Sunday, 17 July 2016 - 5:18pm

Published by Matthew Davidson on Sun, 17/07/2016 - 5:18pm in

This week, I have been mostly reading:

  • Something Crazy Is Happening to Swiss Bonds, and It’s a Sad Sign for the World Economy — Jordan Weissmann at Slate: Yields on government bonds from all around the world have been plunging thanks to anxious investors buying them for their safety. (Bond yields fall as prices rise.) And in many instances, the returns have cratered below zero. As Quartz reports Thursday, “around a third of all developed-country government debt—or more than $7 trillion, in terms of market value—is now trading at negative yields,” meaning that buyers are willing to pay more for these bonds than they will eventually get back if they hold them to maturity. […] The most mind-blowing example of this trend is Switzerland. Last week, yields on all of its government bonds, out to 50 years, turned negative. [A major qualification: Government bonds aren't loans. Governments with their own currency never need to borrow money in order to spend. Bonds are a mechanism to drain reserves held at central banks, in order to hit interest rate targets. The pessimism is real, though.]
  • Corbyn: the summer of hierarchical things — Paul Mason in Medium: By September, if Corbyn wins he’ll be in a position to go into the Labour conference exerting control: over the NEC, where a left slate looks likely to win; and over policy via conference, where the delegates will for the first time reflect the changed membership. After that, in any election called by the incoming Tory prime minister Theresa May, Corbyn’s supporters would be able to stage “trigger ballots” to de-select the MPs most hostile to Corbyn, leaving the leadership, the HQ, the policy and the parliamentary group aligned to the left.
  • Donald Trump Understands the Nexus Between Trade and Immigration — a corker by Marshall Auerback in Naked Capitalism: Historically, immigration law has concerned itself with many considerations, the most of which is the displacement of US workers. By contrast, advocates of free trade ignore this consideration, or blithely suggest that the resultant unemployment in a displaced sector (e.g., the automobile industry), is a “negative externality”, which is generally offset by the resultant gains in competitive efficiency, and lower cost goods. Cheap imports, then, outweigh the displacement of workers. But we do not extend this logic to immigration, or we would move straight to a policy of open borders.
  • The murky world of industrial relations in the higher ed sector — Joanne Finkelstein in On Line Opinion: The quality of universities' delivery to students is adversely influenced by the casual, less engaged and experienced academic. It is particularly evident in newer institutions which have been aggressive in developing new programs of study supposedly in response to market demands. […] in the higher education sector, such a culture has ensured a declining quality in teaching especially in the newer and regional universities – those institutions designed specifically to widen participation and increase social equity.
  • Modern Money: The Basics — Geoff Coventry provides a really nice, concise summary I wish I'd written: Money is a wonderful human invention – perhaps one of our greatest. Most nations have a monetary system designed to provide for private commercial needs, but also, simultaneously, to enable governments to access sufficient resources to create safe, just and ever-improving societies.
  • Bernie Sanders’ connections with two UMKC economists run deep — Mark Davis at the Kansas City Star does a charming local news profile of Stephanie Kelton and Bill Black: Kelton and Black are part of a team of economic advisers, including former labor secretary Robert Reich and James Galbraith at the University of Texas in Austin, who help the Sanders campaign develop policies. Randall Wray, a fellow UMKC economics professor, credits Sanders for embracing thinkers from outside the economic mainstream. “The mainstream is a complete disaster and a complete disaster for our country,” Wray said. [We can assume they won't be advising Clinton.]
  • Note To Economists: Saving Doesn’t Create Savings — Steve Roth in Evonomics;another wonderfully concise explanation I wish I'd written: When you spend money — transferring it to someone else in return for newly-produced goods and services — does it affect our collective monetary savings? In strict accounting terms, obviously not. Your money just moves from your account to someone else’s account; it doesn’t disappear. Your bank has less deposits; the recipient’s bank has more deposits. Aggregate monetary savings is unchanged by that accounting event. […] In three simple words: spending causes saving. Real, collective accumulation of real, long-lived stuff. Monetary saving — not-spending part of your income this year — doesn’t, collectively, create either real or monetary savings.
  • How Democrats Created Liberalism of the Rich — Thomas Frank, Naked Capitalism via TomDispatch: Boston is the headquarters for two industries that are steadily bankrupting middle America: big learning and big medicine, both of them imposing costs that everyone else is basically required to pay and which increase at a far more rapid pace than wages or inflation. A thousand dollars a pill, 30 grand a semester: the debts that are gradually choking the life out of people where you live are what has made this city so very rich. […] Professional-class liberals aren’t really alarmed by oversized rewards for society’s winners. On the contrary, this seems natural to them — because they are society’s winners. The liberalism of professionals just does not extend to matters of inequality; this is the area where soft hearts abruptly turn hard.
  • Letter from US Senator Al Franken to Niantic, Inc., owners of Pokemon GO: Recent reports, as well as Pokemon GO s own privacy policy, suggest that Niantic can collect a broad swath of personal information from its players. From a user's general profile information to their precise location data and device identifiers, Niantic has access to a significant amount of information, unless users - many of whom are children - opt-out of this collection. Pokemon GO'S privacy policy states that all of this information can then be shared with The Pokemon Company and "third party service providers", details for which are not provided, and farther indicates that Pokemon GO may share de-identified or aggregated data with other third parties for a non-exhaustive list of purposes. Finally, Pokemon GO s privacy policy specifically states that any information collected - including a child's - "is considered to be a business asset" and will thus be disclosed or transferred to a third party in the event that Niantic is party to a merger, acquisition, or other business transaction.
  • Privatisation! Free trade! Shares for all! The great con that ruined Britain — Peter Hitchens in the Daily Mail! (via Richard Murphy): I am so sorry now that I fell for the great Thatcher-Reagan promise. […] I thought – this now seems especially funny – that private British Telecom would be automatically better than crabby old Post Office Telephones. I think anyone who has ever tried to contact BT when things go wrong would now happily go back to the days of nationalisation. Soviet-style slowness was bad, but surely better than total indifference.
  • Is Competition the Cause of the Productivity Slowdown? — Dean Baker, CEPR: My alternative explanation is that a weak labor market and low wages explain much of the slowdown in productivity. The argument is straightforward. When Walmart can hire people at very low wages, they are happy to pay people to stand around and do almost nothing. That is why many retailers now have greeters or sales people standing in aisles who contribute little to productivity.