Recommended Weekend Reads

Written By Francis Kelly

August 9 - 11, 2024

Please find below our recommended reads from reports and articles we read in the last week.  We hope you find these useful and that you have a relaxing weekend.   And let us know if you or someone you know wants to be added to our distribution list.

Geoeconomics

  • The Case for a Carbon Tax: My Long Read Q&A with Kyle and Shuting Pomerleau  American Enterprise Institute’s Policial Economy Podcast

    The Biden administration has set ambitious goals to decrease US carbon emissions. Starting in 2022, the Inflation Reduction Act granted clean energy tax credits to businesses in hopes of encouraging a greener economy. Kyle and Shuting Pomerleau see a carbon tax as a superior approach. To offset any regressive effects, they propose a revenue swap, using the income from the tax to directly finance an expanded child tax credit.  The interview is with Shuting Pomerleau, who is the deputy director of climate policy at the Niskanen Center. Kyle Pomerleau is a senior fellow at AEI, where he studies federal tax policy.

  • Pocketbook Politics: The Impact of Wealth on Political Preferences and Participation  Anton Brännlund,  David Cesarini,  Karl-Oskar Lindgren, Erik Lindqvist,  Sven Oskarsson  & Robert Östling/ National Bureau of Economic Research

    The rich tend to support policies favoring the affluent and are over-represented among both voters and legislators. This paper investigates whether these correlations reflect causal effects of wealth by leveraging random, positive wealth shocks in the form of lottery prizes. Compared to suitably matched controls, large-prize winners are no more likely to cast votes in national elections or run for political office. We also find no significant effects of parents’ lottery winnings on their children’s political participation. But winners of large lottery prizes become more negative toward taxes on wealth, real estate and inheritances. Although we do not detect any statistically significant effects on other political preferences, effects tend to go in the direction of a more right-wing political orientation. We find no evidence that lottery wealth changes moral values or strengthens beliefs in the importance of hard work for success in life.

  • Is Greece’s Six-Day Work Week a Harbinger?  Pinelopi Koujianou Goldberg/Project Syndicate

    Greece’s surprising move back to a six-day work week in some sectors reflects a mix of evolving political sentiment and merciless arithmetic. To maintain their current quality of life, citizens across almost all high-income countries must either open their borders to new immigrants or work more.

China

  • China’s Real Economic Crisis – Why Beijing Won’t Give Up on a Failing Model Foreign Affairs

    The Chinese economy is stuck. Following Beijing’s decision, in late 2022, to abruptly end its draconian “zero COVID” policy, many observers assumed that China’s growth engine would rapidly reignite. After years of pandemic lockdowns that brought some economic sectors to a virtual halt, reopening the country was supposed to spark a major comeback. Instead, the recovery has faltered, with sluggish GDP performance, sagging consumer confidence, growing clashes with the West, and a collapse in property prices that has caused some of China’s largest companies to default. But there is a more enduring driver of the present stasis, one that runs deeper than Xi’s growing authoritarianism or the effects of a crashing property market: a decades-old economic strategy that privileges industrial production over all else, an approach that, over time, has resulted in enormous structural overcapacity. For years, Beijing’s industrial policies have led to overinvestment in production facilities in sectors from raw materials to emerging technologies such as batteries and robots, often saddling Chinese cities and firms with huge debt burdens in the process.

  • No Quick Fixes: China’s Long-Term Consumption Growth   Rhodium Group

    Investment-led growth has peaked in China, as the financial system can no longer generate the same pace of credit expansion as in the past decade. With this source of growth drying up, household consumption growth will be the single most important determinant of China’s long-term economic trajectory and growth rate. In this report, the authors explain what is holding back household consumption in China, examine the policy debate over how to catalyze consumer spending, and offer a range of long-term forecasts for consumption growth.

Latin America

  • Can Maduro Pull Off the Mother of All Electoral Frauds?   CSIS Americas Program/Ryan Berg

    Venezuela is now living in the post-electoral moment of one of the most brazen thefts in modern Latin American history. Fortunately, the Venezuelan opposition was well prepared for this. In a June 2023 event with CSIS, opposition leader María Corina Machado predicted that if there were elections in Venezuela, “there are only two outcomes: a landslide victory or an obscene fraud.” These words have proven prophetic in recent days, as both of these outcomes have transpired.  President Nicolás Maduro had telegraphed his intentions ahead of the vote by declaring that he would win “by hook or by crook” and recently warning that there would be a “bloodbath” in the country if he didn’t win.

