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.

——————————————————————————————————
2022: The Year of the Hangover? – Daniel Lacalle
10 januari
The global recovery has slowed down significantly since the peak of the reopening effect in June 2021. What many expected would be a multiyear cycle of above-trend growth is proving to be a more modest bounce. Furthermore, according to Bloomberg Economics, the global economy will likely grow in the next ten years at a slower pace than in the decade prior to the pandemic.
The causes of the slowdown are clear. On one hand, China’s real estate bubble is a larger problem than anticipated, and there is no way in which the Chinese authorities can engineer higher growth from other sectors to offset real estate, which accounts for almost 30 percent of the country’s GDP and was growing at double-digit rates in the past years. Additionally, inflation is rising all over the world due to a combination of excessive monetary policy and supply chain challenges brought by the lockdowns. Global food prices reached a new record high, making it more difficult for the poor to navigate the crisis. Finally, large stimulus plans have delivered no significant multiplier effect.
——————————————————————————————————
***The Real Threat to Democracy is Corrupting Wealth Inequality – Charles Hugh Smith
10 januari
Try to find a developing-world kleptocracy in which the top few collect more than 97% of the income from capital. There aren’t any that top the USA, the world’s most extreme kleptocracy. We’re Number 1.
Imagine a town of 1,000 adults and their dependents in which one person holds the vast majority of wealth and political influence. Would that qualify as a democracy? Now imagine that 100 of the 1,000 adults own 90% of all the wealth, collect 97% of all the income from capital and have virtually all the political power. How can a society in which 90% of the populace is decapitalized, disenfranchised and demoralized by political powerlessness be a democracy?
This is America: a kleptocratic autocracy that serves the few at the expense of the many, stripmining the bottom 90% under the guise of a fraudulent “democracy” in which only the few wield real power. Recall Smith’s Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.
That our elected government responds only to the super-wealthy and corporations has been well-established: Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.
It’s also a fact that the top 10% get virtually all the gains from the nation’s capital, and this wealth is concentrated in the top 0.1%: Monopoly Versus Democracy: How to End a Gilded Age
Ten percent of Americans now control 97 percent of all capital income in the country. Nearly half of the new income generated since the global financial crisis of 2008 has gone to the wealthiest one percent of U.S. citizens. The richest three Americans collectively have more wealth than the poorest 160 million Americans.
——————————————————————————————————
How GDP Stats Create the Illusion of Fed-Fueled Economic Growth – Frank Shostak
11 januari
Most experts tend to assess the strength of an economy in terms of real 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. The GDP is formed as the summation of consumer outlays on goods and services; outlays by businesses on plants, machinery, and inventories; outlays by government; and exports less imports.
An increase in consumer outlays, businesses investment, and government outlays strengthens the economy as described by the GDP statistic. In addition, whenever the exports-imports differential shows a strengthening, the GDP statistic follows suit.
In this way of thinking, an increase in the components of GDP causes an increase in the overall demand in the economy for goods and services. As a result, it is held, this causes an increase in the supply of goods and services. Increases in demand result in increases in the overall supply.
——————————————————————————————————
Trying to account for the decline in the labour share – Gene Grossman, Ezra Oberfield
13 january
After a century of stability, the labour share of national income began to decline around 2000 in the US and many other countries. This column reviews the growing literature examining the potential reasons for the decline of the labour share, which include (1) capital-biased technical change, (2) globalisation and the rise of China, (3) increasing industry concentration and market power, (4) unionisation, and (5) population growth. The column also discusses pitfalls associated with common empirical strategies in the literature and suggests that more work is needed to understand fundamental, rather than proximate, causes of the decline.
——————————————————————————————————
Real Wages Plummet as Inflation Hits the US Recovery – Daniel Lacalle
13 jannuari
The headline 3.9 percent unemployment rate looks positive, but job creation fell significantly below consensus, at 199,000 in December versus a consensus estimate of 450,000.
The weak jobs figure should be viewed in the context of the largest stimulus plan in recent history. With massive monetary and fiscal support and a government deficit of $2.77 trillion, the second highest on record, job creation falls significantly short of previous recoveries and the employment situation is significantly worse than it was in 2019.
