Current Affairs

Is this information about the work week good news or bad news?

But in reality, France’s 35-hour week has become largely symbolic, as employees across the country pull longer hours and work more intensely, with productivity per hour about 13 percent higher than the eurozone average. And a welter of loopholes lets many French employers outmaneuver the law.

All told, French workers put in an average of 39.5 hours a week, just under the eurozone average of 40.9 hours a week, according to the Organization for Economic Cooperation and Development.

That is from Liz Alderman.

“Ghost cities” lined with empty apartment blocks, abandoned highways and mothballed steel mills sprawl across China’s landscape – the outcome of government stimulus measures and hyperactive construction that have generated $6.8tn in wasted investment since 2009, according to a report by government researchers.

In 2009 and 2013 alone, “ineffective investment” came to nearly half the total invested in the Chinese economy in those years, according to research by Xu Ce of the National Development and Reform Commission, the state planning agency, and Wang Yuan from the Academy of Macroeconomic Research, a former arm of the NDRC.

…The bulk of wasted investment went directly into industries such as steel and automobile production that received the most support from the government following the 2008 global crisis, according to the report.

Mr Xu and Ms Wang said ultra-loose monetary policy, little or no oversight over government investment plans and distorted incentive structures for officials were largely to blame for the waste.

Don’t forget this part:

Misallocation of capital and poor investment decisions are not the only explanation for the enormous waste in China’s economy. A significant portion of China’s post-crisis stimulus binge was simply stolen by Communist Party officials with direct responsibility for boosting growth through investment, according to separate estimates by Chinese and overseas economists.

There is more here, from the excellent Jamil Anderlini.  As Arnold Kling would say, 祝你今天愉快…

Addendum: Here is a criticism of how that estimate was made.

FDR once tried to move Thanksgiving, as an act of economic stimulus.  If Putin is going to recreate some version of a non-communist yet Soviet-like empire in his part of the world, perhaps he could also bring back the 24-game world chess championship match?  Season four of Homeland is in fact remarkably good, after I had written the show off.  When will everyday flying feel like Thanksgiving travel?  I am teaching myself Yucatán-style cooking, which involves lots of achiote. sour orange juice (naranja agria), Mexican oregano, and white vinegar.  Cass Sunstein argues that nudging is philosophically defensible (at the very least); I would like to read a paper on friendship and nudging — how much would I want democratically elected friends to nudge me and why exactly might I object?  Macro is the one field which has lost relative attention since 1970, perhaps gathering new data there is so tough.  Here are four animals that lie, including moths.  Why is more than seven percent of the industrial space in Kansas City, Missouri underground in former limestone mines?  There is a consumption boom in the Philippines, I will visit there again next summer.  The George Packer New Yorker profile of Angela Merkel was one of the best articles of the year.

I am thankful and grateful for many things, Happy Thanksgiving everyone…!

The most contentious may be one put forward by a group called Ecopop, which would limit immigration to 0.2 per cent of the resident population. That has alarmed businesses, who worry it would make it harder to hire skilled staff and sour relations with the EU, which is Switzerland’s largest export market.

Another initiative would force the central bank to hold 20 per cent of its assets in gold, as well as ban it from selling any of its holdings of the metal. Gold bug supporters say it would strengthen Switzerland’s independence but the central bank has warned it will make harder its job of ensuring economic stability.

And the third would scrap the system of tax privileges for wealthy foreigners that prompted such people as Michael Schumacher, German Formula 1 racing driver, and Ingvar Kamprad, Swedish Ikea founder, to call Switzerland home.

The full FT story is here.  I am hoping they all fail, although the social scientist in me is curious about #2.

The Bloomberg editorial staff says no:

Videos often lack critical context, and studies have repeatedly shown that jurors can be misled by variables such as a film’s angle or focus, which can unduly sway perceptions of guilt. That cuts both ways: Footage of a protester bumping into a cop, devoid of context, could make life much easier on a prosecutor.

Police cameras are also prone to intentional abuse. With mysterious frequency, they seem to accidentally get switched off or malfunction at critical moments. One obvious remedy is to require that cops always keep them on. But that can be counterproductive. Witnesses and victims may be less forthcoming on camera. Attracting competent officers could become harder if their every interaction is recorded. Crucially, officers may simply avoid engaging certain communities, or avoid areas where confrontations are likely, if they know they’re being filmed.

