Results for “age of em” 17231 found
A short history of bank deposit levies
In July 1992 Italy’s Socialist Prime Minister Giuliano Amato imposed a one-off levy on bank accounts. It was a mere 0.6% in comparison with Cyprus’s scheme, and it still left a lasting scar on the country’s financial psyche. In 1936 Norway experimented with a bank deposit tax, but it caused an exodus of cash from the country. There are also some Latin American examples (Brazil in 1992, Argentina at the turn of the millennium) but most were combined with capital controls, and were last-ditch efforts to rescue the financial system when all else had already been tried.
That is from Edmund Conway, here is more. From Carola Binder, here is a history of capital levies in fiscal crises, and via Google here is what Hungary did in 1920.
Cyprus update
These points are from scattered but I think reliable tweets, of course stay tuned for updates. The Cypriot Parliament wants more time to debate, so they will not be rubber-stamping the depositor haircut measure today, as had originally been the plan. In theory they are now voting Monday, although presumably that stands in doubt too. The German Parliament would not have passed the bailout at all, without the depositor haircut or something similar. This stance could cause other eurozone nations to reevaluate their future policies and also current bargaining strategies. The EU will not rule out “deposit assessments” for future bailouts. As I’ve written, the smooth running of this gambit would not be good news either but would lead only to a raising of the stakes with a replay of the basic game. Barclays thinks that significant bank runs elsewhere are unlikely; in my view the longer-run ramifications most likely operate through changing the incentives of other eurozone member governments, which now can expect a lower share of the surplus from any bargain. Morgan Stanley is less optimistic. Note that Cyprus had met the Maastricht hurdle before the crisis.
The broadest lesson of them all concerns the dangers of framing when you play the same game over and over again (attn: U.S. fiscal policymakers). German policymakers/voters have felt backed into a corner by repeated bailouts and that is when stupid choices start being made. This could go down as a blunder of historic proportions. It also shows that EU governance already is a disaster and profoundly anti-democratic in the worst sense of that term. A second general lesson is that modern politics cannot sustain wealth taxes very well, unless those taxes have a very long history (property taxes) or are extremely non-transparent, such as the lack of inflation indexing on U.S. capital gains levies; the intolerability of the deposit confiscation is closely related to the issues surrounding the stickiness of nominal wages.
Further update: Cypriot bank holiday further extended through Tuesday…And here are thoughts from Matt Yglesias.
The cosmopolitan and civil libertarian core of economics
Here is my latest New York Times column, more philosophical than usual, excerpt:
Economic analysis is itself value-free, but in practice it encourages a cosmopolitan interest in natural equality. Many economic models, of course, assume that all individuals are motivated by rational self-interest or some variant thereof; even the so-called behavioral theories tweak only the fringes of a basically common, rational understanding of people. The crucial implication is this: If you treat all individuals as fundamentally the same in your theoretical constructs, it would be odd to insist that the law should suddenly start treating them differently.
At least since the 19th century, the interest of economists in personal liberty can be easily documented. In 1829, all 15 economists who held seats in the British Parliament voted to allow Roman Catholics as members. In 1858, the 13 economists in Parliament voted unanimously to extend full civil rights to Jews. (While both measures were approved, they were controversial among many non-economist members.) For many years leading up to the various abolitions of slavery, economists were generally critics of slavery and advocates of people’s natural equality, as documented by David M. Levy, professor of economics at George Mason University, and Sandra J. Peart, dean of the Jepson School of Leadership Studies at the University of Richmond, in “The ‘Vanity of the Philosopher’: From Equality to Hierarchy in Post-Classical Economics.”
Professors Levy and Peart coined the phrase “analytical egalitarianism” to describe the underpinnings of this tradition. For example, Adam Smith cited birth and fortune, as opposed to intrinsically different capabilities, as the primary reasons for differences in social rank. And the classical economists Jeremy Bentham and John Stuart Mill promoted equal legal and institutional rights for women long before such views were fashionable. Their utilitarian moral theories placed individuals on a par in the social calculus by asking about the greatest good for the greatest number.
There is more at the link of course, such as:
Often, economists spend their energies squabbling with one another, but arguably the more important contrast is between our broadly liberal economic worldview and the various alternatives — common around the globe — that postulate natural hierarchies of religion, ethnicity, caste and gender, often enforced by law and strict custom. Economists too often forget that we are part of this broader battle of ideas, and that we are winning some enduring victories.
I did not have the space to cover some additional questions of interest. These include:
1. Will the move away from rational choice models, and toward a broader and larger empirical social science, including behavioral and neuro elements, nudge economics away from this heritage?
2. How much of the civil libertarian core, common among many economists, stems from the socioeconomic background of (many) current economists rather than from the economic method?
3. How do Indian economists poll on the caste system, relative to their socioeconomic peers?
4. How much will the extreme influx of non-Westerners into American and British graduate programs in economics affect the discipline in the years to come?
Might this generation have less wealth?
