Results for “secession” 42 found
Assorted links
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
… 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.
Assorted links
What I’ve been reading
1. Supermac: The Life of Harold Macmillan, by D.R. Thorpe. I'm not one of these people who enjoys reading a lot of long tracts about British politicians, but this is one of the best non-fiction books of the year. It's full of good information, offers useful context for British economic and political debates, has plenty of original research, and is as suspenseful as a very good novel. Most of all, it brings its world and character to life. Highly recommended.
2. J.P. Singh, Globalized Arts: The Entertainment Economy and Cultural Identity. The definitive book for updating coverage on its topic, including the best and most comprehensive history of the UNESCO Convention on Cultural Diversity.
3. James K. Glassman, Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. p.11: "Reduce the proportion of stocks in your portfolio."
4. Alan Taylor, The Civil War of 1812: American Citizens, British Subjects, Irish Loyalists, and Indian Allies. "The civil war had four overlapping dimensions. In the first, Loyalists and Americans battled for control of Upper Canada. Second, the bitter partisanship within the United States threatened to become a civil war, as many Federalists served the British as spies and smugglers, while their leaders in New England flirted with secession. Third, Irish republicans waged a civil war within the British empire, renewing in Canada their rebellion, which the British had suppressed in Ireland in 1798. Invading Canada, Irish-American soldiers faced British regiments primarily recruited in Ireland, for thousands of Irishmen had fled from poverty by enlisting in the royal forces. Fourth, the war embroiled and divided native peoples…In the North American civil war of 1812, Americans fought Americans, Irish battled Irish, and Indians attacked one another. They struggled to extend, or to contain, the republicanism spawned by the American Revolution." Some of this book has too much detail for my interests, but overall it is good.
5. Thomas Bartlett, Ireland: A History. I liked the cover so much that I also enjoyed the book more. I also liked the weight of this book a great deal; it was just right. In any case a fine one-volume introduction.
What does Bolivia have to do to make the front page?
As far as I can tell, there has been a partial secession in Bolivia. (This story makes it sound more like "autonomy" than secession, but that line is a fine one, try this story too.) The wealthier, more business-oriented, lighter-skinned, and natural gas-rich provinces near Santa Cruz wish to control their own fate. But as of 8 a.m., there is nada on the front page of The New York Times. So far it doesn’t make the front page of news.google.com either. Nor The Washington Post. Here is a Spanish-language account from Bolivia, it does make the front page there. Here’s a blog report as well.
It is not an accident that Bolivia has lost territory to Paraguay and also to Chile. When it comes to Schellingesque focal point purposes, those events aren’t as long ago as clock time might make them seem. I might add that both conflicts were over resource wealth, just as today’s conflict is in part over natural gas. I would not be surprised if Bolivia lost territory again. If there is any trend over the last five hundred and fifteen years, it is that indigenous peoples in the Americas are losing control over natural resources. Every squib in Kosovo gets reported, why not this too?
Is Firefly libertarian?
I am referring to the Jos Whedon science fiction show that went off the air after eight (?) episodes. I now have watched the available corpus of eleven episodes available on DVD. Many call it libertarian, I see the implicit politics as suggesting the following:
1. Don’t expect much from armed rebellion, the bad guys often win.
2. A galaxy devoid of the rule of law is not such a fun place.
3. Smuggler heroes are noble, but most smugglers are not heroes.
4. Economies of scale matter, and secession is a hard life.
In other words, it is actually Burkean conservative.
One of the heroines is a "companion", so I wonder if the series endorses legalized prostitution. We are told repeatedly that she is "registered" (legally, in the form of a cartel?), and she seems to look down on garden-variety you-know-whats, who presumably also engage in price shading.
Alina Stefanescu offers Firefly commentary; see Rod Long as well. Dan Drezner describes his conversion to the series, plus offers his usual excellent links. Jacqueline Passey is another avid fan.
Why economists should feel conflicted about the Grokster ruling
…it is difficult to judge how a given level of illegal downloads will affect economic efficiency. First, the quantity of music sold in a given year is not a very accurate indicator of how much value consumers receive from music. Fans commonly experiment by buying a number of CDs, only a few of which pay off and become favorites. Many or most of the products bought are quickly regarded as disappointments and discarded; in this regard the market for CDs differs from the market for refrigerators. Whether consumers like what they bought is at least as important as the absolute size of the industry.
