Category: Current Affairs
The Snuggle Theory of Horror
From a survey on the psychology of scary stories:
With regard to age, there’s a suggestion that enjoyment rises through childhood, peaks in adolescence and then gradually fades with age. Related to this is the ‘snuggle theory’ – the idea that viewing horror films may be a rite of passage for young people, providing them with an opportunity to fulfil their traditional gender roles. A paper from the late 1980s by Dolf Zillmann, Norbert Mundorf and others found that male undergrads paired with a female partner (unbeknown to them, a research assistant), enjoyed a 14-minute clip from Friday the 13th Part III almost twice as much if she showed distress during the film. Female undergrads, by contrast, said they enjoyed the film more if their male companion appeared calm and unmoved. Moreover, men who were initially considered unattractive were later judged more appealing if they displayed courage during the film viewing. ‘Scary movies and monsters are just the ticket for girls to scream and hold on to a date for dear life and for the date (male or female) to be there to reassure, protect, defend and, if need be, destroy the monster,’ says Fischoff. ‘Both are playing gender roles prescribed by a culture.’
Happy Halloween.
The update from Pompeii
Almost every word of this report reflects some of Italy’s broader problems:
A labour union on Thursday reported that a chunk of the wall from Domus of Diomede building on Via Consolare collapsed a day after European Commissioner Johannes Hahn announced that the European Union would give up to 105 million euros to protect and restore the fragile site UNESCO World Heritage site that was buried by volcanic ash around two thousand years ago.
The funds are part of one billion euros earmarked for cultural heritage projects, with particular emphasis on southern Italy, according to Italian minister for regional affairs Raffaele Fitto.
An similar collapse last week prompted Italian culture minister Giancarlo Galan to promise that he would make Pompeii his “the utmost priorty.”
He made almost identical remarks in March shortly after the state of Pompeii led to his predecessor’s resignation.
Only thirty percent of the buildings at the site are considered to be in good condition.
Addendum: Here is a report which doubts whether in fact another wall has collapsed.
Roger Kerr passes away
Here is the obituary, and here, this is very sad news for me. Roger had a huge influence on my life. I spent a good deal of time working for him and with him at the New Zealand Business Roundtable in Wellington and he was always up for a discussion and an argument. He seemed to have boundless energy, and he played a key role in making New Zealand a sounder and better country. A lot of my interest in economic policy comes from my time spent with Roger, most of all my interest in the institutional design of central banks but not just. Roger expected you to be ready to discuss anything, at the drop of a hat, and I consider my time with Roger a major influence on my blogging. He exposed me to the New Zealand classical liberal tradition and from that I saw a lot of deficiencies (and some strengths) of the North American traditions. Roger will be missed but we all know that his influence extended far.
The 99% 98%
The Occupy Wall Street volunteer kitchen staff launched a “counter” revolution yesterday — because they’re angry about working 18-hour days to provide food for “professional homeless” people and ex-cons masquerading as protesters.
For three days beginning tomorrow, the cooks will serve only brown rice and other spartan grub instead of the usual menu of organic chicken and vegetables, spaghetti bolognese, and roasted beet and sheep’s-milk-cheese salad.
They will also provide directions to local soup kitchens for the vagrants, criminals and other freeloaders who have been descending on Zuccotti Park in increasing numbers every day.
This is from the NYPost so take it with a grain of salt but still there is a lesson to be learned beyond the chortle.
Left out of some headlines
Nonetheless the FT reports:
“Here’s where you may be a little bit surprised, but this is where we decided to end last night: the specific elements of the deal, that is to say the structure of the new claim on Greece, remains to be negotiated,” said Charles Dallara, managing director of the Institute of International Finance, the consortium of banks that negotiated on behalf of Greek bondholders.
From PaddyPower, not the same as the InTrade odds
From an email:
As EU leaders gather in Brussels to formulate a financial package to avert monetary meltdown, the latest odds from bookmaker Paddy Power show they face a mammoth task to convince the cynical markets.
Odds for Greece to leave the Euro first and a complete Eurozone break-up have shortened as analysts nervously wait for any detail which will secure the financial fate of the monetary union.
Greece is 2/7 to be first to leave the economic union, with Portugal next at 6/1. Germany is at 16/1 – perhaps an indication that the major player in the currency may fancy leaving the worst countries to their own devices. It is 6/5 at the Eurozone will be non existent by 2015.
Paddy Power said: “The ministers have a lot of work to do here. Concerns continue to grow about the stability of Spain and Italy and Greek financial stability still isn’t a foregone conclusion. If the great and the good in Brussels don’t come up with a detailed plan soon, it’s going to get a whole lot worse and that is what we are seeing in our betting.”
