Current Affairs

It seems to be economic policy orientation toward Europe or Russia, and not either language or ethnicity.  Here is a new paper by Timothy Frye:

Language, ethnicity, and policy orientation toward Europe are key cleavages in Ukrainian politics, but there is much debate about their relative importance. To isolate the impact of candidate ethnicity, candidate native language, and candidate policy orientation on a hypothetical vote choice, I conducted a survey experiment of 1000 residents of Ukraine in June 2014 that manipulated three features of a fictional candidate running for parliament: 1) ethnicity as revealed by either a Russian or Ukrainian name 2) native language of Russian or Ukrainian and 3) support for closer economic ties with Russia or with Europe. The results reveal little difference in the average response to these 8 fictitious candidates despite the candidate’s different ethnicities, native language, and economic policy orientations. This seeming homogeneity masks vast differences in the responses of self-reported native speakers of Russian and Ukrainian. Analyzing the responses among Ukrainian and among Russian speakers yields considerable differences in the responses to the different candidates. Perhaps most striking is that among both native speakers of Russian and native speakers of Ukrainian a candidate’s economic policy orientation toward Europe or Russia appears to be a more important determinant of vote choice than a candidate’s language or ethnicity. That policy retains its importance for voters despite the intense politicization of both ethnicity and language and ongoing violence in eastern Ukraine suggests that vote choice in Ukraine has not been reduced to an ethnic or linguistic census.

Hat tip goes to www.bookforum.com.

Japan fact of the day

by on August 28, 2014 at 1:37 pm in Current Affairs, Economics | Permalink

Exports are 16 per cent below the peak reached in 2008 in real terms, according to data from CLSA.

From Henny Sender at The FT, there is more here.

Mr Gan estimates that China’s existing housing stock is already more than sufficient for every household to own their home but developers are still supplying well over 15m new units a year.

There is more here from Jamil Anderlini in the FT, more than just the usual.

U.S.-based economist Arvind Subramanian is poised to be named as chief economic adviser to Prime Minister Narendra Modi’s government, two sources at the finance ministry said on Friday.

There is more here, via David Wessel.  Here are previous MR posts on Subramanian.

How does a stop for jaywalking turn into a homicide and how does that turn into an American town essentially coming under military control with snipers, tear gas, and a no-fly zone? We don’t yet know exactly what happened between the two individuals on the day in question but events like this don’t happen without a deeper context. Part of the context is the return of debtor’s prisons that I wrote about in 2012:

Debtor’s prisons are supposed to be illegal in the United States but today poor people who fail to pay even small criminal justice fees are routinely being imprisoned. The problem has gotten worse recently because strapped states have dramatically increased the number of criminal justice fees….Failure to pay criminal justice fees can result in revocation of an individual’s drivers license, arrest and imprisonment. Individuals with revoked licenses who drive (say to work to earn money to pay their fees) and are apprehended can be further fined and imprisoned. Unpaid criminal justice debt also results in damaged credit reports and reduced housing and employment prospects. Furthermore, failure to pay fees can mean a violation of probation and parole terms which makes an individual ineligible for Federal programs such as food stamps, Temporary Assistance to Needy Family funds and Social Security Income for the elderly and disabled.

Ferguson1new report from Arch City Defenders, a non-profit legal defense organization, shows that the Ferguson municipal courts are a stunning example of these problems:

Ferguson is a city located in northern St. Louis County with 21,203 residents living in 8,192 households. The majority (67%) of
residents are African-American…22% of residents live below the poverty level.

…Despite Ferguson’s relative poverty, fines and court fees comprise the second largest source of revenue for the city, a total of $2,635,400. In 2013, the Ferguson Municipal Court disposed of 24,532 warrants and 12,018 cases, or about 3 warrants and 1.5 cases per household.

You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant “low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay.”

If you have money, for example, you can easily get a speeding ticket converted to a non-moving violation. But if you don’t have money it’s often the start of a downward spiral that is hard to pull out of:

For a simple speeding ticket, an attorney is paid $50-$100,
the municipality is paid $150-$200 in fines and court costs, and the
defendant avoids points on his or her license as well as a possible
increase in insurance costs. For simple cases, neither the attorney nor
the defendant must appear in court.

However, if you do not have the ability to hire an attorney or pay
fines, you do not get the benefit of the amendment, you are assessed
points, your license risks suspension and you still owe the municipality
money you cannot afford….If you cannot pay the amount in full, you must appear in court on that night to explain why. If you miss court, a warrant will likely be
issued for your arrest.

People who are arrested on a warrant for failure to appear in court
to pay the fines frequently sit in jail for an extended period. None of the
municipalities has court on a daily basis and some courts meet only
once per month. If you are arrested on a warrant in one of these
jurisdictions and are unable to pay the bond, you may spend as much as
three weeks in jail waiting to see a judge.

