Politeía Digest

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Posts Tagged ‘Economics

The Economist: For richer, for poorer

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Growing inequality is one of the biggest social, economic and political challenges of our time. But it is not inevitable. In 1889, AT the height of America’s first Gilded Age, George Vanderbilt II, grandson of the original railway magnate, set out to build a country estate in the Blue Ridge mountains of North Carolina. He hired the most prominent architect of the time, toured the chateaux of the Loire for inspiration, laid a railway to bring in limestone from Indiana and employed more than 1,000 labourers. Six years later “Biltmore” was completed. With 250 rooms spread over 175,000 square feet (16,000 square metres), the mansion was 300 times bigger than the average dwelling of its day. It had central heating, an indoor swimming pool, a bowling alley, lifts and an intercom system at a time when most American homes had neither electricity nor indoor plumbing. Read the rest of this entry »

Written by Theophyle

October 15, 2012 at 8:16 am

Government, Geography, and Growth

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The True Drivers of Economic Development

According to the economist Daron Acemoglu and the political scientist James Robinson, economic development hinges on a single factor: a country’s political institutions. More specifically, as they explain in their new book, Why Nations Fail, it depends on the existence of “inclusive” political institutions, defined as pluralistic systems that protect individual rights. These, in turn, give rise to inclusive economic institutions, which secure private property and encourage entrepreneurship. The long-term result is higher incomes and improved human welfare.

What Acemoglu and Robinson call “extractive” political institutions, in contrast, place power in the hands of a few and beget extractive economic institutions, which feature unfair regulations and high barriers to entry into markets. Designed to enrich a small elite, these institutions inhibit economic progress for everyone else. The broad hypothesis of Why Nations Fail is that governments that protect property rights and represent their people preside over economic development, whereas those that do not suffer from economies that stagnate or decline. Although “most social scientists shun monocausal, simple, and broadly applicable theories,” Acemoglu and Robinson write, they themselves have chosen just such a “simple theory and used it to explain the main contours of economic and political development around the world since the Neolithic Revolution.” Read the rest of this entry »

Written by Theophyle

October 10, 2012 at 12:45 pm

Three Reasons to Salute Ben Bernanke

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by John Cassidy

It’s time to give Ben Bernanke some credit. Under attack from the left and right for much of the past year, the mild-mannered former Princeton prof has shown some leadership and pushed through a major policy shift. In committing the Fed to buying tens of billions of dollars worth of mortgage bonds every month until the jobless rate, currently 8.1 per cent, falls markedly, Bernanke and his colleagues on the Fed’s policy-making committee have finally demonstrated that they won’t stand aside as tens of millions of Americans suffer the harsh consequences of a recession that was largely made on Wall Street.

I’ve had my ups and downs with Bernanke, whom I profiled at length back in 2008. At the start of the year, I thought critics were giving him a raw deal. With short-term interest rates close to zero (where they’ve been since December, 2008), and with job growth seemingly picking up, the calls for more Fed action seemed overstated. But over the past six months, as the recovery sputtered and Bernanke dithered, I too, ran out of patience with him. In a column in Fortune last month, I even suggested that Barack Obama should have replaced him when he had the chance, back in 2010. Read the rest of this entry »

Written by Theophyle

September 16, 2012 at 9:15 am

Will Japan Regain Its Greatness?

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By Michael Shari

Business is trying to resurrect Asia’s economic miracle a year and a half after the Tohoku tragedy. Tokyo is enjoying a long-deserved renaissance. Young professionals are converging from all across the Japanese archipelago, driving the population of the Japan’s capital up by about 1 million people, to about 12.5 million, since 1995, while the nation’s population has leveled off at about 128 million since 2004. Cranes are swinging over gaping construction sites citywide thanks to relaxed building height restrictions, defying occasional tremors and transforming the city into a showcase for displays of cutting-edge 21st century architecture. Opened in May was the 634-meter (2,080-foot) Tokyo Skytree, the tallest tower in the world.

“This economy is pretty similar to that of Florence, Italy, in the Renaissance era,” says Hitoshi Itagaki, president of Principal Global Investors, recounting how Italian peasants and artisans who survived bubonic plague flocked to Florence where public services still functioned. “They created a really beautiful Renaissance culture, and the same phenomenon is happening in Japan.” Read the rest of this entry »

Written by Theophyle

September 2, 2012 at 12:39 pm

WP: Small business a common theme at Republican Convention

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By J.D. Harrison, Updated: Thursday, August 30, 12:30 PM

Republicans have made the growing national debt and sluggish economic recovery the central themes of their gathering this week in Tampa. But small businesses have spent their fair share of time in the convention’s spotlight, too, as party leaders try to sell their ticket to voters on Main Street.

On Wednesday, Paul Ryan capped off an evening littered with small business references by sharing an emotional story about his mother, Betty Douglas. He explained that, following his father’s death, his mother returned to school and eventually launched her own interior decorating company in Wisconsin. Read the rest of this entry »

Written by Theophyle

August 30, 2012 at 4:51 pm

Financial Markets, Politics and the New Reality

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Financial Markets, Politics and the New Reality is republished with permission of Stratfor.”

By George Friedman

Louis M. Bacon is the head of Moore Capital Management, one of the largest and most influential hedge funds in the world. Last week, he announced that he was returning one quarter of his largest fund, about $2 billion, to his investors. The reason he gave to The New York Times was that he had found it difficult to invest given the impossibility of predicting the European situation. He was quoted as saying, “The political involvement is so extreme — we have not seen this since the postwar era. What they are doing is trying to thwart natural market outcomes. It is amazing how important the decision-making of one person, Angela Merkel, has become to world markets.” Read the rest of this entry »

Written by Theophyle

August 10, 2012 at 9:14 am

Burberry Scarves, Impeachment, Plagiarism — It’s Romania

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By Marc Champion Jul 19, 2012 10:49 PM GMT

Romania is never boring.

A few days before I drove into the country on a journey from Turkey to the U.K, a former prime minister, Adrian Nastase, shot himself rather than be taken to jail for corruption. He missed. Wounded in the neck, he was carried away with a Burberry scarf wrapped around the injury.

Bucharest, meanwhile, was abuzz with the revelation that current Prime Minister Victor Ponta plagiarized 85 pages of his doctoral dissertation on the International Criminal Court. That’s a sin that also triggered the resignation of Hungary’s president in April and a German defense minister last year. After an educational board confirmed Ponta’s copy-and-paste job, he began dismantling the board to make its rulings toothless. Then he revoked the constitutional court’s powers over parliament. Read the rest of this entry »