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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***What Does GDP Really Tell Us? – Frank Shostak
10 maart
To gain insight into the state of an economy, most financial experts and commentators rely on a statistic called the gross domestic product (GDP). The GDP framework looks at the value of final goods and services produced during a particular time interval, usually a quarter or a year.
This statistic is constructed in accordance with the view that what drives an economy is not the production of wealth but rather its consumption. What matters here is the demand for final goods and services. Since consumer outlays are the largest part of the overall demand, it is commonly held that consumer demand is the key driver of economic growth.
All that matters in this view is the demand for goods, which in turn will give rise almost immediately to their supply. This framework ignores the whole issue of the various stages of production that precede the emergence of the final good.
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Too Busy Frontrunning Inflation, Nobody Sees the Deflationary Tsunami – Charles hugh Smith
8 maart
Those looking up from their “free fish!” frolicking will see the tsunami too late to save themselves.
It’s an amazing sight to see the water recede from the bay, and watch the crowd frolic in the shallows, scooping up the flopping fish. In this case, the crowd doing the “so easy to catch, why not grab as much as we can?” scooping is frontrunning inflation, the universally expected result of the Great Reflation Trade.
You know the Great Reflation Trade: the world has saved up trillions, governments are spending trillions, it’s going to be the greatest boom since the stone masons partied at the Great Pyramid in Giza. It’s so obvious that everyone has jumped in the water to scoop up all the free fish (i.e. stock market gains). Only an idiot would hesitate to frontrun the Great Reflation’s guaranteed inflation.
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Politics and gender in the executive suite – Alma Cohen, Moshe Hazan, David Weiss
08 maart
The gender gap in corporate America is increasingly well documented, but the literature has not yet examined how a CEO’s political preferences might be associated with gender equality in the executive suite. Focusing on the US, this column compares the fraction of a CEO’s political contributions that went to Republican, rather than Democratic, candidates and the gender balance among top executives (excluding the CEO). Companies run by a CEO who only donates to Democrats employ a 15–25% higher fraction of women in the executive suite than those run by CEOs who only donate to Republicans.
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Signs Are Everywhere: Businesses Have Changed Permanently as a Result of the Pandemic – Wolf Richter
9 maart
There is no return to the “old normal.” Employment adjusts too. But it will take years to sort out the issues these sudden massive shifts leave behind.
One of the biggest permanent changes coming out of the Pandemic is that businesses have invested in technologies that have long been available, but that hadn’t been deployed because there was no visible need to deploy them, and because businesses were stuck in a rut, and change is hard and costly – and the rules of inertia had taken over.
But now the Pandemic has forced businesses to change. There is no going back to the old normal. And these technologies impact employment in both directions.
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The ECB’s green agenda – Ethan Ilzetzki, Jason Jia
10 maart
Debates have emerged recently on central banks’ role in mitigating climate change, or at least on increasing their awareness of their environmental impact. The February 2021 CfM-CEPR survey asked members of its European panel of experts about measures the ECB could take to address the environmental impact of its bond-purchasing policies. The majority of the panel supports active measures to use the ECB’s bond-purchasing programme to either exclude industries with negative environmental impact or bias its portfolio towards green investments. An additional 30% of the panel believes that the ECB should rebalance its portfolio to correct its current bias in favour of polluting industries. However, a majority also believes it would be inappropriate to change the ECB’s mandate to reflect green objectives.
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Value Is Subjective: Neither Gold Nor Crypto Have “Real Value” – Connor Mortell
9 maart
A major hurdle to the adoption of bitcoin is that while the average person may be at least open to the idea that fiat money is not the ideal, they still struggle to see a difference between fiat money and cryptocurrency. And this lumping together is not just held to the average adopter but includes many brilliant household names such as Peter Schiff and Elon Musk. This widespread conflation of cryptocurrency and fiat currency comes from two vital misunderstandings: a lack of an understanding of what exactly fiat is and a lack of understanding of value’s subjectivity.
