The Job Creation Hoax

 

On South Asia's Wedding Culture

 

Do we need a Wealth Tax?

 

'The Solution to any Individual Problem is to BUY a Product'

 

Dynastic Wealth and Democracy

 

God™: an ageing product outperforms expectations

From The Economist

God gets mixed reviews on Amazon. This is perhaps surprising. His marketing campaign (now in its third millennium) has been strong. His slogans (“God is Great!”) are positive. And indeed many shoppers effuse. “Wonderful!” reads one five-star review beneath His best-known work, the Bible. “Beautiful,” says another. “Amen,” adds another satisfied customer.

Other reviewers are critical. One, after giving the Bible just a single star, observes bluntly, if rather blasphemously, that it is a “boring read”. Another review complains: “The plot is not cohesive.” A third disgruntled reader argues that there are “too many characters” and that the main protagonist is a bit full of himself.

If it feels surprising that God is reviewed on Amazon, it should not. He may have made heaven and earth, but He also makes an awful lot of money, as Paul Seabright, a British economist and professor at the University of Toulouse in France, points out in a new book.

Hard facts on the economics of the Almighty are hard to come by. But the Mormon church is reportedly one of the largest private landowners in America. One study found that in 2016 American faith-based organisations (non-profits with a religious bent) had revenues of $378bn. This was more than the revenues of Apple and Microsoft combined. Better yet, churches usually pay no tax. God may be great; His full-year results are greater.

Secularists may smirk at religion as silly, but it deserves proper analysis. “The Divine Economy” looks at how religions attract followers, money and power and argues that they are businesses—and should be analysed as such.

Professor Seabright calls religions “platforms”, businesses that “facilitate relationships”. (Other economists refer to religions as “clubs” or “glue”.) He then takes a quick canter through the history, sociology and economics of religions to illustrate this. The best parts of this book deal with economics, which the general reader will find enlightening.

Economists were slow to study religion. Some 250 years ago Adam Smith observed in “The Wealth of Nations” that the wealth of churches was considerable. He used secular language to describe how such wealth arose, observing that churches’ “revenue” (donations) flowed in and benefited priests, who he argued were sometimes animated less by love of God than by “the powerful motive of self-interest”. He also argued that if there were a better functioning market in religious providers, this would lead to increased religious harmony. According to Laurence Iannaccone, a professor of economics at Chapman University in California, Smith’s analysis was “brilliant”—and for a long time largely ignored.

Divinity departments are staffed by theologians rather than economists; the idea of mixing the dismal science with the divine strikes many people at the very least “as odd and at worst strikes them as blasphemous”, says Mr Iannaccone. People associate God with angels, not with Excel.

Yet religions lend themselves to economic analysis nicely. They offer a product (such as salvation), have networks of providers (priests, imams and so on) and benefit from good distribution networks. It is not just trade that travels on trade routes: ideas, diseases and religions do, too. Roman roads allowed the plague of Justinian to spread across Europe with a rapidity never seen before. They allowed Christianity to do so as well.

Starting in the 1970s, some economists have been approaching religion with more academic devotion, analysing, for example, the economics of extremism and obtaining a place in the afterlife. This mode of thinking can help clarify complicated religious history. When historians talk about the Reformation they tend to do so using thorny theological terms such as “transubstantiation”. Economists would describe it more simply as the moment when a monopoly provider (the Catholic church) was broken up, leading to an increase in consumer choice (Protestantism) and the price of services declining (indulgences were out).

A greater variety of suppliers started to offer road-maps to heaven. Henry VIII swapped his old service provider, Catholicism, for the new one—which was not only cheaper, but also allowed him to divorce a troublesome wife. There were, admittedly, some bumps: the pope was not pleased, and the habit of burning picky customers at the stake dented consumer confidence. But overall, the Reformation enabled people and their rulers to “get a better bargain”, says Davide Cantoni, a professor at Ludwig Maximilian University of Munich.

Ask a believer why they believe in their particular deity, and they will tend to talk of religious truth. Professor Seabright offers another explanation. The two most popular religious “brands” (Christianity and Islam) have, he writes, replaced smaller local religions in much the same way that Walmart, Lidl and Tesco have replaced smaller local shops.

These brands have honed the international distribution of their product: the Catholic church, like McDonald’s, offers a striking uniformity of service, whether you are in the Vatican or Venezuela. They have the resources to compete for customers in ways that smaller, less well-financed, local gods cannot. Baal, it seems, died out not because—as the Bible has it—he was a false god but because his franchise failed.

