Economic Issues
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1. Free exchange: The euro zones boom masks problems that will return to haunt it., 30 . 2017[−]
Print section Print Rubric: Europes boom will not last; it had better make the most of it Print Headline: The second chance Print Fly Title: Free exchange UK Only Article: standard article Issue: Howand whyto end the war in Yemen Fly Title: Free exchange WHAT does not kill me makes me stronger, wrote Nietzsche in G?tzen-D?mmerung, or Twilight of the Idols. Alternatively, it leaves the body dangerously weakened, as did the illnesses that plagued the German philosopher all his life. The euro area survived a hellish decade, and is now enjoying an unlikely boom. The OECD, a club of mostly rich countries, reckons that the euro zone will have grown faster in 2017 than America, Britain or Japan. But, sadly, although the currency bloc has undoubtedly proven more resilient than many economists expected, it is only a little better equipped to survive its next recession than it was the previous one. Europes crisis was brutal. ...

2. Borderline solution: The fate of the Irish frontier shows the compromises that Brexit entails., 30 . 2017[−]
Print section Print Rubric: The fate of the Irish frontier shows the compromises that Brexit will force Britain to make Print Headline: Borderline solution Print Fly Title: Brexit and the Irish question UK Only Article: standard article Issue: Howand whyto end the war in Yemen Fly Title: Borderline solution Main image: 20171202_LDP001_0.jpg NORTHERN IRELAND barely featured in last years Brexit referendum campaign, in which Britons were more interested in matters of migration and money. Yet the future of the 500km border that separates the North from the Irish Republicand which will soon separate the United Kingdom from the European Unionhas become one of the trickiest issues of the exit talks. The winding border has revealed a tangle in the red lines laid down by Theresa May. After leaving the EU, Britain wants to do its own trade deals with the ...

3. A job half-finished: Europes banks are stronger than they were, but not strong enough., 30 . 2017[−]
Print section Print Rubric: Much has been done to strengthen Europes banking system. But not enough Print Headline: A job half-finished Print Fly Title: European banks UK Only Article: standard article Issue: Howand whyto end the war in Yemen Fly Title: A job half-finished Main image: 20171202_LDD002_0.jpg THE permanent revolution rumbles on. Ten years after the financial crisis, Europes bankers must wonder whether the regulatory upheaval will ever cease (see article). Next month two European Union directives start to bite. MiFID2 will make trading more transparent and oblige banks to charge clients separately for research; PSD2 will expose banks to more competition from technology companies, and each other, in everything from payment services to budgeting advice. A new accounting rule, IFRS 9, also kicks in, demanding timelier provisions for credit ...

4. Capital in the 80th century BC: Wealth inequality has been widening for millennia., 23 . 2017[−]
Print section Print Rubric: Wealth inequality has been increasing for millennia Print Headline: Capital in the 80th century BC Print Fly Title: Archaeology UK Only Article: standard article Issue: A hated tax but a fair one Fly Title: Capital in the 80th century BC THE one-percenters are now gobbling up more of the pie in Americathat much is well known. This trend, though disconcerting, is not unique to the modern era. A new study, by Timothy Kohler of Washington State University and 17 others, finds that inequality may well have been rising for several thousand years, at least in some parts of the world. The scholars examined 63 archaeological sites and estimated the levels of wealth inequality in the societies whose remains were dug up, by studying the distributions of house sizes. As a measure they used the Gini coefficient (a perfectly equal society would have a Gini coefficient of zero). It rose from about 0.2 around ...

5. Scapegoating trade: A historian on the myths of American trade., 23 . 2017[−]
Print section Print Rubric: Douglas Irwin corrects the record of American trade policy over the years Print Headline: Sticking up for a scapegoat Print Fly Title: A history of trade UK Only Article: standard article Issue: A hated tax but a fair one Fly Title: Scapegoating trade Main image: 20171125_BKP001_0.jpg Clashing over Commerce: A History of US Trade Policy. By Douglas Irwin. University of Chicago Press; 832 pages; $35. TRADE-policy wonks are gluttons for punishment. In good times, their pet topic is dismissed as dull. In bad, they find trade being faulted for everything. As Donald Trump blames Americas economic woes on terrible trade deals, one geek is fighting back. In Clashing over Commerce, Douglas Irwin of Dartmouth College tells the history of American trade policy, showing that trade is neither dull nor deserving of the attacks on ...

