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September 26, 2015

Latest Posts from Economist's View

Posted: 24 Sep 2015 12:06 AM PDT
Posted: 23 Sep 2015 12:11 PM PDT
Kevin Drum is not impressed with Jeb Bush's plan for regulation, or his justification for it:
Jeb Bush Has No Clue About Business Regulation: Jeb Bush today in the Wall Street Journal:
To understand what is wrong with the regulatory culture of the U.S. under President Obama, consider this alarming statistic: Today, according to the World Bank—not exactly a right-wing think tank—the U.S. ranks 46th in the world in terms of ease of starting a business. That is unacceptable. Think what the U.S. could be and the prosperity we could have if we rolled back the overregulation that keeps us from ranking in the top 10.
My goodness. That does sound unacceptable. Still, it never hurts to check up on these presidential candidates... So let's click the link ... and see what it says: "The rankings of economies with populations over 100 million are based on data for 2 cities." Hmmm. It turns out the World Bank is ranking the US based on starting up a business in New York City. That seems to tip the scales a wee bit, no? ...
Now I get it. This isn't about getting a business up and running. It's solely about registering a new business. And it's got nothing to do with any of Obama's regulations. It's all about state and local stuff. ... I'm not sure what Jeb Bush thinks he's going to do to streamline this. Bottom line: this is completely meaningless. ...
But wait! There's more. The World Bank does have a broader "Ease of Doing Business" rank that takes into account the things you need to do to get up and running: construction permits, electricity, credit, paying taxes, enforcing contracts, etc. As it happens, the bulk of this stuff is still state and local, and has nothing to do with Obama or the federal government. Still, let's take a look since Jeb chose not to share it with us for some reason...
The World Bank has us in 7th place. We're already in the top ten that Jeb is aiming for. Mission accomplished! ...
As for the outrageous regulations he promises to repeal on Day One, this would mostly just benefit big campaign donors, not the yeoman entrepreneurs he claims to be sticking up for. No big surprise there, I suppose.
Posted: 23 Sep 2015 09:57 AM PDT
Paul Krugman:
Chinese Spillovers: China is clearly in economic trouble. But how worried should we be about spillovers from China's woes to the rest of the world economy? I have in general been telling people "not very", although it's a bigger issue for Japan and Korea. But Citi's Willem Buiter suggests that it could be a quite big deal, leading to a global recession. ... So could he be right?
Let me start with the case for not worrying too much, which comes down to the fact that China's economy, while big, is still a small fraction of the global economy...
One possibility is ... that a Chinese slump could, via its impact on commodity prices, do a lot more harm to some other emerging markets than the above analysis suggests. I'm still working on this, although so far I don't seem to be finding much there.
Another possibility is an international version of the financial accelerator. As Buiter points out, many emerging markets seem to be vulnerable thanks to private-sector foreign currency debt (which was so deadly in 1997-98). ...
Maybe, also, we could see some version of the financial contagion so obvious in the 1990s. Troubles in Brazil might make investors leery of other emerging markets, driving up interest spreads and forcing fiscal austerity that worsens the downturn. Or for matter, to the extent that the same hedge funds have been buying assets in a number of emerging nations, losses in one place could force them to liquidate assets elsewhere, causing a sort of global debt deflation. That was a popular story in the 1990s...
Overall, I'm not convinced of the Buiter thesis; China still seems to me not big enough to bring down the rest of the world. But I'm not rock-solid in that conviction, largely because we've seen so much contagion in the past. Stay tuned.
Posted: 23 Sep 2015 09:54 AM PDT
At Moneywatch, a discussion of the Atlanta Fed's new ZPOP measure of the labor market's performance:
How will the Fed know if we've hit "full employment"?: How close are we to full employment? That is a crucial question for the Federal reserve, and the answer plays a crucial role in the Federal Reserve's decision about when to begin raising its target rate of interest.
According to the most recent data, the unemployment rate is 5.1 percent, a level that historically has been at or very near full employment. But there are well-known problems with the "headline" unemployment statistics such as the failure to account for discouraged workers, underutilized workers, and demographic effects. When these factors are accounted for, and when other statistics such as the prime-age employment to population ratio are examined, the labor market picture does not look as rosy. But there is still considerable uncertainty about the true state of the labor market, and researchers at the Atlanta Fed have developed an alternative to standard labor market measures that hopefully gives a clearer picture of where we stand. ...
[The editors always change the title/introduction, and there are usually other edits as well, but I never read the new versions to avoid becoming annoyed at the changes (I don't approve changes, they are simply made).]

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