The most alarming datapoint is that real wages are plummeting. Average hourly earnings have risen 4.7 percent in 2021, but inflation is 6.8 percent, sending real wages to negative territory and the worst reading since 2011.
The number of persons not in the labor force who currently want a job did not change in December, at 5.7 million. This is still 717,000 higher than in February 2020.
——————————————————————————————————
Purchasing Power of the Dollar Goes WHOOSH! – Wolf Richter
12 januari
Worst inflation in 40 years is spreading deeper into the economy.
The broadest Consumer Price Index (CPI-U) jumped by 0.5% in December from November, and by 7.04% from a year ago, the highest since June 1982, according to data released by the Bureau of Labor Statistics today.
But there’s a big difference between now and 1982. Now, the inflation index is spiking, and has been getting worse month after month; back in 1982, inflation was coming down. The last time inflation actually spiked like this on the way up and broke through the 7%-mark was in June 1978
——————————————————————————————————
For services firms, small can be beautiful – Elwyn Davies, Mary Hallward-Driemeier, Gaurav Nayyar
12 januari
Conventional wisdom is pessimistic about the prospects for services-led development, leading to worries about premature deindustrialisation. This column argues that the services sector deserves more credit for helping drive economic transformation than it generally receives. Using firm-level data from 20 developing economies, the authors find that while services establishments are smaller than manufacturing establishments, this matters less for their productivity. Services firms can scale up without sizing up through investments in human and other more intangible forms of capital can leverage the diffusion of digital technologies.
——————————————————————————————————
***Should You Move While You Can, Or When You Must? – CHarles Hugh Smith
14 januari
This gives an extreme advantage to those few who move first, long before they must. The financial advantage for first movers is equally extreme.
Moving is a difficult decision, so we hesitate. But when the window to do so closes, it’s too late. We always think we have all the time in the world to ponder, calculate and explore, and then things change and the options we once had are gone for good.
Moving to a new locale is difficult for those of us who are well-established in the place we call home. Add in a house we love, jobs/work, kids in school, a parent living with us and all the emotional attachments to friends, extended family, colleagues and favorite haunts, and for many (and likely most) people, moving is out of the question.
Many of us have fond memories of moving when we were in our late teens or early 20s–everything we owned fit in the backseat and trunk of a beaten up old car, and off we went.
Once you put down roots in a home, work/enterprise, schools, neighborhood and networks, it’s a herculean task to move. Moving to another state or province isn’t just a matter of the physical movement of possessions and buying / renting a new dwelling, itself an arduous process; the transfer of medical and auto insurance, finding new dentists and doctors, opening local bank/credit union accounts, obtaining local business licenses and a staggering list of institutions and enterprises that require an address change is complicated and time-consuming.
Knowing this, I don’t ask this question lightly: Should You Move While You Can, Or When You Must? The question is consequential because the window in which we still have options can slam shut with little warning.
——————————————————————————————————
Money and Banking after World War II: A Study in Extremes – Joseph Solis-Mullen
12 januari
The history of money and banking in the United States since World War II is one of extremes.
From stability to chaos, hubris to paralyzing fear, the era is perhaps best understood in terms of two roughly overlapping periods. The first, spanning approximately 1945–71, was characterized by relative stability. Backstopped by the dollar-centric international monetary system hashed out at Bretton Woods during the final year of World War II and the domestic banking industry constrained by New Deal–era regulations, the US economy grew steadily, inflation after 1950 remained under control, and money and banking were not the focus of any serious policy issues until the 1960s. The second era of money and banking in the United States since World War II, roughly 1971 to the present, has been characterized by turbulence. From the series of ad hoc solutions arrived at in the wake of the breakdown of the Bretton Woods system of fixed exchange rates, the world moved toward a new political and economic paradigm.
Deel 2 vindt u onder deze link.
——————————————————————————————————
Innovation versus imitation: Where all that Chinese R&D is going – Michael König, Zheng (Michael) Song, Kjetil Storesletten, Fabrizio Zilibotti
14 january
China is aiming to become a technological innovation powerhouse by 2050, with Premier Li Keqiang recently announcing an increase in R&D investments by 7% for the next five years. But greater R&D investment is no guarantee of success. This column examines the effects of R&D investments by Chinese firms on aggregate productivity and growth. The authors find that while innovation plays an important role in China’s growth process, the productivity of innovation could be substantially enhanced by reducing distortions in the economy, and further stimulating R&D expenditure is neither necessary nor sufficient to sustain growth.
