Angus Deaton has long been one of my favorite economists, with work that ranges from the technical to the extremely practical. I particularly enjoyed his thoughtful comments on GDP in rich and poor countries (they consume different products, hard to compare) and happiness research (what does it mean when poor people tell us they’re happy?). Quartz has the best short summary, but see also his collection of popular writing and Google Scholar page. Also the Nobel announcement.
In Global Economy, our discussion of the pros and cons of regulation goes like this:
- There’s often a legitimate rationale for regulation (eg, safety).
- Real-world regulation often goes well beyond the rationale, typically because incumbents use it to protect themselves from competition (eg, Tesla, chickens, braiding hair).
From the World Bank:
The number of people living in extreme poverty around the world is likely to fall to under 10 percent of the global population in 2015, according to World Bank projections released today, giving fresh evidence that a quarter-century-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030.
A lot of this comes from China and India, but you see similar patterns across the board.
China has been a constant source of speculation in the econ group here. Some thoughts (quotes approximate):
- Slowdown or crisis? Nouriel Roubini: “I don’t see a hard landing. Growth should be 6-6.5% over the next two years, 5% in the medium term.” That’s slower than we’ve seen, but would look pretty good anywhere else.
- Impact on the US? Lew Alexander, at the CGEB’s forum last week, thought the impact on the US would be small: “The US is still to a remarkable degree a closed economy. A slowdown in China is not that big a deal to the US — unless there’s a financial crisis.” That fits lots of evidence that shows only modest relations between economic fluctuations across countries. The 2008-09 financial crisis was an obvious exception, but that’s the point: it was an exception.
United’s CEO resigned. The Times reports:
In February, federal prosecutors issued subpoenas focused on whether the former chairman of the Port Authority, David Samson, had pushed United to reinstate flights that he used to travel to and from his weekend home in South Carolina.
Julia Lane passes on this wonderful talk. It’s worth 55 minutes of your time for the (cautionary) business stories alone. And no, I won’t give you any soundbites.
From Alex Tabarrok (edited slightly for continuity):
Many people look at big firms and little workers and they see an imbalance and can’t imagine how the firms are not in control. [But] buyers don’t compete against sellers, buyers compete against other buyers. Firms buy labor and they are competing primarily not against workers but against other firms. When firms are thinking about wages what they are thinking about is the threat from other firms. When a firm is hiring it knows it must pay the worker at least as much as other firms are willing to pay.
Your goal, then, is to have a skill set that someone else values. In our world, the cliche is: Deans don’t set salaries, they simply determine where we work.
From today’s FT:
A leading journalist at one of China’s top financial publications has admitted to causing “panic and disorder” in the stock market, in a public confession carried on state television.
The detention of Wang Xiaolu, a reporter for Caijing magazine, comes amid a broad crackdown on the role of the media in the slump in China’s stock market, which is down about 40 per cent from its June 12 peak. Nearly 200 people have been punished for online rumour-mongering, state news agency Xinhua reported at the weekend.
Hyperinflations — annual inflation above 100 percent — have the same appeal as car accidents, it’s hard to look away. Even better, we know how they work: government deficits financed by printing money. The more money you print, the less it’s worth. It’s not complicated.
Venezuela is the latest to join the club. Hyperinflation expert Steve Hanke estimates the inflation rate at 700 percent, which means currency loses one third of its value every month. Price controls have led to widespread shortages of food, medicine, and toilet paper — there’s even a Wikipedia page on the subject.
All of this reflects poor governance: the Venezuelan government simply doesn’t work for most of its citizens.