The Internet already helps music companies track fan demands. When fans sample on-line music, usually they can figure out whether or not they would like the entire CD. Many of these fans still buy the CD, to get better sound, to have the music in more convenient form, to receive the packaging, and so on, as discussed above. These fans usually will be happy with their purchases. As a result, it will be harder for the music companies to issue low quality CDs. Of course this tighter monitoring of quality may cause the number of new issues to decline. In nominal terms the industry will shrink, but at the same time it may produce more real value for consumers. For this reason, a shrinking music industry, as measured in terms of either dollars or new releases, can be desirable from an economic point of view.
Evaluating the efficiency consequences of illegal downloads is difficult for a more fundamental reason. Most generally, we do not understand the demand for music very well. We do not understand what most fans want from their music. Just as book buyers are not always readers, the music market is not always about the tunes. Sometimes it is about symbolic values.
It is a mystery why fans spend almost all of their music money on product of very recent vintage. Until we untangle this puzzle, and we have not yet, we will not understand how Internet music is likely to affect consumer welfare.
Most consumers are not interested in buying much music from 1950, regardless of its objective quality in the eyes of the critic. Music from 1650 is even less popular. Few people search the history of music for “the best recordings” and focus their buying on those. Rather, in any given year the most recent recordings dominate the charts. At a typical moment, all of the Billboard Top 40 singles, or albums, come from the last two years of recorded output. Every now and then there is a Beatles revival, but such events are the exception rather than the rule. Consumers evince an overwhelming preference for music produced in the very recent past.
Most likely the music market is about more than simply buying “good music,” as a critic might understand that term. People buy music to signal their hipness, to participate in current trends, or to distinguish themselves from previous generations. Buyers use music to signal their social standing, whether this consists of going to the opera or listening to heavy metal. Others value partaking in novelty per se. They find newness exciting, a way of following the course of fashion, and the music market offers one handy arena for this pursuit. For some people music is an excuse to go out and mix with others, a coordination point for dancing, staying up late, drinking, or a singles scene. Along these lines, many fans seem to enjoy musical promotions, hype, and advertising as ends in themselves, and not merely as means to hearing music. They like being part of the “next big thing.” The accompanying music cannot be so bad to their ears as to offend them, but the deftness of the harmonic triads is not their primary concern.
In other words, the features of the market that matter to the critic may not be very special to consumers at all. Most of all, consumers seem to care about some feature of newness and trendiness, more than they care about music per se. So how much does it matter, from a consumer’s point of view, if weaker copyright protection reshapes the world of music?
Under one hypothesis, the specific musics of our day are easily replaced, or in economic terminology, highly substitutable. All other things equal, people will buy the new, but they could get along with alternatives almost as well. For instance perhaps “ravers” could use Gregorian chants to define their cultural status. Indeed one chant CD (“Chant”) had a very long and successful chart run. Young rave and techno fans were among the largest buyers of this recording.
Or perhaps half the supply of music could do almost as good a job of supplying symbolic goods, especially if music companies can track fan demand with greater facility. Alternatively, individuals could rely more heavily on alternative means, such as fashion, to signal their social standing and participate in trends. These points are all speculations, but they show the difficult of pinning down what music fans really care about.
Consider two further examples. First, in the former Soviet Union, dissident rock and roll bands performed many popular culture functions and commanded a fervent following. These bands fell short of the objective critical quality of their Western counterparts. Still they provided consumers with many useful services, including a means to signal rebellion against the Soviet state. Second, in 1941, the major radio stations refused to carry the catalog of the music publisher ASCAP, in a dispute over fees. At that time ASCAP, the leading music publisher and clearinghouse in the United States, dominated the music market. The stations instead played BMI music, which was more oriented towards rhythm and blues and offered less Tin Pan Alley, crooning, and big band. Radio listeners seemed to take the sudden change in stride; there is little evidence of a serious problem. Music fans continued pretty much as before, except for the change in styles and associated music publishers.
