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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A Factor in the Bizarre “Great Resignation” & “Labor Shortage” Phenomenon: The Huge Surge of Americans Starting Businesses – Wolf Richter
16 januari
Another testimony of the massive changes in society and the economy. But losing some of the enormous steam.
New business formations in December, based on applications for an Employer Identification Number (EIN) with the IRS, jumped another 20% from the already high December last year, and by 34% from December 2019, according to the Census Bureau.
The explosion of business applications began in June 2020 when stimulus checks, extra unemployment benefits, PPP loans, and other government moneys washed over the land – and when millions of jobs just vanished. And it continued through December 2021. But the spike has been losing some steam in recent months:
These huge numbers of new business formations every month since June 2020 are a piece of the bizarre puzzle of labor shortages, combined with huge record numbers of people who quit their jobs – a record 4.31 million workers “quit” in the private sector in November, up 30.6% from November 2019 – mostly to take a job with better pay as companies got aggressive in recruiting by offering higher compensation and better working conditions.
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Germany’s New Green Stimulus Plan Won’t Save Their Economy – Philipp Bagus
19 januari
Recently, there has been a debate in Germany on the constitutionality of additional government borrowing of €60 billion. The borrowing is debated because Germany has a constitutional debt brake. The debt brake limits the possibility of the government to indebt itself and pushes it toward a balanced budget in normal times. In times of emergency, however, the debt brake allows for exceptions and higher deficits to fight the emergency. Unsurprisingly, huge amounts of debts were issued to cope with the corona crisis.
The German government plans to present a bill that transfers an unused borrowing authorization of €60 billion covid funds from last fiscal year to a special fund called the “Energy and Climate Fund,” even though climate spending by itself would not be excepted from the debt brake. The reasoning to justify the constitutionality of the plan is purely Keynesian. The proponents argue that the state must invest or provide corresponding subsidies to activate private investment in the wake of the corona crisis. The spending shall stimulate the economy. In this way, incomes and jobs are to be saved or secured. And if there must be a Keynesian stimulus plan to overcome the corona crisis, why not spend the tax money on “green projects”? So it is green spending to cope with an emergency.
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Video might kill the radio star: Digitalisation and the future of banking – Thorsten Beck, Stephen Cecchetti, Magdalena Grothe, Malcolm Kemp, Loriana Pelizzon, Antonio Sánchez Serrano
19 januari
New technologies are changing how banks produce and provide financial services. These changes have implications for traditional banks, creating novel sources of systemic risk which could in turn pose regulatory and policy challenges. This column introduces a new report by the Advisory Scientific Committee of the European Systemic Risk Board that discusses the impact that digitalisation may have on the structure of the European banking system. Based on three scenarios for the future development of European banking, the authors derive an array of macroprudential policy recommendations.
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Accounting for the blowout / Project Syndicate – John H. Cochrane
19 januari
A Project Syndicate Essay. Before it moves on to climate change, inequality, and racial issues, the Fed should have to think just a little bit about the evident failure of its existing financial regulation.
Why Isn’t the Fed Doing its Job?
The nomination of new members to the US Federal Reserve Board offers an opportunity for Americans – and Congress – to reflect on the world’s most important central bank and where it is going.
The obvious question to ask first is how the Fed blew its main mandate, which is to ensure price stability. That the Fed was totally surprised by today’s inflation indicates a fundamental failure. Surely, some institutional soul searching is called for.
Yet, while interest-rate policies get headlines, the Fed is now most consequential as a financial regulator. Another big question, then, is whether it will use its awesome power to advance climate or social policies. For example, it could deny credit to fossil-fuel companies, demand that banks lend only to companies with certified net-zero emissions plans, or steer credit to favored alternatives. It also could decide that it will start regulating explicitly in the name of equality or racial justice, by telling banks where and to whom to lend, whom to hire and fire, and so forth.
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***Global Governance versus Freedom and Free Enterprise – Lipton Matthews
17 jaunari
When assailing global governance, pundits rarely comment on its impact on small countries. Yet the degree to which small countries are ignored by global institutions—like the G7, the International Monetary Fund, and the World Bank—helps to illustrate how institutions of global governance tend to primarily reflect the values of managerial elites from large and wealthy states.
That is, global policies are earnestly tailored by rich states in the West in response to specific challenges. In Western countries leaders have expressed concern that major corporations use tax havens as a mechanism to lower their tax burden. Therefore, to rectify the problem, leaders of G7 nations are recommending a minimum corporate tax rate of at least 15 percent.
