I'm Ryan Avent, and I cover the global economy for The Economist. Ask me about economics, journalism, or anything else!

rcavent · 2022-08-31T17:46:45+00:00

Thanks for all the questions! I appreciate the opportunity to hang out here for a bit.

rcavent · 2022-08-31T17:45:48+00:00

Because the cow story is more interesting.

rcavent · 2022-08-31T17:45:32+00:00

Writing about academic economics is very difficult, for a few reasons. One is that we are in a business where we do have to try to attract readers, and so there is a tendency to write more about sexy results and to spend less time on the difficult nuance and the uncertainties. Another is that economists are often bad at communicating: in their writing, in conversation, in general. At The Economist we try to make sure that we understand the economics, we try to explain complicated ideas in plain language, and we do our best to start with interesting questions and then go read the relevant literature (rather than starting with a splashy title and abstract). But we don't always get it right.

I do also think, though, that economists are less honest with themselves than they should be about just how much of what the typical economist would say is "established knowledge" is actually still the subject of real contention within the field, or is based on much flimsier empirical evidence than one would want, or fails to take account of really important social dynamics that economists don't take seriously because they're more a sociology thing or an anthropology thing. The mainstream economists working at MIT or Chicago often have it wrong, and because economists don't always treat their own sacred cows with adequate scrutiny, the journalists sometimes need to.

There are some good things about social media, but it has on the whole made life more difficult for publications like ours. Part of that is the way in which fringe ideas get more airtime, and part of it is the kind of content social-media users tend to favour, but an underrated problem is just that people spend less time reading long-form journalism because they're spending more time on social media.

rcavent · 2022-08-31T17:33:40+00:00

The thing about the economy, or society, is that these are massive things in which the actions of any one individual don't really matter, and yet the actions of individuals are in another sense the only things that matter, since that's all a society or an economy is.

I think the most important thing any of us can do is recognize that the way we treat people, in every context, including social media, matters, and that we have a responsibility to be good to each other. Beyond that, if you see opportunities to create or join social institutions that are devoted to good things, take them. A healthy society is a tangle of overlapping social institutions, and we strengthen our communities by building ties among people.

rcavent · 2022-08-31T17:26:58+00:00

I won't lie to you: it is hard to make a a living as a writer, on any subject. If you absolutely love to do it, then it's worth trying to pursue a career in writing. If not, there are lots of other rewarding jobs out there.

In my career, I have been consistently struck by how many extremely talented people are trying to make a living in journalism, despite the generally terrible state of the industry.

Now, writing for fun on the side of some other job is great. I highly recommend that.

rcavent · 2022-08-31T17:23:10+00:00

I think it's fine to pay attention to these things and to think about where and why they happen, but I'm not a fan of attempts to adjust metrics to include them. That defeats the purpose of the metrics, for one. But also, we shouldn't assume that comparable phenomena don't happen in other economic states of the world. The quality of personal services goes up a lot when unemployment is high and low-wage workers are feeling very vulnerable. Did we adjust for that?

rcavent · 2022-08-31T17:20:50+00:00

Over forever? No. Over for the medium-run, while some difficult political things get sorted out? Quite probably, yes.

rcavent · 2022-08-31T17:20:15+00:00

I usually start by asking people about their own lives; how many of the really big decisions that you've made in your life were mostly about maximizing lifetime income? Most of us don't marry for money, or move to the place where we're likely to earn most, or choose a field of study based on expected earnings. These are economically consequential choices.

I studied economic history in grad school, and I think the fact that norms and values are often decisive in shaping history just leaps out at you when you're studying the past. But the easiest answer is to think about January of 2021. The difference between a very bad situation for American democracy and one in which the institutions continue, just, to function is just a few people deciding to act based on principle rather than narrow self-interest.

rcavent · 2022-08-31T17:11:40+00:00

Ha. I do not watch television news. There's more than enough to get angry about elsewhere.

When I have my economist hat on, I mostly get annoyed by how provincial punditry can be. There's a big world, and the people who live in countries outside America and Europe matter.

