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Posts Tagged ‘economics

“Time isn’t the main thing. It’s the only thing.”*…

 

12_population

 

Vaclav Smil is a distinguished professor emeritus in the faculty of environment at the University of Manitoba in Winnipeg, Canada. Over more than 40 years, his books on the environment, population, food and energy have steadily grown in influence. He is now seen as one of the world’s foremost thinkers on development history and a master of statistical analysis. Bill Gates says he waits for new Smil books the way some people wait for the next Star Wars movie. The latest is Growth: From Microorganisms to Megacities.

You are the nerd’s nerd. There is perhaps no other academic who paints pictures with numbers like you. You dug up the astonishing statistic that China has poured more cement every three years since 2003 than the US managed in the entire 20th century. You calculated that in 2000, the dry mass of all the humans in the world was 125m metric tonnes compared with just 10m tonnes for all wild vertebrates. And now you explore patterns of growth, from the healthy development of forests and brains to the unhealthy increase in obesity and carbon dioxide in the atmosphere. Before we get into those deeper issues, can I ask if you see yourself as a nerd?
Not at all. I’m just an old-fashioned scientist describing the world and the lay of the land as it is. That’s all there is to it. It’s not good enough just to say life is better or the trains are faster. You have to bring in the numbers. This book is an exercise in buttressing what I have to say with numbers so people see these are the facts and they are difficult to dispute.

Growth is a huge book – almost 200,000 words that synthesise many of your other studies, ranging across the world and exploring far into the past and future. Do you see this as your magnum opus?
I have deliberately set out to write the megabook on growth. In a way, it’s unwieldy and unreasonable. People can take any number of books out of it – economists can read about the growth of GDP and population; biologists can read about the growth of organisms and human bodies. But I wanted to put it all together under one roof so people could see how these things are inevitably connected and how it all shares one crystal clarity: that growth must come to an end. Our economist friends don’t seem to realise that…

The always-illuminating Jonathan Watts interviews the always-provocative Vaclav Smil: “Vaclav Smil: ‘Growth must end. Our economist friends don’t seem to realise that’.”

Pair with “Minimal Maintenance,” the essay version of a talk by Shannon Mattern, Professor of Anthropology at The New School for Social Research.  As Patrick Tanguay suggests: it is a “really excellent read which ties together maintenance, degrowth, libraries, museums, environmental justice, and architecture…[it] frames degrowth not as blanket anti-growth but as a critique of growth as an end in itself.”

See also Astra Taylor’s “Bad ancestors: does the climate crisis violate the rights of those yet to be born?” and. for a look at the challenges ahead, The Economist‘s “The past, present and future of climate change.”

* Miles Davis

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As we ponder progress, we might recall that it was on this date in 1961 that How to Succeed in Business Without Really Trying premiered on Broadway.  A musical comedy by Frank Loesser, with book by Abe Burrows, Jack Weinstock, and Willie Gilbert, it was based on Shepherd Mead’s 1952 book of the same name.  It follows young, ambitious J. Pierrepont Finch, who, with the help of the self-help manual How to Succeed in Business Without Really Trying, rises from window washer to chairman of the board of the World Wide Wicket Company.

The play, which starred Robert Morse and Rudy Vallée, ran for 1,417 performances; it won seven Tony Awards, the New York Drama Critics Circle award, and the 1962 Pulitzer Prize for Drama.

220px-How_to_Succeed_in_Business_Without_Really_Trying_1961_Original_Cast_Recording source

 

 

“We only have what we give”*…

 

Charity

 

Total charitable giving rose 0.7% measured in current dollars over the revised total of $424.74 billion contributed in 2017. Adjusted for inflation, total giving declined 1.7%…

“After reaching record-breaking levels of giving in 2017, American individuals and organizations continued their generous support of charitable institutions in 2018,” said Rick Dunham, chair of Giving USA Foundation and CEO of Dunham + Company. “However, the environment for giving in 2018 was far more complex than most years, with shifts in tax policy and the volatility of the stock market. This is particularly true for the wide range of households that comprise individual giving and provide over two-thirds of all giving.”

