Archive for December 9th, 2019

Profile of urban economist Edward Glesar

December 9, 2019

IMF F&D (Dec-2019 edition) profiles Ed Glaesar of Harvard Univ:

Growing up in New York City in the 1970s, Edward Glaeser saw a great metropolis in decline. Crime was soaring. Garbage piled up on sidewalks as striking sanitation workers walked off the job. The city teetered on the edge of bankruptcy.

By the mid-1980s, it was clear that New York would bounce back. But it could still be a scary place; there was a triple homicide across the street from his school on the Upper West Side of Manhattan. Glaeser was nevertheless captivated by New York’s bustling street life and spent hours roaming its neighborhoods.

“It was both wonderful and terrifying, and it was hard not to be obsessed by it,” Glaeser recalls in an interview at his office at Harvard University.

Today, that sense of wonder still permeates Glaeser’s work as an urban economist. He deploys the economist’s theoretical tool kit to explore questions inspired by his youth in New York. Why do some cities fail while others flourish? What accounts for sky-high housing costs in San Francisco? How does the growth of cities differ in rich and poor countries?

 

From GDP 1.0 to GDP 2.0: Distribution to be as important as production

December 9, 2019

Kemal Dervis in this piece:

Building on work by the economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, the Center for Equitable Growth has proposed “GDP 2.0,” a metric that would complement existing aggregate GDP reports by disaggregating the income growth of different cross sections of the population (such as income quintiles). Providing this kind of distributional picture regularly would require increased coordination among government departments, as well as some conventions on, for example, how to use tax data to complement the usual national accounts. But conventions are also needed for existing national income accounting.

Provided that distributional data are routinely available, one could compute a growth rate based on the weighted average across each decile of the income distribution, with equal weighting for population, as in the example above. Individuals would still be weighed by their incomes within each group (which is why it would be preferable to use deciles rather than quintiles), but the final product would be much closer than current methods to the “democratic” ideal.

One of the main advantages of GDP growth is that it is expressed with a single number, whereas other performance indicators either are presented within dashboards comprising multiple metrics or aggregated in essentially arbitrary ways. The implicit use of income shares as aggregation weights is perfectly appropriate for macroeconomic analysis and is not arbitrary. The problem arises when GDP becomes a proxy for progress. What we can measure easily and communicate elegantly inevitably determines what we will focus on as a matter of policy. As the Stiglitz-Sen-Fitoussi report put it, “What we measure affects what we do.”

Publishing a democratic metric like the growth rate of GDP 2.0 is no pipedream. A GDP growth rate using equal weights for each decile of the population would also produce a single number to complement the usual growth rate. True, it still would not capture the substantial differences within the top decile in many countries where the top 1% have been gaining disproportionately compared to everyone else. And we still would need other metrics to measure performance in dimensions other than income. But as a single figure published alongside GDP growth, it could go a long way toward changing the dominant conversation about economic performance.

Using history to understand hidden wealth in the UK

December 9, 2019

Neil Cummins of LSE in this piece:

Popular Presidents versus the Press: Why they love Press but not journalism?

December 9, 2019

Interesting Proj Synd piece by Andrés Cañizález, a Venezuelan journalist.

Populist leaders love the mass media, which enable them to spread their own ideas. But they hate journalism, which asks challenging questions and aims to hold them accountable. That is precisely why we must defend it.

…….

Venezuela is thus an object lesson in why attacks on media by Trump, Bolsonaro, and AMLO must be taken seriously. All media, both targeted and favored, should fight back, including by seeking injunctions in national and international courts. Journalists and others, such as academic associations, can pursue local-level initiatives aimed at defending the rights and freedoms of citizens and media.

NGOs can also help, not only by unequivocally expressing their opposition, but also by collecting and publicizing data on media freedom. Civil society should contribute its own full-throated defense of media, with citizens engaging in joint initiatives with media and their defenders.

An enemy of the free press is an enemy of democracy. We can’t say they didn’t warn us.

This explains much of the dilemma one had so far. These leaders become popular using the press/media and then go onto dislike it. Why? The answer is leaders like the press who spread their cult but not journalists who ask tough qs and hold them accountable..

How ECB is one of the lone central bank against war on cash: Greece and Sweden cases

December 9, 2019

ECB despite wanting to move into e-Euro is also one of those few central banks which understands importance of cash.

In two statements, it welcomes Swedish government’s decision to continue to provide cash services and in another one, it asks Greece Government to remove limits on cash transactions.

Sweden:

The ECB understands that electronic payment instruments are increasingly used as the preferred
method of payment in Sweden, while the use of cash is declining. Nevertheless, cash is a well
established means of payment providing for immediate settlement of debts and direct control over
the payer’s spending. Furthermore, the ability to pay in cash remains particularly important for
certain groups in society that, for various legitimate reasons, prefer to use cash rather than other
means of payment, or who are unable to use digital technology. Additionally, cash payments
facilitate the inclusion of the entire population in the economy by allowing it to settle any kind of
financial transaction in this way12. Further, the number of SEK banknotes in circulation in Sweden
has increased since 2017 and while the rate of identity theft and card fraud continues to rise, it is
still among the lowest in Europe13. The ECB notes that cash could play an important role in the
event of a disturbance in the payment systems, even though cash machines and other service
points may also be affected as these are dependent on interaction with the account holding
institutions

Greece:

the ECB considers that the existing limit on cash payments of EUR 500
for consumer-to-business transactions, and the new tax incentives discouraging companies from
spending cash in excess of EUR 300, are disproportionate in light of the potentially adverse impact
on the cash payment system. In case the legislator wishes to preserve cash payment limitations,
higher thresholds should be chosen and a degree of flexibility should be introduced in the draft
amendments. Cash transactions above the defined thresholds should be permitted as long as the
parties are able to ensure that the payment is traceable by identifying the amount, the reason for
the transaction and the parties involved. In addition, competent authorities are invited to assess
whether the remaining restrictions on cash payments are proportionate and compatible with the
legal tender status of euro banknotes35, in order to ensure that the effects of these measures do
not go beyond what is necessary for achieving the objective of combating tax evasion.

 


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