6. Daily chart: Wealth inequality has been increasing for millennia., 22 . 2017[−]
Main image: THE one-percenters are now gobbling up more of the pie in Americathat much is well known. This trend, though disconcerting, is not unique to the modern era. A new study by Timothy Kohler of Washington State University and 17 others finds that inequality may well have been rising for several thousand years, at least in some parts of the world. The scholars examined 63 archaeological sites and estimated the levels of wealth inequality in the societies whose remains were dug up, by studying the distributions of house sizes. As a measure they used the Gini coefficient (a perfectly equal society would have a Gini coefficient of zero). It rose from about 0.2 around 8000BC in Jerf el-Ahmar, on the Euphrates in modern-day Syria, to 0.5 in around 79AD in Pompeii. Data on burial goods, though sparse, suggest similar trends. The researchers suggest agriculture is to blame. The nomadic lifestyle is not conducive to wealth accumulation. Only when humans switched to farming did people truly begin to acquire material riches. Inequality rose steadily after the shift into settled agriculture, but tailed off in the Americas after around 2,500 years. In the old world, however, wealth inequality continued climbing for several millennia. That may be because Eurasia was richer in large mammals that ...

7. Standard stuff: Timelier provisions may make banks profits and lending choppier., 16 . 2017[−]
Print section Print Rubric: Timelier loan-loss provisions may make earnings and lending choppier Print Headline: Stage fright Print Fly Title: Accounting and banks UK Only Article: standard article Issue: The army sidelines Robert Mugabe, Africas great dictator Fly Title: Standard stuff Main image: 20171118_FNP505.jpg IN THE first quarter of 2018 thousands of banks will look a little less profitable. A new international accounting standard, IFRS 9, will oblige lenders in more than 120 countries, including the European Unions members, to increase provisions for credit losses. In America, which has its own standard-setter, IFRS 9 will not be appliedbut by 2019 banks there will also have to follow a slightly different regime. The new rule has its roots in the financial crisis of 2007-08, in the wake of which the leaders of the G20 countries declared that ...

8. The right connections: Beefing up mobile-phone and internet penetration in Africa., 09 . 2017[−]
Print section Print Rubric: Beefing up mobile-phone and internet penetration Print Headline: The right connections Print Fly Title: Connectivity UK Only Article: standard article Issue: The leapfrog model Fly Title: The right connections WITH ITS SNAZZY technology hubs and army of bright young programmers, Kenya can rightly claim to be east Africas tech startup nation. It was here that mobile money first took off, and it is here that off-grid solar power is making its biggest impact. Even the election in August was meant to be a showpiece of tech wizardry, with voting stations automatically beaming the results via mobile internet to a computer in the capital, Nairobi, to prevent tampering. But it turned out that about a quarter of the countrys 41,000 polling stations did not have mobile-phone reception and sent in incomplete results, leading to allegations of vote-rigging. That helped persuade the courts to order a ...

9. Letters to the editor: Letters., 09 . 2017[−]
Print section Print Fly Title: On globalisation, mussels, Russia, politics UK Only Article: standard article Issue: Americas global influence has dwindled under Donald Trump Fly Title: Letters to the editor Those who are left behind Your briefing on the regions of the world that have been marginalised by globalisation stated that economists once thought that, over time, inequalities between both regions and countries would naturally even out (In the lurch, October 21st). I am not one of them. I have always believed that the global economy can be imagined to be a self-equilibrating mechanism of the textbook variety, or it can be recognised as subject to processes of cumulative causation whereby if one or more countries fall behind the pack, there may be dangers of them falling further behind, rather than enjoying an automatic ticket back to the equilibrium solution path. These two alternative, conflicting views of real-world economic processes have very different implications regarding institutional needs and arrangements (Managing the Global ...

10. The Economist explains: Why is Protestantism flourishing in the developing world?., 09 . 2017[−]
Main image: PROTESTANTISM has played a large part in the development of the modern, liberal world. It has contributed to the emergence of concepts such as freedom of conscience, tolerance and the separation of powers. But as the world marks the 500th anniversary of the start of the Reformation, the faiths axis is shifting. The percentage of Western Europeans and North Americans professing Protestantism is declining, whereas in the developing world the proportion is growing fast. For much of the 20th century, global secularisation was considered inevitable as nations modernised. But the developing world is actually becoming more religious, part of what Peter Berger, a sociologist, called the desecularisation of the world. At the heart of this religious resurgence have been Islam and Pentecostalism, a branch of Protestant Christianity. Islam grew at an annual average of 1.9% between 2000 and 2017, mainly as the result of a high birth rate. Pentecostalism grew at 2.2% each year, mainly by conversion. Half of developing-world Christians are Pentecostal, evangelical or charismatic (all branches of the faith emphasise the authority of the Bible and the need for a spiritual rebirth). Why are people so attracted to it?Christianity has always had ecstatic elements, but modern Pentecostalism was born ...

