Saturday, February 23, 2013

Saturday Morning Links

Assorted content for your weekend reading.

- Chrystia Freeland points out why productivity doesn't provide an accurate picture of economic development if it merely results in increased inequality rather than shared benefits:
Productivity and innovation, the focus of policy makers and business leaders, no longer guarantee widely shared prosperity. “Digital technologies are different in that they allow people with skills to replicate their talents to serve billions,” Mr. Brynjolfsson said. “There is really a drastic winner-take-all effect because every industry is becoming like the software industry.”

Classical economic theory isn’t entirely wrong. The danger isn’t — as it was easy to fear during the depths of the financial crisis — structural unemployment. The problem is what kind of jobs, at what kind of salaries, the shiny new technologically powered economy of the future will generate.

Lawrence H. Summers, the Harvard professor and former U.S. secretary of the Treasury, has a vivid way of describing the dystopian possibility. “As economists like to explain, the system will equilibrate at full employment,” Mr. Summers said in a public interview at the World Economic Forum in Davos, Switzerland, last month. “But maybe the way it will equilibrate at full employment is there’ll be specialists at cleaning the shallow end and the deep end of rich people’s swimming pools. And that’s a problematic way for society to function.” 
- And Michael Harris comments on another obvious set of problems in developing a functional society, as the manipulation of interest rates by a financial sector left to nothing but an irrational honour system served to siphon massive amounts of wealth toward a privileged few:
The snakes in suits who think about sleazy ways of making money day and night couldn’t have dreamed up a better scam than manipulating the Libor. Anyone who pays a mortgage or struggles with a student loan feels their power. So do the people who get less of a dividend on their corporate bonds.

But for bankers and brokers with cash-register hearts, the possibilities of profit and benefit from fiddling the Libor were endless.

That’s because the rate was whatever they said it was. Setting it became a vast exercise in Scout’s Honour run amok. Floor traders who assisted in the scam increased their bonuses. The colluding banks made money by lending at a higher interest rate, knowing that they had the ability to artificially lower their costs when borrowing the same currency by driving down the Libor. Governments had the appearance of wisdom.
...
The thievery and deception went on for years. Finally, heads rolled and charges were laid. As usual, public and private regulators proved to be direct relatives of Rip Van Winkle. They bleated, lamb-like, claiming to be shocked that the world’s biggest banks had turned international banking into a private casino. In that gaming house, the cards were marked, the dice loaded, and everyone got fleeced but the guys who drove Ferraris.
...
The Libor scandal, you see, was actually aided and abetted by the government of the day and the Bank of England. No one was regulating the Wild West banking practices because they had opted for the so-called “light touch” approach to supervising banking.

People with the lightest touch usually turn out to be pickpockets. De-regulation of the banking industry unleashed 10,000 hyenas on an unsuspecting public.
Which is particularly worth noting as other areas of interest - such as, say, Saskatchewan's environment - are also shifted toward models where the specialized expertise of regulators gives way to a similar "light touch" to encourage innovative evasion tactics.
 
- Better Way Alberta emphatically refutes Alison Redford's claim that the province's budget problems are a matter of spending rather than revenue, pointing out that Alberta could raise tens of billions of dollars each year simply by applying a more reasonable royalty structure and a tax system consistent more with other Canadian provinces.

- Glen McGregor and Stephen Maher offer an overview of where Robocon stands, as well as the news that Elections Canada's review of the Cons' vote suppression is still in progress but running into limitations in its own investigative authority.

- Finally, Jeffrey Simpson recognizes that the Cons' much-ballyhooed Office of Religious Freedom is intended purely for domestic political consumption rather than any plausible hope of influence around the world.

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