A number of competing factors in the economic and public policy environments may have affected donors’ decisions in 2018, shifting some previous giving patterns. Many economic variables that shape giving, such as personal income, had relatively strong growth, while the stock market decline in late 2018 may have had a dampening effect. The policy environment also likely influenced some donors’ behavior. One important shift in the 2018 giving landscape is the drop in the number of individuals and households who itemize various types of deductions on their tax returns. This shift came in response to the federal tax policy change that doubled the standard deduction. More than 45 million households itemized deductions in 2016. Numerous studies suggest that number may have dropped to approximately 16 to 20 million households in 2018, reducing an incentive for charitable giving…

More detail from Giving USA at “Americans gave $427.71 billion to charity in 2018 amid complex year for charitable giving.”

* Isabel Allende

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As we reach more deeply, we might recall that it was on this date in 1862 that President Abraham Lincoln signed the (preliminary) Emancipation Proclamation, announcing that if the rebel states did not end the fighting and rejoin the Union by January 1, 1863, all slaves in those states would be free.  No Confederate state capitulated, and on the first day of 1863, President Lincoln issued the Proclamation declaring “that all persons held as slaves” within the rebellious states “are, and henceforward shall be free.”

Despite it’s expansive wording, the Emancipation Proclamation was limited in many ways. It applied only to states that had seceded from the Union, leaving slavery untouched in the loyal border states. It also expressly exempted parts of the Confederacy that had already come under Northern control. Most important, of course, the freedom it promised depended upon Union military victory.

Still, it captured the hearts and imagination of millions of Americans and fundamentally transformed the character of the war.  After January 1, 1863, every advance of federal troops expanded the domain of freedom.  Moreover, the Proclamation announced the acceptance of black men into the Union Army and Navy, enabling the liberated to become liberators.  By the end of the war, almost 200,000 black soldiers and sailors had fought for the Union and freedom.

“First Reading of the Emancipation Proclamation of President Lincoln,” by Francis Bicknell Carpenter

source

 

Written by LW

September 22, 2019 at 1:01 am

“Luncheon: as much food as one’s hand can hold”*…

 

lobster

 

This summer Pret A Manger, purveyor of sandwiches to desk-workers in the white-collar cities of the West, added lobster rolls to its menu. In Britain they cost £5.99 ($7.31); in America $9.99. In both countries they are filled with lobster from Maine, along with cucumber, mayonnaise and more. Rent and labour cost about the same in London as in downtown New York or Boston. Neither sticker price includes sales tax. Yet a Pret lobster roll in America is a third pricier than in Britain, even though the lobster comes from nearer by.

This Pret price gap is not limited to lobster rolls. According to data gathered by The Economist on the dozen Pret sandwiches that are most similar in the two countries, the American ones cost on average 74% more (see chart). An egg sandwich in New York costs $4.99 to London’s £1.79, more than double. A tuna baguette costs two-thirds more. The price mismatch is intriguing—the more so for The Economist, which publishes the Big Mac index, a cross-country comparison of burger prices, which shows a 43% transatlantic disparity…

sandwich prices

Find out “Why Americans pay more for lunch than Britons do.”

* Samuel Johnson

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As we cogitate on the cost of comestibles, we might spare a thought for Luther Crowell; he died on this date in 1903.  A prolific inventor (he held over 280 patents), he invented and patented the first machine to manufacture accordion-sided, flat-bottomed paper bags.

(That said, Margaret E. Knight might more accurately be considered the”mother of the modern shopping bag”: she perfected square bottoms two years earlier.)

source

 

Written by LW

September 16, 2019 at 1:01 am

“Money is the opposite of the weather. Nobody talks about it, but everybody does something about it”*…

 

remittance

 

Every month Joy Kyakwita presses a button on her phone and does something in common with millions of other people across the globe: she sends money home.