Of course, if you are arrested and jailed you will probably lose your job and perhaps also your apartment–all because of a speeding ticket.

As a final outrage, consider this story which ties together Ferguson, the courts, and the arrest of parents, often minority parents, for leaving their kids to play in parks (just as my parents did).

According to local judge Frank Vatterott, 37% of the courts responding to his survey unconstitutionally closed the courts to non-defendants. Defendants are then faced with
the choice of leaving their kids on the parking lot or going into court. As Antonio Morgan described after being denied entry to the court with his children, the decision to leave his kids with a friend resulted in a charge of child endangerment.

Here is an update from Leonid Bershidsky:

Among the 28 EU members, public spending reached 49 percent of gross domestic product in 2013, 3.5 percentage points more than in 2007.

There is more detail at the link, via Garett Jones, Humanist by way of Walt Whitman, Civilizationist by way of Jane Jacobs.

He brings new life to a much-covered topic, here is one good bit of many:

Inserts are one of the last sources of advertising to resist digitization. They are also the next to go. Businesses like Cellfire and Find & Save are working on digital coupons; stores like Kroger’s and Safeway already offer online coupons direct to customers. This digitization is progressing as print circulation decays. Back in Roanoke, the Times was on the market for 5 years before it was bought; in that time the paper lost a quarter of its Sunday readers — 106,000 to 85,000 — and a third of its weekday readers — 96,000 to 65,000. This story too is being repeated all over the country. The print audience continues to defect to mobile, abandon the local paper, or die.

As digital alternatives become attractive while print circulation withers, business will start to shift their money away from inserts. When the inserts go, Sundays won’t prop up the rest of the week. When Sundays turn bad, the presses will become unprofitable.

The full piece is here, and for the pointer I thank Hugo Lindgren.

Here is one bit:

 The combination of low inflation and low growth means that it is the evolution of nominal GDP that really matters now. Nominal GDP is non inflation corrected GDP (or GDP at current rather than constant prices). If inflation remains low or even becomes negative, then nominal GDP will hardly increase and may even continue to contract (as has happened in Japan). The result is bound to be that the gross government debt to GDP ratio rises above the 135.6% it hit in March.

One of the arguments frequently advanced about how this dynamic could be turned around would be for Italy to run a “large” primary budget surplus. Now the emphasis here is on large since the country has in fact run a primary surplus (income – expenditure before paying debt interest) since the early 1990s, but that hasn’t stopped the weight of the debt climbing and climbing.

The full post is here, scary throughout.

Leonid Bershidsky writes:

For more than four years, consumer prices in Switzerland have risen at an annual pace well below 1 percent. In 2012 and 2013, the country even experienced deflation. Yet its economy has grown at a steady pace, and is expected to expand by 2 percent this year. The unemployment rate is a low 3.2 percent.

He makes some good points, but I think he is too complacent about the costs of deflation for less flexible economies.

Josh Barro reports on Rhode Island, arguably the least polarized state in the Union:

Wonder what Washington might look like if it were less polarized? Just look to Rhode Island. The political scientists Boris Shor and Nolan McCarty analyzed state legislative voting records from 1996 to 2013 and found Rhode Island had the least ideological difference between the typical Republican and Democratic lawmakers.

It’s common for Republican officials in heavily Democratic Northeastern states to be moderates. What makes Rhode Island stand out is the number of conservatives within its Democratic legislative supermajority. The median Democrat in Rhode Island was more conservative than in all but 13 state legislatures, scoring directly between Georgia and Indiana and far to the right of those in Connecticut or Massachusetts.

This kind of ideological scrambling — one might say incoherence — has made it possible for Republicans and Democrats to find common ground and work together. But does it actually lead to desirable public policy? Nobody I spoke with in Rhode Island seemed inclined to hold up their state as a model of consultative governance for the rest of the country.

“We are unique state with a unique governing culture – and I would submit, a uniquely bad governing culture,” says Senator Hodgson. Of course, it’s not unusual for a member of a permanent minority party to criticize his state’s governance. But Rhode Island is a notably poor fiscal and economic performer, and observers across the political spectrum tend to talk about Rhode Island as a state that has fallen behind its richer neighbors.

The full story is here.

David H. writes:

Yes, this Forbes list is a miserable failure, but it got me thinking about how to quantify coolness. Good restaurants are valuable, but to be cool, restaurants also need to be affordable and a little off-putting. If I were doing this, I would generate a list of touring bands that rank highly in RYM, knock out the superstars, and then see what US cities they played in the last 4 years. Each band-visit would count as a portion of coolness for that city, and a partial portion for the immediate vicinity. Also, RYM records which cities the bands came from. That should count for a lot. Then I would look for cities with an outsized and lively gay scene. I’m not sure how the causation works – whether a gay scene adds substantial coolness or whether it follows coolness – but the correlation seems pretty clear to me.

