Open thread Jan. 17, 2022
“Open Thread January 6, 2023,” Angry Bear, angry bear blog
Relevant and even prescient commentary on news, politics and the economy.
“Open Thread January 6, 2023,” Angry Bear, angry bear blog
China’s Population Falls, Heralding a Demographic Crisis
NY Times – Jan 16
Deaths outnumbered births last year for the first time in six decades. Experts see major implications for China, its economy and the world.
The world’s most populous country has reached a pivotal moment: China’s population has begun to shrink, after a steady, yearslong decline in its birthrate that experts say is irreversible.
The government said on Tuesday that 9.56 million people were born in China last year, while 10.41 million people died. It was the first time deaths had outnumbered births in China since the Great Leap Forward …
… facing a population decline, coupled with a long-running rise in life expectancy, the country is being thrust into a demographic crisis that will have consequences not just for China and its economy but for the world.
Over the last four decades, China emerged as an economic powerhouse and the world’s factory floor. The country’s evolution from widespread poverty to the world’s second-largest economy led to an increase in life expectancy that contributed to the current population decline …
… Births were down from 10.6 million in 2021, the sixth straight year that the number had fallen, according to the National Bureau of Statistics. China’s overall population now stands at 1.41 billion. By 2035, 400 million people in China are expected to be over 60, accounting for nearly a third of its population.
Labor shortages that will accompany China’s rapidly aging population will also reduce tax revenue and contributions to a pension system that is already under enormous pressure.
Whether or not the government can provide widespread access to elder care, medical services and a stable stream of income later in life will affect a long-held assumption that the Communist Party can provide a better life for its people.
The news of China’s population decline comes at a delicate time for the government in Beijing, which is dealing with the fallout from the sudden reversal last month of its zero-tolerance policy toward Covid. …
Paul Krugman weighs in…
The Problem(s) With China’s Population Drop
NY Times – Jan 17
… So why isn’t population decline good news, an indication that China and the world in general will have fewer people placing demands on the resources of a finite planet?
The answer is that a declining population creates two major problems for economic management. These problems aren’t insoluble, given intellectual clarity and political will. But will China rise to the challenge? That’s far from clear.
The first problem is that a declining population is also an aging population — and in every society I can think of we depend on younger people to support older people. In the United States the three big social programs are Social Security, Medicare and Medicaid; the first two are explicitly targeted at seniors, and even the third spends most of its money on older Americans and the disabled.
In each case, the funding for these programs ultimately depends on taxes paid by working-age adults, and concerns about America’s long-term fiscal future arise largely from a rising old-age dependency ratio — that is, a rising ratio of seniors to those of working age.
China’s social safety net is relatively undeveloped compared with ours, but older Chinese nonetheless depend on government aid — especially the state pension. And China’s old-age dependency ratio is skyrocketing. This means that China will either have to inflict a lot of economic pain on its elderly, sharply raise taxes on younger citizens or both.
The other problem is subtler but also serious. To maintain full employment, a society must keep overall spending high enough to keep up with the economy’s productive capacity. You might think that a shrinking population, which reduces capacity, would make this task easier. But a falling population — especially a falling working-age population — tends to reduce some important kinds of spending, especially investment spending. After all, if the number of workers is declining, there’s less need to build new factories, office buildings and so on; if the number of families is declining, there’s not much need to build new housing.
The result is that a society with a declining working-age population tends, other things equal, to experience persistent economic weakness. Japan illustrates the point: Its working-age population peaked in the mid-1990s, and the country has struggled with deflation ever since …
China’s Economy Stumbled Last Year With Covid Lockdowns Hobbling Growth
NY Times – Jan 16
New government data shows that growth for the year fell far short of Beijing’s goal. With Covid curbs lifted but the pandemic’s course uncertain, hope and fear cloud the forecast.
The Chinese economy had one of its worst performances in decades last year as growth was dragged down by numerous Covid lockdowns followed by a deadly outbreak in December that swept across the country with remarkable speed.
China grew 3 percent for the year, numbers released Tuesday show, much less than in 2021 and short of Beijing’s target of 5.5 percent. Other than 2020, it was the most disappointing showing since 1976, the year Mao Zedong died, when the economy declined 1.6 percent.
The government’s strict “zero Covid” restrictions cast a pall over 2022, strangling the economy with frequent quarantines, regional lockdowns and massive spending to pay for widespread testing. Then on Dec. 7, China lifted the policy without warning after nearly three years. Within weeks, the virus had infected hundreds of millions of people, killed many older residents and left factories, offices and restaurants bereft of workers and customers. …
How ‘Extraordinary Measures’ Can Postpone a Debt Limit Disaster
NY Times – Jan 18
Treasury Secretary Janet L. Yellen will soon need to use accounting maneuvers to keep the United States from defaulting on its debt.
