It has been a while since I have last posted here and I have been relatively busy the last couple of weeks. Here are the links to several interesting articles that I have been reading on top of the numerous economics journals and numerous other magazines I have been rummaging through the last couple of weeks:
1. An article by Steve Mufson in the Washington Post on possible Federal Reserve signals that a rate hike is possible. Here's another article on this particular subject written by John Cassidy of the New Yorker. It has been an interesting signal by the Federal Reserve, headed up by Janet Yellen, that they will eventually raise interest rates, but there are conflicted signals on what the economic outlook is. I forsee a not-so-great economic outlook at least for the next couple of quarters.
2. Matt Rognlie's thoughts on Thomas Piketty's observations posted on the Brookings Institution website. Quite an interesting article that he has written and here's the full copy of his work posted again on the Brookings Institution website. He is currently a PHD down the street from where I live at the Massachusetts Institute of Technology and in this article, he comes up with interesting data that somewhat backs up Thomas Piketty's thesis, but refutes it in the most part. He should be one economist to be followed in the coming years as he publishes more works.
3. A charming German couple goes to the former capital of Greece and pays off their portion of the "German World War 2 reparations" to Greece. This is quite a lovely move by the couple on a very serious issue of Greece threatening Germany with seizing German property if they do not pay long overdue World War 2 reparations, but it just shows the desperation of a completely bankrupt nation with no money left in the bank.
4. An interesting article that actually just came out on my news feed approximately 30 minutes ago. It talks about how debt will hit emerging economies. As predicted by an earlier blog post of mine, a potential economic crisis will start when some of these emerging economies see growth slow, debt accumulate and possible defaults happen.
Showing posts with label Thomas Piketty. Show all posts
Showing posts with label Thomas Piketty. Show all posts
Friday, March 20, 2015
Wednesday, January 28, 2015
Thoughts on this week's World Economic Forum in Davos
Like many around the world, I have been following this year's World Economic Forum in Davos, Switzerland. As I described in a previous blog post, lots of pressing issues are discussed among the leading policymakers from around the world. I mentioned the key points to this year's meeting and it includes many of the pressing issues that we as a world have to face today. Here is the link to the key moments that had happened during this year's World Economic Forum. From what I gather, this year is the year where a combination of low energy prices, terrorism, growing income inequality and a looming economic malaise surround the world at large. I believe the people at this particular conference talked about some of these pertinent issues and they have overall tackled some of the more pressing issues. These issues are very indeed alarming and I believe some of these issues can be tackled without the "action" that some of the conference attendees have come up with.
Thoughts on the key points of the yearly conference:
1. Reduce inequality, but to promote growth
The most pressing issue around the world is the growing inequality that has been prominent in world headlines and in numerous discussions between economists. As Thomas Piketty's book has reached its popularity around the world, numerous other economists and many politicians around the world has mentioned that this was a huge issue that needed to be tackled. There have been tremendous amounts of press coverage in the last couple of years towards this particular subject and the people at the forum have talked about various ways to tackle this pressing issue. Sustainable growth is something that the people at the forum have talked about as a possible resolution to the most critical issue presented at this particular conference. I believe that while it is possible to reduce inequality through promoting growth, it is also important to consider other possible solutions such as structural reform of key institutions and of how certain private institutions could function within the confines of society. It's interesting to note that while some solutions are offered, I believe there should be more radical solutions such as that posited by Piketty's Capital in the Twenty First Century than the more conservative ones mentioned at the forum.
Here are a couple of video links to certain conversations at the forum that concern this particular problematic issue and other related issues: The World Economic Outlook, IMF Director Christine Lagarde's Address, Issue Briefing: Income Inequality, BBC World Debate.