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*******Paper, silver, deficits and inflation — Chinese history version – John H. Cochrane
11 maart
A history of paper money and inflation in China, from Edward Chancellor’s Wall Street Journal review of Jin Xu’s Empire of Silver. In these sparse paragraphs is most of monetary (and fiscal!) theory, along with a history I was not aware of.
Paper money, Ms. Xu tells us, dates back to the Tang dynasty in the ninth century, when the authorities allowed merchants to exchange bronze coins for promissory notes, known as “flying cash.” Two centuries later, in the time of the Song dynasty, merchants in Sichuan were using private exchange notes in place of the cumbersome iron coinage. The Song emperor issued his own paper money against deposits of coin. The jiaozi, as these notes were called, proved so popular that they traded at a premium to cash.
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What’s Behind The Latest Bond Rout, And Where Does It End: BMO Explains – Ian Lyngen, head of US rates strategy at BMO Capital Markets
12 maart
Treasuries are under meaningful pressure as the 1.624% yield peak in 10s comes into range. There was no definitive trigger other than the usual suspects of reopening optimism, supply indigestion, and SLR expiration jitters. To this latter concern, the most recent primary dealer holdings data as of March 3rd revealed a record $64.7Bn decline in Treasury holdings to $185.8 bn. It’s worth noting that -$23.5 bn of this was in the bill sector and -$3.7 bn in floating rate notes; that said, notes and bonds were also reduced. However, given the preceding spike in yields and the fact these figures are reported in market value rather than par terms, the drop reflects more than simply dealers aggressively shedding Treasuries as the extension of SLR became less certain. Nonetheless, dealers selling into the downtrade is consistent with the choppy price action seen during the last several weeks and concerns that ballooning net issuance could be problematic for liquidity conditions; particularly in the event the preferential treatment for Treasuries is lost.
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The “Wait and See” Economy’s Moment of Truth – Charles Hugh Smith
9 maart
The “wait and see” economy is about to face its moment of truth, and one truth is the $1.8 trillion being passed out like candy is already spent.
The defining phrase of the U.S. economy for the past year is “wait and see”: every enterprise impacted by the pandemic that didn’t close immediately has been in “wait and see” mode, clinging on to the hope that once the pandemic ends then everything will roar back to life, bigger and better than before.
With the promise of herd immunity fast approaching, the moment of truth for “wait and see” is also fast approaching. The conventional view is that the trillions of dollars in stimulus kept business as usual alive and ready to soar back to the good old days. The almost $2 trillion injection of financial smack currently in progress will ignite the afterburners and the economy will rocket higher than anyone can imagine.
House Price Inflation in CPI is of Course Complete Baloney, but it Accounts for 1/4 of Total CPI – Wolf Richter
11 maart
With actual house price inflation based on market data, overall CPI would have jumped by 3.7%. Lifting the cover on the deception to keep CPI low.
For most Americans, housing costs are the largest item in their budget, ranging from 30% to 60% of their total monthly spending. In its Consumer Price Index (CPI) for February, released yesterday, the Bureau of Labor Statistics reported that the costs of homeownership (which the BLS calls “Owner’s equivalent rent of residence”) have increased by just 2.0% from a year ago, and that rents (“rent of primary residence”) have increased by 2.0%. They’re the biggest items among the 211 items in the CPI basket and together account for about one-third of overall CPI. They play a huge role in CPI. So…
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Why A Green New Deal Is More Expensive Than Joe Biden Realizes – Charlie Deist
12 maart
One of President Biden’s first executive actions was to declare January 27 “Climate Day.” This ad hoc holiday provided an opportunity for his administration to celebrate the latest rationale for economic central planning.
The day’s festivities began with three executive orders on climate change, science, and technology.
In his remarks, Biden bundled his environmental agenda with a jobs program, along with a broader policy to address social inequality and environmental injustice. Among the ambitious goals of Biden’s $2 trillion Green New Deal are 1 million new high-paying union jobs in the automobile industry, half a million electric car charging stations, and a 100 percent carbon pollution–free electric sector by 2035.
