Category: Current Affairs

The elasticity of natural disaster deaths with respect to income

by  Tyler Cowen in

Matt Kahn has a good paper (and here) on this topic:

Using a new data set on annual deaths from disasters in 57 nations from 1980 to 2002, this paper tests several hypotheses concerning natural disaster mitigation. While richer nations do not experience fewer natural disaster events than poorer nations, richer nations do suffer less death from disaster. Economic development provides implicit insurance against nature’s shocks. Democracies and nations with higher quality institutions suffer less death from natural disaster. The results are relevant for judging the incidence of a Global Warming induced increase in the count of natural disaster shocks.

Germany and Greece

by  Tyler Cowen in

…the Greek Finance Ministry had warned of "complete collapse" if the whole system…was not rethought…"Prices and value move in an atmosphere of imminent catastrophe," he wrote.  "In Greece for a while now all the foundations of a healthy economy have been overturned.  There can be no stability, neither in economic equilibrium nor in monetary or financial affairs."

…While the Italians…were genuinely worried by Greece's financial crisis, it was the Germans who needed to be persuaded.  Initially, Altenburg's advocacy of the Greek position was not well received even in his own Ministry.  But then the political stakes were suddenly raised…

…In Athens people expected the Finance Minister to win substantial concessions from the Germans.  In actual fact he was in a very weak position.

…It was not that the Greek financial crisis could be ignored; nor that the Greek Finance Minister lacked the wit or intelligence to present his case.  It was simply that no Greek politician carried enough weight to be heard seriously in Berlin.

That's from yesterday's Financial Times, no…whoops, sorry!  That's from Mark Mazower's Inside Hitler's Greece: The Experience of Occupation, 1941-44.  It's a good book.

Haiti vignette markets in everything The Ricardo Effect

by  Tyler Cowen in

Haiti, a nation of 10 million, does not have a single sewage treatment plant. Trucks often simply take the waste to the Troutier trash dump near the slums of Cité Soleil on this city’s edge.

The trucks empty into pits filled with medical waste like intravenous bags and garbage. Smoke billows from burning piles of trash. One truck from a private company, Sanco, with its motto “Fighting for a Clean Environment” emblazoned on its side, did not bother to go to a pit, dumping its cargo of human waste on the open ground.

A squatter community of a dozen families, including some new arrivals whose homes were destroyed in the earthquake, tries to eke out its survival by scavenging in this setting.

…The human waste problem was daunting even before the earthquake. Lacking a municipal sewage system, many families here employ a socially scorned class of nocturnal latrine cleaners known in Creole as the “bayakou.” They descend into latrines to clean excrement with their hands, before transporting it in carts to improvised disposal sites.

The story is here.

Haiti fact of the day

by  Tyler Cowen in

Victims like her could eventually bring the number of Haiti's quake-related amputees to as many as 150,000 – meaning almost 2% of the nation's 9 million people could be in that condition by year's end.

The source article is here.  Here is one source on the problem:

Most previous amputees were like Verly Boulevard, 31, who lost a leg in a car crash and has spent years hobbling on crutches, unemployed. "In Haiti, if you're an amputee you don't exist," says Boulevard as he waits for water at a crowded and squalid tent camp in the Port-au-Prince suburb of Pétionville. "It will be difficult to change that, even after the earthquake."

Is the systemic risk council on its way?

by  Tyler Cowen in

I visited Across the Universe only because I liked the dreamy feel of the sappy newspaper ad; the movie had several potential negatives for me, including being a musical, tampering with the sacrosanct Beatles, and a slew of negative or lackluster reviews.  I loved it, though it messed up my plans for the day when I realized I had to stay and see the whole thing.  The kitsch was self-mocking plus the music director understood what made Beatle vocal lines so good, why most of the instrumentation should not be mimicked, and which of the guitar riffs were essential as filler.  The movie was willing to plain flat out admit it didn’t make much sense, which was also a virtue of Dragon Wars.  I saw the first third of that one only because it was South Korean.

Book season this fall is amazing; there is an impressive pile on the sofa, but sadly (for the sake of science) I cannot find many books that I have only one reason for reading.  I liked the title of An Arsonist’s Guide to Writers’ Homes in New England (though nothing else about it) and so I have a library copy.  Tree of Smoke is shaping up as the best American novel in years.  The new Pamuk is getting me interested in rereading Dostoyevsky; it is sad to see Pamuk having written that he cannot imagine leaving Istanbul.

Jacqueline Passey reports that I am less funny in person though she did not resort to the word grim.

I gave my DVD of The 25th Hour to Peter Boettke; we both loved it.  Natasha and I have started following Tell Me You Love Me, the brutal and anti-erotic new HBO show.

I’ve been to lots of meetings lately, if only to become a better and more productive person.

Ferran Adrià confuses us

by  Tyler Cowen in

He now states that El Bulli will not close permanently but rather after a hiatus it will become a foundation.  Kottke parses.  My theory is that he doesn't know what he is going to do, but in the meantime he wishes to avoid negative publicity or seeming irrelevant.

Don't take this personally my foundation-employed readers but…um…I don't feel you have the appropriate organizational form for running the world's best restaurant.  When it comes to the $300 meal, I'll stick with the for-profits.  Maybe someone needs to give Adrià a copy of those Fama papers from 1980 or so.

