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What We Read Today 15 June 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:

  • Trump’s Personal Lawyer Boasted That He Got Preet Bharara Fired

  • The President Responds to Obstruction Investigation

  • Party On! Congressional Democrats Pile On to Another Bogus Emoluments Clause Lawsuit

  • Security fears grow on both sides of aisle

  • Rep. Steve King: Obama fueled divisions that led to shooting

  • The Tragedy of 'Mountain Dew Mouth' and the U.S.'s Insane Approach to Dental Care

  • Now May should say sorry to our EU friends

  • Here’s what happened when Iran introduced a basic income

  • Chinese Archaeologists May Have Solved the Mystery of the Lost Palace of Kublai Khan

  • Australia has stalled on car efficiency

  • Trump to clamp down on Cuba travel and trade

  • How the U.S. Triggered a Massacre in Mexico

  • 5 Most Common Home Buyer Regrets

  • Economist Julie Nelson Says Much of Economics is a Sham Science

  • Harry Markopolos – Who Exposed Madoff – Has Uncovered a New Fraud

  • Why Economists Don’t Know How to Think about Wealth (or Profits)

  • Evidence Accumulates for Ancient Transoceanic Voyages, Says Geographer

  • And More

Articles about events, conflicts and disease around the world

Global

  • Evidence Accumulates for Ancient Transoceanic Voyages, Says Geographer (Ancient Origins)  Mainstream anthropology and archaeology holds that Norse expeditions around 1000 A.D. were the only ones to make it to the New World before Christopher Columbus landed in the 15th century. But on the fringes are multiple theories about other successful pre-Columbian expeditions. These theories are placed under the umbrella of “diffusionism”.  But slowly evidence is mounting that transoceanic travel may have existed in prehistoric times.

U.S.

trump.tweets.2017.jun.15.am

These suits allege that activities that arise out of Trump’s business holdings violate the emoluments clause of the U.S. Constitution, found in Article 1, Section 9, and that states that “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”

Now, as problematic as these conflicts of interest may be, as I’ve written before, beginning in this December post, US Constitution’s Emoluments Clause: a Nothingburger for Trump, the basic hurdle that those wishing to use the US legal system to shut down Trump’s alleged violations of the emoluments clause must clear is to establish that they have standing to sue. As I’ve written before,

Just because something’s unconstitutional, doesn’t mean that any such unconstitutional activity will necessarily be prevented, precluded, or punished.”

  • Security fears grow on both sides of aisle (The Hill)  Members of Congress are debating whether it’s time to adopt new security procedures after the shooting at a Republican baseball practice in Virginia.  Even before the attack, Republican members of Congress were on edge about threats and harassment from constituents angry with President Trump and the GOP’s push to repeal and replace ObamaCare.  Their concerns have only been heightened by Wednesday’s assault, where the lives of lawmakers were likely saved by the presence of Capitol Police officers who were on security detail for House Majority Whip Steve Scalise (R-La.).

  • Rep. Steve King: Obama fueled divisions that led to shooting (The Hill)  Rep. Steve King (R-Iowa) linked former President Barack Obama to the attack on Republican lawmakers at a baseball field in Northern Virginia, arguing Obama deepened the nation's political divisions by emphasizing "differences rather than our things that unify us."

That intense political division, King said, is what led a gunman to open fire at a park in Alexandria, Va., on Wednesday, as Republican members of Congress were practicing for a charity baseball game against their Democratic colleagues.

I suspect that there are at least some who will read this post and regard the poor state of dental health in Appalachia as mainly the result of bad lifestyle choices (too much sugary foods and drinks, smoking, opioid addiction, etc). It’s hard to overstate the impact of something the author skips over: that many don’t drink fluoridated water at the critical juncture, when adult teeth are forming.

We had something of a natural experiment in my family. I’m the oldest child. I didn’t get fluoridated water at the right age. My brothers did. Despite obviously eating the same diet as kids, my becoming vigilant about my weight in my teens (which among other things meant cutting out sweets) and always seeing the dentist on schedule, while one of my brothers has become obese and eats sugary foods daily, I have a mouth full of dental work while my brothers have hardly any fillings. I joke that when I visit the dentist, I am going for a semi-annual assessment. Even with relentless maintenance, fillings eventually beget larger replacement fillings. So imagine what it’s like for people with vulnerable teeth who can’t get good care.

