Month: March 2014
These points have been far too often forgotten:
Even if the multiplier is substantially above 1, it is not obvious that stimulus spending is a good idea. The reason is that we are not trying to maximize output and employment – we are trying to maximize overall social well-being. At a basic level, the idea behind stimulus spending is that the government will spend money on stuff that it wouldn’t have purchased if we weren’t in a recession. The classic caricature of stimulus spending is the idea of paying a worker to dig a hole and then paying another worker to fill the hole in. This type of stimulus spending will increase employment and GDP but it won’t really enhance social welfare. True, we might get the beneficial effects of the stimulus but we could achieve that by simply giving the workers the money without requiring that they dig the holes. If we simply give out the money, GDP increases by less but social well-being goes up by more since the work effort and time wasn’t required.
Even though the Keynesian hole-digging example is silly, the same argument can be applied to any type of government spending. If a project doesn’t meet the basic cost / benefit test, then it shouldn’t be funded, regardless of the need for stimulus. Of course, one form of fiscal stimulus used in the ARRA was providing funds to state governments so they could maintain services that they would normally provide. This is perfectly sound policy because it is allowing the government to continue to fund projects that (presumably) do pass the cost / benefit calculation. If the social value of a government project exceeds its social cost then we should continue to fund the project whether we are in a recession or not. If the social value falls short of the social cost then, even if the economy is in “dire need” of stimulus we should not fund it. If we really need stimulus but there are no socially viable projects in the queue then the government should use tax cuts. Tax cuts can be adopted quickly and aggressively and, unlike spending initiatives, apply to virtually all Americans.
There are other “legitimate” reasons for the government to expand spending during a recession. The most obvious is that many things are relatively cheap in recessions. Reductions in manufacturing and construction employment may lower the cost for government projects. But again, this decision can be made on a simple cost / benefit basis. If prices fall because of a recession and this makes some projects socially viable as a result, then it’s perfectly correct for the government to fund those projects.
If it makes people feel better we could re-label tax cuts as spending. I could pay people $200 to look around for better paying jobs. This would be counted as $200 of job searching services purchased by the government but in reality, the money would be essentially the same as a tax cut.
The full post is here.
6. The growing renown of Knausgaard, “The governing emotion of My Struggle is shame.”
The Netherlands’ biggest newspaper and magazine publishers have agreed to start selling individual articles for as little as €0.10 through a start-up called Blendle that aims to be the “iTunes of journalism”.
The Dutch initiative highlights how publishers are searching for new ways to make money from online content as their print businesses face declining readership and advertising revenues.
Blendle was founded in 2012 by Marten Blankesteijn and Alexander Klöpping, both aged 27.
It plans to launch in the Netherlands in April and has signed up the vast majority of publishers that produce newspapers and magazines in the country, including De Persgroep, Sanoma, Hearst and Reed Elsevier.
From the FT there is more here.
Horse head squirrel feeder. Who could possibly want such a thing? Is that the result of a fixed point theorem? Aren’t fixed costs God’s way of keeping such nasty stuff away from us?:
You have a Creepy Horse Mask, why not the squirrels in your yard? It turns out it’s even funnier on a squirrel. This hanging vinyl 6-1/2″ x 10″ squirrel feeder makes it appear as if any squirrel that eats from it is wearing a Horse Mask. You’ll laugh every morning as you drink your coffee while staring out the window into your backyard. Now, if only the squirrels would do their own version of the Harlem Shake video. Hole on top for hanging with string (not included).
For the pointer I thank John De Palma.
A Texas firm has revealed a personal security drone with a stun gun capable of unleashing 80,000 volts.
The firm showed off the drone in a series of shocking demonstrations bringing a volunteer to the ground.
It says the drone uses a smart app to track intruders, and once it had received the go ahead from a human operator, it fires taser darts and unleashes 80,000 volts.
…Called Cupid which stands for Chaotic Unmanned Personal Intercept Drone, the security product was revealed today at the SXSW Festival in Austin as a concept for the future of security.
Furthermore there is an app:
It can find a subject and send live video to the owner’s phone and ask if you want to authorise the subject or detain them.
‘If you detain them, it drops into fully automomous mode to detain them until police arrive, if need be stunning them with 80,000 volts of electricity to render them incapacitated.’
There is more here, with video demonstration. For the pointer I thank Mark Thorson.
The Comparative Constitutions Project has collected data from 720 of the 800 or so constitutions written since 1789. The shortest constitution, for example, is that of Jordan at 2,270 words while the longest is that of India which at 146,385 words is more than twice as long as the next longest constitution and considerable longer than the US constitution at 7,762 words. The New Zealand constitution grants the fewest rights, namely zero, while the Bolivian constitution grants the most rights at 88.
Among the rights in the Bolivian constitution are “Every person has the right to health.” That does seem ambitious, although I cannot guarantee the translation perhaps it says health care in the original? There are also rights to homes, sewers, and telecommunication services. I cannot go along with those but I do think this is an advance:
Neither the public authority, nor any person or body may intercept private conversations or communications by an installation that monitors or centralized them.
Venezuela offers almost as many rights in its constitution as Bolivia, 81 according to the data. Nevertheless, I think I would feel more secure in my rights living in New Zealand than Bolivia or Venezuela. A constitution with a long list of rights is a bit like a prenup with a long list of rights, looks good on parchment but parchment does not a marriage or a constitution make.
