Relevant and even prescient commentary on news, politics and the economy.

Italy to make climate change study compulsory in schools

Reuters: Italy will become the first nation to require all schoolchildren to study climate change and sustainable development.

Education Minister Lorenzo Fioramonti of the anti-establishment 5-Star Movement: “The entire ministry is being changed to make sustainability and climate the center of the education model. All state schools would dedicate 33 hours per year or almost one hour per school week to climate change issues from the start of the next academic year in September 2020.

I want to make the Italian education system the first education system that puts the environment and society at the core of everything we learn in school.”

Fioramonti goes on; “The entire education ministry is being changed to make sustainability and climate the center of the education model.”

Minister Fioramonti is also behind the popular proposals for taxes on airline tickets, plastics, and sugary foods to help pay for education and are being attacked by critics complaining taxes are too high already.  His progressive positions on the economy and the environment are the antithesis of Matteo Salvini’s hard-right League, which has overtaken 5-Star to become Italy’s most popular party with more than 30% of voter support. Surveys showed 70-80% of Italians backed taxing sugar and airline tickets.

The government has gotten off to a shaky start  with weeks of bickering over the budget. Fioramonti said the new government “will only last if it is brave,” and stops letting Salvini set the news agenda.

Exclusive: Italy to make climate change study compulsory in schools Reuters, November 5, 2019

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Big data helps monopolies, not you

by David Zetland (originally published at One handed economist)

Big data helps monopolies, not you

Economists say competition in markets rages from “perfect” (no company can charge a price over cost without losing 100% of its customers to another company) to “monopoly” (one company sets prices to maximize profits).

Two caveats are important. First, the monopolist doesn’t charge as much as possible but whatever maximizes profits. There might be a lot of trading going on, but also a lot of missing trades. Second, businesses seek monopoly power in different ways, from having a unique product with zero substitutes (pretty rare) to being open for business at a certain time and place (pretty common). Businesses often try to create monopoly power by making it hard to compare products with competitors or across boundaries. That’s why they sell the same razor in pink for women and blue for men, change model numbers for the same product in different markets, change package sizes, and so on.

Thus, businesses make it harder to see similarities and differences because confusion for you means larger profits for them.

Flipping this idea over, businesses want to identify similarities and differences among customers to make it easier to charge different prices to different customers. Their goal is not to charge as much as the market will bear but as much as you will bear.

Thus, businesses “price discriminate” (PD) in a quest to get $4 from you and $6 from me for the same product.  There are three types of PD, arranged from easiest to hardest to implement:

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Weekly Indicators for November 11 – 15 at Seeking Alpha

by New Deal democrat

Weekly Indicators for November 11 – 15 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

Although a few indicators backed off some this week, the overall tone, ex-manufacturing, across all time frames is positive.

You may be reading a few takes today about the poor nowcasts out of the NY and Atlanta Feds, after yesterday’s face-plant of an industrial production reading. Keep in mind that they are mechanically applying that result and not accounting for the GM strike (which is what I would do if I were in their shoes as well). So take those with a healthy dose of salt for now.

As usual, clicking over and reading rewards me with a couple of pennies for my efforts.

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Industrial production tanks on GM strikes; Real retail sales decline slightly

Industrial production tanks on GM strikes; Real retail sales decline slightly

First, let me briefly address industrial production, which fell -0.8% in October. On its face this is an awful number. But take it with a big grain of salt: mainly it reflected the GM  strike.

Here’s the applicable note from the Federal Reserve:

Manufacturing output fell 0.6 percent in October to a level 1.5 percent lower than its year-earlier reading. In October, the strike in the motor vehicle industry contributed to a drop of 1.2 percent for durables. Excluding motor vehicles and parts, the output of durables moved down 0.2 percent…. The production of nondurables was unchanged…. The output of other manufacturing (publishing and logging) fell 1.0 percent.

Even without the GM strike, the number would have been negative. But not nearly as negative as it was. For the record, both utilities and mining (including oil production) were also down substantially, but these tend to be volatile.

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Is Venezuela Stabilizing?

Is Venezuela Stabilizing?

Maybe.

