[y66]

From the Financial Times:

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Forensic experts hired by Jeff Bezos have concluded with “medium to high confidence” that a WhatsApp account used by Saudi Crown Prince Mohammed bin Salman was directly involved in a 2018 hack of the Amazon founder’s phone.

A report on the hack, which has been seen by the Financial Times, says Mr Bezos’s phone started surreptitiously sharing vast amounts of data immediately after receiving an apparently innocuous, but encrypted, video file from the prince’s WhatsApp account in May 2018.

The file was sent via WhatsApp weeks after the pair exchanged numbers at a dinner in Los Angeles during a trip to the US by the crown prince. But the relationship soured after the gruesome murder of Jamal Khashoggi, a veteran Saudi journalist who used a regular column in the Bezos-owned Washington Post to criticise Prince Mohammed’s autocratic leadership.

[y66]

Fun read: https://www.nytimes....lkweed-inn.html

Quote

Ms. Regan grew up with three older sisters on a 10-acre farm near Merrillville, Ind. Her bedroom had plywood floors, and the basement always flooded. The barn was crammed with used restaurant equipment, coffee cans filled with old parts and an abandoned light-blue Chevy, where she used to sit and fantasize she was on a date with a pretty girl. An outsider observing her young life, she wrote, might have bet she’d grow up to be an alcoholic transgender trucker carny.

Her mother liked to read Gourmet magazine and make her own pasta. Her father, a steelworker who never met a vegetable he didn’t want to grow, saw early on that she had a knack for finding the last ripe dewberry on a bush.

In an arresting passage in her book, she describes the day he taught her to hunt for chanterelles. She was about 5, and so focused on the task that she lost track of him. A drunk uncle who she recalls was always telling her what a pretty little girl she was, picked her up from behind and carried her into a dilapidated cabin. A family friend was inside, saving her, perhaps, from something terrible. He took her back to her father. As they headed to the car with their bags of mushrooms, a tornado spun through the sand and swept the family to the ground. When they finally made it home, her father placed her on a stool next to the stove and taught her how to carefully cook the chanterelles with red wine and butter.

“This was the day I slighted fate and became a chef,” she wrote.

[kenberg]

y66, on 2020-January-22, 08:03, said:

Fun read: https://www.nytimes....lkweed-inn.html

That is one great article including some really fun photos, everything from the walleyes being fire cooked to the berry picking.

And here is one of the many quotes I liked:

Quote

"I think some people were unprepared for a Michelin-starred chef to be the daughter of a steelworker union rep who grew up with sisters who were drunk and fighting all the time," Mr. Seibold said.

Yes, I can imagine it might be unexpected!

The whole thing is just a pleasure to read.

[y66]

98.6 degrees Fahrenheit isn't normal anymore. From Jo Craven McGinty at WSJ:

Quote

Nearly 150 years ago, a German physician analyzed a million temperatures from 25,000 patients and concluded that normal human-body temperature is 98.6 degrees Fahrenheit.

That standard has been published in numerous medical texts and helped generations of parents judge the gravity of a child’s illness.

But at least two dozen modern studies have concluded the number is too high.

The findings have prompted speculation that the pioneering analysis published in 1869 by Carl Reinhold August Wunderlich was flawed.

Or was it?

In a new study, researchers from Stanford University argue that Wunderlich’s number was correct at the time but is no longer accurate because the human body has changed.

Today, they say, the average normal human-body temperature is closer to 97.5 degrees Fahrenheit.

[y66]

Quote of the day:

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The time of the traditional car manufacturers is over. -- CEO Herbert Diess in prepared remarks at an internal Volkswagen meeting this month.

From Wise Up, Stock Analysts. Tesla Is the Real Deal. by Matthew A. Winklerby at Bloomberg:

Quote

The greatest shakeup in automobile history reordered the stock market this month when a minnow grew larger than a whale.

Tesla Inc., the 17-year-old Palo Alto maker of battery-powered, zero-emission vehicles, is now the second-largest automaker measured by market capitalization, overtaking No. 2 Volkswagen with a value of $101 billion. It wasn’t long ago that no industry analyst would have predicted that the 82-year-old Wolfsburg, Germany-based seller of 30 times as many vehicles last year would become an also-ran to Tesla. Most of them remain unconvinced that Tesla is worth its price of $558 a share and less than 32% recommend buying the stock, according to data compiled by Bloomberg.

But Tesla customers and investors are making the case that the reliance on the internal combustion engine by Volkswagen — and by the 39 other major automakers committed to a commercial fossil fuel machine invented in the 19th century — is a dubious strategy. Tesla is worth $131 billion less than No. 1 Toyota Motor Corp., but its sales growth has been more than nine times the industry average during the past decade and 832 times Toyota's 25% appreciation since Tesla became a public company in June 2010 with an initial valuation of $2 billion. It opened its largest service center in Germany last year and agreed in December to build its first European car factory, in the state of Brandenburg.

Who is more insane, Elon or car manufacturers and government policy makers who continue to rely on fossil fuel strategies? It's not looking like Elon at the moment. Hope he can pull this off.

