Current Affairs

That is the new and excellent book by Sebastian Strangio, which you can think of as a post-Sihanouk look at the country from a political economy point of view.  Here are just a few bits:

The cruelty and callousness that allowed jilted wives to order and commit such brutal attacks on young women also had its echo in history.  As the historian Michael Vickery has written, patterns of sudden and extreme violence had deep roots in Cambodia, especially against those groups and individuals defined in some way as enemies.  Through cruel violence found its fullest expressions under Pol Pot, it long predated Democratic Kampuchea, stemming from cultural notions of face, honor, and revenge, in which personal grudges (kum) could elicit a disproportionate and overwhelming response.

And:

Hun Sen’s rise over the past two decades has been accompanied by the rise of what might be called HunSenomics — a blend of old-style patronage, elite charity, and predatory market economics.  Since the transition to the free market in 1989, Hunsenomics has succeeded in forging a stable pact among Cambodia’s ruling elites, but has otherwise done little to systematically tackle the challenges of poverty and development.

And:

Because Hunsenomics provides few incentives for sustainable agricultural development, Cambodia’s land and water resources remain drastically underutilized.  Just a third of Cambodia’s total land area is currently under cultivation — a much lower proportion than in neighboring countries.  Only 18 percent of this  land was irrigated as of 2005, compared to 33 percent in Thailand and 44 percent in Vietnam, and due to lack of maintenance only a fifth of irrigation systems were fully functional.  As a result, rice yields per hectare lag far behind the likes of Vietnam and Thailand.

Definitely recommended, and as Dan Klein and I used to say to each other “You so much learn the whole book.”

A very good sentence

by on July 29, 2015 at 1:01 pm in Current Affairs, Law, Philosophy | Permalink

We care about African animals and British people, but ignore African people and British animals.

That is from Andrew Pearson, via Ben Southwood.  And here is an interesting WaPo Lindsey Bever article about the economics of hunting big game.

Killing lions right outside of park boundaries seems like a systemic problem, not just a one-off instance:

Between 1999 and 2004 we undertook an ecological study of African lions (Panthera leo) in Hwange National Park, western Zimbabwe to measure the impact of sport-hunting beyond the park on the lion population within the park, using radio-telemetry and direct observation. 34 of 62 tagged lions died during the study (of which 24 were shot by sport hunters: 13 adult males, 5 adult females, 6 sub-adult males). Sport hunters in the safari areas surrounding the park killed 72% of tagged adult males from the study area. Over 30% of all males shot were sub-adult (<4 years). Hunting off-take of male lions doubled during 2001-2003 compared to levels in the three preceding years, which caused a decline in numbers of adult males in the population (from an adult sex ratio of 1:3 to 1:6 in favour of adult females). Home ranges made vacant by removal of adult males were filled by immigration of males from the park core. Infanticide was observed when new males entered prides. The proportion of male cubs increased between 1999 and 2004, which may have occurred to compensate for high adult male mortality.

The 2007 paper is here (pdf), by Loveridge, Searle, Murindagamo, and MacDonald, via Hollis Robbins.

The latest World Trade Monitor showed the volume of world trade falling in May by 1.2 per cent. It slid in four out of five months in 2015 and risen just 1.5 per cent in the past 12 months — less than the growth in global output and far below the long-term average of about 7 per cent a year.

The problem has been getting worse for some time. Trade bounced back fairly well in 2010 after the global recession but it has disappointed ever since, growing by barely 3 per cent in 2012 and 2013. Now it seems the world cannot manage even that.

That is from Stephanie Flanders.

Annual real growth in gross capital formation hit 6.6 per cent in 2014, down from 10.2 per cent in 2013 and a peak of 25 per cent in 2009.

Thomas Gatley, China corporate analyst at Gavekal Dragonomics, a research firm, estimates that so far this year GFCF may be running at around 4 to 5 per cent.

That is from James Kynge at the FT.  Here is from Ambrose Evans-Pritchard:

David Cui, from Bank of America, said $1.2 trillion of stock holdings are being carried on margin debt. This is 34pc of the free float of the Shanghai and Shenzhen stock markets. “When the market ultimately settles at a level that can be sustained on fundamental reasons, we expect that the financial system may wobble, due to high contagion risk,” he said.

