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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IMF Blames Fall of Middle Class on Globalization and Technology – Yves Smith
11 april
One of the big problem of reports like this is they never consider the question that income distribution is a function of political and social arrangements, and in particular, the rights of capital versus labor. It is hardly an accident that labor stopped sharing in the benefits of productivity gains in the mid 1970s, well before globalization and technology would have played much of a role. The big culprit was loss of labor bargaining power, which become official policy due to Volcker committing the Fed to creating more labor slack to keep inflation as close to his preferred target of zero as possible, and the Reagan/Thatcher “free market” fetish.
Now in fairness, some of the problems with a report like this are the difficulty of unpacking critical issues. For instance, as we’ve discussed regularly, the amount of offshoring of jobs that took place was considerably more than was justified by profit concerns. Direct factory labor is a small percentage of wholesale product cost; savings there are offset by greater managerial, finance, and transport costs, plus higher risks. In others words, offshoring and outsourcing are often, if not mainly, a transfer from low level workers to management rather than a bona-fide plus to the business. So while it is narrowly correct to say that globalization has been a big driver of middle class losses, analyses like that are misleading because they focus on proximate causes, not ultimate causes.
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The End of Ultra-Easy Money? – C.Jay Engel
11 april
After eight years of extremely loose monetary policy, the economy is great again and we are to enter into a post-stimulative era of monetary policy. So said Yellen at a recent discussion at the University of Michigan. In her words, the Fed had given the economy all the “oomph [they] possibly could” and it was time to “allow” the economy to coast along.
Paying no attention to their own econometric constructs such as the GDP, the Fed has declared that the economy is fantastic. After all, the unemployment rate has leapt downward over the last several years (just don’t look at the denominator — the labor participation rate) and the Fed’s inflation measures are right around their arbitrary 2% level. Allegedly, these two pieces (and the unrelenting stock market) means everything is great!
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Subsidiarity: The forgotten concept at the core of Europe’s existential crisis – Jean-Pierre Danthine
12 april
In this column, Jean-Pierre Danthine, a co-author of “Making Sense of Subsidiarity: How Much Centralization for Europe?”, revisits the report nearly 25 years on from its publication. He examines the main themes of the report and shows how such areas as centralisation/decentralisation, subsidiarity, and macroeconomic stabilisation have played out over the years since the report was published. He concludes that the report was both prescient and, at the same time, represents a view from the past of the ‘road not taken’.
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Capital Cause and Effect – John H. Cochrane
14 april
Òscar Jordà, Björn Richter, Moritz Schularick, and Alan Taylor wrote a provocative What has bank capital ever done for us? at VoxEu, advertising the underlying paper Bank Capital Redux (NBER, CEPR link here, google if you can’t access either of those)
It starts with a blast:
“Higher capital ratios are unlikely to prevent a financial crisis.”
Wow! How do they reach this dramatic conclusion? The post and underlying paper are empirical, collecting a very useful dataset on bank structure across countries and a long period of time.
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Capital Flows and Ricardo’s Law – Mark Brandly
10 april
As a presidential candidate, Donald Trump promised to renegotiate international trade agreements such as NAFTA and to withdraw from the Trans-Pacific Partnership. While Trump’s views on international trade are murky, two things seem clear.
One: Trump is in favor of trade deals that halt the migration of US factories to other countries and increase investments in the US. He argues that his policies would give domestic and foreign companies an incentive to invest capital in the US rather than overseas. In economic terms, he wants to increase US net capital flows (capital inflows minus capital outflows).
Two: Trump views the US trade deficit as a loss to the US economy. He sees the $502.3 billion trade deficit in goods and services in 2016 as spending that could create jobs in this country, spending that is forever lost.
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Trade: The benefits of foreign banks – Stijn Claessens, Neeltje van Horen
10 april
Foreign banks can be important for trade. They can increase the availability of external finance for exporting firms and help overcome information asymmetries. This column shows that firms in emerging markets tend to export more when foreign banks are present, especially when the parent bank is headquartered in the importing country. In advanced countries, where financial markets are more developed and information is more readily available, the presence of foreign banks does not play such a role. Financial globalisation through the local presence of foreign banks can thus positively affect real integration.
