Category: Current Affairs
Is the American public becoming more conservative?
Sort of, yes, as John Sides reports:
Importantly, the public has not moved in a conservative direction in all issue areas. For example, support for same-sex marriage has been increasing across all states. It is also worth noting that our findings on the 1960s and 2000s hides important shifts in policy mood between these periods, such as increased policy liberalism during the 1980s. However, when it comes to support of government programs, the net conservative shift is clear. Considering the evidence that inequality is near an all-time high, this may seem like a surprising result. Prominent economic models, for example, expect that as the rich get richer, public support for government policies like spending more on education, infrastructure, and job creation would increase. Instead, across the country, the public’s policy mood has moved in a conservative direction.
There is more of interest here.
Ho hum, move along, nothing to see here (really)
I can’t load the image into WordPress for some reason, but check out this picture of how VIX — one measure of U.S. market volatility — is behaving in recent weeks and months. It’s down, and staying low.
This is one reason why I am not much covering the government shutdown or debt ceiling crisis, though I view both disputes as inefficient, harmful, and tactically unwise to boot. In fact, that graph should be plastered below most of the blog posts you read on these topics.
The back end glitches in Obamacare
Very few of the individuals trying to buy health insurance are getting through to all the steps of the federal ACA website and using it successfully. But once they register, they still may not have actual coverage plans, with successes running at what is (possibly) a one in one hundred rate:
As few as 1 in 100 applications on the federal exchange contains enough information to enroll the applicant in a plan, several insurance industry sources told CNBC on Friday. Some of the problems involve how the exchange’s software collects and verifies an applicant’s data.
“It is extraordinary that these systems weren’t ready,” said Sumit Nijhawan, CEO of Infogix, which handles data integrity issues for major insurers including WellPoint and Cigna, as well as multiple Blue Cross Blue Shield affiliates.
Experts said that if Healthcare.gov‘s success rate doesn’t improve within the next month or so, federal officials could face a situation in January in which relatively large numbers of people believe they have coverage starting that month, but whose enrollment applications are have not been processed.
There is more here, via Megan McArdle, who for years has been predicting major problems with the web sites. By the way, these are not fundamentally problems of high usage or high demand.
Will the Swiss vote in a guaranteed annual income?
Switzerland will hold a vote on whether to introduce a basic income for all adults, in a further sign of growing public activism over pay inequality since the financial crisis.
A grassroots committee is calling for all adults in Switzerland to receive an unconditional income of 2,500 Swiss francs ($2,800) per month from the state, with the aim of providing a financial safety net for the population.
Organizers submitted more than the 100,000 signatures needed to call a referendum on Friday and tipped a truckload of 8 million five-rappen coins outside the parliament building in Berne, one for each person living in Switzerland.
With that, a married couple could piece together more than 67k and simply not work, so this sum appears infeasible. There is more information here, hat tip goes to Evan Soltas.
Competency-based education comes to Wisconsin (hi future)
Later this year Wisconsin’s extension system will start a competency-based learning program, called the Flexible Option, in which students with professional experience and training in certain skills might be able to test out of whole courses on their way to getting a degree.
Competency-based learning is already famously used by private institutions like Southern New Hampshire University and Western Governors University, but Wisconsin will be one of the first major public universities to take on this new, controversial form of granting degrees. Among the system’s campuses, Milwaukee was first to announce bachelor’s degrees in nursing, diagnostic imaging, and information science and technology, along with a certificate in professional and business communication. UW Colleges, made up of the system’s two-year institutions, is developing liberal-arts-oriented associate degrees. The Flex Option, as it’s often called, may cost the Wisconsin system $35-million over the next few years, with half of that recovered through tuition. The system is starting with a three-month, all-you-can-learn term for $2,250.
If done right, the Flex Option could help a significant number of adults acquire marketable skills and cross the college finish line—an important goal in Wisconsin, which lags behind neighboring states in percentage of adults with college diplomas. There are some 800,000 people in the state who have some college credits but no degree—among them Wisconsin Gov. Scott Walker, who dropped out of Marquette University. He had pushed the university system to set up the Flex Option early last year, when he was considering inviting Western Governors to the state to close a statewide skills gap in high-demand fields like health care, information technology, and advanced manufacturing.
The article seems to suggest that some professors in the Wisconsin system are opposed to this innovation. Developing…
Betting market in how long the shutdown will last
There is one site here, American Civics Exchange, with a real money payout for the top predictor, the mean consensus says 18 days. I am not sure how liquid this market is.
For the pointer I thank Chris F. Masse. Chris also sends along this site on prediction markets.
Why did Obama try to scare the markets?
Yesterday Obama played a new strategy:
Obama dismissed talk on Wall Street that Washington will solve its problems, warning that the fight this time is putting not only government operations at risk, but the debt ceiling as well.
“I think this time it’s different,” Obama said in the interview. “I think they should be concerned.”