Mr Cui said the brokers and trusts have barely 1.6 trillion yuan ($260bn) to absorb losses and may be overrun. “Given the particularly thin front line of the financial institutions, we suspect that it’s a matter of time before banks may have to face the music,” he said.

This in turn risks setting off a “bank run” on the shadow banking system as investors lose trust in wealth management funds, fearing that their deposits in the $2.1 trillion industry no longer have an implicit guarantee.

As Arnold Kling would say, have a nice day…

It depends on the Communist Party.

Of course you are free to leave alternative nominations in the comments.

Around 97% of existing yuan-denominated bonds hold ratings of double-A to triple-A—the best a company can get.

That is from Fiona Law, cited by Christopher Balding, and ultimately Alex Frangos, those are ratings from Chinese sources.  Law reports:

With nine Chinese ratings firms to choose among, “bond issuers are encouraged to pick the highest ratings among agencies,” said Guan Jianzhong, chairman of Dagong Global, the country’s third-biggest ratings company in terms of market share. The fact that the bonds are rated double-A-minus or above, they “are not without risks,” he said.

By the way, the Shanghai Composite Index closes down 8.5%.

Arresting the central bank’s governor. Emptying its vaults. Appealing to Moscow for help.

These were the elements of a covert plan to return Greece to the drachma hatched by members of the Left Platform faction of Greece’s governing Syriza party.

That is from the FT, and there is more:

The plan demonstrates the apparently ruthless determination of Syriza’s far leftists to pursue their political aims — but also their lack of awareness of the workings of the eurozone financial system.

For one thing, the vaults at the Nomismatokopeion currently hold only about €10bn of cash — enough to keep the country afloat for only a few weeks but not the estimated six to eight months required to prepare, test and launch a new currency.

The Syriza government would have quickly found the country’s stash of banknotes unusable. Nor would they be able to print more €10 and €20 banknotes: From the moment the government took over the mint, the European Central Bank would declare Greek euros as counterfeit, “putting anyone who tried to buy something with them at risk of being arrested for forgery,” said a senior central bank official.

“The consequences would be disastrous. Greece would be isolated from the international financial system with its banks unable to function and its euros worthless,” the official added.

For all the flaws of the euro, the case for it has never been made more effectively.

Washington fact of the day

by on July 24, 2015 at 12:59 am in Current Affairs, Economics | Permalink

University of California President Janet Napolitano announced Wednesday the school will become the first to raise the on-campus minimum wage to $15 an hour.

“This is the right thing to do,” Napolitano said at a meeting in San Francisco. “For our workers and their families, for our mission and values, and to enhance UC’s leadership role by becoming the first public university in the United States to voluntarily establish a minimum wage of 15 dollars.”

The raise will benefit college employees who work more than 20 hours a week. It will also be applied to thousands of contractors working with the school.

There is more here, via NinjaEconomics.

Arrived in my pile

by on July 23, 2015 at 2:54 pm in Books, Current Affairs | Permalink

John Kay, Other People’s Money: The Real Business of Finance.  This seems to be a book on what is wrong with finance and how to fix it.

The word is now in, Nikkei is the buyer, but Pearson is keeping The Economist.

I find the Financial Times works well as a purely digital product, and of the major newspapers it is the one I can most easily imagine reading digital only.  From a newspaper I care not only about the amount of absolute content, but also the sense that I haven’t “missed anything.”  Often I find this feeling of completeness hard to get from digital editions, even when they are fairly well done.  There is too much content, with too many overlapping categories, to organize everything neatly.  There is a new set of stories up before I am sure I really have culled through the old.  The FT runs fewer stories, has fewer sections and content areas, and the wonderful Saturday edition has a relatively transparent structure which I can navigate on-line.

Would it be so terrible for other newspapers to concentrate their arts and leisure coverage, or their book reviews, on one or two days of the week?  Digitalization might eventually bring that about, for greater ease of navigation.  In the digital world, “less content” seems less miserly, because a universe of alternative content is at your fingertips in any case.

One equilibrium is that more newspapers copy the FT in their greater focus.  Another equilibrium is that only the FT goes digital only.  A third option is that the home page dies altogether, even for major newspapers, and this difference between the FT and other papers ceases to matter altogether.

