Category Archives: Global Economics

The World Is Getting Better and Nobody Knows It

CharityMy Comments: For me, the glass is always half full. I try to live today and worry only about the future. I am easily ticked off by those who try to live in the past, or try to re-litigate the arguments of history. It’s a waste of time in a world, that for me, is getting shorter. You can argue that I see the world through rose colored glasses, and maybe I do, but I am who I am and will probably remain so.

Johan Norberg | Friday, October 14, 2016 |

A couple of years ago, I commissioned a study in which 1,000 Swedes were asked eight questions about global development. On average, every age group and every income group was wrong on all eight questions – because they all thought the world was in bad shape and getting worse. Large majorities, for example, thought that hunger and extreme poverty have been increasing, when they have in fact been reduced faster than at any other point in world history. And those who had been through higher education actually had less knowledge than the rest.

It’s not just Sweden. In Britain, only 10 per cent of people thought that world poverty had decreased in the past 30 years. More than half thought it had increased. In the United States, only 5 per cent answered (correctly) that world poverty had been almost halved in the last 20 years: 66 per cent thought it had almost doubled.

Bad News and the Media

Why do we make these false assumptions? Many of them are formed by the media, which reinforces a particular way of looking at the world – a tendency to focus on the dramatic and surprising, which is almost always bad news, like war, murder and natural disasters.

A study from Baltimore, where crime has been falling rapidly, showed that 73 per cent of those who watched the news every day were careful not to stay out too late in the city, compared to 54 per cent of those who watched it no more than twice a week. Almost everybody thought that crime was prevalent – but they all thought it occurred somewhere other than where they lived. The environment they had first-hand knowledge of felt safe, but the places they heard about on the news seemed very risky.

Many journalists and editors acknowledge this tendency. The American public radio journalist Eric Weiner says: “The truth is that unhappy people, living in profoundly unhappy places, make for good stories.” When the Swedish TV journalist Freddie Ekman was asked about the biggest news stories during his half a century in the trade, he responded by listing the murder of Prime Minister Olof Palme in 1986, the sinking of the cruise ferry Estonia in 1994, and the terror attacks of 9/11. When asked about any positive stories during this period, he answered, “One doesn’t remember them, because they never get big.”

Data vs Emotion

From a broadcaster’s perspective, this makes sense. If a plane crashes, we want to hear about it. But this also means that we shouldn’t be content with getting our information from the news alone; we need background and context, history and statistics. What is really impressive is the fact that 40 million planes take off every year, and almost every one of them lands safely. Since the 1970s, the number of passengers has increased more than ten-fold, and yet the number of accidents and fatalities has halved – but you would never know it from following the news.

Max Roser, an economist at Oxford University who collects data on the world’s development, puts it this way: “Things that happen in an instant are mostly bad. It’s this earthquake or that horrible murder. You’re never going to have an article on the BBC or CNN that begins by saying: ‘There’s no famine in south London today’ or: ‘Child mortality again decreased by 0.005 per cent in Botswana’.

There are many benefits to the kind of instant news that global TV networks and the internet have brought us. At last we have learned about the conditions under which people live in other parts of the world. But it also makes it easier for someone, somewhere to find something truly shocking to report on. There is always a war, and there is always a child murderer on the loose, and that is what will top the news cycle – all the time. And, of course, political parties, campaigners and pressure groups always exploit our fear to promote their own ideologies.

It is our own fault. If we didn’t want to read about, listen to and watch bad news, journalists would not report it. Indeed, when something terrible happens anywhere, two billion smartphones will nowadays make sure that we find out, even if no reporters are on the scene.