UK

Over the past year she has been glacial, disdainful, combative, rude and delusional. She has utterly failed to recognise political realities; the terrifying complexity of withdrawing from the EU, the truth that our economy needs the EU far more than they need us; the bleak consequences if we crash out without a deal, the fact that the closer we get to the end of negotiations the weaker we are and the stronger the other side is.

May has chosen instead to bluster and threaten, portraying Europe as the enemy, priding herself on being a “bloody difficult woman”. It has played well with the Brexiteers in her party and delighted the right-wing press. But it has caused consternation on the continent, among the very people whose goodwill is necessary if we are to get the agreements we need.

Iraq

Yet without any stamp of approval from Baghdad and the international community – or at least from the majority of permanent members on the UN Security Council – the referendum will not by itself make the Kurdish dream of statehood a reality. The Kurds are well aware of this.

Instead, the likely overwhelming vote in favour of independence could inflame already tense relations between the Kurdish capital, Erbil, and Baghdad. The same goes for Turkey and Iran, on whose trade Erbil currently depends for survival as a separate entity. So if this independence vote could escalate tensions and will not confer statehood, why is the KRG holding it?

Iran

  • Here’s what happened when Iran introduced a basic income (The Outline)  Hat tip to Roger Erickson.  In 2011, in response to heavy cuts to oil and gas subsidies, Iran implemented a program that guaranteed citizens cash payments of 29% of the nation's median income, which amounts to about $1.50 every day. (In the U.S. such a measure would translate to about $16,000 per year.) Now, six years later, the results of that measure were released in a report by economists Djavad Salehi-Isfahani and Mohammad H. Mostafavi-Dehzooeifrom for the Economic Research Forum.

The report found no evidence for the idea that people will work less under a universal income, and found that in some cases, like in the service industry, people worked more, expanding their businesses or pursuing more satisfying lines of work.

The researchers did find that young people — specifically people in their twenties — worked less, but noted that Iran never had a high level of employment among young people, and that they were likely enrolling in school with the added income.

China

  • Chinese Archaeologists May Have Solved the Mystery of the Lost Palace of Kublai Khan (Ancient Origins)  Last year, archaeologists found a hint of an amazing discovery while excavating in the Forbidden City in China. While the researchers were somewhat hesitant then to confirm the finding of Kublai Khan’s imperial palace, they now have further evidence supporting the idea that they have found the famous lost domain of the powerful ruler (statue pictured below).

According to Marco Polo, Kublai Khan’s palace was “the greatest palace that ever was.” In his travel journal he wrote, “The palace was made of cane supported by 200 silk cords, which could be taken to pieces and transported easily when the emperor moved.” The walls were described on South China Morning Post (SCMP) as “covered with gold and silver and the main hall was so large that it could easily seat 6,000 people for dinner.”

Australia

  • Australia has stalled on car efficiency (The Conversation)  Last year, Australia’s new cars were just 1.1% less polluting than the year before, according to a report released this week by the National Transport Commission.  This is the smallest improvement on record, and largely due to our growing preference for SUVs and utes. In addition, some locally manufactured cars actually became less efficient.

Cuba

  • Trump to clamp down on Cuba travel and trade (Politico)  Making good on a campaign pledge, President Donald Trump on Friday will announce a significant rollback of former President Barack Obama’s accord with Cuba by clearly banning tourist travel to the island, restating the importance of the 56-year-old trade embargo with the island and instituting a broad prohibition on financial transactions with companies significantly controlled by the Communist government’s military.

Mexico

  • How the U.S. Triggered a Massacre in Mexico (ProPublica)  The United States Drug Enforcement Administration shared intelligence with a Mexican federal police unit that has long had problems with leaks.  The intelligence was leaked to the Zetas drug cartel who then took revenge against the presumed snitches, their families and anyone remotely connected to them.  The community of Allende, a quiet ranching town of about 23,000, just a 40-minute drive from Eagle Pass, Texas was attacked and residents tortured and butchered. Entire blocks of some of the town’s busiest streets lie in ruins. 

