Results for “secession”
36 found

The eternal quest for a free lunch, in this case Escudella

Mas-Colell recuerda que España está obligada a pagar a los pensionistas aunque Catalunya se independice

There is eventually a noisy video at the link, my apologies.  I am not sure what is exactly the best translation of “recuerda” in this context, but the article involves Andreu Mas-Colell asserting that even after Catalonian independence the government in Madrid is obligated to pay for pensions in Catalonia.  That obligation is a legal one which (supposedly) international tribunals will enforce.

The fine points of the conditional and the subjunctive are important for interpreting that article, and perhaps some of those are escaping me.  But I don’t take the journalist to be reporting a prediction that Madrid actually will pay for those pensions, only that they have such a legal obligation, combined with the assumption that this law will reign supreme and the issue therefore won’t be a problem for Catalonia.  There is no mention of the current Spanish law essentially forbidding Catalonian secession or even direct consideration of such.

I have a question.  Of all the economists who have endorsed or indeed fought hard for Catalonian independence (Galí, Mas-Colell, Sala-i-Martí, Antràs, Boix, Ventura, etc.), who offers the best and clearest account of what the associated costs would be?  Please leave your answer in the comments, or if you wish email me.

Here are photos of Escudella.

catalan613-broth_68501116_001

For the pointer I thank Gerardo Gonzalez.

Houston versus California

In my Econ Talk with Russ Roberts on private cities I said this about Houston:

If we think about, what are the best cities in the United States, particularly for the poor, it’s places like Houston, which have no zoning and which have very easy regulatory systems in which you can build. You can get a permit to build within a matter of days, compared to New York where you’ve got to go through a dozen different permitting processes and you have to hire specialized people whose only job is really to stand in line to help you get through the process….So, people of modest means can still buy a house in Houston. And they can’t do that in many other places in the United States because of zoning and not-in-my-backyard rules, a kind of secession of the rich, not in terms of gated communities but in terms of adding on rules and restrictions on how large your lot has to be in order to build a house, how many people can live in the house etc. All of these things have made it extremely expensive to buy in any of these cities, which use more top down planning.

The Economist illustrates with a remarkable statistic comparing Houston with all of California:

Unlike most other big cities in America, Houston has no zoning code, so it is quick to respond to demand for housing and office space. Last year authorities in the Houston metropolitan area, with a population of 6.2m, issued permits to build 64,000 homes. The entire state of California, with a population of 39m, issued just 83,000.

Sardinians who want to be a Swiss Charter-City Island

Most secessionist movements want independence. But a small group in Sardinia, the beautiful island off Italy’s coast has another idea for secession.

sardinie2Angered by a system they say has squandered economic potential and disenfranchised the ordinary citizen, they have had enough. They want Rome to sell their island to the Swiss.

“People laugh when we say we should go to become part of Switzerland. That’s to be expected,” said Andrea Caruso, co-founder of the Canton Marittimo (Maritime Canton) movement.

While many have dismissed the proposal as a joke, its supporters insist they are serious. “The madness does not lie in putting forward this kind of suggestion,” said Caruso. “The madness lies in how things are now.”

The Sardinians are not mad. As with Charter Cities the idea is that if you can’t move to good rules then have the good rules move to you. Charter city proponents, however, are focused on relatively uninhabited areas to avoid political problems but the Sardinians are inviting new rules and rulers. In the United States, firms can choose which state to incorporate in and thus which of 50 packages of laws will govern the relations between their shareholders and managers. Why not let cities, states and regions adopt wholesale a package of laws that will govern them? Competitive federalism on a world scale.

Jason Sorens on Scottish independence

From a longer post:

A closer look reveals that different stocks responded differently to the poll news. Two transportation companies, FirstGroup and Stagecoach Group, lost virtually nothing, and Aggreko, which rents temperature control systems, lost absolutely nothing. Financial and energy/power companies were pounded. An engineering company closely linked to the oil industry, the Weir Group, took a more modest 1.0% loss.

How to sum up?

