Методическая разработка по дисциплине «Профессионально-ориентированный перевод»

Apr 3rd 2012, 19:37 by R.A. | WASHINGTON

MARK THOMA draws our attention to a new economic letter published at the San Francisco Fed. Its authors point out that real wage growth has been strong in the American economy since 2008. Why?

One reason real wage growth has been so solid is that inflation has been low, with the personal consumption expenditures price index increasing at an average annual rate of 1.8% since the start of 2008. Low inflation means that employers cannot reduce real wages simply by letting inflation erode the value of worker pay. Instead, if they want to reduce real labor costs, they must cut the actual dollar value of wages. Employers generally avoid doing so because cuts to nominal wages can reduce morale and prompt resistance even in difficult economic times...

Here is the resistence to nominal wage cuts illustrated, for 2011:

The very large spike at zero suggests that it is much easier to leave wages unchanged than to reduce them. It also hints that firms would have preferred to cut the median worker's wage in 2011.

What meaning should we draw from this? First, as Paul Krugman says, the data suggest that as of 2011, at least, a demand shortfall was a key contributor to high unemployment. We would expect the median wage change to be positive, and indeed above inflation, if the economy were operating close to potential.

Second, a high real wage indicates that the cost of employing a worker is high relative to the cost of a typical basket of consumption. Put differently, labour is relatively expensive. Were the cost of labour to fall relative to other goods in the economy, firms would no doubt wish to employ more labour. Sticky wages therefore contribute to high unemployment.

Of course, it's quite possible to reduce the relative cost of labour without pulling down nominal wages: simply raise inflation. Not for nothing do many prominent macroeconomists argue that a small increase in the inflation rate could yield a large improvement in the employment picture. Conversely, when inflation is low, labour-cost adjustments will prove remarkably difficult. This is certainly true of America. Where labour markets (and wages) are less flexible, as in Europe, nominal adjustments are all but impossible. And yet, that is precisely what European leaders are forcing on workers around the European periphery.

Lastly, as Mr Krugman also says, increased labour-market flexibility might actually prove counterproductive in some circumstances. (His sometime co-author, Gauti Eggertson, contributed to a recent paper arguing that flexible wages were destablising.) In a deflationary environment, flexible wages will fall. That, in turn, will increase the real burden of debt, touching off what Irving Fisher called a debt-deflation theory of Depression.

What Mr Krugman doesn't quite acknowledge here is that sticky wages undercut some of the nastier presumed features of a liquidity trap. Both Mr Krugman and Mr Eggertson have occasionally cautioned against supply-side reforms during liquidity traps on account of the "paradox of toil". An increase in labour supply, they reckon, produces downward pressure on wages and, therefore, prices. With interest rates at zero, downward inflation pressure corresponds to upward pressure on real interest rates, which are contractionary. The "bizarro world" of the liquidity trap rests in no small part on the assumption that wages aren't particularly sticky in the downward direction, when in fact they very much are.

A general conclusion: I am increasingly sceptical that the benefits of low and stable inflation are all they're cracked up to be. Low inflation is grand so long as one assumes that critical variables adjust as easily in one direction as in the other. It should be abundantly clear by now that they do not; for all sorts of variables—wages, prices, and interest rates among them—zero is a big, fat economic obstacle. Central bankers don't seem to mind running the economy repeatedly into this wall—anything to avoid being tarred an inflation dove. But the human cost of ignoring this rather important real world feature is proving to be intolerably high.
Текст 10.

