Macro Roundup

Economist Staff, "Excess Asian savings are weighing on global interest rates,"Economist, November 23, 2019, https://www.economist.com/finance-and-economics/2019/11/23/excess-asian-savings-are-weighing-on-global-interest-rates

"...There are certainly echoes with 15 years ago. High savings rates in Asia continue to translate into large current-account surpluses. Over the past five years East Asia’s current-account surplus has averaged about $525bn annually, a touch higher in cash terms than the average in the five years preceding the 2008 crisis. The distribution has shifted: China’s surplus peaked a decade ago, while those of South Korea and Taiwan are bigger than they used to be. The current-account surpluses in Asia’s big economies add up to about 0.6% of global gdp, roughly the same as that of Europe’s surplus economies, including Germany’s, in combination.....A broader question is whether Asia should be faulted for its predilection for saving. Take Singapore, which lies at the extreme end with a current-account surplus of 18% of gdp. The imf argues that the country’s external position is “substantially stronger” than warranted by fundamentals. It has called for the government to spend more on infrastructure and on social security, which would help reduce its citizens’ precautionary savings. But Singapore has pushed back against such criticisms. Before the mid-1980s it regularly ran a current-account deficit. Its surplus ballooned as it hit a demographic sweet spot, with lots of workers and few retired people. In the coming years, though, it expects its surplus to narrow as its population gets older. Households will draw down savings and the government will face mounting health-care costs. For China, South Korea and Taiwan, all of which are set to age rapidly, the dynamics are likely to be similar.Economists also continue to question how much blame Asian savers really deserve for the global financial turmoil of 2008. There were plenty of other culprits. They included America’s lax mortgage regulations and Europe’s rash banks, which borrowed heavily and scooped up dangerous debt products. Once again, the West is doing much on its own terms that is alarming enough, from America’s trade wars to Europe’s inability to muster a co-ordinated fiscal response to its economic woes. Surplus savings in Asia are yet another drag on a world suffering from weak demand. But of all the things to worry about, they are not top of the list...."

Economist on the chronic surplus Asian countries (Brad Setser is quoted)

McKinsey on how to address housing in LA, basically lots of low hanging fruit in up-zoning single family for multifamily in areas with transit access
"...High housing costs are causing real economic losses and daily trade-offs for individual residents and for the region as a whole.From 2013 to 2017, median rent in LA County increased by 9.7 percent annually, while median household income increased by only 2.4 percent....Increases in rents and home prices have far outpaced wage growth for most of the region’s workers. As a result, one million households, or 70 percent of all households in the City of Los Angeles, would have to stretch financially to obtain a standard-size unit in their current neighborhood. This number rises to a little over 1.9 million households across LA County. The cost of housing has always weighed most heavily on people in the lowest income brackets, but it is now squeezing the middle class as well. While many homeowners are affected, the situation is inherently more precarious for renters.We estimate that the shortage of affordable housing depresses GDP across the metro area by more than 2 percent. This translates into $18 billion to $22 billion in lost output every year for the City of LA, and almost double that amount for all of LA County. Most of this occurs as households forgo other types of consumption to pay the rent or mortgage. Consumption is limited even further for Angelenos who face high transportation costs because they cannot afford to live near their place of employment—a situation that contributes to some of the nation’s worst traffic congestion and related environmental consequences. The people who provide many of the services Los Angeles depends on every day are finding it harder to get by or to live anywhere near where they work...This does not have to involve placing high-rises on every open space. Higher density is a given, but much of the gap could be bridged with low- and mid-rise redevelopment that capitalizes on the ongoing expansion of public transit and is within current zoning. Prioritizing select sites near major transit hubs and primary transit corridors for medium- and some highrise development early in this effort could accelerate progress....:Jacques Bughin, James Manyika, Sven Smit and Jonathan Woetzel, "Affordable housing in Los Angeles: Delivering more— and doing it faster," McKinsey Global Institute, November 2019, https://www.mckinsey.com/~/media/McKinsey/Industries/Public%20Sector/Our%20Insights/Affordable%20housing%20in%20LA%20delivering%20more%20and%20doing%20it%20faster/MGI-Affordable-housing-in-Los-Angeles-full-report.ashx

Ross Douthat, "Social Media and the Populist Moment," New York Times, November 23, 2019, https://www.nytimes.com/2019/11/23/opinion/sunday/social-media-and-the-populist-moment.html

Social Media and the Populist Moment

Counter-protesters gathered opposite a rally outside Trump Tower on Nov. 16 for two Proud Boys who were sentenced to four years in prison for assaulting anti-fascist protesters in 2018.Credit...Dave Sanders for The New York Times

Social media is bad for everything and everybody, for human beings and journalists and other living things. But at least it reliably generates interesting juxtapositions from which op-ed columns can be made — including columns about how a fixation on, well, social media, is damaging liberalism’s understanding of the world.