Ms Kyakwita, a London-based lawyer, gives a third of her salary to her family back home in Uganda, including paying money for school fees for her brothers and nephews.

“I believe that when you pay for them to go on a good course, then there is a good chance of them becoming employable,” she says. “And if they are employed then they will be able to help their siblings as well.”

Ms Kyakwita is just one of an estimated 270m migrants around the world who will send a combined $689bn back home this year, the World Bank estimates. That figure marks a landmark moment: this year remittances will overtake foreign direct investment as the biggest inflow of foreign capital to developing countries.

Remittances were once viewed by many economists as a secondary issue for developing economies behind FDI and equity investments. Yet because of their sheer volume and  consistent and resilient nature, these flows are now “the most important game in town when it comes to financing development”, says Dilip Ratha, head of the World Bank’s global knowledge partnership on migration and development…

The money sent home by 270 million immigrants around the world now exceeds foreign direct investment. The Financial Times takes deep dive into “Remittances: the hidden engine of globalisation.”

(Remittances are painfully expensive for those making them– ranging around the world from over 5% to over 8% of all money transferred… money that goes to financial institutions as opposed to the intended recipients.  Here’s why.)

* Rebecca Johnson

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As we pass it on, we might note that today, September 9, is the most common birthday in the United States.

birthday source

 

Written by LW

September 9, 2019 at 1:01 am

“He who controls the money supply of a nation controls the nation”*…

 

yuan1

 

In all economies, neither the amount of deposits nor the money supply hinge on national or household savings. When households and companies save, they do not alter the money supply. Banks also create deposits/money out of thin air when they buy securities from non-banks. As banks in China buy more than 80 per cent of government bonds, fiscal stimulus also leads to substantial money creation. In short, when banks engage in too much credit origination — as they have done in China — they generate a money bubble.

Over the past 10 years, Chinese banks have been on a credit and money creation binge. They have created Rmb144tn ($21tn) of new money since 2009, more than twice the amount of money supply created in the US, the eurozone and Japan combined over the same period. In total, China’s money supply stands at Rmb192tn, equivalent to $28tn. It equals the size of broad money supply in the US and the eurozone put together, yet China’s nominal GDP is only two-thirds that of the US. In a market-based economy constraints are in place, such as the scrutiny of bank shareholders and regulators, which prevent this sort of excess. In a socialist system, such constraints do not exist. Apparently, the Chinese banking system still operates in the latter.

[Emphasis added]

[image above: source]

* James A, Garfield

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As we practice parsimony, we might recall that it was on this date in 1972 that the longest running game show on American television, The Price is Right, hosted by Bob Barker, premiered on CBS.  Originally called The New Price Is Right to distinguish it from the earlier/original version (1956–65) hosted by Bill Cullen, it proved so popular in its own right that, in June 1973, the producers decided to drop the word “New” from its title.  In 2007, Drew Carey took over from barker as host.  Now in its 47th season, The Price Is Right has aired over 8,000 episodes since its debut and is one of the longest-running network series of any sort in United States television history.

BARKER source

 

“We shape our tools and thereafter our tools shape us”*…

 

visicalc

 

By the late 1970s, workers on Wall Street were already using rudimentary email processes, putting them among the first to adopt personal computers outside of the sciences, academia, and home hobbyists, according to technologist David Wolfe. But finance’s love affair with computers really took off in the early ‘80s when spreadsheets arrived, and firms began providing in-house employee training for this tool—one that, even today, surprisingly few of us feel comfortable with.

At the time, those groundbreaking programs included VisiCalc—the first-ever digital spreadsheet, and “the ‘killer app’ for the Apple II,” [technologist David] Wolfe said—along with Lotus 1-2-3, which offered expanded capabilities in some areas, and similarly boosted IBM’s PCs.