[Zelandakh]

y66, on 2020-January-29, 01:02, said:

Tesla customers and investors are making the case that the reliance on the internal combustion engine by Volkswagen — and by the 39 other major automakers

This is pure advocacy dressed up as market research, a subject I find personally repulsive. VW has invested heavily in electric cars recently, as has pretty much every other car manufacturer. Can you name any of the 39 companies being fingered here that are not working in a similar direction?

[Cyberyeti]

y66, on 2020-January-24, 13:47, said:

98.6 degrees Fahrenheit isn't normal anymore. From Jo Craven McGinty at WSJ:

It was always 98.4 (36.9 C) in the UK

[y66]

Zelandakh, on 2020-January-29, 04:07, said:

This is pure advocacy dressed up as market research, a subject I find personally repulsive. VW has invested heavily in electric cars recently, as has pretty much every other car manufacturer. Can you name any of the 39 companies being fingered here that are not working in a similar direction?

As a longtime fan of German engineering, I applaud VW CEO Herbert Diess for his advocacy and his recognition that the future belongs to companies that have the courage to reject fossil fuel based strategies. Ditto for Mr. Winklerby and Bloomberg for their contrarian view of Tesla's prospects which, no doubt, will continue to mirror the wild swings of their mercurial co-founder.

[y66]

Excellent interview with Fintan O'Toole by Andrew Anthony at The Guardian: https://www.theguard...ish-nationalism

[y66]

From Milton Friedman’s World Is Dead and Gone by Peter Orzag at Bloomberg:

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The annual conclave of the rich and powerful this month in Davos, Switzerland, put the longstanding debate about the social responsibility of corporations front and center by proclaiming its official theme as “stakeholders for a cohesive and sustainable world.”

By using the word “stakeholders,” the World Economic Forum confirmed that it’s taken sides in a debate rekindled last year by the Business Roundtable, a lobbying group representing chief executives of major U.S. corporations. The Roundtable had issued a statement highlighting a “fundamental commitment to all of our stakeholders,” including shareholders, clients, employees, suppliers and communities, thereby situating itself in opposition to the view of corporate responsibility made popular half a century ago by the economist Milton Friedman. Friedman had famously stated in a 1970 New York Times magazine essay that business executives who diverted corporate assets toward social goals were betraying their obligations to shareholders.

Yet the debate between Roundtable supporters and Friedman supporters, a main topic of panels and unofficial conversation at Davos last week, missed five key points:

• When Friedman was writing, the consequences of his view were more modest than they later became. In the 1960s and 1970s the regulatory state was often more interventionist than it is today — especially in industries such as transportation and telecommunications — and social norms were different. Before the deregulation wave of the 1970s and 1980s, arguing that a business executive should focus only on maximizing shareholder value thus may or may not have been wrong theoretically, but the practical impact was less significant. Whether business leaders pursued a narrow or broad definition of their responsibilities didn’t matter as much because government regulation constrained the consequences.
  
• In no small part because of Friedman’s influence, an extreme definition of capitalism has become dominant. By this definition, only perfectly competitive markets with minimally interventionist governments and business executives who maximized shareholder value should be considered capitalist. It’s a strange argument. I doubt that anyone would have said during the 1940s, 1950s or 1960s that the U.S. wasn’t capitalist, but somehow the qualification standards seem to have changed. I heard one person argue at Davos that regulating or even taxing carbon would be “anti-capitalist.” That’s nonsense. Virtually the entire range of policy options for more or less government action on climate change would not, if enacted, affect whether an economy remains capitalist.
  
• As Friedman’s worldview as taught in introductory economics classes became more dominant, policymakers emphasized the effect of incentives and individual skills. Economists focused on assessing how much more productive an individual could be if she faced a lower marginal tax rate or had more education. Studying, instead, how much more productive an individual could be if she worked at Company A instead of Company B, or lived in City X instead of City Y, went out of fashion. And yet the evidence over the past few decades shows the importance of the place-based perspective, with growing differences in productivity and wages for otherwise similar individuals working at different firms, growing differences in returns on capital across firms, and growing differences in upward mobility for people living in different cities.
  
• The evolving view of government’s proper role and the emphasis on individual-based policy instead of place-based policy coincided with fundamental changes in the global economy, especially a substantial expansion in the effective global labor supply, and the evolution of the computer era. Over roughly the same period, the U.S. experienced a disproportionate rise in political polarization, as a new analysis from the National Bureau of Economic Research shows. The authors of that article argue that diverging views among elites (which is plausibly about the role of government, though the authors don’t make that argument) may be the cause of the rapid rise in broader polarization relative to other countries. At the very least, it’s interesting that the country that has most forcefully adopted the Friedman-inflected approach to policy has polarized the most.
  
