The Economist Digest

Nearly half a decade on from the financial crisis, many troubling weaknesses in the global economy remain unaddressed. Deleveraging is occuring dreadfully slowly in many rich countries. “Imbalances” have scarcely been diminished. Monetary policy has propped up economic growth, temporarily buying time for broader structural reforms that governments have failed to deliver. The scope for central banks to do more is limited and the risks of further action are rising. Meanwhile, government debt is a huge threat, particularly given continued problems of undercapitalised banks in some economies. Somehow, governments must return to budget surplus in order to maintain market confidence and create room for future bank rescues, while remaining conscious of the potential blow to growth from dramatic short-term austerity. The immediate future is all sackcloth and ashes.

The overarching theme is quite simple: central banks have done what the economic situation has called for and then some, and they should not and cannot be expected to do much more. Instead, other economic policymakers must finally heed central bankers’ recommendations for how to clean up their messes, fiscal, structural, and otherwise. It strikes me as a deeply mistaken view of the state of the world economy and the proper role of the central banker.

— Free Exchange: “The Twilight of the Central Banker”

Justifying his vote against the act, Rand Paul compared it to Soviet communism. This is sort of a dog bites man story; on a given day, Rand Paul probably compares several dozen things to Soviet communism. But here, for what it’s worth, is why he thinks legislation to make it easier for women to sue when they’ve been paid less than men for doing the same job is just like Soviet communism:

“Three hundred million people get to vote everyday on what you should be paid or what the price of goods are,” Paul told reporters on Capitol Hill. “In the Soviet Union, the Politburo decided the price of bread, and they either had no bread or too much bread. So setting prices or wages by the government is always a bad idea.”

Mr Paul does not appear to understand either the law which he has just voted against, or the class of economic transaction about which he is speaking. If a woman sues because she has been paid less than a man for doing the same work, and a judge rules in her favour, that is not an instance of “setting prices or wages by the government”. The wage in question was set by the employer. What the judge has ruled is that the employer cannot offer different wages to different employees based on their sex.

— Democracy in America: “Protecting Individual Rights Is Not Stalinist”

It’s a fair question whether banning Big Gulps will actually accomplish much towards reducing obesity, and whether this qualifies as “doing something” rather than just making a political gesture. But it’s clear what the mayor is talking about here: he’s thinking in the abstract as a member of society, and trying to figure out how to reduce his society’s rate of obesity. His language is a fairly representative example of how liberals talk about obesity. Liberals don’t view this as a problem of individual obese people, moral weaklings in need of discipline for their own good; that’s the approach you’ll see on The Biggest Loser, and while it can be compelling in the case of those individuals who sign up to be disciplined, as a strategy for tackling a national public-health problem it’s gibberish. Rather, liberals ask what kind of society do we want to be? Do we want to be a society of fat people eating lots of objectively unhealthy food?

— Democracy in America: “In Defence of Baby Authoritarianism”

Nevertheless, the Clinton-era boom and the rise of a rather less fantastic internet economy laid to rest fears of Gen X’s waning fortunes, and my cohort went forth into a sunlit world of stock options, companionate marriages and Netflix marathons. But then, cruel fate, it finally came to pass that Ethan, Winona, Janeane and Ben were more or less vindicated. Reality does bite. We are suffering a great stagnation. Where once I saw pathetic hand-wringing, now I see a venerable American rite of passage. Every generation must contemplate the dread prospect of faring worse than the preceding.

— Democracy in America: “Generational Decline: Reality Bites”

[P]erhaps most fascinating of all, increased scientific literacy only increased the cultural divide [over climate change].

David Roberts captures the upshot of all this.

The operative concept here is “motivated reasoning.” The idea is, we begin by absorbing the values of our tribes — what is and isn’t important, what is and isn’t a risk — and use whatever numeracy and scientific literacy we possess to seek out facts and arguments that support those views. Getting smarter, in other words, only makes us better at justifying our own worldviews. It does not necessarily give us more scientifically accurate worldviews.

— Democracy in America: “Group Dynamics”

The argument is that, unlike some of its European neighbours, the British population is still rising rapidly, thanks in part to immigration. Indeed, the British population will become larger than that of Germany in the mid-21st century, on its way to nearly 80 million by 2100.

This argument was rather surprising since one would have thought that demographics would act against house prices. The baby boomers will be retiring in the next two decades and trading down to smaller places; in some cases, they will be forced to sell their homes outright to meet their nursing care bills. Meanwhile young people are shut out of the housing market by high prices and their inability to afford a deposit (this is one reason why you would expect house prices to have a link with incomes over the long run).

— Buttonwood’s Notebook: “House Prices: A Crowded Island”

There are probably some people trying to argue that we should be demanding Apple make its iPhones in America to avoid infractions of its corporate code of conduct. Mr. Ozimek cites Andrew Leonard’s article at Salon about a labour-union official who said in his search for an ethically manufactured mobile phone he considered buying Samsung because their phones are largely manufactured in South Korea, where safety regulations are better enforced. This is not a significant phenomenon. Vanishingly few people will ever go to the trouble this labour-union official has gone to in researching the sourcing of his phone, so any hypothetical harms from such decisions will fail to develop.

— Democracy in America: “Foxconn and Labour Laws: Using Globalisation for Good”

Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government.

He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.

Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned-income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.

— New York Times: “Even Critics of Safety Net Increasingly Depend on It”