Results for “age of em” 16697 found
How will Greece get off the dole?
My NYT column is here, here is an excerpt:
Consider the World Bank’s Doing Business index, which ranks countries according to the quality of their regulatory environment for commerce. The index places Greece at No. 109, just behind Egypt, Ethiopia and Lebanon. For the category of “high-income countries,” the Greek ranking is next to last, ahead of only Equatorial Guinea, which has oil wealth.
Greece has a malfunctioning fiscal system in which the shadow economy is estimated to be roughly 20 to 30 percent of the reported economy and tax evasion may run at $30 billion a year. Simply collecting taxes that are legally due would help bring Greece’s books into balance, yet even this simple remedy does not appear imminent.
As the World Bank index suggests, government funds are often spent hindering production rather than supporting it. This gives one clue as to why the numbers make Greece appear richer than it really is. Public expenditures are valued at cost when measuring gross domestic product, yet arguably the quality of Greek public services, per dollar spent, is less than that of many wealthy countries. Nonetheless Greece plunged ahead and joined the euro zone in 2001, with some unfortunate consequences.
A few scattered points which did not make it into the column:
1. Count the economic collapse of Greece as an intellectual victory for Douglass North and his brand of "institutions matter" economics.
2. I don't see any reason why a narrower Eurozone has to collapse.
3. Greece with a default and a floating exchange rate could do OK (though not spectacularly well). The real question is how to get from here to there.
4. I don't have any problem suggesting that Greece needed, and still needs, to collect more tax revenue. Yet many writers on "the left" will bend over backward to avoid uttering these simple words: "The Greek government spent too much money." It's true, the Greek government spent too much money. Be worried if you are reading a writer who does not admit (much less emphasize) that upfront.
5. In addition to greater wealth, here are some reasons why California is not like Greece:
The United States has rich and poor regions, but the 50 states are forced to run balanced budgets, and there is greater mobility within the nation, based on a shared language and culture. Major national policies, like President Obama‘s health care plan, are not judged primarily in terms of which states win and lose; in fact the largely opposed “red states” get a lot of the benefits through higher Medicaid subsidies.
Addendum: Arnold Kling comments.
What should World Bank economists do, part II?
My talk there on Thursday outlined and evaluated ten possibilities:
1. Refute the simple (and frequent) fallacies of others in the World Bank.
2. Help the Bank write better contracts — wiser about incentives – for its projects.
3. Study economic growth and Doug North and promote big picture thinking about the big questions that really matter.
4. Abandon big picture thinking — which rarely succeeds – and focus on easy-to-manage public health improvements.
5. Figure out the prevailing net bias in Bank activities and work to offset it. Arguably this bias is that the Bank Board pushes through too many contracts too quickly. Show up to work late. The theory of comparative advantage suggests you focus on what others are lacking.
6. Figure out the prevailing net bias in the economics profession, and work to offset it. Be a generalist.
7. Help the Bank make more money and let the non-economists figure out how to spend it.
8. Take whatever resouces you can, and drop them out of a helicopter onto poor countries. Give up trying to make aid work.
9. Collect and analyze more data.
10. Take a stronger interest in the most effective anti-poverty recipe we have, namely immigration.
Your answers to this question can be found here.
Books in my pile
In various stages of undress:
Sheena Iyengar, The Art of Choosing, reviewed by Virginia Postrel here. Stephen M. Davidson, Still Broken: Understanding the U.S. Health Care System (intelligent book, bad timing since it pushes a non-Obama reform). Peter Heather, Empires and Barbarians The Fall of Rome and the Birth of Europe; good book but I've read too much on this topic lately. What We See: Advancing the Observations of Jane Jacobs, has the pluses and minuses of an edited collection. Boris Groysberg, Chasing Stars: The Myth of Talent and the Portability of Performance; interesting hypothesis but I wanted to see more on regression toward the mean. Stuart Buck, Acting White: The Ironic Legacy of Desegregation, a politically incorrect reexamination of what the title suggests. Matthew E. Kahn, Climatopolis: How Our Cities Will Thrive in a Hotter Future. Nicholas Carr, The Shallows: What the Internet is Doing to Our Brains; is the joke "I couldn't finish it" or "I'm still reading it"? Daniel Rigney, The Matthew Effect: How Advantage Begs Further Advantage, I wonder how much his last book sold.