According to Wolfe, co-director of the Innovation Policy Lab at the University of Toronto’s Munk School of Global Affairs and Public Policy, “The spreadsheet immediately started getting picked up by the financial services industry for its ability to do ‘what if’ calculations, like: If the rate changes from 1% to 2% percent, how will it affect my investment capital?”

Almost immediately, Wall Street also started using the technology to create new, more complex kinds of trading and investments. “It became an incredible time saver-tool, but also started to play into the creation of derivatives,” Wolfe explained…

Let it Visi-snow: “How the Invention of Spreadsheet Software Unleashed Wall Street on the World.”

* Father John Culkin, SJ (though often attributed to his friend Marshall McLuhan)

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As we copy and paste, we might send expansionary birthday greetings to Jean-Baptiste Colbert; he was born on this date in 1619.  Minister of Finances of France from 1661 to 1683 under the rule of King Louis XIV, Colbert pursued dirigiste policies (those of a strong, directive state, e.g., tariffs, proactive industrial policy) to create a favorable balance of trade and to increase France’s colonial holdings and foreign market access.  His policies inspired those of Alexander Hamilton, the first treasury secretary of the United States and foundational architect of the U.S. national economy.

Colbert1666 source

 

 

Written by LW

August 29, 2019 at 1:01 am

“A nickel ain’t worth a dime anymore”*…

 

money

 

The instruments of trade and finance are inventions, in the same way that creations of art and discoveries of science are inventions—products of the human imagination. Paper money, backed by the authority of the state, was an astonishing innovation, one that reshaped the world. That’s hard to remember: we grow used to the ways we pay our bills and are paid for our work, to the dance of numbers in our bank balances and credit-card statements. It’s only at moments when the system buckles that we start to wonder why these things are worth what they seem to be worth. The credit crunch in 2008 triggered a panic when people throughout the financial system wondered whether the numbers on balance sheets meant what they were supposed to mean. As a direct response to the crisis, in October, 2008, Satoshi Nakamoto, whoever he or she or they might be, published the white paper that outlined the idea of Bitcoin, a new form of money based on nothing but the power of cryptography.

The quest for new forms of money hasn’t gone away. In June of this year, Facebook unveiled Libra, global currency that draws on the architecture of Bitcoin. The idea is that the value of the new money is derived not from the imprimatur of any state but from a combination of mathematics, global connectedness, and the trust that resides in the world’s biggest social network. That’s the plan, anyway. How safe is it? How do we know what libras or bitcoins are worth, or whether they’re worth anything? Satoshi Nakamoto’s acolytes would immediately turn those questions around and ask, How do you know what the cash in your pocket is worth?

The present moment in financial invention therefore has some similarities with the period when money in the form we currently understand it—a paper currency backed by state guarantees—was first created. The hero of that origin story is the nation-state. In all good stories, the hero wants something but faces an obstacle. In the case of the nation-state, what it wants to do is wage war, and the obstacle it faces is how to pay for it…

The ever-illuminating John Lanchester explains how, over three centuries, the heresies of two bankers became the basis of our modern economy: “The Invention of Money.”

[Lanchester’s latest novel, The Wall, was just long-listed for the Booker.]

* Yogi Berra

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As we learn from the past, we might recall that it was on this date in 1861 that the U.S. government, in anticipation of the expense of the looming Civil War, levied its first income tax as part of the Revenue Act of 1861.  It assessed 3% of all incomes over $800, but included no enforcement mechanism, and so generated very little revenue.  It was revised in 1862 in a more effective form, then rescinded in 1872.

The first peace-time income tax was established in 1894, but was ruled unconstitutional by the Supreme Court (the 10th amendment forbade any powers not expressed in the US Constitution, and the Constitution provided no power to impose any other than a direct tax by apportionment).  It was in 1913, with the Sixteenth Amendment to the United States Constitution, that income tax became a permanent fixture in the U.S. tax system.

HR54_Revenue_Act source

 

Written by LW

August 5, 2019 at 1:01 am

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