So far capital markets seem to be telling us that the economic costs of independence to Scotland would be significant but not catastrophic, and that they would be virtually nil to the rest of Britain. How much of those costs are due to the policies Scotland would implement after independence, rather than secession as such? It is difficult to know, but the differential returns to particular firms give us a clue. Transportation companies have closer links to the state, so a more statist policy regime might not hurt them. Financial companies might lose because of the lender of last resort issue (Scotland might not have a credible one). Energy and engineering companies might lose because nationalists want to tax oil heavily to fund social programs. Also, stricter environmental laws may hurt the electric utility SSE, which lost heavily on Monday.

Speculatively, then, capital markets seem to be telling us that the costs of secession as such are modest, but that the costs of dramatically different economic policies are substantial.

But I find this earlier bit less optimistic:

What would happen to these firms’ value if independence were dead certain? Expected utility analysis helps us here. They lost $800 million in value on an increase in the probability of independence of 5.5+2.7=8.2%. We can infer that an increase from 20% to 100% would wipe out $800 million*8/.6=$7.8 billion. That’s a fair proportion of their existing value: about 16%.

There is more here, and for the pointer I thank Chaim Katz.

Santa Cruz notes

The town square is lovely, even though they removed the sloth for fear he would electrocute himself.  The population is friendly, the weather is perfect, and there are few sights.  Unlike in much of South America, danger is not a concern.  The small children who hang out in the central square seem to think that a full embrace of a pigeon is a good idea.

The food is excellent and yet you never hear about it.  Try El Aljibe for local specialties (peanut soup, or duck and corn risotto, with egg on top), and Jardin de Asia for Amazonian Andean Peruvian Japanese Bolivian fusion.  It is hard to find the Cochabamba version of Bolivian food that has made it over to the U.S.   The steak here is decent but not as good as Argentina or Brazil.

The taxi equilibrium is that you do not ask in advance what the fare is, because that indicates you do not know.  Be confident, and you will be surprised how little money they ask for.

If you had to pick one city to represent South America as a whole, Santa Cruz might be it.  You can feel elements of Brazil, Argentina, Venezuela, and yes even Bolivia here, all rolled into one.  The proportions of fair-skinned, mestizo, and indigenous people mirrors the Continent as a whole more than the Altiplano.  The secession movement here seems to have failed.  Amazonian indigenous peoples and Guarani are common here.

Arriving at the airport at 3:30 a.m. involves a nightmarish wait.  There is not much air pollution.  I didn’t meet a single person in the service sector who spoke English.  People in Santa Cruz seemed fairly happy relative to their per capita income.

You can study the economic development of China by visiting Bolivia.

Charlie Stross unintentionally explains why Scottish independence is a bad idea

Here is one of the end paragraphs of his “interesting throughout” but unsettling piece in favor of independence:

Which brings me to the punch-line: I’ll be voting “yes” for an independence Scotland in September. Not with great enthusiasm (as I noted earlier, if Devo Max was on the ballot I’d be voting for that) but because everything I see around me suggests that there is some very bad craziness in the near future of England, and I don’t want the little country I live in to be dragged down the rabbit hole by the same dark forces of reaction that are cropping up across Europe, from Hungary to Greece. The failure modes of democracy, it seems to me, are less damaging the smaller the democracy.

Stross is a smart guy and I am an admirer of his writing.  But my view remains pretty straightforward: when dislike of the policy choices of the electorate leads to a serious movement for secession, something has gone deeply wrong with the preconditions for democratic attachment.  The UK is hardly the Third Reich, it has a long tradition of honest elections, and for left-leaning individuals the share of British government in gdp is likely to stay well over 40% in all plausible futures and furthermore most of the conservatives are relatively liberal on social questions.  For those who favor independence for the Scots, what kind of general principle might you lay out for when other peoples also should seek secession?  Do they think that the strongly red states in America also should consider secession?  How about Vermont?  I understand the libertarian case for such secessions, but most supporters of Scottish independence are not arguing from libertarian premises.  How much secession do they think should be happening?  Or do they hold particularist views which do not admit of any generalization at all?  Either way, I consider this a true crisis of governance.

