Tuesday, March 28, 2017

Trump dumps Obama climate change policies; Tough to stay rich without manufacturing; BlackRock bets on tech, cuts jobs, fees

1 Trump dumps Obama climate change policies (BBC) President Donald Trump has signed an executive order rolling back Obama-era rules aimed at curbing climate change. The president said this would put an end to the "war on coal" and "job-killing regulations".

The Energy Independence Executive Order suspends more than half a dozen measures enacted by his predecessor, and boosts fossil fuels. Business groups have praised the Trump administration's move but environmental campaigners have condemned it.

During the campaign, he vowed to pull the US out of the Paris climate deal agreed in December 2015. President Trump takes a very different approach to the environment from Mr Obama. The former president argued that climate change was "real and cannot be ignored".

The Trump administration says that scrapping the plan will put people to work and reduce America's reliance on imported fuel. It says the president will be "moving forward on energy production in the US. The previous administration devalued workers with their policies. We can protect the environment while providing people with work."


2 Tough to stay rich without manufacturing (Noah Smith in Gulf News) A common assertion is that while manufacturing jobs have declined, output has actually risen. But this piece of conventional wisdom is now outdated. US manufacturing output is almost exactly the same as it was just before the financial crisis of 2008:

But even this may overstate US manufacturing’s performance. An alternative measure, called industrial production, shows an outright decrease from a decade ago. So it isn’t just manufacturing employment and the sector’s share of gross domestic product that are hurting in the US. It’s total output. The US doesn’t really make more stuff than it used to.

In other words, Asia is still solidifying its place as the workshop of the world, while the US de-industrialises. Manufacturing sceptics often draw parallels to what happened to agriculture in the Industrial Revolution. But the two situations aren’t analogous. In the 20th century, US agricultural output soared even as it shed jobs and shrank as a per cent of GDP. Machines replaced most human farmers, but the total value of US crops kept climbing.

So US manufacturing is hurting in ways that US agriculture never did. Many sceptics will question why the sector is important at all. Why should a country specialise in making things, when it can instead specialise in designing, marketing and financing the making of things?

Harvard University’s Kennedy School of Government economist Ricardo Hausmann believes that a country’s economic development depends crucially on where it lies in the so-called product space. If a country makes complex products that are linked to many other industries — such as computers, cars and chemicals — it will be rich. But if it makes simple products that don’t have much of a supply chain — soybeans or oil — it will stay poor.

In the past, the US was very successful at positioning itself at the top of the global value chain. But with manufacturing’s decline, the rise of finance, real estate and other orphaned service industries may not be enough to keep the country rich in the long run.


3 BlackRock bets on robots, cuts jobs, fees (Straits Times) BlackRock Inc has said it would overhaul its actively managed equities business, cutting jobs, dropping fees and relying more on computers to pick stocks in a move that highlights how difficult it has become for humans to beat the market.

The world's biggest money manager has faced active stock fund withdrawals and the revamp is its biggest attempt yet to engineer a turnaround. Last May, BlackRock said it had recruited Mark Wiseman, the head of Canada's biggest public pension fund, to oversee the stockpicking operations after he revamped that fund's operations to embrace data-mining and other technological approaches to investing.

BlackRock is rebranding or adjusting investment strategies on about 11 per cent of its $275 billion active stock fund business, putting a greater emphasis on technology-driven investing approaches in the largest set of sweeping changes for the business since transformational mergers that allowed it to grow to manage more than $5 trillion in assets.

Among the changes, BlackRock is removing some seven traditionalist "Fundamental" portfolio managers from their current assignments, according to a source familiar with the matter. More than 40 employees are being laid off, including some of the portfolio managers, according to another source. The company will also cut fees on some products that are being rebranded as an "Advantage" series of lower-cost active funds.


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