Usually political leaders don’t like to spook markets. Presumably Obama hoped to spook markets, which in turn would put pressure on Republicans sooner rather than later. The problem with waiting for “the spook” to come later is that there may not be enough time to put a deal together at the last minute, or trembling hands may make a last minute deal too risky.
But can Obama spook markets in this fashion? Obviously markets know that Obama has an incentive to talk up the fear for this reason. The market might thus remain unruffled, or at least it won’t be Obama’s words that are making things worse (the risk of short-term default is going up in the markets). Furthermore, let’s say that Obama’s strategy, if it could strike fear into the hearts of market traders, would work in pressuring the Republicans. Markets know that too, and so again the fear doesn’t get off the ground.
It is interesting to compare this to the standard game where a politician tries to talk the value of the domestic currency up or down on world markets. A president or central banker might, by saying a weaker currency will be tolerated, signal the future stance of fiscal or monetary policy. Since a leader who wants a stronger currency won’t try to talk down his nation’s money, this strategy (sometimes) succeeds, albeit with multiple equilibria. But here Obama’s cheap talk isn’t signaling his inner preferences about bond prices, but rather it is an attempt to manipulate trading strategies. If Obama sees his own talk as ultimately bullish (which is presumably the case if he is saying it), perhaps markets will too.
Would Obama’s strategy work if he blurted out the worries while evidently drunk? Studied Captain Queeg? Stated them “mistakenly” into an open microphone, of which he was supposedly unaware? What if he just begged everyone to believe that things were really, really bad?
Markets in Everything: Fake Articles
DISGUISED as employees of a gas company, a team of policemen burst into a flat in Beijing on September 1st. Two suspects inside panicked and tossed a plastic bag full of money out of a 15th-floor window. Red hundred-yuan notes worth as much as $50,000 fluttered to the pavement below.
Money raining down on pedestrians was not as bizarre, however, as the racket behind it. China is known for its pirated DVDs and fake designer gear, but these criminals were producing something more intellectual: fake scholarly articles which they sold to academics, and counterfeit versions of existing medical journals in which they sold publication slots.
…The pirated medical-journal racket broken up in Beijing shows that there is a well-developed market for publication beyond the authentic SCI journals. The cost of placing an article in one of the counterfeit journals was up to $650, police said. Purchasing a fake article cost up to $250. Police said the racket had earned several million yuan ($500,000 or more) since 2009. Customers were typically medical researchers angling for promotion.
From The Economist.
Hat tip: Derek Lowe.
Arresting the bad guys in Greece
Probably most of you know by now that the Greek government has moved to arrest leading members of Golden Dawn, their neo-Nazi Party, including parliamentary members and leaders of the party. These members seem to be bad people, even by the low standards of neo-Nazi parties worldwide.
Still, it is odd to arrest the leadership the leadership of an elected political party — even a bad one — all at the same time. At least the typical foreign sources are not completely clear on the exact nature of the “criminal gang” charges (there is a slightly more detailed summary here, and here, see also @Yiannisbab, and one reads that the charges themselves have been leaked only in part to the press). I understand full well that this is an attempt to preserve democracy for Greece, not an attempt to eliminate it, but still the resulting situation is rather awkward. And what if some of the key players cannot be convicted? What kind of new elections are required? And until conviction, what kinds of political powers, and claims to political funds, do the defendants have? As Gideon Rachman wrote: “Mass arrests of legitimately elected politicians should always spark unease.”
From this distance, it is difficult to judge whether the right thing has been done. In any case, when you feel you have to arrest your neo-Nazi party to limit their influence, things have gone far indeed in a very bad direction. Some sources indicate that fifty percent of the police voted for Golden Dawn.
Addendum: Interestingly, for all of their anti-immigrant stances, the Golden Dawn party seems to have used migrants to sell products illegally on black markets as a revenue raiser.
A point on Spanish economic adjustment
Yesterday Edward Hugh wrote an intriguing passage:
Despite the fact that Spain’s unemployment rate is currently around 27% immigrants continue to arrive in the country (often risking their lives to do so), a fact which puzzled the Financial Times demography correspondent Norma Cohen when we spoke about this article. “Why on earth,” she asked me “would people want to come to Spain with such a high rate of unemployment?” Because salaries are better than in their home countries would be the simple answer, and because they are willing to do work which many Spaniards are reluctant to do, at least at the salaries which are on offer. So economic migrants continue to arrive, an estimated 300,000 of them last year, even though the net migrant flow reversed since more left (both native Spaniards and immigrants) with Spain’s population falling for the first time in modern history as a result.
One interpretation of this finding (not one that Hugh necessarily endorses) is thus. Given the quality of its institutions, Spain is due for a lower wage structure, with lower quality jobs, as they might be perceived by the workers themselves. To some extent, Spain will achieve this new equilibrium by population adjustment and exchange. Spanish engineers will move to southern Germany and Ecuadorans will move to Spain.