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Commercial Real Estate: Too Much Debt, Not Enough Assets – Doug French
13 maart
It’s hard to crack the headlines of the financial pages, what with GameStop, bitcoin, Tesla, and squeezes of one sort or another. There is a squeeze in commercial real estate that won’t shock anyone, or shouldn’t. That squeeze is tenants unable to pay owners and owners unable to pay lenders.
It’s possible the pandemic will fizzle, someone will snap their fingers, and everything will revert to the precovid economy. But indications are that commercial real estate will take lumps, some that will be fatal.
The Times reports that HSBC bank, employer of forty thousand people in the UK, occupying 3.3 million square feet at sixty-six locations, announced it’s cutting the bank’s real estate needs by 40 percent.
Noel Quinn, chief executive of HSBC, told the Times the plan was “long term,” because there would be “a very different style of working than before.” You may wonder what the bank pays in rental costs. The Times describes it as “several billion.”
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Technology, labour market institutions, and early retirement – Naomitsu Yashiro, Tomi Kyyrä, Hyunjeong Hwang, Juha Tuomala
12 maart
Across OECD countries, promoting longer working lives is an important policy objective for mitigating fiscal pressures from population ageing. This column uses data from Finland to examine how technological change and access to early retirement pathways reinforce each other in pushing older workers out of employment. It finds that the probability of leaving employment is higher for individuals in occupations with higher automation risks and increases faster for individuals closer to the eligible age for early retirement pathways.Reforms that tighten access to such pathways substantially extend the working lives of older workers exposed to high automation risks, but have little effect on old workers exposed to low automation risks.
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Capital and Labor Both Suffer under Minimum Wage Mandates – Mihai Macovei
8 maart
President Biden and the Democratic Party have pushed hard to more than double the national minimum wage from $7.25 per hour to $15 per hour over the next four years. This aggressive intervention in the functioning of labor markets has been heavily criticized, including in two recent Mises Wire articles. Resorting to both theoretical arguments and results of empirical studies, Robert Murphy and Martin Jones show in a convincing way that such a drastic increase in the minimum wage is bound to have a negative impact on employment and in particular on low-skilled workers. Yet their case focuses primarily on the short-term job losses stemming from such an ill-suited policy. One should not overlook that the minimum wage hike is likely to impair capital accumulation, productivity growth, and future wages as well. It means that this supposedly welfare-increasing measure is actually going to hamper not only employment, but the improvement of standards of living in general.
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***365 Days With My Mother-in-Law: Boots on the Ground View of Barcelona’s Economy – Nick Corbishley
7 maart
It remains in a state of suspended animation.
On March 5, 2020, a venerable Mexican lady flew from Mexico City to Madrid, and then on to Barcelona where her only daughter — my wife — lives. At that time, nobody knew it was the height of the first wave of the covid-19 pandemic in Europe. Sylvia, my mother-in-law, had just sold her apartment in Mexico City with a view to renting a flat near ours in Barcelona. The plan was simple: she would spend the first month or so with us in our 85 square meter apartment (915 square feet), adjusting to her new surroundings before beginning to look for her own place. Three hundred and sixty five days later, she’s still here.
This completely unplanned-for eventuality happened for a variety of reasons. The first was that the Mexican peso, with immaculate timing, shortly after she had sold her apartment and deposited the pesos in the bank, plunged by 25% against the euro in the five-week period from February 20 through March 24, thereby wiping out a quarter of her purchasing power in Spain. The peso has recovered only a small portion of that plunge since then.
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Sustaining India’s growth miracle requires increased attention to inequality of opportunity – Sriram Balasubramanian, Rishabh Kumar, Prakash Loungani
12 maart
India has seen a four-fold increase in average incomes since 1990, which has lowered the share of the population living in absolute poverty from 45% to 20% and improved the lot of 130 million people. But while most segments of society have shared in this remarkable performance, inequality in incomes within India remains large. This column argues that increased attention to mitigating urban–rural and inter-state income and opportunity differentials – leveraging the digital technology in which the country excels – would be a prudent investment to help sustain growth.
