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Published on interest.co.nz  (Auckland), 28 October 2016

1. Don’t like capitalism? Call it something else.

Capitalism: If that sounds too much like ruthless exploitation, steam mills and a dog-eat-dog society, then perhaps the economic system based on free trade and property rights only needs a different name. I am just not sure that “Trade-tested permissionless innovation” does the trick.

A recent survey of millennials reveals some results that should be of interest to those of us who care about free enterprise and the market economy. Slightly more 18-29 year olds (58% vs. 56%) had a favorable view of socialism than of capitalism. That’s a disturbing result.

There’s some evidence that the term “capitalism” is getting in the way of communicating effectively with millennials. However, if the wording was changed to a comparison of a “government managed economy” to a “free market economy,” the results change dramatically with 64% viewing a “free market economy” favourably and 32% viewing a “government managed economy” favorably.

2. Inequality of respect and the rise of Trump

Everybody talks about inequality and the rise of Trumpism. But there’s a discrepancy in the data. It isn’t the poorest who have been lauding Trump. The data instead shows it instead to be a lot of higher income, lower education, white working class supporting Trump. Why? It isn’t the usual income inequality story. It’s an inequality of respect: urban elites versus the countryside.

I was born and raised in Trump country. My family are Trump people. If I hadn’t moved away and gotten this ridiculous job, I’d be voting for him. I know I would.

3. Don’t believe the hype

Tired of the latest health headlines out of the newspapers? They’re almost all wrong. Vox reminds us not to believe the hype. I was reminded of Jenesa Jeram’s helpful guide on how to read a health study in her report, The Health of the State.

In 2003, researchers writing in the American Journal of Medicine discovered something that should change how you think about medical news. They looked at 101 studies published in top scientific journals between 1979 and 1983 that claimed a new therapy or medical technology was very promising. Only five, they found out, made it to market within a decade. Only one (ACE inhibitors, a pharmaceutical drug) was still extensively used at the time of their publication.

4. Understanding Inequality

Equality good, inequality bad. Inequality rising, equality falling. If you read most papers, that’s what you think you know. Except you may not have the faintest idea of what inequality actually measures and where it is trending. Well, you can find out how much you really know by taking a quiz.

In 2015, what percentage of total household wealth in New Zealand was owned by the top 1%?

  • 8%
  • 18%
  • 28%
  • 38%

5. Why study hard for no gain?

Poverty matters for academic performance. We all know about the differences between Decile 1 and Decile 10 school performance. But does that mean that we can’t expect better outcomes in poorer schools until society has become more egalitarian? Hardly.

Here’s the latest from Torberg Falch and Fischer Justina. More generous welfare states result in worsened performance on international student tests. Why? Because strong welfare states mean high tax rates at the top end, so less reason to aim for higher education in the first place.

This paper studies the relationship between welfare state generosity and individuals’ investment in human capital during compulsory education. We estimate differences-in-differences models accounting for unobserved country heterogeneity for the period 1980-2003 using international test scores in mathematics and science that we have made comparable across testing institutions and test years. Our results clearly suggest that the generosity of the welfare state has a deteriorating impact on student performance.

6. What’s Brexit in French?

The official divorce talks between the EU and Britain haven’t even begun and they are already discussing which language should be used for the negotiations. English, say the British. French, says the EU’s (French) chief negotiator. I for one believe that a good compromise would be … German.

The European Union’s lead Brexit negotiator wants British and EU officials to work in French rather than English during the divorce talks, an EU official familiar with Brussels’ Brexit task force said on Friday.

Michel Barnier, the former French foreign minister running the complex separation with London, is keen that his native tongue be used in meetings and documents, the source told Reuters during a EU summit at which Theresa May was making her first appearance as prime minister at the European Council.

“Barnier wants French to be the working language in Brexit negotiations with Britain,” the source said.

7. Green lies

A former convener of the Royal Society’s Scientific Committee on Problems of the Environment has a bit of rant on “false Greenie science scaremongering”.

They have long spread misinformation and lies about genetic engineering (GE), claiming it has never done any good, only harm. But these claims fly in the face of scientific evidence.

In separate reports, the OECD and the American Academy of Sciences reviewed more than 1000 scientific studies of GE earlier this year. They found that farmers using GE got bigger crops, made more money and used less insecticide than conventional farmers. They concluded that GE has never harmed anybody, nor harmed the environment.

Greenie Luddites so put the wind up the New Zealand government that it passed ludicrous restrictions on harmless GE imports and GE research here. We are the poorer for that.

8. Euro impoverishes Europe

Just because we are not hearing much about the euro crisis these days doesn’t mean it’s over. In fact, monetary union keeps impoverishing many European countries and their peoples, as the Daily Telegraph reminds us.

Not being able to afford a phone, or to eat meat three times a week, is no fun. But thanks to the euro that is now the fate of millions of Europeans – and it will not change until the currency is taken apart.

9. Your chance to win £250,000

The world’s second-highest prize in economics (after the Nobel Prize), the Wolfson Economics Prize, has just been announced. If you feel you can answer the following question, you might have a chance to win a quarter million quid: “How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?” Good luck.

I am delighted to support this competition, the third that we have run. There is no charge for entering and anyone can win this open and ambitious competition.

This time, the prize addresses an issue at the heart of every country’s economic future: road infrastructure.

It should be possible to improve roads without increasing the cost of using them. Now is our chance to come up with answers that can help road users, protect the environment, and support our economy — ideas needed not just in Britain, but around the world.

10. The economics of the Poäng chair

Imagine a store where stuff gets cheaper every year. Welcome to Ikea! It’s the world leading furniture chain that seems to have created its own version of economics.

Ikea is a behemoth. The home furnishing company uses 1 percent of the planet’s lumber, it says, and the 530 million cubic feet of wood used to make Ikea furniture each year pulls with its own kind of twisted gravity. For many, a sojourn to the enormous blue-and-yellow store winds up defining the space in which they sit, cook, eat and sleep.

All that wood is turned into furniture that tries to bring a spare, modern aesthetic to the masses. “We’re talking about democratizing design,” Marty Marston, a product public relations manager at Ikea, told me.

The furniture is also sold according to some unique economics. In many cases, Ikea’s famously affordable pieces get dramatically cheaper year after year. In others, prices creep up. In some cases, products disappear entirely. The result is an ever-evolving, survival-of-the-fittest catalog that wields an enormous amount of influence over residential interiors.

 

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