The United States is expected to hit a cap on how much money it can borrow this week, a development that will result in the Treasury Department employing what are known as “extraordinary measures” to ensure that the federal government has enough money to pay its bills.
The United States runs a budget deficit, which means it does not take in enough money through taxes and other revenue to fund its operations. As a result, the country sells Treasury debt to finance its operations — using borrowed money to fund military salaries, retiree benefits and interest payments to bondholders who own U.S. debt.
But Congress limits the amount of money the federal government can borrow — what’s known as the “debt limit” — and the United States is expected to hit the current cap of $31.4 trillion on Thursday.
As a result, Treasury Secretary Janet L. Yellen told Congress last week that the administration would try to keep the country under that debt cap and able to finance its operations as long as possible by using “extraordinary measures.” …
‘Extraordinary measures’ summarized (from the link above):
“Secretaries of the Treasury in both Republican and Democratic administrations have exercised their authority to take certain extraordinary measures in order to prevent the United States from defaulting on its obligations as Congress deliberated on increasing the debt limit. Four of these extraordinary measures are available at this time. The other measures that have been taken in the past are either unavailable at this time or of limited use.
The extraordinary measures currently available are: (1) suspending sales of State and Local Government Series Treasury securities; (2) redeeming existing, and suspending new, investments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund; (3) suspending reinvestment of the Government Securities Investment Fund; and (4) suspending reinvestment of the Exchange Stabilization Fund.” …
America Set to Hit Its Borrowing Limit Today, Raising Economic Fears
NY Times – Jan 19
The milestone will not immediately affect markets or growth, but it sets the stage for months of entrenched partisan warfare.
The United States is expected to hit a congressionally imposed borrowing limit on Thursday, requiring the Treasury Department to engage in accounting maneuvers to ensure the federal government can keep paying its bills.
The milestone of hitting the country’s $31.4 trillion debt cap is the product of decades of tax cuts and increased government spending by both Republicans and Democrats. But at a moment of heightened partisanship and divided government, it is also a warning of the entrenched partisan battles that are set to dominate Washington in the months to come, and that could end in economic shock.
Newly empowered Republicans in the House have vowed that they will not raise the borrowing limit again unless President Biden agrees to steep cuts in federal spending. Mr. Biden has said he will not negotiate conditions for a debt-limit increase, arguing that lawmakers should lift the cap with no strings attached to cover spending that previous Congresses authorized.
Treasury officials estimate the measures that they will begin employing on Thursday will enable the government to keep paying federal workers, Medicare providers, investors who hold U.S. debt and other recipients of federal dollars at least until early June. But economists warn that the nation risks a financial crisis and other immediate economic pain if lawmakers do not raise the limit before the Treasury Department exhausts its ability to buy more time. …
New Zealand’s Economic Troubles Are Here to Stay
NY Times – Jan 19
PM Jacinda Ardern Ardern maneuvered through one crisis after another but had less success confronting persistent challenges that have hobbled successive governments.
(Having spent a week touring around NZ a few years ago, I retain much fondness for and curiousity about that far distant land.)
… Over nearly six years in office, Prime Minister Jacinda Ardern of New Zealand skillfully weathered one sudden catastrophe after another and cruised to re-election in 2020. But in the background, New Zealand’s longstanding economic issues — like expensive housing and a high cost of living — continued to simmer.
Now, with national elections less than nine months away and days after her shock resignation, the future of Ms. Ardern’s liberal Labour Party will hinge on how voters perceive she and her government tackled those problems. And with economic momentum falling, interest rates rising and inflation cutting into household budgets, critics, including those in the opposing center-right National Party, will seek to place the blame at her door. …
Err, all due respect, make that “PM Jacinda Ardern maneuvered…”
… On Thursday, when Ms. Ardern announced her plan to step down, among her detractors was Ben Buist, 49. Speaking in downtown Christchurch, he told of struggling with the country’s cost of living crisis and trying to get affordable housing.
“Where’s all the houses she said she’d build?” he said, referring to a flagship campaign promise to construct 100,000 new homes, a pledge that helped bring Ms. Ardern to power. Only a fraction of those houses were built during her tenure.
When Ms. Ardern notched her surprise upset victory in 2017, New Zealand’s economy was much in the middle, globally speaking, said Brian Easton, an independent economist in the country. “And it is still, today — except the world economy is functioning less well, and so is New Zealand’s,” he said.