2. Europe's Quantitative Easing program
As announced in a previous post, the European Central Bank has announced a new massive quantitative easing program of over a trillion that will be pumped into the European economy. There has been a lot of discussion over this particular policy decision by the panel discussants at the forum, by top economists such as Robert J. Shiller, by the top bloggers and with some of my friends. As mentioned in a previous blog posts, there has been a tremendous controversy over this particular issue, with numerous speakers giving their particular opinion on the particular issue. Here's a list of quotes by key forum speakers and here's a video on the discussion of the effects of quantitative easing in the United States and beyond. Here are two contrasting opinion articles on the effects of quantitative easing, one from Professor Jeffrey Sachs and another from Stephen S. Roach. With this particular problem that has already been implemented by Mario Draghi, I believe it is important for them to promote these particular policies, even though there might be strong negative consequences that come from this round of quantitative easing, such as a combination of weak growth and of higher inflation that might come from this monetary policy, but we will have to wait and see.
3. Energy Prices
I think the recent drop in energy prices have been affecting everyone domestically here in the United States and globally around the world. Energy consumers have been given a break in the recent drop in petroleum prices, but energy producers have hit a wall. Countries such as Russia, Iran, Iraq, Venezuela and others will suffer tremendously in the coming years, which might contribute to significant political instability. I mentioned in an earlier blog post about Russia's internal and external problems, which I think will compound in the coming years. This will see a surge in Russia's more aggressive and nationalistic foreign policy. The oil producers will see significant domestic problems, which were already tremendous in volume, expand rapidly throughout the Middle East. We could see trouble in the coming years with this drop in oil prices because it cause an acute global recession.
Here's a video of an interesting panel discussion during the conference that concerned energy.
4. Market Volatility
The last important point that the people at the forum have made concerned with the issue of market volatility. The markets have been very volatile over the years since the Great Recession with the recent drop in energy prices and the global stock market rallies been at the forefront of discussion.
Here are a couple of discussions that deal with this pressing issue: Volatility as the New Normal, The New Growth Context.
Other Important Points:
1. China
A couple of key panel discussants talked about China at this year's conference, which included the Chinese Premier, Li Keqiang. As mentioned in a previous paragraph, he was one of the first to talk about the income inequality issue in an address to the Forum. China has tremendous challenges when it comes to its economy and its new role in the global economy, but I think it can be a tremendous benefit to the world to more fully incorporate a nation of China's size into the world economy. Here are two videos that address the issue of China in the world: Video of Premier Li Keqiang's Speech and China's Impact as a Global Investor.
2. Al Gore and Climate Change
There was a discussion by Al Gore and another discussion throughout the 4 day conference that concerned the topic of climate change. As many have watched Al Gore's documentary and other documentaries that have talked about the pressing issue of climate change, we can conclude that this is one of the more important topics talked among conference participants and conference followers. These two discussions presents the views of many that concerned this particular issue, with several others chiming in on the discussion. I think there are a tremendous number of economic issues that we will run into if we implement Al Gore's plan to combat climate change. I believe the biggest issue has to deal with the continued development of emerging economies and with the issue of lifting billions of individuals, while simultaneously counteracting this increase in carbon emissions and in pollution.
3. Conflict zones
There were a tremendous number of discussions that dealt with the increasing number of conflicts that have developed in the world, which include a variety of countries. This included actual military conflicts such as those in Syria, Ukraine and Iraq along with competing geopolitical games that larger powers are always conducting. The key discussion in this particular subject is that of the development of a new multi-polar world, which always had potentially dangerous consequences. This also leads us to the question of the viability of the democratic institutions, which has been the landmark of industrialized Western countries such as the United States. Is the end of history as describe by Francis Fukuyama not possible or is it a new chapter in history? We will have to wait and find out what unfolds in the coming years.
There were a lot of great panel discussions over the course of these 4 days in Davos. Despite the amount of content that was covered at this year's edition of the World Economic Forum, there are many economic (and political) issues that are still yet to be discussed. With the interesting economic and monetary situation unfolding in Europe and in Greece, we will have to wait and see what unravels.
Thoughts on the key points of the yearly conference:
1. Reduce inequality, but to promote growth
The most pressing issue around the world is the growing inequality that has been prominent in world headlines and in numerous discussions between economists. As Thomas Piketty's book has reached its popularity around the world, numerous other economists and many politicians around the world has mentioned that this was a huge issue that needed to be tackled. There have been tremendous amounts of press coverage in the last couple of years towards this particular subject and the people at the forum have talked about various ways to tackle this pressing issue. Sustainable growth is something that the people at the forum have talked about as a possible resolution to the most critical issue presented at this particular conference. I believe that while it is possible to reduce inequality through promoting growth, it is also important to consider other possible solutions such as structural reform of key institutions and of how certain private institutions could function within the confines of society. It's interesting to note that while some solutions are offered, I believe there should be more radical solutions such as that posited by Piketty's Capital in the Twenty First Century than the more conservative ones mentioned at the forum.
