Archive for the ‘Political Economy’ Category

the economics of happiness

Friday, January 26th, 2018

Economists continue to study happiness, and new research appears frequently. FT undercover economist Tim Harford faces this question head-on, asking whether the pursuit of wellbeing should guide government policy and, if so, how should we measure wellbeing. Typically, happiness surveys ask respondents how satisfied they are with life, on a scale of one to ten. Is moving from 3 to 4 the same as moving from 7 to 8 on the scale? And, what does a score of one, five or ten really mean? (more…)

Davos Man and liberal economics

Tuesday, January 23rd, 2018

FT columnist Martin Wolf has written an outstanding essay on the demise of liberal international economics. Here is a brief excerpt from his column.

Many Americans feel they have both less reason and less ability to be generous to erstwhile partners. Among domestic changes, many in high-income countries feel that the liberal global order to which their countries have been committed has done little for them. It is generating, instead, the sense of lost opportunities, incomes and respect. It may have brought vast gains to the sorts of people who frequent Davos, but far less to everybody else. Especially, after the shock of the financial crisis, the tide does not seem to be rising and, if it is, it is certainly not lifting all boats.

the genius of Donald Trump

Monday, January 22nd, 2018

I keep promising myself that I will ignore Donald Trump, but am unable to keep my promise. If Mr Trump were just a businessman and reality TV star, I would ignore him and his tweets. But he is the leader of the most powerful nation in the world. What he says and tweets has consequences.

Anyway, FT columnist Gideon Rachman has some thoughts on the intelligence of Mr Trump that I found interesting. Mr Trump is clearly not stupid. He is very bright, but in a political sort of way. He has an uncanny ability to sense that a majority of white Americans are worried that they are becoming a minority in their own country. Moreover, he knows that they have suffered the humility of enduring a black President who was elected by popular vote. In a democracy, with the percentage of white voters falling, it is realistic for them to expect and to fear the emergence of more black and brown rulers in the future. (more…)

racial prejudice and contact with minorities

Wednesday, January 17th, 2018

I recall reading several studies of the US and UK that show a negative correlation between anti-immigrant prejudice and the proportion of immigrants in a community. A new study of the UK by economists from Tilburg University in The Netherlands and the University of Sydney in Australia contributes to this research, and shows that the effects are persistent. Worryingly, though, persistence is weaker in areas that received less subsequent in-migration.

Here is the authors’ conclusion: (more…)

Donald Trump’s path to the presidency

Friday, January 12th, 2018

[David] Frum, a former speech writer to George W Bush and one of the most articulate “Never Trumpers”, asks how a man like Trump could have reached high office in the first place. One answer is that Trump does possess real skills. Among these is an almost diabolical knack for divining other people’s resentments — perhaps because he is riddled with so many of his own. Trump often tries out different applause lines at rallies and sticks with the ones that resonate. Such market testing appears to work. He has an ability to identify with people who feel slighted. [Michael] Wolff describes how … many years ago, Trump was asked to define “white trash”. He replied: “They’re people just like me, only they’re poor.” …. (more…)

Against the Grain

Wednesday, January 10th, 2018

Yale University political scientist James C. Scott has published a fascinating, but controversial book titled Against the Grain. It is the second book by him that I have read, and I confess that it disappointed me. It is too libertarian, too biased for my taste. Not until the last chapter (seven) did his thesis become clear. Here are some brief extracts from the introduction and that final chapter where the author clearly explains his main thesis. (more…)

Seeing like a State

Wednesday, January 10th, 2018

Some years ago Yale political scientist James C. Scott published a book that I read and enjoyed very much, even though it was very libertarian, contrary to my own political philosophy. Here is an excerpt from the book that I posted years ago as a TdJ email:

The state’s goals are minimal, it may not need to know much about the society. Just as a woodsman who takes only an occasional load of firewood from a large forest need have no detailed knowledge of that forest, so a state  whose demands are confined to grabbing a few carts of grain and the odd conscript may not require a very accurate or detailed map of the society. If, however, the state is ambitious–if it wants to extract as much grain and manpower as it can, short of provoking a famine or a rebellion, if it wants to create a literate, skilled, and healthy population, if it wants everyone to speak the same language or worship the same god– then it will have to become both far more knowledgeable and far more intrusive.

James C. Scott, Seeing like a State: how certain schemes to improve the human condition have failed (Yale University Press, 1998), p. 184.

Professor Scott this year published another book that is similar, but more historical, going far back in time. A brief extract from that book follows today as a TdJ blog.

chart of the day

Friday, December 29th, 2017

The chart below shows a negative correlation between public confidence in US president Donald Trump and the price of US stocks. Donald Trump has become less popular than any other US president in the period since World War II, yet the S&P index of 500 stocks has reached an all time high. This seeming paradox cries for an explanation. FT columnist Tim Harford (the well-known undercover economist) offers us not one, but two possibilities.

Part of the explanation is simple: investors have hoped that post-tax profits would surge if and when Congress passed a large corporate tax cut. There was also some hope that an infrastructure spending package would boost growth; the prospect seems to have faded.

Yet the stock market’s buoyancy is puzzling. Many political observers regard the Trump administration as chaotic. It is economically isolationist, sceptical of trade agreements in general and the North American Free Trade Agreement in particular. Militarily, the leader of the free world has been belligerent in the face of a nuclear-armed North Korea.

One possibility is that Mr Trump is not nearly as destructive a president as many fear — at least not to the profits of large US businesses. Another possibility is that the market simply cannot process catastrophic risks. Relative to long-run earnings, the S&P 500 is now around the level seen just before the great crash of 1929. Fingers crossed for 2018. [Emphasis added.]

Donald Trump’s approval rating slumps while markets soar to new highs

Tim Harford, “A year in charts: From bitcoin to Trump and chess playing robots“, The Big Read, Financial Times, 28 December 2017 (gated paywall).


Paul Krugman on net neutrality

Thursday, December 21st, 2017

American journalist Ezra Klein (born 1984), who currently serves as editor-at-large of Vox, recently had a long and very interesting conversation with Paul Krugman. Professor Krugman, I presume, needs no introduction as he is a Nobel Laureate economist, and a columnist at the New York Times.

I agree with almost everything that Krugman says or writes. I was very surprised, then, to learn that Krugman opposes the Universal Basic Income (UBI), with the possible exception of children (universal child allowance). On the UBI for adults I totally disagree with Krugman, but will leave my thoughts on this for a later (and longer) blog. (more…)

China’s covert operations overseas

Tuesday, December 19th, 2017

This rather negative opinion piece on the overseas activity of China’s United Front Work Department has already attracted comments from 212 readers. This is a heated debate with diverse opinions!

“Chinese operations are much more subtle, less targeted and more about long-term influence-building than Russian operations,” says Christopher Johnson, the former head of the China desk at the Central Intelligence Agency and now a senior fellow at the Center for Strategic and International Studies in Washington.

“But as we start to realise that China intends to socialise us rather than become more like us, the debate in the west has taken on a harder edge and people are asking whether 40 years of engagement might have been a sham.”

Jamil Anderlini and Jamie Smyth, “West grows wary of China’s influence game“, The Big Read, Financial Times, 19 December 2017 (gated paywall).