Tag Archives: economics

Trumponomics – just plain made up

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Trump claims recent economic growth is unprecedented. The claim is demonstrably false and just plain made up. According to Politifact:

Trump said, “Watch those GDP numbers. We started off at a very low number, and right now we hit a 3.2 (percent). Nobody thought that was possible.”

This is inaccurate two ways. First, the most recent saw GDP growth of 2.0 percent, not 3.2 percent. And second, exceeding 3 percent GDP growth in a quarter is not an unusual achievement — Obama accomplished it eight times. The real achievement would be a full year at 3 percent, which hasn’t happened under Trump yet.

We rate the statement False.

Much more interesting is that the U.S. has not managed a full year of 3% growth since 2005. Politifact has a much more interesting article here that explains why most economists think a sustained 3% will not be achievable in the foreseeable future.  In summary:

  • Growth in the working-age population is much lower than it was (political response: prevent willing workers from entering the country, oppose measures to provide childcare to working age adults…)
  • Productivity growth has also slowed significantly (political solution: underfund infrastructure, education, research and development; although to be fair, some of the recent changes to corporate tax policy might help if companies choose to invest the savings in plants, equipment, research and development rather than just letting executives pocket them)

 

Who’s really crossing the U.S. border?

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This article is from Lawfare, and the answer is interesting.

First off, while the current administration has tried to tie Central American migrants to MS-13, government data reveals that gang members crossing irregularly are the rare exceptions. Since the Trump administration took office, the Border Patrol has detected fewer gang members crossing irregularly than during the Obama administration. In FY2017, these detections amounted to 0.075 percent of the total number of migrants (228 MS-13 members out of 303,916 total migrants). When combined with MS-13’s rival, the Barrio 18 gang, the number rises only slightly to 0.095 percent. This is far from the “infestation” of violent gang members described by the president…

The face of migration has also changed. Back in 2000, Mexican nationals made up 98 percent of the total migrants and Central Americans (referring to Honduran, Guatemalan, and Salvadoran migrants) only one percent. Today, Central Americans make up closer to 50 percent.

A declining Mexican birth rate, a stable economy, and the U.S. border buildup have all contributed to the decrease in migration from Mexico. But as Mexican irregular migration has plummeted, Central American migration has simultaneously picked up. Until 2011, Central Americans constituted less than ten percent of total U.S.-Mexico border apprehensions, but by 2012 they constituted 25 percent, and by 2014 they numbered half of all illicit border crossers. While migration from each country within the Northern Triangle (El Salvador, Guatemala, and Honduras) has fluctuated over time, each country has sent roughly similar numbers of people in the aggregate. From FY1995 to FY2016, the U.S. Border Patrol apprehended around 500,000 citizens from each country. In other words, it’s not a coincidence that most recent news stories about migrant parents separated from their children feature families from Honduras, Guatemala, and El Salvador.

People from Honduras and El Salvador are often fleeing urban gang violence, while those from Guatemala are often fleeing rural poverty.

 

more on the downward spiral of nuclear power economics

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This one is from Five Thirty Eight:

The age of the nuclear fleet is partly to blame. That’s not because America’s nuclear reactors are falling apart — they’re regularly inspected, and almost all of them have now gone through the process of renewing their original 40-year operating licenses for 20 more years…

Instead, it’s the cost of upkeep that’s prohibitive. Things do fall apart — especially things exposed to radiation on a daily basis. Maintenance and repair, upgrades and rejuvenation all take a lot of capital investment. And right now, that means spending lots of money on power plants that aren’t especially profitable. Historically, nuclear power plants were expensive to build but could produce electricity more cheaply than fossil fuels, making them a favored source of low-cost electricity. That changed with the fracking boom, Morgan told me. “Natural gas from fracking has gotten so cheap, [nuclear plants] aren’t as high up in the dispatch stack,” he said, referring to the order of resources utilities choose to buy electricity from. “So many of them are now not very attractive economically…”

Morgan and other researchers are studying the economic feasibility of investment in newer kinds of nuclear power plants — including different ways of designing the mechanical systems of a reactor and building reactors that are smaller and could be put together on an assembly line. Currently, reactors must be custom-built to each site. Their research showed that new designs are unlikely to be commercially viable in time to seriously address climate change. And in a new study that has not yet been published, they found that the domestic U.S. market for nuclear power isn’t robust enough to justify the investments necessary to build a modular reactor industry.

May 2018 in Review

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Most frightening stories:

Most hopeful stories:

  • There are some new ideas for detecting the potential for rapid ecological change or collapse of ecosystems.
  • Psychedelics might produce similar benefits to meditation.
  • Microgrids, renewables combined with the latest generation of batteries, are being tested in Puerto Rico.

Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:

value of learning curves in climate change planning

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This article gives an example of how to put an economic value on climate change adaptation incorporated in a larger planning framework.

The Economic Value of Climate Information in Adaptation Decisions: Learning in the Sea-level Rise and Coastal Infrastructure Context

Traditional methods of investment appraisal have been criticized in the context of climate change adaptation. Economic assessment of adaptation options needs to explicitly incorporate the uncertainty of future climate conditions and should recognise that uncertainties may diminish over time as a result of improved understanding and learning. Real options analysis (ROA) is an appraisal tool developed to incorporate concepts of flexibility and learning that relies on probabilistic data to characterise uncertainties. It is also a relatively resource-intensive decision support tool. We test whether, and to what extent, learning can result from the use of successive generations of real life climate scenarios, and how non-probabilistic uncertainties can be handled through adapting the principles of ROA in coastal economic adaptation decisions. Using a relatively simple form of ROA on a vulnerable piece of coastal rail infrastructure in the United Kingdom, and two successive UK climate assessments, we estimate the values associated with utilising up-dated information on sea-level rise. The value of learning can be compared to the capital cost of adaptation investment, and may be used to illustrate the potential scale of the value of learning in coastal protection, and other adaptation contexts.

