Current Affairs

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.

Who are the Yazidis?

by on August 8, 2014 at 7:48 am in Current Affairs, History, Religion | Permalink

Their supreme being is known as Yasdan. He is considered to be on such an elevated level that he cannot be worshipped directly. He is considered a passive force, the Creator of the world, not the preserver. Seven great spirits emanate from him of which the greatest is the Peacock Angel known as Malak Taus – active executor of the divine will. The peacock in early Christianity was a symbol of immortality, because its flesh does not appear to decay. Malak Taus is considered God’s alter ego, inseparable from Him, and to that extent Yazidism is monotheistic.

There is more here, interesting throughout.

China will construct a “Chinese Christian theology” suitable for the country, state media reported on Thursday, as both the number of believers and tensions with the authorities are on the rise.

China has between 23 million and 40 million Protestants, accounting for 1.7 to 2.9 per cent of the total population, the state-run China Daily said, citing figures given at a seminar in Shanghai.

About 500,000 people are baptised as Protestants every year, it added.

There is more here, via the excellent Mark Thorson.  It should be noted that this story can be given a number of different interpretations.  Here is a related article.

Putin’s Plan A: Long game, squeeze Ukraine, force deep federation, formalize Russian influence & primacy in SE

Plan B: Invade

The link to that tweet is here.  There is more from Ian here.

I find it worrying that Putin is suspending food imports from parts of the West.  (Note that the text of the ban may be deliberately ambiguous.)  Commentators are criticizing the economics of such a move, but I think of this more in terms of Bayesian inference.  Long-term elasticities are greater than short.  Under the more pessimistic reading of the action, Putin is signaling to the Russian economy that it needs to get used to some fairly serious conditions of siege, and food is of course the most important of all commodities.  Why initiate such a move now if you are expecting decades of peace and harmony?  Or is Putin instead trying to signal to the outside world that he is signaling “siege” to his own economy?  Then it may all just be part of a larger bluff.  In any case, Eastern Europeans do not take food supply for granted.

Bernie Ecclestone, is to make a $100m (£60m) payment to end his trial on bribery charges, a district court in Munich has confirmed.

Ecclestone, 83, went on trial in Munich in April over allegations that he bribed a former German banker as part of the sale of a major stake in the motorsport business eight years ago.

German law provides for some criminal cases to be settled with smaller punishments, such as fines, though the size of the payment in Ecclestone’s case has led some to question a system that effectively favours wealthy defendants.

The Munich court said in a statement that $99m would be paid to the German treasury and a further $1m to a German children’s hospice charity. The money will be paid within a week, after which time the trial will officially be abandoned.

The full story is here, not quite China punishment of the day.

For the pointer I thank Dan Jackson.

That campaign is one of the more notable events going on in a busy and event-rich world, so it feels remiss not to cover it at all.  Here is John Minnich:

The anti-corruption campaign is one of those steps. It serves many overlapping functions: to clear out potential opponents, ideological or otherwise; to consolidate executive power and reduce bureaucratic red tape so as to ease the implementation of reform; to remind the Chinese people that the Communist Party has their best interests at heart; and to make it easier to make tough decisions.

Underlying and encompassing these, we see the specter of something else. The consensus-based model of politics that Deng built in order to regularize decision-making and bolster political stability during times of high growth and that effectively guided China throughout the post-Deng era is breaking down. It can no longer hold in the face of China’s transformation and the crises this will bring. Simply put, now that its post-1978 contract with Chinese society — a social contract grounded in the exchange of growth for stability — is up, the Party risks losing the public support and political legitimacy that this contract undergirded. A new and more adaptive but potentially much less stable model is being erected, or resurrected, from within the old. This model is grounded more firmly in the personality and prestige of the president and more capable, or so Chinese leaders seem to hope, of harnessing and managing the Chinese nation through what could well be a period of turmoil.

This does not necessarily mean a return to Imperial China, nor does it mean a return to the days and methods of the Great Helmsman, Mao. It doesn’t even mean the new model will succeed, even remotely. What it means will be decided only by the specific interplay of structure and contingency in the unfolding of history. But it is this transformation that serves as the fundamental, if latent, purpose for Xi’s anti-corruption campaign.

The full piece is here, and for the pointer I thank Jim Olds.  “Be careful what kind of anti-corruption campaign you wish for…”

Sentences to ponder

by on August 5, 2014 at 1:25 am in Current Affairs, Economics | Permalink

“…while we don’t expect deflation, we do think inflation will remain in negative territory in the coming months.”

That one is about Spain, from Victor Echevarría at BNP Paribas.

The number of distressed neighborhoods in the suburbs grew by nearly 140 percent, compared to 50 percent in urban areas.

That is since 2000, from Danielle Kurtzleben.

Monopsony and its drawbacks

by on August 3, 2014 at 1:45 am in Current Affairs, Law | Permalink

The Bully Fire, which has burned more than 12,600 acres in Shasta County, is nearly contained. In the two weeks since it ignited, about 2,000 firefighters have battled the blaze. Nearly half of them — 900 — are inmates with the California Department of Corrections. These “low-level offenders” making just $2 a day are a crucial component in how the state battles wildfires.

Yet there is some extra compensation:

Once they’re in the program they never spend a night in a prison facility.

Nonetheless:

A few other men say they might try firefighting when they’re released, but most, citing the hot, hard work and long hours, say, “No way.”

There is more here, via Michael Makowsky.

Ghana will turn to the International Monetary Fund for help after the west African country’s currency plunged roughly 40 per cent this year against the dollar, making the cedi the worst performing currency in the world in 2014.

Nearly three years after the start of oil production, which was meant to further strengthen the country’s fiscal position, the public purse is looking empty. Ghana is battling a double-digit fiscal deficit after a 75 per cent increase in public salaries over two years. Inflation is rising rapidly as the cedi plunges.

Ghana ran a fiscal deficit equal to 10.1 per cent of gross domestic product in 2013. The government has promised to lower the deficit to 8.5 per cent this year, but observers believe it would struggled to reduce it below 10 per cent.

The full FT story is here, here are ungated sources, here is one account from Ghana.

Shares in Gazprom, a company that made $32bn in net income last year, trade at only 2.6 times forward earnings.

That is from FTAlphaville.

The notice is here, signers include Bob Solow and Dani Rodrik.  I agree with their arguments, and you will find my slightly different but still consistent earlier critique here.  Here is one bit from the press release:

“It’s a widely shared opinion among economists that the court’s attempt to force Argentina into a default that nobody – not the debtor nor more than 90 percent of creditors – wants, is wrong and damaging,” said Mark Weisbrot, economist and Co-Director of the Center for Economic and Policy Research, who helped circulate the letter.

Matt Levine has a good post on the situation here.

As the conflict rages, displacing hundreds of thousands, U.N. and Palestinian officials say some families have made a macabre calculation: to split up, with each group seeking refuge in different parts of Gaza. If one part of the family gets killed, others will live on to help the survivors and keep their dynasty alive.

But most families, officials say, still move together as a source of strength and comfort. Some are now living with other relatives, further increasing their familial size, while others have taken shelter in U.N.-run schools and other refuges.

From Sudarsan Raghavan, there is more here.  Note that if there is a “single (cost-adjusted) safest perceived place,” splitting up the family into two or more locations is increasing the net expected danger to some family members, without making any members safer.