Imagine you could invest in the stock market last week, with perfect knowledge of how it will move this week. 25 year old Frenchman Max-Hervé George does not need a Delorean, he is the beneficiary of a very unusual 8000 euro life insurance policy that lets him do just that. He could be a billionaire by the end of this decade and, by the end of the next, his contract would be worth more than the insurance company which stands behind it, Aviva France.
There's been a small, but influential, hysteria surrounding the idea is that a huge wave of automation, technology and skills have lead to a massive structural change in the economy since 2010. The implicit argument here is that robots and machines have both made traditional demand-side policies irrelevant or naïve, and been a major driver of wage stagnation and inequality. Though not the most pernicious story that gained prominence as the recovery remained sluggish in 2010 to 2011, it gained an important foothold among elite discussion. That is over.David Autor and Larry Summers tear apart the idea that a Machine Age is responsible for our economic plight.
Treading Water by Laura Parker [National Geographic]
Phil Stoddard, in his third term as mayor of South Miami, is one of the few politicians willing to talk about when that time might come... He drew a graph with three lines that show population, property values, and sea level all rising. Then abruptly, population growth and property values plummet. “Something is going to upset the applecart,” he says. “A hurricane, a flood, another foot of sea rise, the loss of freshwater. People are going to stop coming here and bail.”[more inside]
Let Us Face the Future - "All parties pay lip service to the idea of jobs for all. All parties are ready to promise to achieve that end by keeping up the national purchasing power and controlling changes in the national expenditure through Government action. Where agreement ceases is in the degree of control of private industry that is necessary to achieve the desired end. In hard fact, the success of a full employment programme will certainly turn upon the firmness and success with which the Government fits into that programme the investment and development policies of private as well as public industry." [more inside]
BIG and BOT Policy Proposals (transcript) - "Many of our current economic policies originated during times of scarcity. But now, says investor Albert Wenger, we live in an era of 'digital abundance', when creating new products costs virtually nothing. To adapt to the resulting economic upheavals, we won't need just more tech, says Wenger, but some strong policies. Here he explores two: basic income guarantee and the right to be represented by a bot." [more inside]
The End of Banking: Money, Credit, and the Digital Revolution - "Unregulated banking with access to government guarantees is an enticing business model. It offers the profits of excessive risk-taking in good times, and allows passing on the inevitable losses to taxpayers in bad times." [more inside]
Raj Chetty gives the 2015 Richard T. Ely Lecture (video, slides; talk begins at 9m) for the AEA: [more inside]
In December 1974, Arthur Laffer scribbled a supply-side economic model on a cloth napkin at the Two Continents restaurant in Washington. His dining companions, Donald Rumsfeld and Dick Cheney, took the idea to their boss, President Gerald Ford. And by the time Ronald Reagan was elected president, the first major challenge to Keynesian economics had gained a foothold in the White House. [more inside]
JetBlue is adding luggage charges and packing more seats on its planes, and customers are freaking out. Is contemporary airline service so bad because the airlines are colluding to make you suffer, as Tim Wu writes in the New Yorker? Or because low-price, a la carte service is what fliers actually want, as Alison Griswold writes in Slate? For a data-rich deep dive into what passengers really hate about air travel, see "The Unfriendly Skies" (.pdf), a report on five years worth of air travelers' complaints to the US Department of Transportation.
Premier Foods, one of the UK's biggest manufacturers, has been asking its suppliers for payments to continue doing business with the firm.
ON MONDAY: You are on your way to the fruit market, because you want to buy five oranges. Someone you’ve never met before accosts you on your way and says “Hey, you! Could you buy me five oranges please? I’ll give you the money when you come back and pay you ten pence for doing it”. You think what the hell, and say yes.Daniel Davies tries to explain the FX scandal using the analogy of a fruit market.
An article from The Atlantic's Olga Khazan discusses the invention of a $1 fresh salad vending machine in order to make healthier food options available in lower socioeconomic communities like East Garfield Park in Chicago's West side. [more inside]
LEMONADE WAR: a short film starring Patton Oswalt, Taylor Buck, Mo Collins and Werner Herzog. View more films here from We The Economy: 20 Short Films You Can’t Afford to Miss.
