Category Archives: Economics

Real estate expert documents France “Coming Apart”

From Christopher Caldwell at City Journal,

[Christophe] Guilluy doubts that anyplace exists in France’s new economy for working people as we’ve traditionally understood them. Paris offers the most striking case. As it has prospered, the City of Light has stratified, resembling, in this regard, London or American cities such as New York and San Francisco. It’s a place for millionaires, immigrants, tourists, and the young, with no room for the median Frenchman. Paris now drives out the people once thought of as synonymous with the city.

Yet economic opportunities for those unable to prosper in Paris are lacking elsewhere in France. Journalists and politicians assume that the stratification of France’s flourishing metropoles results from a glitch in the workings of globalization. Somehow, the rich parts of France have failed to impart their magical formula to the poor ones. Fixing the problem, at least for certain politicians and policy experts, involves coming up with a clever shortcut: perhaps, say, if Romorantin had free wireless, its citizens would soon find themselves wealthy, too. Guilluy disagrees. For him, there’s no reason to expect that Paris (and France’s other dynamic spots) will generate a new middle class or to assume that broad-based prosperity will develop elsewhere in the country (which happens to be where the majority of the population live). If he is right, we can understand why every major Western country has seen the rise of political movements taking aim at the present system.

In France, political correctness is more than a ridiculous set of opinions; it’s also—and primarily—a tool of government coercion. Not only does it tilt any political discussion in favor of one set of arguments; it also gives the ruling class a doubt-expelling myth that provides a constant boost to morale and esprit de corps, much as class systems did in the days before democracy. People tend to snicker when the question of political correctness is raised: its practitioners because no one wants to be thought politically correct; and its targets because no one wants to admit to being coerced. But it determines the current polarity in French politics. Where you stand depends largely on whether you believe that antiracism is a sincere response to a genuine upsurge of public hatred or an opportunistic posture for elites seeking to justify their rule.

Guilluy is ambivalent on the question…  More.

Reality check: Except for the elite, globalization averages things. A step up for the immigrant busboy; a step down for the once-employed French deplorables. Then there is the fun, for elite virtue-signallers, of sneering at the latter group’s unhappiness.  And enjoying the thrill of a mild, containable panic over the possible return of fascism..

See also: How did “populism” become such a dirty word? A left-wing journalist offers some thoughts


Has everyone forgotten that the Obama campaign decided to desert white working class voters in 2012? So why are progressive mental basement dwellers still flooding the internet with nonsense about the alt right, fake news, and the Russians in US politics?

The Real Challenge for U.S. Industry

Automation is hardly the main worry in U.S. manufacturing employment.

The conventional wisdom about the decline in American manufacturing jobs is that automation is to blame—“Most US manufacturing jobs lost to technology, not trade,” a Financial Times headline claims. Similarly, a December New York Times article self-assuredly states, “The Long-Term Jobs Killer Is Not China. It’s Automation,” as does CNN Money in its article, “Rise of the machines: Fear robots, not China or Mexico.”

This assessment of the state of U.S. manufacturing rests on two statistics that seem to be in tension. First, employment in U.S. manufacturing has plunged 30 percent since 2000. Second, manufacturing output has held steady as a percentage of GDP. Improvements in productivity, including automation, explain the divergence of these trends: factories are making more with fewer workers. In other words, the only concern regarding American manufacturing competitiveness is what to do with the workers who’ve lost their jobs to robots.

In fact, the conventional narrative is wrong; it is based on misleading manufacturing statistics. A new, more informed counter-narrative is emerging from a handful of economists and Washington policy analysts. This highly technical analysis involves knowledge of the way U.S. statistical agencies calculate manufacturing output. It shows that employment has indeed fallen in manufacturing, but it is likely that output has fallen, too.

The UBI’s Parent Trap

Advocates on the right and left are getting behind the Universal Basic Income—but would they offer it to their own children?

