Daily update
Daily update
- In Germany, the far-right AfD won the largest share of the vote in Thuringia’s state elections. That and high support levels for the AfD and the far-left BSW in eastern Germany remind investors that prejudice politics is widespread and persistent. Industrial revolutions create insecurity about jobs, income, and social status. The causes are complex, but people crave simplicity. Blaming a scapegoat (scapegoat economics) offers simplicity, and encourages prejudice politics.
- Prejudice is economically damaging. It prevents the right person being in the right job at the right time. Ordinarily that is bad for productivity. In a period of structural change, it can prevent technology from being used to its full effect, lessening the economic gains from structural change, and further building prejudice.
- Economic nationalism is a common manifestation of prejudice politics. China has threatened Japan with severe economic sanctions if Japan bans the sale of chipmaking equipment to China (something the US wants). These threats do have market consequences, although as Russian sanctions have shown, the effectiveness of such threats can deteriorate over time.
- The US is off, celebrating its inability to spell “labour” correctly. Europe has manufacturing sentiment opinion polls, which will get more attention than they deserve given the lack of other data.
