Economische aanraders 29-12-2019
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.
How Today’s Central Bankers Threaten Civilization – Claudio Grass
When I was asked to write an article about the impact of negative interest rates and negative yielding bonds, I thought it was a chance to look at the topic from a broader perspective. There have been lots of articles speculating about the possible implications and focusing on their impact in the short run, but it’s not very often that an analysis looks a bit further into the future, trying to connect money and its effect on society itself.
Let us begin with a basic question, that lies at the heart of this issue: Who profits from a loan that is guaranteed to pay back less than the amount borrowed? Obviously, it is the borrower and not the lender, which in our case is the government and those closely connected to it. Negative rates and negative-yielding bonds by definition favor the debtors and punish the savers. In addition, these policies are an affront to basic economic principles and to common sense too. They contradict all logical ideas about how money works and they have no basis and no precedent in any organic economic system. Thus, now, in addition to the hidden tax that is inflation, we also have another mechanism that redistributes wealth from the average citizen to those at the top of the pyramid.
Negative Rates, The Destruction Of Money. Sweden Ends Its Experiment – Daniel Lacalle
Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks and some of their economists who start from a wrong diagnosis: the idea that economic agents do not take more credit or invest more because they choose to save too much and therefore saving must be penalized to stimulate the economy. Excuse the bluntness, but it is a ludicrous idea.
***How to Write and Understand History<***/a> – Ludwig von Mises
[Adapted from Chapter 2 of Human Action.]
The study of all the data of experience concerning human action is the scope of history. The historian collects and critically sifts all available documents. On the ground of this evidence he approaches his genuine task.
It has been asserted that the task of history is to show how events actually happened, without imposing presuppositions and values (wertfrei, i.e., neutral with regard to all value judgments). The historian’s report should be a faithful image of the past, an intellectual photograph, as it were, giving a complete and unbiased description of all facts. It should reproduce before our intellectual eye the past with all its features.
Wealth taxation: The Swiss experience – Marius Brülhart, Jonathan Gruber, Matthias Krapf, Kurt Schmidheiny
Wealth taxes are in vogue, and academic research on the subject is picking up. Recent studies have produced widely diverging estimates of the elasticity of the wealth tax base. Some of this is due to methodological differences. This column analyses wealth taxes in Swiss cantons and shows that jurisdiction size and enforcement also play a role. When applied at the sub-national level and without third-party reporting, wealth taxes are particularly easily avoided.
A “Market” Crash Is Baked In–Here’s Why – Charles Hugh Smith
Anyone looking at the hollowed-out, fragile shell of a Fed-managed “market” as a system realizes a crash that runs away from central planning control is already baked in.
The last thing punters and pundits expect is a stock “market” crash, yet a “market” crash is already baked in and here’s why: real markets have internal resilience (they’re anti-fragile, to use Nassim Taleb’s phrase), and central-planning manipulated “markets” don’t.
Few look at markets as obeying systems-level dynamics that have little to do with “news” or conventional metrics. The media makes money by reporting every tiny change in mood, metrics, rumors, etc., as if these drive markets. But we all know that the reality is much simpler: The Federal Reserve is the “market.”
Dallas Fed Outlines Somber Oil & Gas Industry, “Flaring” of Natural Gas Comes into Focus – Wolf Richter
“The capital markets for oil and gas remain extremely difficult.”
The Dallas Fed’s Forth Quarter Energy Survey, released today, portrays an industry that is turning increasingly somber. The data is based on responses of executives (names are not disclosed) of 170 energy companies – 111 exploration and production (E&P) companies; and 59 oil field services companies – located or headquartered in the Dallas Fed’s district, which covers Texas, northern Louisiana, and southern New Mexico and includes the most prolific shale oil-and-gas field in the US, the Permian Basin.
To Be Useful, Data Needs Theory – Frank Shostak
For most so-called practical economists, information regarding the state of an economy is derived from data. Thus, if an economic statistic such as real gross domestic product or industrial production shows a visible increase, it is considered indicative of a strengthening of the economy. Conversely, a decline in the growth rate is regarded as weakening. It seems that by looking at the data one can ascertain economic conditions. Is this the case, though? The so-called data that analysts are looking at is a display of historical information.
Trade policy after three years of populism – Simon Evenett, Johannes Fritz
The populist and nationalist turn in many nations’ politics has sharpened the rhetoric against globalisation. This column introduces the latest Global Trade Alert report, which confirms that this rhetoric has translated into greater protectionism and less trade liberalisation worldwide.
Why Marx Was Against Individual Rights – David Gordon
People are unequal in abilities and circumstances, and because of this, attempts to make them equal by force will inevitably violate their rights to live in freedom. If people have rights, unequal outcomes will result and trying to impose equality will violate their rights. It is as simple as that.