Universal Basic Income, or UBI, is one of the hot policy ideas of the moment. It calls for the federal government to provide every citizen with an unconditional cash stipend sufficient to meet basic needs. Just this week, Harvard University Press released Basic Income: A Radical Proposal for a Free Society and a Sane Economy, a major work by Belgian professors Philippe Van Parijs and Yannick Vanderborght. Tomorrow in Manhattan, Charles Murray and Andy Stern (bothauthors of pro-UBI books) will debate former Obama advisors Jason Furman and Jared Bernstein on whether “the Universal Basic Income is the Safety Net of the Future.”

These discussions tend to focus on the feasibility of the policy, and comparisons with the current safety net of government programs like Medicaid and food stamps, while ignoring a crucial question: What would it mean to remove the expectation that one provide for oneself and one’s family, instead assigning that role entirely to the state? While policymakers sift through the data, non-economists will find their answer in common sense and lived experience.

Scary Population Tales – No we don’t need mass immigration to ensure our prosperity

An older population is a consequence of capitalism making Western societies richer beyond anything conceivable when our grandparents were young. Capitalism, albeit with hiccups and an occasional convulsion, will go on making us richer and better able to care for the elderly

“…Beyond embracing capitalism, numbers of factors come into play to explain why one nation is more prosperous than another. Education is undoubtedly important. The wisdom of rulers in the way they go about taxing, spending and regulating is important. The availability of natural resources might play a part as, less tangibly, might the degree to which societal norms create an environment which encourages individuals and businesses to be adventurous and innovative. How does population—its size and growth—fit in?

As I will show, by a quick look at the evidence, population size itself hardly matters at all. The economic effects of falling population growth are more difficult to assess. They fall broadly under a heading of the direct and indirect consequences of an ageing population. Those consequences most prominently discussed are increased welfare spending, a fall in the rate of saving, a deficiency of aggregate demand, and a loss of adventure and innovation. I will consider each in turn, but first to population size.”

Scary Population Tales — a Response

Peter Smith has exposed the hollowness of ageing-related excuses for high population growth, but misses the point that these are merely excuses. Until we have a government willing to elevate the interests of ordinary people, the immigration throttle will remain glued to the floor

Peter Smith’s welcome article “Scary Population Tales” makes some valuable points, but was marred by some glaring misrepresentations and ideological non-sequiturs. It’s refreshing to hear a devout ‘capitalist’ questioning the population growth agenda. But I find much of his position hard to stomach.

Related… Lawrence Solomon: American workers didn’t have to suffer for NAFTA, but the deal was rigged so they would

“…It was all for the greater good. But it wasn’t the free market at work. It wasn’t the inevitable march of progress. It wasn’t even for the greatest good. It was, rather, a vast central-planning exercise in which the mandarins — government officials lobbied by myriad trade associations and other special interests — decided which communities would win and which would lose through thousands of pages of legislation and regulations. Their decisions were based not on economics but on politics.”

Yet more Central Planning by way of the Temporary Foreign Workers scam, courtesy Canada’s Crony Capitalists and agenda driven unions aided and abetted by a Liberal government determined to alter the face of Canada forever.

Canada’s Debt-to-Income Ratio Increasing

Let the good times roll:

Canadian household debt as a share of income hit a record high in the second quarter, Statistics Canada data showed on Thursday in a report likely to reinforce concerns of overborrowing by consumers.

The ratio of household credit market debt to disposable income rose to 167.6 percent in the second quarter from 165.2 percent in the previous quarter. That means Canadians had C$1.68 ($1.27) of debt for every dollar of disposable income.

Household credit market debt, which includes consumer credit and mortgage and non-mortgage loans, rose 2 percent in the quarter, easily outpacing growth in disposable income of just 0.5 percent.

Years of low interest rates since the financial crisis have seen Canadians take on more debt, largely due to rising home prices.

Consumers borrowed a seasonally adjusted C$29.2 billion in the second quarter, an increase of C$3.5 billion from the previous quarter. Mortgages accounted for C$19.1 billion of that, up from C$18.4 billion, while other types of debt stood at C$10.1 billion, up from C$7.3 billion.