A new study from the Urban Institute finds that Ms. Brady and her peers up to roughly age 40 have accrued less wealth than their parents did at the same age, even as the average wealth of Americans has doubled over the last quarter-century.
Because wealth compounds over long periods of time — a dollar saved 10 years ago is worth much more than a dollar saved today — young adults probably face less secure futures for decades down the road, and even shakier retirements.
“In this country, the expectation is that every generation does better than the previous generation,” said Signe-Mary McKernan, an author of the study. “This is no longer the case. This generation might have less.”
That is from Annie Lowrey. I would note that some of these “future benefits” will be consumed in the form of health care, but still I think this is far from an efficient (or just) outcome.
China safety markets in everything
Chinese drivers hate to wear their safety belts. Instead, they wear specially designed clothing to pretend they are buckled up. But that won’t stop the seat-belt reminder lights and beeps, which are all extremely annoying.
It is possible to click the belt in the buckle behind your back but that is uncomfortable. It is also possible to fiddle with the electronics but that is difficult. Creative and innovative Chinese companies finally found an easy solution.
They are priced between fifty cents and $2.40. Here is more, excellent photos too, and for the pointer I thank Michael Verdone.
*With Charity for All*
I am a fan of this book. The author is Ken Stern and the subtitle is Why Charities are Failing and a Better Way to Give, with emphasis on the former I would say. Here is one excerpt:
The CBO study and other reporting on the practices of charitable hospitals did in fact spur reforms efforts, including a proposal in Congress to require a minimum uncompensated care rate of 5 percent in return for tax-exempt status. All the major proposals, however, have been beaten back, with reform advocates having to settle for greater public reporting obligations for charitable hospitals on the theory that greater transparency would ratchet up pressure for change. It hasn’t worked. A 2012 nationwide study found continuing low levels of uncompensated care, only 1.51 percent on average, a number less than half the profit margins for the same group of hospitals.
Thwarted body part markets in everything
The Chicago-based nonprofit faces “the same challenge any business would have, whether I’m selling Hostess Twinkies or cadavers,” says Stephen Burnett, a professor of management and strategy at Northwestern University’s Kellogg School of Management.
To stay ahead, the association wants to supply body parts to the FBI and launch new products, including its own plastinated bodies, says Mr. Dudek, 62, executive vice president since 2005. He draws on his entrepreneurial experience as a co-owner of an MRI center in the south suburbs, which he sold to join the association.
Originally known as the Demonstrator’s Society, the association has not changed its business plan since its founding in 1918. Bodies are donated, embalmed and transferred to institutions such as med schools, where dissection remains a rite of passage.
Reasons for donations vary. Some gifts are part of estate planning, while others are made by relatives who cannot afford funerals.
By law, bodies cannot be sold, although groups like the association can be paid for processing. Member med schools pay about $1,300 per cadaver; nonmembers pay $2,300.
Nationwide, there’s a shortage of cadavers, in part because of the rise in organ donation. Cadavers without their organs are not suitable for medical education, Mr. Dudek notes. The association needs about 425 bodies a year for its members but missed that mark in 2009 and has barely met it in three of the last six years.
And yet globalization and government may come to the rescue:
The Middle East, where the culture discourages body donations, could be a new market. Schools in Lebanon and Saudi Arabia have recently expressed interest, he says. Law enforcement agencies also are prospects. Anatomical Gift is close to signing a contract to supply the FBI’s K-9 unit, which uses body parts to train dogs to find crime victims, he says. Limbs cost $570, plus $335 for HIV and hepatitis testing, since they are not embalmed, Mr. Dudek says. An FBI spokeswoman declines to comment.
There is more here, and for the pointer I thank G. Patrick Lynch.
Assorted links
The overtime boom
The last time U.S. factory workers put in longer weeks than they averaged in February, Rosie the Riveter was on the assembly line and American GIs were fighting Nazis in Europe.
All those extra hours helped to drive five straight months of manufacturing growth in the U.S., racking up 52,000 new factory jobs, according to Labor Department data. That includes 14,000 positions in February alone.
Good news of course, but there is a dark lining to the cloud. I take the heavy reliance on overtime to be another sign of labor market polarization, and of low employer demand for a large number of the unemployed.
The story is here, hat tip goes to this chain.
Addendum: As Matt Yglesias reports, retail sales are strongly up too.
Can we agree that…(more on fiscal policy, and hurdle rates)
Ryan Avent puts forward some propositions on fiscal policy that he hopes we can agree on (I agree with most of them, dissenting on the multiplier discussion by wanting explicit time horizon considerations, the overall importance given by multiple mentions of ZLB, and being confused but not disagreeing with the wording of the first part of #13). And in general I am supportive of such attempts to find common ground.
I wish, however, to add to the list. I wish to nominate a few more items, noting that this does not exhaust my wish list. Here goes:
1. Debt-financed government spending must eventually be paid off and the estimated deadweight loss of taxation is at least twenty percent. That immediately puts a hurdle rate of twenty percent or more on projects, even when real borrowing rates are very low.
