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 seven 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 »

‘publish or perish’ in universities

April 23rd, 2018

It is well-known that university professors must publish in peer-reviewed journals in order to obtain tenure and retain their jobs. At the same time, good researchers are rarely the best teachers. Steve Payson, a certified economist who has an MSc from the London School of Economics and a PhD from Columbia University, has written a very personal and very strong critique of this system. Read the rest of this entry »

pre-funding social pensions in Bermuda

April 22nd, 2018

At least some residents of Bermuda, a wealthy self-governing British Overseas Territory in the North Atlantic Ocean, with a tiny population of 63,779, are worried that government has not saved enough to pre-fund its noncontributory old-age pension promises. Benefits as of 2015 were US$103.81 a week for residents aged 65 and older with total annual income greater than $4,000 and US$106.83 a week for residents with less income. Additional requirements are citizenship and at least 10 years of continuous residence in Bermuda in the past 20 years. Read the rest of this entry »

the new barter economy

April 21st, 2018

FT columnist Gillian Tett explains, very well and concisely, that the ‘free’ services that internet companies provide in exchange for our personal data is the age-old system of barter. This system is difficult for economists to understand, because prices, measured in money, are absent. Read the rest of this entry »

global effects of the Trump stimulus

April 20th, 2018

In its latest World Economic Outlook, the International Monetary Fund (IMF) predicts global growth of 3.9% this year and next – the best performance since 2011. Its prediction is based largely an expectation of stimulus from Donald Trump’s tax cuts, which will bring an inevitable increase in US imports and the country’s current account deficit.

But what response might we expect from a president who dislikes trade deficits? The answer is predictable, as FT columnist Robin Harding explains. Read the rest of this entry »