That has been the received wisdom, but it is now challenged by a new paper (pdf) by Christina and David Romer:
This paper revisits the aftermath of financial crises in advanced countries in the decades before the Great Recession. We construct a new series on financial distress in 24 OECD countries for the period 1967-2007. The series is based on narrative assessments of the health of countries’ financial systems that were made in real time; and it classifies financial distress on a relatively fine scale, rather than treating it as a 0-1 variable. We find little support for the conventional wisdom that the output declines following financial crises are uniformly large and long-lasting. Rather, the declines are highly variable, on average only moderate, and often temporary. One important driver of the variation in outcomes across crises appears to be the severity and persistence of the financial distress itself when distress is particularly extreme or continues for an extended period, the aftermath of a crisis is worse.
There is Justin Lahart coverage here, including a contrast with Reinhart and Rogoff.
Here is Jody Lanard and Peter M. Sandman on the risks of an Ebola pandemic in the developing world:
The two of us are far less worried about sparks landing in Chicago or London than in Mumbai or Karachi.
Do read the whole thing, via Andrea Castillo.
That is the new Foreign Affairs piece by Andrei Shleifer and Daniel Treisman, and they argue that matters have gone strikingly well and are relatively normal. Here is one excerpt:
Newspapers overflowed with accounts of soaring mortality amid the stress of transition. On average, however, life expectancy rose from 69 years in 1990 to 73 years in 2012. The speed of improvement was two thirds faster than in the communist 1980s. Russia’s life expectancy today, at 70.5, is higher than it has ever been. Infant mortality, already low, fell faster in percentage terms than in any other world region.
Eastern Europe is infamous for unhealthy binge drinking. However, average alcohol consumption fell between 1990 and 2010 from 7.9 to 7.6 liters of pure alcohol a year per resident aged over 14. There were exceptions — drinking rose in Russia and the Baltic states but even in Russia recorded consumption in 2010, 11.1 liters, was lower than that in Germany, France, Ireland, or Austria. (Of course, more drinking might escape the statisticians in the Slavic region.) Smoking among adult males was high – 42 percent on average but about the same as in Asia. In short almost all statistics suggest a dramatic improvement in the quality of life.
In short, almost all statistics suggest a dramatic improvement in the quality of life since 1989 for citizens of the average postcommunist country — an improvement that rivals and often exceeds those in other parts of the world.
You will note that the published version in Foreign Affairs has slightly different wording and organization.
The theme of a study by Melanie Manion is that China’s approach to fighting corruption hearkens back to Maoist campaigns of the 1950s, with the same undesirable effects: campaigns are too frequent, do not last long enough to enlist public confidence, and undermine the growth of long-term institutions of surveillance and enforcement…
That is from Alan Heston and Terry Sicular in this very useful 2008 book. The Melanie Manion book is here.
Sicily, for instance, employs 28,000 forestry police — more than Canada — and has 950 ambulance drivers who have no ambulances to drive.
More here on the general state of decline in Italy.
It is from Japan:
The Yokohama District Court sentenced a former Japanese college employee on Monday to two years in prison for producing guns with a three-dimensional printer.
Yoshitomo Imura, 28, a former employee of the Shonan Institute of Technology, was found guilty of violating laws that strictly restrict the possession of guns and large knives and the production of weapons. The prosecution had demanded a 42-month prison term.
Imura’s actions were “vicious” because he made it easy to imitate his production method, presiding Judge Koji Inaba said, noting that Imura had released 3-D design data for his guns on the Internet.
The story is here, the pointer is from the excellent Mark Thorson.
This year China is set to pay an interest bill of about $1.7tn, an amount not far short of India’s entire GDP last year ($1.87tn) but larger than the economies of South Korea, Mexico and Indonesia.
That is from James Kynge at the FT, there is more here.
In the United States we are using advanced technology like fingerprint scans to pay for goods. In Venezuela they are using advanced technology like fingerprint scans to ration goods. Here is the WSJ:
Amid worsening shortages, Venezuela recently reached a milestone of dubious distinction: It has joined the ranks of North Korea and Cuba in rationing food for its citizens.
…Under the system in place here, basic price-controlled items—including milk, rice, coffee, toothpaste, chicken and detergent—are rationed, with the fingerprinting machine used to ensure that a shopper doesn’t return over and over to stock up.
