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What We Read Today 12 November 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


  • Surge in Protectionist Measures Blamed for Sapping Trade (The Wall Street Journal)  By now, almost everyone following economic news knows that global trade is swooning this year, buffeted by low commodity prices, an uncertain transition in China and a decelerating world economy.  But some of the biggest countries in the world are compounding the problem with a slew of protectionist measures, ranging from higher tariffs to government bailouts of exporters, according to a report published Thursday by the Center for Economic Policy Research in London.  India, Russia and the U.S. have imposed the most “trade-distorting” measures since 2008. In fact, Russia and India have hit no fewer than nine of the other top 20 global economies more than 150 times since November 2008.



  • Watchdog: IRS used bad Java in PPACA system (LifeHealthPro)  The Internal Revenue Service (IRS) rushed a major Patient Protection and Affordable Care Act (PPACA) tax form checking system into use earlier this year without putting it through a complete security assessment process, a watchdog agency official says.  In addition, because of IRS PPACA system project management problems, the tax form checker was using outmoded, potentially dangerous versions of the Java Runtime Environment program when the IRS started using the tax form checker.  Michael McKenney, the deputy inspector general for audit, an official at the Treasury Inspector General for Tax Administration (TIGTA), presented those conclusions today. 

  • signs up 543,000 in week one, outpacing 2014 results (HealthLifePro)  Obamacare has 17% more enrollments in the first week of the open enrollment period this year than last.  The numbers aren’t perfectly comparable to the 2014 numbers, because Hawaii is now using for enrollment rather than its own state-based enrollment system.

  • Deportation Didn't End Illegal Migration in the '50s – Legal Immigration Did (Foundation for Economic Education)  Note:  "Bracero" refers to a temporary visa for agricultural work, a common type of work permit for legal entry to the U.S.  When these were issued in greater numbers the deportation of undocumented immigrants declined - see Figure 1.  And as the guest worker program built up the number of voluntary repatriations shot up dramatically - see Table 1.






  • Amid offensive, Iraqi Kurds cut Islamic State supply line (Associated Press)  Supported by U.S.-led airstrikes, Kurdish Iraqi troops on Thursday seized part of a highway that is used as a vital supply line by the Islamic State group, a key initial step in a major offensive to retake the strategic town of Sinjar from the militants.  The town was overrun by the extremists as they rampaged across Iraq in August 2014, leading to the killing, enslavement and flight of thousands of people from the minority Yazidi community.


  • Russia reveals giant nuclear torpedo in state TV 'leak' (BBC News)   The Kremlin says secret plans for a Russian long-range nuclear torpedo - called "Status-6" - should not have appeared on Russian TV news.  The leak happened during a report on state-run Channel One about President Vladimir Putin meeting military chiefs in the city of Sochi.  One general was seen studying a diagram of the "devastating" torpedo system.  Launched by a submarine, it would create "wide areas of radioactive contamination", the document says, designed to "destroy important economic installations of the enemy in coastal areas and cause guaranteed devastating damage to the country's territory by creating wide areas of radioactive contamination, rendering them unusable for military, economic or other activity for a long time".

Other Economics and Business Items of Note and Miscellanea

  • The fabricated myth of the invisible hand (Critical Truth Lives)  Economics is and has always been a battleground dominated by factions trying to prevail over each other. However, the battle is not about the pursuit of truth or adherence to scientific methods, but about ideology. Nowhere is this more visible than in our perception of the invisible hand, the most famous idea in economics, attributed to the father of economics, Adam Smith.  The common belief about the invisible hand is that individuals are attempting to maximize their well being, and by doing so will further the interests of society without intending it. The argument essentially is that individual and selfish greed will automatically lead to a harmonious society just as if every individual was guided by an invisible hand.  But this is not related to anything that Adam ever wrote.  The contexts of the three times he mentioned the term "invisible hand" are reviewed in this article.  See also discussion by Steve Keen in a lecture to beginning economics students:  Documentary Of The Week: The Mainstream And Why General Equilibrium Is Unstable.

  • The blinkered economics of the 2016 GOP presidential candidates (The Washington Post)  After offering a few "that was not so bad" observations, Daniel W. Drezner, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University, said that "economic musings" were “so God-awful and wrong that even GOP-friendly observers were nauseated”.  See next article.

  • Goldbugs Take Center Stage at Republican Debate (Bloomberg)  Megan McCardle is a conservative journalist with an MBA from the University of Chicago.  Read this article to find why she found the economics discussed at this week's debate incongruous.

  • A Decisive Monetary Policy Approach Is About More Than Economics (ValueWalk)  We are now concerned that the authorities steering these central bank decisions (The Fed, the ECB and the BoJ) need to get to grips with these signaling issues that may have opposite economic consequences to those that the policies in place are designed to bring about.  The author argues that from an objective point of view, macroeconomic data are still at a level at which the Fed should begin to remove extraordinary monetary measures - and the ECB should give better signals that it intends to continue extraordianry policies.  Why?

 "... in our view, a more certain monetary policy environment from a global perspective would more likely encourage global growth than discourage it. And, we think that makes taking a more decisive approach the right thing to do."  

  • The Ideological Bedrock of Economics (World Policy Blog)  Since economics was created during the 1870s as an offshoot of political economy, it has rested on a handful of bedrock propositions that unassailably define it. These key propositions are derived from widely adopted core assumptions of all the standard economic models. As I mentioned last week, these assumptions are rarely subject to empirical tests, but are simply assumed as necessary starting points.  In chapter three of my book, International Political Economy: The Business of War and Peace, I refer to three core propositions as the Three Golden Pillars of economics. These three are the conclusions that capitalist economies are stable, efficient, and fair. Models that do not embed these conclusions in their assumptions are mostly ignored in textbooks and sidelined within the profession.  Economists claim that they have proved these three, but they have done no such thing. They have simply discovered a set of assumptions, no matter how ridiculous or bizarre these assumptions are, under which these three pillars would hold. They cement these assumed results by barring admittance to their guild, as much as possible, to anyone not willing to presume these ideological conclusions. Economics today functions as more of a cult than a science.

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