Here are a couple of video links to certain conversations at the forum that concern this particular problematic issue and other related issues: The World Economic Outlook, IMF Director Christine Lagarde's Address, Issue Briefing: Income Inequality, BBC World Debate.
2. Europe's Quantitative Easing program
As announced in a previous post, the European Central Bank has announced a new massive quantitative easing program of over a trillion that will be pumped into the European economy. There has been a lot of discussion over this particular policy decision by the panel discussants at the forum, by top economists such as Robert J. Shiller, by the top bloggers and with some of my friends. As mentioned in a previous blog posts, there has been a tremendous controversy over this particular issue, with numerous speakers giving their particular opinion on the particular issue. Here's a list of quotes by key forum speakers and here's a video on the discussion of the effects of quantitative easing in the United States and beyond. Here are two contrasting opinion articles on the effects of quantitative easing, one from Professor Jeffrey Sachs and another from Stephen S. Roach. With this particular problem that has already been implemented by Mario Draghi, I believe it is important for them to promote these particular policies, even though there might be strong negative consequences that come from this round of quantitative easing, such as a combination of weak growth and of higher inflation that might come from this monetary policy, but we will have to wait and see.
3. Energy Prices
I think the recent drop in energy prices have been affecting everyone domestically here in the United States and globally around the world. Energy consumers have been given a break in the recent drop in petroleum prices, but energy producers have hit a wall. Countries such as Russia, Iran, Iraq, Venezuela and others will suffer tremendously in the coming years, which might contribute to significant political instability. I mentioned in an earlier blog post about Russia's internal and external problems, which I think will compound in the coming years. This will see a surge in Russia's more aggressive and nationalistic foreign policy. The oil producers will see significant domestic problems, which were already tremendous in volume, expand rapidly throughout the Middle East. We could see trouble in the coming years with this drop in oil prices because it cause an acute global recession.
Here's a video of an interesting panel discussion during the conference that concerned energy.
4. Market Volatility
The last important point that the people at the forum have made concerned with the issue of market volatility. The markets have been very volatile over the years since the Great Recession with the recent drop in energy prices and the global stock market rallies been at the forefront of discussion.
Here are a couple of discussions that deal with this pressing issue: Volatility as the New Normal, The New Growth Context.
Other Important Points:
1. China
A couple of key panel discussants talked about China at this year's conference, which included the Chinese Premier, Li Keqiang. As mentioned in a previous paragraph, he was one of the first to talk about the income inequality issue in an address to the Forum. China has tremendous challenges when it comes to its economy and its new role in the global economy, but I think it can be a tremendous benefit to the world to more fully incorporate a nation of China's size into the world economy. Here are two videos that address the issue of China in the world: Video of Premier Li Keqiang's Speech and China's Impact as a Global Investor.
2. Al Gore and Climate Change
There was a discussion by Al Gore and another discussion throughout the 4 day conference that concerned the topic of climate change. As many have watched Al Gore's documentary and other documentaries that have talked about the pressing issue of climate change, we can conclude that this is one of the more important topics talked among conference participants and conference followers. These two discussions presents the views of many that concerned this particular issue, with several others chiming in on the discussion. I think there are a tremendous number of economic issues that we will run into if we implement Al Gore's plan to combat climate change. I believe the biggest issue has to deal with the continued development of emerging economies and with the issue of lifting billions of individuals, while simultaneously counteracting this increase in carbon emissions and in pollution.
