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What We Read Today 16 January 2017

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:

  • Solving the Crisis of Extractive Capitalism

  • Don't Let the Dollar Inhibit Growth

  • Do We Need a New Plaza Accord?

  • Ayn Rand Totally Ignored the Reason Why Homo Sapiens Survived and All Other Hominids Didn't

  • Inequality Has Also Increased at the Top

  • Eight Men Now Own More than Half the World's People

  • 10 Economic Shocks to Look for in 2017

  • Can Top Business People be Successful in Government?

  • Have Hate Crimes Increased?

  • Trump may be Inaugurating an Era of Market Failure in Economics and Ideas

  • Democrats Turn to Public to Try to Save Obamacare

  • Officers are now Less Willing to Use Force

  • Europeans are Denouncing Trump

  • Is the UK National Health Service in Crisis?

  • And More

Articles about events, conflicts and disease around the world

Global

Today, eight people have the same wealth as the poorest half of the world’s population. Stop and think about this. It is a mind-boggling concept.

Last year we said we would have needed a double-decker bus to transport the 62 people we thought owned the same as the poorest 3.6 billion on the planet. In 2017, thanks to more accurate data, we find that in fact this group would fit in a single golf buggy.

2017.growth.wef

U.S.

  • Trump's Billionaire Dealmakers (Peter Morici,Washington Times)  Prof. Morici suggests that success in business may have little correlation to sucess in government.  Excerpts:

Many conservatives and Republicans — these days those cannot be assumed one in the same — have harbored the view that Washington is not just corrupt but run by a bunch of bumbling dolts and if business people were put in charge, they could miraculously transform the place for the better.

This requires a bold leap of faith and unusual disregard for history, because experience elsewhere indicates that private sector management skills don’t necessarily transfer well across industries or into the public sector.

Republicans are promising to spend huge sums on new roads, rails and the like — much of it according to Mr. Ross and White House economist Peter Navarro can be financed by the private sector. However, the record of private investment and management of public infrastructure is hardly encouraging.

Republicans like to see the Trump program as another Reagan revolution — lower taxes, deregulation and privatization. However, his notion that the government is in need of a wholly different approach to management may be more remindful of Jimmy Carter, also a successful businessman, who campaigned as an outsider and promised to clean up the mess in Washington. To his dismay he found both Congress and the bureaucracy too difficult to manage and was out in four years.

An FBI report released in November counted more than 5,800 hateful incidents involving 7,100 victims in 2015. Those numbers are voluntarily submitted by local and state police departments through the FBI’s Uniform Crime Reporting Program database. But according to Benjamin Wagner, former U.S. Attorney for California’s Eastern District who has prosecuted dozens of hate crimes, these reports still don’t present the full picture of how widespread hate is in the United States.  He said:

“Many more incidents are likely never reported due to factors such as an unknown suspect or intimidation of the victim.” 

Cynics may believe that business is based on a pack of lies, but at every level of business, from buying a used car to a billion-dollar stock deal, truth is precious.

Investors have been pouring their money into stock markets on the assumption that U.S. president-elect Donald Trump has been telling the truth.

They may be disappointed.

There is increasing evidence that not only has truth been set aside, but the institution created to discover truth has been damaged.

It was the libertarians' hero John Stuart Mill, in his 1859 book On Liberty, who first integrated the principle of the economic free market with the concept of the marketplace of ideas.

EU

  • 'Europe's fate is in our hands': Angela Merkel's defiant reply to Trump (The Guardian)  Angela Merkel and François Hollande have responded curtly but defiantly after Donald Trump cast further doubt on his commitment to NATO and gave strong hints that he would not support EU cohesion once in office.  Responding to Trump’s comments that Merkel had made an “utterly catastrophic mistake by letting all these illegals into the country”, the deputy chancellor and minister for the economy, Sigmar Gabriel, said the increase in the number of people fleeing the Middle East to seek asylum in Europe had partially been a result of US-led wars destabilising the region.  See also article under Germany, below.