First to leave the Euro
2/7 Greece
6/1 Portugal
8/1 Ireland
12/1 Italy
12/1 Spain
16/1 Germany
16/1 CyprusEurozone Break Up
6/5 Eurozone to break up by 2015
4/7 Eurozone to break up by 2020
Caveat emptor!
Bill Niskanen has passed away
Very sad news of course, it is all over Twitter from reliable sources. I must run and do not at the moment have time to blog a tribute, here is a Cato notice.
Somebody’s culture, I am not sure whose
Last week, restaurant in Edinburgh, Scotland, held a competition to eat the extra-hot Kismot Killer curry. Some of the competitive eaters were left writhing on the floor in agony, vomiting and fainting.
According to reports, two British Red Cross workers overseeing the event at the Kismot Indian restaurant in Edinburgh but became overwhelmed by the number of casualties and ambulances were called. Half of the 20 people who took part in the challenge dropped out after witnessing the first diners vomiting, collapsing, sweating and panting.
It turns out that eating a few pounds of the stuff probably can kill you; hat tip goes to Steve Silberman.
How to exit the eurozone, or Lord Wolfson, how about fifty quid for a blog post?
There is no easy way out of the eurozone, as Tim Harford explains with eloquence and good humor. But here is my best guess at Wolfson’s query:
1. Issue a surprise announcement that all euro deposits in Ruritania will be converted into pesos (or whatever) at a new and lower yet defensible rate. If I try to withdraw my ten euros from my bank, I receive an IOU for ten pesos which is worth say six euros. Over time the government will replace these IOUs with a new paper currency.
2. Let physical currency euros leave the country, and stress they will be honored, in any case they are not easy to confiscate or convert. And a country may need them as a partial money during the transition. Not trying to confiscate them will mean that a lot of the euro currency stays. There will be a dual currency regime for some time to come, but the medium of account will become pesos not euros.
3. If you borrowed money denominated in euros, from a Swiss or German bank, that is between you and them. Obviously a lot of borrowers will be in partial or total default, given the whack to their bank accounts. Let the northern nations bail out their banks, they won’t send tanks to extract the funds from good ‘ol Ruritania. Who knows, the rest of the eurozone might be prompted to set up a sensible bank resolution mechanism — working through the ECB of course — though don’t count on it.
4. The assets of Ruritania banks, namely loans to Ruritania citizens, will be redenominated to pesos. Labor and rental contracts will be redenominated too.
5. Nationalize parts of the banking system if need be, so much the better if you can pass on this one. If the bank is essentially empty, that is a deflationary shock. Have the government take over the bank and fill it with new printed money to restore deposits and counter the deflationary shock. If the country cannot trust its nationalizers, they should just print up more pesos and nail them to the bank balance sheets, risking the resulting corruption and drain of funds.
Are we on track so far? The consumption of imports will fall I believe.
6. What about default? If your country is running a primary surplus (Italy yes, Greece no), partially default on your debt but make strict promises to resume payments ASAP. Capture some wealth from the foreign banks and start the game all over again. Without a significant primary surplus, the (temporary?) cessation of foreign borrowing would mean that the country has to cut government spending further. Make a political judgment here but consider not defaulting; default may be unavoidable for Greece in particular but you can’t blame my plan for how deep in the hole they are.
Let’s sum up which problems have been addressed and which not. The domestic banking system is saved, at least provided the new conversion rate is credible enough that no one expects a repeat of the depreciation. It’s key to make that first announcement a real surprise, good luck! A negative wealth shock will come anyway and my plan has accelerated the arrival of that shock; the best one can do is to combine it with monetary expansion and the positive export shock from devaluation. To fix the external banks, the wealthier countries will need to exercise and perhaps improve their LOLR powers, but that is the case under any plan, not just this one.
Admittedly this plan makes the wealth loss in Ruritania quite transparent, which may be politically unpopular, but that transparency eases the economics of the transition.
Voila! Rinse and repeat as necessary. A lot of this would be eased by high inflation from the eurozone itself but a) that would involve collateral costs on the healthier economies, and b) in any case it doesn’t look like it will happen. I’m sticking with what a small country can do on its own.
No need to write in the comments section that this is “illegal.” Breaking the three percent deficit rule, as France and Germany did, was illegal too. Ruritania will not be hauled before a court of law and I also predict Ruritania will not be ejected from EU per se. Maybe their agricultural subsidies will be cut, let them eat floating exchange rates I say.
Report from the front line
Chancellor Angela Merkel said on Saturday that the European Central Bank has just one mission — to ensure monetary stability.
Merkel said in a speech to her Christian Democrats in Braunschweig on Saturday that treaties prevent the ECB from taking on any other tasks, such as those such as the U.S. Federal Reserve have.
That could be a clever Straussian feint and bluff, but with what probability? I don’t think so, I think it is for real.
Buy a House, Get a Visitor Visa?