• Some people who want businesses to adopt a broad view of corporate responsibility argue that companies have to fill a gap left by the diminishing effectiveness of government. (They might not realize that Friedman addressed that issue in his 1970 essay.) Like the old saw about the child who murders her parents and then complains about being an orphan, however, the dominant paradigm of the past several decades has plausibly produced a dramatic rise in inequality and polarization, and that polarization in turn has made the government unable to function effectively. In other words, we have basically done this to ourselves.

So what is the best pathway forward? There is no easy fix, but I like many recent ideas about making public investments and regulatory adjustments to encourage creation of business ecosystems like technology hubs, as has been done in Palo Alto, California; Austin, Texas; and Boston. That would require more government action than is likely in the near term. But as Friedman’s success in altering the dialog demonstrates, a first step is to be clear about what we should be doing, even before we’re capable of doing it. And an approach to policymaking focused more on where we work and live seems vastly more promising than what we’ve tried over the past few decades.

The first bullet point is the key to understanding the context of the Friedman Doctrine. No doubt Friedman would have appreciated the line about the child who murders her parents in the last bullet point and would also agree that the regulatory adjustments we need require more government action than is likely in the near term.

In “Capitalism and Freedom” (1962) he says “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” The "so long as" part of that statement is the part everybody forgets and that now seems incredibly naive.

[y66]

From How to Leave Your Lover with Lemons by Chantel Tattoli:

Quote

In a forum online, I’d seen an exchange come up from Shakespeare’s play Love’s Labour’s Lost where one character suggests a lemon had been gifted to another character instead of precious nutmeg. Could the meaning we attach to lemons have roots, like so much else, in the bard? I asked Barrett. “Again, gaps are suspicious,” he told me. “Shakespeare has been studied for hundreds of years—why would it take so long to happen? Almost all of the expressions we know from Shakespeare show continuous use. It’s very rare for Shakespeare to contribute something freshly into the language.”

Barrett eventually sleuthed out a song titled “A Lemon in the Garden of Love,” by the Broadway composer Richard Carle. (“A million peaches round me / Yet I would like to know / Why I picked a lemon in the garden of love / Where they say only peaches grow.”) He believed this to be the popularizer, the word historians use for the source that renders a phrase recognizable to the general public.“The song’s mentioned a lot in 1906, 1907,” Barrett said, “and that’s when we see this term [handed a lemon] really take off.”

[y66]

Quote of the day via Tim Higgins at WSJ:

Quote

Following another disappointing quarter earlier this month, Ford CEO Jim Hackett tried to assure skeptics that he was preparing the auto giant for the future. “Tesla’s now worth over 5x the market cap of Ford,” an analyst pressed him. “What’s the message the market’s sending Ford?”

[y66]

From a review at The Economist of "10% Less Democracy: Why You Should Trust Elites A Little More and the Masses A Little Less" by Garett Jones

Quote

Garett jones, an economics professor at George Mason University in Virginia, knew he was on to a good thing when he got a call from the campus police. A student journalist had written a report on a lecture that he had given suggesting that rich countries would be better off if they were less, rather than more, democratic. The hostile reaction, which spread beyond the university, included a call threatening enough to trouble the university’s private security force. Mr Jones concluded that he had an idea powerful and contentious enough to make into a book. The result is “10% Less Democracy”.

This is a fertile time for critiques of democracy. In light of the use of state apparatus by elected leaders to undermine an opponent in America, murder people in the Philippines, render a religious minority stateless in India, threaten judicial independence in Poland, and rob the public purse in South Africa, the system which has long provided the rich world with a satisfying mix of moral superiority and stable government is looking a bit ropy. A report last month from the Centre for the Future of Democracy at Cambridge University found that support for democracy had declined sharply in most of the world since the 1990s, including in America and western and southern Europe. The world’s biggest autocracy, meanwhile, is bringing prosperity to its own population and extending its influence round the world.

But as Mr Jones discovered, criticising democracy in the West is still a bit like launching a broadside against the pope in 15th-century Europe—or against a modern-day authoritarian president. You can suggest that all is not going to plan, but you will get a friendlier reception if you pin the blame on dodgy advisers or foreign interference, rather than on the concept itself.

David Runciman’s recent “How Democracy Ends” attributed democracy’s woes to decadence. The system was healthier, he argued, when change or conflict—the expansion of the franchise in the first half of the 20th century, the second world war—had given it a shot in the arm. Pankaj Mishra, in “Age of Anger”, maintained that the problem lies in the growing gap between a political system that promises equality and an economic one that leads to inequality.

By contrast, Mr Jones plants responsibility squarely on the shoulders of the voters. As an economist, he approaches democracy as a production system whose output is governance, and examines how it can be tweaked to improve the product. The core of “10% Less Democracy” is thus research on whether more or less democracy produces better or worse outcomes for countries and citizens.

Early and less often

As the title suggests, Mr Jones’s critique operates within a narrow band. He concedes that massacres and famines are less likely to happen in democracies than in autocracies, and that there is a clear correlation between democracy and prosperity. But he takes issue with Daron Acemoglu’s claim, in the title of a paper published last year, that “Democracy Does Cause Growth”. The paper found that when undemocratic countries became democratic, they grew faster, raising gdp per head by an average of 20% in the long run.

