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What We Read Today 25 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:

  • Why We Should Pay Attention to Talk from the Fed about their Balance Sheet

  • Restricting Trade is Calamitous Policy

  • Why Statistics have Lost their Power

  • The Dangers of thew Post-Truth Rejection of Statistics

  • Why the Trump Staff is Lying

  • U.S. LIBOR Rate is Skyrocketing

  • Trump Preparing Executive Orders to Reduce U.S. Role in the UN

  • Studies Contradict Trump Claims on Voter Fraud

  • Trump Staff has EPA Science under Scrutiny

  • National Park Service Revolt against Climate Science Muzzle is Spreading

  • Americans are Flipping Houses Like It is 2006

  • EU to Investigate UK 'Bureaucratic Wall' against EU Nationals

  • UK University Applications Down: Domestic -5%, from EU -7%

  • Trump Invites India PM Modi to Visit Washington

  • Why Brazilians Are Demanding Laissez Faire Austrian Economics

  • Trump Signs Order to Start Mexican Wall

  • And More

Articles about events, conflicts and disease around the world

Global

  • Trump preparing executive orders to reduce U.S. role in U.N.: NY Times (Reuters)  The Trump administration is preparing executive orders that would clear the way to drastically reduce the U.S. role in the United Nations and other international organizations, the New York Times reported on Wednesday.  The executive orders would also begin a process to review and potentially abrogate certain forms of multilateral treaties, the Times reported, citing unnamed officials.

U.S.

  • Trump narrows down Supreme Court nominee list to 3 (Associated Press)   President Donald Trump has narrowed his choice to fill the Supreme Court vacancy to three judges and said he expects to make his decision in the coming days.  A person familiar with the selection process said the three judges, all white men who sit on federal appeals courts, were on the list of 21 potential high court picks Trump announced during the presidential campaign.  The leading contenders — who all have met with Trump — are William Pryor, Neil Gorsuch and Thomas Hardiman, the person said, speaking anonymously because he was not authorized to speak publicly about internal decisions:

Pryor, 54, is an Alabama-based judge on the 11th U.S. Circuit Court of Appeals. Gorsuch, 49, is on the Denver-based 10th U.S. Circuit Court of Appeals. Hardiman, 51, is based in Pittsburgh for the 3rd U.S. Circuit Court of Appeals. All three were nominated by President George W. Bush for their current posts.

... approximately 24 million—or one of every eight—voter registrations were no longer valid or significantly inaccurate. It also found that more than 1.8 million dead people were listed as voters and that approximately 2.75 million people were registered in more than one state. But the report cited no evidence that those errors had contributed to any significant voter fraud. Instead, it pointed to estimates that at least 51 million U.S. citizens are eligible but not registered to vote. 

  • Steve Bannon registered to vote in two states despite Trump's cries of 'voter fraud' (The Guardian)  President’s senior adviser is registered in both New York and Florida, as president falsely claims in tweet that such an arrangement amounts to fraud.  There is no law that prohits multiple registrations, just multiple votes.

  • EPA science under scrutiny by Trump political staff (Associated Press)  The Trump administration is mandating that any studies or data from scientists at the Environmental Protection Agency undergo review by political appointees before they can be released to the public.  The communications director for President Donald Trump's transition team at EPA, Doug Ericksen, said Wednesday the review also extends to content on the federal agency's website, including details of scientific evidence showing that the Earth's climate is warming and man-made carbon emissions are to blame.  Former EPA staffers said Wednesday the restrictions imposed under Trump far exceed the practices of past administrations.  Ericksen said no orders have been given to strip mention of climate change from www.epa.gov , saying no decisions have yet been made.  See also next article.

  • One, by Redwood national park in California, notes that redwood groves are nature’s number one carbon sink, which capture greenhouse gas emissions that contribute to global warming.  

  • Golden Gate national park in California said in a tweet that 2016 was the hottest year on record for the third year in a row. The tweet directed readers to a report by NASA and the National Oceanic and Atmospheric Administration, also known as NOAA.

  • Death Valley national park tweeted photos of Japanese Americans interned there during the second world war, a message that some saw as objecting to Trump’s pledge to ban Muslims from entering the country and a proposal to restrict the flow of refugees to the US.

  • Americans Are Flipping Houses Like It’s 2006 (Bloomberg)  A tactic that helped define the height of homebuying madness in the U.S. in the years before the market collapsed is rearing its head again.  Housing market investors have pushed the share of flips, or properties sold twice in 12 months, to its highest level in a decade.  The last time this metric was at this level and rising was 2004.  The housing bubble peaked 2 years later.

