Over all, hedge funds have underperformed the broader Standard & Poor’s 500-stock index for seven consecutive years. The average hedge fund returned 4.14 percent this year through September, according to the Hedge Fund Research Composite Index, the broadest gauge of hedge fund performance. The Standard & Poor’s 500-stock index gained 8 percent over that period, accounting for reinvested dividends... More than $50 billion has flowed out of the industry this year, according to Hedge Fund Research. In the latest financial quarter investors took $28 billion, the biggest quarterly outflow since the depths of the financial crisis in 2009.
Out of 252,000 manufacturing companies in the United States, only 3,700 had more than 500 workers. The vast majority employ fewer than 20.
The core element of all Pratham’s Programs discussed here is the pedagogy: it is called Combined Activities for Maximized Learning (CAMaL), but is also referred to as “Teaching at the Right Level” (TaRL). We call it TaRL below. This pedagogy has evolved over the years from Pratham’s own intensive experience, internal assessments, as well as external randomized evaluations...
These facts suggest two conclusions. The first is that, in many countries, a large proportion of measured FDI inflows are just flows going in and out of the country on their way to their final destination, with the stop due in part to favorable corporate tax conditions. This fact is not new, and, as discussed below, countries have tried to im- prove their measures of FDI to reflect it. But the magnitude of such flows came to us as a surprise. The second is that some of these measured FDI flows are much closer to portfolio debt flows, responding to short-run movements in US monetary policy conditions rather than to medium-run fundamentals of the country. Both have implications for how one should think about capital controls and the exclusion of measured FDI from such controls.
A number of other statistical facts are also intriguing and suggest the need for a granular look at tax treaties, specific tax rates, treatment of FDI debt versus FDI equity flows, capital controls, and the details of tax optimization. For example, in a few countries (in particular, India), there is a high correlation between FDI equity inflows and debt outflows. This correlation is consistent with the hypothesis that some of the high correlations (between quarterly FDI inflows and outflows) reflect in part hedging of currency and country risks by foreign investors.
Anemic global growth is "setting the stage for a vicious feedback loop in which lower growth hampers deleveraging and the debt overhang exacerbates the slowdown".
The most striking findings of the paper are about the decline of economics as the pivot of politics. The way politics are thought about today is still shaped by the basic twentieth-century left-right divide. Left-wing parties are associated with increased government spending, a larger welfare state, and regulations on business... Voting patterns traditionally reinforced this ideological divide, with the working class opting for the left and middle and upper classes for the right. Income was usually the best predictor of a person’s political choices. Inglehart and Norris point out that this old voting pattern has been waning for decades... Today, an American’s economic status is a bad predictor of his or her voting preferences. His or her views on social issues—say, same-sex marriage—are a much more accurate guide to whether he or she will support Republicans or Democrats... Noneconomic issues—such as those related to gender, race, the environment—have greatly increased in importance...
This convergence in economic policy has contributed to a situation in which the crucial difference between the left and the right today is cultural... The shift began, as Inglehart and Norris note, in the 1970s, when young people embraced a postmaterialist politics centered on self-expression and issues related to gender, race, and the environment. They challenged authority and established institutions and norms, and they were largely successful in introducing new ideas and recasting politics and society. But they also produced a counterreaction. The older generation, particularly men, was traumatized by what it saw as an assault on the civilization and values it cherished and had grown up with. These people began to vote for parties and candidates that they believed would, above all, hold at bay these forces of cultural and social change. In Europe, that led to the rise of new parties. In the United States, it meant that Republicans began to vote more on the basis of these cultural issues than on economic ones. The Republican Party had lived uneasily as a coalition of disparate groups for decades, finding a fusion between cultural and economic conservatives and foreign policy hawks. But then, the Democrats under Clinton moved to the center, bringing many professionals and white-collar workers into the party’s fold. Working-class whites, on the other hand, found themselves increasingly alienated by the cosmopolitan Democrats and more comfortable with a Republican Party that promised to reflect their values on “the three Gs”—guns, God, and gays.
The notion that today’s yield of 1.15% on the Italian 10-year bond even remotely compensates for the risk embedded in Italy’s fiscal and economic chamber of horrors is just plain laughable. And that’s to say nothing of the risk the Brexit is just stage one, and that the EU itself will ultimately succumb to a wave of populist insurgency, including a Five Star led move to take Italy out of the euro. Indeed, Italy is truly a case of the blind leading the blind... Needless to say, these (government bonds) securities are vastly over-valued owing to the Draghi bond-buying spree, and they would plummet in price were the speculators who have been front-running Draghi’s QE campaign ever to loose confidence in the ECB or the ability and willingness of an Italian government to continue the giant fiscal charade now in place... with public debt already at 133% of GDP, why would anyone except Mario Draghi’s printing press be buying 10-year bonds at a 1.15% yield? Once upon a time, price discovery by the bond vigilantes kept governments quasi-sober and functionally solvent. No more. The Italian Job now underway is just the opening round in a world of failed states and broken markets.
