Category: Current Affairs
Haitian real estate update
More than half of the Haitians driven into tent cities and makeshift camps by the January 2010 earthquake have moved out of them, officially bringing down the displaced population to 680,000 from a peak of 1.5 million, according to the International Organization for Migration.
But what may seem like a clear sign of progress, officials warn, is also a cause of concern.
Very few of the people who left the camps — only 4.7 percent, by the group’s estimate — did so because their homes had been rebuilt or repaired. Instead, a vast majority appear to have been forced out through mass evictions by landowners, or to have left the camps on their own to escape the high crime and fraying conditions there.
Now, most of the former camp dwellers are doubled up in their friends’ or families’ homes, scattered at random in tents and improvised dwellings, or living in “precarious housing” that is dilapidated, damaged or partly collapsed, the organization says. In some cases, the cinder blocks that were toppled by the quake are being cobbled together to make walls again, only more unevenly and wobbly than before.
As for the camps (arguably a step better than the evolving status quo):
Where toilets are provided, each one is shared by an average of 273 people.
The State of the Union
I can understand, although not agree with, wanting to penalize firms for “sending jobs overseas.” I am stunned, however, that the Obama administration’s National Labor Relations Board is trying to penalize Boeing for sending jobs from the state of Washington to the state of South Carolina.
AP: The NLRB complaint filed on Wednesday quotes public statements by Boeing executives saying they put the plant in South Carolina in part to avoid future labor disruptions. The government complaint says this amounts to discriminating based on union activity.
Politicians in South Carolina (mostly Republicans, natch) are not surprisingly outraged but, to its credit, even the Seattle Times editorializes against this move so its hard to see how this will stand. Nevertheless, it’s a bad signal.
Addendum, hoisted from the comments: Jeff Smith: “Perhaps a special tax on Colorado is in order?”
Game theory and the budget
Matt Yglesias writes:
…the right is big government’s best friend…You have a government set to steadily increase spending on autopilot as a result of demographic change and rising health care costs. And you have a Democratic President urging congress to enact spending cuts. But you have conservative politicians refusing to make a serious effort to reach an agreement out of some blend of taxophobia and fear of giving the President a win. The result, again, whether the right realizes it or not, is a gift to the wing of the Democratic Party that disagrees with Obama about the desirability of enacting spending cuts.
I tend to agree with this, but it’s always worth trying to solve for the case where one is wrong. The strategy of “no trade” with Obama could be rational for the Republicans if:
1. Not much will happen this time around anyway, so the Republicans are investing in credibility for a future bargain, perhaps post-2012.
2. Republicans think that prevailing economic conditions will turn public opinion in their favor, over time, and so a later bargain is preferable.
3. Republicans think that if a fiscal crisis comes, drastic spending cuts are especially easy to enact, relative to tax increases, and they are willing to risk that crisis. It’s hard to argue that this belief is true (reindexing benefits to a saner level takes a lot of time), although I would not rule out that some Republican Party politicians may hold it.
4. Wait for party leaders to move first, for political cover, and that is a dragons and ballroom dancing game (pdf).
And there is always:
5. Republican politicians are investing in the value of their non-electoral options and that implies group loyalty above other considerations.
None of us know the true model, but we all know the literature on irreversible investment and option value. If you’re not sure of the true model, wait rather than commit. Here is Jeff on deadlines. Another way to put this point is that we can’t, from current Republican inaction, infer much about the likely final outcome.
Gag Orders
How can the abuse of government power be checked when it’s a crime to even talk about the abuse? Important and outrageous story from The Washington Post.
Three years ago, I received a national security letter (NSL) in my capacity as the president of a small Internet access and consulting business. The letter ordered me to provide sensitive information about one of my clients. There was no indication that a judge had reviewed or approved the letter, and it turned out that none had. The letter came with a gag provision that prohibited me from telling anyone, including my client, that the FBI was seeking this information. Based on the context of the demand — a context that the FBI still won’t let me discuss publicly — I suspected that the FBI was abusing its power and that the letter sought information to which the FBI was not entitled.
Rather than turn over the information, I contacted lawyers at the American Civil Liberties Union, and in April 2004 I filed a lawsuit challenging the constitutionality of the NSL power. I never released the information the FBI sought, and last November the FBI decided that it no longer needs the information anyway. But the FBI still hasn’t abandoned the gag order that prevents me from disclosing my experience and concerns with the law or the national security letter that was served on my company. In fact, the government will return to court in the next few weeks to defend the gag orders that are imposed on recipients of these letters.
Living under the gag order has been stressful and surreal. Under the threat of criminal prosecution, I must hide all aspects of my involvement in the case — including the mere fact that I received an NSL — from my colleagues, my family and my friends.
The Post writes “the author — who would have preferred to be named — is legally prohibited from disclosing his or her identity in connection with receipt of a national security letter. The Post confirmed the legitimacy of this submission by verifying it with the author’s attorney and by reviewing publicly available court documents.”
