Month: December 2012

Stories to watch for in 2013

Here is a list from The Guardian.  Here is an FT list.  My list looks more like this:

1. Economic turnarounds in the Philippines, Sri Lanka, Indonesia, and possibly Pakistan and Myanmar.

2. Pressures for secession in Catalonia, and a potential crisis of the Spanish state.

3. East Asian belligerence, with more hawkish leaders in the three major countries.

4. There is actually a non-trivial chance we totally blow it on the debt ceiling.

5. The continuing rise of machine intelligence and the general recognition of such as the next major technological breakthrough.

6. Significant positive reforms in Mexico on education, foreign investment, and other matters too.

7. Political collapse in South Africa.

8. Continuation of America’s “Medicaid Wars,” over state-level coverage, combined with the actual implementation of much more of ACA.  Continuing attempts in Rwanda, Mexico, and China to significantly extend health care coverage to much poorer populations.

9. The return of dysfunctional Italian politics, combined with the arrival of recession in most of the eurozone economies, including France and Germany.

10. The ongoing barbarization of North Africa, including Mali, Syria, and possibly Egypt.  And whether any of these trends will spread to the Gulf states.

11. Whether China manages a speedy recovery and turnaround.

12. Watching India try to overcome its power supply problems, its educational bottlenecks, and its low agricultural productivity.

13. Seeing whether Ghana makes it to “middle income” status and how well broader parts of Africa move beyond resource-based growth.

14. Whether U.S. and also European political institutions can handle the intensely distributional nature of current fiscal questions.

Those are some of the main stories I will have my eye on, but of course I expect to be surprised.  I suppose Israel and Iran should be on that list somehow, North Korea too, but I don’t find that thinking and reading about it yields much in the way of return, compared to a simple “wait and see.”

Addendum: Here is Matt’s list.

Restrictions on high skill immigration to Britain

From The Independent:

Russian-born physicist Professor Sir Andre Geim said new restrictions on non-European Union immigrants, including minimum salary requirements of at least £31,000 and tighter student visa rules, are blocking the brightest academics from working at British institutions. He told The Independent on Sunday that the restrictions would have prevented him and his team from identifying the revolutionary “super-material” graphene, which earned him the Nobel Prize in physics in 2010.

Sir Andre warned that future scientific breakthroughs at British institutions were at risk because of the tighter controls, introduced this year to bring down annual net migration from more than 200,000 to “tens of thousands”.

..Sir Andre, 54, first arrived in the UK in the early 1990s as a Russian citizen with a permit to work as a post-doctoral fellow at Nottingham University. His salary would have been around £27,000 in today’s money, meaning that he would have been barred from entry under the minimum salary requirement.

FYI, Geim is one of my favorite scientists of all time. He is the only individual to win both a Nobel prize, for graphene, and an Ig Nobel prize, for frog levitation. Awesome!

The Portuguese fiscal cliff [penhasco fiscal?]

Lisbon plans to lift income tax revenue by more than 30 per cent[this coming year], raising the effective average rate by more than a third from 9.8 to 13.2 per cent. Anyone receiving more than the minimum wage of €485 a month, including pensioners, will also pay an extraordinary tax of 3.5 per cent on their income.

We’ll see how that goes, here is the rest of the FT storyHere are some related earlier posts.

Profile of John Ioannidis

He is an important thinker and here is one part of the profile:

Ioannidis’s current work stems from his deep love of math and statistics. He was born in New York City to physician parents but raised in Athens, Greece, where he excelled at math from a young age. He attended the University of Athens Medical School, added a PhD in biopathology, and later trained at Harvard and Tufts and joined the National Institutes of Health, where he worked on pivotal HIV research. These days, although he often collaborates on the design of specific studies, what he mostly does is meta-research, or the study of studies. Using powerful number-crunching programs and constantly evolving algorithms, Ioannidis analyzes many trials, each with many patients. He’s working to see not so much whether one treatment works or does not work, or whether one association of a specific risk factor with one disease is true or false, but whether factors related to the research process—the number of patients tested, the criteria for including data, statistical errors in an analysis, even fraud or financial incentives—may have compromised the data and conclusions. He burst on the medical establishment radar in 2005 with a paper in PLoS Medicine asserting nothing less than: “Why Most Published Research Findings Are False.”

