Adam Smith for our troubled times

June 23rd, 2018

An old joke is that a classical book is one that everyone cites, but no-one reads. By this measure, each of the two books that Adam Smith wrote are classics. If his followers today took time to read then, they would disagree with much of what he wrote. Read the rest of this entry »

Italy’s economic woes

June 20th, 2018

Martin Wolf’s Wednesday column provides an excellent explanation this week of why Italy is in trouble. Italy should never have joined the euro. In theory, countries can avoid devaluation by increasing productivity and lowering wages. In practice, this is politically difficult. In the case of Italy, it is impossible. If Italy had kept the lira, it could easily devalue its currency and regain competitiveness with other countries of the euro zone (primarily Germany). Read the rest of this entry »

New Zealand’s universal pension is in danger

June 16th, 2018

New Zealand has a universal pension scheme that is the envy of the world. It is simple, affordable, and eliminates poverty in old age. When a qualified resident reaches the state pension age, he or she receives a basic, flat pension, regardless of income, wealth or employment history. This benefit, called ‘Superannuation’, is financed from general government revenue. Earmarked taxes are not levied to support it, but benefits are taxable as regular income, so net benefits are lower for pensioners who have income from work or from savings. Read the rest of this entry »

expanding old age pensions in Bangladesh

May 30th, 2018

A daily newspaper in Bangladesh reports that the finance ministry has announced “plans to introduce a universal pension system for both public and private sector employees”. Reading the column, however, shows that the scheme is not universal. It is contributory, and private. If there are no contributions, there will be no old age pension. Government involvement will be limited to matching grants equal to 25 to 50% of the contributions of low-income savers.

The scheme seems to have been promoted by the World Bank. Read the rest of this entry »

the source of US power

May 28th, 2018

FT columnist Wolfgang Münchau explains that acceptance of the US dollar as a global currency gives the country extraordinary power. The United States alone can impose and enforce extraterritorial sanctions. This privilege is not available to other countries because no currency exists to replace the US dollar. Read the rest of this entry »

old age pensions in the Philippines

May 27th, 2018

In January 2017, the government of the Philippines increased social security pensions by 1,000 pesos (19 US dollars) a month without any increase in contributions. Simultaneously, the government reduced income taxes. A young Philippine economist writes that this was bad policy first because it increases government deficits and second because it helps the wealthy at the expense of the poor.

Fewer than a third of the country’s workers have access to any retirement pension at all. The vast majority of pensions are from the social security system, and the beneficiaries are not exactly poor. Increasing their pensions by increasing deficit spending does not help those who do not participate in the social security system, so have no entitlement to a pension in old age.

It would be much better, this economist believes, for government to introduce a universal pension, payable to all residents from the age of 60. I agree, and am pleased to see this call for a simple, universal pension in a country with so much poverty.

All in all, the yawning gaps of the country’s social pension system require bold, comprehensive, and forward-thinking solutions like universal social pension – not simplistic, superficial, and short-sighted ones like [Rodrigo] Duterte’s pension hike. ….
Read the rest of this entry »

China’s view of the world

May 1st, 2018

FT columnist Martin Wolf recently participated in an international conference convened by the Tsinghua University Academic Center for Chinese Economic Practice and Thinking. He describes it as “franker than any I have participated in during the 25 years I have been visiting China”, and lists seven propositions that the Chinese elite expressed to their foreign guests:

1. China needs strong central rule.
2. Western models are discredited.
3. China does not want to run the world.
4. China is under attack by the US.
5. US goals in the trade talks are incomprehensible.
6. China will survive these attacks.
7. This will be a testing year.

Martin simply describes these three propositions, without criticism. I assume that he agrees with them, but perhaps he will express disagreement in a future column. Or, perhaps not. In the meantime, I pass along to you his description of proposition number two, which I found most interesting, and most disturbing for western states: Read the rest of this entry »

measuring economic value

April 29th, 2018

Economists are frequently criticized for failing to include in their measures of output goods and services that have no price. A common example is household services done by parents – or children – without pay. Even worse, cleaning up bads – such as an oil spill – is counted as an increase in national output (GDP). FT columnist Martin Wolf reviews a new book by Italian-American economist Mariana Mazzucato that covers all this and more. Read the rest of this entry »

universal health care and universal pensions

April 27th, 2018

This week’s Economist magazine contains a superb leader, “Universal health care, worldwide, is within reach“. Reading it, it occurred to me that many of the points in it apply equally to universal basic income for older persons.

In a major section of the leader, titled “How the other half dies”, I did little more than substitute “universal basic pensions” for “universal basic health care”, and came up with the following essay. Read the rest of this entry »

life, death and consciousness

April 25th, 2018

I finished reading this fascinating book, and would like to share a few segments with you. The entire book is useful for anyone considering the right to life of a fetus or the right to life (or death) of an unconscious, older person in a vegetative state. It has made me re-think my ‘living will’, my request that no special efforts be made to prolong my life should I become unconscious and unresponsive.

What is consciousness? This is a surprisingly complex question. The author of this book, British neuroscientist Adrian Owen, explains that “part of the problem is that questions about consciousness have as much to do with personal taste as science”. Read the rest of this entry »