The euro crisis

A three-headed beast

Mar 26th 2012, 17:43 by R.A. | WASHINGTON

IN ANCIENT Greek mythology, a three-headed dog guards the gates of hell and prevents the damned from leaving. It's not a bad metaphor for the present euro crisis, as Jay Shambaugh makes clear in a paper presented as part of the Brookings Papers on Economic Activity, entitled "The euro's three crises". The single currency is saddled with not one but three serious problems, he explains: a banking crisis, a debt crisis, and a growth crisis:

Crucially, these crises connect to one another. Bailouts of banks have contributed to the sovereign debt problems, but banks are also at risk due to their holdings of sovereign bonds that may face default. Weak growth contributes to the potential insolvency of the sovereigns, but also, the austerity inspired by the debt crisis is constraining growth. Finally, a weakened banking sector holds back growth while a weak economy undermines the banks. This paper details the three crises, their interconnections, and possible policy solutions. Unless policy responses take into account the interdependent nature of the problems, partial solutions will likely be incomplete or even counterproductive.

The paper is an excellent summary of a complex crisis. And Mr Shambaugh's conclusion is an important one: policies that might normally address one of these crises in isolation may well exacerbate the other crises in the current circumstances, thereby proving ineffective or counterproductive. Bank bail-outs address the banking crisis but worsen the debt crisis, for example, while austerity addresses the debt crisis but worsens the growth crisis. Mr Shambaugh writes that effective solutions must recognise the nature of this interdependency.

Things have been clarified somewhat since the European Central Bank's decision to provide banks with cheap, unlimited 3-year lending. That has essentially severed the link between sovereign weakness and banking-system weakness, helping defang one of the nastiest feedback loops in the crisis. The periphery is also plowing full-speed ahead on austerity measures. What is obviously missing, however, is growth. Everyone agrees that big structural reforms would be advantageous, but it's unreasonable to expect them to work quickly.

And so the core of the present challenge is this: peripheral Europe needs growth and domestic demand is being crushed by austerity, such that external demand is necessary to stabilise the situation. In order to take better advantage of external demand, the struggling periphery must improve its competitiveness, which primarily means reducing labour costs relative to trading partners. 

Internal devaluation is at least technically possible, but in presenting his paper on Friday Mr Shambaugh made the important point that devaluation in this way is virtually unheard of in the rich world since the 1990s. Why? By the 1990s, rich-world central banks had firmly establised low and stable inflation levels. With inflation at or below 2%, it will typically take nominal wage reductions to reduce one region's labour costs relative to another, and wages are very sticky in the downward direction. Which is just as well, since rapid declines in nominal wages would quickly make debts even more unaffordable.

"Fiscal devaluation" is another option. If the periphery raised its VAT and cut labour taxes while the core reduced the VAT rate and raised labour taxes, that would mimic the impact of an actual devaluation. The argument for this policy mix is very strong, but it's unlikely to happen. The core, and Germany especially, does not seem interested in taking steps to reduce its surplus, and a one-sided adjustment wouldn't be nearly as effective. Just as important, the fiscal policy mix implies a cut in the real wage across the periphery, which is sure to prove a hard sell to domestic political interests, including powerful unions.

A third option would be a looser monetary policy. If German inflation were to rise faster than peripheral inflation, that would help adjustment along. Looser money would also weaken the euro, allowing the periphery to better capture demand outside the euro zone. The ECB does not appear to be willing to tolerate higher inflation however (not least because the Germans don't want more inflation or less of a current-account surplus, while many others are concerned about falling real wages).

So far, the euro zone has made the least progress in addressing the growth corner of this triple crisis. And it's hard to see how such progress could occur given present political challenges. But as Mr Shambaugh makes clear in his paper, the extraordinary steps euro-zone leaders have taken to avert a collapse were unthinkable just a few years ago. Without growth, the crisis will continue. And as it continues, measures that now seem unthinkable—like an adequately stimulative monetary policy—may one day become realities. When that occurs, the euro zone might just be able to think about finally stepping clear of this particular hell

Here’s something you don’t often hear an economist admit: We have very little idea where the economy will be next year.

Truth be told, our best guesses just aren’t very good. Government forecasts regularly go awry. Private-sector economists and cutting-edge macroeconomic models do even worse.