Men between the ages of 25 and 54 are in their prime working years. Generally speaking, they’re too old for college and too young for retirement.
In February 2008, 87.4 percent of men in that demographic had jobs.
Six years later, only 83.2 percent of men in that bracket are working.
That is from Binyamin Appelbaum.
For failing to broadcast sufficient levels of Canadian-made pornography — and failing to close-caption said pornography properly — a trio of Toronto-based erotica channels has earned a reprimand from the Canadian Radio-television & Telecommunications Commission.
Wednesday, the CRTC issued a broadcast notice saying AOV Adult Movie Channel, XXX Action Clips and the gay-oriented Maleflixxx were all failing to reach the required 35% threshold for Canadian content.
Based on a 24-hour broadcast schedule, that translates to about 8.5 hours of Canadian erotica a day.
There is more here, and for the pointer I thank TH.
Stephanie Predel, a stick-thin 23-year-old freshly out of jail, said she was off heroin. But she knows precisely where she could get more drugs if she ever wanted them — at the support meetings for addicts.
“I can get most of my drugs right at the meeting,” she said. “Drug dealers go because they know they’re going to get business.” She added, “People are going into the bathroom to get high.”
Bennington, a pre-Revolutionary town of 17,000 people, presents another face of the heroin epidemic that has swept through Vermont.
The piece is here, here is one excerpt:
The only case of economic coercion succeeding in a similar case in history was the 1956 Suez crisis. In that case, Britain, France, and Israel withdrew their forces from the Suez Canal following a U.S.-inspired run on the pound sterling. Except that the Suez case is not at all similar to Russia/Crimea. Britain was a treaty ally of the United States; not so much with Vladimir Putin’s Russia. The Suez was far away from British soil; the Crimea is just across the Sea of Azov. And, perhaps most importantly, Britain was in a fragile economic state trying to protect a fixed exchange rate. Russia’s economy has its problems, but a shortage of hard currency reserves ain’t one of them.
So the conditions under which sanctions would force Russia’s hand in Ukraine are far from ideal. The proposed sanctions coalition is equally flawed, however, as my FP colleague Colum Lynch has noted. European Union leaders are not exactly keen on the idea of broad-based economic sanctions, for understandable reasons. Britain needs Russian finance capital; the rest of Europe needs Russian energy. France is traditionally the most hawkish country in Europe, but that country is too busy planning to export warships to Russia to organize European sanctions.
And here is Dan’s conclusion:
Sorry, but the fact remains that sanctions will not force Russia out of the Crimea. This doesn’t mean that they shouldn’t be imposed. Indeed, there are two excellent reasons why the United States should orchestrate and then implement as tough a set of sanctions on Russia as it can muster. First, this problem is going to crop up again…
Second, while sanctions cannot solve this problem on their own, they can be part of the solution. Over the long term, Russia does need to export energy to finance its government and fuel economic growth. Even if planned sanctions won’t bite in the present, the anticipation of tougher economic coercion to come is a powerful lever in international bargaining.
My earlier post on Drezner on sanctions is here.
Still, Bitcoin watchers said that the creator’s supposed anonymity had played a vital role in the growth of a virtual currency that has become a potent symbol for privacy advocates and critics of government power.
“Having this level of mystery allowed people to project their optimism and their hopes onto the currency,” said Richard Peterson, the chief executive of MarketPsych, a research company that has studied virtual currencies. “If it’s true and people start to believe it, it undermines that mystique.”
Amy Goldstein reports:
The new health insurance marketplaces appear to be making little headway in signing up Americans who lack insurance, the Affordable Care Act’s central goal, according to a pair of new surveys.
Only one in 10 uninsured people who qualify for private plans through the newmarketplaces enrolled as of last month, one of the surveys shows. The other found that about half of uninsured adults have looked for information on the online exchanges or planned to look.
…The McKinsey survey shows that of people who had signed up for coverage through the marketplaces by last month, about one-fourth described themselves as having been without insurance for most of the past year. That 27 percent, while low, compares with 11 percent a month earlier.
There is more here. You will note that a low rate of sign-up is distinct from a rate of sign-up skewed toward the elderly and the sick. In this sense we still do not know how the new law is doing, though in a broader sense a low rate of sign-up should not be considered good news.
To be sure, the British were not adverse to using the referendum as a tactical means of international politics (for example, in the case of the referendum in Moldova in 1857 — where the referendum was a convenient excuse to curb the influence of the Russian Empire after the Crimean War). Here at the request of the British, a poll was held to unify the two territories Moldavia and Walachia (previously an area that had been under Turkish Suzerainty, though often dominated by Russia) under the name Romania. However, it should be noted that the referendum was anything but free and fair; “Intimidations and arrests were not infrequent” and up to “nine-tenth of the population were denied the right to vote,” and that the vote only was held after some “bizarres manoevres diplomatiques.”
Here is an older (free) historical book on the employment of plebiscites to determine sovereignty. Here is the new, well-timed, and not free March 2014 book by Matt Qvortrupp, on same topic. Qvortrup, by the way, helped design the referendum for South Sudan.