Category: History
I don’t see the core to this game
Mr Weidmann proposed last week that Germany’s Target 2 claims should be securitised. Just think about this for a second. He demands contingent access to Greek and Spanish property and other assets to a value of €500bn in case the eurozone should collapse. He might as well have suggested sending in the Luftwaffe to solve the eurozone crisis. The proposal is unbelievably extreme.
It also tells us something else: by seeking insurance against a collapse of the euro, the Bundesbank tells us it no longer regards the demise of the euro as a zero-probability event. If the Bundesbank seeks insurance, so should everybody else.
Here is more, from Wolfgang Münchau. Here is another account, Weidmann by the way runs the Bundesbank. As a general rule of thumb, any time you see an article about “Target 2,” it is important.
Adam Smith on Charles Murray
In every civilised society, in every society where the distinction of ranks has once been completely established, there have been always two different schemes or systems of morality current at the same time; of which the one may be called the strict or austere; the other the liberal, or, if you will, the loose system. The former is generally admired and revered by the common people: the latter is commonly more esteemed and adopted by what are called people of fashion. The degree of disapprobation with which we ought to mark the vices of levity, the vices which are apt to arise from great prosperity, and from the excess of gaiety and good humour, seems to constitute the principal distinction between those two opposite schemes or systems. In the liberal or loose system, luxury, wanton and even disorderly mirth, the pursuit of pleasure to some degree of intemperance, the breach of chastity, at least in one of the two sexes, etc., provided they are not accompanied with gross indecency, and do not lead to falsehood or injustice, are generally treated with a good deal of indulgence, and are easily either excused or pardoned altogether. In the austere system, on the contrary, those excesses are regarded with the utmost abhorrence and detestation. The vices of levity are always ruinous to the common people, and a single week’s thoughtlessness and dissipation is often sufficient to undo a poor workman for ever, and to drive him through despair upon committing the most enormous crimes. The wiser and better sort of the common people, therefore, have always the utmost abhorrence and detestation of such excesses, which their experience tells them are so immediately fatal to people of their condition. The disorder and extravagance of several years, on the contrary, will not always ruin a man of fashion, and people of that rank are very apt to consider the power of indulging in some degree of excess as one of the advantages of their fortune, and the liberty of doing so without censure or reproach as one of the privileges which belong to their station. In people of their own station, therefore, they regard such excesses with but a small degree of disapprobation, and censure them either very slightly or not at all.
True or false?
As commodities prices fall, the rights of women rise.
Facts about welfare transfers
In 1968, the in-kind share of assistance was 60 percent; now it is 85 percent.
That is from Ed Glaeser, who believes we should use more cash payments and less in-kind assistance.
Addendum: Kevin Drum comments.
New results on the missing women question
This paper (pdf) came out about two years ago, by Siwan Anderson and Debraj Ray, in the highly esteemed Review of Economic Studies, yet I haven’t seen it discussed in the blogosphere, so here goes:
Relative to developed countries and some parts of the developing world, most notably sub-Saharan Africa, there are far fewer women than men in India and China. It has been argued that as many as a 100 million women could be missing. The possibility of gender bias at birth and the mistreatment of young girls are widely regarded as key explanations. We provide a decomposition of these missing women by age and cause of death. While we do not dispute the existence of severe gender bias at young ages, our computations yield some striking new findings: (1) the vast majority of missing women in India and a significant proportion of those in China are of adult age; (2) as a proportion of the total female population, the number of missing women is largest in sub-Saharan Africa, and the absolute numbers are comparable to those for India and China; (3) almost all the missing women stem from disease-by-disease comparisons and not from the changing composition of disease, as described by the epidemiological transition. Finally, using historical data, we argue that a comparable proportion of women was missing at the start of the 20th century in the United States, just as they are in India, China, and sub-Saharan Africa today.
That is a very different interpretation from what one usually hears.
Iberia, not Siberia
One of my “crackpot” beliefs about human migration seems to be panning out:
At the height of the last ice age, Stanford says, mysterious Stone Age European people known as the Solutreans paddled along an ice cap jutting into the North Atlantic. They lived like Inuits, harvesting seals and seabirds.