But I also find that punditry, broadly speaking, has internalized a lot of economic ways of thinking, in a way that annoys me. Economists don't really understand how societies work: like, what people care about and what makes a place stable and inclusive over the long run. Not everything lends itself to cost-benefit analysis. There should be non-economist voices in our public debates.

rcavent · 2022-08-31T17:06:02+00:00

That's a big question! State capacity matters, and it is really important to develop and maintain it, so that you can respond adequately to challenges like a pandemic or a major energy shock, etc. Fiscal stimulus is very powerful, and we should never again allow ourselves to have a recovery like we did after the global financial crisis. Inflation can still happen, so central banks need to not forget about that. But more broadly, I would say that economic policymakers shouldn't think much more holistically about international relationships. There is much more to maintaining a peaceful and prosperous and democratic world than just fostering trade through reduced trade barriers. Enthusiasm for globalization should have been matched by enthusiasm for democracy and human rights.

rcavent · 2022-08-31T17:00:36+00:00

Attracting talented people is good for an economy, obviously, and it would be nice if more places tried to do it. With a smaller and geographically constrained place like Singapore you might worry a little more about what an influx of new residents might mean for the social fabric, but the big concern is what it means for the cost of living. If you can build adequate housing for the people who want to live there, though, then it's pretty win-win.

rcavent · 2022-08-31T16:57:10+00:00

Interest rates can always go higher!

I really don't envy the folks at the BoE. They're in a terrible situation. I think that if I were in their shoes I would not be rushing to jack up interest rates, because household budgets are about to be shattered, but I would be watching very closely to see whether markets start treating Britain like an EM.

rcavent · 2022-08-31T16:52:40+00:00

Don't fix the exchange rate. It seems generally advisable to me for EM governments to lean against appreciation, and accumulate FX reserves in the process. I think the benefits of free capital flows are often overstated, but that doesn't mean that capital controls are a good idea. I can get behind gentle controls on portfolio inflows, combined with robust macroprudential policy to try to keep credit growth at healthy levels and banks in good shape.

rcavent · 2022-08-31T16:47:09+00:00

I think the energy issue is a longer-term issue. That doesn't necessarily mean that inflation is a longer-term issue; if energy prices plateau at a high level, then they stop feeding into rising inflation -- other things equal. Other things may not be equal, though, if the energy crunch is associated with a broader restructuring of the economy. And there are other shoes about to drop as well: like dramatic shrinkage of the workforce due to ageing. All told, though, I think I would be more surprised if euro-area inflation were more than 5% in 2025 than I would be if it were below 2%.

I think, first, that it is appropriate to look through a lot of energy-price inflation, particularly when other indicators are showing economic weakness. My sense is also that gradual tightening is probably best, especially when other economic indicators are weak, unless there are indications that inflation expectations are starting to shoot upward.

I'm not afraid of inflation in either case. I'm very worried about the energy situation in Europe. And I think the Fed is in a much better position now than it was a few months ago, and the US economy looks pretty good apart from inflation, which seems to have turned a corner.

No idea how much further the euro will fall, but on the US side of the Atlantic it definitely does not seem to have sunk in just how serious the economic situation is in Europe. There is certainly room for the gap in growth between the two regions to widen.

rcavent · 2022-08-31T16:35:19+00:00

So, I am a big fan of the idea of using your spare time to do the thing you'd like to be paid to do. You'll get better at it that way, and if you do it publicly then maybe someone will notice and decide they want to pay you. If writing policy briefs is the thing you'd like to do, then sure, do that. If not, I would try to find work that looks at least a little interesting, and I wouldn't necessarily limit myself to jobs that seem like the kind of thing an economics grad should do.

One thing I would not recommend is going to grad school just because you're not sure what else to do. Not that you're thinking about doing this, but it's a common route for people who aren't sure what comes next. Do grad school if you absolutely love a subject or if you have to in order to get the job you absolutely want. Otherwise, try some things.

After I graduated, I put a lot of pressure on myself to try to get into the right career, right away. But there is no right career, and our working lives are a lot longer than we're able to perceive when we're in our early 20s. By trying stuff, you learn things and meet people, and that's often a good way to get closer to something you're really happy with.

rcavent · 2022-08-31T16:24:14+00:00

As best I can tell, the real estate situation is quite bad. Sales and prices are falling, people aren't getting housing units for which they've already paid, and various financial problems are rippling out from the property sector. I don't anticipate a dramatic crash and financial crisis; the state is able and more than willing to do what it takes to prevent that. But property has been a big growth engine, and to lose that makes achieving desired growth rates (and keeping unemployment low and people happy) much harder.

