Tyler Cowen

Daniel Drezner on sanctions against Russia

by Tyler Cowen on March 7, 2014 at 1:24 pm in Current Affairs, History, Law, Political Science, Uncategorized | Permalink

The piece is here, here is one excerpt:

The only case of economic coercion succeeding in a similar case in history was the 1956 Suez crisis. In that case, Britain, France, and Israel withdrew their forces from the Suez Canal following a U.S.-inspired run on the pound sterling. Except that the Suez case is not at all similar to Russia/Crimea. Britain was a treaty ally of the United States; not so much with Vladimir Putin’s Russia. The Suez was far away from British soil; the Crimea is just across the Sea of Azov. And, perhaps most importantly, Britain was in a fragile economic state trying to protect a fixed exchange rate. Russia’s economy has its problems, but a shortage of hard currency reserves ain’t one of them.

So the conditions under which sanctions would force Russia’s hand in Ukraine are far from ideal. The proposed sanctions coalition is equally flawed, however, as my FP colleague Colum Lynch has noted. European Union leaders are not exactly keen on the idea of broad-based economic sanctions, for understandable reasons. Britain needs Russian finance capital; the rest of Europe needs Russian energy. France is traditionally the most hawkish country in Europe, but that country is too busy planning to export warships to Russia to organize European sanctions.

And here is Dan’s conclusion:

Sorry, but the fact remains that sanctions will not force Russia out of the Crimea. This doesn’t mean that they shouldn’t be imposed. Indeed, there are two excellent reasons why the United States should orchestrate and then implement as tough as set of sanctions on Russia as it can muster. First, this problem is going to crop up again…

Second, while sanctions cannot solve this problem on their own, they can be part of the solution. Over the long term, Russia does need to export energy to finance its government and fuel economic growth. Even if planned sanctions won’t bite in the present, the anticipation of tougher economic coercion to come is a powerful lever in international bargaining.

My earlier post on Drezner on sanctions is here.

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Assorted links

by Tyler Cowen on March 7, 2014 at 11:20 am in Uncategorized | Permalink

1. Land mammals by weight. And the NYT runs a good Robert Ashley obituary.

2. The risk-taking channel for monetary policy (pdf).

3. No Coase theorem at Pimco.

4. Some economists on the Ryan poverty report.

5. Hispanic enrollment in college is rising rapidly.

6. New Amir Sufi blog on debt.

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Claims about Bitcoin mystique

by Tyler Cowen on March 7, 2014 at 6:30 am in Current Affairs, Economics | Permalink

Still, Bitcoin watchers said that the creator’s supposed anonymity had played a vital role in the growth of a virtual currency that has become a potent symbol for privacy advocates and critics of government power.

“Having this level of mystery allowed people to project their optimism and their hopes onto the currency,” said Richard Peterson, the chief executive of MarketPsych, a research company that has studied virtual currencies. “If it’s true and people start to believe it, it undermines that mystique.”

There is more here, and Timothy Lee adds relevant remarks. And as you all probably know it remains uncertain whether the Newsweek story is to be trusted.

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How many of the previously uninsured have signed up for Obamacare?

by Tyler Cowen on March 7, 2014 at 4:40 am in Current Affairs, Economics, Law, Medicine, Uncategorized | Permalink

Amy Goldstein reports:

The new health insurance marketplaces appear to be making little headway in signing up Americans who lack insurance, the Affordable Care Act’s central goal, according to a pair of new surveys.

Only one in 10 uninsured people who qualify for private plans through the newmarketplaces enrolled as of last month, one of the surveys shows. The other found that about half of uninsured adults have looked for information on the online exchanges or planned to look.

…The McKinsey survey shows that of people who had signed up for coverage through the marketplaces by last month, about one-fourth described themselves as having been without insurance for most of the past year. That 27 percent, while low, compares with 11 percent a month earlier.

There is more here. You will note that a low rate of sign-up is distinct from a rate of sign-up skewed toward the elderly and the sick. In this sense we still do not know how the new law is doing, though in a broader sense a low rate of sign-up should not be considered good news.

