RoW: Links for 13th November, 2019

  1. From a while ago – Peter Baker on Trump’s pullout of troops:
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    “”The Taliban have wanted the United States to pull troops out of Afghanistan, Turkey has wanted the Americans out of northern Syria and North Korea has wanted them to at least stop military exercises with South Korea.

    President Trump has now to some extent at least obliged all three — but without getting much of anything in return. The self-styled dealmaker has given up the leverage of the United States’ military presence in multiple places around the world without negotiating concessions from those cheering for American forces to leave.”
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  2. “As a tribute to the bunnies who lived between the wall, in 1999 artist Karla Sachse installed 120 rabbit silhouettes near the area they once roamed so freely. Unfortunately, in the decades since, quite a few of the brass bunnies are now buried beneath new layers of asphalt. It’s unknown how many still exist, though you can spot some along Chausseestraße.”
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    On the bunnies of the Berlin wall.
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  3. “Young people, many of whom had seen their schooling opportunities delayed for more than a decade, hastily dusted off their textbooks and began studying to prepare for the college entrance exams. That year, 5.7 million entered their names for the exams, and 273,000 were enrolled. Because the number of applicants far exceeded the expected figure, for a time the authorities could not procure enough paper to print the exam papers. The problem was not resolved until the central authorities made the urgent decision to ship in all the paper previously allocated for the printing of the fifth volume of the Selected Works of Mao Zedong.”
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    Andrew Batson on the class of ’77. I cannot improve upon the title of his post, by the way.
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  4. “The upgrade of the China–Sri Lanka relationship to a “strategic cooperative partnership” in 2013 demonstrated the geopolitical consequences of China’s generous support to Sri Lanka. By 2015 Chinese companies had completed infrastructure projects there worth $ 10 billion. In 2016, China overtook India to become Sri Lanka’s biggest trading partner with its $ 4.43 billion trade pipping the $ 4.37 billion of India.”
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    About the upcoming elections in Sri Lanka, and the associated geopolitical factors.
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  5. “But there were signs of trouble from the start. In 2014, a mountainside glass walkway cracked under the weight of too many hikers. In 2015, a glass bridge fractured and had to be closed after a visitor dropped a thermos on it. A year later, the Zhangjiajie Bridge, a 1,400-foot span that hangs 1,000 feet over a gorge, had to be closed after it was mobbed by visitors far in excess of its designed capacity, a mere 13 days after opening. The next year, it was pummeled by falling rocks.”
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    On China’s bubble in building, uh, bridges made of glass.

ROW: Links for 12th June, 2019

  1. “Readers will by now be familiar with the list of industries impacted by the US China trade war. These include soyabeans, cars, steel, and semiconductors.But one commodity is increasingly important to how the tensions play out: students. The Chinese state media is now saying the government will issue a warning on the risk of studying in the US”
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    The FT reports on how Chinese students will now be discouraged from going to American Universities – in a sense, an expected move, but you would be surprised at just how dependent universities in America today are on foreign students. Interesting times.
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  2. “To summarize, based on the above I doubt that actual Chinese growth is more than 1% below the reported figures, at least up through 2018. Of course it’s possible that things have changed in 2019; if so I expect that to show up in upcoming airline travel data for China.”
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    Scott Sumner patiently reminds us that we should look at the data before making a claim, and having looked at the airline data, he rejects the notion that there is a dramatic slowdown in China. The truth, as usual, lies somewhere in the middle.
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  3. “Vietnam, like China really doesn’t import very many manufactures from the United States. That’s partially a function of the fact that the value added in Vietnam is often low, and thus Vietnam cannot afford a lot of top of the line U.S. capital goods (yet). But it is also a function of the fact that many of the global value chains that generate large (often offshore) profits for U.S. firms don’t give rise to that much U.S. production these days. There just isn’t much sign that the Asian value chains stretch back to include U.S. factories and workers. Fabless semiconductor firms that design chips likely export their designs to a low tax jurisdiction before they license their designs to an Asian contract manufacturer. The rise in Vietnam’s exports hasn’t been associated with a commensurate rise in exports from the United States to Vietnam.”
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    Brad Setser takes a look at whether Vietnam is the new China, and concludes that it kind of is, and kind of isn’t.
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  4. “It is not surprising that the CPC has worked so hard to extirpate the Tiananmen Square massacre from public memory. History – including the horrors of Mao Zedong’s rule – is too volatile a substance for the Chinese dictatorship. China’s leaders hold up their system of government as a model for other countries. But how can a regime be confident in the sustainability of its values and methods if it is afraid of its own past?”
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    Chris Patten (who knows a thing or two about this issue) reviews the Tiananmen square massacre, and ponders on what it means for China and Hong Kong today.
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  5. “Despite a small increase in young and female lawmakers—like Ms Suematsu, who is in her forties—local politics is still dominated by old men. “In these municipalities, candidates are so old they have a hard time putting up election posters,” says Shigeki Uno of the Nippon Institute for Research Advancement, another think-tank. Indeed, three-quarters of town and village assembly members are over 60. The oldest, aged 91, holds a seat on a city assembly in Shizuoka, in central Japan.Young people are loth to stand because local politics is not a financially rewarding profession. The law bans assembly members from holding other jobs concurrently. Their pay averages around ¥300,000 ($2,740) a month, hardly enough to support young families. “It’s basically a job for the retired,” sniffs Mr Uno. And for little pay, the workload is onerous.”
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    The Economist reports on Japan, and it’s ageing population – and what that means for democracy on the ground, at local elections.