11. Daily chart: In much of sub-Saharan Africa, mobile phones are more common than access to electricity., 08 . 2017[−]
Main image: A DECADE after mobile phones began to spread in Africa, they have become commonplace even in the continents poorest countries. In 2016 two-fifths of people in sub-Saharan Africa had mobile phones. Their rapid spread has beaten all sorts of odds. In most African countries, less than half the population has access to electricity. In a third of those countries, less than a quarter does. Yet in much of the continent people with mobile phones outnumber those with electricity, never mind that many have to walk for miles to get a signal or recharge their phones batteries.Mobile phones have transformed the lives of hundreds of millions for whom they were the first, and often the only, way to connect with the outside world. They have made it possible for poor countries to leapfrog much more than landline telephony. Mobile-money services, which enable people to send cash straight from their phones, have in effect created personal bank accounts that people can carry in their pockets. By one estimate, the M-Pesa mobile-money system alone lifted about 2% of Kenyan households out of poverty between 2008 and 2014. Technology cannot solve all of Africas problems, but it can help with many. 20171108 17:52:15 Comment Expiry ...

12. Buttonwood: Investors call the end of the government-bond bull market (again)., 02 . 2017[−]
Print section Print Rubric: The big risks may be in corporate, not government, bonds Print Headline: Yielding to temptation Print Fly Title: Buttonwood UK Only Article: standard article Issue: Do social media threaten democracy? Fly Title: Buttonwood FOR the umpteenth time in the past decade, a great turning-point has been declared in the government-bond market. Bond yields have risen across the world, including in China, where the yield on the ten-year bond has come close to 4% for the first time since 2014. The ten-year Treasury-bond yield, the most important benchmark, has risen from 2.05% in early September to 2.37%, though that is still below its level of early March (see chart). Investors have been expecting bond yields to rise for a while. A survey by JPMorgan Chase found that a record 70% of its clients with speculative accounts had short positions in Treasury bondsie, betting that prices would fall and ...

13. Luthers reformation: The stand., 02 . 2017[−]
Print section Print Rubric: Protestantism shaped the development of the modern liberal West. What does its current revival mean for the developing world? Print Headline: The stand Print Fly Title: Luthers reformation UK Only Article: standard article Issue: Do social media threaten democracy? Fly Title: Luthers reformation Location: ALMOLONGA, GUATEMALA Main image: 20171104_ESD001_1.jpg IN THE summer of 1974, a 26-year-old Mayan villager lay drunk in a town square in the Guatemalan highlands. Suddenly he heard a voice that was to change the course of his life and that of his home town, Almolonga. I was lying there and I saw Jesus saying, I love you and I want you to serve me, says the man, Mariano Riscajche. He dusted himself down, sobered up and soon started preaching, ...

14. The generation gain: Millennials are doing better than the baby-boomers did at their age., 26 . 2017[−]
Print section Print Rubric: Millennials are doing better than the baby-boomers did at their age. But the gap is closing Print Headline: The generation gain Print Fly Title: Age and inequality UK Only Article: standard article Issue: A tsar is born Fly Title: The generation gain ALL men are created equal, but they do not stay that way for long. That is one message of a report this month by the OECD, a club of 35 mostly rich democracies. Many studies show how income gaps have evolved over time or between countries. The OECDs report looks instead at how inequality evolves with age. As people build their careers, or dont, their incomes tend to diverge. This inequality peaks when a generation reaches its late 50s. But it tends to fall thereafter, as people draw redistributive public pensions and quit the rat race, a contest that tends to give more unto every one that hath. Old age, the OECD notes, is a leveller. Will it remain ...

15. Buttonwood: Higher taxes can lower inequality without denting economic growth., 19 . 2017[−]
Print section Print Rubric: Reducing inequality in a globalised economy Print Headline: A taxing problem Print Fly Title: Buttonwood UK Only Article: standard article Issue: The right way to help declining places Fly Title: Buttonwood INEQUALITY is one of the big political issues of the 21st century, with many commentators citing it as a significant factor behind the rise of populism. After all, nothing could be more indicative of the triumph of the common man than the elevation of a property billionaire to the American presidency. A new IMF report* looks at how fiscal policy can help tackle inequality. In advanced economies, taxation already has an impact. The Gini coefficient (a standard measure of income inequality) is around a third lower after taxes and transfers than it is before them. But whereas such policies offset around 60% of the change in market inequality between 1985 and 1995, they have had barely any impact ...

