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Dec 5th 2023

Excess heat exacerbates existing medical conditions like lung disease or cardiovascular problems, making them more lethal. It also raises the risk of dehydration which can lead to kidney problems. The very worst extremes of heat and humidity can make it impossible for people to cool down; in effect, their organs cook. In America alone it is thought that heat waves kill more people each year than any other type of natural disaster. A recent study by the Lancet, a medical journal, tried to calculate the effect that this can have on economies

The study estimated that high temperatures led to 490bn lost hours of labour in 2022 (meaning that a combination of factors such as heat and sunlight made it too dangerous to work). Global GDP was $863bn smaller than it would otherwise have been. That is more than triple the amount lost from extreme weather events such as hurricanes and floods. The authors caution that their estimates do not take into account labour in the informal economy.

Dec 7th 2023

delegates from 118 countries have pledged to raise global renewable-energy capacity to 11,000 gigawatts (gw) by 2030, up from 3,400gw last year. But the task of adding roughly 1,000gw every year—almost as much as the entire generating capacity of America

Rising costs, caused partly by higher interest rates, have led developers to abandon once-profitable projects. Five offshore-wind developments have been cancelled in America this year.

There is a bigger problem, too. At a meagre 6%, the average return on capital for solar and wind developers will not entice the $8trn or so of investment needed over the rest of this decade to honour the 11,000gw pledge.

One obstacle is slow approval, which delays projects for years and can needlessly tie up capital, lowering returns.
European Union rules already require permitting to take no longer than two years, a limit that member states often breach.

Another obstacle is that, not counting China, too little development is happening in the global south, even though the demand for electricity there is surging.

One fix is to blend in government funding that takes on some of the risk.
Just Energy Transition Partnerships, which Western governments have set up over the past two years, and the $30bn climate fund announced by the United Arab Emirates on December 1st. Yet the sums involved remain too small, and earlier deals have been beset by backsliding and delays.

A last obstacle is protectionism, which raises costs and threatens shortages. Solar panels are already more than twice as expensive in America as elsewhere, mostly owing to anti-dumping duties on Chinese suppliers.

America is not alone. Last month the European Parliament passed the Net Zero Industry Act, which sets domestic-content thresholds for bidders in public auctions. The European Commission is considering investigating Chinese turbine-makers, which it sees as a threat to local industry because their wares are much cheaper.
It leads to lower returns, higher prices for power and more broken promises over decarbonisation.

The Fiscal Theory of the Price Level. By John Cochrane. Princeton University Press; 584 pages; $99.95 and £84

An economics professor at Stanford University builds a new(ish) theory for how government debt, not interest rates, ultimately determines prices. Not for the faint-hearted, this book is provocative to economists and well timed for an age of big deficits and high inflation.

Best Things First. By Bjorn Lomborg. Copenhagen Consensus Centre; 314 pages; £16.99

A forceful argument to replace the un’s sprawling and vague Sustainable Development Goals with 12 cost-effective policies to help the world’s poor. “Some things are difficult to fix, cost a lot and help little,” the author writes. Others can be solved “at low cost, with remarkable outcomes”.

Material World. By Ed Conway. Knopf; 512 pages; $35. WH Allen; £22

The economics and data editor of Britain’s Sky News travels the world in this study of how six crucial materials—copper, iron, lithium, oil, salt and sand—have altered human history and underpin the modern economy. As countries seek to decarbonise, there is a battle raging to control their supply.

Scaling People. By Claire Hughes Johnson. Stripe Press; 480 pages; $30 and £21.99

Good books about the nuts and bolts of management are vanishingly rare. A former executive at Google and Stripe offers a practical guide to everything from giving feedback and delegating to running a meeting and building teams.

Milton Friedman. By Jennifer Burns. Farrar, Straus and Giroux; 592 pages; $35

The most complete biography of the economist who became a cultural symbol of the free-market era that captured the world in the 1980s. It documents Friedman’s essential role in economic policy and libertarian thought and shows his enduring relevance, despite the world’s protectionist turn.

The Blazing World. By Jonathan Healey. Knopf; 512 pages; $38. Bloomsbury; £30

A page-turning history of the 17th century in revolutionary England. This account of a time of religious and political turmoil, intellectual ferment, scientific innovation and media upheaval is accessible and abounds with contemporary resonances.