But democracy, Mr Jones points out, is not like virginity: countries can be a bit more or a bit less democratic. No modern country, not even Switzerland, is as insanely democratic as ancient Athens, where citizens voted to recall their military leaders from Sparta. All democracies limit popular participation in collective decision-making, be it by handing over responsibility to elected representatives to make big decisions, or by appointing judges and other public servants. Mr Jones believes that, because people do not always vote for what is good for them, those countries that have made it to the top quartile of the democracy scale should set slightly tighter limits.

A study by Alberto Alesina and Lawrence Summers in 1993, for instance, showed that inflation was lower in countries with independent central banks. There was no cost in terms of growth or employment; it was a free lunch. The trick was simply to hand over responsibility for the money supply to an official who had no interest in using it to boost growth in the run-up to elections. (In the best—or only—joke about central bankers, a student visits his former professor, who has become one. The phone rings. “No…no…no…no…yes…no…no,” says the central banker. Hanging up, he explains that the caller was the finance minister. “What did you answer ‘yes’ to?” wonders the student. “He asked if I could hear him.”)

Likewise, regulators’ backbones are stiffened by independence. A study in Europe showed that the less dependent on politicians they are, the more likely they are to stand up to government-owned utilities. Free trade, too, benefits when farther from democracy. The closer politicians are to an election year, the less likely they are to vote for measures to liberalise trade.

In America, which has historically been devoted to democracy, all sorts of officials are elected. State-by-state variations allow comparison of their performance with the appointed type. It turns out that elected judges make worse judgments and elected city treasurers cost their taxpayers more (though not many are as improvident as the man who consulted a psychic to help him manage the voters’ money—and eventually bankrupted Orange County).

A price worth paying

Mr Jones musters plenty of convincing evidence that fewer elections and more distance between voters and decisions make for better governance. But he stretches the argument for limiting democracy far beyond that observation. He is attracted by the idea of “epistocracy”, or rule by clever people; he advocates giving an official role in decision-making to bondholders, who already constrain governments’ freedom by raising the costs of lending to badly managed countries.

These arguments expose the flaw at the centre of this interesting and enjoyable book. Mr Jones looks at democracy as an economic system. But for most people, democracy’s moral component is also essential. It is an expression of the belief that everybody is equal in the sight of God or the presence of the ballot box, and that a country’s people should have power over their government. Less democracy may mean more sensible outcomes, but it also means less legitimacy.

Recent events illustrate that point. Hong Kong is in many ways a splendidly governed place, with reliable social order and a thriving economy—and very limited democracy. The result of last year’s election, in which voters supported pro-democracy protesters, was a clear message to the territory’s Chinese overlords that its people wanted more of a say, even at the cost of less stability.

For its part, the European Union is a model of co-operation and rational decision-making. Yet it has just lost one of its larger members, in part because British voters felt no connection with its governance structures. Technocrats may make sensible decisions, but democracy without legitimacy is a ship without a sail.

[kenberg]

y66, on 2020-February-17, 21:34, said:

From a review at The Economist of "10% Less Democracy: Why You Should Trust Elites A Little More and the Masses A Little Less" by Garett Jones

Another book that I had not before heard of and that no doubt I would find interesting. An example I have mentioned before: I was a high school student in St. Paul in the mid 1950s The schools needed more money and, as required, they put it up for a vote. It was defeated. So they announced that because of a shortage of funds they would need to cut back on high school athletics . Then they put it up for another vote. It passed. A pretty clear statement of what the public thinks is important in educational funding.

But Churchill still had it right: Democracy is the worst form of government except for all those other forms that have been tried.

Clever as that observation is, democracy does lead to serious problems. Fundamentally, people have to care. If they do not care, we are beyond saving.

[y66]

From Remembering Paul Volcker by Don Kohn (Feb 12, 2020):

Quote

... Of course, his best-known and most lasting accomplishment as Chairman was conquering inflation. I was too junior a staff member to be there at the famous October 6, 1979, meeting of the Federal Open Market Committee when it shifted from setting an interest rate to setting a money supply target, but I was involved in the aftermath. He was determined to reduce inflation, but no one knew how high rates would need to go to accomplish that. The incremental monetary policy process of voting on each rate decision probably wasn’t going to get to the right place and wasn’t credible in markets—especially after he only narrowly won board approval for a discount rate increase in mid-September. There was enough evidence linking money supply to inflation over long periods to make a shift to a quantity-based target credible and likely to succeed over time. The shift to money and reserve targets provided a rationale for very large rate increases that was easier to implement in the Committee and easier to explain in public—it was the demand for money that was raising rates, not a deliberate decision by the Fed.