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***Choose One, But Only One: Defend the Billionaire’s Bubble or the U.S. Dollar and Empire – Charles Hugh Smith
19 januari
The Empire is striking back, protecting what really counts, and the Billionaire Bubble sideshow is folding its tents.
One of the most enduring conceits of the modern era is that the Federal Reserve acts to goose growth and therefore employment while keeping inflation moderate (whatever that means–the definition is adjustable). This conceit is extremely handy as PR cover: the Fed really, really cares about little old us and expanding our ballooning wealth.
Nice, except it doesn’t. The Fed’s one real job is defending the U.S. dollar, which is the foundation of America’s global hegemony a.k.a. The Empire.
One thing and one thing alone enables global dominance: being able to create “money” out of thin air and use that “money” to buy real stuff in the real world. The nations that can create “money” out of thin air and trade it for magnesium, oil, semiconductors, etc. have an unbeatable advantage over nations that must actually mine gold or make something of equal value to trade for essentials.
The trick is to maintain global confidence in one’s currency. There is no one way to manage this, as confidence in a herd animal such as human beings is always contingent. Once the herd gets skittish, all bets are off.
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***Empty Shelf at a Grocery Store Near You? Tight Inventories, Labor Shortages, Supply Chain Snags, Strong Sales, Soaring Costs – Wolf Richter
17 januari
It shows how brittle the system has become in face of every new challenge.
Grocery-store shoppers are sporadically encountering portions of a shelf that is suddenly empty when a week earlier there was plenty of product. There are again social-media “reports” of purchase limits of some items, such as toilet paper (why is it always toilet paper?) at some Costco, or pasta at some Walmart, or beef at some Safeway, or whatever. You can buy all kinds of stuff, but you might not be able to get one or two items that are part of your normal list.
At fault is a combination of problems. Staffing shortages due to the difficulty of hiring people are now being aggravated by omicron, where employees that tested positive have to self-isolate and can’t come to work for a few days. This impacts supermarkets and their suppliers in a big way. Transportation companies, faced with soaring demand, already struggled with driver shortages that was further aggravated by omicron, and further aggravated by the recent snow storms first in the West and then in the East, entailing traffic chaos and closed highways.
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When Higher Prices Are Not Inflation – Doug French
17 januari
Back to 2020, the federal government’s covid-mandated shutdown of meat production plants hobbled the nation’s meat production capabilities, leaving farmers with nowhere to send their beef. This resulted in them having to cull cattle and other livestock. The uncertainty caused farmers to scale back their production at the time, which Arun Sundaram told CNBC “can affect production more than a year, year and a half down the road.”
Processing facilities had labor shortages like all other businesses, which reduced their capacity to process meat at the same clip as before the pandemic. Meanwhile, consumers regained their appetites for beef, forcing prices higher.
“You have this huge imbalance of supply and demand which is causing the prices to skyrocket,” Sundaram told CNBC Make It. “The demand side got even stronger as the months progressed in 2021, whereas the supply side of things got worse.”
The question is, is this inflation. Austrians would say no. These price increases are the normal process of a market clearing when supply, for whatever reason, isn’t satisfying all of the demand. Consumers who can and most desire the product will pay more for the limited supply.
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Fair and inclusive markets: Why fostering dynamism matters – Philippe Aghion, Reda Cherif, Fuad Hasanov
20 januari
Rising inequality and firms’ market power pose challenges to the aims of inclusive growth and shared prosperity. Nevertheless, growth and equity need not be mutually exclusive. This column argues that economic dynamism is crucial for achieving sustained growth and more equal market outcomes. It shows that countries that experienced faster growth over the last four decades have lower market inequality in the 2010s. Policy should be aimed at supporting sophisticated export industries, fostering innovation and creative destruction, and promoting competition.
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Milton Friedman Unraveled – Murray N. Rothbard
21 januari
Mention “free-market economics” to a member of the lay public and chances are that if he has heard the term at all, he identifies it completely with the name Milton Friedman. For several years, Professor Friedman has won continuing honors from the press and the profession alike, and a school of Friedmanites and “monetarists” has arisen in seeming challenge to the Keynesian orthodoxy.
