science and economic growth

July 28th, 2016

Like imperialism and trade, science was more a result of economic growth than a cause.

All this remains to be shown …. But understand the main point here: even today … a great deal of economic growth in a country has little or nothing to do with science. The spread of economic growth to places like Brazil or Russia or India or China uses some science-based technologies, such as cell phones, but uses also a great many merely technology-based technologies free of much input from science …. And the international spread of growth has intensively used the social “technology” of bourgeois dignity and liberty.

Deirdre N. McCloskey, Bourgeois Dignity: Why Economics Can’t Explain the Modern World (University of Chicago Press, 2010), pp. 360-361.

Surprised? (I was.) Not convinced? Before rejecting McCloskey’s thesis read all ten pages of chapter 38 (“The cause was not science”), pp.355-365 or, better yet, read the entire book.

renewable energy

July 27th, 2016

These are strange days in the energy business. Startling headlines are emerging from the sector that would have seemed impossible just a few years ago. ….

In the UK, renowned for its miserable overcast weather, solar panels contributed more power to the grid than coal plants for the month of May. ….

Trina Solar, the Chinese company that is the world’s largest solar panel manufacturer, said it had started selling in 20 new markets last year, from Poland to Mauritius and Nepal to Uruguay. ….

It is clear that the world is shifting toward renewables and — as a proportion of total consumption — away from oil, gas and coal.

Ed Crooks, “Balance of power tilts from fossil fuels to renewable energy“, Financial Times, 27 July 2016 (metered paywall).

There is much more in the full column. “While renewable energy has been growing fast,” cautions Mr Crooks, “it is coming from a very low base. ‘Modern renewables’ — mostly biofuels, wind and solar, but not hydro or traditional biomass — provided just 2.5 per cent of the world’s primary energy last year ….”

Ed Crooks is US industry and energy editor for the Financial Times. He was previously an economics correspondent for the BBC

the psychology of financial markets

July 27th, 2016

Financial markets are like small children. They find it hard to focus on more than two things at once.” That is the conclusion drawn by one of my colleagues after a lifetime of professional investing.

Whether small children can focus on anything at all is a matter for debate. Chocolate, perhaps. But he has a point when it comes to global markets. Investors have been so focused on the Brexit vote and its aftermath that they have missed the big picture, which is that the global economy is still worryingly dependent on US growth and the extreme efforts of central banks. ….

Big picture: China might be more stable but is no closer to resolving its structural and financial imbalances than it was a year ago, and it is still exporting disinflation to the rest of the world via a weaker exchange rate. US import prices from China fell by 3 per cent in June, the largest monthly drop since 2013.

Stephanie Flanders, “The world leans ever more on America“, Financial Times, 27 July 2016 (metered paywall).

home-grown terrorists

July 27th, 2016

The ongoing ‘war on terror’, increasingly, is an internal war on each country’s own citizens.

[In Europe, the] pool of vulnerable radicals is large. The UK, for example, has about 800 citizens who have travelled to fight in Syria. MI5, the Security Service, is watching at least 3,000 more at home who are potential recruits to the cause. Elsewhere in Europe, particularly in France, the ratio is greater. An added irony is that as Europe’s security agencies have become better at stopping the flow of their own citizens to the Middle East, they have also begun to swell these ranks. [Emphasis added.]

Sam Jones, “Lone wolf attacks raise the tempo of terror in Europe“, Financial Times, 27 July 2016 (metered paywall).

How can these seemingly random acts of violence be prevented? By placing large groups of ethnic and religious minorities in concentration camps? This was done with the Japanese during the second world war, but is now widely perceived to have been a flagrant abuse of human rights.

good news for poor children in California

July 24th, 2016

Four decades ago, California and 21 other US states passed legislation denying additional benefits to mothers on welfare if they had more children. These measures were inspired in part by the “welfare queen” rhetoric of Ronald Reagan and others.

