Tag Archives: economic growth

is the U.S. becoming a developing country?

This Bloomberg article has a list of areas where the U.S. is following behind its peer group of developing nations.

  • roads, highways, bridges
  • high construction costs for all types of infrastructure, particularly high speed rail causing planned projects to be canceled
  • health care costs and outcomes
  • life expectancy
  • maternal mortality
  • rents rising faster than inflation
  • opioid addiction
  • suicide
  • lead in drinking water
  • poverty and hunger

The article offers the cautionary tale of Italy, which has been sliding backward over a decade or so following many years of similarly flashing warning lights before that.

May 2019 in Review

This wasn’t my most prolific writing (or reading) month ever. In fact, it my have been my worst. But here are a few highlights of what I did get around to.

Most frightening and/or depressing story:

  • Without improvements in battery design, the demand for materials needed to make the batteries might negate the environmental benefits of the batteries. I’m not really all that frightened or depressed about this because I assume designs will improve. Like I said, it was slim pickings this month.

Most hopeful story:

  • Planting native plants in your garden really can make a difference for biodiversity.

Most interesting story, that was not particularly frightening or hopeful, or perhaps was a mixture of both:

  • Joseph Stiglitz suggested an idea for a “free college” program where college is funded by a progressive tax on post-graduation earnings.

 

leisure-enhancing technologies and productivity

This article claims that the rise of the entertainment industry explains slowing productivity growth, because not only does entertainment distract us from creative and productive pursuits, but our creative and productive people are pouring their energies into this sector because it is where the profits are. I don’t necessarily buy the former, because it is possible that we could be deciding as a society that we are productive enough and choosing to spend more time on pursuits that do not put ever more monetary wealth in our pockets. I think some people are doing that, perhaps not most. Perhaps in Scandinavia. But the second part does make sense to me, that the smartest and most creative people are not being drawn to the sectors where they could do the most good for society.

data-driven economics 101

This article in Vox is about an entirely data-driven approach to introductory economics. The idea of asking students to discover their own theories is an interesting one, but in most fields I do think there is an established body of theory and standard practice that students should learn before they are qualified to go off reinventing their own wheels. If a new generation doesn’t know what they don’t know, they have to reinvent everything and society doesn’t make progress.

Joseph Stiglitz’s Economic Platform

Joseph Stiglitz has a new book on what he thinks an evidence-based progressive economic platform should look like. I admit, I haven’t read the book, but I have read this Axios summary of the book. And here is my summary of that summary:

  • “the government should spend as much money as it takes to bring the economy to full employment.” Nicely put.
  • strong antitrust action, including against social media companies
  • a federal job guarantee, but no universal basic income or explicitly race-based reparations
  • the ability to opt in the Medicare
  • (optional) mortgages provided by the government (well, don’t we have something close to this already? I guess it’s just that private banks get their cut before they hand it over to an “implicitly” government-backed lender. I guess you could cut out the middleman.
  • Higher education funded by a progressive tax on post-graduation earnings: “Graduates earning more than $30,000 might pay 1% of their income toward repaying their student loans; those on seven-figure salaries might pay 4%. After 25 years, the loans are forgiven.” He doesn’t specify this has to be public schools only, although it seems to me this would blur the distinction. And if this federal program existed, is it possible states would reduce or end their funding for state schools and blur the distinction even more?

This all sounds good to me. Add some serious research spending and it just might work. The jobs guarantee might work, but would have to be coupled with a stronger disability, mental health and substance addiction safety net than we have now.

where academic economics is headed

Writing in Boston Review, Harvard Professor Dani Rodrik and others talk about how public opinion has turned against the economics profession to some extent over the last decade or so, and how academic economists are trying to engage with the issues of the day, including inequality, technological change and climate change.