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

  • 5 Most Common Home Buyer Regrets (Realtor Mag)  Half of recent home buyers say that if they could repeat the homebuying process, they’d do something differently, according to a survey by financial website NerdWallet.com. Respondents indicate that their biggest source of regret when buying a home was not preparing enough financially for homeownership. Here are some of the most common reasons for buyer regret, according to the survey:

  • Purchasing a home that’s too expensive

  • Purchasing a home that doesn’t fit their needs

  • Not putting enough money down

  • Not being organized

  • Not shopping around for a loan

  • Economist Julie Nelson Says Much of Economics is a Sham Science (Evonomics)  Nelson says that we undermine our survival if we continue to imagine economics as a ethics-free and care-free sphere.  Most economists, rather than seeing ourselves as studying communities of human beings, pretend to a more physics-like discipline. We model market, national, and international phenomenon using ideas of presumably universal “principles,” “laws,” and “forces.” We consider extreme mathematicization, as well as distance from normative concerns, to be signs of objectivity and rigor. Social research, we think, is for the sociologists. Normative arguments are for philosophers. And this is precisely why serious discussions of ethics in economic research are far, far overdue.

A small crack in this “ethics are not our problem” edifice appeared after the financial crisis in 2008. Media coverage, including the movie Inside Job, revealed cases of, for example, the crass slanting of economic “research” results to fit a funder’s requirements. A very modest amount of self-reflection resulted, resulting in more attention to disclosure of sources of funds. Much bigger ethical issues, however, are yet to be addressed.

  • Harry Markopolos – Who Exposed Madoff – Has Uncovered a New Fraud (Robert Heubscher, Advisor Perspectives) RH has contributed to GEI.  Hat tip to Roger Erickson. Harry Markopolos, the investigator who exposed the Bernie Madoff Ponzi scheme, has uncovered a new fraud. The unfunded status of the pension fund of the Boston Transit Authority (the “MBTA”) is $500 million bigger than previously thought, according to Markopolos. This will have a significant impact on the municipal bond market, especially if it turns out that the MBTA’s problems are endemic among similar pension funds.

The unfunded status of a pension fund is the market value of the assets minus the present value of the liabilities, discounted at an actuarially determined interest rate. For most public pension plans, this number is negative; the liabilities exceed the assets and it is underfunded.

Although the full details are not yet known, Markopolos said the $500 gap is due to bad investments, fraudulent accounting and unrealistic actuarial assumptions.

  • Why Economists Don’t Know How to Think about Wealth (or Profits) (Steve Roth, Evonomics)  Roth says that until 2006, economists quite literally weren’t playing with a full (accounting) deck. Most still aren’t.  (Econintersect:  This article covers the equivalent of a one-semester advanced course in economics.  To our knowledge, this is a course that is not offered in any university.  If we are wrong, we hope some reader will put us straight.) Here are some short excerpts from this long artcle:

National wealth is, after all, a rather important economic measure. Adam Smith wrote a whole book about it. But until 2006 there was no coherent national accounting to depict it, or explain its accrual. So it’s been largely invisible and inexplicable to economists.

[BEA’s National Income and Product Accounts] don’t even have balance sheets or tallies of total assets and net worth, nor do they tally asset swaps in the existing-asset markets (eg cash exchanged for stocks or bonds or land titles) — or lending and borrowing.

The FFA [Fed’s Flow of Funds] matrix only tallies net issuance/retirement of financial instruments within a period. It doesn’t tally changes in market prices of instruments issued in previous periods.

By the standards of business financial statements, the sectoral accounting in the FFA matrix is radically incomplete.

Capital gains dominate changes in private-sector balance sheets, always and everywhere.

Perhaps the most significant usage here is Comprehensive “Saving” — saving being the most vexed and ubiquitously misunderstood of economic terms. It simply equals…change in net worth.

The FFA’s definitions of “saving” have no accounting relationship to total assets or net worth. The relationship is, perforce, completely undefined.

Closed-loop monetary-circuit thinking makes monetary profits impossible. Amazingly, most economists don’t even know about this enigma, despite two centuries’ of anguished discussion by many of the leading practitioners in the field: Marx, Kalecki, Keynes, Schumpeter, Samuelson, and others, plus some very insightful recent accounting-based economists. You’ll find an able rundown of that thinking and history, plus important contributions, in Dirk Bezemer’s great paper here. (See also.) Professors don’t even mention this little problem to impressionable young Econ 101 students.

Even with more than half a trillion dollars in revenues, Amazon has “earned” almost zero “profits” in its history. But over that period it has delivered more three hundred billion dollars onto the asset side of household-sector balance sheets. Absent an aggregate accounting that includes capital gains, and economic theory incorporating those measures, the economics of this conundrum are conceptually inexplicable.


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