Addendum: Scottish wealth seems to be lower than they have been claiming: “More than 70% of Scotland’s total economic output – excluding banking and finance and the public sector – is controlled by non-Scottish-owned firms, according to Scottish government data.”

Yet another case where prediction markets would come in handy

From the Financial Times (not Pravda):

Nikolai Vasiliev, a Crimean businessman, can hardly wait for his region to be annexed by Russia. It would “give us a new lease of life”, he says.

Mr Vasiliev is the general manager of AO Pnevmatika, a former state-owned engineering company that has struggled since the Soviet break-up. Now, he hopes, a bold future beckons in a newly minted Russian province.

“A huge market will be opened up to us,” he says. “We will have access to cheap Russian raw materials and low-priced gas and electricity. And the wages of our workers will rise to Russian levels.”

…Alexander Basov, head of the local chamber of commerce, echoes a widely held view that a Russian-ruled Crimea would garner more attention – and investment – from Moscow than it ever got from Kiev.

“Since independence, Ukraine has treated Crimea like an unloved stepchild, not a real son,” he says. “No big factory has been built here in the last 20 years. The only spending was on repairs to the road from Simferopol to the state dacha in Yalta.”

Yet on the other hand:

There are plenty of dissenting voices. One leading Simferopol businessman, who asked not to be named, said the impact of union with Russia on Crimea’s economy would be devastating, especially if the rest of the world refused to recognise it. “There will be no foreign investment in a place with such a dodgy legal status,” he says. “And the odds are that even Russians will not want to invest here.”

There is also concern that Crimea could not survive a total break from mainland Ukraine, the source of much of its water and electricity, with fears that if the peninsula votes to secede in a referendum planned for Sunday, Kiev could retaliate by switching off the lights or imposing an economic blockade. Already, Mr Vasiliev said, train links between Crimea and other parts of Ukraine had been cut or scaled back and online bank transfers from the Ukrainian Treasury shut down.

The huge bureaucratic headaches any change in Crimea’s status would cause are also worrying the business community. “I’ll have to get a new passport, re-register my business, my house,” said Ibrahim Zinedin, who trades in construction materials. “All that will take time and cost a lot.”

Loyal MR readers will not be surprised to read I would put my bets on the more negative scenario.  There is more here.

Wilson.cat and the movement for independence for Catalonia

The Catalonian “human chain” was yesterday, and it drew hundreds of thousands of people, a large number for a single region.  According to the Washington Post, it was more than one million people.

If you would like to read more on this — by economists and other social scientists — Wilson.cat is one intellectual resource for independence.  The site represents writings of prominent scholars favoring independence — or at least an informed referendum — for Catalonia.

I am surprised this initiative is not receiving more attention.  If you were to ask in which ways economists today are having the most influence on the world, this movement would be close to the top of the list.  Among the economists involved are Andreu Mas-Colell, Pol Antràs, Jordi Galí, and Xavier Sala-i-Martin, all of whom are extremely well known in the profession.

Personally, I am still waiting to hear why Catalonian independence would not bring the fiscal death knell of current Spain, and thus also the collapse of current eurozone arrangements and perhaps also a eurozone-wide depression.  Otherwise I would gladly entertain Catalonia as an independent nation, or perhaps after the crisis has passed a referendum can be held.  When referenda are held during tough times, it is often too easy to get a “no” vote against anything connected with the status quo.

Is the view simply that “now is the time to strike” and “it is worth it”?  Obviously, an independence movement will not wish to speak too loudly about transition costs, but I would wish for more transparency.  Or is the view that Spain could fiscally survive the shock of losing about twenty percent of its economy, with all the uncertainties and transition costs along the way?  That could be argued, but frankly I doubt it, OMT or not, furthermore other regions would claim more autonomy too.  An alternative, more moralizing view is that the fiscal problems are “Spain’s fault in the first place” and need not be discussed too much by the pro-independence side, but I am more consequentialist and marginal product-oriented than that.

This piece, in Catalan, does cover the fiscal implications of debt assumption for an independent Catalonia.  The site also links to this somewhat spare piece by Gary Becker, but I still want more of a discussion of the issues raised above.