Popular works have tackled the idea of religions as businesses before. In the 1960s Tom Lehrer, an American satirist, observed that if Catholics “really want to sell the product” they should improve their music: his solution was “The Vatican Rag”, which contained such lines as “Two-four-six-eight / time to transubstantiate”. Incensed Catholics declared it blasphemous.

“The Divine Economy” is more tactful than Mr Lehrer—though not quite as much fun. The book’s scope is big. So too, alas, are many of the words. Sentences such as “Probabilistic models of cognition assume that human cognition can be explained in terms of a rational Bayesian framework” leave the reader wishing for lines that are, like those in “The Vatican Rag”, a little snappier, and his idea that religions are “platforms” is at times more confusing than clarifying.

An obvious riposte to all this religious analysis is: who cares? It is 2024, not 1524. God, as Friedrich Nietzsche stated, is dead. But such a sweeping judgment is misplaced and wrong. The West may be less Christian—but the rest of the world is not. Between 1900 and 2020, the proportion of Africans who are Christian rose from under 9% to almost half; the proportion who are Muslim rose from around a third to over 40%.

Even in secular countries, faith remains powerful. In America in 2022, Roe v Wade was overturned due, in part, to decades of campaigning by evangelicals and Catholics. Non-believers dabble too. Jordan Peterson, a Canadian author, performs to stadiums with a talk titled “We Who Wrestle With God” and garnishes his books with statements such as “Our consciousness participates in the speaking forth of Being.” God might wish He were dead when He hears such things. He is not.

Inside Tony Blair Inc.

 

Economic Freedoms and Outcomes

Discuss the relationship between economic freedom and economic outcomes in a market system

Let's take a balanced approach by discussing both the positive and negative aspects of the relationship between economic freedom and economic outcomes in a market system:

1. Economic Freedom and Positive Outcomes:

a) Entrepreneurship and Innovation: Economic freedom fosters an environment where individuals can freely engage in entrepreneurship and innovation, leading to economic growth and job creation.

Example: "In countries with high economic freedom, like South Korea, entrepreneurs have been able to start successful businesses and drive technological advancements, resulting in economic prosperity and increased employment opportunities."

b) Efficient Resource Allocation: Economic freedom allows market forces to allocate resources efficiently based on supply and demand, ensuring optimal utilization and productivity.

Example: "In a market system with economic freedom, price signals help guide producers in allocating resources effectively. This leads to efficient production and distribution, benefiting both producers and consumers."

2. Potential Negative Aspects of Economic Freedom:

a) Income Inequality: Unrestricted economic freedom can contribute to income inequality, as it allows for the accumulation of wealth by a few individuals or groups.

Example: "In some cases, economic freedom has led to a concentration of wealth among the top earners, exacerbating income inequality and creating social disparities."

b) Market Failures and Externalities: In a completely free market, certain goods and services, such as public goods or environmental conservation, may be underprovided due to market failures. Additionally, negative externalities like pollution may not be adequately addressed without government intervention.

Example: "While economic freedom encourages efficiency, it may overlook external costs such as pollution. Without regulations, businesses may not be motivated to address environmental concerns, leading to negative consequences for society."

Quotation: "Capitalism does a number of things very well: it helps create an entrepreneurial spirit, it gets people motivated to come up with new ideas, and that's a good thing." - Bernie Sanders

It's important to strike a balance between economic freedom and necessary regulations to address income inequality, market failures, and externalities. Governments often play a role in ensuring fairness, protecting consumers, and implementing policies to address societal concerns.

By acknowledging both the positive and negative aspects, societies can aim for a market system that promotes economic freedom while addressing the challenges associated with income inequality and market failures. This balanced approach can help achieve sustainable economic growth and social well-being.

Are Inheritance Laws Good for Capitalism?

The evaluation of inheritance laws and their impact on capitalism can be subjective, and opinions on this matter can vary:

1. Supportive of Capitalism:

a) Encouragement of Wealth Accumulation: Inheritance laws can motivate individuals to accumulate wealth and engage in entrepreneurial activities, which are essential for capitalist economies to thrive.

Example: "Inheritance laws incentivize individuals to work hard and invest their time and resources to build wealth, knowing that they can pass it on to future generations."

b) Preserving Family Businesses: Inheritance laws can help maintain and preserve family-owned businesses, which often play a significant role in the capitalist system.

Example: "Inheritance laws allow successful family businesses to continue operating across generations, contributing to economic growth and employment opportunities."