Thomas Friedman proposes a new rate of marginal transformation

by  Tyler Cowen in

So here is my new rule of thumb: For every Predator missile we fire at an Al Qaeda target here, we should help Yemen build 50 new modern schools that teach science and math and critical thinking – to boys and girls.

The full article is here.  At those prices, how many missiles does the Yemeni government want fired?  The Yemeni median voter?  (Is there a single dimension in Yemeni politics?  If so, what is it?)  The average Yemeni teacher?  By the way, how would we feel if each al Qaeda attack came with 50 new madrassas?

I usually think that building schools — in the absence of other, complementary inputs — doesn't help much.

We are told:

America’s last great ideological foe, Soviet Marxism, produced its share of violent radicals, but it also produced Andrei Sakharov and Aleksandr Solzhenitsyn – because it believed in science, physics, math and the classics of literature. Islamism is not producing any Sakharovs.

Is the problem lack of school buildings?  Is there a recipe for building a modern state and capitalist polity in Yemen?  I'm all ears.  The conclusion is:

…please, let’s end our addiction to oil, which is what gives the Saudi religious ministry and charities the money to spread anti-modernist thinking across this region.

Didn't the Saudis radicalize to a greater extent when their oil income fell?  Will nailing the Saudis help Yemen, given Saudi Arabia is one of their main trading partners? 

When I am blogging this material, you know I have too much time on my hands at home.  I'm not usually this grumpy but I've been locked up for days.  Here are related comments.

The culture that is Japan, snow removal edition

by  Tyler Cowen in

Robot Snowplow from Japan Eats Up Snow, Poops Out Bricks.

Japan

It has a camera and GPS.  Here is a further report from Japan (remarkable detail at that link):

One protective measure against snow and ice for railroads and roadways is the "slush removal system" that hydraulically transfers collected snow that has been removed from the railroad tracks or roadways and deposits it in a river. Also, there is the "sprinkler snow melting system" that melts snow by sprinkling water on the road surface.

Here is a longer study of geothermal snow melting systems.  Here is a discussion of numerous other Japanese snow treatment and disposal technologies.  Here is a report from Tsuruta:

In town several additional unique ways of dealing with this snow exist. A concrete-contained stream runs under downtown sidewalks, covered by hinged, lightweight metal grates. People who have access to this “river” can shovel their snow into the running water, sending it floating to the nearby Sea of Japan. Around the nicer homes in town (luckily, including mine) pipes spray a constant stream of hot water onto snow, quickly melting it.

Still, the snow can gather, breaking the delicate branches of Japan’s carefully tended trees and plants. The solution: wooden cages and bamboo teepees, odd-looking sights.

The abundance of snow in Japan spawned a bewildering variety of shovels with distinct shapes and purposes. Most are plastic. There are wide shovels for moving large quantities of snow; there are smaller shovels for weaker shovelers; there are shovels with handles and shovels without; there are shovel-sleds designed to allow the user to push a large load of snow a long distance; there are also metal shovels for breaking up hard-packed snow.

The shovels come in a selection of neon colors: green, yellow, purple, orange, and blue – some marketer’s feeble attempt to make snow-shoveling fun. Shovels cost from five to thirty dollars. Most people own at least two different types, selected by need.

I like this from Japan (ultimately) too — Bohemian Rhapsody!

The new cabinet in Chile

by  Tyler Cowen in

E. Barandiaran notes in the comments:

You may want to know about the qualification of the new cabinet of 22 secretaries. There are 6 economists with graduate studies in the best US universities: Felipe Larraín will the secretary of the Treasury (Felipe is well known as the co-author with J. Sachs of a macro textbook and also got his Ph.D. from Harvard), two a Ph.D. from Minnesota and three a Master from Chicago. There is only one laywer but with training in law and econ in Harvard. A few others have degrees in public policy or MBA, and most of the others are engineers, all with graduate studies abroad. Most have been related as students, professors, and deans with Universidad Católica. Thus, Sebastián Edwards knows well the six economists (they studied there in the 1970s and were my students and/or assistants). Most have already long, successful careers in private enterprises and close relations with important NGOs. Quite a cabinet.

Here is one external report.

One reason why Germany can’t play tough guy with Greece

by  Tyler Cowen in

In the first year of the German occupation of Greece, austerity and "wage cuts" were imposed on the economy; at least 300,000 Greeks died of hunger.

Here is one contemporary account of that occupation.  The IMF, on the other hand, can't override EU strictures on currency policy and on fiscal policy.

Who then will play tough guy with Greece?

Derivatives are often disguised debt transactions

by  Tyler Cowen in

Felix Salmon points us to this new Der Spiegel article:

Now, though, it looks like the Greek figure jugglers have been even more brazen than was previously thought. "Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products.

Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period — to be exchanged back into the original currencies at a later date.

Fictional Exchange Rates

Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

From what I understand of the Maastricht standards, they are far less stringent than banking regulation, even in places where banking regulation is relatively lax.  Is the premise that governments are more trustworthy and more transparent?  Or is the premise that governments should be allowed to do what banks cannot?

Here is gloss on the Sophoclean chorus on debt; you may need to scroll down to the paragraph on lines 151-58.