  • Twelve Graphs on Why Maduro Could “Win” by Stealing Venezuela’s Election   Cato Institute

    After the recent elections in Venezuela, President Nicholas Maduro claimed – without providing any evidence – that he had beaten opposition candidate Edmundo González by a margin of 51 to 44 percent.  But, as this report shows using stastitical analysis broken down into graphs, the fair calculations, of the results shows around 65 percent of Venezuelan voters rejected Maduro’s government at the polls. 

Russia

  • Too Many Dead Soldiers to Count  Mediazona & BBC New Russia

    BBC News Russia have confirmed the deaths of 61,831 Russian soldiers in Ukraine by name, including over 2,000 confirmed in the last two weeks. In a Telegram post, Mediazona said it currently has a backlog of soldiers’ deaths to confirm: “The number of obituaries is rising so quickly that [we] can’t keep up.” (The journalists’ count only includes soldiers whose deaths can be verified from sources like obituaries and funeral announcements, so the real number of Russian soldiers killed is much higher. Last month, Meduza and Mediazona estimated it at 120,000.)

  • 2024 Defense of Japan  Japanese Ministry of Defense

    In its annual risk assessment, the Japanese Defense Ministry writes that the world “is now facing the greatest trial since the end of World War II” and that Japan faces “a new era of crisis” with potential implications for the Indo-Pacific.  The report not only discusses ongoing tensions with China (which is identified as the gravest threat to Japan) and North Korea, but also Russia in a whole new way. The report castigated Russia, saying “This situation, in which a permanent member of the Security Council, which is supposed to take primary responsibility for maintaining international peace and security, openly engages in military actions challenging international law and the international order, claims innocent lives and repeatedly uses language and actions that can be interpreted as threats involving nuclear weapons, is unprecedented.”

European Union

  • The Missing Strategy in Europe’s Chip Ambitions  Interface I

    European semiconductor technology suppliers hold market-leading—sometimes monopolistic—positions at various points in the global semiconductor value chain. Europe is home to competitive suppliers of semiconductor manufacturing equipment, chemicals, sensors, automotive chips, and power semiconductors, to name just a few. Because of the steep barriers to entry and close customer–supplier relationships, these are not easy markets to enter and successfully compete as a new company. The world depends on semiconductor technologies from European companies, and just as Europe depends on front- and back-end manufacturing in Asia, Asian fabrication plants (fabs) depend on manufacturing equipment and chemicals from European suppliers. Furthermore, manufacturers of electric vehicles all over the world depend on chips from Europe. The list goes on. Semiconductors are a strategic asset to Europe, one that provides geopolitical leverage—as other countries depend on access to our technology.

  • Foreign Direct Investment and National Security: Perspectives from the EU and the US  Istituto Affair Internazionali

    Foreign direct investment (FDI) serves as a cornerstone of the global economy, driving economic growth and development across nations.  However, amidst rising geopolitical tensions and uncertainties, there is a discernible shift towards strengthening or establishing new frameworks for FDI screening.  This study looks at the similarities and differences between the US and EU in conducting such screening – and how the implications of these screenings may have implications that go beyond purely economic considerations, affecting transatlantic relations and the broader geopolitical landscape.

  • How to Ensure Defense Capabilities for Europe? Economic and Fiscal Consequences Econopol

    Abstract: Russia’s invasion of Ukraine has raised the question of whether the issue of external border security and defense needs to be more closely integrated within the European Union. Many proposals are under discussion aimed at assigning the EU with tasks that are currently performed at national level. Most EU members have increased their defense spending in the past year or plan to do so soon. However, whether an EU defense union is politically achievable remains controversial. It entails additional costs and ‒ even more importantly ‒ the member states would have to give up some of their sovereignty. The project is linked to the plan to build a robust and efficient defense industry. This is because European arms production has so far suffered from national fragmentation and chronic underfunding. In this issue of EconPol Forum, our authors take a critical look at the needs of the common EU defense policy. They examine how it should be efficiently financed and coordinated at EU and national level. They also provide insights into the role of the European defense industry in a single market and its strengths and weaknesses in a global context. Furthermore, they shed light on the financing of R&D and technology through the EU’s coordinated defense policy and its expected impact on growth, productivity, and competitiveness.

Francis Kelly
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