16. Free exchange: How should recessions be fought when interest rates are low?., 19 . 2017[−]
Print section Print Rubric: Agreement on how to fight recessions in a low-interest-rate world remains elusive Print Headline: The low road Print Fly Title: Free exchange UK Only Article: standard article Issue: The right way to help declining places Fly Title: Free exchange Main image: 20171021_fnp501.jpg ONE day, perhaps quite soon, it will happen. Some gale of bad news will blow in: an oil-price spike, a market panic or a generalised formless dread. Governments will spot the danger too late. A new recession will begin. Once, the response would have been clear: central banks should swing into action, cutting interest rates to boost borrowing and investment. But during the financial crisis, and after four decades of falling interest rates and inflation, the inevitable occurred (see chart). The rates so deftly wielded by central banks hit zero, leaving ...

17. 20th-century American history: The crazy career of Herbert Hoover., 19 . 2017[−]
Print section Print Headline: A devil to sup with Print Fly Title: Herbert Hoover UK Only Article: standard article Issue: The right way to help declining places Fly Title: 20th-century American history Main image: 20171021_bkp505.jpg Hoover: An Extraordinary Life in Extraordinary Times. By Kenneth Whyte. Knopf; 752 pages; $35. FOR his philanthropic efforts during the first world war, Herbert Hoover was described as a man who began his career in California and will end it in heaven. In a new biography, Kenneth Whyte lists the many hardships Hoover went through. Generally, he used them to his advantageto increase his wealth, achieve fame and become Americas 31st president. At least, that is, until the Great Depression, which ruined him politically. Born in Iowa in 1874, Hoover became determined early in life to earn a fortune for the security and independence it would bring. After graduating as a geologist from ...

18. Globalisations losers: The right way to help declining places., 19 . 2017[−]
Print section Print Rubric: The right way to help places hurt by globalisation Print Headline: Left behind UK Only Article: standard article Issue: The right way to help declining places Fly Title: Globalisations losers Main image: 20171021_LDD001_1.jpg POPULISMS wave has yet to crest. That is the sobering lesson of recent elections in Germany and Austria, where the success of anti-immigrant, anti-globalisation parties showed that a message of hostility to elites and outsiders resonates as strongly as ever among those fed up with the status quo. It is also the lesson from America, where Donald Trump is doubling down on gestures to his angry base, most recently by adopting a negotiating position on NAFTA that is more likely to wreck than remake the trade agreement (see article). These remedies will not work. The demise of NAFTA will disproportionately hurt the blue-collar workers who back Mr Trump. Getting tough on ...

19. Left in the lurch: Globalisation has marginalised many regions in the rich world., 19 . 2017[−]
Print section Print Rubric: Many places have lost out to globalisation. What can be done to help them? Print Headline: In the lurch Print Fly Title: Left-behind places UK Only Article: standard article Issue: The right way to help declining places Fly Title: Left in the lurch Location: GREENVILLE, SOUTH CAROLINA AND SCRANTON, PENNSYLVANIA Main image: 20171021_FBD001_3.jpg EVEN before the disaster, Scranton had been having a poor century. In 1902 the Lackawanna Steel Company left north-east Pennsylvania in search of better access to transport and a less assertive labour force. The area still had coal, and enough spark to start new industries: in the 1920s a local button-maker became the countrys leading presser of 78rpm records. But after the second world war demand for coal fell. Then, ...

20. Tackling inequality: Taxing the rich., 12 . 2017[−]
Main image: FOR once, the Daily Mail and the Guardian, British newspapers of the right and left, agree. In the former, Alex Brummer says IMF's new line of thinking of tax should please Corbyn & co while the latter says that the IMF analysis supports tax strategy of Labour in UK. Both are responding to the IMF's fiscal monitor which does indeed say that there would appear to be scope for increasing the progressivity of income taxation without significantly hurting growth for countries wishing to enhance income redistribution.The report details how income tax progressivity in advanced economies declined in the 1980s and 1990s and that the tax system has done little to reduce inequality in recent yearsBetween 1985 and 1995, rising fiscal redistribution was able to offset about 60 percent of the increase in market income inequality. In contrast, average fiscal redistribution hardly changed between 1995 and 2010, while market income inequality continued to increase. As a result, average disposable income inequality increased broadly in line with market income inequalityBut the report is about the west as a whole, rather than Britain in particular. When it comes to a specific tax rate, it says that Assuming a welfare weight of zero for the very rich, the optimal marginal ...