Links for 3rd June, 2019

  1. “His social credit score has been lowered, and the South China Morning Post reports that Xu also faces travel restrictions for accusing Chen of being a fake master. As a result, Xu can’t ride in second class or above on planes or sleeper trains, and cannot ride high-speed trains at all (and if he had kids they’d face prohibitions, too).”
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    First, the excerpt above is noteworthy because of the real world implications of a reduction in one’s social credit score. Second, read the article to find out why his score has been reduced in the first place. Truly mind boggling.
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  2. “There could be two reasons for this. In rural areas, the downside in incomes appears to have eroded any positive effects of lower inflation. Among urban consumers, the persistent inflation in goods and services other than food may have restricted the real and sentiment impact of lower food inflation. To be sure, it is possible that if inflation is lower but consumption has not gone up meaningfully, then savings have risen. But there is no clear data to prove this yet.”
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    Ira Dugal points out the problems of low inflation in India (who’d have thought it, huh?), but also, more broadly, points out how difficult it is to think through macroeconomic issues.
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  3. “The government has no business being in business. There are scores of government owned companies that do exactly the same thing – like BPCL, HPCL and IOC are all refiners and oil marketing companies. There’s OIL and ONGC. And a GAIL, a Petronet, an IGL and so on. That’s just in the Oil and Gas space. There are a gazillion public sector banks. There needs to be a regular practice to get rid of most of the stake in these companies and to corporatize them. What better time than when you have a mandate?”
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    Deepak Shenoy walks us through his wish list of what the new government should do, and provides (as always) an easy to understand overview of what the response of the markets has been (thus far) to the election results.
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  4. “The Great Trigonometrical Survey is credited with having measured the heights of 79 Himalayan peaks; they include the Everest, K2 and Kanchenjunga. It also measure the baselines of Saint Thomas Mount, Madras, baselines of Calcutta, Coimbatore, Tanjore, Guntur, the measurements of the Cauvery Delta, the measurements of Mysore and the Great Indian Arc – an arc extending from the tip of the Indian subcontinent to the mountains of Himalayas. The measurement of the great Indian arc is a significant milestone for Indian geography because it was the first effort to plot, in mathematical terms, the vastness of the subcontinent from the north to south.”
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    The Madras Courier helps us understand the importance of the Great Trigonometrical Survey, and gives us a peek into the romance associated with the entire exercise. If you find yourself interested in the entire exercise, there is also an entire book about it.
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  5. “So, here’s a story. On 15 April 2019, when the roofspace over the crossing of Paris Cathedral caught fire, I was in a pub in east London having a burger. My initial reaction was not one of anxiety for the 12th-century Early Gothic church, with its splendid 13th-century Rayonnant superstructure and rose windows with contemporary (if VERY restored) medieval stained glass, but instead a slight feeling of dismay of how long this would mean the building would be closed and how much it would cost to replace the roof. It was also a great shame to lose the crowning achievement of the restorer Eugène Viollet-le-Duc, his magnificent Neo-Gothic crossing flèche, albeit mere days after all the statues had been removed from it for restoration. Anyway, then I went off to watch Kubrick-themed Italian thrash-metal revival band Ultra-Violence open for Wisconsin death metallers Jungle Rot without that much worry.”
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    A rather flippant, and therefore enjoyable dissection of the Notre Dame, the damage done to it, and what could be done about it. I do not know enough to comment about whether it makes sense or not, but I learned from reading it – hence the recommendation. Via The Browser.

