September 14, 2016
economics
The Economist explains economics: What is the Keynesian multiplier?
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This week “The Economist explains” is given over to economics. For each of six days until Saturday this blog will publish a short explainer on a seminal idea.
WHEN Barack Obama sought to boost America’s ailing economy with a fiscal stimulus package worth more than $800 billion in the wake of the financial crisis of 2008, a fierce debate ensued. Some economists reckoned the spending would do little to help the economy. Others suggested it could add much more than $800 billion to GDP. These arguments centred on the value of the Keynesian multiplier, which determines by how much output changes in response to a change in government borrowing. (With a multiplier of two, for example, GDP rises by $2 when the deficit increases by $1.) The Keynesian multiplier is one of the fundamental—and most controversial—concepts in macroeconomics. Where did it come from and why is there so much disagreement about it?
The multiplier emerged from arguments in the 1920s and 1930s over how governments should respond to economic slumps. John Maynard Keynes, one of history’s most important economists, described the role of the multiplier in detail in his seminal book, “The General Theory of Employment, Interest and Money”. Conventional wisdom had it that government borrowing raises interest rates and uses resources which might otherwise have been spent by private firms or households. Keynes agreed that this could be the case in normal times, but he also argued that when an economy is operating below full employment, how much is spent determines the levels of investment and income rather than what the economy is capable of producing. During such slumps, stimulus provided by the government does not crowd out private activity, because the economy is operating below capacity. Instead, it ripples across the economy, boosting the incomes of those who receive government contracts or benefit payments, who then go on to spend and invest more. Should the government cut back, the ill effects would multiply in the same way.
Keynes’s thinking upended economic policymaking. It did not settle the debate, however. The Keynesian consensus fractured in the 1970s in the face of criticism from new intellectual camps within economics. The “rational expectations” school, led by Robert Lucas, argued that fiscal policy would be undermined by forward-looking taxpayers. They should understand that government borrowing would eventually need to be repaid, and that stimulus today would necessitate higher taxes tomorrow. They should therefore save income earned as a result of stimulus in order to have it on hand for when the bill came due. The multiplier on government spending might in fact be close to zero, as each extra dollar is almost entirely offset by increased private saving. The backlashes led to the emergence of “New Keynesianism”. Its adherents, among whom are many of the leading economic policy-makers of the past few decades, typically hold that monetary policy is a more powerful and efficient macroeconomic tool than fiscal stimulus. When central banks do their job correctly fiscal policy is unnecessary, they argue; monetary corrections should cancel out the effects of fiscal expansion or contraction, squishing the multiplier to near zero.
The financial crisis led to a reawakening of old Keynesian ideas, however. Scores of papers have been published since 2008 attempting to estimate fiscal multipliers. Most suggest that, with interest rates close to zero, fiscal stimulus carries a multiplier of at least one. The IMF, for instance, concluded that the (harmful) multiplier for fiscal contractions was often 1.5 or more. Even as many policymakers remain committed to fiscal consolidation, plenty of economists now argue that insufficient fiscal stimulus has been among the biggest failures of the post-crisis era. Decades after its conception, Keynes’s multiplier is relevant, controversial and ascendent.
Previously in this series
Monday: Akerlof’s market for lemons
Tuesday: The Stolper-Samuelson theorem
Wednesday: The Nash equilibrium
Coming up
Friday: Minsky’s financial cycle
Saturday: The Mundell-Fleming trilemma
Over the past several weeks The Economist has run two-page briefs on six seminal economics ideas. Read the full brief on the Keynesian multiplier, or click here to download a PDF containing all six of the articles.
September 14, 2016
history
Step-By-Step: How Walking Has Changed Over Time
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Walking may seem like a simple everyday act. But the act of walking has evolved over time, and a new book, “Walking Histories, 1800-1914” (Palgrave Macmillan/2016) examines how walking became a recreational activity and how it influenced both protesters and philosophers in the 19th century.
History professors and editors Paul Readman and Chad Bryant talk about the history of walking.
Host Frank Stasio talks with Paul Readman, professor of history at King’s College London, and Chad Bryant, associate professor of history at the University of North Carolina at Chapel Hill, about the politics behind walking.
March 17, 2016
communication messaging
Fleep: Email compatibility - YouTube
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Published on Feb 5, 2016
Fleep is compatible with email - this means you can receive and send emails in Fleep. This video shows how.
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March 16, 2016
communication messaging
Fleep gets an update - Business Insider
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FleepLeft to right: Henn Ruukel, Asko Oja, Liis Peetermann, Erik Laansoo, Marko Kreen, Andres Järviste.Fleep — a messaging platform launched by six Estonians, including four former Skype engineers — is set to launch a new feature as it looks to go viral in the same way as Whatsapp.