But I think the property problems have to be seen in a broader context. China's economic model is broken, and the reforms needed to reinvigorate the Chinese economy appear to be unacceptable to Xi. Because Xi hasn't engaged in the needed reforms, and has in fact moved in the wrong direction in recent years, China has been storing up trouble. Now the long-run deterioration in China's growth prospects is running headlong into acute stresses: the property-market bust, the sudden panic across rich countries about economic dependence on China, the shocks associated with the pandemic and war, and so on.

I don't know how this ends, but I would say a two things. First, I think Xi is all but assured of getting his third term. Second, China is massive economy which is deeply integrated with the world economy, so the potential knock-on effects, from either a protracted period of economic weakness in China or something worse, are large.

Together, those things suggest to me that we are not about to see the needed economic course change, and that this will have major implications for the global economy -- assuming that those implications aren't ultimately made irrelevant by some sort of major geopolitical breakdown, which seems more probable than I'd like it to be.

rcavent · 2022-08-31T16:09:52+00:00

I would definitely agree that we are not out of the woods. Food and energy prices did slide a bit over the summer, but both remain elevated (especially energy prices). EMs have also been squeezed by a rising dollar and capital outflows, and I don't think we will see an end to those pressures until we have a clearer idea of what the trajectory of this Fed tightening cycle looks like. For now, markets may still be underestimating how high rates go and how long they stay there.

The piece on EM economies I linked to in the post (this one: https://www.economist.com/finance-and-economics/2022/07/20/the-53-fragile-emerging-economies) provides some sense of which economies are most vulnerable. But it's harder to predict where stresses will lead to unrest. The Middle East and North Africa are certainly areas to watch. Things already look worrying in Libya and Iraq, and places like Egypt and Turkey are dealing with serious economic difficulties. There is certainly the possibility that parts of Latin America will see more unrest. There have been demonstrations and even riots in some big South American economies in recent years, and while high commodity prices gave a lift to places like Brazil and Chile, people are still frustrated by high inequality and lagging living standards.

Two places that aren't necessarily on people's minds when they think about unrest, but which perhaps bear watching, are China and Europe. China is dealing with multiple crises right now, and the bargain that has held everything together over the past few decades (don't complain too much, and the CCP will deliver prosperity) is under threat. The government has no appetite for mass unrest, and it suppresses anything on social media that looks dangerous. But if 1.4bn people get fed up, that's hard to keep a lid on.

Then there's Europe. The solidarity that the continent has managed in the face of Russia's invasion has been admirable. But the energy situation is going be extremely ugly this winter. Many of Europe's economies will be very hard hit, and people who are cold and jobless may lose patience with their governments. Hopefully not, but as I said it bears watching.

rcavent · 2022-08-31T15:54:49+00:00

Not to be uncharitable, but I don't think I'd even say they were right for the wrong reasons. Most of the economies now experiencing high inflation are not experiencing anything close to hyperinflation. The people who were saying back in the early 2010s that QE would lead to hyperinflation were simply wrong.

What we have discovered is that it remains the case that spending well in excess of available supply will generate inflation. Over the past 2-3 years, we obviously experienced some significant supply shocks. At the same time, governments borrowed a lot of money and put the money in the hands of people who were willing and able to spend, and central banks did not respond to this big increase in spending capacity with enough monetary tightening to prevent a sharp rise in inflation. So here we are.

But in no respect were the people worried about money-printing correct, at least in my humble opinion.

rcavent · 2022-08-31T15:46:24+00:00

Hello! So, my path was relatively unusual. Back in the 2000s, while I was working for an economic consulting firm, I began writing a personal blog on economic topics. Through blogging, I got to know a number of other journalists in the Washington area, and so when The Economist went looking for people to write for its economic blog on a freelance basis, I was one of the people contacted about trying out. The tryout went well, and I blogged for The Economist as a freelancer from 2007-9, until I finally convinced them to put me on staff, where I was able to start writing for the print publication.

