Recommended Weekend Reads
June 7 - 9, 2024
Here are our recommended reads from reports and articles we read in the last week. With the EU elections now underway, we offer several resources to help understand how the elections work and what and who is trending. We hope you find all these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
EU 2024 Elections
An American’s guide to the 2024 European election Politico EU
The EU elections have begun, choosing a new EU Parliament with more than 400 million Europeans eligible to vote. But, as Politico EU points out, the EU is complicated, and so they break it down for “our cousins across the Atlantic.”
European Elections 2024: All You Need to Know European Elections 2024 (European Parliament Official Site)
The EU Parliament offers this site to voters, giving them all the information, country by country, of who is running, which Parties are on the ballot, how the votes are tallied, and where they can find the election results.
Europe’s center-left struggles to hold back surge from the right BBC
Only four EU member states have center-left or left-wing parties in government, and recent performances at the ballot box have been poor. The omens for the coming days are not good. The EU’s center-left makes up the second-largest group in the outgoing European Parliament. Known as the Progressive Alliance of Socialists and Democrats (S&D), they are projected, at best, to cling on to their 139 seats in the 720-seat parliament. It is Europe's parties on the right that have the wind in their sails, and any success the center-left achieves is likely to be offset by losses elsewhere.
U.S. 2024 Elections
An Unsettled Electorate: How Uncertainty and Apathy Are Shaping the 2024 Election American Enterprise Institute’s Survey Center on American Life
With just under six months until the 2024 presidential election, a new survey of more than 6,500 adults finds considerable uncertainty among the American public, with few paying close attention to issues that may define the election. Americans are evenly divided between Donald Trump and Joe Biden. At this stage in the election cycle, neither candidate is particularly well-liked: Comparable numbers of Americans hold negative opinions of Trump or Biden as say they favor either candidate. Half of voters say things will get worse if either Biden or Trump wins reelection. Still, Americans tend to believe that the candidate options for the 2024 presidential election present an easy choice, though young voters, especially young women, are less certain. Optimism about the state of the country is in short supply. Americans are primarily pessimistic about the national economic outlook, their local economic outlook, and the American Dream as a whole. More than six in 10 (61 percent) Americans say the national economy is worsening. Half (49 percent) say their local economy is getting worse. Most Americans, including large percentages of young Americans, say the American Dream is not easy for people like them to achieve.
Cultural Issues and the 2024 Election Pew Research Center
The 2024 presidential campaign is taking place amid intense debates over topics such as immigration, growing racial and ethnic diversity in the United States, the changing American family, crime, and reproductive issues. These topics are sometimes grouped together as “culture war” or “woke” issues. On most—but not all—of these topics, voters who support President Joe Biden and former President Donald Trump have starkly different opinions. Yet, in many cases, Biden and Trump's supporters are themselves sharply divided.
Global Markets & Geoeconomics
BRICS and De-Dollarization, How Far Can It Go? Responsible Statecraft
Although much U.S. media attention was paid to the enhancement of military and political cooperation during the summit between Russian President Vladimir Putin and Chinese President Xi Jinping in Beijing earlier this month, financial issues also figured high on the agenda. The Russian delegation included Elvira Nabiullin, Governor of the Central Bank of Russia and she rarely travels with Putin abroad. As the current chair of the BRICS, Putin is pursuing a rather extensive agenda related to finance that includes enhancing the role of member countries in the international monetary and financial system and developing interbank cooperation and settlements in national currencies – and part of that is the possibly created a BRICS currency.
Risky Oil: It’s All in the Tails Christiane Baumeister, Florian Huber & Massimiliano Marcelino/National Bureau of Economic Research
The substantial fluctuations in oil prices in the wake of the COVID-19 pandemic and the Russian invasion of Ukraine have highlighted the importance of tail events in the global market for crude oil which call for careful risk assessment. In this paper we focus on forecasting tail risks in the oil market by setting up a general empirical framework that allows for flexible predictive distributions of oil prices that can depart from normality. This model, based on Bayesian additive regression trees, remains agnostic on the functional form of the conditional mean relations and assumes that the shocks are driven by a stochastic volatility model. We show that our nonparametric approach improves in terms of tail forecasts upon three competing models: quantile regressions commonly used for studying tail events, the Bayesian VAR with stochastic volatility, and the simple random walk. We illustrate the practical relevance of our new approach by tracking the evolution of predictive densities during three recent economic and geopolitical crisis episodes, by developing consumer and producer distress indices that signal the build-up of upside and downside price risk, and by conducting a risk scenario analysis for 2024.
