Current Affairs

Germany fact of the day

by on July 27, 2014 at 10:31 pm in Current Affairs, Economics, Law | Permalink

…in Germany, the government is rolling out a red carpet by simplifying immigration procedures, funding free language classes, even opening “welcome centers” for newcomers looking to carve out a piece of the German dream.

In the rankings of the globe’s most prosperous countries, this economic powerhouse of 82 million has now leapfrogged Canada, Britain, Italy and Spain to become the largest destination for immigrants after the United States, according to the Paris-based Organization for Economic Cooperation and Development.

The article is here.

It would be much easier if (some) people would simply say “Of course this normally should be kicked back into the legislature for clarification.  But I don’t want to do that because I don’t regard Republican control of the House, and how that control is used, as a legitimate form of rule.”  One may agree, or not, but the nature of the case is pretty clear.

Instead we read irrelevant blog posts and tweets about how the experts meant to have subsidies at all levels all along.  Of course they did.  But did Congress know what it was doing in a detailed sense, one way or another?  Hard to say, personally I doubt it, and Alex says no.  The basic starter hypothesis here is that many of them knew this was a health care bill, it would extend coverage, it had a mandate, it had some subsidies, it had a Medicaid expansion, it had some complicated cost control, it was approved by leading Democratic Party experts, it met some CBO standards, and beyond that — if you pull out those who were confused on the details of the exchanges and the subsidies do you still have majority support?  I doubt it.  Most absurd of all are the tweets asking the critics to show Congress intended no federal-level subsidies.

So, to return to the title of this post, the import of the Gruber fracas is to show that if he can be confused (more than once, at that, and is “confused” even the right word?) a lot of ACA supporters in Congress probably were confused too.

So given that across-the-board subsidies are not written into the bill formally, and given the importance of precedent, and rule of law, why not kick the matter back into the legislature for redrafting?  Which brings us back to the first paragraph of this blog post…

I have drawn on some Ross Douthat tweets in thinking through this post.

The Ryan plan is here (pdf), an NYT summary is here. Overall it’s pretty good.  It attacks excess incarceration and occupational licensing and regressive regulations, three issues where a serious dialogue is badly needed.  It makes a good attempt to limit the incentives for lower-income people not to work.  It’s better than what the Left is turning out for the first time in…how long?

I’m not crazy about the complicated plan to monitor the lives of the poor in more detail (“…work with families to design a customized life plan to provide a structured roadmap out of poverty.”)  And my biggest conceptual objection is the heavy stress on block grants and letting the states figure things out.  I’m not opposed to that in principle, and I might even favor it, but I think it’s often the lazy man’s way of avoiding talk about difficult trade-offs.  I’d like to see a possible plan for just a single state, or better yet two or three, that is supposed to represent an improvement.  That shouldn’t be too hard to do, or if it is maybe the states can’t do it either.  It’s not as if fifty states are giving us a market-based discovery process, as the rhetoric sometimes implies.  Furthermore we have a bunch of large states with ongoing bad governance, such as CA, NY, and IL, and maybe the federal government really can do better for those places.

Here is Vox on the regulation side of the plan.  Kevin Drum offers comment.  Ross Douthat mostly likes it.  Jared Bernstein doesn’t like it.  Robert Greenstein is critical.  Here is Neil Irwin.  And Annie Lowrey.  And Josh Barro.  And Yuval Levin.  And Ezra Klein.  Other people have opinions about it, too.  Or so I am led to believe.

What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits — but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges.

There is more detail here, from Peter Suderman, along with the video and also the fuller context for those (such as myself) who have not been following this issue very closely.

The manufacturing sector is now operating at 77.8 percent of its capacity, according to Federal Reserve data, well above the 76 percent average during the last expansion and not far from the 79.1 percent peak during the mid-2000s.

That is from Neil Irwin.  As I’ve been saying for over a year, we are no longer at the point where boosting nominal demand will help very much if at all.

From my email:

The Washington Post today launches ‘Storyline’, a new digital initiative led by economics writer Jim Tankersley examining how U.S. public policy is affecting the lives of Americans across the nation. Storyline will feature a mix of narrative writing, data journalism and visual storytelling to explore big questions like: who’s being lifted by the economic recovery, and who’s left waiting for it to kick in? How are Americans adapting to life under Washington’s immigration deadlock?

China’s total debt load has climbed to more than two and a half times the size of its economy, underscoring the difficult challenge facing Beijing as it seeks to spur growth without sowing the seeds of a financial crisis.

The total debt-to-gross domestic product ratio in the world’s second-largest economy reached 251 per cent at the end of June, up from just 147 per cent at the end of 2008, according to a new estimate from Standard Chartered bank.

Such a rapid build-up is far more of a concern than the absolute level of debt, since increases of that magnitude in such a short period have almost always been followed by financial turmoil in other economies.

While calculations of the ratio vary depending on exactly what types of credit are included, several other economists agreed with the new figure. Even those with slightly different calculations said the general trend was clear.

…“China’s current level of debt is already very high by emerging markets standards and the few economies with higher debt ratios are all high-income ones,” said Chen Long, China economist at Gavekal Dragonomics, a research advisory. “In other words China has become indebted before it has become rich.”

The U.S. total debt-to-gdp ratio is now about 260 percent.  From the FT, there is more here.

I also would like to see an estimate of the Chinese wealth-to-income ratio, relative to the U.S. ratio.  I would expect a higher ratio for the United States, which would militate in favor of greater sustainability for American debt, but of course that is why we wish to have the actual numbers.

