Tag Archives: economics

The PRC’s Currency

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The PRC’s Premier Li Keqiang and its People’s Bank of China Governor Zhou Xiaochuan had some words about this at last weekend’s G-20 conference.

China emerged from the weekend Group of 20 meeting with a new measure of trust from major trading partners that it won’t significantly devalue the yuan.

Zhou was quite explicit.

There is no basis for persistent [yuan] depreciation from the perspective of economic fundamentals[.]

What this means, too, is that from within its centrally managed economy, the government is defining “economic fundamentals,” and so the government also has no intention of allowing the currency to float; it’ll continue to manage that value for government purposes in every respect.

A Dangerous Precedent

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I’m hardly a Russian apologist; I’d as soon see the place cleared off and the land restored to the forest and steppe of an earlier era.

However.

Russia is setting up to issue $3 billion in bonds, and they’ve invited a number of European, PRC, and American banks to bid on the issue—a standard government bond issue process, except that these are Russian bonds. Aside from that, the bonds are highly risky, but like many high-risk plays, the payoff can be lucrative. The decision to run a risk of this sort ordinarily is a business decision, made in a free market by the business’ managers and owners.

However.

State and Treasury have

warned some top US banks not to bid on a potentially lucrative but politically risky Russian bond deal, saying it would undermine international sanctions on Moscow, people familiar with the matter said.

Our banks’ participation in the deal is entirely legal with those international sanctions in place. But State and Treasury don’t like them.

This isn’t a President using his bully pulpit to persuade Americans to do this, don’t do that, or support this other, though.

State in particular

warned of “reputational” risks of returning “to business as usual with Russia.”

This is an agency of the Federal government making sotto voce threats against an industry to force it to support a government policy that’s carefully not encoded in law or regulation.

The market, with its understanding of Russia, is fully capable of dealing “reputational” repercussions all by itself in a free economy.

Never mind that State and Treasury each have explicitly declined to set sanctions against Russian banking or the Russian government as a whole, or that either could, if such sanctions were useful. Never mind that Congress could legislate in that direction, if such a thing were useful.

That’s the dangerous precedent. Nice bank you got there. Be too bad if something happened….

Reich’s Analysis

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Ex-Democrat Secretary of Labor Robert Reich has offered his analysis of Senator Ted Cruz (R, TX) and of Businessman Donald Trump and their relative values as Presidents of the US. See his two-minute YouTube video here.

Stipulate everything Reich said about Cruz is accurate (after looking past the hype): Cruz turns out to be pretty good. Cruz should thank Reich for the endorsement, and wear the description proudly.

An Empirical Test

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It isn’t often that we get to run a controlled experiment in economics, but one seems to be beginning in Oregon on the matter of minimum wages.

Oregon lawmakers have approved landmark legislation that propels the state’s minimum wage for all workers to the highest rank in the US, and does so through an unparalleled tiered system based on geography.

The legislation will raise the state’s minimum wage to

$14.75 in metro Portland, $13.50 in smaller cities such as Salem and Eugene, and $12.50 in rural communities.

This will be complete in just six years, by 2022.

And that’s the experiment. Over the course of these next six years, watch employment rates adjust across the three geographies, and watch small business startup and development across those three geographies.

Hmm….

An Academic’s Self-Importance

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Professor Cal Newport, a Georgetown University Computer Science professor, has some interesting ideas regarding how Americans should work and how we should communicate with each other. He laid out these views in a recent Harvard Business Review piece.

This unstructured workflow arose from the core properties of email technology—namely, the standard practice of associating addresses with individuals (and not, say, teams, or request type, or project)….

This is bad, of course, because the individuals doing the work didn’t actually do that. Someboedy else did—those nebulous “teams,” or this thing called a “request type.”

But the big demonstration of an Academic’s self-importance is in this:

But just because this unstructured approach is standard and easy doesn’t mean it’s smart. It’s important to remember that no blue ribbon committee or brilliant executive ever sat down and decided that this workflow would make businesses more productive or employees more satisfied.

Yeah. No Betters told these plebes what to do. They just stumbled around in the dark, using this complex new tool—email!—without guidance, without an Expert’s or a Blue Ribbon Committee’s instruction. Never mind that they got the work done, and better, using this new tool (among others) their way instead of in the Approved Way.

A consequence of this workflow is that an organization’s tasks become entangled in a complicated network of dependencies with inbox-enslaved individuals sited at each node. The only way to keep productive energy flowing through this network is for everyone to continually check, send, and reply to the multitude of messages flowing past—all in an attempt to drive tasks, in an ad hoc manner, toward completion.

Now he’s projecting and assuming everyone shares his shortcomings. Of course in serious work, this isn’t the case. It certainly wasn’t the way we worked—with email and instant messaging—at a major defense contractor that was my latest employer.

Newport’s piece goes on in this vein, but you get the idea.