Month: February 2014
This is from Yana and by Yana, and she passed it along to me just after returning from India, though she wrote it in Singapore:
So I’m in Singapore this week and it’s always been my dream to come here. I love their health care system. I love their food. I love that it came out of left field (here is Singapore 50 years ago, and here’s Singapore today). But the underlying question I love is “why?”
Many people point out that there’s plenty not to love about Singapore, like their mandatory military service and capital punishment for drug users. But these critiques rely on the assumption that democracy and negative liberty are necessary conditions for economic flourishing. Once you’re Singapore everything gets a lot fuzzier. While complaining about Singapore’s autocratic management and lack of freedoms, nobody is asking whether Singapore might be a place we want. Namely, an apolitical society by design, great to live in by global standards but emerging due to strong, and sometimes strong-handed, public policy.
People run in circles discussing whether Singapore is replicable based on its public and economic policies. It seems to me that a third set of institutions running in parallel is what actually makes Singapore so unique and probably impossible (or at least very difficult) to replicate: the Peranakan culture and its predilection for commerce and trade.
Peranakan culture is a pan-Asian blend of descendants of merchants and traders from China, Malaysia, Indonesia and India. It is the culture both of Lee Kwan Yew’s family as well as that of a sizeable percentage of Singaporeans. This culture is a very powerful conduit for passing down a relatively rare trait: a positive view of commercial activity as the machine of wealth creation and basis of improving one’s life. We see this in a rare few historical settings, including the Industrial Revolution in Scotland as well as the American founding. It comes through in Singapore’s public policy, casual discussions with cab drivers (one volunteered to me that “Singapore is the best managed city in Asia”), in the museums, and in daily interaction with a wide variety of merchants. Young Singoporeans love to complain that Singapore is too boring, too orderly, and too strict on personal freedoms, but I’ve yet to hear any complaints about commercial society.
So when Peranakan culture was combined with the British Enlightenment model of governance in the 19th century, the result was truly unique. A set of cultural institutions characterized by positive attitudes towards commerce, innovation and globalization was combined with robust political economy in the form of strong rule of law, property rights and free trade.
Yet unlike so many other former colonies (my current home of India comes to mind), Singapore did not reject these values during its transition to independence. Most other colonies reacted intellectually, if not downright violently, against many of the values promoted by the British. But in Singapore, the continuity of broadly liberal attitudes toward trade and commercial society following independence was supported by continuity in liberal economic policy and enforced by deep-seated cultural attitudes.
To put it bluntly: Singaporeans more or less went along with the policies laid before them. Today that means a thriving economy in Asia with population growth of over 200% since the 1960s, the world’s second largest port, and a significantly more human flourishing than for many people in surrounding countries that didn’t take this leap. I just hope it can last.
The German court left no doubt that the Bundesbank and other German institutions were bound by the constitution. They also made clear they were not letting go of this case. The ruling gives the distinct impression that the judges are referring the case not up to a higher court but down to a lower court…
So what would happen if the ECB wanted to trigger the scheme? Following this ruling, I am not sure the Bundesbank could participate. That would be an inconvenience, no more. I would also expect, though with less certainty, that the German government would torpedo OMT through a technical lever. The scheme requires potential beneficiaries first to apply for a conditional credit line from the European Stability Mechanism. This is where the governments come in: they have to approve any ESM programme by unanimity.
What if the government and parliament voted in favour of a credit line? You could count on an immediate legal challenge at the constitutional court. This is the point when the ruling will matter. The court would then either eat its words or trigger a crisis. It will not refer another case to the ECJ.
The FT piece is here. Developing…
Addendum: Here is commentary from Hans-Werner Sinn.
5. Markets in everything: Canadian House of Commons plants soon to hit auction block.
Doerrenberg and Siegloch say maybe so, especially if you are unemployed:
We examine the effect of salient international soccer tournaments on the motivation of unemployed individuals to search for employment using the German Socio Economic Panel 1984–2010. Exploiting the random scheduling of survey interviews, we find significant effects on motivational variables such as the intention to work or the reservation wage. Furthermore, the sporting events increase perceived health as well as worries about the general economic situation.
