Germany moves one step closer to a new government

Germany moves one step closer to a new government

Basic Income

A Few Bad Arguments Against Basic Income by Matt Bruenig

Bank of Japan ETF purchases

Bank of Japan's $150 Billion ETF Binge Looks Likely to Slow Next Year

As stocks surge and consumer prices inch higher, investors say it’s time for the Bank of Japan to reduce equity purchases that have been criticized for distorting the market. 

Sometime next year, the BOJ will cut its annual buying target for domestic exchange-traded funds by as much as a third from the current 6 trillion yen ($53 billion), says Toru Ibayashi, head of Japanese equities at UBS Wealth Management in Tokyo. Soichiro Monji of Daiwa SB Investments Ltd. expects a similar reduction, but by the end of March. 

“Four trillion yen,” UBS’s Ibayashi predicted. “And everybody will understand.”

O'Brien on Bitcoin

Bitcoin is teaching libertarians everything they don’t know about economics by Matt O'Brien

Sandbu on battles of ideology

The battles of ideology that will define our age by Martin Sandbu

Martin Sandbu 

DECEMBER 26, 2017

If 2016 was the year that opponents of the liberal, rules-based world order built up over 70 years won stunning national victories — in Britain and the US — then 2017 was the year in which the supporters of liberal openness scrambled to mobilise. 

2018 is set to be the year they confront one another. As governments harness state power for their respective sides, tension long simmering within each country morphs into a conflict between nations. 

Profound structural economic change in almost all rich countries had increasingly separated those who reaped the benefits from those of their fellow citizens the transformation had left behind. 

In Brexit and Donald Trump’s election victory, self-declared champions of the left behind took control of the national agenda with a promise to break with the internationalist liberal order. In reaction, centrist leaders elsewhere — most explicitly, Emmanuel Macron in France — have had to define themselves as that order’s defenders. 

EU institutions and many European governments, together with Canada and Japan, now make up an avowedly liberal internationalist camp working to defend a multilateral system of collaborative rules-based governance for economic openness to mutual advantage. 

The anti-liberal front’s undisputed leader, meanwhile, is the US under President Trump. The best guide to his goals is a plain reading of his statements from the inaugural speech to the recent update of the national security strategy. It is a zero-sum world in which there cannot be economic winners without losers, and it is each country for itself. Both camps want to make, or remake, the world in their image. 

It is not the first time that whole nations have had to choose which ideology to rally behind. The same happened in the 1930s, and again during the cold war. Then, too, countries aligned along ideological divides, partly fuelled by economic and social conflict that had previously riven their domestic politics. As a result the battle shifted to the international stage where it was waged by all means including war, direct or by proxy.

Within countries the conflict was to some extent repressed, as governments tried to ensure the side they had picked internationally was not undermined at home. For liberal states, this meant varying degrees of suppression of sympathy with fascism or communism. In dictatorships of the right and left, the elimination of dissenting views was total. 

There is no sign that the current global realignment will cause war between the camps; and we may still hope that political violence within nations can be avoided. But in three other arenas, the battle is on. 

One is international institutions, in particular those in charge of global economic governance. The Trump administration seems determined to undermine the World Trade Organization, whose arbitration function it is sabotaging by frustrating the appointment of judges to the appellate panel. Conversely, the EU and Japan are trying to demonstrate the organisation’s value to US interests by offering a united front in a WTO context against a perceived abusive trade policy by China. 

Another arena is alliance building. The shock of isolationist victories accelerated work on deepening the existing global economic order. The EU has completed free trade agreements with Japan and Canada, and intensified talks with Mexico, Australia and New Zealand. Japan and Canada, besides tying up with the EU, are pushing forward the Trans-Pacific Partnership with the remaining 11 members after the US abandoned it. 

As for Mr Trump, he seems more eager to build bridges with Vladimir Putin’s Russia and befriend autocrats from the Philippines to Saudi Arabia than to shore up relationships with allies or maintain the political unity of Nato. In Europe, Hungary and Poland — the jury is out on Austria — are tilting towards his camp. 

Paradoxically, the most important arena for governments engaged in a global ideological battle remains their own public at home. This third dimension is decisive if the cold war is anything to go by. Communism was boosted by the great depression, but later could not indefinitely survive the evidence that it simply did not perform as well for its people as liberal-democratic capitalism. Conversely today, populist nationalism derives much of its strength from a mishandled financial crisis and mismanaged (often non-existent) policy responses to rapid structural change. 

In the long term, liberals have cause for hope: withdrawing from the liberal order will surely bring lasting harm to countries where isolationists are now in charge. But that hope is vulnerable to two threats. First, if the liberal order unravels, early withdrawers may hold the advantage. Second, the anti-liberals may show short-term economic results for longer than liberals can stay in power — in part because they are free from the pieties of conventional policy. 

While conflicts remained domestic, caution was harmful but sustainable. That luxury is gone. In a global battle of ideas, liberals must show urgently that the existing order can be made to work for everyone. The 1930s and the cold war both saw economic liberalism survive by becoming radically more progressive than before. It is time for such a bold, centrist radicalism again.

ACA and inflation

[links don't mean endorsement. Some reading]

Why does money inflate? by JP Koning

The Growing Problems With Rural Healthcare Exchanges by Megan Stanley

Stranger Things