what is new economics?

[chris macrae]

with thanks to Economistdiary.comad alumnisat.com from [e-mail] hod 390 at ed3dao.com

To alumni of Glasgow's Adam Smith new economics is very old - it audits trust and transparency and natural integrity of supply chain costs as eveywhere present to all deceision makers of a market and its production -  that is any market whose deepest purpose sustains human development across generations out of every gps on earth- ironically von neumann peer gift of 100 times more tech per decade turned economics (mainly a philoshophy dialogue on advancing human good or some common sense (general theiry) pattern rules) into a number chasing game by a breed of americans who have never had the remotest love for deep community development - whilst I dont think the american numbers chasing economic school represents majorities of american peoples whetehr middle class or poor - its the dominant economic model that new economic mapping must redo and changeteacher must ground  before the day after tomorrow if our species is to exist longer than the next numbers led newscast

 here is a rather longwinded apology ? from bloomberg and mckinsey - apparently trust that was simple to smith is now very complex to renew

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Hello. Today we look at whether the events of 2022 mark the start of a new and dangerous era, upcoming interest rate decisions in Canada, Europe, Japan and Brazil, and warnings that inflation may prove sticky. New Era With a growing US-China rift, pandemic-induced supply-chain breakdown and war-induced energy crisis unfolding alongside demographic aging, it’s arguably a cliché to say humanity is entering a new era. That said, a paper from the McKinsey Global Institute details a compelling case for why the world is likely going through something akin to major step changes of the 20th century, including World War II, the 1970s oil crisis and the breakup of the Soviet empire in 1989-92, which powerfully shaped socio-economic outcomes in following decades. A key observation is that this is unlike past business cycles that were ultimately driven by collapses in demand, including the dot-com bust and the global financial crisis. “Today we are seeing a supply shortage — and geopolitical tensions around supply — in the context of strong demand,” the authors note.  “While a demand cycle is colored by psychology, a supply cycle is physical and takes much more time and effort to resolve.” The paper makes for sobering reading: Blocs vs Blocs After decades of globalized economic integration, there may be a “trend toward realignment into regionally and ideologically aligned groups.” The US move toward “friend-shoring” and China’s Belt and Road Initiative come to mind. New Technology “Transversal” technologies are emerging, such as artificial intelligence and quantum computing, that could enhance the competition between global blocs. The current US-China semiconductor tensions showcase such a dynamic. “Strategic autonomy on critical technologies” could become vital. There could also be major disruption, or destruction, of jobs as new capabilities are deployed. Depending on choices made, “technology could fracture the social order.” Commodity Conundrums Investment in energy simply hasn’t kept pace with demand. And spending on renewables would need to be quadruple the 2015-22 rate in order to head toward meeting net-zero emissions targets. “A combination of underinvestment and catch-up investment in both renewable and fossil fuel energy infrastructure could produce a prolonged period of higher prices.” Meantime, the concentration of critical minerals in few locations across the planet may further escalate competition between major blocs. Debt Surge Leverage has continued to climb, most recently thanks to borrowing to fund Covid-19 relief. The Group of 20 major economies now have a debt load amounting to triple their collective GDP. And unlike the period after WWII, it’s unlikely economic growth will be fast enough to do much to shrink that burden. Sources: International Monetary Fund, McKinsey Global Institute analysis For good measure, the team also flagged that “asset prices could revert” to historical averages — “through a painful devaluation.” Demographic Change We may now be at “peak child,” as it’s unlikely there will ever be many  more under-five-year-olds alive than today. Will the aged enjoy “healthy, productive later years,” or will “old-age dependency” impose “heavy social and economic costs on the young”? The outlook is unclear. Meantime, African population growth means by the early 2030s it will have a larger working-age population than China or India. Could that be grounds for prosperity, or hardship? Still Hope But nothing is foreordained. The MGI team says “a new narrative of progress” could still be achieved, with technological breakthroughs offering enormous potential. The rapid development and deployment of Covid-19 vaccines are one example of what’s possible. And everything will be shaped by leaders’ choices. “As the famous adage goes, ‘Nobody can go back and start a new beginning, but anyone can start today and make a new ending.’” —Chris Anstey Got tips or feedback? Email us at [e-mail] The Economic Scene Major central banks return to the spotlight with a mix of hikes and holds coming up. The Bank of Canada is set to deliver a fifth outsized interest-rate hike at 10 a.m. in Ottawa amid signs its inflation-fighting efforts may be dragging the economy into a recession. There are limits to how far borrowing costs can go due to Canada’s high level of household indebtedness, leaving investors watching for any hints that the end of the hiking cycle is near. Then later on, Brazil’s central bank is widely expected to hold its key rate at 13.75%, the highest level since 2017, to ensure inflation continues easing to target after an aggressive monetary tightening cycle. On to Thursday, the European Central Bank is predicted to deliver another three-quarter percentage point hike in rates. While few reckon it will settle there, investors and economists wonder how far it can be lifted as an energy-driven recession threatens to engulf the euro zone, and households grapple with surging heating and mortgage bills. Meantime,Bank of Japan Governor Haruhiko Kuroda appears as determined as ever to see out his inflation mission without buckling to market or political pressure. Entering the final six months of his decade-long stint at the helm, Kuroda on Friday will stick with the central banking world’s last remaining negative interest rate, according to economists.  Today’s Must Reads Wage dent | Inflation is set to put a major dent in salary increases for the second year running in 2023, according to a new survey that sees just 37% of countries globally expecting to see price-adjusted wage hikes. China slows | China’s economy slowed in October as car and real-estate sales weakened and global trade and small business confidence contracted, signaling last month’s pickup in activity wasn’t enough to change the country’s grim economic picture. Political criticism | Italian Prime Minister Giorgia Meloni followed Emmanuel Macron in piling pressure on the European Central Bank not to smash economies. But, UK Chancellor of the Exchequer Jeremy Hunt “reaffirmed his commitment” to the Bank of England’s independence. Legal risks | A group of European lenders warned the European Central Bank of “serious negative consequences” if it makes wholesale changes to its ultra-cheap loan program to banks. Buying time | New UK Prime Minster Rishi Sunak delayed an economic strategy announcement planned for Monday until Nov. 17 as he sought more time to make the “right decisions” on managing the British economy. Separately, Sunak reappointed Jeremy Hunt as Chancellor of the Exchequer. Companies crimped | Visa saw spending growth slow the most since the depths of the pandemic as inflation weighs on consumers, while Microsoft gave a lackluster forecast for sales growth in its Azure cloud-computing services business. Need-to-Know Research Central banks and forecasters may be underestimating the risk of persistently high inflation, according to Jamie Thomson, head of macro scenarios at Oxford Economics. That warning is based on seven inter-related observations. The public is increasingly aware of inflation is elevated Now people have noticed, they expect inflation to stay high The longer inflation stays elevated, the stickier it’ll become Workers are pushing for pay rises, risking a wage-price spiral The public is unaware of central bank targets And they don’t have much faith in central banks anyway The public don’t support the push for low inflation if that costs jobs  While Oxford expects inflation to recede next year, there’s a lot of uncertainty and the risk of a more gradual slowing.  On #EconTwitter And it’s not just Oxford warning inflation may stick around for longer: Read more reactions on Twitter Enjoy reading the New Economy Daily? Click here for more economic stories Tune into the Stephanomics podcast Subscribe here for our daily Supply Lines newsletter Follow us @economics The fifth annual Bloomberg New Economy Forum will be held in Singapore Nov. 14-17, convening public and private sector leaders with ambitious ideas, ample capital and the courage to act on the pressing issues facing the global economy. Learn more and get exclusive alerts to watch the livestream

