My talk from the fourth Nordic Post Keynesian conference is up. The full list of keynotes is here.
My talk from the fourth Nordic Post Keynesian conference is up. The full list of keynotes is here.
In which a camera man faints halfway through--he's OK though, I checked afterwards!
My speech at the MacGill Summer School is here. Thanks to Joe Muholland for inviting me to speak.
All my Sunday Business Post articles (back to 2014/5, when I joined the paper) are available here, behind a paywall, and won't be archived on this site anymore.
This is a quick update to the the previous post about getting a new MacBook Pro. So far three things have happened that people considering the purchase might be interested in.
I’ve been working on Mac laptops since the early 2000s. I typically get a new one every 2-3 years. My first one was a G3 clamshell iBook. Since then the hardware and software has evolved steadily, and this week I moved from a MacBook Air to a 3.1 ghz, 512mb MacBook Pro for three reasons.
We’re living through very strange times. Times when it’s a good thing that only 46 per cent of the Austrian electorate voted for a neo-Nazi to become their president. Thankfully he lost, but only marginally.
Times when fairly sensible constitutional reforms to improve the stability of Italy’s governance system get rejected and immediately throw the Italian banking system, with its €360 billion-worth of non-performing loans, into crisis.
Times when the European Central Bank (ECB) boss Mario Draghi’s decision to only buy the pittance of €60 billion of bonds per month instead of €80 billion in a ‘trimming’ exercise causes the markets to have a conniption.
Times when the 2017 French presidential election will be framed as a contest between Marine Le Pen of the Front Nationale, a hard-right ultra nationalist candidate, and François Fillon, a hard-right neoconservative candidate. Whoever the Socialists choose will be decimated, thanks to François Hollande’s tenure in the Elysée Palace.
Times when Angela Merkel, who allowed more than one million refugees into Germany in under two years to save their lives, needs to kowtow to interests in her own party to stay in power, and starts ranting about appropriate burka policies in supposedly liberal Germany.
Times when a racist, misogynist, lying, nativist demagogue like US president-elect Donald Trump can appoint climate change deniers to the US Environmental Protection Agency and union-busting burger magnates to the Department of Labor, even as the unemployment rate in the US falls to its lowest level since 2006.
Trump will preside over the first US economy since World War II where the average person born in the 1980s has less than a 50 per cent chance of earning the same or more as their parents. Think about that and apply it to your own situation.
Do you expect to earn more than your parents? For most people in Ireland, I think the answer would still be yes. What would it mean for your life, and your expectations for your children, if you didn’t expect to earn more than your parents did?
The ECB last week forecast global economic activity to continue to strengthen, although remaining below its pre-crisis pace. It’s important to stress just how sluggish the international economy is. A recent study on global growth by the ECB found the growth of imports since 2012 has been half of what it was between 1980 and 2008.
We are living through the longest period of below-trend growth in almost half a century, for both advanced and developing economies. One reason for this below-trend growth is the sputtering Chinese economy, which since the 1990s was hoovering up imports of every commodity and service imaginable as it grew.
There’s a problem: prices in China have fallen every year since 2012. No boom here. As China switches slowly from investment-led growth to consumption-led growth, because it has a middle class now, commodity exporters outside China have seen demand for their stuff hit the floor.
Mario Draghi, president of the European Central Bank, addresses the media in Frankfurt last week Picture: Getty
This collapse in demand has geopolitical implications. Countries like Venezuela and Nigeria are deeply dependent on just a few commodities to export. Without buoyant demand for oil, gas, copper and coal, they get mired in recessions and depressions. These recessions have real human consequences, as we in Ireland know.
Venezuela, for example, is currently going through a crisis which makes Ireland’s troika bailout look like a chat over coffee slices in the Shelbourne Hotel. People are unable to find work, food, or shelter, the government is in crisis, and inflation is out of control. Consumer prices in the country have increased 180 per cent year-on-year, and piracy has returned as a real problem.
Another reason for the collapse of global trade is the European Union. Since 2008, austerity and poor crisis management meant that demand for goods and services has been much lower than it should have been. If demand is low, then employment will be low. As we know, long spells of unemployment cause social, economic, and political problems.
Domestic demand in the eurozone was around 1 per cent lower in the second quarter of 2016 than it had been in the first quarter of 2008. The US economy from 2008 to 2016 managed to increase demand by about 23 per cent – which explains why president-elect Donald Trump inherits an economy with low unemployment.
In the eurozone from 2008 to 2016 we managed to increase demand by just 7 per cent. We should have been able to do better. But we didn’t, and the result is mass unemployment and mass youth unemployment in Greece (50 per cent), Spain (48 per cent), and Italy (40 per cent).
Which brings me back to Italy, and its shuddering banking system. Banks are basically balance sheet management systems. We should remember that for a bank, its assets, the things it owns, are its loans and the bonds and cash it holds. The bank’s liabilities, the things it owes, are its deposits and the bonds it has issued to balance the books. A very large bank’s balance sheet is highly sensitive to the economy it operates in.