Keep in mind that two clocks are ticking.  The first is that education in Catalonia is becoming increasingly “hispanicized,” the second is that as economic conditions in Spain improve, or maybe just become seen as a new normal, getting a pro-secession vote in a referendum may become harder.  It doesn’t quite seem like “do or die” right now, but overall time probably is not on the side of Catalonian independence.

If anyone connected with the independence movement could point me to source materials addressing my questions, I would gladly cover it more on MR.

Here is Edward Hugh on the Catalan Way explained.  And here is more from Hugh.

Stories to watch for in 2013

Here is a list from The Guardian.  Here is an FT list.  My list looks more like this:

1. Economic turnarounds in the Philippines, Sri Lanka, Indonesia, and possibly Pakistan and Myanmar.

2. Pressures for secession in Catalonia, and a potential crisis of the Spanish state.

3. East Asian belligerence, with more hawkish leaders in the three major countries.

4. There is actually a non-trivial chance we totally blow it on the debt ceiling.

5. The continuing rise of machine intelligence and the general recognition of such as the next major technological breakthrough.

6. Significant positive reforms in Mexico on education, foreign investment, and other matters too.

7. Political collapse in South Africa.

8. Continuation of America’s “Medicaid Wars,” over state-level coverage, combined with the actual implementation of much more of ACA.  Continuing attempts in Rwanda, Mexico, and China to significantly extend health care coverage to much poorer populations.

9. The return of dysfunctional Italian politics, combined with the arrival of recession in most of the eurozone economies, including France and Germany.

10. The ongoing barbarization of North Africa, including Mali, Syria, and possibly Egypt.  And whether any of these trends will spread to the Gulf states.

11. Whether China manages a speedy recovery and turnaround.

12. Watching India try to overcome its power supply problems, its educational bottlenecks, and its low agricultural productivity.

13. Seeing whether Ghana makes it to “middle income” status and how well broader parts of Africa move beyond resource-based growth.

14. Whether U.S. and also European political institutions can handle the intensely distributional nature of current fiscal questions.

Those are some of the main stories I will have my eye on, but of course I expect to be surprised.  I suppose Israel and Iran should be on that list somehow, North Korea too, but I don’t find that thinking and reading about it yields much in the way of return, compared to a simple “wait and see.”

Addendum: Here is Matt’s list.

The bottom line on the euro right now

From Matt:

… it’s not that long ago that the world was optimistic that Mario Draghi and the European Central Bank had finally gotten the situation under control. But the politics of the thing essentially prevent a “once and for all” resolution from taking place. That’s because the ECB’s game is to centralize as much authority in Frankfurt as possible which means that peripheral governments must be continually put to squeeze between the demands of the central bank and the demands of the voters. The fear is that if the ECB goes “too easy” on the Spanish government, that Rajoy will give in to the political unpopularity of the ECB agenda and back off. Spain needs to be perched perennially on the brink of a crisis since its citizens can’t be trusted to Ireland/Baltic-style simply go along with austerity budgeting.

The Spanish ten-year yield is back up over six percent and climbing…

*Early Retirement Extreme*

That is the title of an erratic but interesting book by Jacob Lund Fisker, and the subtitle is A philosophical and practical guide to financial independence.  Think of it as a study in “least cost living,” his web site is here.

Here is his post on a middle class lifestyle on 7k a year, health insurance included, sans young children, don’t skip the section on the lentils.  How does it compare to how people lived fifty years ago?  To how I lived thirty-two years ago as an undergraduate?

“Not buy very much” seems to be his main strategy.

I transplant these scenarios to a foreign setting.  Let’s say you had 10k a year, net, to live in either India or Mexico.  How high would your standard of living be?  What kind of health insurance could you buy?  How would your level of happiness compare to working at a job you don’t like for 80k a year for twenty more years?

When it comes to modern society, I sometimes wonder, what is the true secession point with decent utility?  What kinds of options are your savings giving you?  Is there any chance you will take those options?

For the pointer I thank CR.