Judgment at Tokyo. By Gary Bass. Knopf; 892 pages; $46. To be published in Britain by Pan Macmillan in January; £30

A meticulously researched and authoritative account of efforts to prosecute and punish Japanese generals and politicians deemed responsible for some of the horrors of the second world war. The author, a former writer for The Economist, looks at why attempts to produce a shared sense of justice failed.

Revolutionary Spring. By Christopher Clark. Allen Lane; 896 pages; £35. To be published in America by Crown in June; $40

A historian at Cambridge traces the events of 1848—the year revolutions spread to almost every country in Europe. “Hierarchies beat networks. Power prevailed over ideas and arguments,” he writes. This scintillating book features a compelling cast of idealists, thinkers, propagandists, cynics, and argues that their sacrifices were not wholly in vain.

Magisteria. By Nicholas Spencer. Oneworld Publications; 480 pages; $32 and £25

The common misconception that science and religion are at odds is revised in a deeply researched history of the interplay between the two ways of understanding the world. Religion produced the critical thinking that welcomed scientific knowledge, and science was often inspired by appreciating forces beyond our ken.


Science and technology

The Coming Wave. By Mustafa Suleyman, with Michael Bhaskar. Crown; 352 pages; $32.50. Bodley Head; $32.50

A co-founder of DeepMind, a leading ai company (and board member of The Economist’s parent company) offers a cogent look at the technology’s potential to transform the economy and society, along with the risks of misuse and surveillance.

Oct 31st 2023

His philosophy was simple: “I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.”

his plans would more than triple the average American tariff. The direct costs would be bad enough, with the tariffs functioning as a tax on consumers and hurting most producers. Yet they would also tear at America’s ties with its allies and threaten to wreck the global trade system.

By 2021 American duties were worth 3% of the country’s total import value, double the level when Mr Trump took office. Tariffs on Chinese imports rose from 3% to 19%,

Mr Trump’s first aim was to slim the trade deficit.
But instead of shrinking, the deficit widened. Instead of buckling, China tripled its tariffs on America. Many allies retaliated, too.

The consequences were dismal. Industries that were protected by tariffs reaped benefits, enjoying greater market share and fatter profits. Most others suffered. America’s International Trade Commission (usitc), a bipartisan agency, found that industries downstream from tariff-coddled producers faced higher input prices and lower profitability. The Peterson Institute estimated that steel users in effect paid an extra $650,000 per job created in the steel industry. Studies have calculated that almost all the costs have been borne by Americans, rather than foreign producers. The usitc found a near one-to-one increase in the price of American imports in the wake of tariffs on China.
(대국이므로 이론적으로는 교역조건의 개선을 기대할 수 있겠지만, 그렇지 못했음.)

Trump did unquestionably succeed in one respect. He helped remake politics. According to a recent survey from the Chicago Council on Global Affairs, a think-tank, 66% of Americans think the government should place restrictions on imported foreign goods to protect jobs at home, up from 60% in 2018.

At the same time, Mr Biden has concocted an enormous industrial policy, fuelled by more than $1trn in subsidies for electric vehicles, offshore wind, semiconductors and the like. It is a more thoughtful and deliberate approach than Mr Trump’s, but it still looks likely to fail to bring about a manufacturing renaissance, is very expensive and, in lavishing subsidies on American factories, discriminates against other countries. It is, in short, rather Trumpist.

How much worse could things get?

Nov 16th 2023


A Shadow looms over the world.

Mr Trump dominates the Republican primary. Several polls have him ahead of President Joe Biden in swing states. In one, for the New York Times, 59% of voters trusted him on the economy, compared with just 37% for Mr Biden. In the primaries, at least, civil lawsuits and criminal prosecutions have only strengthened Mr Trump. For decades Democrats have relied on support among black and Hispanic voters, but a meaningful number are abandoning the party.

America also faces growing hostility abroad, challenged by Russia in Ukraine, by Iran and its allied militias in the Middle East and by China

The greatest threat Mr Trump poses is to his own country. In pursuing his enemies, Mr Trump will wage war on any institution that stands in his way, including the courts and the Department of Justice.

Yet a Trump victory next year would also have a profound effect abroad. The global south would be confirmed in its suspicion that American appeals to do what is right are really just an exercise in hypocrisy.