Say the bank has one mortgage and one deposit. If the price of the house linked to the mortgage falls, the value of the bank’s balance sheet goes down. Even worse, if the person paying the mortgage loses their job and has to default, then the bank has to eat into its equity — the difference between its assets and its liabilities — to cover the losses. If it can’t do that, the bank will need a bailout from the taxpayer or to be wound up.
The Italian banks are stuffed full of non-performing loans. Estimates range from €300 billion to €400 billion.
The era of globalisation we have enjoyed since the 1970s may well be ending
The largest immediate problem is the third-largest bank, Monte dei Paschi di Siena (MDS). It requires €5 billion in recapitalisation funds from the private sector and probably some funds from the European Stability Mechanism, sooner rather than later.
Whatever problems MDS has internally, it shares the same underlying macroeconomic problem with all of Italy’s banks. Without sustained economic growth, loans will continue to either default or scrape by. You can’t heal the balance sheets of a banking system unless the economy is getting stronger. Which it won’t do without significant reforms. The best chance for those reforms went out the window along with Matteo Renzi’s political career.
Italy’s banks are too big to fail, for a few reasons. Size-wise, the banks are about one fifth of Italy’s GDP. They are highly connected, so letting one get into trouble damages other, potentially healthy banks. The ‘bondholders’ of the banks aren’t the typical large international institutional investor. They are ordinary Italian citizens who now own something like €200 billion-worth of bank bonds. Defaulting on them would be like the Irish government defaulting on Prize Bonds.
The likelihood is that European cash will be found to help the injured banks limp along, but this just delays the inevitable. Meanwhile, other tensions increase.
It is fascinating to note that Renzi is the 41st prime minister of Italy since 1946, and the fifth since 2008.
Italy is the only eurozone country whose GDP has not recovered after the crisis. Youth unemployment and Europe’s migration crisis have hit it hard. Yet the amount of net public investment in its crumbling infrastructure has been either zero or slightly negative for decades.
It is not surprising, then, that the world values survey finds the share of the population who “believe it is a good thing to have a strong leader without elections or parliament” is rising.
Faced with either institutional paralysis and democratically elected politicians simply ‘ruling a void’, to use the political scientist Peter Mair’s notable phrase, the average person says no thanks.
Either people disengage politically, or when asked, people use their vote to bring in a strongman character who makes unobtainable populist promises to take power, which, results in corrupting the system further. The model here is not Donald Trump but Silvio Berlusconi, the architect of many of Italy’s current woes.
The era of globalisation we have enjoyed since the 1970s may well be coming to an end. As we’ve talked about in this column many times, economic policy failure always ends up becoming a political problem in the end. So the failure to cope adequately with the global financial crisis of 2008 created many of the problems we have today. Ireland is not insulated from, or immune to, these problems, and a return to re-nationalisation driven by these large forces would hurt us all the more.
Strange times indeed.
Review of 'The Wealth of Humans', By Ryan Avent, Penguin, €19
Will robots eat your job? Will your kids have higher standards of living than you, in an age where there are too many workers and too much savings, when technological change makes the jobs many people do obsolete? When their citizens see their jobs disappearing due to international competition or technological change, how will politicians react? Will we see an increase in globalisation or a series of Brexits to re-nationalise the global economy?
Ryan Avent’s new book The Wealth of Humans takes us through the arguments around the digital revolution, the development of the world economy and the very notion of work and wealth in a new post-scarcity age.
Catastrophes need causality. We even call earthquakes acts of God. There’s something about us that needs to find the whys and the hows of the bad things that happen to us. This is common sense, as we’d like to avoid another catastrophe, if we can.
When it comes to financial catastrophes, it turns out we can’t avoid them, and we can’t quite figure out what causes them. Crash Bang Wallop is the latest in a series of books looking at the recent financial crisis through the lens of history. In this case, the subject under review is the history of the Square Mile of the City of London.
Like most of my generation, I live in, and on, my iPhone 6. This is not hyperbole. The fantastic (and rather scary) Moment app tells me I spend 8% of my waking life accessing my iPhone. I pick it up over 110 times a day, every day. Worryingly, I use my iPhone more on the weekends—when I’m most with my kids—than I do during work.
I’m 38. Imagine I live to be 85, which, statistically, I can expect, and imagine I sleep 50% of that time. I have 23.5 years left awake before I die. That’s 1.88 years of my remaining life I’ll spend on an iPhone.
1.88 years of my allotted time on planet Earth. Fuck that.
I don’t spend 8% of my waking life reading books, or working out, or walking with my family. I’d like to think I spend my time somewhat productively, and I’m a reasonably happy person, but I’m pretty sure I can think of better uses for 1.88 years of my life than staring at a smart phone.
Smart phone use is this generation’s smoking, and I’m a heavy smoker. I’ve been aware of this for some time.
Moment tells me I use Twitter the most, followed by RSS feed app Reeder, podcast app Overcast, and then everything else.