For a spectacular example, let’s go back to August 2008. The economy had been in recession for nine months, the investment bank Bear Stearns Cos. had already collapsed, and Lehman Brothers Holdings Inc. was well on its way to bankruptcy.

Yet leading economists responding to the Survey of Professional Forecasters predicted that unemployment would average 6 percent in 2009. Just a few months later, the White House projected that with the passage of the stimulus bill, unemployment would be less than 8 percent -- far short of the 9.3 percent it ultimately reached.

This was a big miss. It’s also not unusual. The dismal science is more dismal and less science than most people recognize. Careful studies by both Federal Reserve economists and theCongressional Budget Office have found that forecasts of the next year’s economic-growth rate typically miss by about one percentage point, and often more. Unemployment forecasts aren’t much better.

Why? Data are imperfect. Theories are coarse. Models oversimplify. The economy is constantly evolving and can’t be subjected to controlled experiments. Economic cycles are infrequent, so our understanding of them necessarily proceeds very slowly.

False Confidence

None of these drawbacks, though, is fatal to the enterprise. Rather, they tell us that policy makers, the media and the public should beware of economists who argue their forecasts with certainty. All too often we fall for false confidence, bravado and swagger, which crowd out legitimate discussion about our uncertain future.

Serious forecasters embrace uncertainty, giving rise to the much-derided stereotype of the two-handed economist. But this is exactly what we need. Like a meteorologist who warns you to pack an umbrella because there’s some chance of rain, economists can assess the risks that lie ahead in a way that helps policy makers prepare for the future. To do so, they must examine both the rain and the shine scenarios, and weigh the cost of action - - or inaction -- in both cases.

Consider the current economic-policy debate. Most forecasters suggest that as the recovery slowly grinds on, unemployment will fall to about 7.5 percent by the end of 2013, from the current 8.3 percent. While this isn’t great progress, it is fast enough that some have argued against further stimulus.

We know, though, that the consensus forecast is highly likely to be wrong. Unemployment could fall to 6.5 percent, or rise to 8.5 percent. Each of these possibilities needs to be considered, and weighed according to its potential benefit or harm.

If unemployment falls to 6.5 percent, there’s no overwhelming reason for concern. Historical experience suggests that inflationary pressures are unlikely to build unless the jobless rate drops to 5 percent or 6 percent. Even if inflation does accelerate, the Fed has ample power to reverse course by raising interest rates to slow growth.

By contrast, the longer-run consequences could be dreadful, if we find ourselves with 8.5 percent unemployment fully six years after the recession began. Europe’s experience in the 1970s and 1980s demonstrated that persistently high unemployment can become entrenched, leading to further unemployment in the future -- a process economists call hysteresis. Skills atrophy, hope fades and people lose contact with the networks that can help them find work. If this occurs with the millions of U.S. workers who have been without jobs for more than a year, it will be costly and very difficult to undo.

In other words, the cost of too little growth far outweighs the cost of too much. If we readily bear the burden of carrying an umbrella when there’s a reasonable chance of getting wet, we should certainly be willing to stimulate the economy when there’s a reasonable risk that doing nothing could yield a jobless generation.

(Betsey Stevenson and Justin Wolfers, both professors at the University of Pennsylvania’s Wharton School, are Bloomberg View columnists. The opinions expressed are their own)
Текст 12.

iAudit

Mar 30th 2012, 8:58 by M.B.| NEW YORK

IS IT possible to run an “ethical supply chain”? After the publication on March 29^th of the first independent audit of the factories Apple uses in China, the iconic consumer electronics giant has definitely become the test case for whether multinationals can put an end to labour abuses. According to the long awaited report, which is considered one of the most detailed audits of a Chinese manufacturer to date, there were at least 50 “serious and pressing non-compliances” with Chinese law and Apple's code of conduct, including excessive overtime and other health and safety violations.

