The Unassuming Economist

From Oxfam:

“Key recommendations: 

Governments should listen to ordinary citizens and take meaningful action to reduce inequality. All governments should set concrete, timebound targets and action plans to reduce inequality as part of their commitments under Sustainable Development Goal (SDG) 10 on inequality. These plans should include action in the following three areas:

1. Deliver universal free health care, education and other public services that also work for women and girls. Stop supporting privatization of public services. Provide pensions, child benefits and other social protection for all. Design all services to ensure they also deliver for women and girls.
2. Free up women’s time by easing the millions of unpaid hours they spend every day caring for their families and homes. Let those who do this essential work have a say in budget decisions and make freeing up women’s time a key objective of government spending. Invest in public services including water, electricity and childcare that reduce the time needed to do this unpaid work. Design all public services in a way that works for those with little time to spare.
3. End the under-taxation of rich individuals and corporations. Tax wealth and capital at fairer levels. Stop the race to the bottom on personal income and corporate taxes. Eliminate tax avoidance and evasion by corporates and the super-rich. Agree a new set of global rules and institutions to fundamentally redesign the tax system to make it fair, with developing countries having an equal seat at the table.

Public good, not private wealth

The gap between rich and poor is pulling us apart. It stops us from beating poverty and achieving equality between women and men. Yet most of our political leaders are failing to reduce this dangerous divide. It does not have to be this way. Inequality is not inevitable – it is a political choice.8 Concrete steps can be taken to reduce it.

This report focuses on the unparalleled power of universal public services like education and health in tackling poverty and reducing inequality.9 Universal public services are the foundation of free and fair societies. If they choose to do so, governments can deliver life-saving public services for all their citizens.

There is a growing consensus that the wealth of individuals and corporations is not being adequately taxed, and instead taxes are falling disproportionately on working people. For every dollar of tax revenue, on average just 4 cents are made up of revenue from wealth taxes.

The fortunes of the world’s super-rich have grown to record levels. By taxing wealth more fairly, enough money could be raised globally to ensure that every child goes to school and no one is bankrupted by the cost of medical treatment for their families. In doing this, it is possible to build a more Human Economy– one that is more equal and values what truly matters.

Progress in fighting poverty slows dramatically

One of the great achievements in recent decades has been the huge reduction in the numbers of people living in extreme poverty, defined by the World Bank as $1.90 per person per day. Yet new evidence from the World Bank shows that the rate of poverty reduction has halved since 2013. Extreme poverty is actually increasing in sub-Saharan Africa. This new evidence also shows that much of humanity has barely escaped poverty, with just under half the world’s population – 3.4 billion people – subsisting on less than $5.50 a day, which is the World Bank’s new poverty line for extreme poverty in upper-middle-income countries. The Bank finds that women are more often among the poorest people, particularly during their reproductive years, because of the level of unpaid care work they are expected to do.

This is a direct result of inequality, and of prosperity accruing disproportionately to those at the top for decades. The World Inequality Report 2018 showed that between 1980 and 2016 the poorest 50% of humanity only captured 12 cents in every dollar of global income growth. By contrast, the top 1% captured 27 cents of every dollar. The lesson is clear: to beat poverty, we must fight inequality.
The human cost of inequality is devastating. Today:

• 262 million children will not be allowed to go to school.
• Almost 10,000 people will die because they cannot access healthcare.
• 16.4 billion hours of unpaid care work will be done, the majority by women in poverty.”

Continue reading here.

From the latest IMF report on Panama:

“In light of Panama’s continually strong growth in recent decades, this paper investigates the relevance of the “middle-income trap” for Panama and its prospects for maintaining strong growth in the future. It finds that following the political stabilization in the 1990s, Panama experienced stellar growth performance that brought it closer to moving from the middle to the high-income bracket. However, international evidence suggests that maintaining high growth rates may prove increasingly challenging for countries at Panama’s current level of income. In this context, the paper argues that Panama’s prospects for maintaining buoyant growth critically depends on continued productivity growth underpinned by comprehensive reforms focused on improving education quality, attracting talent, and continuing to enhance the investment climate.”

From a new IMF working paper by Sriram Balasubramanian and Paul Cashin:

“This paper examines the origins and use of the concept of Gross National Happiness (or subjective well-being) in the Kingdom of Bhutan, and the relationship between measured well-being and macroeconomic indicators. While there are only a few national surveys of Gross National Happiness in Bhutan, the concept has been used to guide public policymaking for the country’s various Five-Year Plans. Consistent with the Easterlin Paradox, available evidence indicates that Bhutan’s rapid increase in national income is only weakly associated with increases in measured levels of well-being. It will be important for Bhutan to undertake more frequent Gross National Happiness surveys and evaluations, to better build evidence for comovement of well-being and macroeconomic concepts such as real national income.”

On cross-country:

• London, New York and Hong Kong Are No Longer Immune to Global Housing Downturn – Bloomberg
• Global Housing and Mortgage: Outlook 2019 – Fitch Ratings

On the US:

• What if Cities Are No Longer the Land of Opportunity for Low-Skilled Workers? – New York Times
• Recession Signals: Four Housing Indicators to Watch in 2019 – Federal Reserve Bank of St. Louis
• Thousands Face Threat Of Eviction After HUD Contracts Expire Due To Shutdown – NPR
• Your Taxes (Once Again) Are Underwriting Bad Mortgage Loans – Foundation for Economic Education
• Using Data Visualizations to Explain Housing and Mortgages – Barry L. Ritholtz
• Examining Both Sides of the Transaction: Bargaining in the Housing Market – Real Estate Economics
• Real Estate Investors See Riches in a Tax Break Meant to Help the Poor – Bloomberg
• Home Personal Finance Real Estate Buyers are finally finding more discounts on new homes – MarketWatch
• Microsoft Pledges $500 Million for Affordable Housing in Seattle Area – New York Times
• This Year Could Reverse the Slide for Housing and Auto Industries – Bloomberg
• Explaining the U.S. Urban Housing Shortages – Wall Street Journal
• Fed Says Student Debt Has Hurt the U.S. Housing Market – Wall Street Journal
• The Housing Affordability Crisis: The Role of Anti-Sprawl Policy – Cascade Policy Institute
• US real estate: changing the way New York is built – Financial Times
• Expected Gains in Remodeling Spending to Slide Lower in 2019 – Harvard Joint Center for Housing Studies

On other countries:

• [Australia] The Australian Dream Died Alone in an Apartment – Bloomberg
• [Latvia] Latvia’s house price rises decelerating – Global Property Guide
• [Netherlands] Amsterdam Houses Head for Record Prices – Bloomberg
• [Romania] Romania’s housing market is losing steam again – Global Property Guide
• [Spain] Spain’s house prices continue to rise modestly – Global Property Guide
• [Taiwan] Taiwan’s house prices almost steady – Global Property Guide
• [United Kingdom] Why the housing ladder doesn’t exist anymore – Financial Times

From a new IMF working paper by Barry J. Eichengreen, Asmaa A ElGanainy, Rui Pedro Esteves, Kris James Mitchener:

“We consider public debt from a long-term historical perspective, showing how the purposes for which governments borrow have evolved over time. Periods when debt-to-GDP ratios rose explosively as a result of wars, depressions and financial crises also have a long history. Many of these episodes resulted in debt-management problems resolved through debasements and restructurings. Less widely appreciated are successful debt consolidation episodes, instances in which governments inheriting heavy debts ran primary surpluses for long periods in order to reduce those burdens to sustainable levels. We analyze the economic and political circumstances that made these successful debt consolidation episodes possible.”