Finally, equipping police with cameras and audio recorders means that they’re constantly conducting surveillance on innocent civilians — and potentially storing it all. Police frequently enter private homes and encounter people in medical emergencies who may not want to be filmed. Some officers may be tempted to record people on the basis of race or religion. And some departments have asserted that the public has no right to see such footage.

In short, a policy intended to empower the public and monitor the police could have precisely the opposite effect.

There is more here, food for thought of course.  Via Adam Minter.

THREE times in the last 35 years, Russian military forces have crossed international borders – in Afghanistan in 1979, Georgia in 2008 and the Crimea earlier this year. As Simon Derrick, the currency strategist at BNY Mellon points out, each occasion coincided with a peak in the oil price. And each incursion was followed by a very sharp fall in the price of crude (see chart).

…If the previous episodes are any guide, oil has a fair way to fall.

That is from Buttonwood at The Economist, file under “speculative”…

The Bill Cosby Collection

by on November 22, 2014 at 10:56 am in Current Affairs, The Arts | Permalink

It doesn’t sound quite right to still call it that, does it?  In any case it is on display at the National Museum of African Art.  At least two-thirds of the collection is lame and maybe a third or somewhat less is wonderful.  Cosby for instance has excellent works by Jacob Lawrence, Horace Pippin, Minnie Evans, Henry Ossawa Tanner, (and here), Romare Bearden, some amazing quilts and textiles (try here too), and quality African ethnographic pieces.  The works by lesser-known creators are mostly sentimental junk with lots of gloppy paint and hackneyed historical themes, or perhaps a maudlin portrait of some kind.

My hypothesis is simple: in any collecting area where price is a sufficient statistic for quality, Cosby did well by paying top dollar, or at least by letting himself be “mined” by his buyer agent, who probably had a financial incentive to pay top dollar.  In any area where judgment was required, Cosby chose very poorly.

Here is one review of the show and the surrounding controversy.  Here is WaPo coverage.  What is the average moral quality of assemblers of art?  How should we feel about the collection in the Louvre, the Prado, or for that matter art museums anywhere in Russia?  Here is an article on how colleges and universities are responding to their involvement with Cosby.

The African Mosaic show at the African Museum is worth a visit as well.  The Washington D.C. art exhibit scene is much worse than it was fifteen years ago, but right now the African Museum is the place to go.

The Great Zynga Reset

by on November 21, 2014 at 2:03 pm in Current Affairs, Economics | Permalink

At companies where pampering employees has always been part of the culture, it is hard to stop if business turns sour. Zynga Inc. shares have fallen more than 80% since 2012 as the game maker struggles to find a follow-up hit to “Farmville.” Before going public in 2011, Zynga began serving lunch and dinner daily to its employees, using specialty ingredients like Japanese Kewpie mayonnaise and pinecone syrup.

A spokeswoman for Zynga, based in San Francisco, says the company ended free haircuts for employees earlier this year. She declined to comment further.

As perks get bigger and better, some employees figure they can ask for anything. One worker at Pinterest recently wanted the company to build a zip line to a nearby bar, while an Adobe employee asked the maker of Photoshop and Illustrator design software to buy a Slip ’N Slide for workday use.

The article, which focuses on perks in the workplace, is of interest more generally.  For the pointer I thank Samir Varma.

Adam Ozimek reports:

A 2002 paper from Kossoudji and Cobb-Clark found that following the 1986 illegal immigrant amnesty, the wages of those amnestied rose 6% between 1989 and 1992. They found that the majority of the wage penalty of being illegal is due to an inability to move between occupations.

…The effect this will have on labor markets is complicated slightly by the fact that it’s not really a full amnesty. Instead it’s really a three year promise to not deport, and a three year work permit.

There is more here.  The original research is on JSTOR here.

The story is here, his book is Age of Ambition: Chasing Fortune, Truth, and Faith in the New China.  Previous MR coverage is here, it was one of my favorite non-fiction books of the year.

Here is one version of the latest report, here is another.  People, don’t be surprised by this bad news.  Unemployment in Japan already had fallen to about three and a half percent.  So how much of a miracle could Abenomics accomplish in the first place?  Not much, not even for committed Keynesians.  Commentators have grown to expect so much of the Phillips curve these days, but still a mechanism for the output boost is required and the Phillips curve (at best) holds only in some contexts.  Japan simply hasn’t had that many laborers to put back to work.  Getting more women in the workforce, as Abe has tried to do, is a positive development, but that is not mainly about macro policy nor is it mainly about the short run.

