Here is some reading material for your weekend pleasure. Some are related to the market, some to economics, some to geo-politics and some are for fun. Hope you will find these interesting and useful.
Symmetric Scots – This theory mainly focuses on the problem of responding to asymmetric shocks — a slump in Spain while Germany booms, etc.. We know, or we think we know, that when this happens fiscal integration — Florida can count on Washington to pay for pensions and medical care, Spain has no comparable cushion — is crucial. European experience since 2009 has also led us to focus on banking integration or the lack thereof.
What Seems to Be Holding Back Labor Productivity Growth, and Why It Matters – In his video introduction to the report, President Dennis Lockhart explained that the economic growth we have experienced in recent years has been driven much more by growth in hours worked (primarily due to employment growth) than by growth in the output produced per hour worked (so-called average labor productivity). For example, over the past three years, business sector output growth averaged close to 3 percent a year. Labor productivity growth accounted for only about 0.75 percentage point of these output gains. The rest was due primarily to growth in employment.
The Internet Has Been a Colossal Economic Disappointment – To date the Internet has been much more effective at eliminating jobs than creating new ones. Exhibit A: Online retailing has directly replaced many jobs and indirectly eliminated many more. Amazon’s extremely efficient distribution system replaces retail stores and their employees. Their warehouses use robots instead of workers.
Is the internet killing middle class jobs? – To accept Davidow’s broad conclusion, though, one also has to believe workers across many sectors would be a lot better off today if the internet had not been invented. That’s an unlikely counterfactual. Just look at how the labor market has been doing. The U.S. economy has generated 3.3 million jobs over the past year, the best 12-month performance since 2000. And accelerating job growth has pushed down the unemployment rate to 5.5 percent, within the range the Federal Reserve considers full employment.
The Monetarist Mistake – The dominance of Friedman’s ideas at the beginning of the Great Recession has less to do with the evidence supporting them than with the fact that the science of economics is all too often tainted by politics. In this case, the contamination was so bad that policymakers were unwilling to go beyond Friedman and apply Keynesian and Minskyite policies on a large enough scale to address the problems that the Great Recession presented.