1400 Washington DC jobs lost to escalating minimum wage hike

From Tyler O’Neil at PJ Media,

D.C. Restaurants Lose 1,400 Jobs Amid Minimum Wage Increase

In the first six months of 2016, leading up to a $11.50 per hour minimum wage, Washington, D.C., lost 1,400 restaurant jobs, according to the Bureau of Labor Statistics. This is a full 2.7 percent decline in food service jobs in two quarters, the largest such drop since the 2001 recession 15 years ago. In fact, this is the first time since 1991 that restaurants lost jobs in five of the first six months of a year. Even the 2008 recession pales in comparison to this loss of employment.

The decline in such jobs appears limited to the confines of the district. In the Maryland and Virginia suburbs surrounding D.C., restaurants added 2,900 jobs during the first six months of this year. In Virginia, the state minimum wage is only $7.25 per hour, 37 percent below D.C.’s, and in Maryland the state minimum wage is $8.75 per hour (although two counties, Montgomery County and Prince George’s County, have scheduled increases to bring their local minimum wage up to $10.75 per hour).

As Mark Perry, a scholar at the American Enterprise Institute (AEI) and a professor of economics and finance at the University of Michigan, explained, the circumstances provide “a natural experiment to test for the employment effects of DC’s minimum wage law,” and those seem 100 percent negative. More.

Reality check: From the progressive perspective, it doesn’t matter and will not affect their electoral chances. The unemployed slowly transition to a dependent existence, far more in need of progressive policies that they ever were before. Their children grow up knowing nothing else. Having no needed skills to market, they will market identity, grievances, and entitlement.

All of which, progressive government is better prepare to cater for than any government that would encourage initiative in the pursuit of prosperity.

See also: See also: Minimum wage hike is part of planned jobsolescence

Economic Conspiracies

A general economic principle is that any law or regulation that restricts market entry tends to impose the greatest burden on those who can be described as poor, latecomers, discriminated-against and politically weak.

The president of the NAACP’s St. Louis chapter, Adolphus Pruitt, has petitioned a circuit court judge to reject the St. Louis Metropolitan Taxicab Commission’s conspiratorial call to issue a temporary restraining order that would force Uber to shut down. He says the order would negatively impact nearly 2,000 African-Americans who work as Uber partners in black neighborhoods that have long been ignored by taxis and other transportation providers. In a statement, Pruitt said, “The immediate harm of a (temporary restraining order) would strand thousands of African American riders who depend on Uber to travel around a city that has measurable gaps in its transportation system and has failed to serve our neighborhoods for decades.”

A Cheerleader for Globalization Has Second Thoughts

For years, the McKinsey Global Institute has been leading the charge for globalization, publishing research on the virtues of free trade, open data flows, cross-border investment, and liberalized immigration.

“The core drivers of globalization are alive and well,” the think tank of American consultancy McKinsey & Co. wrote in a 2010 study, while the world was still recovering from the financial crisis. “To be unconnected is to fall behind,” its researchers wrote in 2014.

But a study McKinsey released today stresses that the economic gains of changes in the global economy have not been widely shared lately, especially in the developed world. It’s called “Poorer Than Their Parents? Flat or Falling Incomes in Advanced Economies.” Prospects for income growth have deteriorated significantly since the financial crisis, the report finds.

h/t LS

The Human Case for Economic Nationalism

Critics of Donald Trump “America First” economic nationalism are undoubtedly correct when they assert that his policies will raise consumer prices or, put concretely, the $5 made-in-who knows where but probably overseas shirt from Walmart may be history. But, the awaiting price increase is only part of the larger financial perspective, and if viewed more broadly, the picture looks less bleak.

The costs of economic nationalism can be viewed from two vantage points. The dominant perspective, and the one usually favored by multi-national businesses, is to focus on imports as an unqualified good deal for consumers. It is an alluring argument — after all, how many shoppers will pay a premium for an item that comes with a “100% made-in-America” tag?  Imagine if Walmart offered imported products side-by-side with those costing a third or more? A no-brainer or so it would seem. In other words, trade agreements like NAFTA and cheap immigrant labor are a boon for bargain-minded American consumers.

