US Trade Deficit Exploded in 2021: The Price of 30 Years of Rampant Globalization – Wolf Richter
8 feburari
The US still exports a lot of stuff — record amounts. But it drowns under a tsunami of imports. And the services surplus fizzled.
The US trade deficit in goods and services in 2021 exploded by 27% from 2020, to $859 billion, according to data by the Commerce Department. This is the result of 30 years of rampant and government-policy-encouraged globalization by Corporate America, from Walmart, Amazon, and the vast auto industry to the pharmaceutical industry.
The trade deficit is a negative for GDP, and a negative for the overall economy in America, and it contributes substantially to the current supply-chain chaos. But US trade deficits are a huge positive for China, Germany, Vietnam, Mexico, and many other countries that we’ll get to in a moment. The driver behind the trade deficit is Corporate America.
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Debt: The eye of the storm – the 24th Geneva Report on the World Economy – Laurence Boone, Joachim Fels, Òscar Jordà, Moritz Schularick, Alan M. Taylor
9 februari
The Covid-19 pandemic will go down as one of the most severe human, economic, and financial events in the history of the modern world. Nations have accumulated public debt levels not seen since WWII in their efforts to tackle the health crisis and mitigate the ensuing economic dislocation. The private sector has also experienced a run-up in debt, but unlike the Great Mortgaging of the 2000s, this time led by the corporate sector. The 24th Geneva Report on the World Economy explores the geo-economic risks entailed by these historic levels of overall debt and concludes that while debt should not be ignored, neither should it be feared.
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With Inflation at a 40-Year High, the Fed Is Too Afraid to Act -Ryan McMaken
11 februari
According to the Bureau of Labor Statistics (BLS), Consumer Price Index (CPI) inflation rose 7.5 percent in January, year over year. This was, the BLS notes, the “largest 12-month increase since the period ending February 1982.” Moreover,
The all items less food and energy index rose 6.0 percent, the largest 12-month change since the period ending August 1982. The energy index rose 27.0 percent over the last year, and the food index increased 7.0 percent.
When it comes to food, the largest increases were found in “meats, poultry, fish, and eggs, which rose 12.2 percent over the year.”
Housing rose 5.6 percent. Used cars were up a whopping 40.5 percent.
The last time CPI inflation was this high was during February 1982, when the rate was 7.6 percent. That represented an improvement over the very high inflation rates experienced during 1980 and 1981, when inflation topped 18 percent in some months.
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The “Crapification” of the U.S. Economy Is Now Complete – Charles Hugh Smith
9 februari
The crapification of the U.S. economy is now complete. The only thing left is the tiresome waiting for the implosion of the entire travesty of a mockery of a sham.
The U.S. economy has fundamentally changed, and not for the better. There are numerous dynamics behind this decay, and I’ll discuss a few of the more consequential ones this month.
One consequential dynamic few mainstream pundits dare discuss is the “crapification” of the entire U.S. economy. That isn’t my description, “crapification” is now in common use. If the word offends you, substitute terminal decay of quality, competition, utility, durability, repairability and customer service.
One aspect nobody seems to notice is the transformation from a society that once drew its identity from producing quality goods and services to a society that draws its identity from consuming crapified goods and services. Now that Americans define themselves by consuming, they are enslaved to consumption: to limit consumption is to disappear–and ‘spending time” on social media is a form of consumption, even if no goods or services are purchased directly, as one’s attention / time are valuable commodities.
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***Ten Recurring Economic Fallacies, 1774–2004 – H.A. Scott Trask
12 feburari
As an American historian who knows something of economic law, having learned from the Austrians, I became intrigued with how the United States had remained prosperous, its economy still so dynamic and productive, given the serious and recurring economic fallacies to which our top leaders (political, corporate, academic) have subscribed and from which they cannot seem to free themselves—and alas, keep passing down to the younger generation.
Let’s consider ten.
Myth #1: The Broken Window
One of the most persistent is that of the broken window—one breaks and this is celebrated as a boon to the economy: the window manufacturer gets an order; the hardware store sells a window; a carpenter is hired to install it; money circulates; jobs are created; the GDP goes up. In truth, of course, the economy is no better off at all.
True, there is a sudden burst of activity, and some persons have surely gained, but only at the expense of the proprietor whose window was broken, or his insurance company; and if the latter, the other policyholders who will pay higher premiums to pay for paid-out claims, especially if many have been broken.
The fallacy lies in a failure to grasp what has been foregone by repair and reconstruction—the labor and capital expended, having been lost to new production. This fallacy, seemingly so simple to explain and grasp, although requiring an intellectual effort of some mental abstraction to comprehend, seems to be ineradicable.
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Inequalities in student to degree match – Stuart Campbell, Lindsey Macmillan, Richard Murphy, Gill Wyness
13 februari
Many governments have tried to increase the number of young people attending university, raising the question of how well ‘matched’ students are to their degrees. This column follows an entire cohort of 140,000 students in the UK from school to university to discover the types of students that tend to ‘undermatch’. Students with a lower socioeconomic status background are more likely to be undermatched to their degrees both academically and in terms of earnings potential, and women are more likely to undermatch than men when it comes to earnings potential.