Fleep allows people to IM each other, and keep files and pinned notes synced across multiple devices. In order to message someone over Fleep, the user needs to enter the recipient’s email address or Fleep username.
Ultimately, Fleep wants to change the way businesses and individuals communicate. “Leave email behind and manage all conversations with your team, partners and clients in Fleep,” the company writes on its website.
Fleep CEO Henn Ruukel, who used to be director of engineering within the Skype for Business group, told Business Insider today about the changes he is making to help Fleep go viral.
With just 35,000 users across Europe and the US, Fleep has a long way to go if it wants to scale to the same size as platforms like Whatsapp and Skype.
Firstly, the company, which employs 15 people in total, has overhauled its app within the last few weeks with a completely new user interface (Fleep 2.0) that Ruukel hopes will make people want to share it with their friends.
But that’s not all. Ruukel realises that Fleep needs to further expand its product and offer deeper integration with other messaging services if he wants to get more users.
Fleep
Currently users can only send and receive email to their Fleep ID’s (e.g. sam@fleep.io) but that’s about to change.
“In early 2016, Fleep will launch an email integration feature, which will enable users to send and receive email messages in Fleep while maintaining their existing email addresses,” said Ruukel, adding that he’s optimistic the new feature will help Fleep to ramp up its user numbers.
Fleep also hopes to scale up its business by raising another round of funding over the next 6 months. So far the company has raised €1.9 million (£1.34 million), including an undisclosed amount from Skype cofounder Jaan Tallinn.
“I really don’t like email as a communication method and there’s a good reason for this,” Tallinn told Techworld in April. “It was invented in the 70s and it was intended for much lower volumes.”
He continued: “Fleep is kind of like Skype IM on steroids because it was developed by people who were behind Skype IM in the first place. All the familiar mechanisms have been imported and it works very much like Skype IM, except that it’s much better.
“We absolutely have to get more people using it. I think in terms of features it’s already up there with the big players of the world but in terms of users, no.”
March 16, 2016
communication messaging
Fleep, The Team Messaging App Built And Funded By Ex-Skypers, Flicks Monetization Switch
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Fleep, the team messaging app built and backed by a number of ex-Skype engineers, is flicking the monetisation switch today. A year after launching as a free public beta, the Estonian startup is introducing a freemium revenue model that sees users on its paid tier — €3 per month per user — get access to unlimited message history and files, while free users can only access messages from the last 30 days.
That cut off point, says Fleep co-founder and CEO Henn Ruukel, means Premium customers are still able to communicate with non-core team members or external partners on an ad-hoc and free basis, keeping the service as a viable alternative to email.
“If we would have chosen a paid-only model it would limit usage and people would fall back to email, while always-free model would eventually end in indirect monetization through ads or something ugly,” he tells me in a Fleep chat. “I think we were able to draw the line between Free and Premium so it feels fair and is easy to understand.”
In addition to unlimited message and file history, Fleep will soon add “advanced management features” for subscribers to its paid-for Premium service, including team management and administered chats — giving company admins the ability to add and remove users from Fleep chats. That’s no doubt a much-requested enterprise feature, despite Fleep’s positioning as a team messaging app that retains the ‘openness’ of email and its ad-hoc collaborative nature, coupled with the advantage of being a modern messaging platform, including better search, organisational tools and file management. After all, companies still need to maintain a high level of control over company communication, for competitive, political and compliance purposes.
A quick recap of how Fleep works and what makes it different from other team messaging apps, including upstarts such as Cotap, a messaging startup co-founded by two ex-Yammer executives, IMbox.me, backed by ex-Nokia President and CEO Olli Pekka Kallasvuo, TigerText, along with the likes of Microsoft-owned Yammer, Convo, Slack, and HipChat, all of which broadly play in the same space:
To start a new conversation in Fleep, you click on the ‘create new’ button and enter the names of those who you want to see become part of the conversation. If they aren’t already using the app, you can enter their email address instead where they’ll be able to interface with the conversation via email by hitting reply, although in this instance their contribution also gets pulled into Fleep. In other words, not all participants need to be using the app.
To that end, I asked Ruukel why the decision was made to introduce paid tiers now? “Mainly in order to provide clarity to our users,” he says. “Since March when we launched Fleep apps, many have asked how much Fleep will cost, as this is one of the aspects to consider when selecting tools for the team.”
With today’s newly-introduced freemium model, Fleep is finally providing that clarity.