On Fox Business, Arthur Laffer says the U.S. is the bright light in the world economy.
Visual Capitalist provides a fine infographic on the world’s largest exporters in 2018.
On Monday, William Nordhaus and Paul Romer were awarded the Nobel Prize in Economics. Nordhaus, the Sterling Professor of Economics at Yale University, is best known for his work in economic modelling and climate change. Romer, who teaches at New York University, is a pioneer of endogenous growth theory, which holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth.
The two American economists’ research is vital in showing the way people underestimate the progress humanity has already made and the likelihood that it will continue well into the future.
In his 1996 paper, Do Real-Output and Real-Wage Measures Capture Reality? The History of Lighting Suggests Not, Nordhaus looked at the economics of light.
… Accompanying these amazing improvements in the efficiency of lighting was a collapse in its price, both in absolute terms and in terms of human labour. Nordhaus estimates that the price of light per 1,000 lumens was $785 in 1800. By 1992 that price had dropped to 23 cents (both figures are in 2018 dollars). That amounts to a reduction of 99.97 percent. Today, the monetary cost of lighting per 1,000 lumens is inconsequential.
…Now, consider the price of lighting from the perspective of human labour. Prior to the Neolithic revolution, which put an end to our nomadic past and turned our species into agriculturalists, it took more than 50 hours of labor (mostly gathering wood) to “buy” 1,000 lumen hours of light. By 1800, it took about 5.4 hours.
By 1900, it took 0.22 hours. By 1992, 1,000 lumen hours required 0.00012 hours of human labor. That amounts to a reduction of close to 100 per cent.
According to Romer, we do not know the full extent of our resources. That’s because what matters is not the total number of atoms on Earth, but the infinite number of ways in which those atoms can be combined and recombined. As he put it in his 2015 article Economic Growth:
“Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered.
“The difficulty is the same one we have with compounding. Possibilities do not add up. They multiply.… To get some sense of how much scope there is for more such discoveries, we can calculate as follows. The periodic table contains about a hundred different types of atoms. If a recipe is simply an indication of whether an element is included or not, there will be 100 x 99 recipes like the one for bronze or steel that involve only two elements. For recipes that can have four elements, there are 100 x 99 x 98 x 97 recipes, which is more 94 million. With up to five elements, more than 9 billion. Mathematicians call this increase in the number of combinations ‘combinatorial explosion.
“Once you get to 10 elements, there are more recipes than seconds since the big bang created the universe. As you keep going, it becomes obvious that there have been too few people on earth and too little time since we showed up, for us to have tried more than a minuscule fraction of the all the possibilities.”
Andrea Michelson at Smithsonian reports that “Marsh plants respond to increased CO2 by growing many small stems, creating a denser wetland that may protect against sea level rise.”
Chen Gong, founder and chief researcher at Anbound, an influential figure in China and around the world, writing in the Brussels Times observed, of Gov. Carney’s August speech at Jackson Hole:
As the oldest central bank in the world, the Bank of England’s statement on the U.S. dollar from the perspective of central bank governance is not only a theoretical discussion on the financial regulation and monetary policy, but an actual indication that the position of the U.S. dollar system in international trade and finance appears to have been shaken. This is undoubtedly an important signal affecting international trade, finance, and economic structure. Decision-making departments, investors and business practitioners, therefore, should pay heed to this signal. …
The large-scale quantitative easing after 2008 also made the inherent vulnerabilities and implicit systemic risks of the U.S. dollar-dominated international monetary system are gradually becoming clearer. …
The “excessive privileges” of the dollar are increasingly incompatible with the current needs of international trade and financial transactions. For this, the world has a real need and reason to get rid of the dollar. …
In this regard, ANBOUND, an independent think tank based in Beijing, has analyzed the development trend of the international monetary system through the study of the gold standard and super-sovereign currencies. Unlike other forms of “international currency” that are discussed by central banks as alternatives to the U.S. dollar, ANBOUND believes that the “super-sovereign currency” will prevail, or in other words, that the U.S. dollar will be replaced by a geo-currency in the development of the future international monetary system, not by digital currency. The status of the dollar might be in a slow decline, but its decline will be a very long process. In the short term, the world may not ever be able to move on from the dollar system.
Fox Business reports Elizabeth Warren and Mark Zuckerberg are going head to head on Big Tech regulations.