One, there is a big difference between implementing a program on a pilot basis for an experimental study and implementing the same on scale. In the former, the concentrated effort and scrutiny of the research team, the unwitting greater over-sight by the official bureaucracy, and the assured expectation, among its audience, that it would be only a temporary diversion, contributes to increasing the effectiveness of implementation. Two, is the administrative system capable of implementing the program so designed, on scale? Finally, there is the strong possibility that we will end up implementing a program or intervention that is qualitatively different from that conceived experimentally.
It is one thing to find considerable increases in teacher attendance due to the use of time-stamped photographs or rise in safe water consumption from the use of water chlorination ampules when both are implemented over a short time horizon, in microscopic scale, and under the careful guidance and monitoring of smart, dispassionate, and committed research assistants. I am inclined to believe that it may be an altogether different experience when the same is scaled up over an entire region or country over long periods of time and with the “business as usual” minimal administrative guidance and monitoring. And all this is leaving aside its unanticipated secondary effects. In fact, far from implementing an intervention which is tailored based on rigorous scientific evidence, we may actually end up implementing a mutilated version which may bear little resemblance to the original plan when rolled out at the last mile.
Concentrated poverty is defined as neighborhoods or tracts where 40 percent or more of residents fall below the federal poverty threshold (currently $24,000 for a family of four). The study looks at this change across the nation as a whole and within its major metropolitan areas. The number of people living in concentrated poverty has grown staggeringly since 2000, nearly doubling from 7.2 million in 2000 to 13.8 million people by 2013—the highest figure ever recorded. This is a troubling reversal of previous trends, particularly of the previous decade of 1990 to 2000, where Jargowsky’s own research found that concentrated poverty declined. Concentrated poverty also overlaps with race in deeply distressing ways. One in four black Americans and one in six Hispanic Americans live in high-poverty neighborhoods, compared to just one in thirteen of their white counterparts.
They asked the doctors to consider a group of hypothetical patients: one who smoked, one who drank, one who was overweight, and so on. They found that doctors viewed most of their patients’ health with similar seriousness and would advise similar responses. But for three of the hypothetical patients, they found differences. Those patients were devised to have health problems closely tied to hot-button political issues: One used marijuana, one owned guns, and one had a history of abortions. For those patients, Republican and Democratic doctors registered different levels of concern and said they would respond differently. When it came to the patient with a history of abortions, doctors who were Republican said they would be more likely to encourage the patient to seek counseling and express concern about mental health consequences; they also said they would be more likely to discourage the patient from seeking future abortions. For the patient who used marijuana, Republican doctors said they’d be more likely to ask the patient to cut back and to discuss legal risks of using the drug, which is banned under federal and most state laws. For the patient with guns, doctors who were Democrats indicated they’d be more likely to tell the patient not to keep guns at home. Republican doctors, on the other hand, would be more likely to discuss safe storage options.
Newborns have a high body-surface area and lose heat rapidly. Even in warm weather, hypothermia is common, and it makes newborns weak and less responsive, less able to breast-feed adequately and more prone to infection. I noticed that the boy was swaddled separately from his mother. Voluminous evidence shows that it is far better to place the child on the mother’s chest or belly, skin to skin, so that the mother’s body can regulate the baby’s until it is ready to take over. Among small or premature babies, kangaroo care (as it is known) cuts mortality rates by a third... But even in high-income countries we do not consistently use it. In the United States... more than half of newborns needing intensive care arrive hypothermic. Preventing hypothermia is a perfect example of an unsexy task: it demands painstaking effort without immediate reward.
With the BetterBirth Project, we wondered, in particular, what would happen if we hired a cadre of childbirth-improvement workers to visit birth attendants and hospital leaders, show them why and how to follow a checklist of essential practices, understand their difficulties and objections, and help them practice doing things differently. In essence, we’d give them mentors... The project has recruited only the first few of a hundred or so workers whom we are sending out to hospitals across six regions of Uttar Pradesh in a trial that will involve almost two hundred thousand births over two years...
