Economy

Licensing Laws Continue to Drain U.S. Economy

American Interest: “…it’s important that policymakers don’t lose sight of more subtle ways the government has distorted the economy to favor the politically connected.”

“One example: Onerous occupational licensing laws that force people to undergo thousands of hours of often redundant and gratuitous training to perform jobs like auctioneering, tree trimming, and hair styling. The Wisconsin Institute for Justice reports:”

“Occupational licenses are ‘one of the most substantial barriers to opportunity in America today,’ a new study by the Wisconsin Institute for Law & Liberty (WILL) found. According to WILL’s estimates, licensing laws raise prices for consumers by $1.93 billion each year and results in roughly 31,000 fewer jobs. Over the past two decades, the number of license holders has jumped by 34 percent in Wisconsin. Meanwhile, the number of occupational licensing categories has soared by 84 percent.”

Why Trump’s Factory Job Promises Won’t Pan out—In One Chart

Brookings Institution: “Last week, we wrote that we thought President-elect Donald Trump would be hard-pressed to deliver on his promises to ‘bring back’ large numbers of America’s lost manufacturing jobs, even if he does renegotiate the nation’s trade deals. The reason: Manufacturing work is increasingly carried out by robots, rather than people.”

“The problem for Trump and blue-collar workers is that when manufacturing returns to the states (and several trends favor that), the associated job-creation will not be what it once was. Nor will the difference be just a minor effect – it’s going to be major.”

Already a Big Gap Between Trump’s Promises to the Middle Class and His Policies

Economic Policy Institute: “During his campaign, President-elect Donald Trump promised that he would take the side of American workers against economic elites when evaluating policy. Yet, the policy proposals he put forth during the campaign had nothing in them that would actually help working- and middle-class Americans. Now that more plans and potential cabinet appointments are coming into focus, it looks worse than many of us thought even before the election. Across a broad range of crucial issues, the incoming Trump administration appears likely to betray the promises he made to the American middle class. Here’s a rough sketch of how.”

Obama White-Collar Overtime Pay Mandate Blocked by Judge

Bloomberg: “An Obama administration policy that would have given more white-collar workers overtime starting Dec. 1 was blocked nationwide by a federal judge in Texas.”

“The decision Tuesday is a victory for 21 states and dozens of business groups that sued, complaining the new rule would increase government costs in their states by $115 million next year alone and would put private employers on the hook for millions of dollars more, possibly leading to layoffs.”

Will Donald Trump Help or Hurt Big Oil?

CNN Money: “Donald Trump has promised to be a loyal friend of Big Oil. Not only does the president-elect want to remove the shackles on oil by rolling back regulations, but he wants to unleash America’s natural resources by expanding drilling on federal land.”

“Problem is, the world is inundated with oil, currently. So, the actual impact of Trump’s energy agenda is less clear cut. In many ways, Trump presents a double-edged sword for oil: His policies may seek to help the oil industry itself. But tapping oil is not the problem that oil companies face. It’s low prices.”

“In fact, Trump’s efforts to boost production may hurt oil companies by exacerbating the epic supply glut that caused prices to crash in the first place.”

Why the Third Wave of Globalization May Be the Hardest

The Economist: “Bill Clinton once called globalisation ‘the economic equivalent of a force of nature, like wind or water’. It pushes countries to specialise and swap, making them richer, and the world smaller. In ‘The Great Convergence’, Richard Baldwin, a Geneva-based economist, adds an important detail: like wind and water, globalisation is powerful, but can be inconstant or even destructive. Unless beloved notions catch up with reality, politicians will be pushed to make grave mistakes.”

“Continuing the sports analogy, Mr Baldwin says that today’s trade is like the coach of a top team being allowed to offer his services to underdogs. The coach gets rich from the doubled market for his services, while the better team gets a sudden surprise from the newly skilled competition. Mr Baldwin says that discontent with globalisation stems in part from an ‘ill-defined sense that it is no longer a sport for national teams.'”

The Worst-Case Scenario for the Economy Under Trump Just Happened in Another Country

Washington Post: “While there are a number of important differences between the Brazilian and U.S. economies, Rousseff’s policies arguably offer a cautionary example for newly empowered Republicans in Washington.”