21. Sew what now?: Worries about premature industrialisation., 05 . 2017[−]
Print section Print Rubric: Automation is less of a threat to workers in the emerging world than it is made out to be Print Headline: Sew what now? Print Fly Title: Premature deindustrialisation UK Only Article: standard article Issue: Out of the traps Fly Title: Sew what now? Main image: 20171007_SRD005_1.jpg BANGLADESH EXPORTS 60% more ready-made garments than India, a country with over eight times its population. On the busy roads of Dhaka, Bangladeshs capital, white vans nose through the traffic on Emergency Export Duty, according to the ambulance-like letters painted on their sides. The success of this quintessentially labour-intensive industry helped make Bangladesh a lower-middle-income country in 2014, according to the World Banks classifications. But some think that Bangladeshs garment industry now faces a new problem almost as grave as the ...

22. The bull market in everything: Asset prices are high across the board. Is it time to worry?., 05 . 2017[−]
Print section Print Rubric: Prices are high across a range of assets. Is it time to worry? Print Headline: The bull market in everything Print Fly Title: Asset prices UK Only Article: standard article Issue: It is not too late to stop the break-up of Spain Fly Title: The bull market in everything Main image: 20171007_LDD002_0.jpg IN HIS classic, The Intelligent Investor, first published in 1949, Benjamin Graham, a Wall Street sage, distilled what he called his secret of sound investment into three words: margin of safety. The price paid for a stock or a bond should allow for human error, bad luck or, indeed, many things going wrong at once. In a troubled world of trade tiffs and nuclear braggadocio, such advice should be especially worth heeding. Yet rarely have so many asset classesfrom stocks to bonds to property to bitcoinsexhibited such a sense ...

23. Buttonwood: The next financial crisis may be triggered by central banks., 28 . 2017[−]
Print section Print Rubric: The next financial crisis may be triggered by central banks Print Headline: When the cycle turns Print Fly Title: Buttonwood UK Only Article: standard article Issue: The spotlight shifts from Germany to France Fly Title: Buttonwood AS WITH London buses, dont worry if you miss a financial crisis; another will be along shortly. The latest study on long-term asset returns from Deutsche Bank shows that crises in developed markets have become much more common in recent decades. That does not bode well. Deutsche defines a crisis as a period when a country suffers one of the following: a 15% annual decline in equities; a 10% fall in its currency or its government bonds; a default on its national debt; or a period of double-digit inflation. During the 19th century, only occasionally did more than half of countries for which there are data suffer such a shock in a single year. But since the 1980s, in ...

24. The Labour conference: How the Corbynites want to reverse the 1980s., 27 . 2017[−]
Main image: PAUL MASON, a journalist turned Labour Party activist, was very much in evidence at the Labour conference in Brighton this week, competing with the Guardians Owen Jones for the title of Jeremy Corbyns favourite talking head. Mr Mason got a lot of grief for one of his tweets: I really advise my colleagues in the press corps to listen to the conference. Its a breath of fresh air and reminds me of 1980. His colleagues in the press corps quickly reminded Mr Mason that 1980 marked the beginning of 17 years in the electoral wilderness for Labour. The breath of fresh air was a very cold wind indeed. In fact, Mr Masons tweet was the political equivalent of a Freudian slip: the Corbynites are obsessed with the 1980s. Young activists who had not even been conceived when the miners strike happened wear badges reading coal not dole. Trade unionists get standing ovations whenever they mention the devastation of the 1980s. Margaret Thatcher is the gold standard in evil.The Corbynites dearest wish is to relive the 1980sthe harsh clash of ideologies, the bitter industrial disputes, the decimation of the middle groundbut this time in reverse and with them in charge. The 1980s represent both a challenge and a template. The challenge lies in reversing everything that was achieved in those ...

25. A certain idea: President Macron wants France to play a bigger part in Europe., 25 . 2017[−]
Print section Print Rubric: That crucial Franco-German axis Print Headline: A certain idea Print Fly Title: France in Europe UK Only Article: standard article Issue: Regeneration Fly Title: A certain idea Main image: 20170930_SRP004_0.jpg IN EVERY BEGINNING dwells a certain magic. Germanys Angela Merkel quoted these lines from a poem by Hermann Hesse when she welcomed Mr Macron to Berlin the day after his inauguration. The doyenne of European leaders, she was by then on her fourth French president, having worked first with Mr Chirac in 2005. The link with her second, Mr Sarkozy, was volatile; with Mr Hollande, lopsided. The election of Mr Macron, who praised Germany for rescuing our collective dignity during the refugee crisis and whose supporters waved EU flags at rallies, came as a relief and a source of promise. In his first three months Mr Macron ...


 
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