It looks the inflation rate in Venezuela maxed  out in January at an annuualized rate of 192,000 % , whiich fell by September to 4,600% rate, still in hyperinflationary teritoryy, but  clearly coming down substantially.  I am not  a fan of this regime and never was, unlike some prominent economists saying nice t8ings about their economic performance, especially back in 2007, just before  the  world crash, when indeed their  numbers  looked prtty good.  But, not more recently unfortunately.  But maybe they are slowly returning to a more functional economy now, with still a long way to go.

There are also reports that oil production in Venezuela has recently risen.  Reportedly some of the recent possible stabilization in Venezuela may reflect influence of Russian advisers.

Barkley  Rosser

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Initial claims continue to show slowdown, but no imminent recession

Initial claims continue to show slowdown, but no imminent recession

I’ve been monitoring initial jobless claims closely for the past several months, to see if there are any signs of a slowdown turning into something worse. Simply put, no recession is going to begin unless and until layoffs increase.

My two thresholds are:

1. If the four week average on claims is more than 10% above its expansion low.
2. If the YoY% change in the monthly average turns higher.

As of this week, initial claims continue to be very close to their expansion lows. The 4 week moving average of claims Is 217,000, only 7.7% above the lowest reading of this expansion:

On a YoY% change basis, the 4 week average is -1.0% below its level one year ago:

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What quid did the president quo and when did he quo it?

What quid did the president quo and when did he quo it?

Aside from the headline news about a July 26 phone call, I learned four big things from the impeachment inquiry hearing this morning. First, the specific corruption surrounding Burisma Holidings had to do with self dealing by company founder Mykola Vladislavovich Zlochevsky — issuing oil and gas licences to his own company when he was Minister of Ecology and Natural Resources. In other words, Zlochevsky did exactly what Donald J. Trump attempted to do with his Doral Golf Club and the G7 summit.

The second thing I learned is that President Trump was nursing a grudge against Ukraine because some Ukrainian politicians said some nasty things about him after he made a comment about letting Russia have Crimea. That’s why he felt Ukraine “owed” him. The third thing is that the Ukraine shit made fanfall just about exactly the time that Trump was extemporizing about Hurricane Dorian hitting Alabama. Who knew Trump could multi-task?

The fourth thing I learned is the big one. There was not one quid pro quo but two. One involved Zelensky, the other Putin. That’s the significance of the timing of the Trump-Zelensky phone call — the day after Robert Mueller’s congressional testimony was a dud. Humiliating Zelensky by forcing him to make a public announcement of a politically-motivated investigation of Biden-Burisma-2016 would hand to Putin his reward — a weakened negotiating partner — for the favor of having helped put Trump in the White House. The art of the deal, indeed.

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A simple Hayekian test for conservatives

(Dan here…Eric will be posting some of his work.  He has read many econ blogs but has not published in the econ blogosphere.  He is experienced otherwise…welcome  Eric.)

Bio for Eric Kramer

I am an economist and lawyer by training and I am currently writing a book on political economy and the role of government.  The book defends the liberal idea that government should actively regulate markets to promote efficiency and to ensure that opportunity and prosperity are widely shared against the leading arguments for limited government, especially the consequentialist arguments of Friedrich Hayek and James Buchanan and their intellectual heirs.  Prior to starting work on the book, I was a finance and strategy executive for The Plymouth Rock Companies for many years.

 

by Eric Kramer

 

A simple Hayekian test for conservatives

Hayek believed that non-economists are frequently dissatisfied with the hardships, risks, and inequities created by capitalism, and that they frequently support harmful government regulation of markets because they do not know how markets work.  As Hayek recognized, this puts economists in a difficult political position.  Successful persuasion requires a perception of common values, but when economists argue against popular, common-sense efforts to address the perceived hardships and inequities of unregulated capitalism, they risk being dismissed as apologists for the wealthy or as ideological extremists.

Hayek was sensitive to the political challenges he faced as an advocate for lightly regulated capitalism.  He famously emphasized – and arguably exaggerated – the values he shared with his socialist opponents.  He recognized that economists cannot simply urge people to reject bad policy proposals, that they needed to offer constructive solutions to the problems created by capitalism.  To be sure, Hayek sometimes does lapse into harsh criticism of egalitarians and a rigid rejection of welfare state capitalism, but at other times I believe he endorsed a larger role for government than he personally approved of to preserve his own credibility.

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