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20 days

Remembering Albert Hirschman's Tunnel Effect

Why do societies worry about high or rising inequality more at some times than at others? Albert O. Hirschman offered a classic answer in "The Changing Tolerance for Income Inequality in the Course of Economic Development," which appeared in the November 1973 Quarterly Journal of Economics (87: 4, pp. 544-566). His argument is in large part structured around a tunnel metaphor, which goes like this (footnotes omitted):

21 days

Choice and Health Insurance Coverage

If you think if Medicare and Medicaid as examples of "single payer" health insurance plan, you are at best partially correct. Government health spending (including federal, state, and local) does accounts for about 46% of total US health care spending. However, a major and largely unremarked change is that government health care spending is being filtered through a system in which those receiving the government health insurance need to make choices between privately-run health insurance plans.

23 days

Rent Control Returns: Thoughts and Evidence

Rent control is back on the public policy agenda, at least in California, where Proposition 10 on the November ballot "Expands Local Governments’ Authority to Enact Rent Control on Residential Property." Hence some thoughts about rent control in general, and a couple of the more recent studies on the topic.

24 days

How Much is the Fed Going to Raise Interest Rates?

In December 2008, the Federal Reserve took the specific policy interest rate that it targets--the so-called "federal funds interest rate"--down to the range of 0% to .25%. The Fed then held the federal funds interest rate at this near-zero level for seven years, until December 2015. Since then, the Fed has raised the federal funds interest rate eight times in small steps, with the most recent step at its September 27 meeting, so that it now is in the range of 2% to 2.25%. How much higher is the Fed going to go?

24 days

Not Waving but Drowning – Stocks, Debt and Inflation?

The US stock market is close to being in a corrective phase -10% off its highs. Global debt has passed $63trln – well above the levels of 2007. Interest rates are still historically low, especially given the point in the economic cycle. Predictions of a bear-market may be premature, but the headwinds are building.

26 days

The Remarkable Fall in Global Poverty

Back in 1990, the World Bank defined an "absolute poverty" line. It was based on the actual poverty lines as chosen by the governments of low-income countries around the world, and thus can be taken to represent those people who are beneath the most basic minimums for basic necessities like food, shelter, and clothing. This poverty line has been updated over time to adjust for changes in prices and exchange rates, and currently stands at $1.90 in consumption per person per day. The World Bank provides an overview of global poverty in its annual "Poverty and Shared Prosperity" report for 2018, titled "Piecing Together the Poverty Puzzle." Here are some points that caught my eye.

27 days

Trade, Technology, and Job Disruption

Both technological developments and international trade can disrupt an economy, and in somewhat similar ways, but many people have very different reactions to these forces. To illustrate the point, I sometimes pose this question:

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