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October 10, 2015

Latest Posts from Economist's View

Posted: 05 Oct 2015 12:33 AM PDT
Why are Republicans hostile to initiatives that promote wind and solar energy?:
Enemies of the Sun, by Paul Krugman, Commentary, NY Times: Does anyone remember the Cheney energy task force? Early in the George W. Bush administration, Vice President Dick Cheney released a report that was widely derided as a document written by and for Big Energy — because it was...
But here's the thing: by the standards of today's Republican Party, the Cheney report was enlightened, even left-leaning. One whole chapter was devoted to conservation, another to renewable energy. By contrast, recent speeches by Jeb Bush and Marco Rubio — still the most likely Republican presidential nominees — barely address either topic. When it comes to energy policy, the G.O.P. has become fossilized. That is, it's fossil fuels, and only fossil fuels, all the way.
And that's a remarkable development, because ... we're ... living in an era of spectacular progress in wind and solar energy. Why has the right become so hostile to technologies that look more and more like the wave of the future? ...
Part of the answer is surely that promotion of renewable energy is linked in many people's minds with attempts to limit climate change — and ... the association with climate science evokes visceral hostility on the right.
Beyond that,... follow the money. We used to say that the G.O.P. was the party of Big Energy, but these days it would be more accurate to say that it's the party of Old Energy. In the 2014 election cycle the oil and gas industry gave 87 percent of its political contributions to Republicans; for coal mining the figure was 96, that's right, 96 percent. Meanwhile, alternative energy went 56 percent for Democrats.
And Old Energy is engaged in a systematic effort to blacken the image of renewable energy, one that closely resembles the way it has supported "experts" willing to help create a cloud of doubt about climate science. An example: Earlier this year Newsweek published an op-ed article purporting to show that the true cost of wind power was much higher than it seems. But ... the article contained major factual errors, and its author had failed to disclose that he was the Charles W. Koch professor at Utah State, and a fellow of a Koch- and ExxonMobil-backed think tank. ...
While politicians on the right may talk about encouraging innovation and promoting an energy revolution, they're actually defenders of the energy status quo, part of a movement trying to block anything that might disrupt the reign of fossil fuels.
Posted: 05 Oct 2015 12:24 AM PDT
From an interview in USA Today:
The decision about whether to prosecute individuals wasn't up to him, [Bernanke] says. "The Fed is not a law-enforcement agency," he says. "The Department of Justice and others are responsible for that, and a lot of their efforts have been to indict or threaten to indict financial firms. Now a financial firm is of course a legal fiction; it's not a person. You can't put a financial firm in jail."
From another report:
Asked if someone should have gone to jail, he replied, "Yeah, I think so."
There's a video of the interview at the first link.
Posted: 05 Oct 2015 12:06 AM PDT
Posted: 04 Oct 2015 05:43 PM PDT
People on Twitter seemed interested in this:
Paying CEOs fat bonuses for stock performance doesn't work, by Lawrence Lewitinn, Yahoo Finance: It turns out offering CEOs huge bonuses to boost shareholder returns doesn't actually work, according to a new study from Cornell University.
The analysis, done in conjunction with consultants Pearl Meyer & Partners, examined a decade's worth of data from every company in the S&P 500. It compared companies that offer their top brass a total shareholder return (TSR) plan to those that don't and found the increasingly popular pay plans haven't significantly boosted any of a number of key metrics. ...
To be fair, I should note that this is qualified. The end of the article points out that this "doesn't rule out other performance bonuses" that avoid the problems associated with this particular method of trying to align the preferences of CEOs with those of stockholders. Nevertheless, I'm skeptical.
Posted: 04 Oct 2015 05:29 PM PDT
Paul Romer:
Nonrival Goods After 25 Years: Joshua Gans has a generous post that notes the 25th anniversary of the publication of my 1900 JPE article. I could not agree more with his observation that "there is more to be done …" in understanding the economics of ideas.
His post helped me see how to respond to a conversation I had this summer. I'll use the excuse of the anniversary to focus for the month on such basics as the meaning of nonrival good. Doing so will be a shift for this blog, which until now has been concerned primarily with economics as a science and incidentally with my day job, which focuses on the interaction between urbanization and development.
I'm looking forward to revisiting these basics. ...
[He goes on to talk about excludability and nonrival goods.]
Posted: 04 Oct 2015 10:24 AM PDT
Jim Hamilton:
... What evidence is there that worries about a global economic slowdown are figuring prominently in recent oil prices? Exhibit one is the remarkable comovement between commodity and asset prices. Concerns about global economic weakness show up in commodity prices and asset markets across the board. ...
Gavyn Davies:
The turbulence in the global financial markets in the past few weeks has been widely attributed to a "China shock" that has increased the risks of a major downturn in global activity. Last month, this blog concluded that our regular "nowcasts" for global activity had not yet corroborated this narrative.
This month, we have identified the first clear evidence that the global economy has slowed down since mid year, with emerging markets and advanced economies both now growing more slowly. ...

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