Kevin Drum offers some commentary on my take on the uncertainties of 2015.  But keep in mind, by focusing on uncertainties the inquiry has an intrinsic pessimistic bias.  Lots of good things will happen in 2015 too, it’s just that they aren’t very uncertain.  Catch-up growth will continue in most nations, even if at slower rates in many cases.  Medical progress will lumber along.  Poverty will diminish.  Poems will be read and utils will sparkle in people’s brains.  A number of good books will be produced and you will be able to read about some of them right here on MR.  Washington, D.C. will continue to become an interesting city.  More and more people will experience the joys of parenthood.  Indeed there is quite a good chance 2015 will be one of the best years the world ever has seen!

But again, the uncertainties of 2015…those are mostly going to be negative.

Morocco fact of the day

by on December 29, 2014 at 8:57 am in Current Affairs, Economics | Permalink

Economists have also estimated that Morocco’s occupation of Western Sahara, unrecognised by the UN, has cost the country up to 10 per cent of GDP annually. Rabat subsidies the impoverished territory’s economy and the occupation also contributes to its outsized defence budget of 5.1 per cent of GDP.

There is more here, on how the Moroccan economy nonetheless may be poised for sustained growth.

Justin Wolfers considers that topic here.  I don’t disagree with his points, but I’ll offer a separate (but somewhat overlapping) set of picks:

1. The major economic and indeed geopolitical question of 2015 will be whether the Russian economy can manage a graceful decline.  I’ll say no, they can’t, but it is hard to see what lies around the corner or even to outline scenarios.

2. U.S. gdp is now growing at a five percent clip.  Will that finally translate into significant real wage growth?  Again, I’ll say no, see this recent piece by Barry Bosworth.  Either way, this question will shape our entire future looking forward.

3. Can India continue and indeed extend its recent momentum?  They are one of the bright spots in the global economy right now, in terms of rates of growth that is.  I say yes they can, they “enjoy” the odd liberty of not having been very successful exporting in the past and thus they have a relatively insulated position where they can rely on internally generated catch-up growth.

4. Will Canada and Australia turn out to have been bubbles of a kind, due to falling resource prices?  Will the global economy enter a new forty year period where Julian Simon is right once again about resource prices?  I say the word “bubble” is misleading here, but they will see a further growth slowdown in 2015 in those two nations.

5. Will anyone still be pretending that Abenomics has a chance of succeeding?  I say no, not really.

6. Will Greece vote itself out of the eurozone?  (Technically speaking, that could start in very late 2014).  I say yes.

7. How slowly/rapidly will the Chinese government allow the growth rate to fall?  How much excess capacity will be wracked up in the meantime? Does there exist a scenario in which the growth rate decline is so slow that the excess capacity can be worked off in a relatively orderly manner?  I say no.

8. Will Brazil and Mexico turn around the fading economic fortunes of Latin America?  I say no, not this coming year at least.  Not next year either.

9. Will the economies of Italy and France continue to fester?  I say sadly so.  The risk is that Germany joins them.

What are the “unknown unknowns”?  (Can that concept still make sense these days, with so much on-line commentary?)  North Korea was always one, but it can’t fit into the total surprise slot any more.  In any case, the Sony hack and its aftermath will continue to be a big story.  What else might count as speculative guesses?  (NB: not all of these are maximum likelihood estimates, rather they are undervalued possibilities.)  U.S. equities could turn out to be a bubble, even with continuing superior American economic performance.  So we may have a 1987-style crash.  The traditional relationships between macro variables such as currencies, interest rates, growth rates, stock prices and the like will not hold up.  No one’s macro theory will look very good (now that’s a daring prediction).  Each year the chance of a nuclear weapon going off is larger than we think.  Maybe not in 2015, but the chance of France having another “constitutional revision”/peaceful revolution is larger than most people realize.  Private space travel will prove ever more dangerousAvian flu will reemerge.  The Supreme Court will rule against the current version of Obamacare subsidies.  Haiti will reenter political chaos.  An American terrorist will operate in the Middle East and pull off one surprise attack, not huge in terms of casualties but it will create a lot of attention.  The new Star Wars movie will be good.

Throughout the debate, no one (not even Marat or Robespierre) took the truly revolutionary position of suggesting venal offices might be illegitimate privileges that could be cancelled without payment.

This book is interesting throughout for its treatment of fiscal and monetary issues during the time of the French Revolution.  It is not geared toward current macroeconomic debates, but arguably that liberates it to be more interesting on the historical side.  The author is Rebecca L. Spang, of The Invention of the Restaurant fame.