If the intervention saves as many mothers and newborns as we’re hoping—about a thousand lives in the course of a year at the target hospitals—then all that need be done is to hire and develop similar cadres of childbirth-improvement workers for other places around the country and potentially the world. To many people, that doesn’t sound like much of a solution. It would require broad mobilization, substantial expense, and perhaps even the development of a new profession. But, to combat the many antisepsis-like problems in the world, that’s exactly what has worked. Think about the creation of anesthesiology: it meant doubling the number of doctors in every operation, and we went ahead and did so. To reduce illiteracy, countries, starting with our own, built schools, trained professional teachers, and made education free and compulsory for all children. To improve farming, governments have sent hundreds of thousands of agriculture extension agents to visit farmers across America and every corner of the world and teach them up-to-date methods for increasing their crop yields. Such programs have been extraordinarily effective. They have cut the global illiteracy rate from one in three adults in 1970 to one in six today, and helped give us a Green Revolution that saved more than a billion people from starvation.
According to Morningstar, a data provider, since December 2007 passive assets under management have tripled to $5.7 trillion, while assets in active funds have increased by only 54%, to $23.2 trillion. In the first eight months of this year, investors drew down $166.2 billion from actively managed funds specialising in American equities alone. In contrast, passive unds attracted almost $110 billion in new investment.
In 2015, after examining the results of randomised controlled trials in Bosnia, Ethiopia, India, Mexico, Morocco and Mongolia, American researchers questioned whether microlending worked at all. As expected, offering small loans increased business investment. But it had a negligible effect on poor people’s fortunes. Borrowers seemed to cut back on wage work in order to spend more time bent over their sewing machines or running their small, not terribly profitable shops. These days international donors and charities are much more excited about other approaches, including mobile money and “graduation” programmes, which give livestock to indigent people and teach them how to take care of them. As the development caravan rolls away, though, microlending is booming. MIX, which collects data on the industry, estimates that the number of borrowers worldwide grew by 16% between 2014 and 2015, to 130m. The total loan portfolio is now worth about $96 billion. In India, which has more microborrowers than any other country, lending was 64% higher in the second quarter of this year than a year earlier, according to MFIN, a national industry body.
If capturing new clients is essential to success in microlending, creating new loan products is not. “There is zero innovation,” says Ratna Vishwanathan, the head of MFIN. “It’s a vanilla product”. That is a shame because, although small loans are plainly popular and do no economic harm to the average borrower, they could equally plainly do a much better job of helping people become less poor. Like many tiny businesses, Mr Iqbal’s shop swings up and down. He can be extremely busy around Hindu festivals, when people like to shop, but is idle at other times (when your correspondent arrives at his shop, he is napping). In the slowest months, he cuts back spending on himself and his family until he can scrape together enough for the monthly payment. And he knows to take on only as much debt as he can service in the lean season. At this rate, he is no more likely to prosper than he is to default on his loan.
An experiment in Kolkata by two American researchers, Erica Field and Rohini Pande, found that offering borrowers a grace period of just two months at the beginning of a microloan doubled the rate at which new businesses were created. Borrowers were able to take bigger risks, which brought bigger rewards on average. After three years business profits were 41% higher and household incomes were up by 19.5%. If microlending could routinely deliver results like that, it would still be the height of fashion. IFMR Lead, a research organisation based in India, is now testing an even more flexible loan. In conjunction with Sonata, it is offering a few hundred people microloans with two three-month “holidays”. Borrowers will still have to pay something each month, but much less than usual.
While corporations are motivated to “go green,” their push to be more energy efficient leaves the utility with less revenue to maintain the grid and can lead to rate increases. This can cause what energy market observers call the “death spiral.” “If people are consuming less electricity, revenue for the company is going down, so they raise rates on others. That forces more of them to defect.” says Bill Ellard, an energy consultant and chair of economics for the American Solar Energy Society. “Soon, they won’t have enough money to keep gear, power lines, transmission stations working,” Ellard adds. “We have an old, ancient grid. A lot of power companies are just duct-taping and band-aiding things. Now monopolies like NV Energy are competing with free market innovation, and innovation is not their mantra. You don’t have to innovate when you’re a monopoly.” Meanwhile, corporations that have the wherewithal to move forward without the utility are doing so. This year, MGM expanded the solar array at Mandalay Bay Resort and Casino, making it one of the largest rooftop systems in the country. The 8.3 megawatt array can power the equivalent of 1,340 single-family homes, and can handle up to 25 percent of Mandalay Bay’s energy needs when fully active during the day...
While MGM and Wynn will buy their electricity from a brokerage, they still need to use NV Energy’s transmission lines and other equipment, and will remain customers of the utility in that regard... NV Energy, the state-regulated energy monopoly, has to serve a diverse group of energy users and makes plans on how to meet demand years in advance. Confronted with increased use of solar power as the systems become more affordable, the company has moved to stabilize revenue. Earlier this year, NV Energy decreased the amount it pays residential owners of solar arrays for excess electricity they send into the grid, causing a public outcry. Eventually existing solar users were grandfathered into the original rate.
