Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
How average hours worked varies with development: Cross-country evidence and implications (Voxeu.org). The data scatter in the graph below actually looks relatively tight so a reasonable correlation (possibly "fair" but not likely "good")`1 exists. However, this is a good example of two things than are influenced by other factor(s); it makes no sense to consider that working long hours causes low GDP per capita or vice versa. But both may have related (but not identical) causes not identified. The abstract of this article:
The development accounting literature tries to account for cross-country output per worker differences by taking stock of inputs per worker. The data employed are often measured without great precision, however, making comparisons difficult. This column presents a new, internationally comparable dataset of average hours worked per adult across the world income distribution. Adults in poor countries are found to work a lot more and with lower productivity than those in rich countries. The findings suggest that those from poorer countries are not only 'consumption poor', but also 'leisure poor'.
Universal basic income in the OECD (The Economist) In a world in which drudgery has been delegated to robots, the welfare state may need to be re-imagined. One option is to pay out a universal basic income, a simple cash sum, without any nannyish strings attached. Many have dismissed the idea as a non-starter - to provide everyone with enough money to live on would be cripplingly expensive, they argue. But much of the rich world already raises plenty of taxes to hand back to citizens as benefits. Suppose the government did decide to reconstruct the benefits system - how much basic income would it get for its buck? In the UK, for example, the universal basic income figure for a family of 4 would be about £16,000; in Canada about $23,000 (loonies); and in the U.S. about $25,000. The total income dispursed in the U.S. would be about $2 trillion a year (11% of GDP). The chart below can be used interactively at The Economist.
Boxing great Muhammad Ali dead at age 74: media reports (Reuters) Former world heavyweight champion Muhammad Ali, whose record-setting boxing career, unprecedented flair for showmanship, and controversial stands made him one of the best-known figures of the 20th century, died on Friday aged 74, media reports said. Family spokesman Bob Gunnell told NBC News that Ali died in a Phoenix-area hospital. Reuters could not immediately confirm the report.
US Commercial Bankruptcies Soar (despite Rosy Scenario) (Wolf Street) The post-February euphoria in the US bond market has been a sight to behold, stirred up by NIRP and QE in Japan and the Eurozone. The ECB is beginning to buy corporate bonds, including euro-denominated corporate bonds issued by US companies. This is pushing larger amounts of corporate euro bonds into the negative-yield absurdity. And it has opened all kinds of credit doors in the US. But beneath the market euphoria, reality continues to plod forward. Standard & Poor's reported that among the companies it rates there were 12 defaults in May, which pushed its speculative-grade corporate default rate up to 4.1%, the highest since December 2010 when it was recovering from the Great Financial Crisis. In January, so just five months ago, the default rate was still 2.8%. That's how fast credit is deteriorating. Even during the early phase of the Financial Crisis, in September 2008, when Lehman Brothers filed for bankruptcy, and when all heck was breaking lose, the default rate was "only" 2.96%, before skyrocketing and eventually peaking at 12% in November 2009.
Clinton opens up double-digit lead over Trump nationwide: Reuters/Ipsos poll (Reuters) Democratic presidential contender Hillary Clinton has opened up a double-digit lead over Republican rival Donald Trump, regaining ground after the New York billionaire briefly tied her last month, according to a Reuters/Ipsos poll released on Friday. The shift in support comes as Clinton steps up her attacks on the real estate mogul's policy positions, and as Trump fends off criticisms of his eponymous university and the pace at which he doled out money that he raised for U.S. veterans. Some 46% of likely voters said they supported Clinton, while 35% said they supported Trump, and another 19% said they would not support either, according to the survey of 1,421 people conducted between May 30 and June 3.
As China shops for German firms, one early example reassures (Reuters) As Beijing moves in to buy up firms from Germany's famed "Mittlestand" of mid-sized manufacturers, politicians are nervous that Chinese owners may take their vaunted technology and move jobs abroad. But one of the first prominent mid-sized German engineering firms to sell out to the Chinese says such fears are overblown. When Putzmeister, a 58-year-old maker of pumps for concrete, was bought by its Chinese competitor Sany for 360 million euros($402 million) in 2012, its workers protested outside the factory gates, fearing job losses. Four years on, however, the company's employment in Germany has held steady and it has promised to maintain it at least until 2020. Sales are up by nearly a third, the brand is still intact and established relationships with suppliers have been left in place. With the Chinese back for more acquisitions, the four-year-old merger is again drawing attention, this time as an example of how to sell out while safeguarding operations at home.
Carter urges China to join 'principled security network' for Asia (Reuters) U.S. Defense Secretary Ash Carter urged China on Saturday to join a "principled security network" for Asia, saying that the United States would remain the world's most powerful military and the main guarantor of regional security for decades to come.
Canadian Stocks Storm Back Into Bull Market on Commodities Rally (Bloomberg) Canadian stocks surged back into a bull market, propelled by a furious rally in commodities producers and elevating the nation's equity markets to one of the top performers in the world this year. For U.S. investors the returns are even greater. Current gains in U.S. dollar terms are 10% greater than shown below because the loonie (Canadian dollar) has rallied that much since 20 January.
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