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.
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Articles about events, conflicts and disease around the world
Smog chokes Bejing, New Delhi as climate talks begin (The Economic Times) The capitals of the world's two most populous nations, China and India, were blanketed in hazardous, choking smog on Monday as climate change talks began in Paris, where leaders of both countries are among the participants. China's capital Beijing maintained an "orange" pollution alert, the second-highest level, on Monday, closing highways, halting or suspending construction and prompting a warning to residents to stay indoors. In New Delhi, the U.S. embassy's monitoring station recorded an air quality index of 372, which puts air pollution levels well into "hazardous" territory. A thick smog blanketed the city and visibility was down to about 200 yards (metres).
A central conclusion of the 2006 Stern Review of the Economics of Climate Change was that the globalcosts of failing to act on climate change would outweigh the global costs of acting to mitigate it through deep reductions in greenhouse gas emissions.
But the state of the art in economics at the time held that for any single country, reducing emissions would impose immediate, definite and high costs on its local economy for the faint benefit of a long-term, uncertain and marginal reduction in climate risk that would be enjoyed by the whole planet.
On this view, individual countries have an incentive to “free-ride” on the emissions reduction efforts of others rather than take costly action themselves. Since every country has this incentive, none cuts emissions; a “tragedy of the global commons” ensues.
Unearthing America's Deep Network of Climate Change Deniers (Bloomberg) The American public has turned away from outright denial of climate change. Sixty-three percent of adults describe the problem as "serious" in the latest opinion poll from the Washington Postand ABC News, a dip from the 69 percent who held that view in June. The minority who remain skeptical of climate science—a group that includes presidential hopefuls and powerful lawmakers—can count on a dedicated network of several thousand professional supporters. New research for the first time has put a precise count on the people and groups working to dispute the scientific consensus on climate change. A loose network of 4,556 individuals with overlapping ties to 164 organizations do the most to dispute climate change in the U.S., according to a paper published today in Nature Climate Change. ExxonMobil and the family foundations controlled by Charles and David Koch emerge as the most significant sources of funding for these skeptics. As a two-week United Nations climate summit begins today in Paris, it's striking to notice that a similarly vast infrastructure of denial isn't found in any other nation.
At NATO, Turkey remains defiant over Russian jet (Reuters) Turkey's prime minister dismissed on Monday any suggestion Ankara should apologize for downing a Russian warplane in its airspace last week, after winning strong NATO support for the right to defend itself.
Crude Economics: Saudi Interest Rates Hit 6-Year High Amid Tight Liquidity (Sputnik International) The Saudi economy is short of cash, prompting both the public and the private sector to cut their expenditures; meanwhile, bank clients are withdrawing their deposits and taking new loans, meaning the economic outlook for the oil-reliant nation is rather gloomy. Although the Saudi economy hasn't been badly shaken yet by the decline in oil prices, it has by now lost its development momentum, meaning the nation's capability to expand oil production is limited. As most Saudi energy projects are bound to falter amid the mounting disinvestment, crude prices will settle at a more stable foundation and the Kingdom will lose some of its historic pricing power.
The $30 Oil Cliff Threatening Russia's Economy (Bloomberg) For Russia, $30 is the number to watch. Crude prices at that level will push the economy to depths that would threaten the nation’s financial system, according to 15 of 27 respondents in a Bloomberg survey. Lower prices for the fuel are next year’s biggest risk for Russia, which is unprepared to ride out another shock on the oil market, most economists said. Other dangers for 2016 include geopolitics, strains in the banking industry and the ruble, according to the poll of 27 analysts.
Tokyo’s Test: Policy vs. Demographics (The Wall Street Journal) Japan is running an economic experiment with significant implications for the rest of the world, testing whether strong policy can offset weak demographics. The results so far aren’t too encouraging—though it’s too soon to declare defeat. For nearly a quarter century, Japan has been the cautionary tale for advanced economies, enduring persistent stagnation, a debilitating deflation, and a rapidly aging, shrinking population. While Japan is the world’s first “superaged society”—defined as a country where at least 20% of the population is elderly—more than 30 countries will hit that benchmark by 2050. So Japan’s ability to cope is being closely watched elsewhere.
Japan combats rise in hate speech (Al Jazeera) There are half a million ethnic Koreans in Japan, people known as Zainichi. They have kept their South Korean citizenship out of ancestral pride, but Zainichi are permanent residents. They're assimilated into Japanese culture, and many don’t speak Korean or have ties to Korea. Even so, ultranationalist groups have singled them out and used Japan’s very liberal protection of speech to harass, intimidate and silence Zainichi with noisy street protests and attacks online, often anonymously.
IMF Approves Reserve-Currency Status for China's Yuan (Bloomberg) The International Monetary Fund) IMF will add the yuan renminbi to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan. The yuan joins the euro, pound sterling, yen and U.S. dollar as one of the "basket" currencies comprising the IMF's "drawing rights units". Effective 01 October 2016 the units will be 41.73% dollar, 30.93% euro, 10.92% yuan, 8.33% yen and 8.09% pound. This is the first change since 1999 when the euro replaced the German mark and the French franc.
World Markets Weekend Update: The Rally Moderates (Doug Short, Advisor Perspectives) DS is a regular contributor to GEI. Six of the eight indexes on our world markets watch list posted gains last week, down from all eight the previous week, and the weekly advances were noticeably smaller. Germany's DAX was the top performer, up 1.56%, well off its 3.84% gain the previous week. India's SENSEX had the next best week, up an even one percent. The FTSE and CAC 40 straddled the half percent line, up 0.64% and 0.39%, respectively. The S&P 500 and Nikkei hovered just above the flat line. The worst performers were the Hang Seng and Shanghai Composite, with -3.02% and -5.35% declines.
Other Economics and Business Items of Note and Miscellanea
Douglass C. North, who died last week at the age of 95, was one of the less well-known Nobel Laureates in economics. But his contributions to economic theory have had an enormous influence on how scholars understand institutions and the process of economic change.
North received the 1993 Prize alongside Robert Fogel “for having renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change.” In part, the Prize recognized a career devoted to understanding “what made economies work the way they did or fail to work".
North focused on economic history in the belief that we need first to develop an understanding of what determined the performance of economies through time before we can an attempt to improve their current performance.
North’s analysis of the economic performance of nations focused on the role of institutions. He asserted loudly that institutions matter. Indeed, he argued that institutions are the underlying determinants of economic performance; more important that other factors commonly ascribed key roles, such as changes in technology or relative prices.
Unlearning economic paradigms (Bruegel) What’s at stake: Both the crisis, its aftermath, and the empirical econ revolution have changed our understanding of economics. Conventional wisdoms about the supply side of the economy, the length of the short run, or the international adjustment process are all being challenged. Even conventional microeconomic wisdoms about the role of minimum wages and welfare programs are being challenged by new data raising questions about how economics should be taught and used to guide policymaking.
In Future, the Internet could come through Your Light Bulb (Scientific Computing) WiFi, which uses the radio and microwave portions of the electromagnetic spectrum, could evenutually share applications with LiFi using the visible and near visible frequencies. In situations where line-of-sight or optical fibers can be used to lighten the load on the very crowded and highly regulated microwave and radio frequencies.
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