It’s Evolution

This obviously has long-term consequences. The psychologists Daniel Kahneman and Amos Tversky have shown that people do not base their estimates of how frequent something is on data, but on how easy it is to recall examples from memory. This “availability heuristic” means that the more memorable an incident is, the more probable we think it is, so we imagine that horrible and shocking things, which stay in our thoughts, are more frequent than they are. We are built to be worried. We are interested in exceptions. We notice the new things, the strange and unexpected. It’s natural. We have been hardwired this way by evolution. Fear and worry are tools for survival: the hunters and gatherers who survived sudden storms and predators were the ones who had a tendency to scan the horizon for new threats rather than those who were relaxed and satisfied. If the building is on fire, we need to know about it immediately.

Steven Pinker mentions three particular psychological biases that make us think that the world is worse than it really is. One is the well-documented fact that “bad is stronger than good” – we are more likely to remember losing money, being abandoned by friends or receiving criticism than we are to remember winning money, gaining friends or receiving praise.

Another emotional bias is the psychology of moralisation. Complaining about problems is a way of sending a signal to others that you care about them, so critics are seen as more morally engaged. A third bias is our nostalgia about a golden age when life was supposedly simpler and better. As the cultural historian Arthur Herman observed: “Virtually every culture past or present has believed that men and women are not up to the standards of their parents and forebears.”

The fact that things have in fact been getting better – overwhelmingly so – does not guarantee progress in the future. After years of easy money and debt financing of companies and governments, a large-scale financial crisis is possible, when all the bills come due. Global warming may threaten ecosystems and affect the lives of millions. Large-scale war between major powers is possible. Terrorists could wreak havoc on a massive scale if they get access to our most powerful technologies, but they could also co-ordinate a large number of smaller attacks on civilians.

But more than that, people led by fear might curtail the freedom and the openness that progress depends on. When Matt Ridley, author of The Rational Optimist, is asked what he is worried about, he usually responds, “superstition and bureaucracy,” because superstition can obstruct the accumulation of knowledge, and bureaucracy can stop us from applying that knowledge in new technologies and businesses.

Yet in our era of globalisation, more countries, in more places, now have access to the sum of humanity’s knowledge, and are open to the best innovations from other places.
In such a world, progress no longer depends on the whim of one emperor. If progress is blocked in one place, many others will continue humanity’s journey.

Solar Power Capacity Tops Coal for the First Time Ever

My Comments: Yes, this is only in China. But I grew up when coal was virtually 100% (in England). While China is newly industrialized compared to our status in the world, this headline has huge implications.

Also, keep in mind as a Florida voter, to vote NO on Amendment 1. This was promoted by the oil and gas industry to limit flexibility with respect to solar energy. And while you’re at it, don’t automatically re-elect the three judges on the Florida Supreme Court that allowed Amendment 1 to appear on the ballot. They are Charles Canady, Jorge LaBarga and Ricky Polston.

by Geoffrey Smith | October 25, 2016

China alone installed two wind turbines per hour and 500,000 solar panels a day last year.

Solar power now accounts for more installed capacity than any other form of electricity generation, according to new data out Tuesday.

“About half a million solar panels were installed every day around the world last year,” the Paris-based International Energy Agency said in a new report on the renewables sector, as emerging markets in particular bet heavily on green power. China also installed the equivalent of two wind turbines every hour last year.

In total, over half the new power capacity installed last year—153,000 megawatts, or 153 gigawatts—was renewable-sourced. That’s a 15% increase from the previous year, and three-quarters of it came in the shape of wind (66 GW) or solar photo-voltaic (49 GW).

Capacity is what a plant can theoretically produce. Actual generation remains much lower, due to the basic unpredictability of resources such as sunlight and wind. But even on levels of actual generation, the IEA said renewables would close the gap rapidly going forward.

“We are witnessing a transformation of global power markets led by renewables and, as is the case with other fields, the center of gravity for renewable growth is moving to emerging markets,” said Dr. Fatih Birol, the IEA’s executive director.

The IEA said the share of renewables in the generation mix would rise to 28% within six years, from 23% at the end of last year. It raised its forecast for green power output in that timeframe by 13% “due mostly to stronger policy backing in the U.S., China, India and Mexico.”