I have been promoting a “buy a house, get a visa” program for several years, so I was initially pleased to see a new bill on this theme from Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah).
…the proposed measure would offer visas to any foreigner making a cash investment of at least $500,000 on residential real-estate—a single-family house, condo or townhouse. Applicants can spend the entire amount on one house or spend as little as $250,000 on a residence and invest the rest in other residential real estate, which can be rented out.
On closer inspection, however, the bill is very weak. Most importantly, the visa would simply allow the buyer to live in his or her house but would not allow them to work in the United States. Pathetic.
I also liked Matt Yglesias‘s spin on this:
The larger issue, however, is that the Schumer/Lee proposal would deny the new immigrants the right to work in the United States. As with other restrictions on high-skill immigration, this is essentially a form of class warfare against less educated Americans. We should be clamoring to increase the supply of foreign-born doctors, lawyers, engineers, and other highly educated occupations as a way of increasing the real wages of America’s factory workers, janitors, waitresses, carpenters, and retail clerks.
Addendum: Canadians are not impressed with the offer.
Will China soon have a trade deficit?
China may see its first annual trade deficit for two decades next year, Wei Jianguo, former vice-minister of commerce, said.
September and October are traditionally the peak time for contracts ahead of the festive season in Europe and the United States but demand is sharply down this year, he said.
“China’s export-reliant enterprises are facing their toughest time in years. The possibility of a full-year trade deficit cannot be ruled out next year,” Wei, secretary-general of the China Center for International Economic Exchanges, a government think tank, told China Daily.
The article is here and I thank Mark Thorson for the pointer.
A point of light
The Obama administration moved Tuesday to roll back a number of rules governing hospitals and other health care providers after concluding that the standards were obsolete or overly burdensome to the industry.
Among other things, the proposals would allow hospitals to save money by sometimes using qualified nurse practitioners and physician assistants in place of better-paid doctors, allowing doctors to focus more on patients and helping address “impending physician shortages.”
Here is more. Had I been President, this would have been one of my priorities from day one.
Ahem…
The price of Bitcoin continues to drop by about a dollar every week to ten days, currently settling at about $2.80 USD, and Bitcoin enthusiasts are starting to get worried. “I am not trying to cause a panic here, but the value of Bitcoin has dropped very low today with huge spikes,” one user wrote on the Bitcoin forum on Reddit. “I do suspect it will hit 1 USD mark this week maybe even lower.We need to be discussing thoroughly on promoting Bitcoin and actively putting more effort to spread the message to newer users as I do suspect the popularity is dropping very steeply too.”
Here is more, thanks for the pointer to numerous folks on Twitter.
Ilya Somin on Israeli signaling (markets in everything)
Ilya writes:
Various commenters on this and my previous post on the same subject claim that the Israeli government had to do this in order to send its citizens a “message” about how much it valued their lives and was willing to pay a high price to save them. But if these deals lead to the deaths of far more innocent Israelis than they save, the real message sent will be exactly the opposite: that the government is willing to make a large net sacrifice of innocent life in order to gain short term public relations benefits or a short-term boost in national morale. It’s possible, of course, that Israeli public opinion is myopic enough that they will think that the government is saving life despite the fact that it is actually sacrificing a much larger enough of innocent lives. If so, there could be a more permanent and substantial boost in national morale. Even then, it will probably fade as public attention shifts to other issues. In any event, it’s not worth the sacrifice of numerous innocents and the creation of perverse incentives for terrorist groups.
Link here. I don’t know whether this exchange is a good idea, but Ilya is possibly underrating the power of signaling models. It is precisely the fact that that Israeli government will trade for this single life, even apart from whether it is instrumentally rational, that sends the relevant signal. The less “rational” the act, the more potent the signal of concern, and in this case the possible irrationality is stochastic, not certain. Perhaps one must take a stand for the single, identifiable life in question; Hollywood rescue movies accept this meme and they face market tests all the time. Doesn’t the starship captain go back down to save the one life, even though it may place the entire ship in jeopardy? “That’s what makes us human, Bones,” while Spock raises the eyebrow, etc.
One can also read the Israeli government as signaling (correctly or not) that it has the power to prevent or at least limit future kidnappings. It is an expression of strength, or at least a belief in strength, and citizens seem to like that signal from their leaders. It also may allow governments to perform other (efficient) acts which involve offsetting signals of weakness.
That said, Ilya’s comments indirectly raise an issue in signaling theory: where does salience come from? Why is “one person” the relevant unit of concern for the Israeli citizenry here? There are plenty of simple answers, but most of them beg the question and of course one person is often considered quite disposable in other contexts, especially military. It also would not suffice to get just a month of freedom for him. Yet neither is the deal insisting that more than this one soldier be delivered.
If you haven’t already, I recommend that you all read David Grossman’s splendid To The End of the Land.