The country has a small, open and not especially competitive economy. Its moniker — the “shaky isles” — is an accurate one: at the mercy of global events, highly susceptible to changes in the Chinese economy and at constant risk of natural disaster, because it is situated on multiple earthquake fault lines. …
Shaky Isles: Why NZ’s seismic hazard has just increased
NZ Herald (Auckland) – Oct 3, 2022
Live & Work in NZ – Housing
New Zealand’s housing reforms offer a model
Brookings – Jan 24, 2022
Over the past decade, many cities around the world have experienced a significant rise in housing costs, and the large cities of New Zealand are no exception. The small nation’s median house price rose by approximately 130% between 2011 and 2021,
far outpacing household income growth and eroding housing affordability.
Undersupply has contributed to these rising housing costs. Census data reveals that New Zealand’s population increased by 10.8% between 2013 and 2018, but the stock of occupied dwellings only increased by 6.6% over the same period—indicating that there are chronic shortages of housing in the locations where people want to live.
In response, the New Zealand government recently passed sweeping zoning reform legislation to permit medium-density housing in all of the country’s major cities. This policy builds on the earlier success of upzoning in the country’s largest city, Auckland, to redress housing shortages by encouraging higher-density housing. The reform is also part of a broader policy shift to encourage housing construction by allowing cities to build up. …
Auckland is a large city, comprising over 30% of the total polulation currently.
Nearby are Hamilton and Tauranga, with another 10% between them.
Another 10% in Wellington & Christchurch, farther away.
The population density near & around Auckland exacerbates housing problems.
Supreme Court Says It Hasn’t Identified Person Who Leaked Draft Abortion Opinion
NY Times – Jan 19
The Supreme Court announced on Thursday that an internal investigation had failed to identify who leaked a draft of the opinion overturning Roe v. Wade, the 1973 decision that had established a constitutional right to abortion.
In a 20-page report, the court’s marshal, Gail A. Curley, who oversaw the inquiry, said that investigators had conducted 126 formal interviews of 97 employees, all of whom had denied being the source of the leak. But several employees acknowledged that they had told their spouses or partners about the draft opinion and the vote count in violation of the court’s confidentiality rules, the report said.
The investigation did not determine that any of those discussions led to a copy of the draft opinion becoming public, however. Investigators also found no forensic evidence of who may have leaked the opinion in examining the court’s “computer devices, networks, printers and available call and text logs,” the report said. …
(Justices were not interrogated. That might not have been useful, dontchaknow.)
The findings raised the possibility that no one will be held to account for one of the most stunning breaches of secrecy in the Supreme Court’s history. The leak left the court in a state of mutual suspicion about whether a clerk or even a justice betrayed its code of silence about rulings before they are announced. …
Is the leaking of the decision the real problem, or would that not be the decision itself?
I mean, some of them would have lied, and nobody wants to hear of a Supreme Court Justice doing that.
Surprise Deal Would Be Most Ambitious Climate Action Undertaken by US
NY Times – Jan 20
… Only late Friday afternoon, a day after the report was released and after repeated questions were submitted to the court’s public information office about whether the justices were interviewed in the probe, did some clarification come from the court.
Its marshal, Gail A. Curley, who conducted the inquiry, said in a written statement that during the course of her investigation, she spoke to all the justices and they “actively cooperated in this iterative process, asking questions and answering mine. I followed up on all credible leads, none of which implicated the justices or their spouses.” She said she did not believe it was necessary to ask the justices to sign sworn affidavits under penalty of perjury — unlike every other employee interviewed. She does not say whether spouses of the justices were interviewed. …
The new statement adds key information inexplicably missing from a report that is critical to the credibility of the court. But it still leaves some questions unanswered. …
… While the court’s marshal at least spoke with the justices, her failure to investigate them — or their spouses — on equal terms with all other court employees is glaring for at least three reasons.
First, outside of the court employees who were carefully examined by investigators, the justices were apparently the only other people who had “access to electronic or hard copies of the draft opinion.” No investigation honestly aimed at uncovering the truth would ignore them as a possibility.
Second, some justices possessed an especially plausible motive to leak the draft. Recall that the leak happened shortly after The Wall Street Journal’s editorial board published an inside account suggesting that Chief Justice John Roberts was working to persuade other justices, likely including Amy Coney Barrett and Brett Kavanaugh, to join him in a narrower ruling. Leaking the draft opinion — which Justices Barrett and Kavanaugh had voted to join, according to reporting at the time — would have trained immense pressure from conservative elites on both justices to stick with their original votes, thus preserving Dobbs’s eventual five-member majority.