Apple had asked the Fair Labour Association (FLA), a non-government organisation, to conduct the audit following a burst of bad publicity over reports of workers being abused, particularly at factories in China operated by Hon Hai, known as Foxconn, the world’s biggest contract manufacturer. The FLA visited Foxconn factories in Shenzhen and Chengdu, and surveyed some 35,000 workers at three facilities where Apple products, including iPhones and iPads, are assembled.

At all three, during the past 12 months workers on average exceeded the limit of 60 hours of work a week stipulated in Apple’s code of conduct. Many also worked more than 36 hours overtime a month, China's legal limit. Nearly half of workers surveyed said that they had had an accident or seen one. On the other hand, no workers appear to have been under age (in contrast with a recent internal audit by Apple), and the FLA says that conditions were "no worse than any other factory in China".

Apple and its chief executive Tim Cook (pictured, talking to employees during his visit of the iPhone production line at the newly built Foxconn Zhengzhou Technology Park, Henan province, on March 28), to their credit, welcomed the report and agreed to support its recommendations. "We think empowering workers and helping them understand their rights is essential," the said in a statement. And it claimed that is has been working quietly on these issues for years, albeit clearly with only mixed results. Foxconn has told the FLA that it will reduce working hours to legal limits by July 2013, which is a start. The FLA says this will require Foxconn to recruit tens of thousands of extra workers.

Compliance will not be easy as long as Apple's existing business model remains unchanged. The evidence from other big consumer brands suggest that most abuses of workers—particularly when it comes to overtime—occur when a factory is under pressure to meet a sudden surge in demand, often around product launches. The same appears to be true of Apple, judging by comments made by Auret van Heerden, FLA's chief executive. Working hours, he said at the presentation of the audit, were being "blown out" during peak periods like device launches and the holidays.

The big question is: Can Apple find a way to reengineer its product cycle in such a way that it does not put the factories it uses under excessive strain next time it launches a new iPhone or iPad?

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By Sharlene Goff

Published: February 3 2011 12:05 | Last updated: February 3 2011 12:05

As top bankers around the City of London prepare to receive their bonuses, some might be feeling they could have done better elsewhere.

New rules on pay, coupled with warnings from the UK government that banks must show restraint on bonuses, mean awards to British bank staff – while still generous – could fall below those in other countries. The banks appear to have largely escaped efforts by politicians to force dramatic cuts in bonus pools and reveal the salaries of the highest paid staff – but the pressure for restraint on pay is adding to a sense that being based in the UK is losing its allure.

From this year, banks operating in the UK are having to contribute to a new industry levy that will eventually raise about £2.5bn a year for the public purse. On top of that, senior staff at UK banks are having to take a higher proportion of their bonuses in shares rather than cash and defer it over a number of years.

But while the lure of lower taxes and lighter regulation in markets such as Asia can be a powerful one, the trouble for banks as big as HSBC or Barclays is that moving overseas would be hugely complex. Consultants point to the cost and uncertainty for shareholders and customers, and the myriad practical considerations for companies looking to relocate.

Institutions would also have to consider the quality of life for staff and their families – schools and healthcare, for example, difficulties over visas and any language barriers. Even more mundane considerations such as transport to and from the new office and the price and availability of accommodation need to be examined.

However, while the City of London is yet to lose one of its leading banks, a number of smaller, more nimble institutions, such as hedge funds, have left and could be paving the way for some larger institutions: the idea seems to be gaining momentum.

HSBC and Standard Chartered, which both generate the majority of their revenue in Asia, and Barclays, which has a large investment bank in New York, have all made clear they may not be firmly wedded to the UK – although none has gone as far as to say where they might go.

Also, even if banks do not go as far as moving their headquarters, Ms Knight points out that one effect of the tougher UK environment is that they are not hiring as many British-based staff.

One of the first moves by Stuart Gulliver, the new chief executive of HSBC, for example was to bolster its senior management team in Asia, the bank’s heartland for a long time.

