Economics

A tale of two Chinas

Outside China, the key question is whether companies use Chinese technology or compete against it. Cheaper Chinese industrial robots and machinery can boost productivity and ease labor shortages for their customers. For rival producers, the economics are less appealing. European machinery makers illustrate the squeeze. China has moved from a major buyer of advanced machinery to a formidable competitor at home and abroad. In…

Indian government sucks at industrial policy

I’d say that I am not against the government’s actions; I am very much for the government’s actions on dealing with the fundamentals. So let’s focus on public goods such as education and healthcare, let’s focus on building good roads, let’s focus on creating a good business environment, let’s focus on utilities, let’s focus on water, electricity, logistics. These are areas where you have a much better chance of success…

Galbraith’s Antidote to Economic Dogma

I react to what is necessary. I would like to eschew any formula. There are some things where the government is absolutely inevitable, which we cannot get along without comprehensive state action. But there are many things — producing consumer goods, producing a wide range of entertainment, producing a wide level of cultural activity — where the market system, which independent activity is also important, so I react…

Mancur Olson on collective action

In his first book, The Logic of Collective Action: Public Goods and the Theory of Groups (1965), he theorized that what stimulates people to act in groups is incentive; members of large groups do not act in accordance with a common interest unless motivated by personal gain (economic, social, etc.). While small groups can act on shared objectives, large groups will not work towards shared objectives unless their individual…

What GDP Doesn't See

“GDP per capita turns out to be a handy and available proxy.”

Research on the wealth effect

Now, you might think that broader participation in the stock market would increase the strength of the wealth effect, with more households exposed to market volatility. But this is not quite right. ++New research++ from the Federal Reserve Bank of New York finds that the more widely Americans hold shares, the weaker the effect of a rate change on the real economy, which is the opposite of what you might expect: instinctively,…

How does the preference for sons impact the mental well-being of women in rural India?

The researchers surveyed a sample of married women of reproductive age and their co-residing mother-in-law in Jaunpur district, Uttar Pradesh. When there was more than one daughter-in-law in the household, they included the youngest woman. They collected socioeconomic and demographic data, as well as information on mental health using a survey that screens for the risk of depression and anxiety. They found the strongest…

Is microfinance useful or useless?

The evidence base for microfinance being effective was always extremely thin. Morduch (1999), in an otherwise hopeful article on the development of microfinance, could not help but note the paucity of the available evidence that it was actually doing anything. The best evidence cited at the time for the Grameen Bank was Pitt and Khandker (1998), who used an eligibility requirement to infer the effect of the loans. However,…

Trump's stupid trade war takes a stupid new turn

The court’s 6-3 decision has significant implications for the U.S. economy, consumers and the president’s trade policy. The Trump administration had said that a loss at the Supreme Court could force the government to unwind trade deals with other countries and potentially pay hefty refunds to importers. Mr. Trump is the first president to claim that a 1970s emergency statute, which does not mention the word “tariffs,” allowed…

Age of anxiety

THERE is still time for the cheerful and the gloomy to disagree, sincerely, about the net impact on employment from automation and artificial intelligence. Perhaps AI will unleash a job-creating economic boom for the ages, as boosters maintain. Maybe on balance the doom-mongers are right, and grim legions of algorithm-guided bots and robots will conquer one industry (and profession) after another. One outcome is not up for…

Some interesting facts

Lots of population numbers are pretty made-up. In many countries, there just isn’t really the infrastructure to do a good census. In Papua New Guinea, they’re not sure if the number of people is 9 million or 17 million. Similar things are true in other countries like Nigeria, which may have tens of millions more or fewer people than is standardly reported. In lots of countries, the way they get their official census numbers…

Fuck you money

There are many things money can buy, but the most valuable of all is freedom. Freedom to do what you want and work for whom you respect. Those who live paycheck to paycheck are slaves. Those who carry debt are slaves with even stouter shackles. Don’t think for the moment their masters don’t know it. Chains I first accumulated the modest amount I needed around 1989. Not enough to retire on perhaps, but enough to say F-you if…

The future of AI and automation

Summary by Claude. Let me break down what Jones and Tonetti are arguing. The Core Question How much of past economic growth came from automation, and what does that tell us about AI's future impact? The Key Insight: "Weak Links" The paper's central concept is that economic production involves complementary tasks — you need all of them to produce output. Think of it like a chain: your output is limited by your weakest link,…

Emotional returns vs financial returns

Loose reflection. Since I work in finance, and since my area of focus is around investing and personal finance more broadly, a lot of people—friends, relatives, colleagues—ask me for advice on various aspects of their finances. And in all of this, the one big recurring theme I've noticed time and again is that people…

Poor countries are not catching up with rich countries

The original story of divergence then convergence remains the same, despite the scope for the revised data to alter results. For the three decades leading up to the empirical literature on economic growth, the gap between developed and developing nations expanded. That all started to change around the fall of the Berlin wall, and poor countries went from lagging behind richer ones to maintaining pace with and then ultimately…

An unified theory of vibes

Kyla Scanlon is one of the most perceptive writers about the US economy and culture. Several years ago, she coined the term "vibecession" to describe the divergence between economic data and how people felt. In other words, after the pandemic, something weird started happening in the US. While economic data, despite…

The future of global trade

Both economists agree that growth is still possible, but the age of “hyperglobalisation” – with its extraordinary convergence of openness, technology, and trust – is unlikely to return. > “Growth miracles seem less likely because two of the key mechanisms – access to big, lucrative markets and willingness to share technology across borders – no longer seem to be here.” Goldberg As global trade enters a new, more fragmented…

On having a philosophy of money

A few thoughts on people doing dumb shit with money.

Naked without values

This deterioration in the practice of politics can be attributed to many causes. One of the most important may be found in the deterioration in how economics is practiced. Economics is often described as a scientific discipline, which studies “if-then” propositions without reference to morals and values. But scientific findings do affect our values and normative judgments, and claims of “scientific objectivity” can be used to…

You never know when the carousel stops spinning

One complication of the n+1 listing is not so much the salary itself but the sheer number of responsibilities. A managing editor must oversee all three print issues, supervise fact-checking and proofreading, serve as “product manager” for n+1 Books, plan and execute magazine events and fundraisers, read submissions and respond to pitches, hire interns, and “assist with the management of n+1 programming and day-to-day…

Will the poor countries catch up the rich?

What Remains of Cross-Country Convergence? A Critical Review of 50 Years of Economic Growth Research. Summary by Claude. This comprehensive 2020 review by Paul Johnson and Chris Papageorgiou examines one of economics' most enduring questions: Do poor countries eventually catch up to rich ones? After analyzing five decades of research and data, their conclusions challenge popular narratives about global economic convergence.…

The Protection Racket: A History of Tariffs and Who Really Pays

On that day, an executive order was signed imposing a sweeping new regime of "reciprocal" tariffs. The action was vast in its scope, targeting nearly 70 countries and territories in addition to the European Union. The tariff rates varied widely, based on justifications ranging from trade imbalances to national security concerns. Rates for some nations were set as high as 41% (Syria) and 39% (Switzerland), while key trading…