“More than any U.S. politician’s platform, Trump’s agenda on the economy resembles those of populist leaders abroad. In particular, the policies he has proposed are very similar to those of Dilma Rousseff, the former president of Brazil who was ousted from office in August.”

“As Trump has planned to do, Rousseff enforced restrictions on imports. She promised new spending on infrastructure and granted generous subsidies to corporations with the goal of stimulating the economy, especially manufacturing.”

A Super-Nerdy Insurance Plan Could Save Poor Countries from Damage Caused by Climate Change

Quartz: “CCRIF was, according to its CEO Isaac Anthony, the world’s first ‘multinational parametric insurance company.’ In layman’s terms: it’s insurance for acts of God, designed to help countries rebound quickly after disaster.”

“Parametric insurance makes payments not based on assessed loss, but on the intensity of an event. With a hurricane like Tomas, for instance, CCRIF measures the volume of rainfall and wind speeds. They then compare these factors to models of how much damage the disaster was likely to inflict, taking into account the regions and cities affected. Member countries take out policies with different levels of protection, and within two weeks of a disaster, CCRIF determines what, if any, payment they will make.”

“Parametric insurance makes payments not based on assessed loss, but on the intensity of an event. With a hurricane like Tomas, for instance, CCRIF measures the volume of rainfall and wind speeds. They then compare these factors to models of how much damage the disaster was likely to inflict, taking into account the regions and cities affected. Member countries take out policies with different levels of protection, and within two weeks of a disaster, CCRIF determines what, if any, payment they will make.”

The Glaring Contradiction at the Heart of Donald Trump’s Economic Policy

Neil Irwin: “A centerpiece of Mr. Trump’s campaign was the United States’ trade deficits. He pledged to eliminate them and create a resurgence in American manufacturing.”

“But let’s imagine that Mr. Trump follows through on the policy mix he’s hinted at so far: a combination of loose fiscal policy (think more spending on defense and infrastructure, and tax cuts) and tighter monetary policy (the Federal Reserve raising interest rates faster than had seemed likely before the election). At that point, the dollar could move more decisively higher, creating a tension that the president and his advisers would have to resolve one way or the other.”

Trump’s Monetary Conundrum 

Nouriel Roubini: “Markets will give Trump the benefit of the doubt, for now; but investors are now watching whom he appoints to his administration, what shape his fiscal policies actually take, and what course he charts for monetary policy.”

“They may be watching monetary policy most closely. During his campaign, Trump threatened the US Federal Reserve’s independence, and heaped criticism on Fed Chair Janet Yellen. But Trump is a real-estate mogul, so we cannot immediately assume that he is a true monetary-policy hawk, and not a closet dove. His campaign rhetoric may have been directed at the Republican Party base, which is full of Fed-bashing gold bugs.”

“If Trump does choose a more hawkish monetary-policy approach, it will have an ambiguous impact on the dollar, owing to his other proposals’ downstream effects. Looser fiscal policy and tighter monetary policy should, as in former President Ronald Reagan’s first term, strengthen the dollar; but if Trump pushes the US toward protectionism, he will generate economic and geopolitical tail risks that would weaken the dollar and increase US country risk.”

The TPP Is Dead, Long Live the TPP

Brookings Institution: “The election of Donald Trump as the next president of the United States seems to have sealed the fate of the Trans-Pacific Partnership.”

“We should not jump to the conclusion, however, that a TPP without the United States is without value for the remaining members. In fact, a relaunched TPP could be the best vehicle for these countries to adapt to the new—and harsher—reality of international trade in a world increasingly consumed by populism, especially considering that Trump may feel compelled in the early stages of his tenure to deliver on the disruptive elements of his trade agenda…”

“In this new world of resurgent protectionism, the value of the TPP rises significantly.”

Trump Voters Don’t Sweat Robot Outsourcing

Inverse: “As long as the robots are American, we’re good.”

“You’d think this creeping automation, not creeping Sharia, would concern Trump’s base, but as long as robots are in America, they seemed comfortable with the idea.”

“A common theme in Trump’s rhetoric — which is not reflected in his policy — is that he is a champion of the common person. And looking to the future, there are a lot of low-paying jobs that could be turned over to machines.”