Category: Economics

Read Disruption’s legacy by Martin Weller (blog.edtechie.net)
Clayton Christensen passed away yesterday. I never met him and he was by many accounts a warm, generous individual. So this is not intended as a personal attack, and I apologise if it’s timing seems indelicate, but as so many pieces are being published about how influential Disruption Theory was, I would like to offer a counter narrative to its legacy.
One of the most important points here:

It legitimised undermining of labour – the fact that Uber, Tesla, Amazon etc all treat their staff poorly is justified because they are disrupting an old model. And you can’t bring those old fashioned conceits of unions, pensions, staff care into this. By harking to the God of Disruption, companies were able to get away with such practices more than if they had simply declared “our model is to treat workers badly”.

Originally bookmarked on January 29, 2020 at 06:38AM

📖 I’m 4% done reading Economy, Society, and Public Policy by CORE Team

Read sections 1.0-1.3. I’m loving the graphs, charts, videos, and supplementary interactive material they’re including in the book. It’s completely fascinating and quite a different reading experience on a computer versus either paper or e-reader.

Having immediate access to data like this make for a more interesting Economics experience.

Annotations from Unit 1 Capitalism and democracy: Affluence, inequality, and the environment

Cyril Ramaphosa ❧

https://en.wikipedia.org/wiki/Cyril_Ramaphosa
Annotated on January 30, 2020 at 12:00PM

PPP ❧

PPP stands for Purchasing Power Parity
How to Calculate and Use Purchasing Power Parity – PPP
Annotated on January 30, 2020 at 12:07PM

But some have taller skyscrapers at the back, meaning a greater disparity between the top 10% and the rest of the population, whereas others have a less steep profile. ❧

It might be more interesting if the top decile in each country were broken into tenths to show the even more severe disparities. I suspect that some of the height differences would be even more drastic if we could see the top 1% or even the top 0.1% on these graphs.
Annotated on January 30, 2020 at 12:36PM

A thousand years ago, the world was flat, economically speaking. ❧

I don’t think we have to go back even this far. If I recall correctly, even 150 years ago the vast majority of the world’s population were subsistence farmers. It’s only been since the 20th century and the increasing spread of the industrial revolution that the situation has changed:

Even England remained primarily an agrarian country like all tributary societies for the previous 4,000 years, with ca. 50 percent of its population employed in agriculture as late as 1759.

–David Christian, Maps of Time (pp 401) quoting from Crafts, British Economic Growth, pp. 13–14. (See also Fig 13.1 Global Industrial Potential from the same, for a graphical indicator.
Annotated on January 30, 2020 at 01:03PM

If you have never seen an ice-hockey stick (or experienced ice hockey) this shape is why we call these figures ‘hockey-stick curves’. ❧

I’m glad they’ve included an image of a hockey stick to provide the context here, but I’ve always thought of it rotated so that the blade was on the ground and the sharp angle of the handle itself indicated the exponential growth curve!
Annotated on January 30, 2020 at 01:18PM

Watched Hans Rosling's 200 Countries, 200 Years, 4 Minutes from The Joy of Stats - BBC Four | YouTube

Hans Rosling's famous lectures combine enormous quantities of public data with a sport's commentator's style to reveal the story of the world's past, present and future development. Now he explores stats in a way he has never done before - using augmented reality animation. In this spectacular section of 'The Joy of Stats' he tells the story of the world in 200 countries over 200 years using 120,000 numbers - in just four minutes. Plotting life expectancy against income for every country since 1810, Hans shows how the world we live in is radically different from the world most of us imagine.

More about this programme: http://www.bbc.co.uk/programmes/b00wgq0l

I really love the visualizations here! There’s so much to pull apart and analyze. I do wish I had a more focused view on some of the time lapse. There are some countries moving around in interesting ways and I’d love to be able to watch what they’re doing and match them up with various historical events. Watching Japan, for example is fascinating. The near-global dip for large portions of the connected world in 1918 was particularly interesting to see as well.
Read How to Calculate and Use Purchasing Power Parity – PPP: Why Does a Big Mac Cost a Lot Less in China? (The Balance)
Purchasing power parity is a theory that says prices of goods between countries should equalize over time. Formula, how to use, and examples.

After the war, the Swedish economist Gustav Cassel suggested multiplying each currency’s pre-war value by its inflation rate to get the new parity. That formed the basis for today’s PPP. ❧

Annotated on January 30, 2020 at 12:29PM

Why We Don’t Live in a PPP World
PPP depends on the law of one price. That states that once the difference in exchange rates is accounted for, then everything would cost the same.
That’s not true in the real world for four reasons. First, there are differences in transportation costs, taxes, and tariffs. These costs will raise prices in a country. Countries with many trade agreements will have lower prices because they have fewer tariffs. Socialist countries will have higher costs because they have more taxes. 
A second reason is that some things, like real estate and haircuts, can’t be shipped. Only ultra-wealthy global travelers can compare the prices of homes in New York to those in London. 
A third reason is that not everyone has the same access to international trade. For example, someone in rural China can’t compare the prices of oxen sold throughout the world. But Amazon and other online retailers are providing more real purchasing power parity to even rural dwellers.
A fourth reason is that import costs are subject to exchange rate fluctuations. For example, when the U.S. dollar weakens, then Americans pay more for imports. ❧

Annotated on January 30, 2020 at 12:31PM

Annotated Unequal Scenes - USA (unequalscenes.com)

"Some inequality of income and wealth is inevitable, if not necessary. If an economy is to function well, people need incentives to work hard and innovate.The pertinent question is not whether income and wealth inequality is good or bad. It is at what point do these inequalities become so great as to pose a serious threat to our economy, our ideal of equal opportunity and our democracy."
—Robert Reich ❧

An important observation. What might create such a tipping point? Is there a way to look back at these things historically to determine the most common factors that would create such tipping points?
Listened to Want to succeed? Take an Econ 101 course by David Brancaccio from Marketplace

New York Times Columnist Nicholas Kristof thinks understanding the basics of the economy will help you get far in life.

https://www.marketplace.org/2020/01/28/want-to-succeed-take-an-econ-101-course/

College students receive any number of recommended introductory courses. But according to New York Times columnist Nicholas Kristof, one of the key classes you might need to take to succeed in life might be an introductory economics course.

As part of the Marketplace Morning Report’s “Econ Extra Credit” project, host David Brancaccio spoke with Kristof about how an Econ 101 class can provide a student with a robust toolbox that could be used later in life to both understand and address larger issues like rent control or how to fund a tax cut.

“We’ve repeatedly mangled macro economic policy in the U.S.,” Kristof said. “It’s pretty obvious that even lawmakers kind of have no clue about really basic issues, like you know, what a fiscal stimulus is.”

Click on the player above to hear their conversation on the merits of Econ 101, as well as Kristof’s thoughts on how introductory economics has adapted to better reflect real world economic issues.

This interview is part of our “Econ Extra Credit” project, where we read a new introductory economics textbook provided by the non-profit Core-Econ together with our listeners. If you’d like to join us in this project, email MorningReport@marketplace.org and let us know you’re reading along with Marketplace through the end of Spring.

I love the idea that Marketplace is planning on using an OER (open educational resources) economics textbook to do a public bookclub/MOOC/guided self-study of Economics 101. 

Naturally I worry that the participation rates will start high and end low, but the fact that they’re encouraging their listeners to expand themselves and delve a bit deeper than just listening to their show is fantastic.

And honestly, who couldn’t use an ECON refresher from time to time–particularly one that takes a dramatically different approach to the subject than the one many of us took?