Author Archives: Yves Smith

Links 5/24/14

Global Food Security Needs States to Ally with Family Farmers

Yves here. If you live in an advanced economy, and are at least middle income, you probably don’t give much thought to the availability of food. Expect that to change in the coming years. Agribusiness is a major driver of food insecurity. Successful experiments show that relocalization of food production can be an effective remedy.

Financial Times Finds “Many” Errors in Piketty Analysis, Argues They Undermine His Thesis

Chris Giles of the Financial Times has charged Thomas Piketty with making Reinhart and Rogoff-like data and methodological errors in his best-selling book on wealth inequality, Capital in the 21st Century.

Links 5/23/14

Widespread Signs of Credit Market Froth

I’m getting a bad case of déjà vu from reading the Financial Times over the last week.

Credence Goods: The Unique Economics of Health Care

Why health care will never work as a market good – there are extreme information asymmetries between the providers and the patients. That means, among other things, we need to recognize the inability of patients to know if they are getting good care or not (beyond a basic level of attentiveness) and the ease of getting them to believe that a lot of treatment, as in overtreatment, is tantamount to “good care”.

Credit Suisse’s Guilty Plea: The WSJ Uses the Right Adjective to Modify the Wrong Noun

Yves here. I generally avoid Wall Street Journal editorials because they are designed to make readers stupider (op eds are a different matter, some decent pieces get published). Bill Black does yeoman’s work in deconstructing the Journal’s attempt to depict Credit Suisse as a victim of Department of Justice overreach.

Links 5/22/14

Wall Street Journal Exposes Possible Grifting by Private Equity Kingpin KKR and KKR Capstone

So when does a related entity rise to the level of being an affiliate? That issue, sports fans, will likely determine whether the SEC will hit the private equity kingpin KKR with fines relative to its relationship with the consulting firm KKR Capstone, which works exclusively for KKR’s portfolio companies.

America: Europe and Canada’s Willing Chump

How America facilitates a labor and environmental race to the bottom, helping companies based in Europe, Canada, and Mexico.

Is the Piketty Enthusiasm Bubble Subsiding?

Although Piketty’s Capital has garnered a great deal of praise, the criticisms were initially overlooked. They are finally getting the attention they warrant.

Gaius Publius: “Erring on the Side of Least Drama” — Why Climate Scientists are Inherently Conservative

Climate scientists are understating their findings to a significant degree. “Least drama” might be too kind a characterization. “Self censorship” might be closer to the mark.

Links 5/21/14

Wolf Richter: This Chart Is The Fate of Housing In America As Student Loans Bankrupt A Whole Generation

Student loans are a millstone that is crushing college educated young adults, and with them, key parts of the economy.

Randy Wray: Forget Taxes for Redistribution – What to do About Inequality

Yves here. A lot of people argue for redistributive taxes, contending that they were very successful in the golden age of the American middle class, from the end of World War II through the Reagan era, in constraining the concentration of income and wealth at the top. However, that tax structure reflected a broad social consensus in favor of fostering prosperity for ordinary Americans, in no small measure to keep Communist impulses at bay.

In Yankee terms, Wray’s argument against using taxes to create a more egalitarian distribution of income is “You can’t get there from here”.