Hugh’s post is mostly about Latvia, here is another interesting bit:
…three IMF economists (hereafter BGG) effectively signed off on their study of “what just happened on Latvia” and, they hoped, drew to a close a debate which has been going on now for some 6 years. In fact, far from closing the debate, what they may have done is effectively extend it into new terrain, since these apparently harmlesss words – “the recovery from the slump is largely complete” – have far reaching implications, as does the methodology they use for reaching it. These implications reach well beyond Latvia, and even far beyond the Baltics and the CEE in general, despite the conclusion that everyone seems to be reaching that Latvia was just a “one off”. Possibly without intending to do so, they have drawn onto the clinical investigation table issues which have been mounting up in the theoretical lumber rooms of neoclassical growth theory for some time now, issues which begin to assume a paramount practical importance in the context of our rapidly ageing societies. What, for example, do we understand by the term “convergence” these days? And if “steady state” growth can no longer be understood as implying a constant growth rate (trend growth in developed economies is now systematically falling) should we be considering the possibility that headline GDP growth will at some point turn negative, even if GDP per capita may continue to rise, due to the fact that populations are steadily starting to shrink. And if the answer to the former question is “yes”, then what are the implications of this for the financial system, for the system of saving and borrowing, and for the sustainability of legacy debt? Not little questions these, but one which will need to find answers and responses in countries like Latvia over the next couple of decades.
A simple account of the pending government shutdown
The House GOP has voted to repeal Obamacare 41 times, as of last count, but that link is from Sept.12 and maybe by now the number is higher yet. One can thus conclude that the GOP sees advantage in staking out a public position against Obamacare, whether this be with voters, donors, primary opponents, whatever.
By threatening a government shutdown over Obamacare defunding, the GOP is again staking out a public position against the law. Such a statement is more focal, and generates more publicity, than a 42nd vote for repeal. Everyone is talking about it, even me (sorry people). If you’ve voted 41 times for repeal, you will like the fact that everyone is concerned with this new dispute.
If the GOP lets the government actually shut down, people will talk about their Obamacare stance even more. But the party, and its representatives, will bear costs from being associated with the shutdown, which is inconvenient, hurts the economy, and lowers our international status. We don’t know whether they will cross this threshold, but either way it is a purely political calculation and not especially mysterious or “irrational.”
It seems to me that ideally the GOP would prefer to “negotiate” forever, without having to shut down the government at all, see this recent report.
The GOP also wishes to combat the notion that it is the intransigent party, and a battle over the relatively unpopular ACA (“why will Obama negotiate with Putin and Assad but not with us?”) is a better arena for them than most of the other venues where this clash of reputations might pop up.
The GOP, from its budget strategies, might manage to repeal the medical devices tax. Repealing a tax, and chipping away at ACA, is in this setting a major victory for them, especially given that right now they are not winning so many victories. It doesn’t matter so much that the medical device tax repeal would be relatively small in its impact. “We forced the repeal of one part of Obamacare” is a big symbolic victory.
Recent events are simply public choice theory in action.
The nature of current unemployment
Dylan Matthews writes:
…Short-term unemployment is actually lower than it was in 2007. Indeed, the percentage of the labor force that had been unemployed for five weeks or less didn’t grow all that much during the economic meltdown. What changed was what happened after or within those five weeks. In 2007, they typically ended with a job. In 2009 and 2010, they more often ended with another few weeks of unemployment. The result is that if you break down the unemployment rate by duration, the problem appears to be almost entirely about long-term unemployment…
There is more here, including a good picture.
Syria crisis fact of the day
Via Chris Blattman, from Hugh Eakin and Alisa Roth:
Already, the number of school-age Syrian children in Lebanon is scheduled to surpass the entire population of school-age Lebanese children by the end of the year.
The article is interesting more generally.
Do Americans favor debt ceiling conditionality?
I don’t think there should be a debt ceiling at all, and I also don’t favor conditionality on raising it, as I don’t think hostage-taking leads to better policy in the long run or even in the short run for that matter. Yet it seems to me this is an under-reported angle on the recent controversies:
Americans by a 2-to-1 ratio disagree with President Barack Obama’s contention that Congress should raise the U.S. debt limit without conditions.
Instead, 61 percent say that it’s “right to require spending cuts when the debt ceiling is raised even if it risks default,” because Congress lacks spending discipline, according to a Bloomberg National Poll conducted Sept. 20-23.
That sentiment is shared by almost three-quarters of Republicans, two-thirds of independents, and a plurality of Democrats. Just 28 percent of respondents backed Obama’s call for a clean bill that has no add-on provisions.
The Bloomberg article is here, and I would say this means the Republican strategy may be working somewhat better, and be less insane and out of touch, than its critics often suggest. (I do, by the way, understand that the framing of the initial question is going to influence the poll results significantly.)
As they sometimes say, it is time to elect a new people.
http://www.macrodigest.com/
The site is here, and it presents recent macro discussions on an issue-by-issue basis in easy to use, easy to scan form. Furthermore it covers links which I otherwise would not see. I not only visit the site every day (or more), I use it every day, and there are no more than half a dozen aggregator sites where I would say that.
Definitely recommended, and it comes from the LSE Department of Economics.