Chopin’s Sonata #2
Democrats and Republicans are joining to oppose one of the most important features of President Obama’s new deficit reduction plan, a powerful independent board that could make sweeping cuts in the growth of Medicare spending.
There is a growing move to do away with the board and that move enjoys widespread support:
Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, called it “a rationing board” and said Congress should not “delegate Medicare decision-making to 15 people appointed by the president.” He said Mr. Obama’s proposal would allow the board to “impose more price controls and more limitations on providers, which will end up cutting services to seniors.”
Here is the article (1/20). Here is Chopin’s Sonata #2. On the brighter side, here are outlines of a budget deal under discussion.
Rio’s off-shore oil
Already estimated to contain 50bn barrels, and with much of the area still to be fully explored, the fields contain the world’s largest known offshore oil deposits. In one step, Brazil could jump up the world rankings of national oil reserves and production, from 15th to fifth…
“This could be the largest private sector investment programme in the history of mankind – more than actually putting a man on the moon,” says Pedro Cordeiro of the Bain & Company consultancy in São Paulo. He estimates the total investment could be roughly equivalent to the annual gross domestic product of Australia. “Not counting new concessions, you will have $1,000bn of investment over the next 10 years. It’s huge.”
The article is interesting throughout. Ken Rogoff put it well: ““Brazil has everything that China doesn’t…”
For the pointer I thank Rohan Varavadekar, who also refers me to this article on hospital competition through billboards.
David Brooks nails it
The Democrats are on defense because they are unwilling to ask voters to confront the implications of their choices. Democrats seem to believe that most Americans want to preserve the 20th-century welfare state programs. But they are unwilling to ask voters to pay for them, and they are unwilling to describe the tax increases that would be required to cover their exploding future costs.
…Until they find a way to pay for the programs they support, they will not be serious players in this game. They will have no credible plans and will be in an angry but permanent retreat.
Here is the full column (NYT), worth one of your twenty. As this is the blogosphere, it’s worth noting that many bloggers, including many of the best ones, will come right out and advocate higher taxes on the middle class. But the Democrats more generally have painted themselves into a corner on this issue. People will look back and see the non-expiration of the Bush tax cuts as a turning point.
Will the government shut down?
Here are the Bookmaker’s odds:
Will the U.S. Congress reach an agreement on the federal spending cut bill for the rest of the fiscal year before March 4th?
YES -140 58%
NO -110 47%[The +/- Indicates the Return on the Wager. The percentage is the likelihood that response will occur. For Example: Betting on the candidate least likely to win would earn the most amount of money, should that happen.]
For the pointer I thank Samuel Arbesman. Why is there no InTrade.com market?
Addendum: InTrade now shows a 39 percent chance of a shutdown before the end of June.
How are Irish banks doing?
Depending how you do the count, at best the headline “ECB plans emergency €60bn scheme for Irish banks” is the seventh lead article on www.irishtimes.com right now. (It’s a much bigger story on www.ft.com.) It’s right between “Jesuits pay $166m to abuse victims” and “Mammies prefer hugs to presents.”
Forthcoming stress tests this week will reveal that Irish banks need a good deal more capital to keep going. You will recall that “silent runs” on Irish, Portuguese, and other banks are the main force which can require a rather sudden end to euro membership, by bringing capital controls and convertibility suspension (with completely hollowed out domestic banks as the alternative).
The first country which can, with no shame, credibly threaten to leave the eurozone or outright default can blackmail Brussels and Berlin into further aid, due to fear of contagion effects. Some are arguing that Portugal is already assuming that strategic stance.
Former CEA Chairs Call for Deficit Reduction
Ten former chairs of the Council of Economic Advisors have written a letter calling for deficit reduction:
As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties.
There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention….
It is signed by Martin N. Baily, Martin S. Feldstein, R. Glenn Hubbard, Edward P. Lazear, N. Gregory Mankiw, Christina D. Romer, Harvey S. Rosen, Charles L. Schultze, Laura D. Tyson, and Murray L. Weidenbaum.
Privatize the Spectrum
The proposed merger between AT&T and T-Mobile is getting a lot of attention with most of the focus being on whether consumers will pay higher prices. The answer is maybe. Prices per minute have been falling and this was true even following the two big mergers in 2004-05 (Cingular/AT&T Wireless, and Sprint/Nextel). Quality-adjusted prices, i.e. taking into account the post-merger buildout of 3G networks, have fallen even further. On the other hand, although there are competitors in many large local markets and potential competitors (the Cable companies own a chunk of spectrum not yet in use) a merger could increase market power. But even if consumer prices did rise the merger is probably still a good idea. It’s long been known that even small cost savings can outweigh losses to consumers from a price increase (Nobelist Oliver Williamson was one of the first to drive this point home.)