——————————————————————————————————
The Fed’s Huge Income Statement for 2021 Is Out – Wolf Richter
15 januari
“Net income” is a bizarre term for an organization that buys trillions of dollars of securities with money that it itself created.
The Federal Reserve’s balance sheet is a gigantic pile of assets on one side and liabilities and statutory capital on the other side. That balance sheet, which is released weekly and which we discuss frequently, generates a lot of income and a lot of expenses. In addition, the Fed gets income from fees. It has a ton of operating expenses. It pays dividends to its shareholders. And it remits to the Treasury Department what’s left over. The Fed discloses all this annually in its financial statement.
On Friday afternoon, the Fed released its unaudited preliminary financial statement for 2021. The audited financial statements will be released later in 2022.
For what it’s worth: The Fed’s audit firm, KPMG, has been entangled in innumerable scandals – such as using stolen regulatory information to cheat on audit inspections – and massive audit failures, such as of UK outsourcing giant Carillion, which suddenly collapsed at the beginning of 2018. So there’s nothing to worry about.
The Fed’s total “net income” for 2021: $107.8 billion.
——————————————————————————————————
***Colonialism Isn’t the Source of Latin America’s High Inequality – Lipton Matthews
14 januari
Income inequality in Latin America is appallingly high, with the richest 10 percent of the population controlling 54 percent of national income. According to the 2021 Regional Human Development Report’s “Trapped High Inequality and Low Growth in Latin America and the Caribbean,” published by the United Nations Development Program, Latin American countries record higher inequality and worse social indicators than countries in other regions with similar levels of development. However, the story of inequality in Latin America has not been a desolate narrative of doom since the mean Gini coefficient decreased from 0.534 in 2002 to 0.499 in 2010.
But some worry that these gains might be eroded due to external shocks and economic downturns springing from covid-19. Indeed, researchers point out that covid-19 has heightened the growth of inequality by worsening economic opportunities. The inequality-inducing effects of covid-19 have brought the persistence of inequality in Latin America to the forefront of academic discourse. Many attribute the blatant inequality of Latin America to the colonial era. Writing in this vein, Sergio Costa and Francesc Badia I Dalmalse posit that leftist administrations were elected “based on a premise of reverting inequalities accumulated since the colonial period.”
——————————————————————————————————
How global risk perceptions affect economic growth – Jon Danielsson, Marcela Valenzuela, Ilknur Zer
13 january
The relationship between financial risk and economic growth is complex. This column finds that perceptions of high risk unambiguously harm growth, while perceived low risk has an initial positive impact, which eventually turns negative. Global risk has a stronger effect on growth than local risk, via its impact on capital flows, investment, and debt-issuer quality, challenging monetary policy independence.
——————————————————————————————————
Stop Pretending Price Inflation Is a Result of “Too Much” Profit – Frank Shostak
15 januari
Some commentators attribute the latest sharp increase in the Consumer Price Index to businesses pushing prices of goods higher in order to secure higher profits. (See the New York Times article “Democrats Blast Corporate Profits as Inflation Surges,” January 3, 2022). Note that the yearly growth rate of the Consumer Price Index jumped to 6.8 percent in November 2021 from 1.2 percent the year before. However, is it true that businesses are determining the prices of goods and services?
shos1
How Prices Are Established
As a rule, a supplier sets the price. After all it is the supplier who offers the goods to the buyers. So it is the supplier who must set the price of a good before he presents the good to the buyers.
In order to secure the price that will improve his lot, the price that the supplier sets must cover his direct and indirect costs and provide a margin for profit. By setting the price, the supplier must make as good an estimate as possible regarding whether he will be able to sell his entire supply at the price set.
——————————————————————————————————
***Opening the black box of hospital mergers – Martin Gaynor, Adam Sacarny, Raffaella Sadun, Chad Syverson, Shruthi Venkatesh
16 januari
Despite the current wave of US hospital mergers, it is unclear how they change behaviour and performance. This column ‘opens the black box’ of hospital practices by analysing a mega-merger between two for-profit chains. Benchmarking the merger’s actual effects against the acquirer’s stated aims, its shows that while the merger achieved some goals – harmonising electronic medical records and sending managers to target hospitals – it produced few gains in overall performance. Further research is needed into the impact of mergers on the healthcare industry specifically and the economy more broadly.