The Solutreans eventually spread across North America, Stanford says, hauling their distinctive blades with them and giving birth to the later Clovis culture, which emerged some 13,000 years ago.
When Stanford proposed this “Solutrean hypothesis” in 1999, colleagues roundly rejected it. One prominent archaeologist suggested that Stanford was throwing his career away.
But now, 13 years later, Stanford and Bruce Bradley, an archaeologist at England’s University of Exeter, lay out a detailed case — bolstered by the curious blade and other stone tools recently found in the mid-Atlantic — in a new book, “Across Atlantic Ice.”
Here is much more.
Assorted Links
1. Google’s Policy by the Numbers blog features my post on The Innovation Nation versus the Warfare-Welfare State (no new info for loyal readers but an interesting signal.) Buy Launching.
2. Atheist leaders of the civil rights movement.
3. Federal Reserve Bank of Richmond’s Region Focus with introductory material on patents. early childhood education, and NGDP targeting.
4. Google’s bug bounty program.
5. An Illustrated Guide to Criminal Law: Attempt. Excellent.
6. Ron Paul, rock star.
More on *Fairness and Freedom*, by David Hackett Fischer
I very much liked this book, which compares the histories of New Zealand and the United States, and in particular I liked:
1. The discussion of how the New Zealand government encouraged smaller land holdings through some deliberate policy decisions in the late 19th century (p.165).
2. The discussion of how New Zealand abolished its provinces in 1875 (circa p.193), and the importance of that decision (passim).
3. The near-uniformity of the crime rate throughout New Zealand (p.198).
4. The comparison between labor movements in the two countries and the possibly differing history of labor-saving devices (circa p.328).
5. The comparison between Bills of Rights; New Zealand for instance has a right not to be subjected to medical experiments and a right to refuse medical treatment, but no right to a jury trial (circa p. 464).
It is probably the best introduction to New Zealand history for an American, even though much of the book is not about New Zealand history at all. That said, while I found this a very good book, and certainly a book to recommend and to make the year’s “best of” list, it did not for me quite live up to its full potential. I have high standards in this particular area, so I would have liked:
6. A discussion of “cutting down tall poppies” before p.487.
7. A deeper discussion of the differences in role models in the two countries. New Zealanders admire Sir Edmund Hillary more than a successful businessman, though this has changed somewhat.
8. A comparison between American social conformism, as outlined brilliantly by Tocqueville, with the more outwardly conformist New Zealand working class variety.
9. A discussion of why New Zealanders are less prone to extreme thought and explicit missionary dedication; can you imagine a Kiwi version of Whittaker Chambers?
10. More attention to the commodities dependence in the New Zealand economy, and the importance of the UK abolishing NZ trade preferences in 1972-3, and the ongoing struggles to suss out a coherent vision for a relationship with Asia and China.
11. More discussion of how it mattered for New Zealand as many centres of activity shifted over time from the South Island to the North Island, culminating in the centralization of so much activity in or near Auckland.
12. Much more discussion of religion, and of the extreme enthusiasms which are bred in the United States.
13. A greater understanding of how Americans would not necessarily regard their society as “less fair,” but rather that some benefits are to be portioned out in accordance with a peculiarly American notion of what a person deserves.
14. A discussion of Upper Hutt or Lower Hutt, ideally both.
15. Why are New Zealanders perhaps the most polite people in the Western world?
16. The importance of having so many people living so close to the water, and (in some parts of the country) being surrounded by relatively few trees, and the much lower productivity of hunting in New Zealand, as there is not so much to hunt.
17. A more explicit discussion of economies of scale, and of why New Zealand is sometimes accused of being boring. There is one quotation offered from an outside visitor: “”I suppose they are happy,” she wrote in her contemptuous way. “I couldn’t bear it.”” (p.xix).
*Fairness and Freedom*
The author is David Hackett Fischer and the subtitle is A History of Two Open Societies: New Zealand and the United States. Excerpt:
They do not all climb mountains, play rugby, raise sheep, and consume large platters of Pavlova for dessert.
So far it is the best non-fiction book of the year, by a clear mark, I will read more of it soon.