The Finnish Model

“…This year, the Finnish government hopes to begin granting every adult citizen a monthly allowance of €800 (roughly $900). Whether rich or poor, each citizen will be free to use the money as he or she sees fit. The idea is that people are responsible for their actions. If someone decides to spend their €800 on vodka, that is their decision, and has nothing to do with the government. In return for the UBI, however, the public accepts the elimination of most welfare services. Currently, the Finnish government offers a variety of income-based assistance programs for everything from housing to children’s education to property insulation. Axing these programs should free up enough public resources to finance the UBI. The bureaucracy that currently governs welfare payments will disappear. There will no longer be any need to ask for government help, nor to fill out forms or wait for the competent authorities to examine each dossier to determine eligibility.”

Link fixed.

The Man Who Says Poland Will Be Dead by 2020

Despite his penchant for dressing up as Michael Jackson or Hunter S. Thompson for class, Janek Sowa is absolutely not kidding when he says, as he does to anyone who’ll listen, that Poland will cease to exist. Odds-on favorite? By the year 2020.

“We have an economy that constantly produces good macroeconomic indicators,” the slight, bespectacled, 39-year-old professor and sociologist at Jagiellonian University in Kraków, Poland, says from his hotel room in Berlin, where he’s attending a conference. Sowa cites things like public debt, which, according to him, is “not very elevated”; gross domestic product growth, which has stayed at 5 to 6 percent per year since the mid-’90s, he says, and never dropped below 2 percent even after the 2008 financial crisis; and a steady wave of foreign investments. Nonetheless, Sowa says, the average Polish citizen saw “very limited benefits from this economic miracle.”

Free Trade With China Wasn’t Such a Great Idea for the U.S.

In his recent book “Economics Rules,” Harvard economist Dani Rodrik laments how economists often portray a public consensus while disagreeing strongly in private. In effect, economists behave like scientists behind closed doors, but as preachers when dealing with the public.

Nowhere is this evangelism clearer than on the issue of trade. Ask any economist what issue they agree on, and the first answer you’re likely to hear is “free trade is good.”  The general public disagreesvehemently, but economists are almost unanimous on this point.

But look at actual economics research, and you will find a very different picture. The most recent example is a paper by celebrated labor economists David Autor, David Dorn and Gordon Hanson, titled “The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade.”

The study shows that increased trade with China caused severe and permanent harm to many American workers…

The low tricks of high finance: how greedy bankers, weak politicians and timid journalists could cause a new crash

It amazes me, simply amazes me, that journalists aren’t all over these stories. Doesn’t it amaze you too?’

I’m in a plush room in a swanky central London hotel, in conversation with Michael Lewis. He is all fired up, leaning forward as he perches on the hard edge of the cushion-strewn sofa. He oozes incredulity, palms upward, shoulders raised.

‘I’m not saying there aren’t good financial journalists,’ he concedes. But the qualification seems half-hearted — and is quickly reversed. ‘The Wall Street Journal is a much worse newspaper than it was 20 years ago,’ he asserts, taking aim at the bible of US high finance. ‘The news side of the paper has the fingerprints of the finance industry all over it’.

Switzerland to vote on banning banks from creating money

Switzerland will hold a referendum to decide whether to ban commercial banks from creating money.

The Swiss federal government confirmed on Thursday that it would hold the plebiscite, after more than 110,000 people signed a petition calling for the central bank to be given sole power to create money in the financial system.

The campaign – led by the Swiss Sovereign Money movement and known as the Vollgeld initiative – is designed to limit financial speculation by requiring private banks to hold 100pc reserves against their deposits.

“Banks won’t be able to create money for themselves any more, they’ll only be able to lend money that they have from savers or other banks,” said the campaign group.


Well that’s kinda Christmassy…