That is the title of my latest New York Times column, here is one excerpt:
In recent weeks, Argentina, Turkey, Ukraine and Thailand have endured plunging currencies, capital flight and political disruptions in varying combinations. While they have all been affected by global economic tides, these nations are facing crises because of problems in their national governance. And if we look elsewhere around the world, we find that governance has been re-emerging as a major factor behind success or failure in many emerging nations.
It’s not that macroeconomic quandaries have gone away in all of those countries. There are still many such issues: how to deal with current account deficits, for example, or how to face the consequences of tighter monetary policy in the United States. But these concerns were foreseeable, and some countries have been meeting them, if imperfectly, while others are letting these problems push them over the precipice. In this context, good governance means directing political energies at strengthening the economy rather than trying to cement power and keep down the opposition.
This new world contrasts with two earlier waves of change. The first started in the 1990s, when a rising China bought and invested in raw materials at an unheard-of pace. That flow of purchasing power was so strong that it brought better times to other emerging nations, including many in South America and Africa, regardless of whether the individual countries had good governance in place.
The second major wave was the recent global recession, which damaged the commercial prospects of many nations. For instance, in the first quarter of 2009, the gross domestic product of Singapore fell at an annualized rate of 8.9 percent. That wasn’t because Singapore had bad economic policy, but because exports were hit by a global downturn beyond the country’s control.
The two waves have had such noticeable effects that we’ve become unaccustomed to evaluating political fundamentals in individual nations. But these waves, though not quite over, have slowed.
Some of the likely losers are Argentina, Thailand, Turkey, and Ukraine. Chile, Malaysia, and Mexico are likely to come out of the turmoil in OK shape, to cite some examples on the other side. As for China…?
Do read the whole thing.
According to one new study (“Generational Differences in Workplace Behavior,” gated here), not so much:
John Bret Becton, Harvell Jack Walker & Allison Jones-Farmer
Journal of Applied Social Psychology, forthcoming
Popular stereotypes suggest that generational differences among workers present challenges for workplace managers. However, existing empirical research provides mixed evidence for generational differences in important values and attitudes. The current study extends generational effects research by examining differences in actual workplace behaviors. Drawing from commonly held generational stereotypes, the authors hypothesized that Baby Boomers would exhibit (Hypothesis 1) fewer job mobility behaviors and (Hypothesis 2) more instances of compliance-related behaviors in comparison with both GenXers and Millennials, while (Hypothesis 3) GenXers would be less likely to work overtime in comparison with Baby Boomers and Millennials. A sample of 8,040 applicants at two organizations was used to test these predictions. Results provided support for Hypothesis 1 and Hypothesis 3 and partial support for Hypothesis 2, but the effect sizes for these relationships were small. It appears the effects of generational membership on workplace behavior are not as strong as suggested by commonly held stereotypes. Implications for future research and practice are discussed.
The number of people exonerated after they were falsely convicted of crimes in the US has reached an historic high, with 87 walking free last year.
A new report from the National Registry of Exonerations finds that almost a third of the people in 2013’s unprecedented crop of exonerations were convicted in cases in which, in fact, no crime was committed – a record-breaking number in itself. Some 22 men and five women were given sentences ranging from probation to life, yet when their convictions were investigated, they were not only found to be innocent, but it was discovered that no offence had occurred in the first place.
There is further information here.
From the FT, Chris Bryant reports:
…in Germany, growing numbers of school leavers are choosing to go to university instead of starting an apprenticeship, triggering alarm that small businesses will struggle to fill skilled positions.
…The number of young Germans starting an apprenticeship declined 4 per cent last year to 530,700, the lowest level since German reunification in 1990. Some 33,500 apprenticeships went unfilled, the most since 1996.
…The reasons for the falling number of apprentices are hotly debated. Partly it reflects demographic trends: there are fewer young people around today than when the baby boomer generation came of age.
Studying for an undergraduate degree has become more attractive, in part because it no longer takes so long. German students can obtain a bachelor’s degree in just three years, instead of five years for the old-style diploma.
Almost 500,000 Germans began a university degree last year, compared with fewer than 360,000 a decade ago. Nevertheless, around one-quarter of German students break off their studies prematurely and do not graduate at all.
Meanwhile, trade unions accuse cost-conscious companies of offering an insufficient number of apprenticeships, and point to an increase last year in the number of young people who were unable to find one.