——————————————————————————————————
Wage Price Spiral Takes Off, Companies Point at it: Albertsons Shares -8%, JP Morgan’s Dimon Sees “Huge Pressure” on Labor Market – Wolf Richter
11 januari
The Fed finally sees it too.
For businesses, there is a good side to inflation: They can jack up prices and get away with it without losing customers because customers bought into the inflationary mindset and are paying whatever; and thereby companies can raise their revenues without having to actually sell more.
And there is a bad side to inflation for businesses: Their costs are surging, not just the costs of products and services, but also the costs of labor. And those surging costs are now squeezing margins.
Shares of supermarket conglomerate Albertsons Companies [ACI] got whacked down 8% at the moment after the company, which also owns Safeway, reported stellar sales growth of 8.4% in its third quarter, ended December 4, driven by increases in retail prices, incremental sales from administering vaccines in its pharmacies, and from buying and opening additional stores.
That’s the good side of inflation: the company is able to charge higher retail prices and thereby increase its revenues.
——————————————————————————————————
How Easy Money Inflated Corporate Profits – Brendan Brown
11 januari
In the incessant media discussion about whether inflation is transitory there is a big elephant in the room about which all are silent. Perhaps strangely some do not see it. Others for whatever reason pretend it is not there. The elephant is the fantastic surge in US corporate profits that monetary inflation has fueled during the second year of the pandemic. This elephant’s unremarked appearance is likely transitory, unlike the simultaneous jump in US consumer prices.
Transitoriness is the essential theme of the contemporary Fed show—a point it has in common with Arthur Miller’s Death of a Salesman. There antihero Willy Lowman laments that in the twilight of his working life he still feels “temporary.” The Fed show, though, fits best into the theater of the absurd. The big elephant occupies a large part of the stage, but the characters never acknowledge its existence.
——————————————————————————————————
The zero lower bound on inflation expectations – Yuriy Gorodnichenko, Dmitriy Sergeyev
11 januari
Inflation expectations affect the decisions of households, firms, and policymakers. Expectations of negative inflation can be particularly harmful and lead to deflationary spirals when nominal interest rates are near zero. This column uses survey evidence to show that households and firms almost never expect deflation, even when it is a clear possibility. This apparent zero lower bound on inflation expectations has important implications for macroeconomic dynamics and the effectiveness of monetary policy. Unconventional policies, such as forward guidance, which aim to increase inflation expectations may be less effective when expectations are stuck at the zero lower bound.
——————————————————————————————————
Oh My, the American Consumer amid the Distortions and Price Spikes of Our Time – Wolf Richter
14 januari
“Not seasonally adjusted” retail sales spiked to a record. “Seasonally adjusted” retail sales fell. Both: +16.9% from year ago. What the heck is going on?
What was in the headlines all over the place is that retail sales in December, including at restaurants and bars, fell 1.9% from November, seasonally adjusted.
What wasn’t in the headlines is that this was up by 16.9% from December a year earlier, which is a huge gigantic jump in sales.
And what wasn’t in the headlines either is that “not seasonally adjusted,” retail sales spiked by 10% from November to a new blistering record of $715 billion, also up 16.9% from a year ago, according to the Census Bureau today (red = seasonally adjusted; purple = not seasonally adjusted)
——————————————————————————————————
Quantifying the full impact of country-specific policies on trade flows – Rebecca Freeman, Mario Larch, Angelos Theodorakopoulos, Yoto Yotov
12 januari
Most economists rely on the structural gravity model to analyse the impact of trade policies on bilateral trade flows. However, while the gravity model is well suited to examine the impact of bilateral trade costs, it is poorly equipped to estimate the impact of country-specific policies. This is problematic, as in practice many policy-relevant trade costs are country-specific. This column proposes a solution to this problem and discusses new methods to identify the full impact of country-specific characteristics within the structural gravity framework. A useful by-product of the methods is that they deliver disaggregate trade elasticity estimates without the need for price/tariff data.
——————————————————————————————————

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