Links for 2nd April, 2019

  1. “The growing use of digital transactions—by consumers, investors, tax payers—as well as the rise of newer forms of data collection has the potential to revolutionise Indian public policy. It is unlikely that these newer forms of data will completely replace the more traditional numbers derived from surveys, national accounts and administrative data. They will more likely complement each other. Government agencies will increase their dependence on big data analytics in the coming years—though the risks to individual privacy should not be underestimated.”
    Niranjan Rajadhakshya on big data, data collection, and how we might reach conclusions on the basis of both over time. The papers he mentions towards the end are also worth reading in their own right!

  2. “According to the Handbook Of Statistics On Indian Economy 2016-17, since the 1991 reforms, the Union government’s revenue has increased 25 times and state government revenues have increased 28 times in nominal terms, and about 4 times in real terms. Economic growth and the consequent increase in revenue also increases the ability of the government to focus on inequality and deal with sector-specific distress.”
    The article is about why economic growth is important for poverty alleviation, an as the article itself says, this is both an obvious point, but also one that bears repetition. But the excerpt above was notable for me: obvious in retrospect, but worth thinking about. Government revenues have gone up significantly since liberalization.

  3. “In 2014, the Delhi High Court found both major parties guilty of violating foreign-exchange laws when they accepted a donation from London-based commodities giant Vedanta Resources Plc.(The suit, filed by a former top bureaucrat and the Association for Democratic Reforms, was against the political entities and Vedanta wasn’t a party. The company didn’t respond to request for comment. The BJP and Congress argued the donations weren’t foreign because the Vedanta units that channelled the money were registered under Indian law.)
    The law passed last year changed the definition of a foreign company all the way back to 1976, effectively nullifying the court’s verdict because Vedanta’s overseas parent owned less than 50 percent of the Indian unit.”
    A somewhat depressing, if all too predictable read about campaign financing in India. There isn’t that much more to say  do read the whole thing, though.

  4. “This jellyfish doesn’t mean to brag, but it’s both beautiful and immortal. If it gets sick, or even stressed, it just reverts into it’s younger self so it can get strong and mature again, bouncing between youth and adulthood forever.”
    It’s impossible to choose one particular thing to highlight – please (for a change!) read every single comment. Nature is an impossibly weird thing, and we know far too little about it.

  5. “One of the great sources of leverage is other people. You can get leverage via directing folks to do things (a superpower whose impact I probably underappreciated when running my business solo). You can also get it by making them more effective at doing things.”
    A very long essay, perhaps rambling in part – but a great read nonetheless. About a whole variety of things, but mostly about productivity, I’d say – the self and the organization, both.

What does economics have to say about (the emergence of) Mr. Trump?

It might seem like a rather weird topic for a blog called Economics for Everybody to think about, but what explains the rise, and the seemingly inevitable ascent to the Presidency of the USA, of Mr. Trump?

This blog post isn’t about the politics of Mr. Trump, endlessly fascinating a topic though it is. It is instead about an attempt at looking at the economic factors that caused this phenomenon to occur at all.

And one cause is related to this:

Of the jobs lost during the recession, about 60 percent of them were in what are called “mid-wage” occupations. What about the jobs added since the end of the recession? Seventy-three percent of them have been in lower-wage occupations, defined as $13.52 an hour or less.

That is pulled from a book written by Tyler Cowen, called Average is Over. Read the whole book, it is worth the price of admission. But the trend that is highlighted in this book is the trend that is causing the rise and rise of Mr. Trump.

One, there are likely to be fewer jobs for all of us in the future. Two, those jobs that do exist are not going to pay very well at the bottom of the pyramid. One shouldn’t describe a book in two sentences, but that’s the quick summary of Average is Over.

Here’s the thing, though: machines don’t vote. People do. And who do you think those seventy-three percent in the block-quote above are going to vote for? For the guy who promises to cure their problems by – well, by curing their problems.

Mr. Trump’s solutions might not win him an academic degree in economics, but that’s not the race he’s running. The race he’s running is being judged by the people who have mostly lost in this era of globalization, and according to some of them, he’s doing just fine. If this “disenchanted” group turns out to be large enough, and motivated enough, Mr. Trump stands a very real chance of becoming President Trump by year end.

The disenchanted workers of the globalization era is not a new idea, far from it. And there is a lot more to the idea than what has been written here. The reason I’m writing about it now, and the reason I’m highlighting this one factor above all else,  is because old theories are beginning to receive fresh validation,  and that makes it an exciting time to be an analyst.

Being a global citizen right now, on the other hand, might well raise the demand for blood pressure pills.