Another factor expected to help is a continued fall in costs: the IEA reckons the cost of solar PV will fall by a quarter, and the cost of onshore wind will fall by 15%. Lower capital costs mean that an installation can break even with lower load rates.

While climate change policy plays a large role in countries’ policy choices, especially in the wake of the Paris summit last year, the IEA pointed out that cutting air pollution and diversifying energy supplies are just as important some some countries. In China, in particular, renewables are helped by the fact that overall energy demand is growing rapidly, and renewables are the only option for meeting demand in places where pollution is already a hard constraint.

In China and India, where the fastest growth in green power is expected, it will still cover less than half of the overall increase in electricity demand. By contrast, in developed economies, renewables will grow faster than overall generation.

Would The Donald Be Good For Business?

US economyMy Comments: Clients ask me what is likely to happen to their investments if Donald achieves the White House. Frankly, I have no idea. You might as well ask me what I’m having for lunch next Monday; I have no idea.

But his candidacy and his expressed values will influence how he might think and act on economic issues over the next four years. It is already having an effect across the world. And it’s not good.

This article came from a news feed I follow and was originally published by the Foundation for Economic Education. ( )

By Jeffrey A. Tucker | 10/15/16

The public-relations disaster that Trump has caused the GOP won’t soon be repaired.

But I’m worried about another, and ultimately more serious problem: the damage that Trump has inflicted on the reputation of capitalism, business and commerce – the very basis of our standard of living that is forever under attack. Trump has given no one a reason to support capitalism and every reason to regard it as dangerous, hateful and aggressive.

Think of it. At long last, a successful businessman with no prior political experience received the nomination of a major political party. For those of us who celebrate markets and entrepreneurship, you might think this would be something to celebrate.

Except that it’s not. The whole Trump phenomenon has created a terrible mess for the reputation and cause of economic liberty. It’s a correctable setback in the PR war, to be sure, but active explanation is necessary.

The Cartoon Capitalist
The point was underscored by the first presidential debate. Clinton cited the many instances, now heavily documented, in which Trump had stiffed workers.

Clinton: I have met a lot of the people who were stiffed by you and your businesses, Donald. I’ve met dishwashers, painters, architects, glass installers, marble installers, drapery installers, like my dad was, who you refused to pay when they finished the work that you asked them to do.

We have an architect in the audience who designed one of your clubhouses at one of your golf courses. It’s a beautiful facility. It immediately was put to use. And you wouldn’t pay what the man needed to be paid, what he was charging you to do.…

Trump immediately shot back without thought: “Maybe he didn’t do a good job, and I was unsatisfied with his work.”

The response seemed to concede the truth of what she said. The message here is that capitalists have all power and pay when they want, as if contracts have nothing to do with it. The rich have all the power to decide whether to pay, he implies.

We’ve all known people, rich and poor, who fail to live up to their commitments. This is not something markets reward; indeed the opposite is true. Markets reward promise keeping, even mandate it.

The truth is that in the world of business, Trump has a very bad reputation. Many institutions and people will not deal with him. In retrospect, it makes sense why he would choose politics, a terrain where you can fool more people for longer than you can in the business world.

Next during the debate Clinton accused him of not giving to charity (he didn’t dispute it, and there’s been no documented record of his charitable giving) and claimed he paid no taxes. Trump’s instant response: “That makes me smart.”

For those who claim that the rich are getting a free ride at the expense of everyone else, this response was the vindication of their most paranoid fantasies.

Finally, Clinton accused Trump of profiting from the housing collapse. Trump shot back: “That’s called good business,” seeming to show zero sympathy for the millions who lost their savings during that disaster.

The real story of that crash is that Wall Street paid a heavy price and got bailed out by the political system just as the markets were working to punish bad judgment.

Looking at Trump’s behavior that night, you have the leftist caricature of a rapacious looter who cares about no one, wins as everyone else loses and pays nothing back to the society he loots. It’s straight out of Marxian central casting.

