We’re Not as Selfish as Economists Think We Are. Here’s the Proof.
Economic fundamentals illustrate clearly why innovation is so critical for China. Analyzing in terms of classical "growth accounting," an economy's supply side inputs are capital, labour and "total factor productivity" (TFP) – the latter being all growth that can't be explained by increases in capital and labor. More precise versions add "intermediate products" – the inputs of one economic sector into another produced by increasing division of labour and specialization. Innovation's effects are measured as part of the TFP.
In most economies the most powerful forces of economic development are, in descending order of importance, intermediate products, fixed investment, labour inputs and TFP. This applies during periods of high innovation.Garage startups as the source of innovation is a myth, along with individuals' creativity and ingenuity being all there is to it. In fact, the "garage" is the state, as Mariana Mazzucato showed in The Entrepreneurial State, and the state provides incubation for creativity and ingenuity, which don't come out of nowhere. People have to be trained and basic research and development funded. China is well-poised to take advantage of this. The leadership understands the opportunities and challenges and has the tools to deal with them.
Inevitably there are already claims that the arrest and prosecution of Russia’s only liberal governor is politically motivated – supposedly as a tightening up exercise in light of the forthcoming parliamentary elections. The Russian authorities of course deny this, and the reasons for supposing a political motive are not obvious. Belykh is hardly a popular figure and as governor of the remote and underpopulated Kirov Region he is hardly a threat to the authorities in Moscow. If he was they would have presumably dismissed him before now. As it happens Belykh is the third Russian regional governor to be arrested on corruption charges this year, which suggests that he has simply fallen foul of an ongoing anti-corruption campaign.…
Belykh’s political longevity notwithstanding the scandals of his administration and his all-too obvious administrative incompetence is an indication of how Russian liberals – far from being the persecuted minority they claim to be – in reality enjoy extraordinary privileges in a country where they are widely disliked. His arrest however suggests that his incompetence and/or corruption have finally caught up with him.Russia recently appointed an independent investigator whose reputation for honesty and effectiveness is high to lead the offensive against endemic corruption. Xi Jinping has acted similarly in China, since corrupt is a major drag there as well as it Russia. Needless to say, the West sees this as an ominous sign of political repression. Damned if you do, damned if you don't.
President Erdogan said he is willing to deal with the crisis in relations between Russia and Turkey. According to Kremlin spokesman Dmitry Peskov, Erdogan said that Turkey…“shares the pain of downed Su-24 pilot’s death with his family” and “sees it as Turkey’s pain”It’s no secret that Turkey’s economy has been beaten and battered by Russia’s sanction, especially in the tourism sector where Turkish hotels (once the primary destination for Russian summer travellers) remain completely abandoned and empty.
Let’s not even mention Syria, where Erdogan’s once grand ambition to overthrow Assad, and get a Saudi/Qatari pipeline flowing through Turkey on route to Europe, has been obliterated by Russia’s targeting of Turkey/NATO trained ISIS and Al Nusra forces.…The Duran
Helicopter money is not monetary policy. It is a fiscal policy carried out with the cooperation of the central bank. That is, if the Fed were to drop $100 bills out of helicopters, it would be doing the Treasury’s bidding.
We are wary of joining the cacophony of commentators on helicopter money, but our sense is that the discussion could use a bit of structure. So, as textbook authors, we aim to provide some pedagogy. (For the record, here are links to Ben Bernanke’s excellent blog post, to a summary of Vox posts, and to Willem Buiter’s technical paper.)
To understand why helicopter money is not just another version of unconventional monetary policy, we need to describe both a bit of economic theory and some relevant operational practice. We use simple balance sheets of the central bank and the government to explain.…Money & Banking
The UK vote in favor of BREXIT has stoked the fears of the New York Times to a fevered pitch. Their greatest collective fear is the rise of “populism.” The NYT fashions itself the last redoubt of “serious people” under siege by the rabble. BREXIT is an opportunity to drive home to the rabble the folly of failing to fall in line with the policies of the serious people featured in the NYT. The moral of the story is a simple one – when the electorate in a democratic election ignores the technocrats the result is an economic and social catastrophe.