The incentive effects of marginal tax rates
Christina and David Romer have a new paper (pdf), focusing on the interwar era:
This paper uses the interwar period in the United States as a laboratory for investigating the incentive effects of changes in marginal income tax rates. Marginal rates changed frequently and drastically in the 1920s and 1930s, and the changes varied greatly across income groups at the top of the income distribution. We examine the effect of these changes on taxable income using time-series/cross-section analysis of data on income and taxes by small slices of the income distribution. We find that the elasticity of taxable income to changes in the log after-tax share (one minus the marginal rate) is positive but small (approximately 0.2) and precisely estimated (a t-statistic over 6). The estimate is highly robust. We also examine the time-series response of available indicators of investment and entrepreneurial activity to changes in marginal rates. We find suggestive evidence of an impact on business formation, but no evidence of an important impact on other indicators.
For the pointer I thank Ilya Novak. I have not yet read the paper.
The most interesting man in the world?
At 9, he settled a dispute with a pistol. At 13, he lit out for the Amazon jungle.
At 20, he attempted suicide-by-jaguar. Afterward he was apprenticed to a pirate. To please his mother, who did not take kindly to his being a pirate, he briefly managed a mink farm, one of the few truly dull entries on his otherwise crackling résumé, which lately included a career as a professional gambler.
From the NYTimes obit of John Fairfax and oh did I mention he rowed across the Atlantic…and the Pacific.
How much would (did) it cost to build the Death Star?
Oh, and the cost of the steel alone? At 2012 prices, about $8,100,000,000,000,000. Or roughly 13,000 times the world’s GDP.
Here is more, via A. Gupta.
A wee bit of financial history
If March 4, 1933, and February 11, 2009, marked the nadirs of public confidence in Wall Street, then the years 1928 and 1999 marked the zeniths, when Goldman Sachs sold shares to the public for the only two times in its history. In December 1928, the partners of Goldman Sachs sold shares in a subsidiary called Goldman Sachs Trading Corporation–for its day, a complex, highly leveraged instrument with many layers that made transparency all but impossible. By the time of Roosevelt’s inauguration in 1933, the shares were nearly worthless. For the next 70 years, burned by that experience and FDR’s excoriation in 1933, the firm’s partners retreated to their roots as a private partnership, using their own personal capital with only modest leverage to advance their role as a financial intermediary.
By 1999, Goldman’s reputation had recovered to its previous zenith–to the point that a public offering again was possible. Its partners had debated the merits of such a change for years, and, even when the decision was made to go forward, the decision was reached only after vigorous debate and much disagreement. In favor of going public were those partners who saw a need for a larger capital base to allow the firm to compete in the increasingly globalized economy with the larger players both in the U.S. and overseas. Furthermore, once a public market was established for its shares, Goldman would have a currency other than cash with which to acquire other businesses and grow into financial services it could not afford to enter as a private partnership. On the other side of the argument were those partners who were worried about the impact that transition to a public firm would have on the firm’s culture. Heretofore, the firm had been known for its low ego and gang-tackling ethos, with aggressive personalities kept in check by the partnership potential that was strongly linked to both productivity and cultural fit.
What neither the firm’s partners nor outside observers were able to foresee was the resulting change in the firm’s risk tolerance…
For the pointer I thank John Phillips.
*Buckley: William F. Buckley and the Rise of American Conservatism*
By Carl T. Bogus. It is an excellent and admirable book, highly readable, and also a good example of how liberals should write about conservatives.
You can order it here. My previous coverage of Carl T. Bogus is here.
Department of Yikes
…his German counterpart [finance minister] suggested postponing Greek elections and installing [sic] a new government without political parties.
I do understand the financial motive here, but this is not a good idea! It is even less of a good idea to say so in public. Is the goal simply to irritate the Greeks so much that they leave the Eurozone on their own? Twitter rumors are suggesting that Finland and the Netherlands are raising similar ideas, namely postponing elections and, it seems, simply ruling the country through its budget? I am not sure how this is supposed to work, or to be received in Greece, or why it should be a good precedent for the European Union. The FT story is here.