Not True
For decades, advocates of market freedom have worked to change this impression of capitalists and capitalism. Milton Friedman rightly pointed out that the main beneficiaries of capitalism are the poor and the workers. The natural state of humanity is desperate poverty; creating wealth to lift everyone out of the muck requires enterprise and private property.

Ludwig von Mises worked mightily to demonstrate that if anyone has power within the capitalist economy, it is consumers, not producers. It is their decision to buy or not to buy that determines how resources are used and who profits.

The real story of markets is that profits are extremely hard to maintain in a highly competitive environment; the innovation and service to society must never stop.

And countless activists in our own time are working to free the lives of small entrepreneurs who have their innovations blocked by regulations, taxes, zoning controls and trade restrictions.

Now Trump comes along and seems to undermine the whole message in one fell swoop. We should not underestimate the potential damage a person like this does to a wonderful cause.

He Is No Capitalist
It’s not just Trump’s policies, but those matter. He jumped into the campaign advocating (as a first principle) not market competition but the opposite: protectionism. His tariff proposals are about taxing American consumers in order to block competitive goods and services from outside the country—the classic mercantilist policy that real capitalists have battled for centuries. His immigration ideas apply that same policy to people.

Beyond that, his infrastructure and military ideas are all about huge government spending. Even the Wall is little more than a public-sector boondoggle (the building of which will result in mass theft of private property). It’s a major opportunity for countless sweetheart deals that give well-connected contractors a free ride.

In terms of the digital economy today, he has no sympathy. He has advocated busting up Amazon with antitrust laws and imposing speech restrictions on The Washington Post.

His knowledge of the greatest innovation in the history of technology is near zero. The entire debate, he kept referring to the entire digital realm as “the cyber.” Incredible.

Not the Capitalist Way
None of this is the capitalist way. To be very clear, what market liberals favor is full freedom for everyone in the commercial sphere of life, and privileges for none: no bailouts, no subsidies, no favors, no special access to power. No matter how rich or powerful or connected you are, a society of commercial freedom gives no one a legally enforced advantage over anyone else.

This, not monopolistic protection for cronies, is the way the free market operates.

If this weren’t enough, in his business dealings, which are now under heavy scrutiny, Trump has become the caricature of the connection fat cat that the Marxists have dreamed of, and always claimed to be the norm under capitalism. He is their ideal, not ours, of what it means to be successful and rich.

Think of the capitalist that the fevered Marxist imagination has conjured up since the 19th century. He sells illusion to unwitting buyers and then the dream fails to materialize in any substantial way. He doesn’t pay his workers. The dream dies but the initial promoter makes off with millions. And with that the community suffers.

He Plays One on TV
The more we learn about Trump’s business successes, the more we see not the market at work but the kind of tainted success generated by state intervention in the market.

He uses eminent domain, litigious methods of contract enforcement, zoning regulations, subsidies of all sorts, to drive his business. He has learned to work a state-dominated, politically manipulated system. This is not the same as market success.

What’s more, deeper research into his history of enterprises reveal the surprising truth that Trump is not a winning builder and investor so much as a brand name that he sells to stamp on other people’s projects.

The most successful thing he has ever done is a television show. There’s nothing wrong with being an entertainer but he is not the successful real estate investor he claims to be.

It’s also true that bad businesspeople exist even within a market setting. No system of economics can change human nature. A wonderful feature of the market (and not government), however, is that it adapts to punish such people over time and deny them a free ride. Trump’s now-famous $1 billion loss is a better indication of what the market is capable of imposing on such people.

Truly, even though the Trump case might indicate otherwise, the justly rich are worth defending. A free society needs them. Capital accumulation is meritorious, an essential feature of a prosperous society.

But let’s never forget that capitalism is also about the Etsy seller, the Uber driver, the hair braider, the small contractor and the tens of millions of small-scale entrepreneurs who find personal joy and fulfillment in the service of others through the opportunities capitalism provides.