It took 22 years, but California finally acknowledged last month that the ban was cruel and ineffective. …  Gov. Jerry Brown quietly signed into law the repeal of the so-called maximum family grant cap. “I don’t know a woman — and I don’t think she exists — who would have a baby for the sole purpose of having another $130 a month,” declared State Senator Holly Mitchell, a Democrat who led the repeal, in denouncing “a racist, classist, sexist policy.”

Repeal means $220 million a year in extra welfare aid to provide $136 a month for each of 130,000 children in 95,000 families. ….

California is the seventh state to repeal family caps since 2002 on the basis of studies showing that the strictures have had no effect on the birthrates of welfare mothers. ….

The family cap laws … are still in place in 15 states. The New Jersey Legislature voted to repeal the family cap last month. But Gov. Chris Christie vetoed the measure, saying that non-welfare mothers “do not automatically receive higher incomes following the birth of a child.”

Editorial Board, “California Deposes Its ‘Welfare Queen’”, New York Times, 24 July 2016.

Governor Chris Christie is wrong. Non-welfare families receive an income tax deduction for each additional dependent, so their after-tax income increases following the birth of a child. After-tax income is what matters for the family budget. Note, however, that the value of this gift of reduced taxable income is greater for high-income taxpayers, who are almost always in high tax brackets compared to low-income taxpayers. The value an additional dependent allowance is zero for parents on welfare, who earn so little they have no taxable income.

A more equitable way to combat child poverty would be to replace deductions for dependent children with universal child credits. The credits should be taxable as income, thus ‘clawed back’ in part from families with taxable income. This is the system used in many countries.

‘war porn’

July 23rd, 2016

Isis has taken the media game to a new level. In the past, terrorist and insurgent groups have often used the media to propagate their messages. What makes Isis unusual is that it is not only extraordinarily adept at mastering modern media platforms but that it has made this a strategic priority. One goal is to spread fear. The other is to attract new recruits.

Its media outreach has been so effective that some US intelligence observers even suspect that Isis has studied western consumer giants to replicate their marketing tactics.

Gillian Tett, “The digital war with Isis“, Financial Times, 23 July 2016 (metered paywall).

on pacifism

July 22nd, 2016

“The Christian ideal has not been tried and left wanting. It has been found difficult; and left untried.” G.K. Chesterton wrote that in 1910, and during the hundred or so years since, nothing has changed. “Difficult” concepts (thou shalt not kill; love your enemies; do good to those who hate you) become impossible in times of war and are conveniently forgotten.

[…]

During the 1939-45 war … all the churches I knew … seemed in support of the war. …. [J]ust as we prayed to God for victory and deliverance, so did the German people; and just as chaplains on our side blessed the men before battle, so did the other side. […]

Gradually [as years went on] the church I had grown up with ceased to have relevance. …. In my early thirties, I found myself on a spiritual search and to my everlasting gratitude was led to Quakers and read the great testimonies. It was … as though everything came tumbling into place. …. I knew then that I could not answer all the questions that arise, such as “What would you do if …” and “What about Hitler and his attempt to execute all the Jews, the homosexuals, the mentally ill, the gypsies?” Later, I met a relative who had been a conscientious objector in the 1939-45 war, and he gave me great help. His brother lived in a psychiatric hospital due to injuries received in the 1914-18 war, and indeed died there in the early 1970s. The simplicity of his answer, “I did not want to do to anyone what had been done to my brother,” put into words what has remained a truth for me.

Quaker Quest, “Twelve Quakers and Pacifism”, Quaker Quest Pamphlet 3 (London, UK, 2005), pp. 13, 15-16.

I have begun my own spiritual search, so would like to share these words with you. This and other pamphlets in the series are not available online, but can be purchased from quakerquest@blueyonder.co.uk

contributory and non-contributory pensions in Vietnam

July 22nd, 2016

The World Bank this week (19 July) released a report on Vietnam that emphasizes the challenges of coping with an ageing population. I have not seen the report, but an online news feed provides a brief summary. Here are some extracts.