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Health spending: It’s not just about ageing – Mirko Licchetta, Michal Stelmach
14 april
Population ageing is one of the most commonly cited drivers of rising healthcare spending. However, other non-demographic cost pressures, such as increasing relative health spending and technological advancement, also contribute substantially over the longer term. This column argues that taking these additional factors into account, the UK’s net public debt due to healthcare is projected to be up to twice as large in 2066. These findings stress the importance of balancing the budget as early as possible to keep public finances on a sustainable path.
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Frédéric Bastiat Is Right (Again) – Jeff Thomas
14 april
French economist Frédéric Bastiat was a man far ahead of his time. He was a “classical liberal,” which, today, would identify him as a libertarian. He expanded upon the free-market argument set forth by Adam Smith in 1776.
In 1845, the French government levied protective tariffs on scores of items, from sewing needles to locomotives. The intent was to protect French industries from companies outside France that could produce the goods more cheaply.
The reaction from Mister Bastiat was to publish The Candlemaker’s Petition, a satirical proposal to the government that was intended to help them to see the nonsense of protective tariffs.
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***“Canada: Irrational Exuberance?” Wild Housing Speculation Drives Entire Economy – Wolf Richter
10 april
Here’s another data point on the Canadian housing bubble, how immense it really is, and how utterly crucial wild housing speculation has become to the Canadian economy.
Housing starts surged to 253,720 units in March seasonally adjusted, the highest since September 2007, according to Canada Mortgage & Housing Corp. Of them, 161,000 were multi-family starts of condos and rental units in urban areas. In Toronto, one of the hot beds of Canada’s house price bubble, housing starts jumped by 16,600 units, all of them condos and apartments, defying any expectation of a slowdown.
Housing starts are an indication of construction activity, a powerful additive to the local economy with large secondary effects. Housing construction gets fired up by the promise of ever skyrocketing housing prices, and thus big payoffs for developers, lenders, real estate agents, and the entire industry.
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Embracing the silver economy – Uuriintuya Batsaikhan
10 april
What’s at stake: The oldest human in known history was a Frenchwoman called Jeanne Calment who celebrated her 122nd birthday in 1997. Thanks to advances in technology and medicine humans living until 100, if not 122, might not be an exception in the near future. Ageing, while described as a looming demographic crisis, also offers a silver lining. Business in rapidly ageing societies is already adapting their strategies to navigate the “silver economy”. This blogs review looks at the implications of the silver economy on growth, productivity and innovation as well as the opportunities offered by the silver industry.
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Green Shoots! Is Argentina’s Economy Finally Growing? – Bianca Fernet
11 april
Hold on to your boots, you’re about to get some economic good news from Bianca Fernet.
Last week, our President Mauricio Macri sat down with Bloomberg to get mansplained while squinting into the sun give an interview on the state of Argentina’s economy and affairs. During this interview, Macri stated clearly and unequivocally that there is no need for a “Plan B” because the economy is already growing. I’m not going to lie, I was severely tempted to roll my eyes at this.
I’m still paying obscene prices for lettuce and dealing with butter shortages in the supermarket, and at the same time forced to deftly dodge these daily inane protests dedicated to cluttering the streets with tiny pieces of paper and noisy drum circles. Zero sarcasm, I could probably drum up a protest against protests with minimal effort.
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Robots and jobs: Evidence from the US – Daron Acemoglu, Pascual Restrepo
10 april
As robots and other computer-assisted technologies take over tasks previously performed by labour, there is increasing concern about the future of jobs and wages. This column discusses evidence that industrial robots reduced employment and wages between 1990 and 2007. Estimates suggest that an extra robot per 1,000 workers reduces the employment to population ratio by 0.18-0.34 percentage points and wages by 0.25-0.5%. This effect is distinct from the impacts of imports, the decline of routine jobs, offshoring, other types of IT capital, or the total capital stock.
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***Millennials Are Abandoning the Postwar Engines of Growth: Suburbs and Autos – Charles Hugh Smith
12 april
Where’s the growth going to come from as the dominant generation makes less, borrows less, spends less, saves more and turns away from long commutes, malls and suburban living and abandons the worship of private vehicles?
If anything defined the postwar economy between 1946 and 1999, it was the exodus of the middle class from cities to suburbs and the glorification of what Jim Kunstler calls Happy Motoring: freeways, cars and trucks, ten lanes of private vehicles, the vast majority of which are transporting one person.
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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.