Mr Trump’s protectionist instincts would be unbound, too. He and his lieutenants are contemplating a universal 10% levy on imports, more than three times the level today. Mr Trump also fired up the economy in his first term by cutting taxes and handing out covid-19 payments. This time, America is running budget deficits on a scale only seen in war and the cost of servicing debts is higher. Tax cuts would feed inflation, not growth.

Mr Trump’s lust for a deal and his sense of America’s interests are unconstrained by reality and unanchored by values.

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Nov 14th 2023

Developed by Claudia Sahm, a former economist at the Federal Reserve, in 2019, the rule would have been capable of identifying every recession since 1960 in its early stages

If the unemployment rate increases by half a percentage point from its trough of the past 12 months, the economy is said to be in a recession. To smooth out the figures, which jump around, both the current unemployment rate and the trough are measured as three-month moving averages. At present the Sahm indicator stands at 0.33 percentage points. It would not take much for it to reach the half-point mark. If the unemployment rate, which hit 3.9% in October, rises to 4.0% this month and 4.1% next month, the economy would, according to the Sahm rule, be in a recession.


What about in reality? As Ms Sahm herself is quick to point out, her rule describes an empirical regularity, not an immutable law. What is more, the post-pandemic economy may have fostered the exact kind of conditions that violate this regularity. During downturns companies fire workers, and the layoffs typically go well beyond the Sahm rule’s half-point line.
This time, though, the increase in the jobless rate appears to have been driven less by a reduction in demand for workers and more by an increase in their supply. The American labour force, including both people in work and looking for jobs, has expanded by nearly 3m, or 1.7%, since the end of last year. During that same time the number of jobs has increased by about 2m, or 1.2%.


For Ms Sahm the sudden fame of her measure has brought with it an additional wrinkle. She has had to grapple with the world taking her rule in a different direction from her initial intent. Ms Sahm was not trying to get into the forecasting business, much less into timing financial markets. Rather, she wanted to come up with a benchmark for triggering automatic payments to individuals in order to insulate them from a recession. “Many people have asked me if we are going into a recession,” she says. “Almost no one has asked me what policymakers can do about it.”
Considering the paralysis in Congress, it is a fair bet that policymakers will not do much of anything if unemployment continues to rise in the coming months. So Ms Sahm is now in the curious position of rooting against her own rule, and hoping that America skirts a recession.

Ms Sahm was not trying to get into the forecasting business, much less into timing financial markets. Rather, she wanted to come up with a benchmark for triggering automatic payments to individuals in order to insulate them from a recession.

Jun 22nd 2013
 
 

 
 
BANKS do not keep their doors open an extra half-hour just because their customers need more money. But when the banks themselves are short of cash, things are different. On June 19th China’s interbank market stayed open late as banks scrambled to borrow funds from each other. On June 20th the seven-day repo interest rate shot up to 12%, the highest on record (see chart). The Shanghai interbank offered rate (SHIBOR), an average of the rate at which big banks say they will lend, also rose.
In a more mature economy such a spike would be “very scary”, notes Tao Wang of UBS. In such economies central banks set the interest rate at which they will provide funds to banks. If they keep this policy rate steady, then interbank rates can surge only if banks start to doubt each other’s creditworthiness.
 

Nov 9th 2023

The problem is that, of late, manufacturing’s powers seem to have vanished. Figures published on October 26th show that America’s gdp jumped by 4.9% at an annualised rate in the third quarter of the year. Nearly 80% of output is now made up of services

labour productivity in manufacturing fell by 0.2% at an annualised rate, meaning that the boost to growth was driven by services.

What has prompted the reversal? Mr Cass’s favourite explanation, trade policy, can be dismissed. American manufacturing employment fell sharply in the early 2000s, in part owing to the integration of China into global trade. Some think that this “China shock”, which led to a wave of outsourcing, also caused productivity to decline by reducing the incentive for American firms to invest. Yet productivity grew until 2011. Moreover, it also subsequently declined in sub-sectors that are mostly domestic and immune to trade, including cement and concrete production.

