Category: Current Affairs
Totally conventional views which I hold
Most days on MR we try to bring you something new, whether it be a report or an opinion of ours. Even if it is not truly new, perhaps it is at least new relative to the discourse on most other web sites. We are reluctant to recycle old posts, even though I am still thinking about whether a lot of food tastes better when you eat it with your fingers.
But maybe telling you something conventional can be new in a way too. So here are a few totally conventional views which I hold, or still hold, but otherwise don’t bother reporting very often if at all:
1. Scott Walker and Jeb Bush are the most likely candidates to win the GOP nomination.
2. The GOP won’t try to repeal Obamacare, see #Syriza.
2b. Obamacare hasn’t made us healthier (yet?), but it has served as an inefficient form of wealth insurance for some lower-income groups. On net, the negative health consequences of the disemployment effects of the law could easily counterbalance the direct positive health care access effects. Imagine that, a health care reform that doesn’t even boost health. Given their utility functions, many of the law’s backers should be happy with it, but they shouldn’t think I am impressed with their numerous “victory lap” blog posts. Here is my 2009 post on what we should have done instead. I still think that, noting that I remain happy with the cost control parts of what was done.
3. The Supreme Court will rule against the current version of Obamacare and send the matter back to Congress. Confusion will result.
4. During the upward phase of the recovery, monetary policy just doesn’t matter that much.
5. We are still in the great stagnation, for the most part. But with nominal gdp well, well above its pre-crash peak, it is not demand-based “secular stagnation.” It just isn’t, I don’t know how else to put it. And the liquidity trap is still irrelevant and has been since about 2009.
6. There is modest good news on the wage front, but so far it doesn’t amount to a fundamental shift in regime. Following the monthly squiggles doesn’t tell us much. And since wage trouble dates from 1999 and arguably earlier, I don’t attribute much of it to debt overhang from the recession.
7. Edward Snowden is both a hero and a traitor.
8. Syriza still has to try to make a Greek economy work with roughly the same means their predecessors had. I don’t think they can do it, and I am sticking with my recent Grexit prediction, which by the way had an 18-month time horizon on it (see my earlier Twitter response to Felix Salmon).
9. No one knows what to do about ISIS or Putin. The latter is a bigger danger than the former. Confusion will result.
If you’re not excited, fine, that’s the point. The predictable is a kind of news, too. But hold on and come back, because tomorrow you might just hear more about remote-controlled, cyber cockroaches.
Goolsbee and Krueger on the auto bailout
I have not read their new paper, but here it is (pdf), along with the abstract:
This paper takes a retrospective look at the U.S. government’s effort to rescue and restructure General Motors and Chrysler in the midst of the 2009 economic and financial crisis. The paper describes how two of the largest industrial companies in the world came to seek a bailout from the U.S. government, the analysis used to evaluate their request, and the steps taken by the government to rescue them. The paper also summarizes the performance of the U.S. auto industry since the bailout and draws some general lessons from the episode.
Why is the British electorate fragmenting?
The Economist, referring to “six-party politics,” reports:
In 1951 the Conservative and Labour parties together scooped 97% of the vote; in May, opinion polls suggest, they will each win barely a third.
You will note that the UK has a fairly strict “first past the post” system, so if such fragmentation happens in their system perhaps it could happen anywhere. A second Economist article offers a few hypotheses about why this is happening:
1. People are now used to shopping in markets, and on the internet, for exactly what they want.
2. Politics has become increasingly multi-dimensional; this article cites the possibility that a “libertarian-authoritarian” axis may be replacing “left-right,” or consider the issue of Scottish independence.
3. Perhaps current politicians are less skilled than Thatcher and Blair at attracting the allegiance of a broad cross-section of British society.
I worry that the general decline of discretionary government spending may make politics less stable (but also more interesting, not necessarily in a good way). When there is plenty of spending to bicker about, politics revolves around that question, which is relatively harmless. When all the spending is tied up, we move closer to the battlefield of symbolic goods, bringing us back to “less stable and more interesting.” If that is a cause, this trend is likely to spread. (In a new paper David Schleicher argues that electoral reform may not stop polarization and splintering.)
Arguably a good deal of American politics is a cloaked debate over whether a particular kind of Christian worldview ought to enjoy higher or lower social status. Since Britain doesn’t have much religion, perhaps that is why they are fragmenting in so many other directions. Exactly which British debate is supposed to be imposing the uni-dimensionality on the political spectrum?
Assorted Greek links (Greece lost)
1. The new Greek deal and trust. Die Welt (in German) says that Greece has four months to get its act in order, otherwise prepare for an orderly exit. Here is the comment of the Greek government issued at the end of the Eurogroup meeting, worth a read. Here is a Rubens painting of Achilles.
2. Numerous sources suggest that without a deal, Greek banks would have been broke on Tuesday (Monday is a holiday there). Given game theory, does this raise or lower your opinion of the quality of the deal that was cut?
3. Peter Spiegel notes on Twitter: “Morning after: still not sure why @syriza_gr picked this fight. Got v little, & spent lots of political capital they need for 3rd progm negs”
4. The struggle resumes on Monday, with further negotiations required to define the actual substance of the policy reform part of the agreement.
5. It seems to me that if you put aside the talk, and the creative ambiguity on the primary surplus numbers, that overall Greece is on a shorter leash than before. The Germans have shown credibly that they are willing to live with Grexit, Syriza showed it doesn’t have a Plan B, doesn’t have so much support within the eurozone, and it is revealed that Greek deposit flight is on a trigger-sensitive path at any moment.
Articles and tweets about Amartya Sen which I do not really understand
Here is one account:
Nobel Laureate Amartya Sen, today withdrew his candidature for a second term as Nalanda University chancellor. He blamed this on the Government’s delay in approving his candidature. He also alleged that the Government is using its political might to “interfere in academic matters“. He was helped by fellow “liberals” on Twitter, in playing the victim of political vendetta.