Meanwhile Standard Chartered, which is particularly frustrated with the UK climate, given that it generates almost all of its revenue elsewhere, recently raised £3bn of fresh capital which will be used to drive its growth overseas. The bank has been on a hiring spree, adding about 7,000 people during 2010 across Asia and other emerging markets, including Africa and Latin America.

Consultants say banks could also single out departments or individuals to move overseas.

Clearly, banks would want to retain a UK branch network and would need client-focused staff – such as mergers and acquisition advisers – to remain close to the local market in which deals are being done.

But there are a number of more mobile operations, notably trading desks, where most of the banks’ highest paid – and highly taxed – individuals tend to work. Given the sophistication of modern technology, traders are no longer fixed to a desk in a particular market as they can access data instantly from almost anywhere.

Well-paid traders have an incentive to move, given lower tax rates elsewhere, notably in Asia, and PwC also points out that these roles tend to be held by younger individuals with looser family ties and less dependence on professional services in their home market.

But while movement so far is at a trickle, there are fears that serious action to curb the sector – such as the separation of retail and investment banks – could test banks’ patience.

“The outcome of the banking commission will be hugely important to what banks decide to do,” says Chris Harvey, global head of financial services at Deloitte. “Many senior executives have already publicly questioned what value they get out of the banking levy and attempts to break up the banks would give them another reason to reconsider their location.”
Текст 2.

America's economy

Nimble on the outside, sclerotic on the inside

YESTERDAY'S Link exchange included a link to a new piece by Tyler Cowen in theAmerican Interest, on "what export-oriented America means". Mr Cowen argues that America is well on its way to an export resurgence, for three reasons. First, America is leading a new high-technology revolution that will render labour costs increasingly irrelevant to production location decisions. Second, technology is allowing America to develop more of its fossil fuel resources, potentially turning it into a net exporter of energy. And third, rapid emerging-market growth will lead to enormous middle classes in places like China and India, which will be hungry for the high-end goods America excels at producing: jets, cars, drugs, and movies, among other things.

It's a good piece; go read it. I was struck by two particular aspects of it, however. First, the story is very much a microeconomic one: America will sell more abroad because it will better satisfy market demands. I don't really disagree with the microeconomic stories he's telling, but it's funny to downplay the macroeconomic side of things. It isn't as though America hasn't had things that foreign markets wanted; exports routinely topped $1 trillion over the past decade. To understand why net exports haven't been larger, we need a story about macroeconomic variables. Is net American saving likely to rise in coming years while net saving falls elsewhere, perhaps in China? One might write a companion piece to Mr Cowen's that reads, "the dollar will fall until the current account is in surplus". Or maybe Mr Cowen is focused on exports as a share of output rather than net exports (he cites the current export share in his second paragraph). That, too, seems to have little to do with individual markets; rather, a rising export share looks like an ineluctable part of globalisation:

Secondly, I thought this was a critical paragraph—the buried lede, perhaps:

He calls out health care, education, and government, but the brewing sclerosis strikes me as broader than that. America is in the midst of an information and communication technology revolution. ICT is a general purpose technology, equivalent to electrification, that offers the possibility of enormous productivity gains all across the economy. These cross-cutting productivity gains will, however, disturb many service-sector interest groups which have been slowly accumulating like arterial plaque. New businesses like Uber (an app-based taxi company) and Airbnb (an online real-estate sharing service) have run afoul of tax and regulatory laws, and have been pursued, in part, because they disturb the formerly safe business models of established interests.

During the industrial revolution, there were far fewer obstacles to the sweeping economic change generated by transformative technologies. That lack of obstacles generated more than a few nasty outcomes, including labour and environmental conditions at which we now recoil. We're nonetheless grateful, I think, that it occurred and was so transformative. Today's economies simply aren't as flexible as they used to be. If that leaves whole sectors of the economy walled off from change, then the impact on growth in incomes, employment, and especially living standards could be significant.