Some of you might be thinking “well, won’t inflation cause some kind of output rise, if only by stimulating demand?”  People, there is still no mechanism specified in that sentence.  And you may recall, the 1970s and early 80s saw the rise of a bunch of “monetary misperceptions” theories, often stemming from the work of Bob Lucas, postulating something to that effect.  It was the Keynesians who slapped them down on both empirical and theoretical grounds, as intertemporal elasticities of substitution are simply not high enough to support this as a major channel of output determination.  There has been no reason since then to think those theories deserve to make a major comeback.

Here is Scott Sumner on Japan, here is Megan McArdle on Japan, and here is Edward Hugh on Japan.

I noticed a comment by Alen Mattich on Twitter:

If a mere 3 percentage point increase in taxes kills Japan’s economy, got to wonder about how that 230% of GDP debt will ever be resolved.

I’m not sure 230% is the best number there, but still that is the question of the day.  With the continuing circulation of what I call “the Venceremos mentality,” the limits of economic policy remain underappreciated, and the recent news from Japan should provide a sobering lesson for us all.

There are many good bits, here is one of them:

…I have a slightly different cut on the Snowden revelations. I think it shows the NSA more as the Keystone Cops than as Big Brother. What is striking to me is how little James Bond-like stuff was going on and how little they did with all this information. That’s why I think, in some ways, the NSA is more in this anti-technological zone where they don’t know what to do with the data they find. So they just hoover up all the data, all over the world. I think it was news to Obama that he was tapping into [German Chancellor Angela] Merkel’s cell phone.

One way to think about this is that if the NSA bureaucracy actually knew what they were doing, they would probably need way less information. What’s shocking about Snowden is how much information they had and how little they did with it.

Read the whole thing.

There are already more speakers of Aramaic in metropolitan Detroit (around a hundred thousand) than in Baghdad…

That is from Christian Caryl in the 4 December 2014 New York Review of Books, reviewing Gerald Russell’s Heirs to Forgotten Kingdoms: Journeys into the Disappearing Religions of the Middle East.

Both sides put out their joint statement, the U.S. issuing it via the White House and China releasing it through the official Xinhua News Agency. But whereas one side gave it a high gloss, the other seemed to be trying to bury it under the rug. The top story on the website affiliated with the Communist Party flagship paper The People’s Daily was about Xi and Obama meeting the press  – but the article made no reference to the climate agreement. Other stories on the homepage touched on the climate statement but tended to relegate it to the latter half of the article, and omitted the American-style superlatives. The popular Beijing News, a state-run paper known for gently testing the editorial boundaries, also didn’t mention the climate deal in its Nov. 12 cover story on the APEC meeting that brought Obama to China. It focused instead on the meeting’s anti-corruption accord and progress on plans for a pan-Asian free trade zone spearheaded by China.

Here is one reason why:

Beijing is under fire domestically for its unsuccessful efforts to curb local air pollution, noting that people were furious that authorities managed to clear the air for the visiting APEC dignitaries but can’t do it on a daily basis for their own citizens. ” There may be worries that focusing on climate change rather than air pollution doesn’t meet the public’s main concerns,” Seligsohn said via email.

That is all from a good piece by Alexa Olesen at Foreign Policy.

Is it up to three cynical tapes about Obamacare now?   I’ve lost track.

I’m not so interested in pushing through the mud on this one.  It’s a healthy world where academics can speak their minds at conferences and the like without their words becoming political weapons in a bigger fight.  Or how about blogs?: do we want a world where no former advisor can write honestly about the policies of an administration?  I’ve disagreed with Gruber from the beginning on health care policy and I thought his ObamaCare comic book did the economics profession — and himself — a disservice.  But I’m simply not very interested in his proclamations on tape, which as far as I can tell are mostly correct albeit overly cynical.  (If anything he is overrating the American voter — most people weren’t even paying close enough attention to be tricked.)  Criticisms of Gruber are not criticisms of a policy, and it is policy we should focus upon and indeed there is still a great deal of health care policy we need to figure out.  It’s hardly news that intellectuals who hold political power, even as advisors, very often do not speak the truth.  If anything, I feel sorry for Gruber that he has subsequently felt the need to so overcompensate by actively voicing such ex post cynicism, it is perhaps the sign of a soul not at rest.

In the meantime, I’d like to see more open discourse, not less.  Perhaps we should subsidize people who end up looking foolish, rather than taxing them.