A total of 52 EPC road projects worth about Rs.26,700 crore have been awarded between January and June, according to data compiled by brokerage Equirus Securities Pvt. Ltd. Of these, close to 40 projects were won below the National Highways Authority of India’s estimated cost and each of the projects attracted three to 14 bidders. The government’s push for a new low-risk hybrid-annuity model (HAM), in which the state commits up to 40% of the project’s total cost to kick-start private sector investments, and the emergence of a number of smaller, regional companies have added to the competitive intensity, according to road developers and analysts.
Larsen and Toubro Ltd (L&T) has... won five awards in the six months ended 30 June, all of them below estimated costs. It won two EPC projects in Tamil Nadu in February by bidding 27% and 13% lower than the project cost... In March, L&T won a road project in Kerala at a bid that was 38% below the estimated project cost. Similarly, Bhopal-based Dilip Buildcon Ltd has won six contracts, which were between 13% and 31% below the estimated cost.
As low-income countries industrialize, workers choose between informal self-employment and low-skill manufacturing. What do workers trade off, and what are the long run impacts of this occupational choice? Self-employment is thought to be volatile and risky, but to provide autonomy and flexibility. Industrial firms are criticized for poor wages and working conditions, but they could offer steady hours among other advantages. We worked with five Ethiopian industrial firms to randomize entry-level applicants to one of three treatment arms: an industrial job offer; a control group; or an “entrepreneurship” program of $300 plus business training. We followed the sample over a year. Industrial jobs offered more hours than the control group’s informal opportunities, but had little impact on incomes due to lower wages. Most applicants quit the sector quickly, finding industrial jobs unpleasant and risky. Indeed, serious health problems rose one percentage point for every month of industrial work. Applicants seem to understand the risks, but took the industrial work temporarily while searching for better work. Meanwhile, the entrepreneurship program stimulated self-employment, raised earnings by 33%, provided steady work hours, and halved the likelihood of taking an industrial job in future. Overall, when the barriers to self-employment were relieved, applicants appear to have preferred entrepreneurial to industrial labor.
The North American Free Trade Agreement, or Nafta, exposed workers in the United States to competition with Mexico, but its passage came in the mid-1990s, just as investment was pouring into the web, creating demand for a range of manufactured goods — office furniture for Silicon Valley coders, trucks for the couriers delivering e-commerce wares. China’s entry into the World Trade Organization in 2001 unleashed a far larger shock, but a construction boom absorbed many laid-off workers... But the pervasive stagnation (today) has left little cover for those set back by globalization.
In the first 13 years after China entered the W.T.O., its exports of goods swelled to nearly $2.3 trillion in 2014 from $266 billion, according to the World Bank. The beneficiaries of this surge include anyone who has bought practically anything touched by human hands — an iPhone, a car, a Christmas ornament. Corporations that used China to cut costs raised their value, enriching executives and ordinary investors. The casualties of China’s exports are far fewer, but they are concentrated. The rugged country of western North Carolina suffered mass unemployment as Chinese-made wooden furniture put local plants out of business. So did glassmakers in Toledo, Ohio, and auto parts manufacturers across the Midwest. A paper published last year by a trio of economists — David H. Autor at the Massachusetts Institute of Technology, David Dorn at the University of Zurich and Gordon H. Hanson at the University of California, San Diego — concludes that Chinese imports eliminated nearly one million American manufacturing jobs from 1999 to 2011. Add in suppliers and other related industries, and the total job losses reach 2.4 million.
In the five years after a job loss, an American family of four that is eligible for housing assistance receives average benefits equal to 25 percent of the unemployed person’s previous wages, according to datafrom the Organization for Economic Cooperation and Development. For a similar family in the Netherlands, benefits reach 70 percent.
The worst-off benefit far more from trade than the rich. A study of 40 countries found that the richest consumers would lose 28% of their purchasing power if cross-border trade ended; but those in the bottom tenth would lose 63%. The annual cost to American consumers of switching to non-Chinese tyres after Barack Obama slapped on anti-dumping tariffs in 2009 was around $1.1 billion, according to the Peterson Institute for International Economics. That amounts to over $900,000 for each of the 1,200 jobs that were “saved”.
A study by Pablo Fajgelbaum of the University of California, Los Angeles, and Amit Khandelwal, of Columbia University, suggests that in an average country, people on high incomes would lose 28% of their purchasing power if borders were closed to trade. But the poorest 10% of consumers would lose 63% of their spending power, because they buy relatively more imported goods.