For whatever reason, most consumers find it harder to reorient their attention towards older musics. Perhaps only new music allows for effective signaling and sorting. When music is new, individuals can show that they are connected to current modes of thinking and feeling. Not everyone can know “what is in,” because “what is in” is changing so frequently. That very fact makes it worthwhile for consumers to put effort into following the new. The music market might therefore churn product to help people communicate their identities to others, and to help people play an ongoing dynamic game of clues and cues. Furthermore previous generations already have claimed older musics, making them less well suited for social differentiation. Perhaps musical taste is a game of secession and repudiation more than anything else.
So the music of Chuck Berry “no longer fits” the world of 2005, and cannot be made to fit it. Critics still love the music, and some niche consumers will be drawn to its merits, but it can never hold the current place of Britney Spears. That is why hit reissues are rare. It is not because consumers still remember the older musics. Rather most consumers do not care about them very much. It thus appears that the value of popular music, to most consumers, consists of some temporally specific tracking quality. This may involve an ability to follow, correspond to, or perhaps even shape the spirit of the times. Rejection of the previous Zeitgeist may be part of this same process. For consumers, this tracking quality is a significant part of the value of music. The music industry is delivering the goods when its product performs this tracking function, and otherwise not. The Internet helps music perform tracking functions of this kind.
The bottom line: The welfare economics of music do not resemble those of bread or buttons. Right now we do not even know whether music is being oversupplied or undersupplied, relative to an optimum. Beware of any analysis of this case which does not consider these deeper underlying issues.
Is it better to be a small nation?
Of the ten richest countries in the world in terms of GDP per head, only two have more than 5m people: the United States…and Switzerland, with 7m. A further two have populations over 1m: Norway, with 4m and Singapore, with 3m. The remaining half-dozen have fewer than 1m people.
The Size of Nations, a new book by Alberto Alesina and Enrico Spolaore, addresses why some small countries have done so well. Here is a related working paper by Alesina, here are some related working papers by Spolaore. As some of the larger empires of the past break up, questions of national size increase in importance. More than half the world’s countries have fewer than six million people, roughly the population of the state of Massachusetts.
The Economist offers the following summary:
The book argues that the best size for countries is the result of a trade-off between the benefits of scale and the costs of heterogeneity; and that openness to trade alters this trade-off. The gains from being big are considerable. Large countries can afford proportionately smaller government (although they often don’t). Essential running costs can be spread over many taxpayers. Embassies, armies and road networks are all likely to cost less per head in populous countries. Defence in particular is cheaper for giants. “It is only safe to be small in a peaceful world,” say the authors (who, unusually for economists, offer two stimulating chapters on conflict, war and the size of nations).
Large countries are able not only to spend more efficiently; they can also raise taxes in more cost-effective ways. Income taxes are more efficient than customs duties, but require a bigger initial bureaucracy. Large countries have bigger internal markets, allowing more specialisation and returns to scale. And they can redistribute resources geographically, providing insurance when one part of the country is hit by disaster or recession and shifting income from rich regions to poor ones.
So why don’t all countries merge into one large superstate? Well, smallness has its benefits too:
…large countries are also likely to have a diverse population whose varying preferences and demands a government may find hard to meet: America, Brazil and India are cases in point. A study of local government in the United States suggests that Americans are willing to put up with the higher running costs of small municipalities and school districts in exchange for living in communities with little variation in income, race or ethnicity. This could imply that people also prefer to live in more homogeneous countries. With the main exception of America, successful big countries (such as Japan) have relatively homogeneous populations.
The authors argue that a worldwide regime of free trade will make the optimal size of nations smaller. If you can trade with other nations, there is no need to be large to ensure an open internal marketplace. So rising globalization should make secession easier to endure, which indeed seems to be the case.
My take: I am less convinced of the benefits of smallness. Think of small countries as having greater scope for experimentation, and thus a higher variance of outcomes. They also pop in and out of existence at a higher rate. Brazil will always be Brazil, but the fortunes of Croatia have varied over the years. If we look at the small countries that continue to exist, there is positive selection bias. We should expect them to do better than average, as the failures disappear, unlike with the less politically fluid larger countries. The observed superior performance of small countries does not mean that ex ante you should prefer to live in San Marino. In a small country, you face some very real chance that your system will fail, and that you will cease to exist, possibly under unfavorable terms. Especially if you are risk-averse, there is much to be said for the security of living in a larger nation.