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***To Understand Economics, First Understand Private Property – Chris Calton
6 maart
In Man, Economy, and State, Murray Rothbard expounds the principles of economics by reconstructing an economy from the ground up. Following the practice of classical economists, he opens the book by imagining Robinson Crusoe alone on an island. After identifying the operative laws that apply even to isolated individuals, Rothbard’s second chapter considers Crusoe on an island with one other person, introducing the concept of direct exchange, or the barter economy. In the third and fourth chapters, Rothbard considers the origins of money and prices in an economy of indirect exchange.
For a treatise on price theory, Rothbard recognizes the need to explain the origins of money prices, as Carl Menger and Ludwig von Mises did before him. In The Theory of Money and Credit, Mises built on Menger’s original explanation for the origin of money by formulating the regression theorem. When considering price changes back through time, Mises theorized, we must naturally come to points of origin and departure. Paper dollars today have no commodity foundation, but we can easily identify the point at which they were disconnected from specie. Going further back, we may not be able to identify empirically the moment at which specie, or any other commodity, was first used as a medium of indirect exchange, but we can logically deduce that such a moment must have occurred as primitive economies grew increasingly complex.
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Dollar’s Purchasing Power Dwindles to Another Record Low. Fed is Getting its Wishes – Wolf Richter
10 maart
Durable goods inflation +3.3%. Food inflation +3.4%. Services inflation rising, but still held down by battered airline fares, lodging, event tickets, etc. — until people start traveling and going to events again.
The Consumer Price Index rose 1.7% in February from a year earlier, the fastest year-over-year increase in 12 months, picking up speed from the stall in April and May last year. Prices of goods are rising sharply, amid all kinds of shortages of durable goods after stimulus-fed red-hot demand, and food prices are rising too, according to data released by the Bureau of Labor Statistics today.
Price increases for services, the biggie, are held down by the battered discretionary services such as lodging, airline fares, and tickets for sporting and entertainment events, whose sales have collapsed.
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***The productivity of working from home: Evidence from Japan – Masayuki Morikawa
12 Maart
Working from home has become much more prevalent across advanced economies during the Covid-19 pandemic. This column uses survey data from Japan to explore how widely working from home has been adopted across industries and how productive employees are at home. It finds that the overall contribution of working from home to labour input is surprisingly small. Even where firms adopted the practice, many employees did not exploit it; and even those who did work from home did not necessarily do so throughout the week. The firm survey responses suggest that across industries, the average productivity of employees when working from home relative to at the workplace is 68.3%, which is similar to the findings from an employee survey. The results suggest that there is room for improvement to make working from home more feasible.
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Moral Courage and the Austrian School – Llewellyn H. Rockwell Jr.
13 maart
When economic crises hit, most pundits and intellectuals never see it coming. That is because they have never learned the lesson that Bastiat sought to teach, namely that we need to look beneath the surface, to the unseen dimensions of human action, in order to see the full economic reality. It is not enough just to stand back and look at points on a chart going up and down, smiling when things go up and frowning when things go down. That is the nihilism of an economic statistician who employs no theory, no notion of cause and effect, no understanding of the dynamics of human history.
So long as things were going up, everyone thought the economic system was healthy. It was the same in the late ’20s. In fact, it has been the same throughout human history. It is no different today. The stock market is going up, so surely that is a sign of economic health. But people ought to reflect on the fact that the highest performing stock market in the world in 2007 belonged to Zimbabwe, which is now home to a spectacular economic collapse.
Because of this tendency to look at the surface rather than the underlying reality, the business-cycle theory has been a source of much confusion throughout economic history. To understand the theory requires looking beyond the data and into the core of the structure of production and its overall health. It requires abstract thinking about the relationship between capital and interest rates, money and investment, real and fake saving, and the economic impact of the central bank and the illusions it weaves. You can’t get that information by watching numbers blow by at the bottom of your TV screen.
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