Category Archives: Economics

Miscellaneous economy stuff

A Telecon Transcript

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A leaked phone call held by International Monetary Fund officials is exposing strains between Greece and its international creditors, highlighting the risk that the country’s bailout program could be headed for more drama this summer.

And from that phone call,

“Look, you Mrs Merkel you face a question, you have to think about what is more costly: to go ahead without the IMF…or to pick the debt relief that we think that Greece needs in order to keep us on board,” Mr [Director of the European Department of the IMF, Poul] Thomsen tells his colleagues, according to the Wikileaks transcript.

A couple of thoughts on this.  Were I Merkel, I’d have something like this to say to the IMF: “I don’t appreciate ultimatums, Mr Thomsen.  Your threat has made our pick for us.  We’re done here.”  I’m not sure she’s ready to cut the cord, though.

And: who leaked the transcript?  The IMF, to pressure Greece (rather than Germany)?  Germany, to prepare Europe and Greece for the IMF’s withdrawal from the bailout?  Greece, to pressure the IMF and/or Germany?

Censorship

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…and cowardice?

France’s privacy regulator, known as CNIL [National Commission for Computing and Liberties], last week fined Google €100,000 ($112,000) for not applying Europe’s “right to be forgotten” across the search engine’s global network of sites.

And

Now Paris contends that only a world-wide scrub will do. “For people residing in France to effectively exercise their right to be delisted, it must be applied to the entire processing operation,” the regulator says.  If it stands, this ruling would compel Google to remove links globally.

Aside from simple free speech questions in the land of Voltaire, this

limits the ability of non-Europeans to vet French prospective business associates or German job applicants.

To say nothing of the sovereignty of nations outside of France.  Or CNIL is saying the whole world is part of Metropolitan France.

This whole smelly affair should make it…difficult…to do business in France, for Google and for those non-Europeans.

Google says they’ll appeal, but then what?  Will they have the courage to ignore this idiocy, this arrogant power grab outside French borders?

American Exceptionalism

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…seen from the other side of the world.  Singapore Prime Minister Lee Hsien Loong has a perspective.

Every one of America’s important trading partners in Asia, he points out, now has China as its “biggest trading partner.”  These nations know they will have a freer and more open trading system if America, not China, is writing the rules.

And

What makes it all so twisted [the debate over the TPP], says Mr Lee, is that no one in Asia is rooting for an American retreat.  To the contrary, Asian leaders are eager to make America great again….

And

“Your role,” says Mr Lee, “remains indispensable, whether you are prepared to step up to it or whether you decide to chuck it.”

And one last bit, which might seem self-serving but, even were it so, is no less true for that:

…you are wealthy enough and resilient enough to be able to help those who are buffeted and to take advantage of the opportunities which are out there, rather than say “I don’t want the competition….”

A Thought on Immigration

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A couple of early warning signs for us.  One I’ve written about before (here’s one such): the demographics of Social Security.

When Social Security was instituted…there were roughly 7 workers paying into the system for every retiree and a retiree lifespan in retirement was about 6 years.

Today…the number of workers paying into the system is around 3 for each retiree, and that number is falling.  Then, each retiree is expected to live for 17+ years in retirement.

Now we’re seeing the beginnings of a regional realization of that demographic crisis.  Although this example specifically concerns the legal industry in the Midwestern rust belt, I think it’s symptomatic of the larger problem.

  1. The Great Lakes/Midwest region…will fall short of recreating the base of manufacturing activity that produced a strong upwardly mobile middle class of the kind that sustains high-level educational activity.
  2. The region’s populations are static, aging, or declining with the result that the applicant pool for law schools in the geographic area is falling.
  3. The region’s lawyer job markets are saturated to the point that there are not a significant number of new jobs being created, and the replacement market that depends on the deaths or retirement of lawyers currently in practice is slow moving.

These come against a backdrop of our national fertility rate, the average number of children born to a healthy woman over her lifetime, of around 1.9.  This is relatively high compared to most other nations, but it’s below a population replacement, the rate at which a population is maintained at its current level rate of around 2.1.

This is the beneficial effect of immigration.  Immigrants easily make up for these population shortfalls.  Immigration, for instance, will contribute to alleviating the population/labor shortage in the Midwest, and by their existence, those workers will contribute to mitigating the worker-to-retiree ratio.

Certainly, we need secure borders, and certainly, we need to allow in only those who do us economic good.  But just as certainly, if we don’t make legal immigration easy to do, if we don’t have a positive immigration rate, we won’t solve this problem.  We’ll just continue our slide.

My Irony Meter is Pegged

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Facing a $220 million budget shortfall, Democrats in Hartford have proposed taxing the unspent earnings of university endowments with more than $10 billion in assets.  Only Yale’s $25.6 billion endowment—the country’s second largest after Harvard—fits the tax bill.  Yale’s tax-exempt investments earned $2.6 billion last year, eight times more than the University of Connecticut’s $384 million endowment.  Oh, the inequality!

Indeed.  Hartford’s Progressive government plainly thinks that, at a certain point, Yale has made enough money.

No one is safe when progressives run out of other people’s money.

Not even fellow Progressives.