EU

  • Plight of EU nationals seeking UK residency to be investigated (The Guardian)  The European parliament is to investigate the British government’s treatment of EU nationals living in the UK who have applied for citizenship or permanent residency since the Brexit vote.  Sophie in ‘t Veld, a deputy leader of the liberal group in the parliament, told the Guardian that she intends to form a cross-party taskforce to examine cases where EU nationals have faced a “bureaucratic wall” when seeking to secure their future in the UK.  Econintersect:  Don't forget that the British government is home to the 'Circumlocution Department'.

UK

  • EU applications for UK university places down 7%, MPs told (The Guardian)  Applications from EU students for places at UK universities have dropped by more than 7% according to latest figures, a committee of MPs investigating the impact of Brexit on higher education has been told.  It is the first decrease in applications from EU students to study in the UK after almost a decade of unbroken growth and will inevitably be blamed on last year’s vote to leave the EU.  There has also been a nearly 5% fall in the number of applications from UK students and a 0.26% drop in international students overall, the provost of one of the UK’s most prestigious universities has told MPs.

India

  • US President Donald Trump invites Narendra Modi (BBC News)   US President Donald Trump has invited India's Prime Minister Narendra Modi to visit the United States after a phone call between the two leaders.  Washington said Mr Trump saw India as a "true friend and partner in addressing challenges around the world".  Mr Modi said he had "also invited President Trump to visit India".

North Korea

  • People will rise against N Korean regime, says defector (BBC News)  In August last year, Thae Yong-ho became one of the highest-ranking officials ever to defect from North Korea. In a wide-ranging interview in Seoul, he tells the BBC's Stephen Evans he believes leader Kim Jong-un would be prepared to attack the US with nuclear weapons, but that the regime will one day fall.

Brazil

The intellectual underpinnings of the recent Brazilian protests are the result of a decades-long movement seeking a deep ideological change in the country. It is said that Hayek advised Anthony Fischer to avoid politics and influence intellectuals instead because he believed that the intellectual arguments would prevail in the long run. Fischer went on to create the Institute of Economic Affairs. Several years later, we saw the rise of public figures like Thatcher and Reagan. Something similar is happening in Brazil.

Mexico

  • Trump signs order to begin Mexico border wall in immigration crackdown (The Guardian)  Press secretary Sean Spicer repeats insistence ‘Mexico will pay’ for wall as Trump signs additional executive order to cut funding for ‘sanctuary cities’.  Donald Trump faced a fresh torrent of criticism on Wednesday as he moved ahead with plans to build a wall on the Mexican border via executive order.  The US president said to applause at the Department of Homeland Security:

“The secretary of homeland security, working with myself and my staff, will begin immediate construction of a border wall.  So badly needed. You folks know how badly needed it is as a help.”

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

  • Heed the Fed's Balance Sheet Banter (Danielle DiMartino Booth, Bloomberg)  DDB is a GEI contributor.  Danielle says that the bond market could be in for a shock if Janet Yellen follows through with her hinted change in more than three years of unstated by widely understood Fed policy.  An excerpt:

... she uttered these words: “If fiscal policy changes lead to a more rapid elimination of slack, policy adjustment would, all else being equal, likely be more rapid than otherwise, with the conditions the FOMC has set for a cessation of reinvestments of principal payments on existing securities holdings being met sooner than they otherwise would have been.”

The financial markets have rightly shifted to "DefCon 1'' in light of what they construe to be a threat to the de facto agreement that’s been in place between bond market participants and the Fed for almost three years: Don't shrink the balance sheet and we won't tank the bond market. Remember the "taper tantrum'' of 2013 that roiled markets and sent bond yields shooting higher when then Chairman Ben S. Bernanke suggested the Fed could pull back from its bond purchases?

  • Restricting Trade Is Calamitous Policy (Foundation for Economic Education)  (Econintersect:  The movement of manufacturing from an established location to a new one for cheaper labor, less regulation and other factors is not new.  For example, the textile industries of New England shuttered their factories and moved south in the 20th century.  This was cited by New Englanders as "unfair competitive practices".  See, for example, this January 1954 article by the newly elected junior senator from Massachusetts, John Fitzgerald Kennedy, from The Atlantic:  New England and the South.)  The conclusion from the current article:

In reality, there’s no reason to set the 80% of American workers in the service sector against the 10% in manufacturing. Both benefit from foreign trade. Economists agree: TPP would have increased incomes, exports, and growth for the United States. Killing it was a mistake. Trump is serious about his willingness to sacrifice the American economy to protect jobs that won’t exist in a decade regardless. The American people lost bigly. It’s up to us to put pressure on Congress to block further trade mistakes before Trump costs us more billions in lost wages and growth.

