Month: February 2015

Is Greece really going to leave the eurozone?

No one knows.  Nor should you react too much to the latest headline or tweet.  The further apart the various parties appear to be, the more the whip of concession gets cracking.  The closer to an agreement they may seem, the greater the incentive to play hardball and demand further concessions.  So short-run news reports are hard to interpret, don’t obsess over them.  A given swing very often implies a counter-swing in the opposite direction, even if the latter has not yet made a headline.  So the direction of the last-reported swing just doesn’t contain that much information.

We won’t know until the proverbial “fat lady” sings, namely deposits leave the country at a critical pace, or not, or the ECB cuts off Emergency Liquidity Assistance, or not.

So why, then, do I believe that Greece will leave the eurozone?

First, I do not see that (most) extant commentary is properly accounting for the very recent fiscal collapse of the Greek economy.  I am not sure there is any fix, and the expression “failed state” comes to mind.  The momentum here does not seem to be positive.

Second, I do not assume Syriza — whom I have called The Not Very Serious People — have a coherent bargaining strategy at all.  I take this point from a broader reading of history, where I see that quite often leaders in critical positions simply do not know what they are doing.  By no means is that always the case, but it is more often the case than narrative-imposing journalism encourages us to perceive.

Third, I believe we as observers tend to overestimate the permanence of trends/state of affairs which have lasted ten to fifteen years or more.  That included the Great Moderation and that also includes Greece in the eurozone.  In a broader historical perspective, the arrangement simply doesn’t make sense to me, as there is more than one Europe.  So I am willing to predict its end.  And the next year seems like a quite possible time for that end to come about.

Fourth, I still don’t think enough commentators are stressing how much the creditor eurozone countries see this as a nested game, where concessions to Greece would have to imply larger concessions elsewhere and embolden Podemos in Spain.

Fifth, it is hard to see Greece being in truly safe territory for the next few years to come, even if a handy bargain is dispatched over the next day or two.

I gladly admit all of those reasons are speculative rather than firm or based in concrete information.  But that is what I think and why.  I don’t consider this kind of prediction to be very scientific, but still we proceed by engaging in discourse and, next time around, seeing what we got wrong the time before.

Why is global anti-semitic violence up, when general violence is down?

Kevin Drum reports an anomaly:

…here’s the rate of anti-Semitic incidents in the U.S., as tallied by the Anti-Defamation League. What you see is a peak in the early 90s and a decline ever since. This is exactly the same thing that you see in rates of violent crime in general. In other words, as violent crime fell, violent crime directed at Jews also fell. This makes sense.

But the global picture is quite different. Partly this is probably due to the fact that the worldwide numbers come from a different source (the Kantor Center in Tel Aviv) and are tallied up using a different methodology. But I doubt that accounts for the stark contrast: worldwide, anti-Semitic attacks have been on a straight upward path ever since the late 90s. This is despite the fact that violent crime in Europe, which accounts for most of the incidents, has followed a trajectory pretty similar to the U.S.

Kevin also reports that the Canadian pattern is closer to Europe than to the United States.  You also can find some charts at the link.

Are there any reasonable explanations which involve economic factors?

Accelerating the velocity of goods, a continuing series

Uber for private jets, sort of:

To make travel easier, and to avoid the headache of commercial flying, he [Aaron Smart] often uses JetSmarter, a start-up service that, for an annual membership fee [7k], allows him to fly on so-called empty legs, or private jets flying without passengers on their way to pick someone up.

…In some cases, the flights end up costing the same or less than first-class tickets on a commercial airliner.

Among the start-ups is Magellan Jets, which offers a subscription-based model where passengers can buy blocks of flight time and then get matched to planes through an iPhone app. Magellan users are not tied to a specific plane, which allows more flexibility.

Magellan Jets guarantees an aircraft — including turboprops and helicopters — within 10 hours of a customer’s request in the United States, or within 24 hours in Europe. The company, which is based in Quincy, Mass., and works with about 95 aircraft providers, conducts background checks on flight crews before every trip, said Magellan’s president, Anthony Tivnan.

The full story is here.

The disappointment of the professors?