Nonetheless those were tough times—economically and politically. Interest rates of 20 percent and unemployment rates of 10 percent; rings of tractors around the board building; offices filled with 2x4s mailed in by builders; consumer demonstrations outside the building; talk of his impeachment in the Congress. In response to the consumer protests, he agreed to send board members and senior staff to meet with consumer groups around the country. It was a very unpleasant experience, marked by hostility, harassment, and demands for personal financial information. Paul recognized the sacrifice he had asked us to make and had a ceremony in his office awarding us purple hearts for wounds suffered in service to the central bank. I confess to a small degree of satisfaction when at the end of the round of meetings, the group came into the board room at the Fed and behaved in a way that earned the Chairman his own purple heart.

“[T]he decisions on when to shift away from particular strategies require an even broader perspective, a greater subtlety of thinking and analysis, and confidence in one’s own judgment and ability to convince others than the decisions to undertake those strategies in the first place. Paul Volcker had the required attributes in great abundance.”

I think we can draw a couple of lessons for public policy from his handling of the fight against inflation. First, once an important public policy goal and a course of action to achieve it are identified, stick to it, recognizing that the short-run costs will be far outweighed by longer-term gains. And, the Volcker disinflation set the stage for two and a half decades of almost uninterrupted growth. But second, once that calculus of short-run costs and longer-run gains flips, back off. That’s what happened in the fall of 1982 when inflation had receded considerably and was still on the way down, and the high interest rates of previous years were threatening debt sustainability in Latin America and therefore the viability of several major US banks. His book is entitled “Keeping at It” and that’s a great description of his lifelong pursuit of key public policy goals. But sometimes, within that overall arc, the decisions on when to shift away from particular strategies require an even broader perspective, a greater subtlety of thinking and analysis, and confidence in one’s own judgment and ability to convince others than the decisions to undertake those strategies in the first place. Paul Volcker had the required attributes in great abundance.

When the news of his passing came out, I was in London and Brookings asked for a statement to give reporters. Here’s what I said: For me, he was mentor, role model and friend. He rejected some of the technology of modern central banking—the explicit inflation target, the transparency, the ease with new-ish financial instruments. But he had the essential elements of courage, integrity, devotion to public service and a laser like focus on price and financial stability that made him a great central banker. We were fortunate to have him among us.

[y66]

From Can We Have Prosperity Without Growth? by John Cassidy at the New Yorker:

Quote

In 1930, the English economist John Maynard Keynes took a break from writing about the problems of the interwar economy and indulged in a bit of futurology. In an essay entitled “Economic Possibilities for Our Grandchildren,” he speculated that by the year 2030 capital investment and technological progress would have raised living standards as much as eightfold, creating a society so rich that people would work as little as fifteen hours a week, devoting the rest of their time to leisure and other “non-economic purposes.” As striving for greater affluence faded, he predicted, “the love of money as a possession . . . will be recognized for what it is, a somewhat disgusting morbidity.”

This transformation hasn’t taken place yet, and most economic policymakers remain committed to maximizing the rate of economic growth. But Keynes’s predictions weren’t entirely off base. After a century in which G.D.P. per person has gone up more than sixfold in the United States, a vigorous debate has arisen about the feasibility and wisdom of creating and consuming ever more stuff, year after year. On the left, increasing alarm about climate change and other environmental threats has given birth to the “degrowth” movement, which calls on advanced countries to embrace zero or even negative G.D.P. growth. “The faster we produce and consume goods, the more we damage the environment,” Giorgos Kallis, an ecological economist at the Autonomous University of Barcelona, writes in his manifesto, “Degrowth.” “There is no way to both have your cake and eat it, here. If humanity is not to destroy the planet’s life support systems, the global economy should slow down.” In “Growth: From Microorganisms to Megacities,” Vaclav Smil, a Czech-Canadian environmental scientist, complains that economists haven’t grasped “the synergistic functioning of civilization and the biosphere,” yet they “maintain a monopoly on supplying their physically impossible narratives of continuing growth that guide decisions made by national governments and companies.”

Once confined to the margins, the ecological critique of economic growth has gained widespread attention. At a United Nations climate-change summit in September, the teen-age Swedish environmental activist Greta Thunberg declared, “We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!” The degrowth movement has its own academic journals and conferences. Some of its adherents favor dismantling the entirety of global capitalism, not just the fossil-fuel industry. Others envisage “post-growth capitalism,” in which production for profit would continue, but the economy would be reorganized along very different lines. In the influential book “Prosperity Without Growth: Foundations for the Economy of Tomorrow,” Tim Jackson, a professor of sustainable development at the University of Surrey, in England, calls on Western countries to shift their economies from mass-market production to local services—such as nursing, teaching, and handicrafts—that could be less resource-intensive. Jackson doesn’t underestimate the scale of the changes, in social values as well as in production patterns, that such a transformation would entail, but he sounds an optimistic note: “People can flourish without endlessly accumulating more stuff. Another world is possible.”

Even within mainstream economics, the growth orthodoxy is being challenged, and not merely because of a heightened awareness of environmental perils. In “Good Economics for Hard Times,” two winners of the 2019 Nobel Prize in Economics, Abhijit Banerjee and Esther Duflo, point out that a larger G.D.P. doesn’t necessarily mean a rise in human well-being—especially if it isn’t distributed equitably—and the pursuit of it can sometimes be counterproductive. “Nothing in either our theory or the data proves the highest G.D.P. per capita is generally desirable,” Banerjee and Duflo, a husband-and-wife team who teach at M.I.T., write.