Finally, justices have a long history of being the ultimate source of leaks. …
In the end, we may never know who leaked the Dobbs draft opinion. But this much we do know: The public report on the leak investigation will do little to repair the court’s battered public image.
(The op-ed continues. Court staff were interrogated. Justices were not. That post was not -yet- accepted. Some past justices were notrious leaders.)
Did the Supreme Court’s Leak Investigation Let the Justices Off the Hook?
Some of those ‘notrious leaders’ were notorious leakers.
The new statement adds key information inexplicably missing from a report that is critical to the credibility of the court. But it still leaves some questions unanswered.
Let’s start with what the report says the investigators did do. After carefully determining that 82 court employees in addition to the justices had access to the draft opinion, investigators conducted an impressive total of 126 formal interviews. …
The report does not explicitly declare that the justices were not interviewed or investigated. But the report does say that investigators conducted interviews only of court “personnel,” a term the report defines as including “temporary (law clerks) and permanent employees” — yet seemingly not the justices. What is more, the investigation was perhaps never likely to delve into the justices to begin with, given the very real sense shared by clerks and permanent court employees alike that the justices are simply above reproach. And of course, the person tasked with running the inquiry, the marshal of the Supreme Court, answers to (and can be fired by) the justices. …
While the court’s marshal at least spoke with the justices, her failure to investigate them — or their spouses — on equal terms with all other court employees is glaring for at least three reasons.
First, outside of the court employees who were carefully examined by investigators, the justices were apparently the only other people who had “access to electronic or hard copies of the draft opinion.” No investigation honestly aimed at uncovering the truth would ignore them as a possibility.
Second, some justices possessed an especially plausible motive to leak the draft. Recall that the leak happened shortly after The Wall Street Journal’s editorial board published an inside account suggesting that Chief Justice John Roberts was working to persuade other justices, likely including Amy Coney Barrett and Brett Kavanaugh, to join him in a narrower ruling. Leaking the draft opinion — which Justices Barrett and Kavanaugh had voted to join, according to reporting at the time — would have trained immense pressure from conservative elites on both justices to stick with their original votes, thus preserving Dobbs’s eventual five-member majority.
Finally, justices have a long history of being the ultimate source of leaks. …
… some justices possessed an especially plausible motive to leak the draft. Recall that the leak happened shortly after the WSJ … published an inside account suggesting that Chief Justice John Roberts was working to persuade other justices … to join him in a narrower ruling. Leaking the draft opinion … would have trained immense pressure from conservative elites on (these) justices to stick with their original votes, thus preserving Dobbs’s eventual five-member majority. …
(The op-ed goes on to suggest why a conservative justice might leak the draft ruling, because Chief Justice Roberts was said to be devising a more narrow decision that some other justices might sign on to, and leaking the decision would cause pressure to be applied to NOT sign on to this narrower decision which would preserve some abortion rights.)
(There is more in this op-ed that might be of interest, but cannot be posted.)
… In the end, we may never know who leaked the Dobbs draft opinion. But this much we do know: The public report on the leak investigation will do little to repair the court’s battered public image.
(The title of the link above should be)
Did the Supreme Court’s Leak Investigation Let the Justices Off the Hook?
Inside the Supreme Court Inquiry: Seized Phones, Affidavits and Distrust
NY Times – Jan 21
An investigation of the abortion opinion leak was meant to right the institution amid a slide in public confidence. Instead, employees say, it deepened suspicions and caused disillusionment.
… On Thursday, the court issued a 20-page report disclosing that the marshal’s monthslong search for the leaker had been fruitless, and detailing embarrassing gaps in internal policies and security. While noting that 97 workers had been formally interviewed, the report did not say whether the justices or their spouses had been.
… A day later, the court was forced to issue a second statement saying that the marshal had in fact conferred with the justices, but on very different terms from others at the institution. Lower-level employees had been formally interrogated, recorded, pressed to sign affidavits denying any involvement and warned that they could lose their jobs if they failed to answer questions fully, according to interviews and the report.
… Instead of putting the matter to rest, Friday’s statement heightened concerns about a double standard for justices.
“They weren’t subjected to the same level of scrutiny,” said one court worker on Friday, speaking on the condition of anonymity because of the court’s confidentiality rules. “It’s hard to imagine any of them suffering meaningful consequences even if they were implicated in the leak.” …
… “justices have a long history of being the ultimate source of leaks,” Aaron Tang, a law professor and former clerk to Justice Sonia Sotomayor, wrote in an Opinion essay in The New York Times. …