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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The US Recovery Is Weak, Especially Given the Size of the “Stimulus” – Daniel Lacalle
24 april
The United States: Hardly A Recovery
There is an overly optimistic consensus view about the speed and strength of the United States’ recovery that is contradicted by facts. It is true that the United States recovery is stronger than the European or Japanese one, but the macrodata shows that the euphoric messages about aggregate GDP growth are wildly exaggerated.
Of course gross domestic product is going to rise fast, with estimates of 6 percent for 2021. It would be alarming if it did not after a massive chain of stimuli of more than 12 percent of GDP in fiscal spending and $7 trillion in Federal Reserve balance sheet expansion. This is a combined stimulus that is almost three times larger than the 2008 crisis one, according to McKinsey. The question is, What is the quality of this recovery?
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Ditch the EU’s fiscal rules; develop fiscal standards instead – Olivier Blanchard, Álvaro Leandro, Jeromin Zettelmeyer
22 April
The EU’s fiscal rules are currently suspended. If reinstated, they will need to be modified to account for the higher levels of debt. This column, part of the Vox debate on euro area reform, argues that simple fiscal rules provide a crude and unsatisfactory assessment of debt sustainability and proposes that they be replaced with fiscal standards. In particular, it calls for qualitative prescriptions that leave room for judgement together with a process to decide whether the standards are met. This proposal envisages a larger surveillance role for independent fiscal councils and/or the European Commission, as well as a judicial body for adjudication over disputes.
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12 Myths Fueling Government Overreach in Times of Crisis – Robert Higgs
22 april
Congress and the president have adopted many critically important policies in great haste during brief periods of perceived national emergency. During the first “hundred days” of the Franklin D. Roosevelt administration in the spring of 1933, for example, the government abandoned the gold standard, enacted a system of wide-ranging controls, taxes, and subsidies in agriculture, and set in motion a plan to cartelize the nation’s manufacturing industries. In 2001, the USA PATRIOT Act was enacted in a rush even though no member of Congress had read it in its entirety. Since September 2008, the government and the Federal Reserve System have implemented a rapid-fire series of bailouts, loans, “stimulus” spending programs and partial or complete takeover of big banks and other large firms, acting at each step in great haste.
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Softer monetary policy increases inequality – Asger Lau Andersen, Niels Johannesen, Mia Jørgensen, José-Luis Peydró
19 April
Who gains – and by how much ­– when central banks soften their monetary policy regime is a key policy question. This column discusses new evidence on the distributional effects of monetary policy based on detailed administrative household-level data. The authors show that the gains from lower policy rates exhibit a steep income gradient, with the increases in income, wealth, and consumption modest at the bottom of the income distribution and highest at the top.
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Nuclear power and growth – John H. Cochrane
20 april
Jason Crawford’s “Roots of Progress” blog on what happened to nuclear power is an important read for many reasons, among them economic growth, climate, and regulation. It’s a review of Why Nuclear Power Has Been a Flop by Jack Devanney which goes on my must-read list.
Perhaps the important economic question of our time is this: Is growth over? Are we running out of ideas? Or is our decades-long growth slowdown the result of an increasingly sclerotic, over-regulated, crony-capitalist rent-seeking political system? Nuclear power offers an interesting case study.
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Globalisation and global crises – Assaf Razin
23 April
Concerns associated with the Covid-19 pandemic have led to new rationales of protectionism, with renewed emphasis on domestic production and sourcing. This column compares the current economic crisis brought on by the pandemic to previous major economic crises and examines what this could mean for the future of various aspects of globalisation.
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Save Earth… Get Rich… – Raul Ilargi Meijer
23 april
I sometimes can’t believe I think I must revisit this theme time and again, but here we are. Joe Biden is chairing a virtual climate plan/summit/whatever, and absolutely nothing has changed since the last time I tried to explain why it is nonsense, or all the other times before that. But this is the biggest boondoggle/cheat/trick ever played on mankind, so what choice do I have?
It’s still a bunch of politicians all over the world who are beholden to a bunch of extremely rich people for their cushy positions and claim they intend to save the world hand in hand with these rich people. In other words, our resident sociopaths and psychopaths are the only ones who can save us. But you’re going to have to pay up, or they won’t do it.
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Silicon Valley: Supply in Need of Demand – John McNellis
22 april
Landlords failed to disclose how much they had to fork over to office tenants to get even these reduced rents. Since we have holdings on the Peninsula, we know the real numbers first-hand.
“Britannia est insula. Italia est paeninsula.” The first two sentences of my freshman year Latin book were easy to understand: England is an island and Italy a paen or almost island. After that easy beginning, Latin tumbled into incomprehensibility, but the thought stuck that England was fully insulated and peninsulas only a bit less so. Decades later I learned real estate’s two-word formula for lasting success: supply constraint.