The huge personal disappointment—and it puzzled me for a long time—was that junior professors did not, by and large, give us work I wanted to print. I knew their professional work was good. These were brilliant thinkers and writers. Yet the problems I encountered, I hasten to say, were absolutely not those of academic stereotype—not esotericism, specialization, jargon, the “inability” to address a nonacademic audience. The embarrassing truth was rather the opposite. When these brilliant people contemplated writing for the “public,” it seemed they merrily left difficulty at home, leapt into colloquial language with both feet, added unnatural (and frankly unfunny) jokes, talked about TV, took on a tone chummy and unctuous. They dumbed down, in short—even with the most innocent intentions. The public, even the “general reader,” seemed to mean someone less adept, ingenious, and critical than themselves. Writing for the public awakened the slang of mass media. The public signified fun, frothy, friendly. And it is certainly true that even in many supposedly “intellectual” but debased outlets of the mass culture, talking down to readers in a colorless fashion-magazine argot is such second nature that any alternative seems out of place.

That is from Mark Greif, an editor and founder of n+1.  He says actually that graduate students do much better than the junior professors.

For the pointer I thank Claire Morgan.

President’s Day fact of the day

During the president’s two terms in office, the Washingtons relocated first to New York and then to Philadelphia. Although slavery had steadily declined in the North, the Washingtons decided that they could not live without it. Once settled in Philadelphia, Washington encountered his first roadblock to slave ownership in the region — Pennsylvania’s Gradual Abolition Act of 1780.

The act began dismantling slavery, eventually releasing people from bondage after their 28th birthdays. Under the law, any slave who entered Pennsylvania with an owner and lived in the state for longer than six months would be set free automatically. This presented a problem for the new president.

Washington developed a canny strategy that would protect his property and allow him to avoid public scrutiny. Every six months, the president’s slaves would travel back to Mount Vernon or would journey with Mrs. Washington outside the boundaries of the state. In essence, the Washingtons reset the clock. The president was secretive when writing to his personal secretary Tobias Lear in 1791: “I request that these Sentiments and this advise may be known to none but yourself & Mrs. Washington.”

There is more here, depressing throughout, and for the pointer I thank Michael Clemens.

How bad is age discrimination in academia?

I believe it is very bad, although I do not have data.  I believe that if a 46-year-old, with an excellent vita and newly minted Ph.D in hand, applied for academic economics jobs at the top fifty research universities, the individual would receive very few “bites.”  Unless of course he or she managed to cover up his or her age.  (I am very pleased with the openness of my own university, I will add in passing.)

Perhaps there are not many examples of this kind of age discrimination (do you know of any?).  In part that is because older individuals are so discouraged from going down that path in the first place.  Furthermore it is likely harder for older individuals to go down that path.  In addition to life-cycle considerations, there may be age discrimination at the stage of graduate admissions.

I rarely hear complaints about age discrimination in academia, though I often hear complaints about gender and race discrimination.  I believe all of these phenomena are real (and unfortunate), and I wonder what exactly this discrepancy indicates.  If anything, I suspect age discrimination is far more extreme, at least when it comes to the final stage of the process, namely the actual interview and hiring decisions.

Is age discrimination less of a concern because “older people as a class” face fewer, other general handicaps than do women or African-Americans?  Or is there some other reason for this difference in worry?

I believe also that older, newly minted doctoral candidates bring useful differences in perspective, as can women and ethnic minorities, due to their differing life experiences.

Here is an article about age discrimination in academia, although I find the cited evidence inconclusive.  Here is an interesting short piece from someone who is arguably the victim of age discrimination in academia.

Even for similarly-aged candidates, is there a bias in academic hiring to prefer “potential” over a solid/good but perhaps not fully inspiring track record?  I believe so.  This is related to the causes of age discrimination, which are not always about age per se.

I found very interesting the new book by Joseph Coleman, Unfinished Work: The Struggle to Build an Aging American Workforce, which deals with some related issues though not primarily in the academic context.

From the comments, on the Greek primary surplus

Tom Warner writes:

…the budget balance fell off a cliff in December. State budget revenues were only 2.4% below adjustment program target in Jan-Nov, but were 14% below target in December and 20% below target in January. That’s a huge shortfall – if a 20% revenue shortfall were to persist for the whole of 2015, that would be more than €11b euros of missing revenues and more than 6% of GDP.

So the issue now isn’t whether Greece can hit some pie-in-the-sky target, it’s whether it can get back to where it was in Jan-Nov of last year. Syriza’s going to have to get the state finances in order very quickly or they’re going to go boom.

Here is Tom Warner’s blog.

Sunday assorted links

1. Should all children wear helmets?

2. Interview with Amy Pascal, with reflections on Bernard Mandeville.

3. Driverless car beats racing driver for the first time.

4, Interesting Krugman post on what is the real price to Greece of continuing the status quo ex ante.  His argument is not exactly my view, but if true in some way, it may imply no deal is on the table.  It would be interesting to write a contrasting “nested game” post about how much one euro’s worth of concessions to Greece cost Germany and others ?? through a rewriting of other, larger eurozone bargains.