Assorted links

by on December 28, 2014 at 12:56 pm in Uncategorized | Permalink

1. How the Chinese mimic foreign brands.

2. Using DNA to catch canine culprits.

3. The David Beckworth criticisms of secular stagnation theories.  Just for review, here is the longest Summers statement of the theory I know of.

4. Are the arts dead in New York City?  I say “no,” but I couldn’t help but notice that those arguing “no” in this piece made the best case for the “yes” point of view.

5. “Fire Sale: How the Asset Buying Binge of the Great Depression Changed America.”

6. Will Magic Leap make a magic leap?

7. Britain to pay off debts from 1720.

Here is the final paragraph from a recent MRI paper by Farrow, Burgess, Wilkinson, and Hunter, “Neural correlates of self-deception and impression-management“:

Taken together, one appealing ‘pop-psychology’  interpretation of these results would be that being excessively honest with ourselves (‘faking bad’ at self-deception) is our least indulged in pursuit while giving out the best possible image of ourselves to other (‘faking good’ at impression-management) is a behaviour with which we are much more familiar and practised.

From the abstract you can read that “Our neuroimaging data suggest that manipulating self-deception and impression-management…engages a common network…”

Robin Hanson has suggested related hypotheses in the past.  Caveat emptor, for the pointer I thank Michelle Dawson.

The impact will vary by state, but a study by the Urban Institute, a nonpartisan research organization, estimates that doctors who have been receiving the enhanced payments will see their fees for primary care cut by 43 percent, on average.

Stephen Zuckerman, a health economist at the Urban Institute and co-author of the report, said Medicaid payments for primary care services could drop by 50 percent or more in California, Florida, New York and Pennsylvania, among other states.

That is from Steven Lee Myers and Jo Becker, there is more here.

Just two months ago, e-commerce company Markhor, which works with local artisans to produce high-quality men’s leather shoes, became Pakistan’s most successful Kickstarter campaign, raising seven times more than its intended goal, catching the attention of Seth Godin and GOOD Magazine.

There is no greater evidence of this positive change than in Pakistan’s burgeoning technology ecosystem. In a new report released by my company, Invest2Innovate – which was commissioned by the World Bank’s Consultative Group to Assist the Poor (CGAP) – we mapped the number of startup competitions, incubators, university programs, coworking spaces and forums, and analyzed the gaps and challenges entrepreneurs continue to face in the country.

Three years ago, the ecosystem was relatively nascent, with just a handful of organizations. Today, the space is unrecognizable and brimming with constant energy and activity.

That is from Kalsoom Lakhani, there is more of interest here.  Here is my earlier post on Pakistan as an underrated economy.

Assorted links

by on December 27, 2014 at 12:35 pm in Uncategorized | Permalink

1. MBA programs go digital.

2. Claims about pain.  Or is it contrast?  Or something else?

3. Will the Thai military bring free wi-fi to the country?

4. Apps to measure (and help control?) epilepsy.

5. Why is everyone so busy?

6. MindGeek, monopsony, copyright, and the economics of adult entertainment.  More interesting than it sounds.

This is from Karen Dawisha’s more-important-than-ever Putin’s Kleptocracy: Who Owns Russia?:

When the economy almost collapsed in 2008, the Russian government bailed out state-supported banks first, to the tune of 5 trillion rubles (approximately $230 billion), in a move which government ministers who sat on boards (such as Finance Minister Kudrin, who sat on the board of VTB Bank) simply helped themselves to their own private stimulus package.  But instead of using the money to stabilize the Russian ruble (which plummeted from 23RR/US$ to 36RR/US$) or the stock market (which lost 80 percent of its value), it only stimulated capital flight.  Kudrin estimated that between October 2008 and January 2009, $200 billion was taken out of the country — i.e., virtually the entire stimulus.

This book contains a remarkable amount of research.  The point I wish to make today is that the Russian economic collapse is just beginning to unfold.

*What makes this book so great*

by on December 27, 2014 at 1:03 am in Books, Education | Permalink

That is the title of the new Jo Walton book, and the subtitle is Re-Reading the Classics of Science Fiction and Fantasy.  It is an extended paean to the pleasures of re-reading, exhibiting a taste which is interesting , useful, and yet uneven (fifteen separate works by Lois McMaster Bujold are covered, each with its own chapter.  I do like her, but…).  Most of the book offers analyses of individual works, here is one broader bit:

In a science fiction novel, the world is a character, and often the most important character.

In a mainstream novel, the world is implicitly our world, and the characters are the world.

In a mainstream novel trying to be SF, this gets peculiar and can make the reading experience uneven.

