The secret but vital to know number in today’s economic news

Summary: Economists get excited about aggregate GDP (today’s hot economic news dot). People — you, me, our neighbors — care about per capita GDP. GDP that grows along with the population does nothing for our standard of living, (and less than nothing if the 1% cream off most of it). It is important to us, so journalists ignore it (hence the newsroom layoffs).

Slow Economic Growth

The economy has recovered since the crash (the doomsters saying otherwise are, as usual, wrong). But the stories about the wonderful economy are also bogus. Per capita real GDP has grown a total of 3.4% since its previous peak in Q4 of 2007 — only 0.4% per year (which is also its YoY growth in Q2 2016). This is secular stagnation. The causes are only somewhat understood; economists have only guesses as to its cure (as usual, delusionally confident guesses).

Growing at 1% – 2% per year since the crash. Slowing fast since 2014.

Growth of US Per Capita Real GDP since the recession - Q2 2016

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Paul Krugman explains how to break the climate policy deadlock

Paul Krugman — Nobel Laureate economist, #5 on Prospect magazine’s 2015 list of the world’s top “thinkers” —  gives us powerful advice about the climate policy debate in his August 12 NYT op-ed (similar to this from a February column).

Paul Krugman

Paul Krugman. Creative Commons license.

Here’s how I would approach the issue: by asking how we know that a modeling approach is truly useful. The answer, I’d suggest, is that we look for surprising successful predictions. General relativity got its big boost when light did, in fact, bend as predicted. The theory of a natural rate of unemployment got a big boost when the Phillips curve turned into clockwise spirals, as predicted, during the stagflation of the 1970s.

So has there been anything like that in recent years? …Were there any interesting predictions from … models that were validated by events?

In fact he is discussing his own field, macroeconomics — but this insight has deep roots in the philosophy of science and applies as well to climate science. Predictions are the gold standard for validating theories. In The Structure of Scientific Revolutions (1962) Thomas Kuhn described failed predictions that undermined dominant paradigms (e.g., the Michelson–Morley experiment) and successful predictions that helped establish new paradigms (e.g., the orbit of Mercury). He said…

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An anthropologist explains the disruptive politics of immigration

Summary: Immigration is one of the central political issues of our time, challenging the current ideologies and parties. It meets several needs of western elites, and so has bipartisan support. But its destabilizing effects have become obvious as the list of losers from immigration grows. Opposition to it brought Trump the nomination (before he abandoned it for sideshow comedy), and that opposition will survive his defeat. To understand why, read this brilliant essay by Professor Maximilian Forte. It’s essential reading to understand social, political, and economic developments shaping western nations.

Immigration

Immigration and Capital

By Maximilian C. Forte.
From Zero Anthropology. Reposted with his generous permission.

Immigration, rightly or wrongly, has been marched to the frontline of current political struggles in Europe and North America. Whether exaggerated or accurate, the role of immigration is situated as a central factor in the Brexit referendum in the UK, and the rise of the “America First” Trump movement in the US. It seems impossible that one can have a calm discussion about immigration today, without all sorts of agendas, assumptions, insinuations and recriminations coming into play.

Staking a claim in immigration debates are a wide range of actors and interests, with everything from national identity and national security to multiculturalism, human rights, and cosmopolitan globalism. However, what is relatively neglected in the public debates is discussion of the political economy of immigration, and especially a critique of the role of immigration in sustaining capitalism.

Before going forward, we have to first dismiss certain diversionary tactics commonly used in public debate, that unfortunately misdirect too many people. First, being “anti-immigration” does not make one a “racist”. One does not follow from the other. Being a racist means adopting a racial view of humanity as being ordered according to what are imagined to be superior and inferior, biologically-rooted differences. Preferring “one’s own kind” (whatever that means) might be the basis for ethnocentrism, but not necessarily racism as such.

It’s important not to always lunge hysterically for the most inflammatory-sounding terms, just because your rhetorical polemics demand an instant “win” (because you don’t win anything; you just sound like someone who doesn’t know what he or she is talking about). Also, xenophobia neither implies racism nor ethnocentrism, because it can exceed both by being a fear or dislike of anyone who is “foreign” or “strange”.

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