If mega-rich people could buy places on clinical trials, would this help drive forward the development of new treatments that could benefit everyone? [more inside]
Robert Peston, BBC : "Well you may recall that the Office for National Statistics recently recalculated the size of our national income to take account of unreported or under-reported parts of the economy, such as research and development, illicit drugs and prostitution. So thanks in part to the inclusion in the official economy of our productive sex workers, our EU membership fee has been augmented." - The BBC's economic editor's take on the UK's new, increased (by £1.7 billion) EU subscription. [more inside]
In the Billfold: a tale of a day-long tryout for an early stage startup, the author dubs The Start-up From Hell. The COO responds in Valleywag, "While it posted today (October 21), the article [...] relates to an experience she says she had 15 months ago. [...] At that time, Handybook employed less than 15 people. Today, Handy is two and a half years old and employs 200 people. [...] In short, as we continue to grow we're working every day to ensure the happiness of our customers and employees." [more inside]
What is a work of art in the age of $120,000 art degrees? A new report (PDF) by activist collective BFAMFAPhD laments the shrinking job prospects and growing debt burden for art school graduates. [more inside]
The return to pushing children hard consists of the increased likelihood that they will do well later in life. How important this is to parents depends crucially on the degree of economic inequality, and in particular on the return to education. In an economy where education and effort are highly rewarded and where people with little education struggle, parents will be highly motivated to push their children hard. Thus, we expect economic inequality to be associated with intensive (authoritarian and authoritative) parenting styles. In contrast, in an economy where there is little inequality and artists and school dropouts earn only slightly less than doctors and engineers, parents can afford a more relaxed attitude, and permissive parenting should be more prevalent. [study here]
This Is What's the Matter With Kansas: Sam Brownback tried to create a conservative utopia. He created a conservative hell instead. [more inside]
So you wanna join this bitcoin thing but can't afford the processing cycles to actually mine stuff? Now you can earn bitcoins using pencil and paper!
The political economy of a universal basic income: "your view of what is feasible should not be backwards looking. The normalization of gay marriage and legalization of marijuana seemed utopian and politically impossible until very recently. Yet in fact those developments are happening, and their expansion is almost inevitable given the demographics of ideology... UBI — defined precisely as periodic transfers of identical fixed dollar amounts to all citizens of the polity — is by far the most probable and politically achievable among policies that might effectively address problems of inequality, socioeconomic fragmentation, and economic stagnation." [more inside]
Portland’s paradox is that it attracts so many of “the young and the restless,” as demographers call them, that it has become a city of the overeducated and underemployed — a place where young people are, in many cases, forced into their semiretirement.
Don’t Want Me to Recline My Airline Seat? You Can Pay Me [New York Times]
"...airline seats are an excellent case study for the Coase Theorem. This is an economic theory holding that it doesn’t matter very much who is initially given a property right; so long as you clearly define it and transaction costs are low, people will trade the right so that it ends up in the hands of whoever values it most. That is, I own the right to recline, and if my reclining bothers you, you can pay me to stop."
"Using contractors it calls "brand ambassadors," Uber requests rides from Lyft and other competitors, recruits their drivers, and takes multiple precautions to avoid detection. The effort, which Uber appears to be rolling out nationally, has already resulted in thousands of canceled Lyft rides and made it more difficult for its rival to gain a foothold in new markets. Uber calls the program "SLOG," and it’s a previously unreported aspect of the company’s ruthless efforts to undermine its competitors."
Why the Ice Bucket Challenge is bad for you: "The ALS campaign may be a great way to raise money – but it is a horrible reason to donate it" [more inside]
The Upshot asked: Where are the hardest places to live in the U.S.? (A bit more on the ranking.) Now, given continuing economic divergence (previously): What do the two Americas search for?
Millennials Don't Stand A Chance. A terrific debate from Intelligence Squared: "...spotlight is shown on millennials and their use of revolutionary technology while growing up in a time of recession. Some think they are coddled, narcissistic and lazy. Have we let conventional wisdom blind us to the millennial's openness to change, innovation, and optimism in the face of uncertainty, which, in any generation, are qualities to be admired?" (running time ~50:00) [more inside]
FiveThirtyEight's Ben Casselman has crunched the economic numbers and determined: Corporate America Has NOT Been Disrupted. "By a wide range of measures, the advantages of incumbency in corporate America have never been greater." There are fewer startups hiring fewer people and failing more often. Considering that "entrepreneurship is a critical source of jobs in the economy (and) a major driver of productivity growth", a more accurate 'd-word' may be Derangement.