Even for the NYT, however, their attacks on the UK electorate for daring to vote for BREXIT were extraordinary in their intensity and multiplicity. At least seven articles, each of them negative about the UK voters, were featured in today’s paper. (I had no strong views on the vote. I think reasonable UK voters could disagree on the desirability of BREXIT.)
This is the first in a seven-part series discussing each of these seven articles decrying BREXIT. I focus on the unintended aspect of each article, for each demonstrates the contempt that a broad range of elites have for the voters and democracy.…New Economic Perspectives
The class struggle is back! Who would have thought. After years of being told by the likes of John Major and then Tony Blair that “the class war is over” (Blair) and the we now all live in “the classless society” (Major) the working class has fought back, albeit under the motivation of the looney, populist Right rather than a progressive left, who remain a voice for capital. Remember when we were told that the Left-Right continuum was irrelevant now in this global world where nation states had given way to grand communities (like the EU) and that, in this new post-modern world, we could all be entrepreneurs (meaning we sell our labour to a capitalist!). And now we know that class never went away. It might have been hi-jacked by the Right but it is there – and it is powerful. Planet Earth to British Labour – do something about it or wither away and make way for a progressive new organised working class movement.…
LIVE: Jim Rogers: “The bear case is the pound disappears” https://t.co/WVAVrr9UnQ pic.twitter.com/xBckP05H1J— Yahoo Finance (@YahooFinance) June 27, 2016
Boris Johnson has broken cover for the first time since reacting to the vote for Brexit to set out how the country may look if he wins the race to succeed David Cameron as prime minister.
Amid clamour for the leave campaign’s leaders to set out what happens next, Johnson claimed Britain will be able to introduce a points-based immigration system while maintaining access to the European single market.
Johnson sought to reassure remain voters the UK will continue to intensify cooperation with the EU and told his fellow leave supporters they must accept the 52-48 referendum win was “not entirely overwhelming”.…The Guardian
Spanish elections delivered a hung parliament for the second time in six months on Sunday, adding to political uncertainty in Europe after last week’s shock Brexit vote and piling intense pressure on Spain’s warring politicians to form a government.
Acting Prime Minister Mariano Rajoy’s centre-right People’s Party (PP) again emerged with the single biggest bloc of seats but fell short of a majority, leaving the euro zone’s fourth-largest economy at risk of another lengthy political stalemate.Spain in political limbo.
China's 13th Five-Year Plan reflects its ability to embrace the new industrial revolution and its growth philosophy will help it play a leading role in the process, World Economic Forum founder and executive chair Klaus Schwab said Saturday. [Special coverage]
The Fourth Industrial Revolution is not science fiction -- we are already in the midst of it, he told Xinhua in an exclusive interview ahead of the upcoming Annual Meeting of the New Champions 2016, also known as the Summer Davos Forum.
"It will not only change what we are doing and how we communicate, but the whole of society and our identity," he said.
More than half of the Chinese population are prepared for the Fourth Industrial Revolution and the 13th Five-Year Plan reflects this ability, he added. The blueprint, released last year, outlines China's development path for the next five years, with growth driven by innovation, coordination, green development, opening up and sharing.
Schwab expects the five principles to be beneficial to China's future economic growth, and among them, innovation is the most important principle to the progress of the Fourth Industrial Revolution.
The new wave of technological developments will not only bring opportunities such as increased productivity, but might widen the gap between the rich and the poor due to exposure to the latest tools, he pointed out.
Therefore, sharing is important. Governments should ensure the benefits of new technology are shared domestically and globally, he said.
There might be some layoffs due to technology such as robotics. The process will be a kind of destructive creation, with old jobs reduced and new jobs created. The challenges lies in the different speeds of the two process, he said, adding that the government and business communities should ensure people are retrained and new jobs created.
Building a green economy should be the goal of all efforts, and that will take coordination and synergy between governments and the business community. More than that, there needs to be more networking, not only within a country, but also on a global scale, thus, underscoring the need to continue to open up, Schwab said.
China is one of the largest markets for robots and is supplying the world in many other technological areas, said Schwab, who was impressed with the flexibility and reliability of the latest drone product developed by the Shenzhen-based technology firm DJI, a leading manufacturer of commercial and recreational drones for aerial photography and videography.
"I think China can play a leading role in shaping the Fourth Industrial Revolution," he said.