Murray Rothbard in Egalitarianism As a Revolt Against Nature states the point in this way: “An egalitarian society can only hope to achieve its goals by totalitarian methods of coercion; and, even here, we all believe and hope the human spirit of individual man will rise up and thwart any such attempts to achieve an ant-heap world. In short, the portrayal of an egalitarian society is horror fiction because, when the implications of such a world are fully spelled out, we recognize that such a world and such attempts are profoundly antihuman; being antihuman in the deepest sense, the egalitarian goal is, therefore, evil and any attempts in the direction of such a goal must be considered evil as well.”
All I Want for Christmas Is an Unmanipulated Market – Charles Hugh Smith
The irony, of course, is that only those punters who sold on the way up will escape the devastation of the collapse into a bidless “market.”
All I want for Christmas is an unmanipulated market, because manipulated markets always crash big and crash hard. Virtually every market in America is heavily manipulated by the Federal Reserve, which creates currency out of thin air to either buy assets (outright market manipulation) or distribute to financiers, banks and corporations, which then manipulate the markets with their own profiteering (stock buybacks, leveraged buyouts, derivatives, etc.).
The Fed decided long ago that the housing and stock markets were too critical as signals that all is well to remain real markets, because real markets fluctuate and on occasion crash, especially if participants are playing fast and loose with debt, leverage and speculative bets placed with zero collateral (or fake collateral, which is the same thing).
Healthcare and “Market Failure” – Marc Fouradoulas
In the face of illness and suffering, private markets for healthcare services allegedly fail. Since the 1960s, neoclassical economists have legitimized the regulation and collectivization of this sector under the term “market failure.” This assumption forms the foundation of the discipline of health economics and its attempt to replace the failed market using econometrics. In addition to widespread ethical principles such as equality of access and solidarity, health economics legitimizes collectivist state intervention for the development, maintenance, and regulation of national healthcare systems. The threat of government failure is to be averted by health policy interventions, and health economic models and research (health services research, econometric cost-benefit studies, etc.) are supposed to inform these interventions. Health economists — so-called social engineers — in line with politicians, aim at technocratic management of healthcare systems and the associated political discourse. The consequences are far-reaching: compulsory insurance, price controls, and third-party financing of all services ultimately transform the entire sector into a bureaucratic form of economy.
What Options Do Mall Landlords Have When Brick & Mortar Retail Melts Down on Them? – Wolf Richter
Even in San Francisco: From a brand-new glitzy zombie mall to innumerable vacant storefronts.
Mall investors have long denied it. But year after year, ecommerce has been eating up brick-and-mortar retail sales, in the third quarter faster than ever, and in the fourth quarter, according to early indications, even faster. Turns out, ecommerce is a structural change that grew out of the arrival of the Internet, has been underway for two decades, and will continue until it has played out.
Sure, malls are not all going to be shuttered overnight. But many of them have already been turned into zombie malls; and others that are located on good locations are being redeveloped into office and apartment buildings with some retail and restaurant space, along with movie theaters, and other entertainment venues.
Auto Lenders Have Verified Income On Just 7% Of All Loans Since 2017 – Tyler Durden
The auto industry in 2019 is starting to look a lot like the subprime mortgage market in 2007.
One such example of an industry trying to move vehicle inventory by any means necessary was Mirna Lopez, a 65 year old who was able to buy a 2018 Nissan Pathfinder on monthly earnings of just $660. Her car loan’s monthly payment was slated to be $809.
How was this possible? The Wall Street Journal reports that an employee at the dealership that sold her the car simply listed her monthly earnings at $7,833. Nothing creative, nothing fancy: just plain old fraud.
Chile Is in Danger of Becoming Just Another Crisis-Ridden Latin American Country – Matheus Fialho Vieira
Although we Latin Americans thought Chile was immune to populism, small protests have grown into the largest ones since the nation’s re-democratization in the 90s. Initially, the protestors were groups of students complaining about a raise in the Santiago subway fare — an increase of 3.75 percent or about five US cents (which could add up to $1.15 during peak hours). They demanded that prices be held lower, and some even called for free passes.
Now, the movement has taken on a whole new character, with protestors’ complaints becoming about income inequality and a poor welfare state. Violence also entered the picture, as protestors started rioting, burning nineteen subway stations. President Sebastian Piñera then declared a state of emergency, calling in troops to restore order.
***What’s Good And Bad About Automation – Steven Davies
Currently, there is a lot of discussion about the impact of technologies such as artificial intelligence on the world of work and employment.
Some of this is alarmist, and some excessively excited. There will indeed be dramatic changes, but history and economic theory both suggest that these will not radically alter the nature of the economic system.
What an Independent Britain Could Learn from Singapore – Ferghane Azihari
Imperial nostalgia leads Europeans to adopt the prejudice that the prosperity of a civilization depends on its ability to transform itself into a vast empire. Hence the anxious atmosphere that reigns over the United Kingdom, which has been trying for too many months to implement the exit from the European bloc decided in the referendum of June 23, 2016. Is the cult of political gigantism justified?
The history of Singapore proves the opposite.
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