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The History of Ethno-National Referendums 1791-2011

by Tyler Cowen on March 7, 2014 at 2:03 am in Current Affairs, History, Law, Political Science, Uncategorized | Permalink

That is the title of a useful article by Matt Qvortrup (or here, both possibly gated). Here is one excerpt:

To be sure, the British were not adverse to using the referendum as a tactical means of international politics (for example, in the case of the referendum in Moldova in 1857 — where the referendum was a convenient excuse to curb the influence of the Russian Empire after the Crimean War). Here at the request of the British, a poll was held to unify the two territories Moldavia and Walachia (previously an area that had been under Turkish Suzerainty, though often dominated by Russia) under the name Romania. However, it should be noted that the referendum was anything but free and fair; “Intimidations and arrests were not infrequent” and up to “nine-tenth of the population were denied the right to vote,” and that the vote only was held after some “bizarres manoevres diplomatiques.”

Here is an older (free) historical book on the employment of plebiscites to determine sovereignty. Here is the new, well-timed, and not free March 2014 book by Matt Qvortrupp, on same topic. Qvortrup, by the way, helped design the referendum for South Sudan.

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The Economic Origins of the Territorial State

by Tyler Cowen on March 6, 2014 at 1:14 pm in Uncategorized | Permalink

That is a recent paper by Scott Abramson of Princeton (headed to Rochester), here is the abstract:

This paper challenges the long standing belief that changes in patterns of war and war-making caused the emergence of large territorial states. Using new data describing the universe of European states between 1100 and 1790 I find that small political units continued to thrive well into the “age of the territorial state,” an era during which some argue changes in the production of violence led to the dominance of geographically large political units. In contrast, I find evidence that variation in patterns of economic development and urban growth caused fragmented political authority in some places and the construction of geographically large territorial states in others. Exploiting random climatic variation in the propensity of certain pieces of geography to support large populations, I show via an instrumental variables approach that the emergence of towns and cities caused the formation of small and independent states. Last, I explore how changes in economic forces interacted with patterns of war-making, demonstrating that the effect of urban development was greatest in periods associated with declines in the costs of producing large-scale military force.

Here is Abramson’s forthcoming book on that same topic., summarized here:

Under what conditions do some political units expand and others contract? Why do some fail and others persist? In which periods should we expect universal empires and why in others systems of states? My dissertation answers these questions by explaining variation in the number and size of the basic unit of political life, the state. Using a combination of formal, statistical, and historical methods, this book length project explores the origins of the territorial state between 1100 and 1789. I first develop a game theoretic model of state formation that captures both war-making and economic constraints on state-makers. The theory’s implications are then empirically tested through a series of quasi-experimental research designs and historical case studies. While many macro-historical accounts highlight the consequences of changing patterns of war and war-making for processes of state formation, this book argues that these effects have been overstated. Rather, I show that changes in economic geography caused variation in the number and size of states across both time and space.

His introductory chapter you will find here (pdf). For the pointers I thank Mark Koyama.

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Bureaucracies can act swiftly when they wish to

by Tyler Cowen on March 6, 2014 at 10:43 am in Current Affairs, History, Law, Political Science | Permalink

Russia’s takeover of Crimea is already so complete that commercial flights to Kiev from the region’s main airport, located outside Simferopol, the regional capital 50 miles from Sevastopol, now leave from the international terminal instead of the domestic one as they did until last week.

There is more here.

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Assorted links

by Tyler Cowen on March 6, 2014 at 9:15 am in Uncategorized | Permalink

1. Robot journalism.

2. A group blog run by Hutterites.

3. The IBM Watson food truck.

4. The decay rate on the value of stolen credit card information.

5. Brian Eno’s book recommendations. Brief economic profile of Ukraine.

6. Wealthy people are more musical.

7. The evolution of the Democratic Party.

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Profile of Satoshi Nakamoto, creator (?) of Bitcoin

by Tyler Cowen on March 6, 2014 at 7:14 am in Current Affairs, Economics, Uncategorized, Web/Tech | Permalink

Mitchell suspects Nakamoto’s initial interest in creating a digital currency that could be used anywhere in the world may have stemmed from his frustration with bank fees and high exchange rates when he was sending international wires to England to buy model trains. “He would always complain about that,” she says. “I would not say he writes flawless English. He will pick up words and mix the spellings.”

And he worked in secrecy:

Not even his family knew.

The full story is here, fascinating throughout.

Addendum: Andrea Castillo adds comment.