UK

  • The NHS is not in crisis – here’s why (The Conversation)  Long waits, job losses and problems with bed-blocking are a systemic problem for the NHS that seemingly won’t go away. But all is not lost.  Summary:

The solution will not be easy and the current problems with waiting targets is a distraction from the main problem: social care services need to transfer into the NHS to create a greater level of coordinated care for the most vulnerable. And at the same time, the NHS needs to be brave and rid itself of irrelevant, low-value interventions that are undermining progress towards a compassionate, evidence-based healthcare system.

Germany

  • Germany hits back at Trump criticism of refugee policy and BMW tariff threat (The Guardian)  Germany’s deputy chancellor and minister for the economy, Sigmar Gabriel, blames America’s ‘flawed interventionist policy’ for refugee crisis and warns of ‘bad awakening’ for US carmakers who are reliant on transatlantic supply chains.  Gabriel said that if America wants to sell more cars and take market share from Germany they need to do one thing:  "Build better cars."

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

  • Solving the Crisis of Extractive Capitalism (Evonomics)  Our world is once again hurled into a deep socio-economic crisis, in which the current extractive model of value creation is facing a series of structural crises. But as the old world is dislocating, the seeds of a new one are being sown.  The peer-to-peer capacity to relate to each other over the Internet entails the emergence of what Yochai Benkler in The Wealth of Networks called ‘commons-based peer production’ (CBPP). CBPP is a new pathway of value creation and distribution, where peer-to-peer infrastructures allow individuals to communicate, self-organize and, ultimately, co-create non-rivalrous use value, in the form of digital commons of knowledge, software and design. 

Extractive entrepreneurs seek to maximize their profits, and generally do not sufficiently re-invest in the maintenance of the productive communities. Like Facebook, they do not share any profits with the co-creating communities on which they depend for their value creation and realization. Like Uber and AirBnB, they tax exchanges but do not contribute to the creation of transport or hospitality infrastructures.

Generative entrepreneurs do create added value around these communities. Seed-forms of commons-oriented entrepreneurial coalitions create added value on top of the commons that they co-produce and upon which they are co-dependent. In the best of cases, the community of entrepreneurs often coincides with the productive community. The contributors build their own vehicles in order to create livelihoods while producing the commons. They re-invest the surplus in their own well-being and the overall commons system they are co-producing.

“In 1985, after much discussion by Mr. Mundell, Rep. Kemp and others, the Reagan administration addressed the high dollar in cooperation with other major economies. The Plaza Accord, negotiated by then-Treasury Secretary James Baker, lowered and stabilized the exchange rate. The period after 1985 is now fondly remembered as the “Great Moderation,” when inflation and interest rates were down, the dollar was moving into a healthy trading range, and global economic growth was strong. Protectionist pressures faded and trade expanded.

Another Plaza Accord may be needed to do the same for today’s far larger interdependent global economy. European Central Bank President Mario Draghi spoke of the need for greater currency alignment and stability at an ECB conference in June, saying, “In a globalized world, the global policy mix matters.”

... ask why our species of hominid is the only one still in existence on the planet, despite there having been many other hominid species during the course of our own evolution. One explanation is that we were cleverer, more ruthless and more competitive than those who went extinct. But anthropological archaeology tells a different story. Our very survival as a species depended on cooperation, and humans excel at cooperative effort. Rather than keeping knowledge, skills and goods ourselves, early humans exchanged them freely across cultural groups.

When people behave in ways that violate the axioms of rational choice, they are not behaving foolishly. They are giving researchers a glimpse of the prosocial tendencies that made it possible for our species to survive and thrive… then and today.

  • Income Inequality (inequality.org)  Income includes the revenue streams from wages, salaries, interest on a savings account, dividends from shares of stock, rent, and profits from selling something for more than you paid for it. Income inequality refers to the extent to which income is distributed in an uneven manner among a population. In the United States, income inequality, or the gap between the rich and everyone else, has been growing markedly, by every major statistical measure, for some 30 years.

Inequality in America is growing, even at the top. The nation’s highest 0.1 percent of income-earners have, over recent decades, seen their incomes rise much faster than the rest of the top 1 percent. Incomes in this top 0.1 percent increased 7.5 times between 1973 and 2007, from 0.8% to an all-time high of 6%. The Great Recession in 2008 did dampen this top 0.1 percent share, but only momentarily. The upward surge of the top 0.1 percent has resumed.

 


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