The big issue, however, is not the merger. The big issue is reallocating spectrum from low to high value uses. My colleague Thomas Hazlett argues that spectrum currently being used for low-value over-the-air broadcast of television could, if it were reallocated to high-value uses like wireless, increase consumer welfare by over a trillion dollars. Moreover, for a price of about 3 billion we could switch almost all of the tv-viewers to cable or satellite. President Obama has pledged to move a big chunk of spectrum, about 500 mhz, to wireless but the process is slow and highly politicized. What really needs to be done is to auction off as much spectrum as possible with as few restrictions on it use as possible. Let the market allocate spectrum across all uses, allowing value maximizing trades. More spectrum would not only be good in itself it would alleviate any concerns about the merger.
The history of Libyan unity and partition
In 1949, Benjamin Rivlin wrote an instructive piece “Unity and Nationalism in Libya” (JSTOR), excerpt:
…the Big Four have been sharply divided on the question of Libyan unity…In supporting the Sanusi claims, Great Britain has become the chief advocate of a divided Libya…Similarly, the United States has given support to a divided Libya by abandoning its original proposal for an international trusteeship, in favor of support for the British position…Not to be forgotten is…France, also, advocated a partitioning of Libya, but a partition of its own special variety. Under the guise of “border rectifications,” France has laid claim to the Fezzan in southwestern Tripolitania and to all of Libya south of the Tropic of Cancer…The French claim is based primarily on the fact that Free French troops wrested this desert region from Italian control, and is an attempt to bolster the sagging prestige of France as a world power by a tangible reward for its role in the war.
The Soviet Union opposed a partition of Libya and favored Italian trusteeship. Back then, it seems that Europe took the lead role and the U.S. followed along. Here is one good sentence:
In examining the history of Libya one is struck with the fact that only on rare occasions has the area constituted a unified political entitity…there have never been firm bonds of union.
The difference between the two territories goes back to antiquity, when the territory was divided by rule by Greece and rule by Phoenicia. Even when Italy claimed the country in 1912, it effectively governed over two separate territories, Tripolitania and Cyrenaica. What is the fundamental principle of division?:
The division of Libya into Cyrenaica and Tripolitania down through the ages is no mere quirk of history. It reflects, rather, the basic physiographic character of the territory. A great natural barrier — the Gulf of Sirte [now Sidra] and the projection of Libyan desert along its 400-mile shore — divides Cyrenaica from Tripolitania, limiting communication between the two territories and to a very large extent shaping their economies. Trade between the two territories has played a minor role, and the movement of the nomadic tribes in both territories has been and remains north-south, not east-west.
And:
Unity vs. separatism has been the chief concern of all political leaders in Tripolitania and Cyrenaica ever since the relaxation of military administration controls during the past three years…
Here is a summary of the Sanusi. Here is a useful map. Having read this article, I have revised upwards my priors on the likelihood of partition as the result of the current conflict, whether or not Gaddafi falls.
U.S. press coverage of foreign crises
Here is a well-known but now somewhat dated (1991) paper by Zaller and Chiu. It suggests two regularities:
1. U.S. press coverage tends to take its positions from the range of views which exist within government (“indexing”).
2. When a foreign conflict goes well, the U.S. press becomes more hawkish; when the conflict goes less well, the press becomes more dovish. The press swing in opinion is stronger than the swing of opinion from official sources.
Here is an empirical paper, applying this framework to the Libya crisis of 1985-1986. Here is a general look at the indexing hypothesis, again dated and pre-blogosphere. Here is a 2008 paper, showing greater influence for media, relative to the distribution of opinion within government.
A tale of Washington and Iowa and Libya
Sunstein got in such an involved conversation with a voter that he left [Austan] Goolsbee and [Samantha] Power outside, shivering in the snow. The three joked that, between their three sprawling areas of expertise, they had almost any potential question about Obama covered. They failed at the first door, when a voter wanted to know the location of the nearest caucus.
Sunstein and Power, who is 39, soon went on a date, and she asked him if he ever fantasized about doing anything else. “I expected him to say he dreamed of playing for the Red Sox,” she told me. “His eyes got real big and he said: ‘Ooh! OIRA!’ ”
“And I said, ‘What the hell is that?’ ”
The article is here (beware Canadians, not worth the click!). Here is a recent article on Samantha Power as the architect of Obama’s Libya policy. Here is an article on why last chapters disappoint.
Haitian update
Has a new dystopian form of urban organization been invented, or rather reinvented in the Western hemisphere, namely the aid-supported tent city?:
A large but unknown number of people in the camps are choosing to stay in them. Life is better there than in the sprawling, gang-infested slums. Camp-dwellers pay no rent. Nor do they have to pay for sanitation, because latrines are often provided by the aid agencies, or clean water, since that is often supplied by the agencies or by the government. Medical services are also easier to find and, again, probably free, courtesy of agencies like UNICEF or charities like Médecins Sans Frontières. A cholera epidemic makes that all the more vital.