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An American Fight in Ukraine Brings Big Costs, No Benefits – Joseph Solis-Mullen
10 februari
If there was one thing that predictably united the usually squabbling Roman elite, it was the emergence of a perceived threat to Rome’s Mediterranean and near-continental hegemony. To some degree, however difficult to calculate, it is impossible to deny that the dissolution of the Soviet Union has been responsible for the increasing polarization of American politics. Mikhail Gorbachev predicted as much as the Cold War neared its end, saying, “Our major secret weapon is to deprive you of an enemy.” Sure enough, their mortal foe vanquished, Republicans and Democrats set about fighting for position and privilege with an unconstrained vigor that over the course of thirty years led to the violation of many of the Republic’s so-called democratic norms long before Donald Trump became the 2016 Republican nominee for president.
It should be no surprise, then, to find Republicans and Democrats trying to recapture some of that once celebrated bipartisanship by once again uniting to battle the next round of challengers to liberal capitalist hegemony. However, in this refight of the Cold War, now cast as “democracy versus authoritarianism,” the United States is starting from a far weaker relative position than it did in, say, 1950. In 1950, for example, its industrial output constituted half the world total. Also weighing in its favor, Europe at that time was completely dependent on the Americans, both economically and militarily, and so allowed Washington to, more or less, dictate a joint foreign policy vis-à-vis the Soviet Union at its discretion.
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The impact of monetary policy on income and wealth inequality – Petri Mäki-Fränti, Aino Silvo, Adam Gulan, Juha Kilponen
11 februari
New monetary policy instruments introduced by the ECB following the 2008-2013 financial and debt crisis have raised concerns that central banks’ securities purchase programmes disproportionately benefited wealthy households. Using Finnish data, this column finds that while the impact on economic growth has been significant, on average the changes in income and wealth disparities have been small. Nevertheless, the results suggest the precise channels through which monetary policy affects inequality may differ across countries.
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On-Time Rent Payments Sag amid Massive Spike in Rents – Wolf Richter
11 februari
I mean, who would have thought?
How have on-time rent collections been doing in this era of spiking rents? Across the 100 largest markets in the US, in multifamily buildings the median asking rent for one-bedroom apartments jumped by 12% year-over-year. The median asking rent for two-bedroom rents jumped by 14%. In 34 cities, asking rents spiked by 15% to 28% year-over-year.
Turns out, there is a perplexing deterioration of on-time rent payments that started in mid-2019 and has continued through the end of 2021, interrupted only by the months when the big stimulus checks – not the little one – went out that allowed more households to make timely rent payments.
Only 92% of renter households had made their rent payment for December by the end of December, the lowest percentage since April 2019, down from 93.8% in December 2020, and down from 95.9% in December 2019.
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Woke Capitalism Is a Monopoly Game – Michael Rectenwald
10 februari
In 2018, Ross Douthat of the New York Times introduced the phrase “woke capital.” Essentially, Douthat suggested that woke capitalism works by substitut­ing symbolic value for economic value. Under woke capitalism, corporations offer workers rhetorical pla­cebos in lieu of costlier economic concessions, such as higher wages and better benefits. The same gestures of woke­ness also appease the liberal political elite, promoting their agendas of identity politics, gender pluralism, transgender rights, lax immigration standards, climate change mitigation, and so on. In re­turn, woke corporations hope to be spared higher taxes, in­creased regulations, and antitrust legislation aimed at monop­olies. Although woke capitalism alienates cultural conservatives, the Republican Party remains procorporate, making woke capitalism a win-win strategy for corporations.
Business Insider columnist Josh Barro suggested that woke capitalism provides a form of parapolitical representation for workers and corporate consumers. Given their perceived political dis­enfranchisement, woke capitalism offers them representation in the public sphere, as they see their values reflected in corporate pronouncements.
Others have suggested that corporations have gone woke only to be spared cancellation by Twitter mobs and other activists, that wokeness is a good “branding tool,” or that progressive shareholders also demand corporate activism.
But woke capitalism cannot be sufficiently explained in terms of placating coastal leftists, ingratiating left-liberal legislators, or avoiding the wrath of activists. Rather, as wokeness has escalated and taken hold of corporations and states, it has become a demarcation device, a shibboleth for cartel members to identify and distinguish themselves from their nonwoke competitors, who are to be starved of capital investments. Woke capitalism has become a monopoly game.
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***Comparing attitudes towards immigrants across regions: A network science approach – Rachael Kei Kawasaki, Yuichi Ikeda
11 februari
Attitudes towards immigrants have become a crucial topic in policy and politics. This column uses tools from network science to identify and compare determinants of attitudes toward immigrants from a global perspective. It finds that prejudice is a common determinant of negative attitudes across all regions, especially towards people of another race. Furthermore, individuals in European countries display a more values-based approach towards determining attitudes, compared to non-European contexts. These results imply that successful communication by policymakers on the topic of immigration should account for region-specific cultural and socio-political factors.
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