…The difference between a mainstream novel and a SF one is that different things are just scenery.

She is trying to tell me that I should attempt Samuel R. Delany’s Dhalgren again.  She recommends re-reading Neal Stephenson’s Anathem, but can’t bring herself to say it is good.  Overall buying this book caused me to make four additional Amazon purchases, a good sign that is was worth my while.

Basketball average is over?

by on December 26, 2014 at 11:52 am in Economics, Sports | Permalink

So in May, the team [Milwaukee Bucks] hired Dan Hill, a facial coding expert who reads the faces of college prospects and N.B.A. players to determine if they have the right emotional attributes to help the Bucks.

The approach may sound to some like palm reading, but the Bucks were so impressed with Hill’s work before the 2014 draft that they have retained him to analyze their players and team chemistry throughout the current season.

There is more here.  How well does this model retrodict various successes and failures, relative to underlying levels of talent?  How about if we apply the model to economists?  Potential graduate students?  Mates?  Where else?  File under speculative.

Assorted links

by on December 26, 2014 at 11:24 am in Uncategorized | Permalink

1. Sorting M&Ms with an iPhone.

2. The Japanese cotton-spinning bar.

3. Ten essential Asian films of 2014.

4. Japanese saving rate turns negative.

Feline tax collateral in Russia

by on December 26, 2014 at 3:26 am in Current Affairs, Economics, Law | Permalink

Tax collectors in Russia have stumbled across a new way of getting people to pay their debts – by threatening to take away their cats, it’s been reported.

State collectors in the Siberian city of Novosibirsk recently succeeded in getting a resident to pay 12,000 roubles ($198; £127) he owed in unpaid taxes after threatening to seize his expensive pedigree cat, Interfax news agency reports. When bailiffs arrived at the student’s flat, they initially found nothing of value worth seizing – that is until they spied the British Shorthair cat he was holding and three of its kittens running around the place. “Because the animals are pedigree and expensive, the representative of the law decided to place the cat brood under arrest”, Interfax quotes a statement from the region’s court marshal’s service.

In another case, bailiffs in the Siberian region of Tomsk placed four pedigree Scottish Fold kittens “under arrest” after their owner, a former businesswoman, failed to make payments into a company pension fund, Tass news agency reports. She was eventually allowed to keep the cats after managing to get hold of the money. And it seems it’s not just people’s beloved felines that have fallen prey to the latest scheme. In another Siberian region, Krasnoyarsk, a man who owed 20,000 roubles in unpaid utility bills had his “British Shorthair cat named Yasmin and his fluffy pet rabbit” seized, Interfax reports.

The link is here, via the excellent Mark Thorson.  And by the way, via Abigail Tucker, it was not so long ago that “Russian Bank Will Send a Cat to Your House if You Sign.”  Hmm…

Other essential books of 2014

by on December 26, 2014 at 1:31 am in Books | Permalink

A few weeks ago I listed the best non-fiction books of 2014, here are a few which I either forgot or were late coming to my attention or were published or shipped after the first list.  These are all very, very good:

1. Adam Tooze, The Deluge: The Great War and the Remaking of World Order, 1916-1931.  This one also starts slow but after about 13% becomes fascinating, especially about the internal politics in Germany and Russia, circa 1917-1918.

2. Michael Hofmann, Where Have You Been?: Selected Essays.  Excellent and informationally dense literary essays, I especially like the ones on the German-language poets and writers, such as Benn and Walser and Bernhard and Grass.

3. Henry Marsh, Do No Harm, a neurosurgeon does behavioral economics as applied to his craft.

4. Philippe de Montebello and Martin Gayford, Rendez-Vous, a discursive chat while looking at some classics of art

5. Clive James, Poetry Notebook 2006-2014.  A superb book, one of the very best appreciations of poetry and introductions to poetry of the 20th century.  This book has received raves in the UK, it is not yet out in the U.S.

In fiction, to supplement my earlier list, I recommend:

6. Hassan Blasim, The Corpse Exhibition and Other Stories of Iraq.  Short stories about the conflict in Iraq, by an Iraqi.  I expected to find these widely heralded stories to be disappointing, as the premise is a little too easy for the Western critic to embrace.  But they are excellent and this book is one of the year’s best fiction releases.

7. Andy Weir, The Martian.  Ostensibly science fiction, but more a 21st century Robinson Crusoe story — set on Mars of course — with huge amounts of (ingenious) engineering driving the story.  Lots of fun, many other people have liked it too.

8. Geoffrey Hill, Broken Hierarchies, Poems 1952-2012.

By the way, Uwe Tellkamp’s The Tower [Der Turm] is now out in English.