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What We Read Today 14 May 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:

  • Libertarian Says Cooperation Essential for Societal Success

  • Economics Writer Says 'Of Course Econ 101 if Useless for Designing Policy'

  • Advertising Cannot Sustain the Internet

  • FIFA Compliance Chief Quits in Face of Corruption

  • Big Oil and Green Energy

  • Many Schools Already Successfully Accommodate Transgender Students

  • TSA Lines to Get Longer

  • Recession Coming, No Matter Who Wins White House

  • European Banks Afraid of Iranian Business

  • Venezuela in Turmoil

  • And More

Articles about events, conflicts and disease around the world

Global

  • FIFA Compliance Chief Quits, Saying Corruption Fight Threatened (Bloomberg)   FIFA’s head of audit and compliance, Domenico Scala, quit Saturday to protest changes at the top of global soccer’s governing body that he said will imperil efforts to eliminate corruption.  Scala, who was with the organization for four years, said a vote Friday by FIFA to let the ruling council dismiss members of its independent advisory bodies would leave them “in danger of becoming auxiliary agents of those whom they should actually supervise.” The changes were made at the first congress under new President Gianni Infantino.

  • Where the Black Flag of ISIS Flies (Frontline)  This feature-length article discusses the geographic extent of ISIS  from Nigeria and Algeria in the west to Afghanistan in the east, and also discusses future threats, especially to Europe.

  • Big Oil Unexpectedly Backing Newest Non-Fossil Fuels (Bloomberg)   Big oil is dipping a few more toes into clean energy.  Exxon Mobil Corp. is partnering with a company to capture carbon-dioxide emissions from power plants. Total SA, the French oil supermajor, announced a $1.1 billion deal Monday to buy the battery maker Saft Groupe SA, complementing its 2011 purchase of a majority stake in the solar-panel maker SunPower Corp. And the Canadian pipeline company Enbridge Inc. announced Tuesday it will pay $218 million for stakes in offshore wind farms as it attempts to double its low-carbon generating capacity.  While fossil fuel companies have been dabbling in clean energy for years, they typically stayed close to their roots by focusing on ethanol and other biofuels. This round of investments takes them into the heart of the clean-energy industry. As crude prices struggle to recover and growth projections for renewables soar, oil companies see a chance to diversify.

green.oil

U.S.

  • Schools offer lessons on accommodating transgender students (Associated Press)   From locker rooms and sex education classes to dress codes and overnight field trips, many U.S. public schools already are balancing the civil rights of transgender students with any concerns that classmates, parents and community members might have.  The U.S. Department of Education is drawing on those practices to guide other schools as they work to comply with the Obama administration's directive that transitioning children be treated consistent with their gender identity.  That has been the policy since 2013 of the Arcadia Unified School District in Southern California. As part of a settlement with the federal departments of Justice and Education that became the foundation for the national mandate issued Friday, students may use the bathroom, locker room or wilderness cabin that corresponds with their recognized gender outside school, Superintendent David Vannasdall said.

  • TSA security line waits inevitable, DHS secretary says (CNN)   The U.S. Department of Homeland Security will immediately increase the use of overtime and work to quickly bring in more screening officers to help alleviate long lines at airport security checkpoints, Homeland Security Secretary Jeh Johnson said Friday.  But Johnson warned that longer wait times are inevitable during the busy summer travel season.

  • Recession May Loom for Next U.S. President No Matter Who That Is (Bloomberg)   Talk about a poisoned chalice. No matter who is elected to the White House in November, the next president will probably face a recession.  The 83-month-old expansion is already the fourth-longest in more than 150 years and starting to show some signs of aging as corporate profits peak and wage pressures build. It also remains vulnerable to a shock because growth has been so feeble, averaging just about 2 percent since the last downturn ended in June 2009.

recession.lengths.since.wwii

Iran

  • US says Iran open for business, but Europe's banks disagree (Associated Press)   The Obama administration's calls for restoring global business ties with Iran are falling flat in Europe, where risk-averse banks told U.S. Secretary of State John Kerry on Thursday that they don't believe they can do business in the Islamic Republic without triggering U.S. sanctions.  Nearly a year after the U.S. and world powers struck a deal to ease financial penalties against Iran in exchange for curbs on its nuclear program, the Tehran government complains that U.S. policy is denying that promised relief. Kerry and other top officials have been fanning out across the globe to correct what Kerry called "misinterpretations or mere rumors" about what kind of transactions are still prohibited.

Afghanistan

  • AP Exclusive: Peace deal expected with armed Afghan group  (Associated Press) Afghanistan is expected to finalize a peace deal with a notorious militant group in the coming days, in what could be a template for ending the 15-year war with the Taliban, a government official and a representative of the militant group said Saturday.  The deal is partly symbolic as the group in question, Hezb-i-Islami, has been largely inactive for years, but it marks a breakthrough for President Ashraf Ghani, who has made little progress in reviving peace talks with the far more powerful Taliban.  Under the 25-point agreement, a draft of which was seen by The Associated Press, Hezb-i-Islami would end its war against the government, commit to respecting the Afghan constitution and cease all contact with other insurgents. In return its members would receive amnesty and its prisoners would be released.