2. Challenging for Capitalism:

a) Wealth Concentration and Inequality: Inheritance laws may perpetuate wealth concentration within a few families, potentially leading to income inequality and reduced economic mobility.

Example: "Inheritance laws that allow massive wealth transfers can create a system where the rich become richer, leaving fewer opportunities for others to accumulate wealth."

b) Market Distortions: Inheritance laws can distort market dynamics by providing individuals with resources without necessarily requiring them to contribute actively to the economy. This can hinder the meritocratic principles of capitalism.

Example: "Inheritance laws can result in some individuals having significant advantages in terms of wealth and resources, irrespective of their efforts or abilities."

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford

This quote indirectly touches upon the potential negative consequences of wealth concentration, which can be influenced by inheritance laws. Concentration of wealth and power can lead to societal unrest and disrupt the capitalist system itself.

Overall, the evaluation of inheritance laws in relation to capitalism depends on weighing the advantages of wealth accumulation and business preservation against the challenges of wealth concentration and market distortions. It is important to strike a balance that promotes economic growth, social mobility, and fair opportunities for all individuals within a capitalist framework. 

Oxfam's dodgy calculations?

 

Are the "Extreme" Economic Systems Totally Pointless?

 

Young Generations Are Now Poorer Than Their Parents And It's Changing Our Economies

 

Bitcoin: It’s always difficult to get people to understand something if their wealth depends on their not understanding it.

The rising price of electricity and the plunging value of the cryptocurrency could burst the speculative bubble for today’s prospectors writes John Naughton in The Guardian

Bitcoin mining has previously produced lucrative gross margins as high as 90%. Photograph: Jack Guez/AFP/Getty Images 
In the bad old days, prospecting for gold was a grisly business involving hysterical crowds, pickaxes, digging, the wearing of appalling hats, standing in rivers panning for nuggets, “staking” claims and so on. The California gold rush of 1848-55, for example, brought 300,000 hopefuls to the Sierra Nevada and northern California and involved the massacre of thousands of Indigenous people.

In our day, the new gold is bitcoin, a cryptocurrency, and prospecting for it has become a genteel armchair activity, although it is called “mining”, for old times’ sake. What it actually involves is using computers to perform unfathomably complicated calculations to create cryptographic “hashes” – codes that are, in practical terms, uncrackable.

Sounds intimidating, doesn’t it? But in reality anyone can play the game. You just have to have the right kit – a special bitcoin-mining computer called an Asic (application-specific integrated circuit). These gizmos are readily available online. I’m looking at one as I write: the Bitmain Antminer S19, which costs $6,999 (£5,600) and can do 95 terahashes – 95tn calculations – every second.

Mining is a misleading term for the computational work that’s needed to validate transactions on the blockchain – the cryptographically protected distributed ledger that underpins bitcoin. For every “block” that a miner is able to validate, they are rewarded with a number (currently 6.3) of new bitcoins. The value of the reward is tied to the prevailing price of the currency at the time. Not so long ago, for example, when each bitcoin stood at $68,000, that reward was worth nearly $430,000.

So you can understand why bitcoin mining looks a bit like a contemporary version of what happened in California in the 1840s. While most of the hopeful arrivals then were Americans, there were also thousands from Latin America, Europe, Australia and China. The Judge Business School in Cambridge, which has been tracking bitcoin mining for years, now finds that the US, with 37.84% of global hashrates, remains the biggest location, followed by China (21.11%), Kazakhstan (13.22%), Canada (6.48%) and Russia (4.66%).

So bitcoin mining has become a global phenomenon. And while here and there there are small outfits diversifying into it, such as the Californian pancake-batter maker that bought an Asic after pancake sales plunged during the pandemic, most miners are now industrial-scale operations with large sheds of Asics in serried racks, looking for all the world like small-scale data centres of the kind run by Google and co.

And, like data centres, they are power-hungry. That Bitmain Antminer machine, for example, has a power rating of 3,250 watts. It was recently estimated that bitcoin consumes about 110 terawatt hours per year, which is 0.55% of global electricity production, or roughly equivalent to the annual energy draw of countries such Malaysia or Sweden. 

For many operators, bitcoin mining has up to now been an astonishingly lucrative activity, with gross margins sometimes as high as 90%. But suddenly things have changed. First, bitcoin’s price has plunged – from its peak of $68,000 to $30,587 as I write this. And second, electricity prices have soared – by up to 70% in parts of the world, leading some industry experts to calculate that mining a single bitcoin can now cost up to $25,000. So the industry finds itself squeezed at both ends. Just like any ordinary business, in other words.