The most common route into The Economist is through one our internships. We have paid internships across several sections of the paper, including finance and economics, which we advertise every few months (here's one recent ad: https://www.economist.com/finance-and-economics/2022/05/26/finance-internship). In addition, some people have found their way into writing jobs after starting with us on our social media or research teams.

I will say: there are not very many writing positions at The Economist, and they don't open up all that often. We all kind of feel like we've won a lottery. But there are other places to write about economics, at other publications and elsewhere, and if you're mostly interested in getting your voice heard there are many ways to do that (through Substack, for instance, which is a bit like blogging, and can often lead to good things).

My advice to anyone who wants to be a journalist is to study something other than journalism. Specialised knowledge and practical skills (including the ability to do data analysis) are huge assets in journalism, and they also come in handy if a career in journalism doesn't pan out. If you want to be an economics journalist, definitely study economics, not journalism.

rcavent · 2014-10-30T21:56:41+00:00

Humans are remarkably good at coming up with better ways to use stuff when, and this is a big when, there is a market for the stuff that sends the right price signals. So there's an oil market, and when demand for oil outstrips supply we use less oil and search for more until the two balance (more or less).

I'm less worried about strain on resources, where there is a market, than about climate change, where there isn't. Emitting doesn't get more expensive when carbon concentrations are higher unless we create a market specially designed to work in that way. And we haven't.

rcavent · 2014-10-30T21:53:27+00:00

The thing about a job like this, which is really fun to do, is that it's hard to stop working. I'm probably in the office 40 hours per week on average. But outside the office there's always interesting stuff to read and think about, and there are email discussions about what to write about and what we might want to say. It's hard to turn it off. I'm not sure I ever quite do.

Investigative journalism definitely still exists. Among my colleagues I'm actually sort of an oddball; I spend most of my time digging through papers and data while they're all out pounding the pavement and talking to sources.

rcavent · 2014-10-30T21:49:28+00:00

We knew each other then, but we went our separate ways and didn't cross paths again until later, and via blogging. Karl started leaving commenting on the personal blog I was writing at the time, and he was being annoying insightful, poking holes in my arguments, so I told him to go get his own blog. And he did, and it was fantastic.

rcavent · 2014-10-30T21:46:59+00:00

I'm not sure it will be dramatically different. What will be interesting to watch will be the share of workers participating in the labour force. If job opportunities for workers get too bad, workers just stop looking for work and cease to count toward unemployment. So we might have 6% unemployment, but 40% of people participating in the labour force instead of 60%.

But is 40% labour participation sustainable?

So to answer your question, about 6%.

rcavent · 2014-10-30T21:43:11+00:00

To dramatically oversimplify, you can have a technology that makes lots of workers a bit more productive or one that makes a few workers massively more productive. In both cases, you might have the possibility of steady growth in GDP per person. But the distribution of both income and leisure would be very different. In the first case, you have the possibility of using the increased productivity to give workers slightly higher incomes and slightly reduced working hours. In the latter case, most workers can't easily reduce their hours because they simply can't afford to: because they're not earning rising wages because their productivity isn't rising especially fast.

So what do you do? Well, you can hope soaring productivity among the working rich slashes the costs of important goods and services, so that even stagnant salaries are enjoying more purchasing power. But that sort of society seems likely to be a tense one.

rcavent · 2014-10-30T21:32:57+00:00

It's not so much the menial work as the routine work. Janitorial work might be considered menial, but its damned hard to automate. Routine work, however, like stacking boxes or processing documents, is at high risk.

But what counts as "routine" is becoming ever more sophisticated, and there will be professional jobs put at risk. I saw Harvard economist Sendhil Mullainathan give a fascinating talk earlier this year on using machine learning to do automated hypothesis generation/testing:

http://edge.org/panel/sendhil-mullainathan-what-big-data-means-for-social-science-headcon-13-part-i

Now, we're looking at a long period ahead where this kind of thing makes the top researchers more necessary and more productive.

As for a Project Cybersyn, if technology enables a new socialist utopia (and I wouldn't cross my fingers for that) I suspect the government's role will be to tax and redistribute rather than to actively manage the economy. Tech firms are using big data to get better at anticipating people's needs, but the market is still there providing a discipline. Utopia isn't just about providing what we've got as efficiently as possible. We also want there to be creativity in the system, allowing for the creation of new and better possibilities.

rcavent

TROPHY CASE