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What We Read Today 01 March 2016

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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Topics today include:

  • Polling Predictions for Super Tuesday Voting Today

  • Seattle's Minimum Wage Law May Be Unconstitutional

  • EU on the Verge of Self-Induced Crisis

  • Greece Asks for Troica review

  • History of the Caliphate and the Islamic State

  • What is Kurdistan?

  • China to Lay Off 6 Million

  • States vs. Markets:  A Misleading Dichotomy

  • Sixth Grade Economics

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • Here's What The Polls Say Could Happen On Super Tuesday (The Huffington Post)  The polls say Clinton and Trump will each win big, but some of the polls have no new data since January and some of the margins (especially for Clinton) are within measurement error.  Here is the HuffPo summary:

Democrats:

Former Secretary of State Hillary Clinton -- expected to win 8 states

Sen. Bernie Sanders (I-Vt.) -- expected to win 1 state

Tossup -- 2 states, plus American Samoa and Democrats abroad

Possible upset: Massachusetts

Republicans:

Businessman Donald Trump -- expected to win 9 states

Sen. Ted Cruz (R-Texas) -- expected to win 1 state

Sen. Marco Rubio (R-Fla.) -- might be expected to win 1 state

Tossup - 1 state, plus the 2 caucus-convention states

Possible upset: Texas

  • More than half a million registered Texans don’t have the right ID to vote on Super Tuesday (The Washington Post)   As voters go to the polls on Super Tuesday, many will be casting ballots in states that have passed strict election laws that didn’t exist during the last presidential race.  Out of the 13 states holding primaries or caucuses, there are five where voters will face new rules: Alabama, Georgia, Tennessee, Texas and Virginia. The laws range from asking voters to present photo IDs at the polls to requiring proof of citizenship when registering to vote.  Voting experts say that primary voters tend to be of demographics relatively unaffected by such requirements, as they are typically older and wealthier. The primaries also tend to attract more white voters. Still, Super Tuesday could serve as an early test of how the new laws will play out in the general election in November. This presidential race will be the first since a divided Supreme Court  invalidated a key part of the Voting Rights Act and triggered a number of states to pass stiffer requirements for voting.

  • McConnell Visits Obama To Tell Him To Forget That Supreme Court Seat (The Huffington Post)  When Senate Majority Leader Mitch McConnell (R-Ky.) decided that he would keep Antonin Scalia's Supreme Court seat vacant so the next president could decide, he might not have anticipated exactly how ugly the campaign was about to turn in his party.  But he knows now, and McConnell announced Tuesday that he's standing by his decision -- even going to the White House with Judiciary Committee Chairman Chuck Grassley to tell President Barack Obama so.

  • Seattle’s Minimum-Wage Law Is Unconstitutional (Not Just Bad Economics) (Cato Institute)  Seattle’s $15 minimum-wage law separates employers into two categories, those with 500 or more employees (Schedule One) and those with fewer (Schedule Two), and mandates that the first category implement wage increases more quickly than the second. But the law creates a special rule for Seattle franchises, placing them into the first category if the total number of employees in the franchise network is 500 or more.  

A group of franchise owners, led by the International Franchise Association, challenged the ordinance, to no success in the lower courts. Cato is now supporting their petition to the Supreme Court. Seattle insists that this categorization is neutral as between in-state and interstate commerce, because a franchise network could be entirely within Washington. The reality is that all Seattle franchises that are in Schedule One have either an out-of-state franchisor or are associated with out-of-state franchises of the same brand. The law thus discriminates against interstate commerce in precisely the way the Commerce Clause was intended to prevent.

EU

Greece

  • Greek PM says lenders could return for bailout review in early March (Reuters)   International lenders could return to Greece within the first 10 days of March to complete a bailout review, Prime Minister Alexis Tsipras said on Tuesday, a move desperately needed by Athens to move on to debt relief talks.  Tsipras, who has a fragile parliamentary majority, wants to conclude the review swiftly to start talks on debt relief hoping to convince an angry public that their sacrifices are paying off after six years of austerity and lure back investors.  Greece signed up to a new bailout agreement worth up to €86 billion ($93.6 billion) last year, staving off the immediate threat of the country toppling out of the euro zone.

