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What We Read Today 12 June 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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Topics today include:

  • The Confliction of Ayn Rand

  • Is Oligarchy on the Brink of a Civilization-Threatening Collapse?

  • The Rise of Populism

  • The Vocabulary of Multisided Platforms

  • World Markets Weaken

  • Edward Snowden on the State of Surveillance

  • Colleges Where Alumni Make Less then High School Graduates

  • Interest Rates Below Zero Forever - Well More than 4 Years

  • Monetization of Sovereign Debt

  • Should You Go to Rio?

  • And More

Articles about events, conflicts and disease around the world


  • The Resistible Rise of Populism (Project Syndicate)  Populism has historically been a slippery phenomenon, sometimes focused squarely on economic grievances, but often exploiting such grievances to advance a chauvinist political agenda. That is also true today, when populist movements are gaining ground in Europe and the U.S., even as they and their leaders are being forced from power in Latin America.  This article is a collection of brief comments by a group of economists and writers.

  • Bond Yields Around the World Fall to Records on Growth Outlook (Bloomberg)  As bond yields plummet around the globe, investment-grade bond index has best start to year since 1997.






  • A Tale of Two Debt Write-Downs (Project Syndicate)  Why don't sovereign currency nations issue money directly instead of doing so as debt?  This article doesn't answer that question but Adair Turner writes of the Japanese process of sovereign debt management which is a de facto process for government issued money:

... the debt owed by the Japanese government to private investors is in free fall. Of Japan’s net debt of 130% of GDP, about half (66% of GDP) is owed to the Bank of Japan, which the government in turn owns. And with the BOJ buying government debt at a rate of ¥80 trillion ($746 billion) per year, while the government issues less than ¥40 trillion per year, the net debt of the Japanese consolidated public sector will fall to 28% of GDP by the end of 2018, and could reach zero sometime in the early 2020s.

The current official fiction, however, is that all the debt will eventually be resold to the private sector, becoming again a real public liability which must be repaid out of future fiscal surpluses. And if Japanese companies and households believe this fiction, they should rationally respond by saving to pay future taxes, thereby offsetting the stimulative effect of today’s fiscal deficits.

Realism would be a better basis for policy, converting some of the BOJ’s holdings of government bonds into a perpetual non-interest-bearing loan to the government. Tight constraints on the quantity of such monetization would be essential, but the alternative is not no monetization; it is undisciplined de facto monetization, accompanied by denials that any monetization is taking place.


The WHO has declared Zika a “Public Health Emergency of International Concern,” and has advised pregnant women not to travel to Brazil. But how does staying at home help a pregnant woman if others bring the virus back from Rio? With 500,000 people expected to attend the Olympics, that is likely to happen in several countries in which Aedes aegypti, the mosquito that can transmit the virus, is present.

Two arguments will be made against this reason for postponing or moving the Games. First, the risk of infection in winter is low, as there are fewer mosquitos, and Brazil is using the military to spray areas where mosquitos breed. But, as Amir Attaran, a professor of law and population health at the University of Ottawa, argued recently in the Harvard Public Health Review, the transmission of dengue fever, a virus that is related to Zika and transmitted by the same species of mosquito, declines but does not cease in the Rio winter.


But millions of tourists visit Rio anyway, so the spread of Zika to other countries with the Aedes aegypti mosquito is inevitable; it makes little difference whether visitors who bring it back to their home countries went to the Olympics. But, as a result of the Brazilian outbreak, research into Zika has accelerated, and it is reasonable to hope that a vaccine, anti-viral drug, or other means of combating the infection or its spread will be found.


If the Olympics go ahead, visitors will come to Brazil from many more countries than would otherwise be the case. If they bring Zika back to regions with Aedes aegypti and inadequate health-care systems – West Africa or South Asia, for example – millions of infections could occur before effective means of prevention or cure are developed.


It is neither socially responsible nor ethical to ignore the risks that the Zika virus poses to adults and to children yet to be born. Perhaps the risks are low enough to justify going ahead with the Rio Olympics (which in any case could be postponed rather than canceled), but perhaps they are not. Until qualified experts have laid out all the facts, the world should stay away.

