Get our daily newsletter Upgrade your inbox and get our Daily Dispatch and Editor's Picks. DONALD TRUMP owes his presidency to America’s quaint system of electing leaders. Despite losing the popular vote, he prevailed in the electoral college by winning lots of states by small margins and losing a few by large ones. Now, as Democrats prepare to impeach him, a similar quirk is helping him stay in office—and insulating his party from voters’ wrath. Whereas the electoral college is only mildly anti-majoritarian, the Senate often deviates wildly from the popular will. Because each state is weighted equally, voters in less-populous states are over-represented relative to those in large ones. Now that Republicans derive an outsize portion of their support from rural voters, their share of senators exceeds their share of total votes cast in Senate elections. This imbalance weighs on the politics of impeachment. Even if the Senate were apportioned by population, as the … [Read more...] about A plurality of Americans—but not of states—want Donald Trump impeached
Are anti-competitive firms killing American innovation?
WHEN THOMAS PHILIPPON moved from France to America in 1999 to begin a PhD in economics, he found a consumer paradise. Domestic flights were dazzlingly cheap. Household electronics were a relative bargain. In the days of dial-up modems Americans, who were charged a flat rate for local calls, paid far less than Europeans to get online. But over the past two decades, Mr Philippon writes in “The Great Reversal”, this paradise has been lost. Europeans now enjoy cheap cross-continent flights, high-street banking, and phone and internet services; Americans are often at the mercy of indifferent corporate giants. Perking up their economy might mean cutting those giants down to size. Much that has happened to the American economy since the 1990s has not been to the typical worker’s advantage. Growth in output, wages and productivity has slowed. Inequality has risen, as have the market share and profitability of the most dominant firms. Economics journals are packed with papers … [Read more...] about Are anti-competitive firms killing American innovation?
Why are people attracted to 50:50 probabilities?
BARACK OBAMA’S intelligence officers told him, variously, that there was a probability of between 30% and 95% that Osama bin Laden was in the Abbottabad compound in Pakistan in April 2011. The president was having none of it. “This is 50:50,” he said. “Look guys, this is a flip of the coin.” That bin Laden was found and killed does not reveal whose estimate of the odds was best. But new research argues that Mr Obama’s instinct—to treat probabilities as evenly split when they are uncertain—is widespread. In a working paper Benjamin Enke and Thomas Graeber, both of Harvard University, argue that the bias towards 50:50 has shown up in many contexts. One is decision-making under (known) risks, such as gambling at a (fair) slot machine. Economists have long realised that people are more sensitive to changes in probabilities, the nearer they are to the boundaries of 0% and 100%. For example, the chance of a big win of, say, $1m rising from 0% … [Read more...] about Why are people attracted to 50:50 probabilities?
A Nordic pioneer of negative interest rates gets cold feet
THE WORLD’S oldest central bank, Sweden’s Riksbank, is a trendsetter. In July 2009, in the depths of the financial crisis, it was the first central bank to cut interest rates below zero. It set the global record, of minus 1.25%, for the lowest interest rate on deposits parked with it by domestic banks. Now, however, it looks set to bring the experiment to an end. On December 19th it is widely expected to leave negative territory, raising rates from minus 0.25% to 0%. Since the economy is in the doldrums, the rationale is unclear. Inflation is 1.7% and forecast to stay below the target of 2% for some time. Meanwhile, the most recent figure for annualised GDP growth was a paltry 1.1%, and the purchasing-managers index, a measure of business activity, is at its worst since the euro-zone crisis of 2012. Get our daily newsletter Upgrade your inbox and get our Daily Dispatch and Editor's Picks. The words and actions of the Riksbank’s five voting members seem to be all … [Read more...] about A Nordic pioneer of negative interest rates gets cold feet
Central bankers debate tackling climate change
AS FAR AS interest rates are concerned, the new boss of the European Central Bank (ECB), Christine Lagarde, seems largely in agreement with Mario Draghi, her predecessor. Where she seems to differ is in wanting the bank to be greener. On December 2nd she told European parliamentarians that a planned review of its monetary-policy strategy should take in the impact of climate change. Other central bankers, too, are going green. In recent months ratesetters from Sydney to San Francisco have opined on the impact of climate change on economic and financial stability. The subject has long preoccupied Mark Carney, the governor of the Bank of England, who is soon to become the UN’s climate envoy. So far central banks have focused on the impact of climate risk on the financial system. But activists argue that, just as central bankers saved the global economy during the financial crisis, so too must they tackle the next emergency by shifting capital away from polluters and towards greener … [Read more...] about Central bankers debate tackling climate change