Real capitalism is not about ripping people off and bragging about it. It’s about freedom, serving others, realizing dreams, spreading opportunity, better lives, and a beautiful world that is prosperous and free.

If you see something or someone who looks like a different animal, it probably is.

Prepare yourself, market apologists: We are going to be digging out from under the Trump rubble for years to come.

Jeffrey A. Tucker is director of digital development at the Foundation for Economic Education and chief liberty officer of

About Your Money Market Fund

My Comments: We take them for granted. A place to park money that earns a little bit and can be used to buy stuff or used to invest somewhere else. If you’re bored by finance and economics, this post is not for you, even though it may affect your wallet along the way.

by Bob Bryan | October 15, 2016

On Friday, money market funds underwent a huge shift in how they will be regulated, resulting in a sea change for the $2.65 trillion money market fund industry.

Let’s recap quickly. Money market funds are mutual funds that invest mostly in short-term assets such as US Treasurys and short-dated corporate bonds with maturities under one year. These funds are generally thought of as safe, but yield low returns.

The net asset value [(market value of all of its shares – fund’s liabilities) / number of issued shares] of money market funds is designed to remain around $1, but should not go below. Only three money market funds have fallen below $1 in NAV, or “broken the buck,” the most recent in 2008. This caused a run on money market funds and contributed to the financial instability of the time.

To try to prevent this from happening again, the federal government passed regulations in 2014 that mandated changes to make these funds safer. Now all money market funds are required to maintain an average maturity for their assets of just 60 days, and the ratings criteria for the types of assets the funds can hold have increased as well.

The new regulations have made investors shift large amounts of money out of prime market funds, which invested in all types of short-dated assets, and into government funds which only invest in government debt. In fact, prime market funds have seen massive outflows.

“More than half a trillion dollars have fled the prime money market fund complex since this summer,” said Dominic Konstam, an analyst at Deutsche Bank. “In recent weeks, the pace of outflows has also picked up considerably – prime funds lost on average $60 billion of assets per week in September and an eye-popping $110 billion last week, with their total assets now below $500 billion for the first time.”

In total, more than $700 billion has flowed out of prime market funds, according to Barclays, since the reforms were announced, with much of it heading to government funds.

With fewer funds holding non-government short-dates assets, the liquidity in trading for things such as commercial paper and certificates of deposit have increased. With less liquidity, interest rates for near-term lending products such as the London Interbank Offering Rate, or Libor, have increased to their highest levels since the financial crisis.

This increase in Libor, however, may have run its course according to Konstam. The gap between the Federal Reserve’s fed funds rate and the Libor rate, which is used as a proxy of stability for the banking system and the benchmark for how expensive short-term leaning is, has tightened in recent weeks after exploding over the summer.

“Despite this, 3-month Libor and the Libor bases have been relatively well behaved during this stretch, and FRA/OIS spreads are actually now ~5 bps tighter from three weeks ago,” said Konstam.

“We are inclined to think that the midsummer Libor pain has fully run its course, and 3-month Libor could begin to set tighter against Fed expectations (OIS) after next week’s SEC money market reform deadline.

All in all, these changes aren’t going to impact retail investors very much and the long lead time has allowed many fund managers to make the shift in portfolios ahead of time.

Jim O’Connor, senior portfolio manager for money market funds at BNY Mellon’s subsidiary The Dreyfus Corporation, told Business Insider that most of his clients’ portfolios had been shifted away from prime funds well before the date of the regulation implementation and the only changes made in the run-up were to back-end maintenance.

The jump in rates such as the Libor, however, may impact some borrowers. Floating rate mortgages and other types of floating rate loans can be pegged to the Libor, thus as it increases the interest costs for those borrowers will increase.

The move has been a massive multi-year shift of billions of dollars, but for many investors it will likely not even move the needle.

