by Art Woolf
My weekly look at interesting sites, economic and otherwise, on the web.
1. All the media is abuzz about the case of Chinese human rights activist Chen Guangchen. But this week, Chinese human rights activity (and economist and former engineer) Mao Yushi will be awarded the Milton Friedman Prize for Advancing Liberty. Mr. Mao, 83 years old, was severely persecuted, along with his family, during the Cultural Revolution. He started his career as an engineer and then
After the death of Mao Zedong in 1976, he turned his focus to economics, and in 1993 he and four other economists founded the Unirule Institute of Economics, an independent Chinese think tank committed to the growth of market economy and to reforming Chinese government policies. Its name references what he calls the “universal rules that govern all fields.”
...Professor Mao was among the first signers of Charter 08, a manifesto calling for separation of powers; legal and judicial equality; and basic freedoms such as those of conscience, expression, association, and property.
...in 2011 he angered the extreme left-faction in China, who still support Mao Zedong’s policies, with his article “Returning Mao Zedong to Human Form,” published on the Caixin website, in which he boldly calculated the human cost of Mao’s brutal Communist policies from 1949 to 1976. The article led to calls for his prosecution and execution, with 50,000 left-faction members signing a petition that called for his imprisonment on charges of treason. Immediately following the article’s appearance he had to be surrounded by students to protect him from physical attack from zealots, while the government remained silent and neutral.
2. Our neighbors to the north will no longer be using the penny. The mint has just produced the last one. Future generations will no longer understand the phrase "a penny for your thoughts." (They're worth a franc, if you are Ingrid Bergman in love with Humphrey Bogart in Paris in 1940.) At least Canadian banks won't have much to worry about. According to Bloomberg News, four of the ten strongest banks in the world are Canadian. Not bad for a nation of 35 million.
the gains for women came not only from changes within sectors, but also from broader job shifts in the economy.
4. Virginia Postrel does a nice job explaining why recycling is often very inefficient by examining what happens when you put your used prescription eyeglasses into one of those recycling bins you see.
So I sympathize with charities that collect eyeglasses to distribute to people who can’t otherwise afford them.
But such efforts turn out to be a terrible waste, for reasons that are completely logical once you think about them. The case of recycled eyeglasses illustrates how easy it is to fool ourselves when we think about thrift, waste and charity. We overestimate the importance of the physical things we can see and forget about the real costs of time and attention, as well as the importance of intangible values like aesthetics to the people we’re trying to help.
And on her blog, she cites a colleague's comments:
recycling is a fundamentally economic activity. Nobody sorts somebody else's garbage for free. Most of the developing world understands that, while the developed world - the EU and US, in particular - seems intent on seeing recycling as a moral activity (and a means of tribal identity) above all else. Unfortunately, when people view waste and recycling in moral terms, rather than economic ones, they have an unerring tendency to demand local governments set up recycling programs that are destined to lose money from the get-go (like curbside recycling in spread-out Houston). Meanwhile, the folks who know how to make money from recycling, like scrap yards, are denigrated and often subjected to totally unreasonable barriers to entry (and exit).
5. $120 million for The Scream. After adjusting for inflation, it's not the most that's ever been paid for a piece of art at auction. The Economist's graphic shows the top twenty. There are more Picassos than any other artist on the list, but the most expensive (in inflation adjusted dollars) goes to van Gogh's Portrait du Docteur Gachet. The magazine (or newspaper, as it likes to be called), notes that
press reports suggest that a buyer paid $250m for Paul Cézanne's "The Card Players" in 2011
6. What has been Social Security's impact on national saving, and hence on investment, and therefore on capital formation, and therefore on real wage growth? Laurence Kotlikoff, Kerk Phillips and Richard Evans argue that Social Security takes money from the young, who tend to save (and hence finance investment that leads to growth) and gives it the old, who consume. The macroeconomic consequences:
Hence, in taking from young savers and giving to old spenders, which Uncle Sam has spent six decades doing on a massive scale, the lifecycle model predicts a major decline in US net national saving associated with a major rise in the absolute and relative consumption of the elderly. This is precisely what the data show.
In 1965, the US net national saving was 15.6% of net national income. Last year, it was just 0.9%. And, according to Gokhale et al (1996) and Lee and Mason (2012), the secular demise in US saving has coincided with a spectacular rise in the consumption of older Americans relative to that of younger Americans.
As Feldstein and Horioka (1980) document, US net domestic saving tracks US net national saving. Hence, postwar intergenerational redistribution has not only lowered net national saving; it has also reduced net domestic investment, from 14.0% of national income in 1965 to just 3.6% in 2011. This decline in the rate of net domestic investment is, no doubt, playing a major role in the slow growth in US wages. Indeed, the level of private-sector average real earnings per hour, exclusive of fringe benefits, is lower today than it was 40 years ago.
7. A guy walks into the bank and asks to raise his debt limit. Some may see some parallels to a bigger problem. A 3 minute youtube.