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Strange sentences about Mexico and China (and other places too)

by Tyler Cowen on March 6, 2014 at 4:31 am in Current Affairs, Economics, Law | Permalink

Mexican security officials this week launched a major crackdown on the cartel’s business smuggling iron ore to China, which another senior government figure confirmed had become more profitable for the Knights Templar than drug running.

There is an FT article here. The smuggling accounted for 44 percent of the iron ore produced in Mexico. And why smuggle iron ore? The New York Times adds:

Chinese buyers, law enforcement officials have said, have been pressured into buying ore from the gang under threats.

Furthermore many of the mines were not legally registered or the iron ore was stolen. There is more detail here, and here is another exotic sentence:

In a scene that could have been imagined by Gabriel García Márquez, last Christmas three Sinaloa drug cartel members were arrested in a cock fighting farm close to Manila.

The broader question here is whether “drug gangs” could find new outlets for their shenanigans, if drugs were to be legalized or decriminalized. For more on that you can read this older MR post.

By the way, via Craig Richardson, here are photos of a Chinese ghost town in Angola.:

Kilamba is an enormous and largely empty housing development 30 km (18 miles) from Luanda,the capital city of Angola, designed to accommodate 500,000 people, with a dozen schools and other facilities. As of July 2012 only 212 houses had been sold, due to difficulties in obtaining mortgages. The cost is reported as US$3.5 billion, financed by a Chinese credit line and repaid by the Angolan government with oil. The city of Kilamba is a government project that coincides with President Jose Eduardo dos Santos 2008 election pledge to build one million homes in four years. (He just didn’t promise people would live there.)

And what happened to Hong Kong and Tibet?

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In with the new, out with the old [Il mio papa]

by Tyler Cowen on March 5, 2014 at 3:27 pm in Games, Religion | Permalink

The 68-page Il Mio Papa (My Pope) will hit Italian newsstands on Ash Wednesday, offering a glossy medley of papal pronouncements and photographs, along with peeks into his personal life. Each weekly issue will also include a pullout centerfold of the pope, accompanied by a quote.

“It’s a sort of fanzine, but of course it can’t be like something you’d do for One Direction,” the popular boy band, said the magazine’s editor, Aldo Vitali. “We aim to be more respectful, more noble.”

There is more here. It will sell for fifty cents, but there are intellectual property issues:

“Various magazines publish the pope’s teachings, but they have an accord with us,” said the Rev. Giuseppe Costa, the director of the Libreria Editrice Vaticana. A similar accord has not been signed with My Pope, he added, though the magazine should have known better “because we have a relationship with Mondadori.”

“In the case they publish the pope’s words, I will have to intervene,” Father Costa said.

Meanwhile, on the other side of the ledger:

Former Pope Benedict, in one of the few times he has broken his silence since stepping down nearly a year ago, has branded as “absurd” fresh media speculation that he was forced to quit.

And his world of scarcity continues:

Libero also suggested that Benedict chose to continue to wear white because he still felt like he was a pope.

Benedict, who lives in near-total isolation inside a former convent on the Vatican grounds, was also asked about this and responded:

“I continue to wear a white cassock and kept the name Benedict for purely practical reasons. At the moment of my resignation there were no other cloths available.

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Can too much cultural similarity cause war?

by Tyler Cowen on March 5, 2014 at 1:35 pm in Current Affairs, History, Law, Political Science | Permalink

Akos Lada has a new research paper (pdf) on this question:

Does sharing the same religion, civilization or racial proximity lead to more peaceful relations between countries? This paper argues that cultural similarity can actually cause wars, which occur to combat diffusion. This new theory of war combines the models of Acemoglu and Robinson (2006) and Fearon (1995), and shows that cultural similarity can lead to more warfare when old elites are afraid of losing their position to a newly inspired citizenry, as these elites try to destroy the external source of inspiration. The microfoundation for inspiration is derived from revealed information about the income level under given institutions, which are assumed to have positive correlation with cultural proximity. On the empirical side, I present case studies on the 1848 Revolutions, the 2013 Korean Crisis (using content analysis of official North Korean articles) and on the First World War, as well as statistical analysis on all the wars of the last two centuries.

Here is Lada’s blog post on Ukraine and Russia. Excerpt:

Perhaps because a more democratic Ukrainian government may serve as an example to Russian citizens of how culturally-similar people can be alternatively governed. As history shows, a dictator with an army does not wait for this to happen.

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