3. Conflict zones
There were a tremendous number of discussions that dealt with the increasing number of conflicts that have developed in the world, which include a variety of countries. This included actual military conflicts such as those in Syria, Ukraine and Iraq along with competing geopolitical games that larger powers are always conducting. The key discussion in this particular subject is that of the development of a new multi-polar world, which always had potentially dangerous consequences. This also leads us to the question of the viability of the democratic institutions, which has been the landmark of industrialized Western countries such as the United States. Is the end of history as describe by Francis Fukuyama not possible or is it a new chapter in history? We will have to wait and find out what unfolds in the coming years.
There were a lot of great panel discussions over the course of these 4 days in Davos. Despite the amount of content that was covered at this year's edition of the World Economic Forum, there are many economic (and political) issues that are still yet to be discussed. With the interesting economic and monetary situation unfolding in Europe and in Greece, we will have to wait and see what unravels.
Wednesday, January 7, 2015
Thoughts on the Thomas Piketty event
As I mentioned in my last post, I had the great pleasure of attending the Thomas Piketty event at this year's American Economic Association annual meeting. I have been reading his latest work, Capital in the Twenty First Century, which has been published to both great acclaim and great criticism. Ever since Thomas Piketty published the book, it has sent shockwaves through the current economic establishment with many rebuttal books written to in response to the ideas that Professor Piketty had presented. (The number of rebuttal books range from sort articles to large pamphlets, if you look at the Amazon website, you'll be able to find several) Within the confines of the academia and outside of it, there has been almost a numinous reception of his work. For the popularity within the outside world, it has created numerous tractable differentials in opinions, from those who love it and those who hate it. Some people have praised it and bought the book in record numbers. There have been many prominent economists who have published great books and papers, but I believe the response that Professor Piketty's book has had a ripple-like effect on the consciousness of the entire economic community. I personally enjoyed this book immensely, even though I don't necessarily agree with much of its content. In this article, I will try to dissect the 2 hour conference and throw in my thoughts about the event itself.
The Thomas Piketty event at the AEA meeting was an immense occasion where the room was packed to capacity, with perhaps about a hundred people extra standing at the sides to witness the presentation featuring other prominent economists such as Greg Mankiw. David Weill, Professor of Economics at Brown University, gave an approving observation and analysis of Thomas Piketty' ideas that were presented in Capital. Based Professor Weill's observations, we can see the wealth of knowledge that the 700+ page book has to offer for both economic researchers and wider audiences beyond. Professor Alan J. Auerbach and Dr. Kevin Hassett had different ideas when it came to Piketty's book. Despite their disagreements with much of Thomas Piketty's theories, they are very impressed by the depth of its analyses, but they feel like certain things about the book were perhaps too unrealistic in terms of its application, especially in tax reform and other related things.
Professor Greg Mankiw, Chair of Harvard University Department of Economics, gave the next lecture on his interpretation of the book and he then gave a thorough lambasting of Piketty's book. He labeled Piketty's book as resorting to the simple promotion of egalitarian policies that lead both of the rich and the poor to sink into destitution. This does not come as a surprise to many economists and voracious readers who knows about Professor Mankiw's defense of the top one percent in his recent article, Defending the One Percent, which was published in the Journal of Economic Perspectives. During this time, there were certain people that heckled Professor Mankiw, with loud cheers of approval on one side of the economic spectrum coupled with disapproving shrugs on the other side. Personally, I am impartial to the views of both conflicting sides as there is much to derive from the analyses on both viewpoints. What's interesting about Professor Mankiw's conclusion is that r>g is not the problem, but that r<g is the problem! This is a particular interesting observation as I believe that Thomas Piketty has the correct observation, but perhaps not the correct response to such taxing issues. (For those interested in a good opinion article that I had read last year, please refer to Tim Worstall's Forbes article.)The excitement in the room grew with the anticipation of Thomas Piketty's talk on the ideas that he had promoted in his book.
