The kooky degrowth movement advocates for a radical reduction in economic growth to achieve its social and environmental goals. Degrowthers argue that the continued pursuit of infinite growth is ecologically unsustainable on Spaceship Earth, causing massive environmental destruction, social inequality, and political instability. Given that current global per capita GDP is currently around $12,000 a year, we’re either talking about a big reduction in rich country living standards or a world with far fewer people.--Pethokoukis
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It is said U.S. maternal deaths are up. But methods of classifying them have changed. Calculating maternal mortality rates in 2015 and 2016 in a consistent manner for the entire United States without using the standard checkbox item yielded rates similar to the maternal mortality rates calculated from vital statistics before the standard checkbox item was introduced.
At least some, and perhaps all, of the apparent increase in recent years of maternal mortality rates in the United States is an artifact of a change in death certificate recording.
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E.V. graveyards are therefore an indictment of government policy, not capitalism. When private entrepreneurs enter into a nascent market, they put their own capital on the line; their ambition is tempered by the fear that failure will mean losing their shirt. But when the government agrees to cover part of the bill, or requires people to use that product, then it artificially lowers the risk.--Lancaster
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The Federal government is spending a lot more than it receives in taxes, so it is running a deficit that is financed by borrowing in the bond market. The size of the deficit relative to total domestic production (GDP), a rough measure of our ability to pay for our indebtedness, is about 6% in 2023. That percent has been higher in the past, during wars and recessions, but those episodes required deficit spending, and then the government returned to fiscal responsibility. Not so today. We are at full employment and not engaged in world conflict, so the 6% deficit is an unprecedented problem, especially since about 30% of our debt is held by foreigners. The chart below from a paper by George Hall and Tom Sargent shows holders of U.S government debt from 1900 through 2022. The fraction held by foreigners (shown in orange) remained small through the mid-1970s but has ballooned since 2000, and this is cause for concern on a number of levels. First, we can no longer claim the old refrain, “we owe the interest and principal to ourselves so the government debt does not burden our children.” China and Japan, the largest foreign holders of U.S. obligations, receive interest payments that will eventually require higher taxes, especially with the new era of high rates. The budget deficit will grow as current government bonds mature and are replaced with higher interest-rate obligations. Second, foreigners can stop investing in U.S. government debt whenever they please, and that would either drive down the value of the dollar in the foreign exchange market, raise U.S. interest rates, or both. Those unpleasant outcomes are unlikely to occur as long as the dollar remains international money, the world’s medium of exchange, but that needs a commitment to fiscal discipline. The pound sterling was once the world’s reserve currency but lost its “exorbitant privilege” to the American dollar during World War I as Britain turned from creditor nation to debtor. It is not easy to replace the established medium of exchange, but it has happened before. America should tighten its belt when it can, not when it has to.--Bill Silber,
Former Marcus Nadler Professor of Finance and Economics, Stern School of Business, NYU; Author;
August 13, 2023, 4:30pm.
E.V. graveyards are therefore an indictment of government policy, not capitalism. When private entrepreneurs enter into a nascent market, they put their own capital on the line; their ambition is tempered by the fear that failure will mean losing their shirt. But when the government agrees to cover part of the bill, or requires people to use that product, then it artificially lowers the risk.--Lancaster
***
The Federal government is spending a lot more than it receives in taxes, so it is running a deficit that is financed by borrowing in the bond market. The size of the deficit relative to total domestic production (GDP), a rough measure of our ability to pay for our indebtedness, is about 6% in 2023. That percent has been higher in the past, during wars and recessions, but those episodes required deficit spending, and then the government returned to fiscal responsibility. Not so today. We are at full employment and not engaged in world conflict, so the 6% deficit is an unprecedented problem, especially since about 30% of our debt is held by foreigners. The chart below from a paper by George Hall and Tom Sargent shows holders of U.S government debt from 1900 through 2022. The fraction held by foreigners (shown in orange) remained small through the mid-1970s but has ballooned since 2000, and this is cause for concern on a number of levels. First, we can no longer claim the old refrain, “we owe the interest and principal to ourselves so the government debt does not burden our children.” China and Japan, the largest foreign holders of U.S. obligations, receive interest payments that will eventually require higher taxes, especially with the new era of high rates. The budget deficit will grow as current government bonds mature and are replaced with higher interest-rate obligations. Second, foreigners can stop investing in U.S. government debt whenever they please, and that would either drive down the value of the dollar in the foreign exchange market, raise U.S. interest rates, or both. Those unpleasant outcomes are unlikely to occur as long as the dollar remains international money, the world’s medium of exchange, but that needs a commitment to fiscal discipline. The pound sterling was once the world’s reserve currency but lost its “exorbitant privilege” to the American dollar during World War I as Britain turned from creditor nation to debtor. It is not easy to replace the established medium of exchange, but it has happened before. America should tighten its belt when it can, not when it has to.--Bill Silber,
Former Marcus Nadler Professor of Finance and Economics, Stern School of Business, NYU; Author;
August 13, 2023, 4:30pm.
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