The Minnesotan left-wing economic miracle continues, while neighboring Republican states slowly collapse

Last fall, I wrote about the strange case of Minnesota governor Mark Dayton, a left-wing billionaire heir to the Target fortune who came to power and reversed his Republican predecessors' Reagonomic idiocy, instead raising taxes on rich people, increasing public spending, and creating shared prosperity for the people of Minnesota. Read the rest

The Carbon Bubble is about to pop

Despite Trump's denial of climate change the the ghastly attacks on climate science and mitigation in the new proposed budget, the Carbon Bubble -- which overprices hydrocarbons and the industries that rely on them, as though we'll be burning all of them with impunity -- is about to pop. Read the rest

The economics of airline classes

Wendover Productions explains how airlines make most of their money from business and first class tickets. Read the rest

How the GOP's simplified Border Adjustment Tax will be instantly riddled with loopholes

The GOP is advocating for a "Border Adjustment Tax," which is something like a complicated Value Added Tax that is meant to encourage companies to on-shore or re-shore their manufacturing, without raising prices for Americans (because the US dollar is supposed to rise by up to 25% (!) as a result), while removing the complexity that allows companies to dodge tax by finding loopholes. Read the rest

Sugar taxes reduce soda consumption

In 2016's Impact of the Berkeley Excise Tax on Sugar-Sweetened Beverage Consumption (Sci-Hub Onion mirror), UC Berkeley scientists showed that the imposition of a $0.01/ounce tax on sugary drinks led to a sharp decrease in the consumption of sodas in Berkeley. Read the rest

The internet promised open markets, delivered rigged ones, then fake ones, then outright monopolies

Markets don't solve all our problems, but they sometimes produce remarkably efficient systems for producing and distributing goods, and the internet traded on that promise with marketplaces like Ebay (anyone can sell, anyone can buy); Google (anyone can publish, anyone can read), and Amazon (one marketplace where all goods are transparently priced and ranked). Read the rest

The empty "zombie cities" of China's stillborn rustbelt

China's explosive growth as the world's factory powerhouse is almost impossible to overstate: the largest migration in human history took place when 80 million young women left the provinces to come to the Pearl River Delta for the new manufacturing jobs, and China began building new megacities across its landmass to serve as the hubs for new factories and industries, consuming as much cement between 2011 and 2013 as the whole US used during the whole 20th century. Read the rest

Catastrophes are reliable levelers of inequality; inequality creates catastrophes

Stanford history and classics professor Walter Scheidel writes in the Atlantic that the only reliable ways for unequal societies to become more equal is to suffer catastrophes that upend the order of things; Scheidel concludes that our modern, unequal state may not be able to avail itself of a convenient catastrophe for this purpose because "Technology has made mass warfare obsolete; violent, redistributive revolution has lost its appeal; most states are more resilient than they used to be; and advances in genetics will help humanity ward off novel germs." Read the rest

Bank fraud and Dieselgate: how do we design regulations that are harder to cheat?

Tim Harford points out that Dieselgate -- when VW designed cars that tried to guess when they were undergoing emissions test and dial back their pollution -- wasn't the first time an industry designed its products to cheat when regulators were looking; the big banks did the same thing to beat the "stress tests" that finance regulators used to check whether they would collapse during economic downturns (the banks "made very specific, narrow bets designed to pay off gloriously in specific stress-test scenarios" so that they looked like they'd do better than they actually would). Read the rest

In China's once poverty-stricken villages, former peasants manufacture a single product for one retailer

Alibaba subsidiary Taobao has given rise to "Taobao Villages" -- 18 villages that were once among China's poorest places, where former peasant farmers have attained prosperity by working in factories that produce a single class of goods (for example, Daiji township, a remote town in Shandong where most working age people have moved away, is now a high-speed-fiber linked booming factory town dedicated to "acting and dance costumes"). Read the rest

Piketty: the poorest half of Americans saw a "total collapse" in their share of the country's wealth

In a new analysis of the World Income Database published by the National Bureau of Economic Research, Thomas Piketty and colleagues from the Paris School of Economics and UC Berkeley, describe a "collapse" of the share of US national wealth claimed by the bottom 50% of the country -- down to 12% from 20% in 1978 -- along with an (unsurprising) drop in income for the poorest half of America. Read the rest

A succinct, simple, excellent description of the problems of neoliberalism and their solution

Ha-Joon Chang, an author and reader in Political Economy of Development at the University of Cambridge, opens his interview about the problems of neoliberalism with Truth-Out by quoting Gore Vidal: Neoliberalism is "free enterprise for the poor and socialism for the rich," where "the rich have been increasingly protected from the market forces, while the poor have been more and more exposed to them." Read the rest

Multigenerational wealth makes white Americans richer than black Americans

Black American wage disparity can be offset by education; but even though black American families -- one parent, two parent, educated, uneducated, employed, unemployed -- save more and spend less than their white counterparts, white families have substantially more wealth than black families -- college-educated white adults have 7.2 times the wealth of their black counterparts. Read the rest

Brexit, Chicken and Ulysses Pacts: the negotiating theory behind the UK-EU stalemate

Ever since Thomas Schelling -- an advisor on Dr Strangelove! -- published his work on negotiating theory and nuclear deterrence, we've developed a rich vocabulary for describing negotiating tactics and their underlying theories. Read the rest

The secret to success in local politics: steal from the people, but not too much

In a new paper in Progress, Oxford economist Vuk Vukovic argues that the key to re-election in local politics is to be just corrupt enough: giving lucrative contracts and other benefits to special interests who'll fund your next campaign, but not so much that the people refuse to vote for you. Read the rest

The World Wealth and Income Database: data and visualizations from 110 researchers in 70 countries

Thomas "Capital in the 21st Century" Piketty endorses the World Wealth and Income Database, where you will find "open and convenient access to the most extensive available database on the historical evolution of the global distribution of income and wealth, both within countries and between countries" in English, with upcoming translations in Chinese, Spanish, Arabic and French. Read the rest

A handful of essential ideas from economics

Inspired by this year's Edge question ("What scientific term or concept ought to be more widely known?"), Bloomberg columnist Noah Smith enumerates five economic concepts that we would be well-served to familiarize ourselves with: "Endogeneity" (when you don't know whether something is a cause or effect); "Marginal versus average" (something can be good on average, but so bad at the margins that it's a net negative); "Present value and discounting" (how much would you sacrifice today for the promise of something great tomorrow?); "Conditional versus unconditional" (you can hedge a prediction by adding a condition: "Assuming Donald Trump loses the election, the biggest crisis we'll face is a continued transfer of wealth from the poor to the rich"); "Aggregate" (differentiating global effects from local ones: borrowing money reduces your personal net worth, but increases some one else's, so you're getting poorer, they're getting richer and in the aggregate, it's a wash -- governments need to think in aggregate, voters need to think in particular). Read the rest

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