Christina Leung on whether countries are stealing growth from each other, why Americans are gloomy when their economy's improving, lack of respect for women economists, rail, Dilbert & more

Christina Leung on whether countries are stealing growth from each other, why Americans are gloomy when their economy's improving, lack of respect for women economists, rail, Dilbert & more

Today's Top 10 is a guest post from Christina Leung who is a Senior Economist at the New Zealand Institute of Economic Research (NZIER). She also heads up Membership Services at the NZIER, which produces the long-standing Quarterly Predictions and Quarterly Survey of Business Opinion for its members.

As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

And if you're interested in contributing the occasional Top 10 yourself, contact gareth.vaughan@interest.co.nz.

See all previous Top 10s here.

1) Why are people so gloomy when the economy is on the mend?

The Wall Street Journal looks at why US residents are so pessimistic despite the improving state of its economy.

“For the most part, the economists are divided between two wonky and interesting explanations: 40% of economists said they believe this is mostly a cyclical phenomenon—the economy always has its ups and downs and people are slow to pick up on it. For now, the explanation goes, people remain deeply unsettled or scarred by the Great Recession, but their pessimism will fade with time as cyclical improvement becomes clearer.

But the slightly more popular explanation, favored by 42% of economists, is that the lack of confidence is a structural phenomenon. Yes, unemployment is down and GDP has been growing, but these factors bounce around a long trend line, and that trend line has some troubling characteristics.”

2) We’re all getting into music streaming – but what’s the effect on the music industry?

This National Bureau of Economic Research paper looks at the effects of music streaming services on the music industry - does the revenue from streaming make up for lower sales of recorded music? It appears so.

“our sales displacement estimates show that the losses from displaced sales are roughly outweighed by the gains in streaming revenue. In other words, our analysis shows that interactive streaming appears to be revenue-neutral for the recorded music industry.”

3) Are we all just stealing growth from each other?

Economics Editor of The Guardian Larry Elliott discusses a world where all central banks are undertaking very loose monetary policy to weaken their exchange rates. How do you get all exchange rates low at the same time…?

“…by deliberately weakening their exchange rates, countries are stealing growth from each other. Central banks insist that this does not represent a return to the competitive devaluations and protectionism of the 1930s, but it is starting to look awfully like it.”

4) Who knew property investors would take advantage of leverage when interest rates fall (!)

The Reserve Bank of New Zealand takes a closer look at what has been driving the recent strength in housing market activity using unit-record data of house sales. It finds leveraged small property investors have been the key driver of strengthening housing market activity.

“Increased housing market activity in recent months has been driven by strong investor demand, both within and outside of Auckland, as reflected in increased investor purchases and significant growth in investor-related mortgage credit. The primary driver of their increased market share has been a rising incidence of small investors (that are heavily reliant on credit) in the market, as opposed to greater activity among larger investors.”

5) Even Famous Female Economists Get No Respect.

Justin Wolfers from the New York Times looks at why even the most famous female economists play second fiddle to male economists (in some people’s minds anyway).

“But the real clunker came with his advice to Ms. Yellen that “I think that you should sit down with your Nobel Prize-winning husband George Akerlof.” His directive continued: “Together, figure out what to do.”

It is not clear why Ms. Yellen would need her husband’s help to do this. She is an accomplished economist in her own right, and arguably the most powerful economist in the world. Moreover, if Ms. Yellen needed help figuring anything out, she would be unlikely to need to rely on her husband, as she has hundreds of Ph.D. economists working for her.”

6) Is distributed generation the future of energy generation?

Renewable energy is becoming increasingly popular, but distributed generation has its drawbacks, including diseconomies of scale. The Berkeley Blog discusses the pros and cons.

“That’s not to say that distributed generation couldn’t be the best way for some people at some locations to adopt renewables, but simply that DG should not be the goal in itself. We desperately need to reduce greenhouse gases from the electricity sector, not just in the U.S., but around the world, including some very poor countries where affordability is a real barrier and electricity access is life-changing.”

7) Is rail really necessary as public transport?

Radio NZ reports that double-decker buses have come to Auckland, heralding in a new era of everyday commuting – boomtown!

“Double decker buses are used by long-distance and charter operators, but the Auckland fleet will be the country's first for urban commuting.”

8) Is there still a case for biodiesel?

The Volkswagen emissions cheating scandal has called into question whether clean diesel technology is all it’s hyped up to be. The Conversation argues there is still a place for a clean diesel solution.

“It’s still unclear why VW decided to evade emissions tests. But the technology to meet the EPA air pollution standards and still achieve relatively high fuel efficiency exists today, whether it’s from Volkswagen or other carmakers.”

9) Don’t worry, be happy. 

Danish think tank the Happiness Research Institute finds digital detoxers had higher rates of happiness and enthusiasm, better social lives and fewer problems with concentration.

“After one week without Facebook the treatment group experienced an increase in their social activity – and an increase in their satisfaction with their social life.” 

10) Sugar consumption tax’s impact on farmers. 

The UK Farmers’ Weekly looks at the effects of a tax on the consumption of sugar.

“It comes at a time when UK sugar beet producers are already under pressure from price cuts amid a glut of sugar on the world market.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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16 Comments

No 1 - it has to be a structural problem.....The world has too many academics who have no practical experience and that goes for economists!!