Islands—small ones anyway—are perfectly supply constrained; peninsulas can be nearly as limited. Until the virus struck a year ago, business islands like Manhattan and peninsulas like San Francisco’s were fortresses high-walled by supply constraint. Until the virus rolled up its siege wagons, smug landlords (such as ourselves) considered full occupancy a birthright and rents a stairway to heaven. In short, we had forgotten the other half of real estate’s magic formula: demand.
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***The People Have Lost Faith in the State, and the State Has Lost Faith in its People – Charles Hugh Smith
13 April
This is how states and empires decay and slide into the dustbin of history.
Democracy is fundamentally about advocacy: the people are free to advocate for their interests and form groups to represent their shared interests. In the broadest scope, the people are free to advocate for what they hold as the common good, policies and programs that benefit the entire populace rather than one special-interest group.
Since the state (all levels of government) concentrates wealth and power via taxation and a monopoly on force, groups advocate/lobby the state to recognize and respond to their interests. At the local level, this advocacy entails contacting city council members, speaking at council meetings, developing outreach tools (email lists, website, etc.), holding rallies at city hall, etc.
People advocate when they still have faith in their government. When they lose that faith, their only option is dissent. When advocacy yields zero results because government really only responds to corporations and the super-wealthy, then people lose faith in the representational branch of the state.
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The voice of monetary policy – Yuriy Gorodnichenko, Tho Pham, Oleksandr Talavera
25 April
While the effectiveness of central bank’s verbal communication is well documented, little is known about the effectiveness of communication via non-verbal channels. This column discusses vocal features of Federal Open Market Committee communication and examines the impacts on financial markets. The results suggest that tone of voice can contain distinct information not captured in the texts of press conferences. A positive voice tone can lead to higher share prices and decreases in volatility, highlighting the importance of voice control for central bank communication.
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Biden’s Big Spending Plans Will Not Revive the Economy – Frank Shostak
20 april
On March 11, 2021, US president Biden introduced his $1.9 trillion covid-19 stimulus plan. The president also announced a plan of more than $2 trillion to rebuild US infrastructure, which includes repairing roads and bridges, as well as expanding access to long-term care services under Medicaid, building schools, and expanding internet access across the US.
It is commonly accepted that during difficult economic times the government should run large budget deficits in order to keep the economy going. This is because when overall demand in the economy weakens, the government should step in and boost its spending in order to provide support to demand. In this situation, a widening in the budget deficit in response to increased government outlays can be great news for the economy. It is held that the increase in demand will be followed by the production of goods and services. That is, demand generates supply.
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EU economic policy and architecture after Covid: Rebooting the debate on the EU reform roadmap – Jan Pieter Krahnen, Jean Pisani-Ferry, Philippe Martin, Lucrezia Reichlin, Beatrice Weder di Mauro
22 April
The financial crisis of 2007-2012 was the first wake up call to the inadequacy of the euro area architecture when facing a large systemic crisis. This column explains why the Covid crisis will leave a deeper impact on the European policy system, and re-introduces the Vox debate on Europe’s economic architecture in the context of the transformations that we have witnessed over the past year. Contributions to the debate are welcome.
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America’s Fatal Synergies – Charles Hugh Snmith
19 April
America’s financial system and state are themselves the problems, yet neither system is capable of recognizing this or unwinding their fatal synergies.
why do some systems/states emerge from crises stronger while similar systems/states collapse? Put another way: take two very similar political-social-economic systems/nation-states and two very similar crises, and why does one system not just survive but emerge better adapted while the other system/state fails?
The answer lies in what author Geoffrey Parker termed Fatal Synergies and Benign Synergies in his book Global Crisis: War, Climate Change, & Catastrophe in the Seventeenth Century. Synergy results from “interactions that produce a combined effect greater than the sum of their separate effects.” In other words, 2 + 2 + 2 + 2 = 8 is linear, while synergy is 2 X 2 X 2 X 2 = 16.
Given that the core function of states is the distribution of resources, capital and agency, we can distill the difference between Fatal Synergies and Benign Synergies into two questions:
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***Understanding “Austrian” Economics – Henry Hazlitt
23 april
“Austrian” economics owes its name to the historical fact that it was founded and first elaborated by three Austrians: Carl Menger (1840–1921), Friedrich von Wieser (1851–1926), and Eugen von Böhm-Bawerk (1851–1914). The latter two built on Menger, though Böhm-Bawerk, in particular, made important additional contributions.
Menger’s great work, translated into English (but not until 79 years later!) under the title of Principles of Economics, was published in 1871. In the same year, by coincidence, W. Stanley Jevons in England published his Theory of Political Economy. Both authors independently developed the concept now known as “marginal utility.” (Menger never used the term. Jevons called it “final degree of utility.” It was Wieser who first employed the German term Grenznutzen, which translates as “marginal utility.”)