Spain

  • Why Spain Won't Quit the Eurozone (Boston Review)  The author makes a plea for reform and not the type currently being pushed by Brussells.  Here is his conslusion:

European authorities are trying to create a new image of mass unemployment, a reduced welfare state, and a worsening income distribution as the new normal for Europe, just as stagnant wages and sharply rising inequality became the norm in the post-1980 U.S. economy. In their narrative, the electoral gains of right-wing, anti-immigrant, and racist parties are due to “anti-European” sentiment; in this one term they lump valid criticisms—from across the political spectrum—of their neoliberal straitjacket. But it is their own policies and the resulting damage that has moved, for example, French workers to vote for the National Front.

There is no economic reason for Europeans to surrender to a political agenda that has already subjected them to long-term economic failure. But to reject such a program, they will need progressive governments that are strong enough to implement practical alternatives at the national level. It will be a race against time to see if these efforts can succeed before more structural damage is done.

Turkey

  • How the political crises of the modern Muslim world created the climate for Islamic State (The Conversation)  Harith Bin Ramli traces the Muslim world’s growing disaffection with its rulers through the 20th century and how it created the climate for both the genesis of Islamic State and its continuing success in recruiting followers.  The deep history of the Caliphate ended with the conquest of the Middle East by the Mongols in 1258.  There was a more recent disputed caliphate under Ottoman rule - see next article.

Click for larger image at The Conversation.
 

  • The Myth of the Caliphate (Foreign Affairs)  The "caliphate" that existed from the 16th century until 1924 under the Ottoman Empire was really mostly an opposition force to colonialism more than a religious movement.  The author summarizes curent affairs and history thusly:

By treating the Ottoman caliphate as the final historical reference point for what current Islamists aspire to, Western pundits conflate the contemporary dream of a powerful, universally respected Muslim leader with the late Ottoman sultan's failed dream of becoming such a figure himself. The circumstances uniting these dreams—and the appeal of strong religious power in the face of Western political, military, and economic power—may be the same. But so are the challenges. Contemporary claimants to the title of caliph may quickly find themselves in the same boat as Ottoman caliphs. Political or military success, rather than history or theology, can bring short-lived legitimacy, but failure in these realms will bring other contenders for power.

Syria

  • End Times for the Caliphate? (London Review of Books)  Hat tips to Chuck Spinney and Roger Erickson.  The war in Syria and Iraq has produced two new de facto states in the last five years and enabled a third quasi-state greatly to expand its territory and power. The two new states, though unrecognised internationally, are stronger militarily and politically than most members of the UN. One is the Islamic State, which established its caliphate in eastern Syria and western Iraq in the summer of 2014 after capturing Mosul and defeating the Iraqi army. The second is Rojava, as the Syrian Kurds call the area they gained control of when the Syrian army largely withdrew in 2012, and which now, thanks to a series of victories over IS, stretches across northern Syria between the Tigris and Euphrates. In Iraq, the Kurdistan Regional Government (KRG), already highly autonomous, took advantage of IS’s destruction of Baghdad’s authority in northern Iraq to expand its territory by 40%, taking over areas long disputed between itself and Baghdad, including the Kirkuk oilfields and some mixed Kurdish-Arab districts.

kurds.control.syria.iraq

Kurdistan

  • Kurdistan (Wikipedia)  Contemporary use of the term refers to four parts of a greater Kurdistan, which include parts of eastern and southeastern Turkey (Northern Kurdistan), northern Syria (Western Kurdistan), northern Iraq (Southern Kurdistan), and northwestern Iran (Eastern Kurdistan).  The combined areas of Kurdistan is estimated to be between 74,000–151,000 sq. mile (up to 500,000 km²), somewhere between the land area of Missouri and Montana.  The population of all the areas of Kurdistan is estimated to be about 28 million, approximately the same as Texas. 

Click for larger image at Wikipedia.

China

  • Exclusive: China to lay off five to six million workers, earmarks at least $23 billion (Reuters)  China aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two reliable sources said, Beijing's boldest retrenchment program in almost two decades.  China's leadership, obsessed with maintaining stability and making sure redundancies do not lead to unrest, will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years.  Econintersect:  This is much larger than the 1.8 million lay-offs for 2016 mentioned in Early Bird today.

Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea

  • States vs. Markets:  A Misleading Dichotomy (Mariana Mazzucato)  Prof. Mazzucato says the proposition that the state competes with the private sector is a false logical construction.  Below is the introduction to her essay.  In her conclusion she says that only when the vision becomes one of co-creating a new future, rather than allowing one side to pick up the pieces, while the other continues to make short-term profits, will we get out of the usual ‘tutto deve cambiare perche, tutti resti come prima’ (‘everything needs to change, so everything can stay the same’).