Ah the non-intellectual book burning routine, I wonder where I have heard that before....oh wait,

"Anti-intellectualism is a common facet of totalitarian dictatorships to oppress political dissent.Perhaps its most extreme political form was during the 1970s in Cambodia under the rule of Pol Pot and the Khmer Rouge, when people were killed for being academics or even for merely wearing eyeglasses (as it suggested literacy) in the Killing Fields.

During the Spanish Civil War and the following dictatorship, General Francisco Franco's civilian repression, the White Terror campaign, killed an estimated 200,000 civilians, targeting heavily writers, artists, teachers and professors."

"In the 20th century, intellectuals were systematically demoted or expelled from the power structures, and, occasionally, assassinated.[where?] In Argentina in 1966, the military dictatorship of Juan Carlos Onganía intervened and dislodged many faculties, leading to a massive brain drain in an event which was called The Night of the Long Police Batons. The biochemist César Milstein reports that when the military usurped Argentine government, they declared: "our country would be put in order, as soon as all the intellectuals who were meddling in the region were expelled".

"The Red Guards were particularly brutal in attacking their teachers and professors, causing most schools and universities to be shut down once the Cultural Revolution began"

ie oh so lets use ppl like you who blindly guess based on their political viewpoint? Now while economists are not my favourite ppl I'd rather have to go with what they say than say yourself.

yes, bound to go well.

What part of "too many" do you not understand?? Balance is a necessity along with comprehension.......think about critical thought.....how can one do that if they have incomplete information? Not all information comes from text books, lecturers and the like....

In life we might think we have a fair idea of what something is like, or how something will be etc, but until you have been at the coalface you know very little of anything......nothing to do with political viewpoint all to do with reality!!!

Incomplete information of course depends no whether the said information is actually of any use or is even real information, I suppose you would supply it? yeah right. Coal face, well frankly no, that is usually a technical level of competency not an engineer / academic but then you fact you cannot fathom this as a difference does not surprise me.

An example would be the first atomic bomb, a technician simply would have never built it, ever, it took the very best academics to do so from the entire world.

Reality, fraid I cannot agree with your reality.

Wow, clever idea using double decker buses for commuting. Who would have thought?

Need the numbers to justify the extra cost both weight and energy use especially when empty. though NZ's reason is axle weight limitations, which now we have bypassed that suggests greater road wear and tear, ie cost.

So peak time sure instead of 55~70 ppl full and say a 12tonne bus? we get 100ppl and a 18tonne bus. During the off peak however with say 3 OAPS all on a gold card we are now carrying 6tonnes of extra weight for zero income. It would almost make sense to pay for a shuttle.

I think we could use those other strange things in Tandem too.

Double up on bikes.

Then we could kill two birds with one stone.

Remove the fat of the land as well as the congestion and save on petrol or diesel into the bargain.

But that would be too obvious for the lazy burghers of Awkland.

They can only think big. That is why we have so many problems, healthwise, otherwise and property wise.

But, you lot all go ahead and not build yer muscles and keep yer brains active. Die of congestion, keep on eating, keep on smoking and leave us fit people alone.

City folk are so dumb, they think a real Double Decker is from Mcdonalds and a Mcmansion is an investment in prosperity.

One day they might wake up dead wrong on both counts.

#1 People just don't trust the powers that be after the GFC and all the Wall street bankers got away with their shenanigans. The fact that the Fed is a private Bank advising the Govt and so on. Too many conflicts of interests, vested interests and personal agendas, not to mention wallets on the line.
#5 this comment is more a reflection on Ralph Nader (the man who made it) than on Ms Yellen's abilities, credentials or opinions. Gender has nothing to do with ability, but irrespective who or what you are if you want to put an opinion in the public arena, do not be surprised if it gets debated vigorously, and definitely don't be offended by those who disagree, or the small minded ones who can only resort to personal attacks to justify their position. How the dabate is carried is a reflection on those participating, not what is being debated.

Rail patronage hit 15 million passengers in Auckland this year. I use rail on a daily basis - it's efficient, quick, direct and isn't held up by nose-to-tail crashes on the north-western.

Do yourself a favour and stick to economics.

She's just reporting what's being talked about....she wasn't arguing the case against rail...

#7 - route is everything. I personally greatly look forward to the AKL airport-Ellerslie rail trip. But I rather suspect that I'll be long retired before I see it.....

... I suspect we wont need it, primarily due to the impact of ride sharing APPs on traffic volumes. Some rather crude one's have arrived (such as chariot), but imagine when this is refined to the point when you can walk out the front door, send a notfify on your phone, passing car picks you up, automatically calculates your fare, auto debits, plus an ability to recalculate if someone else picked up on the way - a version of uber but cheaper as the driver is on his way to work or whatever. Bad news for car manufacturers and associated industry - and challenges the projections for more and more roads.

Yep, lets do noting for 30 years and hope self driving taxis will fix things...

#6 I have been meaning to look for something on this given Gareth Hughes fascination with house solar, an interesting piece.

#2 I wonder what the difference in energy consumption is between the 2 methods.

#8 bio-diesel has an awful EROEI. "The EROEI of biodiesel is only somewhat better than that for ethanol" which then is bloody awful. So for our modern economy we need 8 to 1, when biofuels are more like 1 to 1. ie we put a lot of fertilizer and fossil fuel into making a crop that we might have well just burned the fuel in the first place and saved capital investment in a blind alley.

http://physics.ucsd.edu/do-the-math/2011/11/the-biofuel-grind/#more-534