Coolness is unstable partly because it’s much more difficult to achieve in expensive cities. San Francisco and Berkeley are sinking in coolness partly for this reason. A truly cool city needs a critical mass of underemployed creative types who will devote a great deal of time to “the scene”, and this is hard to do when you’re paying $6+ for each of your beers. So, the lower the urban rents and general cost of living, the cooler the city, other things being equal.

OK, Forbes was right that proportion of young people living in the city is important. I also think that trends are important, like: Which cities are gaining young people, and which are losing them?

What else?

The link to RYM was added by me.  I would think that a truly cool place cannot be rated as cool by too many other sources.  How about that retirement community in Florida, an incorporated city, ruled largely by contract, where only the elderly live and the visits of grown children are regulated and rationed?  How about the city in America which has the highest birth rate?  Isn’t that kind of cool?  Seriously.  That would put Memphis, Ogden, and Provo in the lead.  What’s so cool about tracking RYM?

It turns out we are getting our own branch of Momofuku.  And Forbes recently decided DC is the coolest city in the United States.  As an act of apparent satire, they followed up by naming Bethesda #19.  I say Bethesda is about the least cool town around, Annandale should have done better.

What do I think?  Well, Washington would be cooler if it were breeding its own Momofuku equivalents; northern Virginia did produce or at least refine or perhaps drive crazy the unreliable Peter Chang.  David Chang, the Momofuku guy, did grow up in northern Virginia and ate in the “American-Chinese” restaurants of Vienna, VA, before striking out on his own in New York City, rated by Forbes as the eleventh coolest city in America (doesn’t NYC have to be either #1 or “totally not cool at all”?  Can you really sandwich it between #10 Dallas and #12 Oakland?).

You know, I very much enjoy and admire quite a few Forbes writers, most of all Modeled Behavior.  So I don’t mean for what follows to cast any aspersions on Forbes, but…you know…Forbes itself isn’t actually all that cool, not in the world of media at least.

Can we agree that…Washington really does deserve to be Forbes’s idea of the coolest city in America?

(I thank J.O. for a useful conversation related to this blog post.)

Assaf Zimring writes to me:

Since we tend to associate high unemployment with any economic calamity, people don’t seem to think a lot about why we see very high unemployment in Gaza. But I am puzzled by it. How come an economy with such tremendous shortages fails to employ 40% of its workers in an attempt to meet these shortages?

Has the (by now, fairly loose) blockade pushed the MPL to zero for 40% of workers? Is it uncertainty that stops investment? Did large aid payments (in some years – 50% of GDP) cause some kind of a Dutch disease of an epic scale (though I am not sure that would lead to unemployment)? I wonder if you have any thoughts about that.

At the first link you will find some interesting papers by Assaf on the Gaza blockade and other Gaza shocks.  One option of course is simply that hardly anyone is really employed, although there is massive underemployment in grey and black market economies, including for the digging of tunnels and subsistence agriculture.

“There are two things which a democratic people will always find very difficult – to begin a war and to end it.”

– Alexis de Tocqueville

If a captive soldier is known to be in a certain vehicle, Mr. Amidror said, it is permissible to fire a tank shell toward the engine of the car. “You for sure risk the life of the soldier, but you don’t intend to kill him,” he said.

Asked whether it was morally acceptable to risk a soldier’s life in this way, Mr. Amidror said: “You know, war is very controversial. Soldiers have to know there are many risks in the battlefield, and this is one of them.”

That is for Israeli soldiers and it is called the Hannibal Procedure more generally.  The subtext is that an Israeli soldier captured by the enemy can end up being traded for a thousand or more imprisoned Palestinians.  The persistence of the kidnapped state for the soldier may create an intolerable situation for the Israeli public, more than would seem to be the case for a deceased soldier, and arguably it damages morale for future soldiers to a greater extent.

Not everyone likes the Hannibal Procedure:

“The procedure is morally flawed,” said Emanuel Gross of Haifa University, an expert in military law and a former military judge. “We have no right to risk the life of a soldier only to avoid the payment for his return from captivity.”

Instead, Mr. Gross said, Israel ought to stand more firmly against the inflated demands of the captors.

I wonder how the opinion of the median soldier or soldier-to-be on this policy compares to the opinion of the median Israeli citizen.  Our philosopher readers will also note the connection of this debate to the longstanding conundrums over whether a person ceasing to exist can be said to harm that person, a topic discussed by Derek Parfit among others.

The full story is here, interesting throughout.