Venezuela

  • U.S. concern grows over possible Venezuela meltdown, officials say (CNBC)   The United States is increasingly concerned about the potential for an economic and political meltdown in Venezuela, spurred by fears of a debt default, growing street protests and deterioration of its oil sector, U.S. intelligence officials said on Friday.  In a bleak assessment of Venezuela's worsening crisis, the senior officials expressed doubt that unpopular leftist President Nicolas Maduro would allow a recall referendum this year, despite opposition-led protests demanding a vote to decide whether he stays in office.  But the two officials, briefing a small group of reporters in Washington, predicted that Maduro, who heads Latin America's most ardently anti-U.S. government and a major U.S. oil supplier, was not likely to be able to complete his term, which is due to end after elections in late 2018.  See also next article.

  • Venezuela opposition slams 'desperate' Maduro state of emergency (Reuters)   Venezuela's opposition on Saturday slammed a state of emergency decreed by President Nicolas Maduro and vowed to press home efforts to remove the leftist leader this year amid a grim economic crisis.  Maduro on Friday night declared a 60-day state of emergency due to what he called plots from Venezuela and the United States to subvert him. He did not provide specifics.  The measure shows Maduro is panicking as a push for a recall referendum against him gains traction with tired, frustrated Venezuelans, opposition leaders said during a protest in Caracas.

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

  • Leading Libertarian Says Social Justice Is a Cause and Effect of the Great Enrichment  (Evonomics)   A leading Libertarian writer, Will Wilkinson,  says that certain parts of the world became disproportionately and suddenly wealthy (see graphic below) partly because "humans rather suddenly got immensely better at cooperating and now a lot of us are really rich".   (Econintersect:  Take note of this libertarian view of "return on coordination", Roger Erickson.)   How can one whose philosophy is based on free, unhindered individual freedom reconcile with the benefits of group action?  It is really quite rational and even does a good job of dealing with the question of addressing inequality.  Here is an excerpt:

The enrichment has been great, but its progress has been greatly uneven and its riches unevenly, unfairly spread. These inequalities shape our world, and our politics, to this day.

Still, a lot of us did get rich, and it happened through grand improvements in the scope and fruitfulness of cooperation. We cooperate because we do better together. When we effectively coordinate our efforts, we produce gains over and above what we could have done acting independently. Those gains are the “surplus” of cooperation. Enrichment—that is to say, economic growth—is about creating ever more and ever larger surpluses from cooperation.

But whenever we produce a surplus there’s always the question of how to divvy it up. If it’s a question about how to divide it fairly—about who ought to get what, rather than about who has the power to snatch the mostthen it’s a question of “distributive justice.”

Questions of distributive justice are hard. Who did how much work? How well did they do it? How relatively valuable were the efforts of the various contributors to the common enterprise? Maybe everyone agreed to the division in advance. But was the distribution of bargaining power that led to the agreement itself fair?

 

Economics is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong. About the future, not so much. However, careful economic analysis does have one important benefit, which is that it can help kill ideas that are completely logically inconsistent or wildly at variance with the data. This insight covers at least 90 percent of proposed economic policies.

  • Advertising Cannot Maintain the Internet. Here’s the “Secret Sauce” Solution. (Economics)  The author says that making the internet financially viable for content providers must get to a "pay to read" operation.  The argument presented is that users are not adverse to paying but that the transaction process is simply too troublesome.  Many "sole-proprietor" content providers could function very well at a $0.10 per article access fee, with just a few hundred "readers" per article and a handful of articles a day.  [Some numbers (from Econintersect):  400 "readers" per article x 5 articles per day x 5 days per week x $0.10 per "click" is $1,000 a week, certainly far more than most blog hosts can ever hope to make from advertising.  And $1,000 a week is certainly adequate compensation for a full-time blogger, most of whom have additional sources of income.]  But it's not the $0.10 cost that is the problem, it is the transaction burden that inhibits the business model from working.  He proposes a "micropayments secret sauce" which will be revealed in a future article.  An excerpt from this article:

Our first fallacious assumption is that Internet users demand content that is free... that no one will pay a penny for what they can get elsewhere online at zero cost. Any content owner intent on monetizing must either put up a pay wall (which seldom works, outside of music or TV), or demand substantial transfer via PayPal or credit card or else fall back on on advertising — a well that is already tapped by established players.

Examine this truism — that you would never pay a nickel for a New York Times article that you enjoyed. What? Ten minutes of your time isn’t worth five cents? What aggravates users about current pay-for-use methods is not cost, buthassle of transaction. Going through rituals to become a paywall subscriber, then having to sign in each time you return? That’s the deal-breaker.

This isn’t about customer cheapskate-stinginess — it is businesses failing to provide shopping convenience for low-cost transactions.


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