The debate about the relative roles of the state and the market in capitalist economies tends to swing from side to side in the hearts and minds of public opinion: periods when the state is defended for its role in economic development are always superseded by an attack on its intervention into ‘well functioning’ markets. It has been like this throughout the twentieth century. And it is what has happened since the most recent global financial crisis and economic recession: a brief period right after its outbreak, when there was consensus that the state had a key role to play in both saving the banks and using fiscal policy to promote growth, was quickly apprehended by those who feared rising levels of public debt. Indeed, this debt was mistakenly seen as the cause rather than the result of the crisis—due to lower tax receipts, rising bailouts, etc. So austerity became again the flavour of the day, while any sort of serious economic and industrial policy became anathema.

What is missing from the public perception is how through the history of modern capitalism, the state has done, and continues to do, what markets simply won’t. This is not about its role in simply fixing ‘market failures’, but its role in directly shaping and creating markets. Take the financial sector. A well-functioning financial system must in theory fund the capital development of the economy, promoting economic growth and rising living standards. One of the biggest banks in the US is called Chemical Bank because it had its origin in funding the chemical sector—unthinkable today that a bank would be so focussed on the real economy!. Yet in recent years finance has not been funding investment or innovation in the real economy but financing… itself. Since the 1970s, financial innovations coupled with deregulation have made it easier to earn profits from speculative investments in financial assets.

  • Osama bin Laden almost sounds like a U.S. presidential candidate in this secret letter (The Washington Post)  In a letter apparently written by Osama bin Laden, the late al-Qaeda leader denounced the corporate interests supposedly driving politics in the United States and hailed the courage of the country's Founding Fathers.  Econintersect:  Not quite what a letter from a real candidate would say.  For one thing, it is blatantly anti-semetic.  Read the document here.  See also Bin Laden called for Americans to rise up over climate change (Reuters).

  • Could You Pass Sixth Grade Economics? (The Wall Street Journal)  Public schools are teaching more economics in the aftermath of the financial crisis.  Unfortunately it seems that what is being taught is barter economics and scarcity of money.  While this may be excellent for personal finance, what does it do to educate students in political economy?  Not much.  National fiscal policy cannot be successfully "worked out around the kitchen table" as many woefully ignorant politicians are found espousing.  Fortunately some teachers are not spending much time on macroeconomics.  One teacher suggests that marginal analysis is too difficult for beginning students.  Let's hope that whatever he/she says about that they do not extrapolate from micro (where it has validity) to macro where it is often at odds with empirical observations of the economy.  What Econintersect would suggest would be beginning economics that does not try to explain what is known about economics as much as to define some of the things that are not known.  As flawed as economic theory is, why should we send our brightest students forward in education believing they know something when the most dangerous thing for them is not having any idea what they don't know.   

  • Socialists, look to economists at UMass Amherst for support (The Boston Globe)  This article gives some of the background behind Prof. George Friedman, whose analysis of the economic performance of Bernie Sanders' economic plan has been cited by the Sanders campaign and criticized by economists supporting the GOP and Hillary Clinton. 

  • Doing the sums on Donald Trump economics (Irish Examiner)  Mr Trump’s most notorious plan, the enforced repatriation of roughly 11 to 14 million undocumented, or ‘illegal’ immigrants from the US over the period of a year to 18 months could plunge America into a Depression, according to Mark Zandi, chief economist, Moody’s Analytics.  The American Enterprise Forum warns that immediate and full enforcement of immigration law would cost the Federal government between $400 billion (€365.7 billion) and $600 billion.  John McLaren of the University of Virginia tells ‘The Street’ that farmer income would plunge while food prices would soar as output fell.  Here is a further excerpt:

The non-partisan Tax Foundation estimates that Trump’s tax plan would cut taxes by $12 trillion, leading to 11% growth in GNP, a 6.5% jump in wages, and 5.3 million extra jobs.

The rich fare best with growth in capital stock of 30%.

However, the Foundation warns tax revenues would fall by over $10 trillion causing global investors to take fright as the US “drove deliberately over a fiscal cliff.”

His backers such as the Texas-based Institute of Policy Innovation insist that his tax plan is “one of the most dynamic tax plans out there”. It certainly has echoes of the supply side economics beloved of President Ronald Reagan in the 1980s.


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