The highway, however, is getting mighty crowded. Hundreds of different beers debut weekly, creating a scrum of session IPAs, spiced witbiers, and barrel-aged stouts scuffling for shelf space. For consumers, the situation is doubly confusing. How can you pick a pint on a 100-brew tap list? Moreover, beer shops are chockablock with pale this and imperial that, each one boasting a different hop pun.America has too many craft brewers.
Carlos Slim calls for a three-day working week "We've got it all wrong, says Carlos Slim, the Mexican telecoms tycoon and world's second-richest man: we should be working only three days a week." also btw: The four-day work week (previously)
Tip The Pizza Guy is the most exhustive, detailed, old-school website about Tipping and Pizza Delivery I have ever seen. (last seen in 2001 and still being updated.)
- Welfare economics: an introduction
- The perils of Potential Pareto
- Inequality, production, and technology
- Welfare theorems, distribution priority, and market clearing
- Normative is performative, not positive
The loaded meaning behind 'What do you do?': [Deb] Fallows says the questions are meant to tease out socioeconomic status, political viewpoints, and cultural background. “You know that somebody’s kind of digging for information to put you into their world – how do you fit into my world?” [more inside]
Fat-Booty Butch Buys A Suit On A Budget.
I’m a brown dyke living in the Bronx, working 40 hours a week at an non-profit arts center. I’m finally with it enough to pay all my bills on time, if at all. I’ve got a roof over my head and some change in my savings account. I’m not complaining. It’s been worse for me but fuck, just having a job feels like a blessing sometimes. Living in this city makes it feel like I’m scraping by with every penny just to live. My play money is tight and I don’t know how to sew. I wear clothes until they’ve given up on life and I’m not ashamed. I often wonder how regular people buy new clothes all the time. Clothes in the hood and at super-low discount shops never seem to last very long. Fancy clothes cost so much, like why isn’t everyone just running around in cloth diapers? What is someone like me supposed to do when they need to look good in real life?[more inside]
Monopoly is back: Barry Lynn on the concentration of American economic power — and how we can restore fairness. Highlights: [more inside]
The Economic Risks of Climate Change in the United States (PDF); prospectus (PDF); press coverage (YT) - "The signature effects of human-induced climate change—rising seas, increased damage from storm surge, more frequent bouts of extreme heat—all have specific, measurable impacts on our nation's current assets and ongoing economic activity. [The report] uses a standard risk-assessment approach to determine the range of potential consequences for each region of the U.S.—as well as for selected sectors of the economy—if we continue on our current path..." [more inside]
What was the average American college graduate's college-related debt in 2013? What state has the highest rate of poverty in the United States? Answer these and other depressing questions (or submit your own) at How Wrong You Are.
"Hi, Marc... You seem to think everyone's worried about robots. But what everyone's worried about is you, Marc. Not just you, but people like you. Robots aren't at the levers of financial and political influence today, but folks like you sure are. People are scared of so much wealth and control being in so few hands... Unless we collectively choose to pay for a safety net, technology alone isn't going to make it happen." [more inside]
"Maybe Angola will colonise us now," says Vasco Lourenço, the head of Associação 25 de Abril, an organisation that is trying to preserve the spirit of the 1974 revolution. Forty years ago he was one of the young army officers who took up arms to end the Salazar dictatorship and colonial wars.While Portugal is still in the throws of recession, Angola is booming and investing heavily in its old colonial ruler. Now Portugal is struggling with the effects of this investment and the implications it brings with it.
“Hindus are, on average, richer and more educated than Muslims. But oddly, the child mortality rate for Hindus is much higher. All observable factors say Hindus should fare better, but they don't. Economists refer to this as the Muslim mortality puzzle. In a new study, researchers believe that they may have found a solution to the puzzle. And, surprisingly, the solution lies in a single factor – open defecation.” [more inside]