The stark contrast between our advanced technology and our primitive ethics has often been noted. Our advanced technology also stands in stark contrast to our primitive economics. Sadly, the problem is not only in Venezuela. Here is the WSJ (!) “explaining” the shortages:
Venezuela is turning to rationing because of shortages caused by what economists call a toxic mix of unproductive local industry—hamstrung by nationalizations and government intervention—and a complex currency regime that is unable to provide the dollars importers need to pay for basics.
No, no, no, a thousand times no! (And I very much doubt that is what the economists told the reporter.) Nationalizations, the currency regime, unproductive industry, Venezuela has many problems but shortages are caused by price controls.
Check out this wonderful photograph and the face of the customer.
A party can deviate only so far from its core voters:
Cutting federal health and retirement spending has long been at the top of the GOP agenda. But with Republicans in striking distance of winning the Senate, they are suddenly blasting the idea of trimming Social Security benefits.
The latest attack came in Georgia, where the National Republican Campaign Committee posted an ad last week accusing Rep. John Barrow (D) of “leaving Georgia seniors behind” by supporting “a plan that would raise the retirement age to 69 while cutting Social Security benefits.”
Crossroads GPS, the conservative nonprofit group founded by GOP strategist Karl Rove, has run similar ads against North Carolina Sen. Kay Hagan (D), Arkansas Sen. Mark Pryor (D) and Rep. Scott Peters (D-Calif.). Crossroads accused Hagan of supporting a “controversial plan” that “raises the retirement age.”
There is more here, from Lori Montgomery.
In 2002 Chinese investors spent just $2.7bn on acquisitions and greenfield projects abroad but by 2013 the total had increased 40-fold to $108bn.
From Jamil Anderlini at the FT, there is more here.
Venezuela loses $728MM for each 1$ the oil price drops. Assuming oil @ $104 in 2014 and $96 in 2015 Vzla’s $ deficit in 2015 will be $27.8bn
That is from Moisés Naim on Twitter. Here is more on the same topic.
Underpaid or overpaid?:
They’re looking for the few, the proud — and the really desperate.
For a measly $19 an hour, a government contractor is offering applicants the opportunity to get up close and personal with potential Ebola patients at JFK Airport — including taking their temperatures.
Angel Staffing Inc. is hiring brave souls with basic EMT or paramedic training to assist Customs and Border Protection officers and the Centers for Disease Control and Prevention in identifying possible victims at Terminal 4, where amped-up Ebola screening started on Saturday.
EMTs will earn just $19 an hour, while paramedics will pocket $29. Everyone must be registered with the National Registry of Emergency Medical Technicians.
The medical staffing agency is also selecting screeners to work at Washington Dulles, Newark Liberty, Chicago O’Hare and Hartsfield-Jackson Atlanta international airports.
There is more here, via Matthew E. Kahn. How much does the regular (non-Ebola) staff earn?
Geoff Olynyk writes:
So for once I can intelligently comment on a Marginal Revolution article. (I have a Ph.D. in applied plasma physics and fusion energy; I worked on the “conventional” fusion reactor design, the tokamak). Lockheed hasn’t released many details of their concept (at least, not enough details that it can actually be evaluated in technical detail), but it looks like it’s a combination of a magnetic mirror and a levitated dipole. The magnetic mirror was studied in detail in the 1960s and 1970s and didn’t work out (due to [detailed plasma physics reasons]) and the levitated dipole has a fundamental flaw as a power-producing reactor in that the superconducting magnets are inside the neutron shielding – neutrons destroy the magnets.
It’s tough as a scientist to be able to comment on things like this, because it’s “science by press release”, i.e. there’s a big media hype but the actual researchers don’t release enough technical details to actually evaluate it. One wants to remain cautiously optimistic, but with fusion in particular, we’ve been down this road many, many times. Thus I predict that the most likely outcome is that as they scale their device up, they’ll find that the confinement (a measure of how well the device holds a fusion plasma) unexpectedly drops off due to some different types of turbulence turning on at higher temperatures / higher pressures… and it will quietly go away.
I hope that I am proven wrong.
There are other interesting comments at the link and Kottke offers more.