However, instead of the common response of reverence and awe for “one of our own who has made it,” libertarians should greet the whole affair with deep suspicion: “If he’s so devoted a libertarian, how come he’s a favorite of the Establishment?” An advisor of Richard Nixon and a friend and associate of most Administration economists, Friedman has, in fact, made his mark in current policy, and indeed reciprocates as a sort of leading unofficial apologist for Nixonite policy.
In fact, in this as in other such cases, suspicion is precisely the right response for the libertarian, for Professor Friedman’s particular brand of “free-market economics” is hardly calculated to ruffle the feathers of the powers-that-be. Milton Friedman is the Establishment’s Court Libertarian, and it is high time that libertarians awaken to this fact of life.
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Identifying state dependence in brand choice: Evidence from hurricanes – Julia Levine, Stephan Seiler
23 januari
Consumers tend to be loyal to products they have purchased in the past, which companies may exploit to raise prices. To better understand whether this brand loyalty is driven by preferences or state dependence, this column looks at how households react when stockouts due to hurricanes force them to purchase different brands of bottled water. The authors do not find evidence of state dependence in bottled water brand. Although there is a large and significant decrease in loyalty during the stockout weeks, there is no effect in the post-hurricane period.
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***The Cult of Speculation Is a Cult of Doom – Charles Hugh Smith
21 januari
Surely the Fed gods will affirm the cult’s most revered articles of faith. But false gods eventually fail, even the Fed.
Every once in awhile the zeitgeist sets up an either / or: either the zeitgeist is crazy or I’m crazy. (OK, let’s agree I’m crazy; see, it’s not that hard to find something to agree on, is it?)
What strikes me as crazy is the global Cult of Speculation which has recruited virtually the entire human populace in a bizarre cult in which speculating wildly is now the accepted norm, a norm papered over with fine-sounding phrases such as “investing for the future,” “hold on for dear life,” “conviction trade,” “new paradigm,” and so on, all variations on the time-honored “this time it’s different.”
But speculative frenzies that sweep up everyone with a few quatloos to place on the gaming table are not different, they are the norm. Humans love gambling, winning, windfalls, something for nothing, being ahead of the pack (“the new paradigm,” etc.) and the excitement of running with the triumphant herd, all of which are fulfilled by speculative frenzies.
All the speculative free-for-all is lighthearted fun on the way up, but there is a much bleaker reality that few are willing to recognize, much less discuss: now that the global economy is in thrall to the top 0.1% and the foundations of widespread prosperity crumble into dust, the ladder to wealth, power and prestige has few rungs left.
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Consumption inequality in the digital age – Kai Arvai, Katja Mann
21 januari
When considering the effect of digitalisation on inequality, researchers usually focus on income inequality. This column compares the consumption baskets of US households to study the effect of digitalisation on consumption inequality. High-income households have a higher share of ICT-intensive products in their consumption, and thus benefit more from price declines in these goods due to digitalisation. The price channel accounts for 22.5% of the increase in consumption inequality between 1960 and 2017.
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Stop Trying to Turn Economics into a Branch of Psychology – Frank Shostak
20 januari
Recently, a relatively new economics called behavioral economics (BE) has started to gain popularity. Its practitioners, such as Daniel Kahneman, Vernon Smith, and Richard Thaler, were awarded Nobel Prizes for their contribution in the field of BE.
The BE framework emerged because of dissatisfaction with the neoclassical theory regarding consumer choices. In the neoclassical theory, individuals are presented as if a scale of preferences is hard-wired in their heads. Regardless of anything else, this scale remains the same all the time.
The practitioners of BE hold that this is unrealistic. To make the mainstream framework more realistic they are of the view that there is the need to introduce psychology into economics.
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New & Used Vehicle Inventories Rise, But for the Wrong Reasons – Wolf Richter
21 januari
New vehicle sales out-plunged production. Used vehicle supply already above normal amid weak sales.
The number of new vehicles in inventory on dealer lots rose to 1.098 million vehicles in December, the fourth month in a row of increases, and the highest inventory level since July, according to data from Cox Automotive. But inventory is still desperately short, after having collapsed by 76% from an average of 3.66 million vehicles in 2019 to just 886,000 vehicles in September, which was the low point of the year.
But inventories inched up for the wrong reason: New vehicle retail sales plunged 24% year-over-year in December, to just 1.40 million vehicles, and thereby out-plunged production that to this day is struggling with the semiconductor shortage.
There’s a circularity here. Sales were so weak because there was so little on the lot, and what customers could buy came with ridiculous prices, which depressed sales, which then allowed inventories to build a little.
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