…on July 13, about four days before the actual incursion began, about 67 percent of Israelis supported a ground operation. By authorizing one, Netanyahu has given the public what it has demanded.

That is from Brent Sasley.

Fred Kaplan wonders whether Israel has lost its ability to think strategically.  Even Max Boot seems to think Hamas will stay in charge of Gaza.

Or is the fear that even intercepted Hamas rockets will in the long run spur too much Israeli emigration?  Are the economics of long-run rocket/shoot-down reciprocity unacceptable to Israel?

A friend of mine suggests that Israel feels the need to send a tough signal to Iran.

Or all of the above?

I am by the way not impressed by various Twitter demands that I should spend more time moralizing about this conflict.  I do think it is deontologically wrong on the part of the Israelis, and I also do not understand their strategy from even a purely nationalistic point of view.  But my voice will have no influence, and I would rather learn something from the comments section about why such strategies are being pursued.  Call me selfish if you wish, I am.

The economy here is just fine by most traditional measures.  And yet:

Virginia has an unemployment rate of 5.1 per cent but average hourly wages in the year to May 2014 declined by 0.1 per cent.

That is from a probably gated piece, by James Politi, surveying the U.S. labor market more broadly.

Many people in Russia are putting their own spin on recent events:

Did you know Malaysia Air Flight 17 was full of corpses when it took off from Amsterdam? Did you know that, for some darkly inexplicable reason, on July 17, MH17 moved off the standard flight path that it had taken every time before, and moved north, toward rebel-held areas outside Donetsk? Or that the dispatchers summoned the plane lower just before the crash? Or that the plane had been recently re-insured? Or that the Ukrainian army has air defense systems in the area? Or that it was the result of the Ukrainian military mistaking MH 17 for Putin’s presidential plane, which looks strangely similar?

Did you know that the crash of MH17 was all part of an American conspiracy to provoke a big war with Russia?

There is more here from Julia Ioffe.

Bolivia fact of the day

by on July 20, 2014 at 7:29 am in Current Affairs, Economics | Permalink

One of the most surprising developments is the way that Bolivia has amassed foreign currency, salting away a rainy-day fund of about $14 billion, equal to more than half of its gross domestic product, or 17 months of imports, that can help it get through economic hard times.

According to the monetary fund, Bolivia has the highest ratio in the world of international reserves to the size of its economy, having recently surpassed China in that regard.

There is more here.  What do you recommend as good to read on the economy of Bolivia?  Please let me know in the comments.  I am going there in late August.

To enlist in the People’s Liberation Army (PLA), potential recruits have to take tests. To make sure their sons and daughters pass, families pay up. At one recruitment office in the eastern Chinese province of Jiangxi, this year’s going rate, depending on your guanxi, or connections, is as much as 99,000 yuan ($16,000), says Wang, a recruitment officer in the province who asked that his full name not be used because he isn’t authorized to speak publicly. Limited openings, plus a high failure rate on the fitness exam, push parents to buy spots for their children during the annual enlistment drive that runs through September. Success offers a stable job and, for some, an escape from rural poverty.

The price varies, Wang says. His old army friends “asked me what the current price tag is, and I said ‘around 80,000 to 90,000 yuan for you guys.’ If your guanxi was really strong, it’d cost you around 50,000 to 60,000 yuan; if it was just so-so, you would have to spend 100,000 yuan at least.”

So how formidable a fighting force are they?  There is more here.

The excellent Brendan J. Nyhan directs my attention to this forthcoming paper by Anna Getmansky and Thomas Zeitzoff (pdf):

How does the threat of becoming a victim of terrorism affect voting behavior? Localities in southern Israel have been exposed to rocket attacks from the Gaza Strip since 2001. Relying on variation across time and space in the range of rockets, we identify the effect of this threat on voting in Israeli elections. We first show that the evolution of the rockets’ range leads to exogenous variation in the threat of terrorism. We then compare voting in national elections within and outside the rockets’ range. Our results suggest that right-wing vote-share is 2 to 6 percentage points higher in localities that are within the range– a substantively significant effect. Unlike previous studies that explore the role of actual exposure to terrorism on political preferences and behavior, we show that the mere threat of an attack affects voting.

Here is a related post from Monkey Cage.

Facts about Latino children

by on July 17, 2014 at 6:12 am in Current Affairs, Law | Permalink

Accepting 60,000 children in a population of 317.2 million — less than two hundred-tenths of 1 percent (.02 percent) of our population — would hardly be straining our resources.

Despite the vast differences in wealth and resources between our country and those of Lebanon, Jordan and even Iran, which currently has one of the world’s largest refugee populations, the end-of-the-world scenarios proffered by some ring of hyperbole.

At a time when we were a more generous, caring nation, we brought 14,000 children into the United States from Cuba under Operation Peter Pan. In 1966, we flew 266,000 Cuban men, women and children into the United States from the Port of Camarioca. At the time, those 266,000 Cubans represented .14 percent of our population, seven times the number of migrants we are talking about today.

That is from Ira Kurzban, via Timothy Ogden.

China sentences to ponder

by on July 16, 2014 at 10:45 am in Current Affairs, Economics | Permalink

With credit at 200% of GDP and average financing costs of roughly 7%, Chinese borrowers now need to generate cash-flow growth of 14% to cover their interest payments without eroding their profitability or being forced to borrow yet more.

From Free Exchange blog, there is more here.