5. How much of violence is motivated by a desire to be virtuous?

6. The wedding that is Indian.

Is teaching about instruction or selection?

That is the title of a short essay by Gary Davis, here is the essay in toto:

Teaching is commonly associated with instruction, yet in evolution, immunology, and neuroscience, instructional theories are largely defunct.

We propose a co-immunity theory of teaching, where attempts by a teacher to alter student neuronal structure to accommodate cultural ideas and practices is sort of a reverse to the function of the immune system, which exists to preserve the physical self, while teaching episodes are designed to alter the mental self.

This is a theory of teaching that is based on the inter-subjective relationship between teacher and learner. This theory posits that teaching does not, as is commonly assumed, take place via instruction from teacher to students, but rather through a process of selection in the learner’s brain, stimulated by materials and activities utilized by the teacher. In this theory, the mechanism that drives the selection process in learners’ brains is co-regulated emotional signaling between teacher and learner. From this perspective, the power of formative assessment is that it intrinsically carries with it emotional aspects for both learner and teacher, in that it provides a feedback relationship between them both, and so, according to the Greenspan & Shanker theory of cognitive symbolic development, promotes cognitive development.

That is from the Journal of Brief Ideas, a new and worthy web site, and for the pointer to the site I thank Michelle Dawson.

Storing Paco (negative nominal interest rates)

Paco is a dog who lives in Norman, Oklahoma.  Recently I learned it costs $12 to store him for a day, with webcam services attached.  In this sense there is a negative nominal interest rate on Paco.

You might store Paco for a day if you are going to the Thunder-Clippers game, and you see leaving him at home as too risky.  For related reasons, you might pay 0.75% to put your funds in Danish currency.

If all resources are costly to store, rather than some of them yielding a return, you would expect an economy to shrink over time, just as your Danish holdings eventually will waste away.  Similarly, Paco does not paint your house or make it more valuable, and so both he and the home decline as the clock ticks.

Some parts of the economy are productive, so why pay for storage rather than investing there?  Either those sectors are very risky, or there is no free entry into those investments.

In many (but not all) countries, consumer confidence measures are reasonably high and VIX indices are low, indicating that expected volatility is probably not so high. If these safe-ish-looking numbers were wrong, however, we would have a lot of reason to worry.  Negative nominal rates — with negative real rates even lower in most cases — would imply there is a great deal of risk.

Alternatively, perhaps there is no free entry into productive investments.  That suggests productive investments are not being replenished over time, and we might expect the growth rate to fall, eventually, and in the meantime for inequality to rise.  That is another story of decay and decline.

Right now there are about $2 trillion in eurozone bonds with negative yields, or so I am told.

I liked Paco (more importantly Paco liked me), but I do not enjoy living in a Paco economy.  I think of the calm before the storm and wonder how to reconcile the observed calm and the potential for the storm.  I do not like the most obvious attempts at reconciliation.

When it comes to policy: “Trying to keep nominal rates below the cost of currency storage and movement would convert bankers back into goldsmiths, tightening rather than loosening monetary conditions.”  That’s not any fun either.

What is it like to hear your own voice in an automated system?

…Most disturbing for Mr Briggs, was when he received a phone call from himself trying to flog payment protection insurance.

Briggs was also the voice of Siri for a while.  Here is from another person who has been the voice of Siri:

The 65-year-old confesses she found listening to Siri a bit creepy. It was not that she hated hearing herself — that is an everyday occurrence for the voice recording artist. She is used to hearing her voice over tannoys at airports and stores, as well as telephone on-hold systems. She is her son’s bank’s automated voice and it tickles her to assume that voice and taunt him by saying: “Thank you for calling the bank. You are overdrawn.”

It was interacting with herself that felt so peculiar. “It was very strange having my voice coming back to me from my hand. I said, ‘Hi Siri, what are you doing?’ Siri said, disgustedly: ‘Talking to you.’”

That is from Emma Jacobs at the FT, interesting throughout.

Korea (Japan) fact of the day

The average wage of Korean workers has surpassed that of Japan in terms of purchasing power parity (PPP) for the first time. In addition, Korea topped the list of OECD member countries in the pace of wage increases from 1990 to 2013. However, Korean ranked second among OECD counties in terms of wage inequality. Wages rose sharply but it happened around large companies so wage inequality was deepening among workers.

According to the 2014 wage report released by the Economic and Social Development Commission on Thursday, the wage of the average full-time Korean worker stood at $36,354 as of the end of 2013, higher than $36,354 in Japan in terms of PPP.

There is more here, via Jonathan Cheng.