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

  • What Happens When You Believe in Ayn Rand and Modern Economic Theory (Evonomics)  The core of Rand’s philosophy — which also constitutes the overarching theme of her novels — is that unfettered self-interest is good and altruism is destructive. This, she believed, is the ultimate expression of human nature, the guiding principle by which one ought to live one’s life. In “Capitalism: The Unknown Ideal,” Rand put it this way:

    Collectivism is the tribal premise of primordial savages who, unable to conceive of individual rights, believed that the tribe is a supreme, omnipotent ruler, that it owns the lives of its members and may sacrifice them whenever it pleases.

    Econintersect:  Did Ayn Rand ever wonder why the tribal collective arose?  Did she ever acknowledge that the tribal collective arose originally from individuals who discovered that by banding together for self-defense, efficient partition of labor, etc. their individual lots improved?  Is it not a rational argument that Ayn Rand argued for a return to prehistorical chaos?  It seems that she did, according to what is written in this article, find contradictions in what she proposed.  But it seems that she chose to ignore these troubling thoughts and strive blindly for a hypothetical ideal which can only succeed in a world of perfect competition, not recognizing that such competition remains perfect for an instant until one competitor gains advantage over the rest.    See next article.    

  • Trump-Sanders Phenomenon Signals an Oligarchy on the Brink of a Civilization-Threatening Collapse (Evonomics)  The author maintains America is in another cycle that will repeat events like those of the 1760s, 1850s and 1920s.  She describes possible non-chaotic solutions that could be better in terms of human experience than the American Revolution, the Civil War and the Great Depression that were the resolution processes of the previous crises.  Here is the introduction:

The media has made a cottage industry out of analyzing the relationship between America’s crumbling infrastructure, outsourced jobs, stagnant wages, and evaporating middle class and the rise of anti-establishment presidential candidates Donald Trump and Bernie Sanders. Commentators are also tripping all over one another to expound daily on the ineffectual response of America’s political elite – characterized by either bewilderment or a dismissal of these anti-establishment candidates as minor hiccups in the otherwise smooth sailing of status-quo power arrangements. But the pundits are all missing the point: the Trump-Sanders phenomenon signals an American oligarchy on the brink of a civilization-threatening collapse.

The tragedy is that, despite what you hear on TV or read in the paper or online, this collapse was completely predictable. Scientifically speaking, oligarchies always collapse because they are designed to extract wealth from the lower levels of society, concentrate it at the top, and block adaptation by concentrating oligarchic power as well. Though it may take some time, extraction eventually eviscerates the productive levels of society, and the system becomes increasingly brittle. Internal pressures and the sense of betrayal grow as desperation and despair multiply everywhere except at the top, but effective reform seems impossible because the system seems thoroughly rigged. In the final stages, a raft of upstart leaders emerge, some honest and some fascistic, all seeking to channel pent-up frustration towards their chosen ends. If we are lucky, the public will mobilize behind honest leaders and effective reforms. If we are unlucky, either the establishment will continue to “respond ineffectively” until our economy collapses, or a fascist will take over and create conditions too horrific to contemplate.

The new economics of multisided platforms involves a number of concepts that are familiar to economists as well as some new ones. This glossary, which is drawn from our book Matchmakers: The New Economics of Multisided Platforms, is an attempt to put together the main concepts and to provide short definitions for them. We believe this common vocabulary, which we’re sure others will refine and evolve, will be helpful for research and the exchange of ideas going forward and may serve as a quick primer for those who are new to the field, including students.

  • World Markets Weekend Update: The Picture Worsens (Doug Short, Advisor Perspectives  DS is a regualr contributor to GEI.  The past week was a gloomy one for the 8-bourse world market watch list. The average of the eight was -1.00% week-over-week, down from a flat 0.09% the week before and 2.60% the week before that. Only one of the eight posted a gain last week, India's Hang Send rising a modest 0.46%. The European indexes were the big losers, with "Brexit" risk a definite factor in the negative mood. Germany's DAXK (the DAX ex dividends) was lost the most ground, down 2.76%.

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