Here is a good Nieman article on the economics of the FT.

Addendum: Here is Peter Thai Larsen: “In 1987 Pearson sold the FT’s building to a Japanese buyer and kept the paper. Now it’s selling the paper and keeping the building. Discuss.”

Recent overweighting to stem A-share plunge has made China Securities Finance Corp (CSF), central bank-backed refinancing institution, among top 10 shareholders of many listed-firms, reported Securities Times on Wednesday.

Among all investments, eight firms have been confirmed of the CSF’s stake, which include property developer Dulexe Family, Hualan Biological Engineering, resource purifying developer SJ Environment Protection, Yunnan Tin Company Group, Fujian Cosunter Pharmaceutical Co, Hunan Er-Kang Pharmaceutical Co, digital map provider NavInfo Co, and retailer Friendship&Apollo.

The CSF has been listed as the second-largest holder of tradable shares at Cosunter Pharmaceutical, third largest at SJ Environment Protection, and fifth-largest shareholders at Yunnan Tin Company, according to the Times citing disclosures to Shanghai and Shenzhen stock exchanges.

There is more here, by ChinaDaily, via Patrick Chovanec.  I wonder how they are planning to unwind all of those share purchases?

Taylor Swift, Straussian?

by on July 22, 2015 at 12:41 pm in Current Affairs, History, Music | Permalink

Taylor

The singer is launching her own Taylor Swift-branded clothing line next month, on the platforms of local e-commerce giants JD.com and the Alibaba group, with t-shirts, dresses and sweatshirts featuring the politically charged date 1989.

The date – as well as being Swift’s year of birth – refers to her album and live tour of the same name, which she will perform in Shanghai in November.

But the date – and the initials TS – are particularly sensitive in China, as they signify the Tiananmen Square massace in 1989, when hundreds of students were killed in pro-democracy protests.

There is more here.  Here is a story on the map of China accompanying Dwyane Wade.

I mean that question quite um…seriously.

Paul Krugman, who I believe originated the concept, recently defined it as follows: “…someone distinguished by his faith in received orthodoxy no matter the evidence.”  I would rather have something less normative and also more specific.

I think of it this way: the People are Very Serious if they realize that common sense morality must, to a considerable extent, rule politics.  At least if voters are watching.

So what is common sense morality in this context?  It embodies a number of propositions, including, for instance (with cultural variants across nations):

1. Political decisions should be based on what people and institutions deserve, based on their prior conduct and also on their contributions to the general good.

2. Economic nationalism.

3. Traditional morality, based on respect for authority, repayment of debts, savings, and hard work.

4. Inflation is bad, in part because it violates #1 and #3, and in the case of the eurozone it often violates #2 as well.

5. “I don’t care what you all say, the government should be able to find some way of arranging things so that I don’t have to suffer too badly from this.”

Now here’s the thing: common sense morality very often is wrong, or when it is right that is often with qualifications.

Therefore at the margin there is almost always a way to improve on what the Very Serious People are pushing for.  The Very Serious People realize this themselves, though not usually to the full extent, because they have been cognitively captured by their situations.  They see themselves as “a wee bit off due to political constraints,” instead of “a fair amount off due to political constraints.”  So there is usually some quite justified criticism of the Very Serious People.  Common sense morality is needed at some level, but still at the margin we wish to deviate from it.

That said, it is a big mistake to try to throw the Very Serious People under the bus.  The Very Serious People understand pretty well how to deal with a public which believes in some version of 1-5, and furthermore they often know that such public beliefs, whatever their limitations, are useful too.  Anyone else trying to manage the situation may come up with some favorable breakthroughs, but also may make a total hash of it, as was the case with Syriza.  Syriza failed to realize the import of 1-5 for both domestic and foreign politics,and so they drove the Greek economy to the point of total desperation.  There is a nested game going on, where the public has a big say on the heavily publicized issues, and the politicians must in some way heed that.

If you want to try the “replace the Very Serious People” game, and assume the subsequent risks, that is a judgment which can be made.  The mistake is to think that the partial wrongness of the Very Serious People is necessarily a reason to take matters out of their hands.

Addendum: Via Tim, here is the entry on Very Serious People on RationalWiki, it seems Atrios first put forward the concept.  And here are the remarks of Tsipras.