  • economic history
  • behavioral economics
  • the study of culture (hmm, not sure if economists first thought of this one…)
  • wealth concentration
  • costs of climate change, and setting an appropriate carbon price
  • “concentration of important markets” (maybe this means concentration of a few firms within a given market?)
  • working class income stagnation
  • social mobility
  • empirical data analysis to test and confirm theory
  • analysis and study of institutions
  • appropriate allocation of property rights, including “intellectual property”
  • innovation, technological change, and their effects on growth and labor markets
  • money, power, and politics

They list a few “economic universals” which they think will never change: “market-based incentives, clear property rights, contract enforcement, macroeconomic stability, and prudential regulation”. Traditional topics that will probably always be studied include labor, credit, and insurance markets; tax, fiscal and monetary policy; international trade; recessions and financial crises; public goods and social insurance programs. I had to look up prudential regulation, which is basically capital requirements and limits on risk in the banking sector.

socialism, capitalism, and inequality

This article on History News Network sums it up pretty well. Socialism doesn’t work well when it means an authoritarian government controlling all aspects of the economy in the name of “the people” (e.g., the Soviet Union). Capitalism works well for an elite few but does not work well for the majority when it allows private wealth to hijack the political process (e.g., the United States, especially in recent decades).

There is a formula that works pretty well. It’s almost boringly simple and yet seems depressingly out of reach for the U.S. as long as wealthy individuals and industries are able to buy elections and write the nation’s laws to continue stacking the deck in their favor, while using our free speech protections to wage an effective propaganda war so that the public actually supports this.

It’s a common mistake of both left and right to talk about capitalism and socialism as if there were only two choices. One-party socialist systems in less developed countries have not worked well over the past century. Capitalism as practiced in the United States and many other nations has mainly benefitted those who already are wealthy. The nations in which all citizens gain from economic growth have combined elements of market economies, private ownership, and political policies that mitigate inequality. In western Europe, public health care, nearly free university education, stronger progressive taxation, higher minimum wages, and inclusion of trade unions in corporate decision-making result in much lower inequality and much happier populations.

what is “dark enlightenment”?

Well, according to Quartz, basically “dark enlightenment” is a neo-fascist ideology to beware of, in which democratic governments are replaced by corporations.

What are the tenets of Dark Enlightenment theory? There are a few consistent themes, circling around technology, warfare, feudalism, corporate power, and racism. “It’s an acceleration of capitalism to a fascist point,” says Benjamin Noys, a critical theory professor at the University of Chichester and author of Malign Velocities: Accelerationism and Capitalism.

Land believes that advances in computing will enable dominant humans to merge with machines and become cybernetic super beings. He advocates for racial separation under the belief that “elites” will enhance their IQs by associating only with each other.

Capitalism has not yet been fully unleashed, he argues, and corporate power should become the organizing force in society. Land is vehemently against democracy, believing it restricts accountability and freedom. The world should do away with political power, according to Dark Enlightenment, and instead, society should break into tiny states, each effectively governed by a CEO.


I’m reminded of a lecture I attended by Paul Romer on his idea of “charter cities”. The basic idea was to create something that looked very much like a corporate state where virtually all institutions including politics would be subordinated to the maximization of economic growth. Now, I am not accusing Paul Romer of being a fascist. In fact, in his conception people from any country can be part of the charter city, as long as they have skills and follow norms of behavior designed to maximize economic growth. But one thing his concept does appear to share is that those norms of behavior are imposed from above, and the only free choice people have is that society is a choice to either be part of it or not.

margin calls

I don’t pay too much attention to stock market commentary, but another warning light on the economic dash might be that margin calls appear to have spiked. You ignore most of those warning lights most of the time, but sometimes they mean something, and if there are more of them over time and they are all flashing at once you might want to do something about it. Margin calls mean investors who have borrowed money from their brokers to buy stocks are being told by the brokers they have to pay the loans back, which forces them to sell some of what they have. It suggests the brokers are nervous the market might fall. If it actually starts to fall, this can accelerate the fall because people are then forced to sell when they don’t want to and everybody else is selling. And margin calls are just the visible tip of a debt iceberg, most of which lies unseen beneath the surface. This blog is called Wolf Street.