[T]he rate of participation of the people in the retirement fund is still low, reaching only 22% of the workforce, while the majority are only entitled to a small social pension if they live to the age of 80.

The [contributory] pension system in the formal sector is financially unsustainable though it underwent reform in 2014. ….

[A proposal to lower] the age … [of eligibility for the] social pension from the current level of 80 years … has … not yet [been] approved. …. Besides, the social pension is very low, only equivalent to 10% of the average income ….

The official [contributory] pension … [is] currently … 3% for women for each year of contribution and 2.25% for men. Compared to international standards, this is a very high rate and unsustainable ….

Despite the high rate, the practical benefit is lower because most people only contribute based on the basic salary, which is usually the minimum wage.

In 2014, the Vietnamese government implemented reforms to expand the contribution base … [to include] not only the basic wage but also allowances, bonuses and other remuneration regimes. ….

[The World Bank recommends three policy changes.]

Firstly, gradually reduce the social pension age from 80 to 70. Secondly, … expand the … subsidized program [of social pensions for the informal sector]. [Emphasis added.]

Thirdly, … Vietnam cannot maintain the current [contributory] system without reform.

WB report: Vietnam’s pension system faces challenges“, VietNamNet Bridge, 22 July 2016.

HelpAge International (Pension Watch) reports that Vietnam’s social pension of 180,000 Dong (9 US$) a month is pension-tested for those aged 80 and older, and means-tested for those aged 60-79 years. The social pension, according to the same source, reaches 2% of Vietnam’s 60+ population.

I don’t understand the discrepancies between information from the World Bank and that from Pension Watch. Is there a social pension for persons aged 60-79 years? Or is it limited to those aged 80 and older? If the social benefit is pension-tested for those aged 80 years and older, this implies that 100% of the 80+ population receives some sort of cash pension, unless take-up of the social pension is low for reasons other than eligibility.

Perhaps someone from Pension Watch can clarify this. I appreciate the good work that Help Age does, filling gaps in our knowledge of social pensions. Non-contributory pensions are sadly neglected by the World Bank, ILO and other institutions, so the country data posted at Pension Watch are very helpful.

Adam Smith on income and happiness

July 21st, 2016

Adam Smith (1723-1790) wrote that, beyond some basic amount, money does not buy happiness. “The beggar, who suns himself by the side of the highway,” he wrote, “possesses that security which kings are fighting for.” So much, then,  for greed and profit as the driving force of capitalism.

The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. …. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.

Adam Smith, The Theory of Moral Sentiments (6th edition, 1790), part IV, ch I, paragraph 10.

good and evil

July 21st, 2016

If there is a loving God, why does evil exist? This is a question that troubles everyone with faith. Quakers believe that there is potential for good and for evil within each of us. There exists no Devil to tempt us or attack us, no Hell to punish us.

We Quakers are often accused of a rosy view of the world and of people that denies the existence of evil. That is entirely to misunderstand what we mean when we speak of ‘that of God in every person’. it does not mean that every person is good, that no person is capable of evil, but rather that every person has the seeds of goodness, and of God, within her or him. It means that every person has within the potential to reach some perception of God. …. To put it in conventional religious language, even the most sinful person is capable of redemption.

Likewise, we all have within us the potential for wrongdoing. …. The absolute ethic that my religious perception leads me to is simple: loving my fellow beings is right; hurting them is wrong. Any action hurting or diminishing another is an evil one, bearing within it the seeds of greater evils. Thus can contempt of one’s neighbour escalate and accumulate force until it results in war.

Quaker Quest, “Twelve Quakers and Evil”, Quaker Quest Pamphlet 4 (London, UK, 2006), pp. 16-17.

I will fear no evil: for thou art with me.

Psalms 23:4