The thing is, I love my iPhone. I love everything about it. But I don’t think spending 2-3 hours a day accessing it is smart.
The Punkt phone challenge came at exactly the right time. It’s summer and as an academic I’ve fewer responsibilities, apart from writing. I also had a nice mixture over the weekend of free time, and travel.
I started the challenge on Thursday the 5th of August in the evening. I sent a tweet announcing it, and the fun began.
Unboxing the phone was a lovely experience. The packaging is sleek and well considered, the setup instructions are very clear, and the phone itself is both pleasing hold and obviously, very simple.
Once I was up and running, I sent a few text messages to friends to tell them not to message me on WhatsApp or any of the other iPhone centric services I use, and then got stuck in to doing not much at all with my phone.
The urge to tweet about how I didn’t have a phone anymore was somewhat overpowering.
The idea of disconnection is appealing, and a little frightening. I write to be read for a living, and I am a digital native. But have I ever really been disconnected?
There is a German word to describe the nostalgia for things you never knew, and the word is Sehnsucht. Nostalgia or longing for a distant place you’ve never actually been to, but which may inexplicably, be home. There’s nothing quite like Sehnsucht in English.
The Punkt MP01 is a Sehnsucht phone. It is nostalgia for disconnection in a small, modern, well designed plastic shell.
The lack of music, of podcasts, of feeds, of twitter, was a little alarming. I didn’t get iMessages, or pictures of my kids. Because I couldn’t import contacts onto my sim, I didn’t know who any of the calls I received were from. This unnerved those on the other end of the call more than me after a while. We’re used to being pre-recognised these days. The predictive text messaging is deliberately rudimentary. Replying to text messages became a total pain, so I just started calling people back, which I could tell annoyed some of them a little bit, sometimes. Voice calls can be an intrusion in 2016.
On Sunday, I travelled from Limerick to London to give some lectures. I’ve flown this route dozens of times. It is, essentially, a bus ride for me. Printing out boarding passes felt very 20th Century. The Punkt phone was to be my alarm clock and my phone. My iPhone stayed in Limerick. I brought my laptop for work, and an old kindle.
I managed to read a few books on my kindle, which is itself a form of ‘calm’ technology, the kind of tech that demands the smallest amount of attention, be as informative as possible, and create calm when it can. I read books by Theodore Zeldin, Warren Ellis, and James C. Scott. Those were, I think, a better use of my time than reading tweets. I still allowed myself to tweet a bit from the computer when it suited, but I wasn’t running to it every 5 minutes. From Thursday 5th to Thursday 11th, I sent 15 tweets, 4 of which were retweets of the news paper I write for. More importantly, the hours I normally spent on twitter were now minutes.
Travel was a good bit harder for me. I got lost on trains, on streets. In fact, I got lost pretty much everywhere I went in London. With no map apps to guide me, I had to rely on the kindness of strangers. Strangers who mostly had earbuds in, foreheads down, and when stopped for directions, didn’t know how to get to where I was going either. They used their phones to show me, but we had a laugh as well. There was a human connection, however brief, brought on by the phone.
I became much more aware of street signs, and of just listening. No headphones and no notifications beyond the odd text message meant I had a lot of time to just listen on planes and trains. The average train carriage is quite a loud space. Everyone listening to an individual sound source but me, shuttling through London’s underground and overground services. I looked out the window a lot.
When I got home from London, I played with my kids and didn’t think to check my phone once. I only realised this when it beeped at me. I charged the phone fully on Thursday the 5th. I’m writing this on Wednesday the 10th, and it is has just demanded a bit of power with a little vibration. My iPhone 6 barely made it past 3pm on any day.
I then travelled to Belfast for another set of lectures. Again, no iPhone. No problem this time as I was driving, but without the turn by turn navigation, the trip into Belfast city became a little fraught. I'm also really missed podcasts, which were a staple of my driving experience up to now.
I've now been using it for 15 days. The iPhone has stayed in its box and hasn't been used once in 15 days. Thats 12,650 times I haven't picked it up. I've charged the phone twice in those 15 days.
I am going to keep using the Punkt phone for another 15 days. 48 hours wasn’t enough to really see where this can take me. 360 hours gave me a sense that phones like this, which represent a sort of pulling back from the notification nirvana that is the iPhone, have a real place in the lives of digital natives like me.
The conditions I'm using the phone in are, as economists say, out of sample. I’m going to extend this experiment into a new academic term and new responsibilities at work, to see how much I really need the iPhone in my professional life.
Here's my lecture on life cycle inequality (.pdf) for the Queens University Summer School on social welfare and social policy (.pdf). This was a really interesting engagement with public and civil servants who work in this area, at the coal face, as it were. Incredibly thoughtful and engaged people, willing to be challenged and to debate the issues of the day.
Below are my slides (in .pdf) from the closing keynote of the Applied Stock-Flow consistent Macro-modelling summer school. I'm told a video of the lecture will be online at some point as well, I'll pop it up here then. SFC_Strategy_Kingston_Aug_2016
Our paper just published in Frontiers of Public Health.