Paul Krugman says it himself: it’s the similarities between our time and other economic periods that often offer the best insight. But he’s currently in Paris thinking deep Parisienne style thoughts, which might explain the following…
There are, as he notes, some important distinctions to be made this time around, not least globalisation’s impact on the role of intangible rents.
Consequently, we may be living in an economy in which profits no longer remotely resemble a “natural” aspect of the economy. They are, one might say, somewhat synthetic. Read more
Paul Krugman is getting serious about the effects of technology and robots on the economy. He’s made noises about this theme before, but this time he’s taking things a bit further by offering a potential solution to the more sour consequences of the new industrial revolution.
If the fight is between capital and labour, and capital is winning, it seems subsidies in the form of some basic type of income may be called upon. Read more
We just saw this post from Pragmatic Capitalism’s Cullen Roche on the supply of assets.
It offers a nice chart showing net issuance of “safe” assets, from Citi’s research team:
Now that we have Chinese socialites engaging in public cat fights over who is richer, posting snapshots of their bank accounts “Rich Kids of Instagram style“, one has to wonder if it may be worth revisiting John Hempton’s prediction last year that the Chinese authorities will finally crack down on this sort of over-the-top gratuitous wealth display, and when that happens the luxury brands — among them Swiss watches — will begin to suffer.
(*We should note the “I’m really richer than you” meme possibly applies to Prince Alwaleed bin Talal as well). Read more
Marginal Revolution’s Tyler Cowen linked to a new paper by David Autor, David Dorn, and Gordon Hanson entitled “Untangling Trade and Technology: Evidence from Local Labor Markets”.
Long story short, it suggests computers haven’t been taking our jobs, China has. Read more
A great pick-up from Climateer Investing on the extremely important subject of whether we are collectively, as a planet, mismeasuring GDP by failing to account for the transformation of the economy into a service-oriented, information-based, digital entity.
It comes from Irving Wladawsky-Berger, the former IBM executive.
As he notes:
Gross domestic product (GDP) is the basic measure of a country’s overall economic output based on the market value of all the goods and services the country produces. Most measures of economic performance used by government officials to inform their policies and decisions are based on GDP figures. But, many concerns have been raised about the adequacy of GDP-based measurements given the major structural changes that economies around the world have been going through over the past few decades. GDP is essentially a measure of production. While suitable when economies were dominated by the production of physical goods, GDP does not adequately capture the growing share of services and the production of increasingly complex solutions that characterize advanced economies. Nor does it reflect important economic activity beyond production, such as income, consumption and living standards.
This is the third installment in FT Alphaville’s “Beyond Scarcity” series, a somewhat radical look at the impact of technological progress and efficiency on the volume of goods and services being produced by the system, asking whether “abundance” could now be a key determinant of deflationary forces in the western world.
On top of this, we have considered the role played by “artificial scarcity”, whether imposed wittingly or unwittingly by industry participants as a counterweight to such deflation, and to what degree such measures could now be running into scalability issues. In short, whether there is a limit to how much artificial scarcity private organisations can impose to counteract deflationary forces of abundance, without experiencing diminishing returns. Read more
With so much doom and gloom about, we’d like to take you on a trip through the looking glass to a world where the future is bright, not bleak. Optimistic, not pessimistic. Hopeful, not dismal.
And we mean that in the context of today’s data. Not in some parallel-universe that doesn’t exist. Read more
Presenting an economic journey in felt, looking at whether the system’s ails have more to do with an abundance of goods than a shortage of credit because of the system’s technological advances and efficiencies. Move ahead to slide 20 for a snapshot of where we *think* we are today.
1) The water source. Read more