  • How statistics lost their power – and why we should fear what comes next (The Guardian)  The author argues that the ability of statistics to accurately represent the world is declining. In its wake, a new age of big data controlled by private companies is taking over – and putting democracy in peril.  (Econintersect:  We would argue that the biggest problem is that the majority of people have little understanding of statistical methods and what results mean.  Too many consider that staistics should represent exact reality rather than reflecting the distribution of possible realities.  In addition, public understanding of data obtained by surveys is lacking.  Most people think that a report of 4.8% unemployment is better than 5.0%.  Understanding measurement error uncertainty would reveal that there is about a 30% probability that either (1) the unemployment rate reported as 4.8% is actually 5.0% or higher or that (2) the unemployment rate reported as 5.0% is actually 4,8% or lower.  This means that there is about a 50% probability that employment reported as 4.8% is actually better than the report of 5.0%.  This is due to the uncertainty assocuiated with sampling 60,000 people and extrapolating to the entire nation.  This measurement error is reduced dramatically by using moving averages for many successive measurments (or following data trends over tiem, which is equivalent to using moving averages.)  The author writes:

The declining authority of statistics – and the experts who analyse them – is at the heart of the crisis that has become known as “post-truth” politics. And in this uncertain new world, attitudes towards quantitative expertise have become increasingly divided. From one perspective, grounding politics in statistics is elitist, undemocratic and oblivious to people’s emotional investments in their community and nation. It is just one more way that privileged people in London, Washington DC or Brussels seek to impose their worldview on everybody else. From the opposite perspective, statistics are quite the opposite of elitist. They enable journalists, citizens and politicians to discuss society as a whole, not on the basis of anecdote, sentiment or prejudice, but in ways that can be validated. The alternative to quantitative expertise is less likely to be democracy than an unleashing of tabloid editors and demagogues to provide their own “truth” of what is going on across society.

Is there a way out of this polarisation? Must we simply choose between a politics of facts and one of emotions, or is there another way of looking at this situation?One way is to view statistics through the lens of their history. We need to try and see them for what they are: neither unquestionable truths nor elite conspiracies, but rather as tools designed to simplify the job of government, for better or worse. Viewed historically, we can see what a crucial role statistics have played in our understanding of nation states and their progress. This raises the alarming question of how – if at all – we will continue to have common ideas of society and collective progress, should statistics fall by the wayside.

A post-statistical society is a potentially frightening proposition, not because it would lack any forms of truth or expertise altogether, but because it would drastically privatise them. Statistics are one of many pillars of liberalism, indeed of Enlightenment. The experts who produce and use them have become painted as arrogant and oblivious to the emotional and local dimensions of politics. No doubt there are ways in which data collection could be adapted to reflect lived experiences better. But the battle that will need to be waged in the long term is not between an elite-led politics of facts versus a populist politics of feeling. It is between those still committed to public knowledge and public argument and those who profit from the ongoing disintegration of those things. 

  • Why Trump's Staff Is Lying (Bloomberg)  Prof. Tyler Cowen is an economist (George Mason University) but he is obviously also a student of the pychologies involved in propaganda and control if  subservients:

By requiring subordinates to speak untruths, a leader can undercut their independent standing, including their standing with the public, with the media and with other members of the administration. That makes those individuals grow more dependent on the leader and less likely to mount independent rebellions against the structure of command. Promoting such chains of lies is a classic tactic when a leader distrusts his subordinates and expects to continue to distrust them in the future.

Another reason for promoting lying is what economists sometimes call loyalty filters. If you want to ascertain if someone is truly loyal to you, ask them to do something outrageous or stupid. If they balk, then you know right away they aren’t fully with you. That too is a sign of incipient mistrust within the ruling clique, and it is part of the same worldview that leads Trump to rely so heavily on family members.

  • U.S. Libor Rate (The Daily Shot)  The U.S. LIBOR rate continues to grind higher, which is expected to cut into corporate profits – especially for leveraged firms. Things will get really interesting if/when interest expense can no longer be deducted from income for tax purposes, which one of Donald Trump's proposals for corporate taxes.


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