The two made their reputations by applying rigorous experimental methods to investigate what types of policy interventions work in poor communities; they conducted randomized controlled trials, in which one group of people was subjected to a given policy intervention—paying parents to keep their children in school, say—and a control group wasn’t. Drawing on their findings, Banerjee and Duflo argue that, rather than chase “the growth mirage,” governments should concentrate on specific measures with proven benefits, such as helping the poorest members of society get access to health care, education, and social advancement.

Banerjee and Duflo also maintain that in advanced countries like the United States the misguided pursuit of economic growth since the Reagan-Thatcher revolution has contributed to a rise in inequality, mortality rates, and political polarization. When the benefits of growth are mainly captured by an élite, they warn, social disaster can result.

That’s not to say that Banerjee and Duflo are opposed to economic growth. In a recent essay for Foreign Affairs, they noted that, since 1990, the number of people living on less than $1.90 a day—the World Bank’s definition of extreme poverty—fell from nearly two billion to around seven hundred million. “In addition to increasing people’s income, steadily expanding G.D.P.s have allowed governments (and others) to spend more on schools, hospitals, medicines, and income transfers to the poor,” they wrote. Yet for advanced countries, in particular, they think policies that slow G.D.P. growth may prove to be beneficial, especially if the result is that the fruits of growth are shared more widely. In this sense, Banerjee and Duflo might be termed “slowthers”—a label that certainly applies to Dietrich Vollrath, an economist at the University of Houston and the author of “Fully Grown: Why a Stagnant Economy Is a Sign of Success.”

As his subtitle suggests, he thinks that slower rates of economic growth in advanced countries are nothing to worry about. Between 1950 and 2000, G.D.P. per person in the U.S. rose at an annual rate of more than three per cent. Since 2000, the growth rate has slowed to about two per cent. (Donald Trump has not, as he promised, boosted over-all G.D.P. growth to four or five per cent.) The phenomenon of slow growth is often bemoaned as “secular stagnation,” a term popularized by Lawrence Summers, the Harvard economist and former Treasury Secretary. Yet Vollrath argues that slower growth is appropriate for a society as rich and industrially developed as ours. Unlike other growth skeptics, he doesn’t base his case on environmental concerns or rising inequality or the shortcomings of G.D.P. as a measurement. Rather, he explains this phenomenon as the result of personal choices—the core of economic orthodoxy.

Vollrath offers a detailed decomposition of the sources of economic growth, which uses a mathematical technique that the eminent M.I.T. economist Robert Solow pioneered in the nineteen-fifties. The movement of women into the workplace provided a onetime boost to the labor supply; in its aftermath, other trends dragged down the growth curve. As countries like the United States have become richer and richer, Vollrath points out, their inhabitants have chosen to spend less time at work and to have smaller families—the result of higher wages and the advent of contraceptive pills. G.D.P. growth slows when the growth of the labor force declines. But this isn’t any sort of failure, in Vollrath’s view: it reflects “the advance of women’s rights and economic success.”

Vollrath estimates that about two-thirds of the recent slowdown in G.D.P. growth can be accounted for by the decline in the growth of labor inputs. He also cites a switch in spending patterns from tangible goods—such as clothes, cars, and furniture—to services, such as child care, health care, and spa treatments. In 1950, spending on services accounted for forty per cent of G.D.P.; today, the proportion is more than seventy per cent. And service industries, which tend to be labor-intensive, exhibit lower rates of productivity growth than goods-producing industries, which are often factory-based. (The person who cuts your hair isn’t getting more efficient; the plant that makes his or her scissors probably is.) Since rising productivity is a key component of G.D.P. growth, that growth will be further constrained by the expansion of the service sector. But, again, this isn’t necessarily a failure. “In the end, that reallocation of economic activity away from goods and into services comes down to our success,” Vollrath writes. “We’ve gotten so productive at making goods that this has freed up our money to spend on services.”

Taken together, slower growth in the labor force and the shift to services can explain almost all the recent slowdown, according to Vollrath. He’s unimpressed by many other explanations that have been offered, such as sluggish rates of capital investment, rising trade pressures, soaring inequality, shrinking technological possibilities, or an increase in monopoly power. In his account, it all flows from the choices we’ve made: “Slow growth, it turns out, is the optimal response to massive economic success.”

Vollrath’s analysis implies that all the major economies are likely to see slower growth rates as their populations age—a pattern first established in Japan during the nineteen-nineties. But two-per-cent growth isn’t negligible. If the U.S. economy continues to expand at this rate, it will have doubled in size by 2055, and a century from now it will be almost eight times its current size. If you think about growth-compounding in other rich countries, and developing economies growing at somewhat faster rates, you can readily summon up scenarios in which, by the end of the next century, global G.D.P. has risen fiftyfold, or even a hundredfold.