Here is Sen’s full letter of protest. Here is the matter trending on Twitter. Many of the opinions expressed are rather strong.
The military that is German
The German army has faced a shortage of equipment for years, but the situation has recently become so precarious that some soldiers took matters into their own hands.
On Tuesday, German broadcaster ARD revealed that German soldiers tried to hide the lack of arms by replacing heavy machine guns with broomsticks during a NATO exercise last year. After painting the wooden sticks black, the German soldiers swiftly attached them to the top of armored vehicles, according to a confidential army report which was leaked to ARD.
…To make matters worse, the broom-equipped German soldiers belong to a crucial, joint NATO task force and would be the first to be deployed in case of an attack.
There is more here.
Complex sentences to ponder
How quickly are negative nominal interest rates self-correcting? Izabella Kaminska at the FT serves up part of an answer here:
Yet, in a globalised FX market, it’s arguably not until all carry is exhausted that excess funds can lead to a commodity-style liquidation effect that corrects the price of money against a basket of goods and services, by means of actual consumption.
Quick: true, false, or uncertain? Show your work. The rest of the post will make your head hurt, in the best sense of course.
Via Craig Richardson, here is a story about a parmesan cheese bank.
Norway (Greece) fact of the day
In 1971 — when the North Sea oil was just beginning to flow — the average Norwegian was about as poor as the average Greek…
That is from Matthew C. Klein at the FT, the post on Norway is interesting more generally. Here are my earlier remarks on whether Norway is an economically overvalued country.
Addendum: See the comments, it is not obvious this is true, I will look into the matter (but must teach shortly). You can see in this OECD data source that, in 1971, Finland is only barely richer than Greece per capita, ppp-adjusted. Via Klein on Twitter, here is the original source, from Norges Bank through BIS, but it seems to run counter to the other numbers. Matt has some follow-up tweets here.
From the comments, on Grexit
Syriza will deal. As with the “troika,” there’ll be a change in vocabulary so they can minimize loss of face, but they’ll deal. They simply don’t have a choice if they plan to remain in power very long.
Not only do most Greeks oppose Grexit, but the sympathies of far too much of the Greek army and law enforcement agencies are, frankly, not with Syriza. Nobody knows if they’ll acquiesce to being paid in drachmae and not deutschmarks by the grandsons of “anarcho-communists.”
Neither, incidentally, do the rest of the EU gain anything from another failed state and/or Russian client in the Balkans.
By now, they’ll have told Varoufakis, in some form, formally (during discussions) and informally (during networking breaks):
“Yanis. We get it. You’ve made your point. Greece is a miserable place right now. There’s a lot of it going around. Listen to us. Please. We secretly care about Greece enough not to want another 1967 or Balkan war. You don’t have to believe that, but it’s true.
“We may have overdone it. Fine. We’re flexible. But seriously—if you walk away we’re looking at another 1967 when you run out of cash. Greece will become an even more miserable place real fast. Do you want our help or not?”
That is from Richard Besserer.
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?
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.
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.
How much should you spend on Valentine’s Day flowers?
Showing that you care:
“It’s always about upping the ante,” says Meredith Waga Perez of Belle Fleur in the Flatiron District, who says clients drop as much as $5,000 for the big day.
Last year, Aleks Degtyarev spent $6,000 at Flower District-based rose-delivery service, Ode à la Rose, to propose to his girlfriend of three-plus years, Lulu.
“I wanted 1,114 roses,” says Degtyarev, a 33-year-old from Bay Ridge. “A rose for every day we knew each other.”
A friend helped him strew the thousand-plus loose stems across a Montauk bluff.
There are a variety of other anecdotes at the link. You don’t have to be a proponent of romantic countersignaling, or a member of Kakuhidou, to think this is overall counterproductive.
For the pointer I thank D.
The Valentine’s culture that is Japan against the romantic-industrial complex
On February 14th, Kakumei-teki himote doumei (革命的非モテ同盟) — literally, “Revolutionary Alliance of Men That Woman Are Not Attracted To”– will gather in Shibuya, an area of Tokyo popular with young couples, to protest Valentine’s Day and its roots in what they call “romantic capitalist oppression.”
The group, known as Kakuhidou for short, was started in 2006, when its founder, Katsuhiro Furusawa, returned home one day after being dumped by his girlfriend and began reading the Communist Manifesto. He quickly came to the realization that being unpopular with girls is a class issue.
Since then, the group has held several demonstrations each year, all coinciding with holidays that are associated with romantic love in Japanese culture, such as Valentine’s Day, Christmas, and White Day .
Kakuhidou’s slogans combine Japanese internet culture with classical Marxism, and its origins in cyberspace can be charted through its choice of language. For example, one frequent target of the group’s admonitions are the so-called “riyajuu” (リア充）, a neologism frequently used in online communities such as 2chan to refer to those who experience fulfillment in their offline lives (riyajuu is a portmanteau that combines “real” with “jyuujitsu”, the Japanese word for fulfillment).
The release posted on Kakuhidou’s website for this year’s anti-Valentines parade says “the blood-soaked conspiracy of Valentine’s Day, driven by the oppressive chocolate capitalists, has arrived once again. In order to create a brighter future, we call for solidarity among our unloved comrades, so that we may demonstrate in resolute opposition to Valentine’s Day and the romantic industrial complex.”
At previous events, leaders of the group have yelled slogans such as “I hope all riyajuus explode! But we’re still a little jealous!” while wearing shirts that say, roughly, “sex is useless.”
There is more here. By the way, the group’s official vehicle is a Mercedes-Benz.
For the pointer I thank Andrea Castillo.