Meanwhile, as China is part of the global economy, it should facilitate global dialogue and cooperation to manage development within a fair environment, Schwab added.
Klaus Schwab is German engineer and economist, best known as the founder and executive chairman of the World Economic Forum. His wife and former secretary, Hilde, co-founded the Schwab Foundation for Social Entrepreneurship. — WikipediaAlso
The first of the achievements is that the SCO has advocated and put into practice the pioneering Shanghai Spirit, which features mutual trust, mutual benefit, equality, consultation, respect for diverse civilizations and pursuit of common development, said the Chinese president.
For those of us outside the United Kingdom, the "Leave" victory in the referendum is not enough to cause worries about the real economy. We have entered the thin summer market period, so some form of financial turbulence is likely, but until some defaults occur it is not going to matter for non-levered investors. For the U.K., the most likely outcome is going to be an extremely long period of technical negotiations, which will eventually be pushed out of the news cycle by news about the Royal Family and football.Bond Economics
On June 24, foreign oil company TransCanada filed a lawsuit against the U.S. under NAFTA, the North American Free Trade Agreement, arguing that the U.S. rejection of the Keystone XL pipeline violated NAFTA’s broad rights for foreign investors by thwarting the company’s “expectations.” As compensation, TransCanada is demanding more than $15 billion from U.S. taxpayers.
TransCanada’s case will be heard in a private tribunal of three lawyers who are not accountable to any domestic legal system, thanks to NAFTA’s “investor-state” system, which is also included in the proposed Trans-Pacific Partnership (TPP). The controversial TPP would empower thousands of additional corporations, including major polluters, to follow TransCanada’s example and use this private tribunal system to challenge U.S. climate and environmental policies.…
Summary: Great Britain’s decision to leave the EU presages a global financial meltdown that could resemble the 1930s. Banks will demand massive bailouts. We will be forced, if the banks are bailed out again, to endure harsher austerity and a prolonged depression.Michale Hudson
Michael Hudson argues that military interventions in the Middle East created refugee streams to Europe that were in turn used by the anti-immigrant right to stir up xenophobia.Actually, Michael Hudson sees much more than immigration at work. But immigration was probably the final straw.
Europe is sort of like the Soviet Union in the 30s and 40s. There was an argument, is it reformable or not? There is a feeling, and I think its correct, that the European Union, the eurozone, and the euro, is not reformable, as a result of the Lisbon treaties and the other treaties that have created the euro. Europe has to be taken apart in order to be put together not on a right-wing, neoliberal basis, but on a more social basis.
Now, ironically, the parties who call themselves socialists are now moved to the ultra-right, to the neoliberal. The French socialists, the German social democrats. But youre having real radical parties arise in Italy, Spain, Portugal, and potentially in Greece, again, that are going to say, well, the key of any government, of any national government, has to be the ability to issue our own money, to run a deficit, spending into the economy to make the economy recover. We cannot recover under the Lisbon agreements, under the eurozone, where the central bank will only create money to give to banks, not money to spend into the economy, to actually finance new investment and new employment. And we cannot be part of a eurozone that insists that pensions have to be cut back in order to make the banks whole and save the one percent losing money.…The Real News Network
The majority vote by Britons to leave the European Union was an act of raw democracy. Millions of ordinary people refused to be bullied, intimidated and dismissed with open contempt by their presumed betters in the major parties, the leaders of the business and banking oligarchy and the media.
This was, in great part, a vote by those angered and demoralised by the sheer arrogance of the apologists for the "remain" campaign and the dismemberment of a socially just civil life in Britain.…
When you think of economic issues what are the first things that come to mind? Poverty, inequality, unemployment, inflation, and crisis are all common answers to the question. Wouldn’t it be great if there was a policy that could address all of those issues (and more) in a cost-effective manner? In this piece I will give a very brief introduction to Job Guarantee (JG) schemes, the proverbial economic silver bullet.…The Minskys — an economics blog created by graduate students from the Levy Economics Institute
The European Union has sowed the wind. It may reap the whirlwind. Unless it moves, and quickly, not merely to assert a hollow “unity” but to deliver a democratic, accountable, and realistic New Deal – or something very much like it – for all Europeans.Diem25