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What We Read Today 23 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".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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The rest of this post is available only the GEI Members.  Membership is FREE -  click here

Topics today include:

  • To Avoid Felony Charges, Issue a Contract Before You Commit the Crime

  • Bank of America and Countrywide Beat the Rap

  • What Milton Friedman Got Wrong (Actually this article has only parts of the errors.)

  • How Household Expenses Rose as Incomes Fell

  • The Foundations for Zika Were Set by Neglect in the 1970s

  • Impact of TPP Almost Impossible to Predict

  • Why Monsanto Should Take the Bayer Deal

  • Officer Acquitted in Freddie Gray Case

  • Dems Offer Sanders Say on Platform

  • Opiod Prescriptions Dropped in U.S. for Last Three Years

  • Why Socialists and Capitalists are Both Missing the Point

  • And More

Notice:  Unexpected travel for family business will prevent the preparation and publication of 'What We Read Today' Tuesday and Wednesday this week (24 and 25 May).

Articles about events, conflicts and disease around the world


  • Zika outbreak fuelled by mosquito control failure, says WHO boss (BBC News)  The spread of Zika is the price being paid for a massive policy failure on mosquito control, says World Health Organization leader Margaret Chan.  Speaking at the agency's annual World Health Assembly, Dr Chan said experts had "dropped the ball" in the 1970s with regards to getting a handle on disease-carrying insects.

  • Big Report, Little Finding: The ITC evaluates the economic impact of the TPP (Jared Bernstein Blog)  Hat tip to Doomstead Diner.  Bernstein says the 792 page "report" is not bad he sees "no rational way your support or opposition to the TPP can be informed by these findings".  The findings are largely positive on net but tiny and trade agreements, as opposed to trade, have little to do with US growth and jobs.

  • Monsanto: Take the Money and Run (Bloomberg)  Bayer is offering $122 a share in cash, or about $62 billion including debt, for the U.S. seed giant. The questionable wisdom of such a financially straining bet has been well-documented, not least by the German aspirin inventor's slumping shares.  From Monsanto's perspective, though, a buyout with a decent premium might not be so bad.



  • Officer cleared of all charges in Freddie Gray case (Associated Press)  Prosecutors failed for the second time in their bid to hold Baltimore police accountable for the arrest and death of Freddie Gray when an officer was acquitted Monday in the racially charged case that triggered riots a year ago.  A judge cleared Officer Edward Nero of assault, reckless endangerment and misconduct, concluding that Nero played little role in Gray's arrest and wasn't responsible for the failure to buckle the black man into the police van where he suffered a broken neck.

  • House Dems Back Bill to Overhaul Chemical Regulation (Bloomberg)   Top House Democrats said Monday they will support a bipartisan bill to overhaul regulation of asbestos and other dangerous chemicals, clearing the way for the bill's passage in the House and Senate.  House Minority Leader Nancy Pelosi, D-Calif., and two other high-ranking Democrats said they remain concerned that the bill limits states' ability to act aggressively on toxic substances.  But they said changes made by Democrats in recent days ensure the measure is "a long-overdue step forward to protect families and communities from toxic substances".

  • Democrats, seeking unity, give Sanders say in party platform (Reuters)  The Democratic Party said on Monday it will give U.S. presidential contender Bernie Sanders a prominent say in writing its platform this year, a gesture that could ease tensions between Sanders' camp and party leaders, whom Sanders has accused of favoring rival Hillary Clinton.  Sanders has remained steadfast in his long-shot battle with Clinton for the Democratic nomination for the November presidential election, even though he lags her in the delegate count with only a few state contests remaining. The divisiveness among the Democrats stands in contrast to the Republicans, whose party leaders are slowly rallying behind Donald Trump, their presumptive nominee.

  • Opioid Prescriptions Drop for First Time in Two Decades (The New York Times)  After years of relentless growth, the number of opioid prescriptions in the United States is finally falling, the first sustained drop since OxyContin hit the market in 1996.  For much of the past two decades, doctors were writing so many prescriptions for the powerful opioid painkillers that, in recent years, there have been enough for every American adult to have a bottle. But for each of the past three years — 2013, 2014 and 2015 — prescriptions have declined, a review of several sources of data shows.  Experts say the drop is an important early signal that the long-running prescription opioid epidemic may be peaking, that doctors have begun heeding a drumbeat of warnings about the highly addictive nature of the drugs and that federal and state efforts to curb them are having an effect.  Econintersect:  An increasing problem for many of these drugs has become internet access to global markets.  So declining U.S. prescription rates may not mean decreased U.S. usage.