2. Private companies, when making investment decisions, often use hurdle rates as high as twenty or thirty percent, even when their cost of capital is much lower. Often it is believed this is to constrain overeager empire builders, or “cowboys.” For sure, the agency problems in the public sector differ considerably from those in the private sector, but arguably there should be a “cowboy premium” for the public sector as well, even if that premium should be lower for the public sector.
3. The real risk of public sector investment is not measured by the borrowing rate, but rather by the covariance of the value of public sector outputs with a very broad notion of the market portfolio. I call this the Jensen premium, since Michael Jensen first outlined this argument clearly.
This is all standard stuff, none of it is like reading the “he said, she said” debates over the proper size of the fiscal policy multiplier.
To do some adding up, we have twenty percent plus the cowboy premium plus the Jensen premium. Plus of course the real time preference rate, if that should be positive too. It is hard to get a good sense of the size of the cowboy and Jensen premia but still we are running clearly over twenty percent, perhaps a good deal over twenty percent.
I also believe (more controversially, this point is not consensus) that the cowboy premium is considerably higher for debt-financed expenditures, relative to balanced budget expenditures.
Now let’s come to my complaint (which is not directed against Ryan). I have read dozens — or is it now hundreds? — of blog posts arguing that low borrowing rates make for a very strong case for fiscal policy. I do not often if ever see these posts admit that the hurdle rate for government investment still can be quite high and still is likely quite high. I do not see these posts discussing the DWL of taxation, the cowboy effect, or the Jensen effect. I see only the mention of a very low borrowing rate.
Of course you should adjust the social costs of the project downward to the extent it is mobilizing specific unemployed physical resources (which is quite distinct from the existence of a low borrowing rate per se; for one thing, it is easy to have projects which reshuffle resources and a low borrowing rate, plus the crowding out may come on the labor side). I see this point about unemployed resources mentioned many, many times, though not with the proper caveats, and I see the points about hurdle rates hardly mentioned at all. And note by the way that the DWL of taxation premium should be applied to all upfront pecuniary costs, whether or not they are true social costs.
Addendum: Brad DeLong comments. His #1, if I understand it properly, confuses “spending at all” with “taxing vs. borrowing” calculations. #2 ignores agency problems and #3 assumes a rather definite view on the understanding of risk. You will note that my post is quite agnostic on the size of #2 and #3 in any case.
Further assorted links
1. Resource mobility in Japan.
2. The culture that is New York; “You likely wouldn’t have sex with someone who took you to the wrong restaurant (or at least wouldn’t be happy about it).”
3. Bryan Caplan on the minimum wage.
4. Vivek Wadhwa on the great stagnation.
5. I favor the campus right to a guinea pig.
Good sentences about John Stuart Mill
He was so bewildered by his lack of books that he even began sleeping late, once not getting up till nine o’clock. One of the daughters [in Toulouse] pitying his plight gave him Legendre’s Geometry. He dissected it eagerly, although its muddled thinking on Ratio took away a good deal of its merits as an elementary work. The confusion in the house grew worse; a dog went mad and terrorized the servants. To John’s orderly mind the Benthams seemed to live in a state of constant uproar. They were always interrupting him for other things. He was never left to himself. They took him to see peasant dances…
That is from Michael St.John Packe, The Life of John Stuart Mill.
You are fairly predictable, perhaps
The new article is “Private traits and attributes are predictable from digital records of human behavior,” by Michal Kosinski, David Stillwell, and Thore Graepel. Here is the abstract:
We show that easily accessible digital records of behavior, Facebook Likes, can be used to automatically and accurately predict a range of highly sensitive personal attributes including: sexual orientation, ethnicity, religious and political views, personality traits, intelligence, happiness, use of addictive substances, parental separation, age, and gender. The analysis presented is based on a dataset of over 58,000 volunteers who provided their Facebook Likes, detailed demographic profiles, and the results of several psychometric tests. The proposed model uses dimensionality reduction for preprocessing the Likes data, which are then entered into logistic/linear regression to predict individual psychodemographic profiles from Likes. The model correctly discriminates between homosexual and heterosexual men in 88% of cases, African Americans and Caucasian Americans in 95% of cases, and between Democrat and Republican in 85% of cases. For the personality trait “Openness,” prediction accuracy is close to the test–retest accuracy of a standard personality test. We give examples of associations between attributes and Likes and discuss implications for online personalization and privacy.
For the pointer I thank Brandon Robison.
Assorted links
The jobs of the future?
Katherine Young, 23, is a Google rater — a contract worker and a college student in Macon, Ga. She is shown an ambiguous search query like “what does king hold,” presented with two sets of Google search results and asked to rate their relevance, accuracy and quality. The current search result for that imprecise phrase starts with links to Web pages saying that kings typically hold ceremonial scepters, a reasonable inference.
Her judgments, Ms. Young said, are “not completely black and white; some of it is subjective.” She added, “You try to put yourself in the shoes of the person who typed in the query.”
How smart do you need to be to do this? How well-educated? How is the quality of your work to be judged? The full article is here, interesting throughout.