The relevant juxtaposition comes from my Twitter feed, which on Friday featured — to great acclaim and many retweets — a speech by Sacha Baron Cohen, the erstwhile fake newsman Borat, condemning “a handful of internet companies” for building the “greatest propaganda machine in history” and driving the rise of authoritarianism, demagoguery and bigotry.

At the same time, Twitter also surfaced a recent study from academics in France, Canada and the United States, which examined the relationship between social-media echo chambers and support for populism in France, Britain and the United States. The authors found that there was either no relationship or a negative one: Populist voters were somewhat more likely to hang out with people of a similar ethnicity or social class offline, but on the internet they were no more likely than other voters to inhabit an echo chamber. And social media use was a strong predictor of opposition to the campaign of Donald Trump.

This is not the first study to question social media’s supposedly central role in the drama of right-wing populism. Shortly after Trump’s election, economists at Brown and Stanford found that he performed more poorly than Mitt Romney and John McCain among Americans who get their news online, while the voters he converted were often the very offline.

This kind of evidence doesn’t mean that online conspiracy mongering has no influence on populism. People who rarely use the internet might be more easily deceived by fake headlines when they do wander online. Normal partisans may get kookier under the sustained influence of the memeplex. And Cohen is right that small communities of depraved people, from pedophiles to anti-Semites, use online platforms in vicious ways — and internet giants invoke free expression while shirking their responsibility to deny such viciousness a refuge.

But we should be more doubtful of Cohen’s larger narrative, which is commonplace among progressives — a narrative that invokes the “sewer” of social media to explain everything from climate-change skepticism to anti-immigration sentiment, portrays Russian trolls and YouTube stars as the crucial actors of the populist era, and proposes the regulation of online speech as the main restorative that the liberal order needs.

Instead, the evidence in the papers cited above hints at a different scenario — in which because educated liberalism is increasingly so very online itself, ensconced in its own self-reinforcing information bubble, liberals end up analyzing populism exclusively through their digital experience even when that analysis is obviously insufficient.

In a recent Boston Review essay, Tufts political scientist Eitan Hersh notes that many American liberals participate in politics through a kind of uber-online “political hobbyism,” in which real-world organizing recedes in favor of constant engagement “from behind screens or with earphones on.”

Inside this hobbyist’s world the centrality of those screens becomes a given. Spend all your time on Twitter and Facebook and it seems that Twitter and Facebook must be essential to the far right’s appeal, and that a better social media ecosystem would suffice to deal with Trump or suppress Marine Le Pen or sideline Nigel Farage.

But if the other side is actually less online than you are, this assumption leads to two mistakes. First, you end up downgrading the obvious real-world forces driving populism’s appeal, persuading yourself that an algorithmic tweak or better fact-checking will deal with deep trends — economic stagnation, social crisis — that would exist with or without fake news.

Second, you lose sight of the ways in which your own information bubble is a potential radicalizing force — including for people observing it from outside, for whom it makes political liberalism seem like an airless world filled with hyper-educated ideologues. Indeed, on the evidence of a Democratic primary that seems made for the social-media bubble, it’s liberalism that’s being warped by online feedback loops and radicalization cascades.

Which is not to say that conservatism isn’t pretty warped at the moment, or that social media has been good for right-wing decency and common sense. (Remember where I began: It’s bad for everything.) But what’s wrong with conservatism has as much to do with old-media forces like talk radio and cable news, plus real-world isolation and disconnection, as it does with QAnon. Donald Trump owes his (relative) resilience to the inertia of medium-information voters enjoying a decent economy, not to YouTube radicalism.

And if those voters are the battlefield, then any Democratic strategy will be insufficient unless liberalism realizes that before it regulates social media for other people, it should learn how to resist the internet itself.