Is such a scenario environmentally sustainable? Proponents of “green growth,” who now include many European governments, the World Bank, the Organization for Economic Co-operation and Development, and all the remaining U.S. Democratic Presidential candidates, insist that it is. They say that, given the right policy measures and continued technological progress, we can enjoy perpetual growth and prosperity while also reducing carbon emissions and our consumption of natural resources. A 2018 report by the Global Commission on the Economy and Climate, an international group of economists, government officials, and business leaders, declared, “We are on the cusp of a new economic era: one where growth is driven by the interaction between rapid technological innovation, sustainable infrastructure investment, and increased resource productivity. We can have growth that is strong, sustainable, balanced, and inclusive.”

This judgment reflected a belief in what’s sometimes termed “absolute decoupling”—a prospect in which G.D.P. can grow while carbon emissions decline. The environmental economists Alex Bowen and Cameron Hepburn have conjectured that, by 2050, absolute decoupling may appear “to have been a relatively easy challenge,” as renewables become significantly cheaper than fossil fuels. They endorse scientific research into green technology, and hefty taxes on fossil fuels, but oppose the idea of stopping economic growth. From an environmental perspective, they write, “it would be counterproductive; recessions have slowed and in some cases derailed efforts to adopt cleaner modes of production.”

For a time, official carbon-emissions figures seemed to support this argument. Between 2000 and 2013, Britain’s G.D.P. grew by twenty-seven per cent while emissions fell by nine per cent, Kate Raworth, an English economist and author, noted in her thought-provoking book, “Doughnut Economics: Seven Ways to Think Like a 21st Century Economist,” published in 2017. The pattern was similar in the United States: G.D.P. up, emissions down. Globally, carbon emissions were flat between 2014 and 2016, according to figures from the International Energy Agency. Unfortunately, this trend didn’t last. According to a recent report from the Global Carbon Project, carbon emissions worldwide have been edging up in each of the past three years.

The pause in the rise of emissions may well have been the temporary product of a depressed economy—the Great Recession and its aftermath—and the shift from coal to natural gas, which can’t be repeated. According to a recent report by the United Nations and a number of climate-research institutes, “Governments are planning to produce about 50% more fossil fuels by 2030 than would be consistent with a 2°C pathway and 120% more than would be consistent with a 1.5°C pathway.” (Those were the targets established in the 2016 Paris Agreement.) In a recent review of the literature about green growth, Giorgos Kallis and Jason Hickel, an anthropologist at Goldsmiths, University of London, concluded that “green growth is likely to be a misguided objective, and that policymakers need to look toward alternative strategies.”

Can such “alternative strategies” be implemented without huge ruptures? For decades, economists have cautioned that they can’t. “If growth were to be abandoned as an objective of policy, democracy too would have to be abandoned,” Wilfred Beckerman, an Oxford economist, wrote in “In Defense of Economic Growth,” which appeared in 1974. “The costs of deliberate non-growth, in terms of the political and social transformation that would be required in society, are astronomical.” Beckerman was responding to the publication of “The Limits to Growth,” a widely read report by an international team of environmental scientists and other experts who warned that unrestrained G.D.P. growth would lead to disaster, as natural resources such as fossil fuels and industrial metals ran out. Beckerman said that the authors of “The Limits to Growth” had greatly underestimated the capacity of technology and the market system to produce a cleaner and less resource-intensive type of economic growth—the same argument that proponents of green growth make today.

Whether or not you share this optimism about technology, it’s clear that any comprehensive degrowth strategy would have to deal with distributional conflicts in the developed world and poverty in the developing world. As long as G.D.P. is steadily rising, all groups in society can, in theory, see their living standards rise at the same time. Beckerman argued that this was the key to avoiding such conflict. But, if growth were abandoned, helping the worst off would pit winners against losers. The fact that, in many Western countries over the past couple of decades, slower growth has been accompanied by rising political polarization suggests that Beckerman may have been on to something.

Some degrowth proponents say that distributional conflicts could be resolved through work-sharing and income transfers. A decade ago, Peter A. Victor, an emeritus professor of environmental economics at York University, in Toronto, built a computer model, since updated, to see what would happen to the Canadian economy under various scenarios. In a degrowth scenario, G.D.P. per person was gradually reduced by roughly fifty per cent over thirty years, but offsetting policies—such as work-sharing, redistributive-income transfers, and adult-education programs—were also introduced. Reporting his results in a 2011 paper, Victor wrote, “There are very substantial reductions in unemployment, the human poverty index and the debt to GDP ratio. Greenhouse gas emissions are reduced by nearly 80%. This reduction results from the decline in GDP and a very substantial carbon tax.”

More recently, Kallis and other degrowthers have called for the introduction of a universal basic income, which would guarantee people some level of subsistence. Last year, when progressive Democrats unveiled their plan for a Green New Deal, aiming to create a zero-emission economy by 2050, it included a federal job guarantee; some backers also advocate a universal basic income. Yet Green New Deal proponents appear to be in favor of green growth rather than degrowth. Some sponsors of the plan have even argued that it would eventually pay for itself through economic growth.