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Riskiest Junk-Rated Companies Borrow at Lowest Cost Ever amid Torrid Yield Chasing. AMC Bonds Sell at a Premium – Wolf Richter
20 april
Commercial bankruptcy filings drop to lows last seen in the loosey-goosey days just before the Financial Crisis.
The yields of the riskiest category of junk bonds – those rated CCC or below, which range from “substantial risk” to “default imminent with little prospect for recovery,” according to my cheat sheet of corporate bond ratings – have dropped to record lows, despite the enormous operational issues these companies face and despite the high probability that they will default and restructure their debts or liquidate, thereby offering investors a great opportunity to get crushed.
The average CCC-or-below rated junk bonds have yielded between 7.09% and 7.16% over the past two weeks, a new all-time record low. During a crisis, these companies are among the first to default. They have negative cash flows and fund their operations by issuing ever more debt, and when investors stop throwing money at these companies, it’s over, which happens massively during a crisis. But not this time. What crisis?
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Accounting for the Great Divergence: Recent findings from historical national accounting – Stephen Broadberry
20 April
As a result of recent work on historical national accounting, it is now possible to establish more firmly the timing of the Great Divergence of living standards between Europe and Asia in the 18th century. This column shows that there was a European Little Divergence as Britain and the Netherlands overtook Italy and Spain, and an Asian Little Divergence as Japan overtook China and India. The Great Divergence occurred because Japan grew more slowly than Britain and the Netherlands starting from a lower level, and because of a strong negative growth trend in Qing dynasty China.
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Make No Mistake: Programmable Digital Currencies Are Weaponizable Money – Peter Earle
24 april
Earlier this year, China began to roll out a project that had long been in the works – a digital version of its currency, the yuan, is now being used in four Chinese cities. The Chinese government sees two major potential benefits to the experiment: a tangible challenge to the U.S. dollar’s global ubiquity, and a way to control how Chinese citizens spend their money.
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Are Monarchies Better for Economic Growth? Here’s What the Empirical Evidence Says – Lipton Matthews
23 april
Hans-Hermann Hoppe has argued that monarchies take a longer-term view of their national economies and therefore are more likely to pursue more stable and secure economies. That is, among monarchs, the desire to maximize wealth promotes more farsightedness than exists in democratic regimes. Due to the lower time preference of monarchs, they are less likely to succumb to the whims of economic populism.
Hoppe outlines this argument in a 1995 article:
A private government owner will predictably try to maximize his total wealth, i.e., the present value of his estate and his current income…. Accordingly, a private government owner will want to avoid exploiting his subjects so heavily, for instance, as to reduce his future earnings potential to such an extent that the present value of his estate actually falls. Instead, in order to preserve or possibly even enhance the value of his personal property, he will systematically restrain himself in his exploitation policies. For the lower the degree of exploitation, the more productive the subject population will be; and the more productive the population, the higher will be the value of the ruler’s parasitic monopoly of expropriation.
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The growing concentration of wealth in Italy: Evidence from a new source of data – Paolo Acciari, Facundo Alvaredo, Salvatore Morelli
24 April
Growing wealth disparities can have corrosive effects on equality of opportunity when they crystallise over time and turn into persistent disparities across generations. This column uses newly assembled data from Italian inheritance tax records to show that the wealth share of the top 1% (half a million individuals) increased from 16% in 1995 to 22% in 2016, and the share accruing to the top 0.01% (the richest 5,000 adults) almost tripled from 1.8% to 5%. In contrast, the poorest 50% saw an 80% drop in their average net wealth over the same period. The data also reveal the growing role of inheritance and gifts inter vivos as a share of national income, as well as their increasing concentration at the top.
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“The Stock Market Has Gone Crazy And Will Likely Go Even Crazier” – Mark Dittli
22 april
Chen Zhao, Founding Partner and Chief Strategist of Montreal-based Alpine Macro, has been analyzing global financial markets for more than thirty years. Numerous investors worldwide know him as the long-serving Chief Strategist of BCA Research.
Today, Zhao is confident about equity markets. He sees the ingredients for a strong recovery in the global economy, and he believes fears of higher inflation are overblown. He sees the potential for the Federal Reserve’s monetary policy to inflate a new speculative bubble. «This bubble is going to be a whole lot bigger than the tech bubble of the late nineties, and it will probably run a whole lot longer than we think», says Zhao in an in-depth conversation with The Market NZZ.
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Bulking up: Booms and busts in maritime transport costs and their drivers – David Jacks, Martin Stuermer
18 April
As the recent past has shown, maritime transport costs are subject to wide swings. This column analyses a large new dataset on dry bulk freight rates from 1850 to 2020, when maritime transport costs fell 79%. Turning to the drivers of booms and busts in the dry bulk shipping industry, it finds that shipping demand shocks dominate both fuel price and shipping supply shocks. Shipping demand shocks have increased in importance over time while shipping supply shocks have become less relevant.
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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.

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