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What We Read Today 29 March 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).


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Articles about events, conflicts and disease around the world





  • Greece's creditors mull new reform plans (BBC News)  The plan includes moves to combat tax evasion, more privatisations and higher taxes on alcohol and cigarettes - will raise €3 billion (£2.2 billion; $3.3 billion) in state revenues.




The wage growth debate is over (Business Insider)  The latest data shows a clear pick-up in wage growth and in the number of companies planning wage increases.



True Economic Growth vs. a Pyramid Scheme (Alexey Malakov, LinkedIn)  Very valid thesis by an Associate Professor of Finance at the University of Arkansas:  Debt is justified if it grows the economy and produces enough growth to pay off the debt.  But the interpretation leaves a lot to be desired, in our opinion.

1.  The focus of the discussion is on government debt, where private debt is the larger problem.  See next article.

2.  The author makes a statement which is an expression of choice, not a definition of all possibilities:

The government only has two options: either it can raise taxes to pay off the debt, or it can refinance the debt itself – by borrowing more money to pay what is due today.

We chose to have virtually all money created as bank credit for both public and private use.  We could have chosen to have public use money created by the federal government as specified by the Constitution rather than subcontracting to the banks (for the last 100+ years regulated by the semi-private, quasi-public Federal Reserve Bank).  See forthcoming Opinion blog article by John Lounsbury on how the current system has been corrupted.

3.  The author concludes that the problem is the government:

Now let’s consider the difference between “true” long term economic growth, i.e. growth driven by technological innovation and increased productivity, as opposed to “growth” via government spending. Notice that if a government spends more money by increasing its debt then GDP numbers are overstated relative to true economic growth – we are feeling a short term “high” that overestimates long term growth. A prolonged period of increased government spending creates a prolonged period of inflated GDP numbers that hide the fact that true growth is weak.

For more see next article.

Plouffe says cut Medicare and Medicaid? No! Hell NO! (Tony Wikrent, real economics)  In the previous article the problem with growing government debt was discussed.  We maintain that (U.S. federal) government debt is not the problem and this article provides a Steve Keen graph which shows that clearly.  When the Great Financial Crisis broke in 2008 private debt in the U.S. was more than 5x the federal debt. By the end of 2011 the ratio was less than 3x.  Why?  Private debt was reduced and public debt was increased.  What is that called?  A bailout.  If the problem is government, in this situation it is because of oligarchy.

New U.S. Bank Formation Weakest in 50 Years (Pedro Nicolasi da Costa, The Wall Street Journal)  As the oligarchy has tightened its control competition has been squeezed out.  The effect has accelerated since the early 1980s.  This is commenting on an economic brief from the Richmond Fed:  Explaining the Decline in the Number of Banks since the Great Recession ( Roisin McCord, Edward Simpson Prescott, and Tim Sablik).  Quotes below are excerpts from the Richmond Fed authors.


Other Economics and Business Items of Note and Miscellanea

A note on Piketty and diminishing returns to capital (MIT)  Is wealth inequality really all (or mostly) based on land and real estate (read that as homes)?

Analysis of Leaked Trans-Pacific Partnership Investment Text (Public Citizen)  Hat tip to Rob Carter.  Investors uber-alles:

The leaked text would empower foreign firms to directly “sue” signatory governments in extrajudicial investor-state dispute settlement (ISDS) tribunals over domestic policies that apply equally to domestic and foreign firms that foreign firms claim violate their new substantive investor rights. There they could demand taxpayer compensation for domestic financial, health, environmental, land use and other policies and government actions they claim undermine TPP foreign investor privileges, such as the “right” to a regulatory framework that conforms to their “expectations.”

Marriage Made in Corporatist Heaven Slams into Resistance (Wolf Street)  The ultimate corporate wet-dream:  Governments become subservient to corporations.  Corporations regulate government, not the other way around.  If the Trans Pacific Partnership (TPP) discussed above does not get your interest piqued, how about the TTIP (Transatlantic Trade and Investment Partnership) summarized by this article as:

The potentially game-changing trade deal is aimed at radically reconfiguring the legal and regulatory superstructures of the world’s two largest markets, the United States and the European Union – for the almost exclusive benefit of the world’s biggest multinational corporations.

Elon Musk explains why living off a dollar a day as a teenager convinced him he could do anything he wanted with his life (Business Insider)

Can't Every Aggregate Afford To Generate Their Needed Diversity ... And Have It Too? (Open Operations Forum)  Roger Erickson is asking a fundamental question:  How can the ultimate biological system, human society, optimize results by denying the laws of biological systems?  See also GEI OpinionAggregate Entrepreneurism.

Why We’re All Deficient In Magnesium, The Many Signs & What To Do (Collective Evolution)  Hat tip to Roberta Fordham.

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