  • Many Vietnam vets say they support lifting of arms embargo (Associated Press)  President Barack Obama's decision to lift the half-century-old arms embargo was seen Monday by many veterans as a logical outgrowth of efforts to normalize relations between the U.S. and the southeast Asian nation that has become a major trading partner since the war ended in 1975.


  • Venezuela's Collapse Won't Bury Appeal of Socialism (Foundation for Economic Education)  Econintersect:  We see a basic problem:  Socialists say that capitalism is all bad and Capitalists say that socialism is all bad.  Here is what Marian L. Tupy syas in this article:

I know that Venezuela’s descent into chaos – hyperinflation, empty shops, out-of-control violence and the collapse of basic public services – will not be the last time we hear of a collapsing socialist economy. Looking into the future, it is safe to predict that more countries will refuse to learn from history and give socialism “a go.”

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

  • Why Bank of America Won (The Wall Street Journal)  Bank of America’s just-announced victory in the “Hustle” case is a pretty big setback for the government’s efforts to hold banks accountable for their role in the financial crisis.  The case had been one of the biggest courtroom victories for the government. A jury in 2013 found Bank of America and a top mortgage executive liable for fraud in connection with sales of mortgages by Countrywide, which was later acquired by Bank of America, to Fannie Mae and Freddie Mac. Judge Jed Rakoff ordered the bank to pay $1.27 billion in civil penalties.  The U.S. Court of Appeals for the Second Circuit knocked down both the jury decision and the penalty, entering a judgment for the bank and its executive. The government failed to prove that the bank or anyone else had a fraudulent intent when they entered into contracts guaranteeing the mortgages sold to Fannie and Freddie would be “investment quality,” according to the court.  This doesn’t mean that Countrywide did not actually sell bad mortgages to Fannie and Freddie. The government offered plenty of evidence at trial that the mortgages Countrywide sold did not live up to the representations the lender was required to make when it struck deals with Fannie and Freddie.  Not only that, but the evidence showed that executives knew the mortgages didn’t live up to what was promised.   Here's the logic of the reversal decision:

    So why did the court reverse the judgment?  Because even though Countrywide promised to only sell “investment quality mortgages” to Fannie and Freddie and then knowingly sold them mortgages that weren’t investment quality, it didn’t do those two things at the same time.

    The court ruled that in order for Countrywide to have committed fraud, it would have had to have intended not to live up to its promises at the time it made them. Deciding to break the promises later on, as the mortgage market fell apart, isn’t fraud. It’s just a breach of contract.

    Econintersect:  OMG!!!!!!  If you plan to rob someone, issue them a guarantee you will not rob them a year ahead of time.  Then there is no felony when you do rob them, simply a breach of contract.

  • What Milton Friedman Got Wrong: Biologists Destroy Homo-Economicus (Evonomics)  Hat tips to too many to list.  The author of this article is David S. Wilson, SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo.  This excellent discussion finds the shortcomings of economics can often be traced to lack of consilience (consistency with other branches of knowledge).  The author argues in the case of post-Keynesian neoclassical economics, a major shortcoming is the absence of recognition of adaptation as a "product of selection" with correctly identified "relevant selection pressures".  (Econintersect:  This criticism is closely aligned with another which we have oft repeated - economic thinking that considers social systems (including economics) to exist in states of equilibrium is defective at its core.)  Here is the introduction (read the entire post - it's excellent):

One of the most influential articles published in the field of economics is Milton Friedman’s (1953) “The Methodology of Positive Economics”, in which he argues that people behave as if the assumptions of neoclassical economic theory are correct, even when they are not. One of the most influential articles in the field of evolution is Stephen Jay Gould and Richard Lewontin’s (1979) “The Spandrels of San Marcos and the Panglossian Paradigm”, which argues against excessive reliance on the concept of adaptation.

Different disciplines, different decades. No wonder these two classic articles have not been related to each other. Yet, there is much to be gained by doing so, for one reveals weaknesses in the other that are highly relevant to current economic and evolutionary thought.

Here is the problem, the hope of higher personal consumption and stronger GDP has been the ever evolving “wish” of the Federal Reserve since the “financial crisis.” Of course, with each passing year, these “hopes” have turned to dust as consumers have struggled to make ends meet as wages have failed to grow, employment has been in primarily lower wage paying jobs,



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