There’s an agreeable sense of schadenfreude in all this. Bitcoin has been a fascinating phenomenon from the very beginning, but one that morphed under the pressure of greed. Originally conceived as a currency – that is, as a means of payment – it rapidly became perceived as an asset class and, in a time of low interest rates, was the subject of an hysterical speculative bubble that now seems to have deflated, even if it hasn’t definitively burst.

Although it was predictable from the outset that, as the currency evolved, maintenance of its underpinning cryptographic blockchain would become ever-more onerous, it took a long time for the environmental consequences of that fact to be realised. But perhaps that’s a hallmark of every speculative bubble. It’s always difficult to get people to understand something if their wealth – real or anticipated – depends on their not understanding it. Meanwhile, the rest of us are left with the realisation that even the coolest idea can fry the planet.

The Stock Market is Rigged Against the Working Class

 

Beware the rich persons’ savings glut

Since the 1990s, the private share of national wealth has soared while public wealth has shrunk writes Gillian Tett in The FT

This week, as western governments pondered sending aircraft to Ukraine, the Kyiv government embarked on a novel financing step: it launched a website #buymeafighterjet to crowdsource donations for jets from the world’s mega-rich. 

Once that might have seemed a laughably bizarre thing to do. But today it no longer appears quite so odd. Never mind the fact that events in Ukraine show we live in a world where networks, not institutions, wield power; today the ultra wealthy increasingly wield riches and power, with some billionaires controlling budgets comparable to those of small countries. 

And while it is unclear whether #buymeafighterjet will deliver planes, the symbolism is worth noting. It highlights a trend that deserves far more attention from economists and political scientists alike — and in spheres that have nothing to do with war. 

Consider one radically different context: this week’s World Economic Outlook report from the IMF. The message in this tome that grabbed most attention this week was that the world faces rising inflation, high debt and stalling growth — stagflation, in other words, although the IMF tactfully downplays that term. 

But on page 62 of the report there was also an intriguing little sidebar about the “Saving Glut of the Rich”. A decade ago, the concept of a “savings glut” was something usually discussed in relation to China. When market interest rates plunged in the early 21st century, economists argued that rates were being suppressed because emerging market countries were recycling their vast export earnings into the financial system. 

Or, as Ben Bernanke, former Federal Reserve chair, wrote in 2015: “A global excess of desired saving over desired investment, emanating in large part from China and other Asian emerging market economies and oil producers like Saudi Arabia,” had created a “global savings glut”. 

But, this week, the IMF highlighted another, little-noticed contributing issue: the ultra-rich. It pointed out that a “substantial rise in saving at the very top of the income distribution in the United States over the past four decades . . . has coincided with rising household indebtedness concentrated among lower-income households and rising income inequality”. 

And while economists used to look at this through an American lens, “the phenomenon may not be limited to the United States”, the Fund notes. It seems to be global. And since the rich cannot possibly spend all their wealth — unlike the poor, who usually do — this savings glut has almost certainly “contributed to the secular decline of the natural rate of interest”. 

Moreover, while the IMF downplays this, the actions of western central banks have made the pattern worse. Years of quantitative easing have raised the value of assets held by the rich, thus expanding inequality — and with it the rich persons’ savings glut. 

How much has this affected rates? In truth, no one knows, not least because information about this shadowy world of ultra wealth is sparse. Or, as the World Inequality Laboratory notes in its 2022 report: “We live in a data-abundant world and yet we lack basic information about inequality.” 

Furthermore, western central bankers have limited incentive to study these issues too publicly, since many feel privately embarrassed that quantitative easing has made inequality worse. 

But one sign of the trend can be found in the 2022 Wealth Inequality Index report: not only have the richest 1 per cent across the world apparently taken 38 per cent of all wealth gains since the mid 1990s, but also the private share of national wealth has soared, while public wealth has shrunk. 

Another striking clue emanates from reports collated by Campden consultants, experts on the family office ecosystem. In 2019, they calculated that there were 7,300-odd family offices in the world, controlling $6tn in funds, a 38 per cent increase from 2017. Between 2020 and 2021, during the latest wave of QE, funds under management increased on average by 61 per cent. 

It is possible that this trend in inequality will slow if QE — and with it asset inflation — comes to an end in 2022 and beyond. Or maybe not — as the IMF report also points out, a world of stagflation risks and rising rates is one that will hurt the indebted poor far more than it will the rich. 