A better clue is provided by what went well in earlier decades. During the 1990s and 2000s manufacturing productivity soared, with the production of computers and electronics, especially semiconductor chips, leading the way. Gains seem to have topped out at around the time things went wrong more broadly, in the early 2010s. All told, more than a third of the overall slowdown in manufacturing since 2011 is accounted for by computers and electronics.

Perhaps all those computers have been put to poor use. America may be a technology superpower, but when it comes to using tech in the physical world it lags behind others. It ranks seventh out of 15 countries in the adoption of robots per worker, according to the Information Technology and Innovation Foundation, a think-tank. South Korea, the world leader, uses over three times more robots per worker. And after adjusting for average wages—richer countries tend to be more advanced—America ranks 11th.
But it is not clear whether there was a big change in American manufacturers’ adoption of tech, compared with other sectors, in the early 2010s. Indeed, the evidence points in the opposite direction. As Chad Syverson of the University of Chicago notes, the ratio of capital to labour has actually grown slightly faster in manufacturing than in the private sector as a whole.

If investment has not plummeted, it must then be paying fewer dividends. Low-hanging fruit might have been plucked more eagerly in manufacturing. This idea is supported by the fact that industrial productivity growth has slowed across the rich world, even if not by as much as in America (see chart 2). The extra bit of American underperformance is trickier to explain. Economists throw out a boatload of hypotheses. America is known to have laxer antitrust enforcement than its peers; perhaps scrutiny was especially needed in the manufacturing sector. Maybe American manufacturing was more advanced when robots arrived on the scene, so had less to gain. Some have even argued that because America’s software and internet sectors have been so lucrative, talent has been diverted away from older industries.

Nov 2nd 2023

In properly weighted opinion polls, support for the Palestinians is much less marked

keyboards. “At first I was angry at Hamas and Palestine for the attacks” wrote one user, “but now after seeing more of what’s going on I cannot support such a regime in Israel. #FreePalestine”.

Do such views reflect overall opinion? At our request dmr, an ai-technology firm, collected 1m posts from Instagram, Twitter and YouTube from October 7th to 23rd. All contained hashtags from a list with similar numbers of pro-Israeli and pro-Palestinian terms in English, or replied to such posts. dmr then built a machine-learning model to classify posts as backing one side, the other or neither. It was trained on content in English, but also processed posts in any language that included English hashtags.

One cause of this gap is age. Social-media users skew young, and such people are unusually pro-Palestinian in their views. Moreover, dmr’s sample did not include Facebook, which may be the most pro-Israel platform owing to its older users. In polls of people in Denmark, France, Spain and Sweden, Israel drew more total sympathy, but young participants’ opinions matched social-media ratios. Yet in America and Britain, social-media views are even more pro-Palestinian than those of young poll respondents. Israel’s backers show rather less zeal for online combat.

nov. 2nd. 2023.

The conviction that rates will remain “higher for longer” is spreading around the world.

Can the world economy cope with corporate deleveraging, falling house prices, turmoil at banks and fiscal frugality? Surprisingly, the answer is, perhaps—if rates have risen for the right reason.

For rates to have shifted permanently, that outlook must have changed. One possible reason it might have is the anticipation of faster economic growth, driven, perhaps, by recent advances in artificial intelligence (ai). In the long term, growth and interest rates are intimately linked.

It might seem farfetched to say that optimism about ai is pushing up bond yields. Yet it would explain why the prospect of higher-for-longer has not caused stockmarkets to fall much.

In fact, as optimism about ai has spread, the value of big tech firms such as Microsoft and Nvidia has soared.

To the extent that productivity growth explains higher rates, the new era could be a happy one. Alongside the rise in debt-service costs, households will have higher real incomes, firms will have higher revenues, financial institutions will enjoy low default rates and governments will collect more tax. Healthy competition for capital might even bring benefits of its own.

To the extent government debt is to blame for “higher-for-longer”, then the world economy will have to deal with higher rates without any accompanying fillip to growth. That would be painful.

Something’s got to give, whether it’s a more restrictive fiscal policy or some sort of debt crisis.

Other than a fiscal crisis, how could the tension be resolved? One possibility is that persistently high inflation could erode the real value of government debts.

Another possibility is that high rates push the world economy into a recession, which in turn causes central banks to cut them.

래리 서머스: 미국 정부부채와 고이자율
https://youtu.be/o-Yi3s9JduM?si=AveQOW5JXwDd3tk4