There’s another challenge for growth skeptics: how would they reduce global poverty? China and India lifted millions out of extreme deprivation by integrating their countries into the global capitalist economy, supplying low-cost goods and services to more advanced countries. The process involved mass rural-to-urban migration, the proliferation of sweatshops, and environmental degradation. But the eventual result was higher incomes and, in some places, the emergence of a new middle class that is loath to give up its gains. If major industrialized economies were to cut back their consumption and reorganize along more communal lines, who would buy all the components and gadgets and clothes that developing countries like Bangladesh, Indonesia, and Vietnam produce? What would happen to the economies of African countries such as Ethiopia, Ghana, and Rwanda, which have seen rapid G.D.P. growth in recent years, as they, too, have started to join the world economy? Degrowthers have yet to provide a convincing answer to these questions.

Given the scale of the environmental threat and the need to lift up poor countries, some sort of green-growth policy would seem to be the only option, but it may involve emphasizing “green” over “growth.” Kate Raworth has proposed that we adopt environmentally sound policies even when we’re uncertain how they will affect the long-term rate of growth. There are plenty of such policies available. To begin with, all major countries could take more definitive steps to meet their Paris Agreement commitments by investing heavily in renewable sources of energy, shutting down any remaining coal-fired power plants, and introducing a carbon tax to discourage the use of fossil fuels. According to Ian Parry, an economist at the World Bank, a carbon tax of thirty-five dollars per ton, which would raise the price of gasoline by about ten per cent and the cost of electricity by roughly twenty-five per cent, would be sufficient for many countries, including China, India, and the United Kingdom, to meet their emissions pledges. A carbon tax of this kind would raise a lot of money, which could be used to finance green investments or reduce other taxes, or even be handed out to the public as a carbon dividend.

Taking energy efficiency seriously is also vital. In a 2018 piece for the New Left Review, Robert Pollin, an economist at the University of Massachusetts, Amherst, who has helped design Green New Deal plans for a number of states, listed several measures that can be taken, including insulating old buildings to reduce heat loss, requiring cars to be more fuel efficient, expanding public transportation, and reducing energy use in the industrial sector. “Expanding energy-efficiency investment,” he pointed out, “supports rising living standards because, by definition, it saves money for energy consumers.”

To ameliorate the effects of slower G.D.P. growth, policies such as work-sharing and universal basic income could also be considered—especially if the warnings about artificial intelligence eliminating huge numbers of jobs turn out to be true. In the United Kingdom, the New Economics Foundation has called for the standard workweek to be shortened from thirty-five to twenty-one hours, a proposal that harks back to Victor’s modelling and Keynes’s 1930 essay. Proposals like these would have to be financed by higher taxes, particularly on the wealthy, but that redistributive aspect is a feature, not a bug. In a low-growth world, it is essential to share what growth there is more equitably. Otherwise, as Beckerman argued many years ago, the consequences could be catastrophic.

Finally, rethinking economic growth may well require loosening the grip on modern life exercised by competitive consumption, which undergirds the incessant demand for expansion. Keynes, a Cambridge aesthete, believed that people whose basic economic needs had been satisfied would naturally gravitate to other, non-economic pursuits, perhaps embracing the arts and nature. A century of experience suggests that this was wishful thinking. As Raworth writes, “Reversing consumerism’s financial and cultural dominance in public and private life is set to be one of the twenty-first century’s most gripping psychological dramas.”

Related: Put a Stop to Economic Growth? Huge Mistake by Noah Smith at Bloomberg

[y66]

How Technology Is Changing the Future of Higher Education by Jon Marcus at NYT.

How do you say good stuff in Mandarin?

[Winstonm]

y66, on 2020-February-25, 11:20, said:

How Technology Is Changing the Future of Higher Education by Jon Marcus at NYT.

How do you say good stuff in Mandarin?

Ga-ooh-Duh ssst uhf en Ma-n-dah-ren.

[Winstonm]

Father Hazmat has been ordered to the front:

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Pope Francis Tells Italian Priests: Go Out and Visit Coronavirus Patients

[Winstonm]

More good news:

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Economists from Goldman Sachs are forecasting a dramatic 24% drop in the nation’s gross domestic product in the coming months, as governments, businesses, schools and more announce increasingly strict measures to keep people at home and apart to try to slow the spread of coronavirus nationwide.

In an analysis released Friday, economists with the major bank revised their previous forecast of a 5% drop in U.S. GDP for the second quarter (April through June) to a 24% drop, citing expected declines in manufacturing activity and services consumption. If that materializes, it would be historic: In modern history, the largest quarterly decline in U.S. GDP was a 10% drop in the first quarter of 1958.

“The sudden stop in U.S. economic activity in response to the virus is unprecedented,” the economists wrote, adding that in just the last few days, “social distancing” measures across the country have “shut down normal life” and have already led to a rise in layoffs and a “collapse” in consumer spending.