Jutta Rump, director of the Institute for Employment and Employability (IBE) in Ludwigshafen, said there had indeed been a “cannibalisation” of vocational training via increasing university attendance.
The Germans can’t quite seem to extend a model that everyone else is falling in love with and trying to copy…
For the pointer I thank Jim Olds.
BC: Every economist who gives policy advise is implicitly relying on philosophy. Unfortunately, most economists want to rely on philosophy without really reflecting on it, so they’re usually just crude utilitarians (with a heavy bias toward the status quo and democratic fundamentalism).
2. Is there a secret German economic boom? (speculative)
The Economist covers the economics of online education:
Alex Tabarrok…reckons the most salient feature of the online course is its rock-bottom marginal cost: teaching additional students is virtually free.
..as prices converge towards marginal cost, there will be little scope for undercutting the competition. Instead MOOCs are likely to compete on quality…Higher production costs are a small price to pay to attract much greater numbers of students. Such markets often evolve into winner-take-all, “superstar” competitions. The best courses attract the most customers and profit handsomely as a result. In this respect online education may more closely resemble information industries such as film-making than service industries such as hair-cutting.
The market for textbooks already fits this description. New textbooks are costly to write and design but can be reproduced fairly cheaply. Not surprisingly, only four introductory economic texts account for half of the American market, according to Mr Tabarrok. Indeed, says Tyler Cowen, a co-founder of Marginal Revolution University, it is possible that textbook publishers are better equipped than universities to develop MOOCs profitably.
I agree also with a point made by Caroline Hoxby:
Less selective institutions are close substitutes for MOOCs. Course content is often standardised and interaction with professors is limited in order to keep costs down.
…Elite institutions face very different circumstances, Ms Hoxby reckons. They operate like venture-capital firms, offering subsidised, labour-intensive education to highly qualified students. They aim to cultivate a sense of belonging and gratitude in students in order to recoup their investment decades later in the form of donations from successful alumni…. For top schools, the best bet may simply be to preserve their exclusivity.
Abstract Although previous research has indicated that Facebook users, especially young adults, can cultivate their civic values by talking about public matters with their Facebook friends, little research has examined the predictors of political discussion on Facebook. Using survey data from 442 college students in the United States, this study finds that individual characteristics and network size influence college students’ expressive behavior on Facebook related to two controversial topics: gay rights issues and politics. In line with previous studies about offline political discussion, the results show that conflict avoidance and ambivalence about target issues are negatively associated with Facebook discussions. Perhaps the most interesting finding is that users who have a large number of Facebook friends are less likely to talk about politics and gay rights issues on Facebook despite having access to increasing human and information resources. Theoretical implications of these findings and future directions are addressed.
The link to the paper is here. Of course one possibility is that popular people do not want to endanger their popularity with controversial discussions. Another is that non-controversial people are simply more popular to begin with.
Hat tip goes to @Neuroskeptic.
That is a new paper by W. Kip Viscusi, Joel C. Huber, and Jason Bell, the abstract is here:
This article examines evidence for the private rationality of decisions to choose bottled water using a large, nationally representative sample. Consumers are more likely to believe that bottled water is safer or tastes better if they have had adverse experiences with tap water or live in states with more prevalent violations of EPA water quality standards. Perceptions of superior safety, taste, and convenience of bottled water boost consumption of bottled water. Blacks and Hispanics are more likely to drink bottled water due to their relatively greater exposure to unsafe water and greater risk beliefs. The coherent network of experiences, beliefs, and actions is consistent with rational consumer choice.
That is rationality at the margin, of course, as the entire practice of bottled water in developed countries strikes me as not rational for most people. Tap water is fine and to me even tastes better.
Hat tip goes to www.bookforum.com.
That is the new book by Benjamin Baumer and Andrew Zimbalist and the subtitle is Assessing the Growth of Analytics in Baseball. It is an excellent and well-written look at where sabermetric knowledge stands today, here is one excerpt:
…once the ball has been put into play, it doesn’t seem to matter all that much whether it was put into play against Roger Clemens or Roger Craig.
…an extra win will bring more revenue to a team in New York City than in Kansas City.
This is a very useful book on its chosen topic.