Here is Alex’s earlier post on him.  For the pointer I thank Mark D.

Pakistan update

1. Militants kill 41 in the Peshawar region.

2. Adulterated cough syrup kills 33, the second such incident in recent times.

3. Pakistan lifts its YouTube ban, but for three minutes only.

Those are the headlines immediately visible today.

Less widely reported is that during 2012, the Pakistani stock index — namely the KSE-100 — is up 48% in local currency and 37% in U.S. dollars.

Which are the remaining economically underrated countries?

We read about the Philippines in yesterday’s FT:

Last quarter, its economy again surprised on the upside, growing 7.1 per cent and notching up its 55th straight quarter of growth. It now seems to be growing at a steady 5-6 per cent, despite an adverse external environment, against a lowly 3 per cent in the 1990s. The finance ministry believes the potential growth rate can be lifted to 6-7 per cent and eventually to 7-8 per cent.

…The stock market, one of the world’s best-performing in 2011, is up 32.5 per cent in the year to date in peso terms. That makes it the world’s fifth-best performing index. The peso itself has strengthened 7 per cent against the dollar. There is even talk of new investor interest in manufacturing. Japanese companies, looking for an alternative to China, have been nosing around. Philippine exports, not as important to the economy as for many Asian countries, have held up well in spite of falling demand for electronics, suggesting a degree of diversification.

Mexico is now also widely recognized as doing quite well.  So from the earlier list of undervalued countries, it seems all the pressure is on Pakistan.  Please keep in mind, the place need only outperform the expectations.

What are the policy implications of capital-biased technological change?

Paul Krugman has a very interesting post on this topic, so I will add a few points:

1. Taxing capital per se is not the way to go, since capital (of some kinds) bids up the wages of labor.  If one accepts Krugman’s distributional premises (not exactly my view but let’s see where it brings us), the answer is to tax mainly those forms of capital which substitute for labor, either directly or indirectly.  That would mean high taxes on the internet and other media of communications as well as high taxes on software and embedded software.  I don’t myself favor those policies, all things considered, but still I find it worth pursuing this logic to its implied conclusion.  It would imply especially high taxes on our technologically most dynamic sectors.

2. Intellectual property rights of many kinds should be weaker, as Alex discusses in his Launching the Innovation Renaissance.  That is one way to “tax” some forms of capital.  But do not expect the main action here to be found in easy-to-reproduce forms of capital, rather look to the more durable rents.

3. If you believe that the wages of labor are “stickier” than payments to capital, and there is downward pressure on wage shares, this implies a higher steady-state rate of price inflation.  I know, I know, there are various nominal vs. real finesses buried in my claim but still I think it holds up for the most part.

4. A lot of the surplus from Ricardian progress will end up captured by land, so we should follow Matt Yglesias’s recommendations in The Rent is Too Damn High.

5. A lot of the surplus from Ricardian progress will end up captured by resource owners, so we should relax constraints on resource exploration and development as an egalitarian move.  (NB: Beware tech models with only two factors!  They are usually wrong when it comes to incidence and the like; see for instance Nick Rowe.)

6. Let’s consider cutting the minimum wage.

7. Whatever we do, we should avoid mandated benefits programs — which raise the fixed cost of hiring an ever-cheapening labor — like the plague.  Whoops.

8. Lower wages strengthen the case for subbing in social security income for Medicare benefits, as the marginal value of cash is becoming higher for many of the elderly.  The case for in-kind as the appropriate form of aid is weaker.  Let’s also think about a longer-term consolidation of various aid programs into some form of guaranteed annual income.

What else can you think of?

Peter Boettke’s Ph.d grading strategy

…your final draft of your paper will be due on April 29th and I will submit your papers (blind) to external referees as well as myself for assessment, an A grade will be limited to those papers, and only those papers, that are recommended for acceptance or conditional acceptance, a B grade will be assigned to those papers that receive a recommendation of revise and resubmit, and a C grade will be assigned to those papers that are rejected by the external referees and myself.  I will be available throughout the semester to discuss and read your drafts, so don’t be a stranger.

The source is here, and for the pointer I thank Jacob T. Levy.