March 2018 in Review

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Most frightening stories:

Most hopeful stories:

  • One large sprawling city could be roughly the economic equivalent of several small high-density cities. This could potentially be good news for the planet if you choose in favor of the latter, and preserve the spaces in between as some combination of natural land and farm land.
  • The problems with free parking, and solutions to the problems, are well known. This could potentially be good news if anything were to be actually done about it. Self-parking cars could be really fantastic for cities.
  • The coal industry continues to collapse, and even the other fossil fuels are saying they are a bunch of whining losers. And yes, I consider this positive. I hope there aren’t too many old ladies whose pensions depend on coal at this point.

Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:

the sinking dollar

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Barry Eichengreen points out that while the differential between growth and interest rates between the U.S. and most other countries should have predicted a stronger dollar in 2017, it actually fell by 8% and is still falling so far in 2018. Explaining exchange rate changes after the fact is a lot like explaining stock market changes after the fact – they are easy to rationalize after the fact, but if anyone really knew how to predict them accurately, that person would be a trillionaire. Somewhat humorously, Mr. Eichengreen links to an article that gives 17 possible reasons (with links to sources for many of them), which is essentially the same as giving none.

Finally he says the most likely explanation is just uncertainty. Foreign investors just don’t know where the U.S. and its economy are headed, or that it will continue to be the rock solid safe haven it has been for the past 50 years. This sounds about right to me. Foreigners have been willing to stuff U.S. dollars under their mattresses for 50 years, in the last couple decades with low or even no returns, and some may have decided it is time to diversify.

January 2018 in Review

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Most frightening stories:

  • Larry Summers says we have a better than even chance of recession in the next three years. Sounds bad, but I wonder what that stat would look like for any randomly chosen three year period in modern history.
  • The United States is involved in at least seven wars: Afghanistan, Iraq, Syria, Yemen, Libya, Somalia, and Pakistan. Nuclear deterrence may not actually the work.
  • Cape Town, South Africa is in imminent danger of running out of water. Longer term, there are serious concerns about snowpack-dependent water supplies serving large urban populations in Asia and western North America.

Most hopeful stories:

Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:

cities and gamification

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This article is about applying gamification to the planning and running of cities.

Cities and the politics of gamification

Gamification is widely intended as the mobilisation and implementation of game elements in extra-ludic situations, including the management of social problems and issues. By mobilising virtual rewards and playful elements, mobile apps, websites, social initiatives and even urban policies are getting more and more gamified. The aim of this viewpoint paper is to stimulate a critical discussion on the potential relationships between gamification processes and cities, particularly by reflecting on the cultures of gamification and by discussing potential lines of research for urban studies.

December 2017 in Review

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Most frightening stories:

  • The U.S. has lost ground relative to its peers on road deaths, and is now well below average. I noted that something similar has happened with respect to health care costs, life expectancy, infant mortality, education, drug addiction and infrastructure. Maybe a realistic goal would be to make America average again.
  • A lot of people would probably agree that the United States government is becoming increasingly dysfunctional, but I don’t think many would question the long-term stability of our form of government itself. Maybe we should start to do that. The Consumer Financial Protection Bureau has been doing a decent job of protecting consumers and reducing the risk of another financial crisis. The person in charge of it now was put there specifically to ruin it. Something similar may be about to happen at the Census Bureau. A U.S. Constitutional Convention is actually a possibility, and might threaten the stability of the nation.
  • Daniel Ellsberg says we are very, very lucky to have avoided nuclear war so far. There are some tepid ideas for trimming the U.S. nuclear arsenal, and yet it is being upgraded and expanded as we speak. The North Korea situation is not getting better. Trump may be playing to religious fundamentalists who actually are looking forward to the Apocalypse.

Most hopeful stories:

  • Exercise may be even better for your brain than it is for your body, and exercising your body may be even better for your brain than exercising your brain itself.
  • Macroeconomic modeling is improving. So, just to pick a random example, it might be possible to predict the effects on a change in tax policy on the economy. Now all we need is politicians who are responsive to logic and evidence, and we could accomplish something. At least a few economists think the imperfect tax plan the U.S. Congress just passed might actually stimulate business capital investment enough to move the dial on productivity. The deliberate defunding of health care included in the bill is going to hurt people, but maybe not all that dramatically.
  • Moody’s introduced a new methodology for assessing climate risk in municipal bonds.

Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:

  • There are life forms surviving in space right now, most likely of Earth origin. I wondered if maybe we should purposely contaminate other planets with them.
  • Microsoft is trying to one-up Google Scholar, which is good for researchers. More computing firepower is being focused on making sense of all the scientific papers out there.
  • Futuristic technologies keep coming along. Something vaguely like the “liquid metal” from Terminator 2 is being used for experimental aircraft parts. Vital signs might be monitored soon using a simple RFID device. A tiny electric shock of just the right size to just the right part of your brain might cure you of bad habits. And Magic Leap may finally release…something or other…in 2018.