A depressing view of economics and elections and links to other interesting news and views

• Economics and elections – A depressing quote or two from Paul Krugman: Economics and Elections: [A] large body of political science research [on elections shows] … What mainly matters is income growth immediately before the election. And I mean immediately: We’re talking about something less than a year, maybe less than half a year. This is, if you think about it, a distressing result, because it says that there is little or no political reward for good policy. A nation’s leaders may do an excellent job of economic stewardship for four or five years yet get booted out because of weakness in the last two quarters before the election. … What, then, should those of us who study economic policy and care about real-world outcomes do? The answer, surely, is that we should do our jobs: Try to get it right, and explain our answers as clearly as we can. Realistically, the political impact will usually be marginal at best. Bad things will happen to good ideas, and vice versa. So be it. Elections determine who has the power, not who has the truth.

From The Laughing Bone where I learned: “Lemming suicide is fiction. Contrary to popular belief, lemmings do not periodically hurl themselves off of cliffs and into the sea. Cyclical explosions in population do occasionally induce lemmings to attempt to migrate to areas of lesser population density. When such a migration occurs, some lemmings die by falling over cliffs or drowning in lakes or rivers. These deaths are not deliberate “suicide” attempts, however, but accidental deaths resulting from the lemmings’ venturing into unfamiliar territories and being crowded and pushed over dangerous ledges. In fact, when the competition for food, space, or mates becomes too intense, lemmings are much more likely to kill each other than to kill themselves.”

• Are Money Managers Lemmings? – It was once widely believed that the rise of professional investors would make financial markets less prone to manias, panics and crashes. Lately, the opposite belief has begun to take hold. … a burgeoning new official literature on the problems with asset managers. … The main problem with asset managers, one learns from reading (or, in a couple of cases, skimming) these papers and reports, is that they behave too much like other asset managers. That is, they “herd” — buying into particular securities or asset classes mainly because lots of other asset managers are doing it. In the process, they make market highs go higher and market lows go lower. This acknowledgement that professional investors don’t automatically drive prices toward something close to their correct levels is a welcome shift in economic consensus.
• A Penny for Your Sugar: Setting a Price on Sin – What do you have to drink in your refrigerator? I’ve got kids in grade school, and our fridge always holds their favorite: Juice boxes filled with 100% apple juice. I felt pretty good about that “100%” until I looked at the label. There are 18 grams of sugar in one 6.75-ounce serving. Coca Cola? Six ounces contain 19.5 grams. Oops. Look: Sugar tastes great, but in excess, it can do a real number on a waistline. I can take some solace in the fact that my kids’ juice has no added sugars. The American Heart Association recommends that we all cut back on added sugar to help curb obesity. Sugar-added beverages are pretty popular, and given the US obesity rate and its associated costs, they pose a problem. Can the problem be solved with a sin tax? Or in this case, as it’s more palatably known, a “soda tax?” (That is not an all-inclusive term, it just rolls off the tongue more easily than “sugar-added beverage tax.”)
• Clinton campaigns for underdog status – As Hillary Clinton prepares to announce her long-awaited second bid for the White House, her advisers are touting a new strategy to dispel the air of inevitability that hangs over her candidacy.

• How Criminals Built Capitalism – Whenever buyers and sellers get together, opportunities to fleece the other guy arise. The history of markets is, in part, the history of lying, cheating and stealing — and of the effort down the years to fight commercial crime. In fact, the evolution of the modern economy owes more than you might think to these outlaws. That’s the theme of “Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance” by Ian Klaus. It’s a history of financial crimes in the 19th and early 20th centuries that traces a recurring sequence: new markets, new ways to cheat, new ways to transact and secure trust. As Klaus says, criminals helped build modern capitalism.
• At this election, British politicians can afford to speak out against Rupert Murdoch – In the past all parties have played it safe but after the phone-hacking scandal, with its exposure of the abuse of power, they have nothing to lose but their fear