The Simple Macroeconomics of AI Daron Acemoglu/National Bureau of Economic Research
This paper evaluates claims about large macroeconomic implications of new advances in AI. It starts from a task-based model of AI’s effects, working through automation and task complementarities. So long as AI’s microeconomic effects are driven by cost savings/productivity improvements at the task level, its macroeconomic consequences will be given by a version of Hulten’s theorem: GDP and aggregate productivity gains can be estimated by what fraction of tasks are impacted and average task-level cost savings. Using existing estimates on exposure to AI and productivity improvements at the task level, these macroeconomic effects appear nontrivial but modest—no more than a 0.66% increase in total factor productivity (TFP) over 10 years. The paper then argues that even these estimates could be exaggerated because early evidence is from easy-to-learn tasks, whereas some of the future effects will come from hard-to-learn tasks, where there are many context-dependent factors affecting decision-making and no objective outcome measures from which to learn successful performance.
China
How China Could Quarantine Taiwan Center for Strategic & International Studies
In this interactive report, CSIS China has significantly increased pressure on Taiwan in recent years. Its military ships and aircraft now operate around Taiwan on a near-daily basis, stoking fears that tensions could erupt into outright conflict. Much of the world’s attention has focused on the threat of a Chinese invasion, but Beijing has many options besides an invasion to coerce, punish, or annex Taiwan. One major step China could take is a “gray zone” quarantine led not by the military but by the coast guard and other law enforcement forces. Rather than sealing off the island, a quarantine would aim to demonstrate China’s ability to exert control over Taiwan.
How is China’s Economic Transition Affecting Its Relations with Africa? Carnegie Africa Program/Carnegie Endowment for International Peace
Amid increasing tensions with the United States and domestic pressures, China has been more motivated to reorient its economic and diplomatic relations with the Global South. China’s economic transition is already affecting its relations with Africa in several domains, including trade, investments, and people-to-people ties. The authors of this study provide insights into the implications of China’s economic transition for Africa, as well as the roles for third parties like the United States to shape how these changes unfold.
Russia/Ukraine
Russia’s Soaring Wartime Salaries Are Bolstering Working-Class Support for Putin Carnegie Politika
Many formerly badly paid Russian blue-collar workers have seen their salaries skyrocket since the full-scale invasion of Ukraine, far outpacing inflation. he reasons for rising incomes in Russia have been well documented: a labor shortage, hefty payments to soldiers and their families, and an unprecedented level of state spending that has obliged defense sector factories to work around the clock. However, whether standards of living have actually improved is open to debate, given the record military spending, high inflation, Western sanctions, and limits on hydrocarbon exports. The second trend is the booming gambling market. The income of legal bookmakers rose 40 percent in 2023, and active gamblers (those who bet at least once a week) numbered some 6.6 million people. In total, more than 15 million people gambled (about one in seven Russians over the age of 18) over the course of the year. At the same time, inflation means the size of the average bet is growing. Current trends have even led to calls to raise the legal limit on a single bet from 600,000 rubles to 1.4 million rubles.
The destruction of the dam at Ukraine’s Kakhovka Hydroelectric Power Plant on the morning of June 6, 2023, caused the flooding of about 80 towns and villages in the country’s Kherson and Mykolaiv regions. Kyiv and Moscow blamed each other for the collapse and the resulting humanitarian and environmental disaster (though the dam has been controlled by Russian forces since the start of the full-scale invasion). In addition to inundating communities downstream from the facility, the dam’s breach caused catastrophic shallowing further upstream, devastating communities in the Zaporizhzhia region that used to rely on fishing and river transport for their livelihoods. For Meduza, Ukrainian photographer Pavel Korchagin traveled to the region to capture the way its landscape has changed in the year since the dam burst.