The 19 Most Productive Countries In The World

My Comments: Computers and the internet have been the major drivers of worker productivity across the planet over the past three decades. Here in the USA, we think of ourselves as being the best and throw scorn on anyone who suggests otherwise. And like with so many things, we don’t let facts get in the way. These facts suggest we’re OK, but so are a lot of other countries.

Will Martin,  Jul. 24, 2016

Productivity is one of the key drivers of economic success. The more productive a country’s workers are, the more value they can bring to their employers and therefore their home nation’s economy.

New research from business-to-business marketplace Expert Market has shed some light on where in the world people are the most productive. Expert Market compared data from 35 of the world’s biggest economies before compiling their ranking.

To do this, they looked at the GDP per capita of nations and divided that by the number of hours worked per person, giving a rough guide to which nations make the most money in the least amount of time, and are therefore the most productive.

Numbers quoted below are the amount of value each worker brings to their country’s economy per hour worked. Check out the ranking underneath:

See all 19, ranked in reverse order, here:

Why Interest Rates Are Lower Than Ever

Piggy Bank 1My Comments: Please keep reading…

Paul J. Lim,  July 6, 2016

If you think the financial panic over Brexit is over — because stocks have bounced back somewhat from their initial sell off — think again.

As scared investors continue to seek shelter in boring government bonds, fixed income prices have soared while yields on 10-year Treasury securities plummeted to as low as 1.34%, marking the lowest levels ever seen in U.S. history.

In early morning trading Wednesday, yields bounced slightly to 1.37%. But that’s a far cry from the 5% yields on 10-year Treasuries before the global financial crisis.

Overseas, the situation has gotten even worse: 10-year German and Japanese bonds have sunk further into negative yield territory, which means investors are so concerned about the economy that they’re willing to pay officials for the right to park their money with the government.
Aren’t record low rates a good thing?

Normally, investors crave low interest rates because cheap borrowing costs encourage spending and capital investments, which fuel economic activity and growth. Low rates also offer relief for debt-laden governments and consumers, who can now refinance existing loans at better terms.
But ultra-low interest rates can also be a sign that investors are so worried about stagnation or recession that their primary focus is on the safe return of their capital—that is, making sure they can simply get it back—not earning big returns on their capital.

The uncertainty caused by Britain’s unprecedented move to leave the European Union has fueled fear over what’s to come for the global economy. And in times of fear, investors generally flock to bonds, which drives up their prices and drives down their yields. (Market interest rates move in the opposite direction of bond prices.)

Less than two weeks after the vote, economists have already been ratcheting down their expectations for growth overseas. IHS Global Insight, for instance, now believes the gross domestic product among countries in the Eurozone will grow just 1.4% this year and 0.9% next year. Before Brexit, the economic research firm had been forecasting Euroepean economic growth of 1.7% this year and 1.8% in 2017.

How scared should you be?

It’s far too soon to tell if the U.S. is also headed for negative rates. But one thing is clear: The so-called “yield curve” is flattening out. And that normally spells trouble for the economy.

The yield curve refers to the spectrum of rates paid by Treasuries of various maturities. Normally, longer-dated Treasuries — such as 10- or 30-year bonds that require investors to tie up their money for extended periods of time — pay substantially more than short-term debt, which poses less risk.

Yet when fear over the economy bubbles over, investors tend to flock into long-term bonds, driving down long-term yields. And when that happens, the gap between what short- and long-term bonds are paying decreases and the yield curve “flattens.”

Ed Yardeni, president and chief investment officer at Yardeni Research, points out that the spread between yields on 10-year and two-year Treasuries is the flattest it has been since November 14, 2007. Indeed, the spread between 10-year and two-year yields is down to just 0.8 percentage points. A year earlier, it was roughly double that.

Why is this important? Because Nov. 14, 2007 was just two weeks before the start of the 2007-2009 recession that coincided with the global financial crisis.

If the yield curve actually inverts — meaning 10-year Treasuries start paying less than two-year Treasuries — it’s virtually certain that the economy is in or headed for recession.