Professor Thomas Piketty, Chair of the Paris School of Economics, gave a simple explanation of his 700+ page book, which has reached the absolute apex of its acclaim. It has been on the front page of newspapers, best-selling book lists and other similar journals, with raising him into the public spotlight beyond what is normal for economists. In this presentation, Professor Piketty presented the basic theories in his book with a special focus on r>g in trying to resolve the huge issues that the world faces today. He talked about how its entirely applicable to the study of long-run wealth inequality versus labor income equality, which you cannot utilize r>g to solve. The other point that I derived from his work was the basic model that he had presented, with a strong focus on the reinforcement of more democratic institutions with the certain mechanisms surrounding income and wealth. He postulated that the serious problem of inequality should be tackled through a progressive wealth tax, escalating at each level, which is quite unrealistic in my mind. I have yet to complete the many sections of the book, as I've only skimmed parts of it, but it'll be exciting to write my second thoughts on the book after going through each section in more detail.
Overall, this session was one of the most exhilarating sessions I've been to in Boston and I've been to a couple of very heated Israel-Palestine conferences. The session was followed by an extremely tense question and answer session, with a particular individual launching a fallacious tirade at both Professor Mankiw and Professor Piketty. I also had the privilege of speaking with Professor Thomas Piketty briefly after the event and I hope to have better questions prepared for him next time.
The Thomas Piketty event at the AEA meeting was an immense occasion where the room was packed to capacity, with perhaps about a hundred people extra standing at the sides to witness the presentation featuring other prominent economists such as Greg Mankiw. David Weill, Professor of Economics at Brown University, gave an approving observation and analysis of Thomas Piketty' ideas that were presented in Capital. Based Professor Weill's observations, we can see the wealth of knowledge that the 700+ page book has to offer for both economic researchers and wider audiences beyond. Professor Alan J. Auerbach and Dr. Kevin Hassett had different ideas when it came to Piketty's book. Despite their disagreements with much of Thomas Piketty's theories, they are very impressed by the depth of its analyses, but they feel like certain things about the book were perhaps too unrealistic in terms of its application, especially in tax reform and other related things.
Professor Greg Mankiw, Chair of Harvard University Department of Economics, gave the next lecture on his interpretation of the book and he then gave a thorough lambasting of Piketty's book. He labeled Piketty's book as resorting to the simple promotion of egalitarian policies that lead both of the rich and the poor to sink into destitution. This does not come as a surprise to many economists and voracious readers who knows about Professor Mankiw's defense of the top one percent in his recent article, Defending the One Percent, which was published in the Journal of Economic Perspectives. During this time, there were certain people that heckled Professor Mankiw, with loud cheers of approval on one side of the economic spectrum coupled with disapproving shrugs on the other side. Personally, I am impartial to the views of both conflicting sides as there is much to derive from the analyses on both viewpoints. What's interesting about Professor Mankiw's conclusion is that r>g is not the problem, but that r<g is the problem! This is a particular interesting observation as I believe that Thomas Piketty has the correct observation, but perhaps not the correct response to such taxing issues. (For those interested in a good opinion article that I had read last year, please refer to Tim Worstall's Forbes article.)The excitement in the room grew with the anticipation of Thomas Piketty's talk on the ideas that he had promoted in his book.
Professor Thomas Piketty, Chair of the Paris School of Economics, gave a simple explanation of his 700+ page book, which has reached the absolute apex of its acclaim. It has been on the front page of newspapers, best-selling book lists and other similar journals, with raising him into the public spotlight beyond what is normal for economists. In this presentation, Professor Piketty presented the basic theories in his book with a special focus on r>g in trying to resolve the huge issues that the world faces today. He talked about how its entirely applicable to the study of long-run wealth inequality versus labor income equality, which you cannot utilize r>g to solve. The other point that I derived from his work was the basic model that he had presented, with a strong focus on the reinforcement of more democratic institutions with the certain mechanisms surrounding income and wealth. He postulated that the serious problem of inequality should be tackled through a progressive wealth tax, escalating at each level, which is quite unrealistic in my mind. I have yet to complete the many sections of the book, as I've only skimmed parts of it, but it'll be exciting to write my second thoughts on the book after going through each section in more detail.
Overall, this session was one of the most exhilarating sessions I've been to in Boston and I've been to a couple of very heated Israel-Palestine conferences. The session was followed by an extremely tense question and answer session, with a particular individual launching a fallacious tirade at both Professor Mankiw and Professor Piketty. I also had the privilege of speaking with Professor Thomas Piketty briefly after the event and I hope to have better questions prepared for him next time.
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