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[chris macrae]

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The two largest economies in the world have committed to courses of action that blatantly disregard the longstanding trade rules and principles, and systematically subordinated the system to their hegemonic priorities, Daniel Ikenson writes. China’s net zero targets mean trouble for its economic growth, Henry Storey says. Plus, Biden’s IPEF is a hard sell in Asia, notes Amitendu Palit, and our latest guide on how to break down UNCTAD’s World Investment Report 2022. Watch our second countdown video to the STI 2022 launch, and join Stewart Paterson at Chatham House.

NEW RESEARCH

Great power rivalry bedevils global trade

Daniel Ikenson 26 October 2022

The rules-based multilateral trading system predicated on the principles of “most-favored nation” and “national treatment” no longer exist, writes Dan Ikenson, director of policy research at the think tank ndp | analytics. The two largest economies in the WTO have committed to courses of action that blatantly disregard these principles and systematically subordinate the trade rules to their hegemonic priorities. Read Ikenson’s new paper, the latest in a series of five installments, for a sweep through the last 30 years of globalization and, now, its breakdown.

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China’s net zero dilemma

Henry Storey 26 October 2022

Looking at how Beijing is putting into motion a slew of development blueprints, one might think everything’s on track for its ambitious climate goals. But there’s just one problem, Dragoman risk consultancy’s Henry Storey writes: If China were to meet its net zero goals, it would mean a huge weight on the nation’s already faltering economic growth. This article explores themes in the Hinrich Foundation’s Sustainable Trade Index 2022, a ranking of 30 major economies to be published on November 8.

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Biden brings IPEF to a chilly reception in Asia

Amitendu Palit 26 October 2022

The progress of President Biden’s Indo-Pacific Economic Framework for Prosperity will encounter challenges. This is already evident from India – one of the largest economies in the group and a strategic partner of the US – opting out of negotiations on trade policy. Progress on the framework has won some level of ‘acceptance’ of these goals by members, but the IPEF still has a long way to go, Amitendu Palit at Singapore’s Institute of South Asian Studies writes.

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[chris macrae]

NEW 'HOW TO USE IT' GUIDE

UNCTAD World Investment Report 2022    UNCTAD’s annual investment report tracks global and regional investment trends, helping policymakers understand how such flows and related rules are changing. The 2022 Report focuses on upcoming reforms to international taxation rules and incentives for foreign investment. Read our guide on how to understand and use this Report.

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COUNTDOWN TO STI 2022

Launch of the Hinrich-IMD Sustainable Trade Index 2022   The Hinrich Foundation will soon be releasing its fourth Sustainable Trade Index (STI). This iteration is produced in partnership with IMD World Competitiveness Center, and seeks to analyze the factors that affect the sustainability of trade in a rapidly shifting international order for 30 economies. IMD's Christos Cabolis explains our approach in a new countdown video. Also, join us at the official launch on Nov 9 for a discussion on the key findings and their policy implications.

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Chatham House Global Trade Conference 2022

How is the increased geo-politicization of trade impacting global commerce? Are we entering a new phase of de-globalization or rather re-globalization? How can business better prepare themselves for shocks? Sign up now for Chatham House’s annual Global Trade Conference on Nov 3, sponsored by the Hinrich Foundation and featuring Research Fellow Stewart Paterson.

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The Hinrich Foundation is committed to advancing sustainable global trade. We welcome your support to share our commentaries and analyses.   Please encourage others to subscribe to our newsletter and follow Hinrich Foundation on Twitter, LinkedIn, Facebook, and YouTube.   Contact us for any inquiries.   Visit hinrichfoundation.com for more articles, reports and analysis.