If the economy is so scary, why are stocks doing reasonably well?

That’s a good question. IHS Global Insight economist Patrick Newport points out that “the seemingly contradictory demand for stocks given the rally in bonds is likely driven by the perception that the Federal Reserve will further delay raising rates in the wake of the Brexit vote, making stocks more attractive in terms of returns.”

Income-oriented investors, who’ve been frustrated by the paltry yields being paid by bonds, may also be driving this trend.

Back in the early 1980s 10-year Treasuries were yielding 10 percentage points more than the dividend yield on blue chip U.S. stocks, notes Jack Ablin, chief investment officer at BMO Private Bank. “Nowadays that gap has disappeared and then some,” he said. Indeed, today, the dividend yield on the S&P 500—what you get for holding the stocks above and beyond stock price appreciation—is more than half a percentage point higher than what 10-year Treasuries are paying.

This trend could persist and stocks could keep rising for months on the strength of income investors. The problem is, if the bond market is right and the economy is this weak, eventually the stock market will get the message too.

My delayed comment: there is a sizeable number of people in this country who are convinced we are in the ‘end of days’ scenario which I think is patently stupid. But constant talk about this assumed chaos can be a self-fulfilling prophecy when leadership elements keep pushing and pushing. But it makes no sense economically.

The Only Way To Save the EU Is For The UK To Leave It

Brexit-4My Comments: Forget the UK and Europe. There’s a message here that applies to us in the United States and the anger among so many that gives rise to a choice between Donald Trump and Hillary Clinton.

It echoes the comments I’ve made here for years that “It’s economics, stupid!”. A primary driver of deteriorating race relations, of attacks on immigrants, on law enforcement, on the LGBT community, on gun owners, etc., is the fear that many of us are no longer in control of our own destiny. There is a pervasive appeal to try and turn back the clock, to reinvent the past and the conditions that led to a growing middle class in this country.

To the extent that those at the lower end of the economic spectrum, whether white, black or brown, cannot find a way to improve their quality of life, there is going to be stress. And that stress manifests itself as protests in the streets that appear to be focused on racial issues, on law enforcement issues, on immigrants who ‘take away our jobs’, and any number of other real and imagined grievances.

When you’re working 40 plus hours a week and making enough money to adequately feed, clothe and house your family, those grievances become irrelevant. Or at least manageable. They only surface and become a societal nightmare when enough people feel abandoned and disrespected and forgotten. And economics is a fundamental cause behind this drift toward chaos.

I’m not sure Hillary can fix this and I’m quite sure Trump can’t fix this. But I’m going to vote for whomever I think is most likely to force a discussion about the economic realities in this country. This is a long read but if you believe that income inequality is a problem, you need to read all of it.

by Gwynn Guilford on July 15, 2016

Xenophobic. Racist. Jingoistic. Nativist. Parochial. The 52% of British voters who hit the EU eject button might be all of those things. But they were also backing the right horse.

The vote repudiates a vision of Europe that rewards companies at workers’ expense. It’s a rebuke of a government that invests authority in a professional elite insulated from the economic realities of ordinary Europeans. The free flow of goods, services, capital, and people within the EU was supposed to spread prosperity. It hasn’t. Eventually, something big had to break.

While Brexit is certainly big, the fissure beneath it is bigger than Britain, or even Europe. The imbalances of trade, capital, labor, and—above all—savings that lie at the heart of Europe’s current turmoil warp the entire global financial system. Nearly everywhere you look, growth is sputtering because there’s simply too little demand—and far too much debt—to go around. And that’s thanks in no small part to the EU’s wooly-headed policies. However painful it might make the next few months or years, Brexit might ultimately be the wake-up call that prevents the EU from unleashing another global financial crisis, and condemning the world to decades of feeble growth.

To understand why things have gotten to this point, we have to examine the fundamental flaws in the EU’s design that are largely responsible for these distortions.