GINI, Getting Big, Economic Surprises, Budget Again, Productivity Considered, ETF Scare, Beijing Remade, Shooting the Regulator

Big Picture blogger Jim Ritholtz self-described ‘ardent capitalist’ on the dangers of rising income inequality.

Like Alberta’s Social Credit leader William Aberhart’s (image left) analysis in the 1930s, if people don’t got money then they can’t buy what the economy produces, and what follows isn't pretty.

Articles also on why China and India will have to lead in energy saving technologies, Jim O’Neil’s reminder of the importance of accurate GDP forecasts, TD Economics looks at the Canadian Federal Budget, the road ahead for improving Canadian productivity, how dangerous are ETFs, Beijing’s 25 year long facelift, and the attack on Elizabeth Warren.

An important summary of the fact and consequence of rising income inequality.

Big Picture – Whither and Withering Demand?
I have long wanted to collect my thoughts about some of the issues — masked in part, I believe, by the two bubbles we’ve had in the past 11 years — that are exacerbating our current crisis and will continue to forestall any semblance of a robust recovery.

Quote worth quoting.

“It’s my personal opinion that we have worked our way toward the end of “trickle down” economics and, while of course others are free to feel differently, I label it a failure.”

Forecasts for the growth of the Chinese and Indian economies to surpass the United States can not come true without a completely different approach to energy use. Necessity will breed innovation or stop these economies cold.

New York Times – Can the Planet Support Two More Americas?
Try to imagine a world with three Americas.

Downside GDP surprises can hurt financial markets a lot.

Financial Times – Accurate GDP Forecasts Prove Vital To Equities Performance
Financial market participants spend much of their time responding to economic statistics.

TD Economics’ take on Canada's Federal Budget, long on deficit cutting but short on details.

Pdf below -- Canada Federal Government Budget June 2011

Our good friend Charles McMillan tackles that old bugaboo, Canada’s weak productivity.

Pdf below -- CJM - Competing On Productivity - Ivey Business Journal (May June 2011)

Radiation fears bear down on Japan. Thanks to Jeremy of Tokyo for sending this in.

New York Times – Radiation’s Unknowns Weigh On Japan
As officials in Japan agonize over what constitutes a safe radiation dose for people who live near the Fukushima Daiichi nuclear reactors, the state of the science has been a daunting problem.

The systemic risk of ETFs is getting more attention. Thanks to Michael of New York for sending this in.

Financial Times – Investment: Exchange-Traded Funds
There are well over 2,500 of them and they offer the chance to profit from movements in anything from top stock market indices to the world’s waste management industry.

A bunch of great books on how Beijing has been transformed by development over the past 25 years.

New York Review of Books – The High Price of the New Beijing
One recent weekend, I went for a walk through the alleys around the Qianmen shopping district, once Beijing’s commercial heart and still home to nationally known traditional shops.

The assault on Elizabeth Warren reminds us of the importance of protecting regulators so they can protect consumers.

New Yorker – The Warren Court
Elizabeth Warren may well be the most popular person in Washington.

Canada Federal Government Budget June 2011.pdf445.73 KB
CJM - Competing On Productivity - Ivey BusinessJournal (May June 2011).pdf206.69 KB
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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.