Friday, October 16, 2015

The world would be a better place if only 1% of the amount of time, money and press space that we spend discussing climate change could be spent discussing more critical and verifiable subjects such as the abolition of border and immigration controls or the dismantlement of nuclear arsenals.

Sunday, June 14, 2015

Wednesday, March 18, 2015

Schmidt-MacArthur Fellowship & Summer School

This year I'm having the pleasure of mentoring Sylvain Masserot for the Schmidt-MacArthur Fellowship. He was selected to be one of the few 2015 Fellows. It means that we'll both have the opportunity to work with scholars from other global top schools of design, engineering and business on topics related to the circular economy during the Summer School at the Imperial College London. In this video he summarizes his project:

Thursday, January 22, 2015

Quantitative Easing Explained

Quantitative Easing (QE) is a Newspeak term for transactions by central banks which consist in the exchange of newly issued currency, not just overnight and possibly permanently, for government or corporate bonds. These transactions are equivalent to taxation through seigniorage with revenues being used to finance bond owners at artificial, privileged and distortionary low rates.

When the central bank buys government bonds in this fashion it validates financial irresponsibility and dishonesty, because we are all being taxed to cover government mismanagement of its finances while not being told the truth. It's even worse however when QE is used to buy bank assets or corporate bonds, in this case we are all  being taxed to finance private or semi-private groups not only without consent but without being told so.

In any case, there is one thing you can count on: if you don't feel that you are footing the bill now, be sure that you'll foot it later, or your descendents will do it instead of you. This is true even if the central bank ends up recovering the full value of the assets bought at the highest possible price under these programs, after all of us users of state money financed the financial privileges created by the QE transactions.

The least bad type of QE would be to use the seigniorage revenues to buy "bonds" issued by households like you and me, in other words, to give us directly cheap credit that we could use, for example, to pay back debt, invest or buy things that we need. Those bonds could be eventually cancelled if judged necessary, meaning, the debt could be forgiven, as it will probably be done anyway in the case of the unsustainable debt trajectories of governments that won't ever pay them back. But, oh I wonder why, I don't see any politician, government officer or banker saying that this would be the least bad among all possible ways to implement QE.

Wednesday, June 12, 2013

Keynesians, Remember: Tax Policy Is Fiscal Policy

According to an AER article by Correia, Farhi, Nicolini and Teles:
When the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that, in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use inefficient policies such as wasteful public spending or future commitments to low interest rates.
My own interpretation:
(a) Wasteful government spending? Always better to do nothing (CHECK).
(b) Forward guidance, quantitative easing? Always better to do nothing (CHECK).
(c) Reduce the tax load? Maybe (CHECK). But be prepared to pay the price later (CHECK).

Jeffrey Tucker on the Character of Edward Snowden

Jeffrey Tucker writes an interesting article in The Freeman about the important role played by people like Edward Snowden in the defense of freedom. This Orwellian statement by Snowden is particularly significant:
You can't come forward against the world's most powerful intelligence agencies and be completely free from risk because they're such powerful adversaries. No one can meaningfully oppose them. If they want to get you, they'll get you in time. But at the same time you have to make a determination about what it is that's important to you. 
And if living unfreely but comfortably is something you're willing to accept—and I think many of us are, it's the human nature—you can get up every day, you can go to work, you can collect your large paycheck for relatively little work, against the public interest, and go to sleep at night after watching your shows.

Tuesday, June 4, 2013

The Bastiat in a 7-Year-Old Boy

Conversation with my son Arnaud, age 7, last Sunday during lunch:

Me: "You know son, there's this great French economist Bastiat, he writes some cool stories, I think you'd enjoy reading his books."

Arnaud: "Oh yeah?"

Me: "Yes, kind of like Aesop fables [which he loves]. But his stories are real ones, about the economy, written 150 years ago."

Arnaud: "What did he write about?"

Me: "One story is about a child that breaks one of his home's window glass panes. His father is mad at him, but passersby say that this is good for the economy, so he shouldn't be mad."

Arnaud [startled]: "WHAT?"

Me: "What 'WHAT'?"

Arnaud: "Who are those silly people that would say something so stupid?"

Me: "Why do you think it is so stupid?"

Arnaud: "Because it's so obviously bad for the economy."

Me: "Is it? The passersby believe that if the broken window needs to be fixed then it will create work for the window repairman."

Arnaud [chuckling]: "This is so stupid... If his father spends the money fixing the window, then they won't have money for buying a new Lego set (did they have Lego sets at that time?), so it's obviously bad for the Lego factory. And the family now has the same window but no new Lego set, so the economy is worse off."

Me to my wife: "Isn't it telling that a 7-year-old boy knows more economics than most central bankers and finance ministers in this world of ours?"

Thursday, May 30, 2013

My Personal Reading of Ayn Rand's "Anthem"

I chose to free myself from Christianity, Catholicism and its catechism during my early adolescence. Reading Voltaire's God and Human Beings was important in my intellectual transformation, but I also remember how Bertrand Russell's essential essay titled "Why I Am Not a Christian" turned to be the final nail in the coffin of my Christian beliefs.

Ayn Rand's "Anthem," to my surprise, rekindled my teenager memories of intellectual struggle with religion. Less surprisingly, it also made me think of my second liberation, which took place a few years later when I rejected socialism. It didn't take me much at that time to realize that socialism was mostly a perversion of Christianity, one that was useful to me only as a temporary buffer between an impractical and obsolete code of conduct and the dangers of Rand's "uncharted forest" - the latter a perfect metaphor for my early political and economic ignorance.

Like Bertrand Russell, Ayn Rand wasn't fond of Christian values. According to a letter that she wrote in 1946:
There is a great, basic contradiction in the teachings of Jesus. Jesus was one of the first great teachers to proclaim the basic principle of individualism -- the inviolate sanctity of man's soul, and the salvation of one's soul as one's first concern and highest goal; this means -- one's ego and the integrity of one's ego. But when it came to the next question, a code of ethics to observe for the salvation of one's soul -- (this means: what must one do in actual practice in order to save one's soul?) -- Jesus (or perhaps His interpreters) gave men a code of altruism, that is, a code which told them that in order to save one's soul, one must love or help or live for others. This means, the subordination of one's soul (or ego) to the wishes, desires or needs of others, which means the subordination of one's soul to the souls of others.
This is a contradiction that cannot be resolved. This is why men have never succeeded in applying Christianity in practice, while they have preached it in theory for two thousand years. The reason of their failure was not men's natural depravity or hypocrisy, which is the superficial (and vicious) explanation usually given. The reason is that a contradiction cannot be made to work. That is why the history of Christianity has been a continuous civil war -- both literally (between sects and nations), and spiritually (within each man's soul).