Either way, the pattern deserves far more debate among economists and political scientists. We need to know, for example, whether ultra-wealthy funds will step in to buy assets like Treasuries as central banks wind down QE. 

The way family offices are contributing to a secular shift from public capital markets to private ones should get more attention — particularly since economists such as Mohamed El-Erian predict that this will accelerate in the wake of Russia’s invasion of Ukraine. 

We also need to pay more attention to governance issues. The expanding private pots are generating innovative forms of philanthropy (which is good). But they can also subvert democracy via dark money donations (which is bad). Either way, #buymeafighterjet is one tiny symbol of an increasingly networked but unequal world. We ignore this at our peril.

Why Billionaire Philanthropy Won't Solve Anything

 

Be a Loser if Need Be | The Philosophy of Epictetus

 

Wikipedia co-founder: I no longer trust the website I created

 

Why Capitalism Reproduces Inequality & a Solution

 

The parable of John Rawls

Janan Ganesh in The FT

In the latest Pixar film, Soul, every human life starts out as a blank slate in a cosmic holding pen. Not until clerks ascribe personalities and vocations does the corporeal world open. As all souls are at their mercy, there is fairness of a kind. There is also chilling caprice. And so Pixar cuts the stakes by ensuring that each endowment is benign. No one ends up with dire impairments or unmarketable talents in the “Great Before”. 

Kind as he was (a wry Isaiah Berlin, it is said, likened him to Christ), John Rawls would have deplored the cop-out. This year is the 50th anniversary of the most important tract of political thought in the last century or so. To tweak the old line about Plato, much subsequent work in the field amounts to footnotes to A Theory of Justice. Only some of this has to do with its conclusions. The method that yielded them was nearly as vivid. 

Rawls asked us to picture the world we should like to enter if we had no warning of our talents. Nor, either, of our looks, sex, parents or even tastes. Don this “veil of ignorance”, he said, and we would maximise the lot of the worst-off, lest that turned out to be us. As we brave our birth into the unknown, it is not the average outcome that troubles us. 

From there, he drew principles. A person’s liberties, which should go as far as is consistent with those of others, can’t be infringed. This is true even if the general welfare demands it. As for material things, inequality is only allowed insofar as it lifts the absolute level of the poorest. Some extra reward for the hyper-productive: yes. Flash-trading or Lionel Messi’s leaked contract: a vast no. Each of these rules puts a floor — civic and economic — under all humans. 

True, the phrase-making helped (“the perspective of eternity”). So did the timing: 1971 was the Keynesian Eden, before Opec grew less obliging. But it was the depth and novelty of Rawls’s thought that brought him reluctant stardom. 

Even those who denied that he had “won” allowed that he dominated. Utilitarians, once-ascendant in their stress on the general, said he made a God of the individual. The right, sure that they would act differently under the veil, asked if this shy scholar had ever met a gambler. But he was their reference point. And others’ too. A Theory might be the densest book to have sold an alleged 300,000 copies in the US alone. It triumphed. 

And it failed. Soon after it was published, the course of the west turned right. The position of the worst-off receded as a test of the good society. Robert Nozick, Rawls’s libertarian Harvard peer, seemed the more relevant theorist. It was a neoliberal world that saw both men out in 2002. 

An un-public intellectual, Rawls never let on whether he cared. Revisions to his theory, and their forewords, suggest a man under siege, but from academic quibbles not earthly events. For a reader, the joy of the book is in tracking a first-class mind as it husbands a thought from conception to expression. Presumably that, not averting Reaganism, was the author’s aim too. 

And still the arc of his life captures a familiar theme. It is the ubiquity of disappointment — even, or especially, among the highest achievers. Precisely because they are capable of so much, some measure of frustration is their destiny. I think of Tony Blair, thrice-elected and still, post-Brexit, somehow defeated. (Sunset Boulevard, so good on faded actors, should be about ex-politicians.) Or of friends who have made fortunes but sense, and mind, that no one esteems or much cares about business. 

The writer Blake Bailey tells an arresting story about Gore Vidal. The Sage of Amalfi was successful across all literary forms save poetry. He was rich enough to command one of the grandest residential views on Earth. If he hadn’t convinced Americans to ditch their empire or elect him to office, these were hardly disgraces. On that Tyrrhenian terrace, though, when a friend asked what more he could want, he said he wanted “200 million people” to “change their minds”. At some level, however mild his soul, so must have Rawls.