More Evidence for the Slartibartfarst Principle
Earlier I wrote that due to the Slartibartfarst principle,
…the evidence for intelligent design ought to be readily available in the graffiti of DNA. "Slartibartfast was here," or perhaps "3.14159265," or given what we know of economics, "All rights reserved, MegaCorp. Call for a free estimate."
The fact that, as of yet, we don't see this kind of signature in the data is evidence against intelligent design.
With yesterday's announcement we have a bit more evidence favoring the premise of my argument.
To distinguish their synthetic genome from the naturally occurring version, the researchers encoded a series of watermarks into the sequence. They began by developing a code for writing the English alphabet, as well as punctuation and numbers, into the language of DNA–a decoding key is included in the sequence itself. Then they wrote in their names, a few quotations, and the address for a website people can visit if they successfully crack the code.
Life as advertisement, this is the wave of the future!
Why is Europe so worrisome for the financial markets?
Scott Sumner writes:
Stocks crashed 4% today because people are increasingly worried about the macroeconomy. Yes, there are real aspects to the Greek crisis. Greece will need to engage in austerity over the next few weeks. But Greece, Portugal, and Spain are not big enough countries to knock 25% off the price of oil in one month. Oil prices are plunging for the same reason as US equity prices are plummeting–fear of a sharp fall in AD (and hence economic activity) all over the world.
I don't yet follow Scott's reasoning. If anything, in very recent times the ECB has shown it is willing to abandon independence to monetize various national debts. How much that will boost nominal GDP I am not sure, but I don't take it as negative news for nominal GDP, relative to previous expectations.
I am usually reluctant to play "market psychologist," but I see potentially insolvent banks as a major issue, plus their connection to money market funds. That has an AD link to be sure, but the uncertainty of another major bailout, and its fallout for intermediation, would be paralyzing to financial markets. Most of all, the fear is that "Europe-as-we-knew-it" was a bubble of sorts, and that other people's digestion and comprehension of that possibility will create adjustment problems around the world, including China.
I'm not convinced that the "end of the tunnel" for Europe on this one has to be so dire. (Imagine the 1987 world, with Greece not on the Euro, and extrapolate it, with Greece in default a lot of the time but with most of Europe simply being Europe; is it so bad?) It's the uncertainty about the transition path and what that path means for broader notions of European cooperation. It's like imagining a man committed to driving from here to there, yet with no paved road in between or maybe also no unpaved road. Yet Europe is committed to the journey.
Markets in everything
Hedge funds have found a new market to invest in: whistle-blowers.
Informants who turn in tax cheats have to wait years to get their share of any reward from the I.R.S.’s recently expanded whistle-blower program. So hedge funds, private equity groups and other big investors are offering an alternative. They are essentially agreeing to buy a percentage of those future payouts in exchange for a smaller amount upfront to the whistle-blowers.
The surging size of the potential awards is driving all the interest. Three years ago, the I.R.S. began offering bigger rewards – 15 percent to 30 percent of whatever money the government recovered – in a move that has turbocharged the agency’s whistle-blower program.
The full story is here. And what about the price?
While the market in whistle-blower futures is in its infancy, investors have been requesting as much as 65 percent of any award an informant receives, according to lawyers negotiating possible deals. In the more established field of litigation finance, investors who underwrite the cost of a lawsuit get 5 percent to 50 percent of any legal settlement or jury award.
Assorted links
1. A granular look at financial market job losses.
2. Thumbcharts.
3. "Keep your identity small."
4. Should pedicures by fish be banned?
5. "Disacknowledgements", the anti-authors "without whom the work would have proceeded much more briskly and less painfully".
Incorporated Men and Women
In my post on The Unincorporated Man “framing” writes:
Instead of saying that a corporation can own shares in your income, how about saying it is like a loan that you wont get into trouble ever paying back, but will have to pay more if you become rich.
Exactly. In fact, I have written about income-contingent loans before and how one of them got Bill Clinton through college. At the PSD blog Ryan Hahn also points to Lumni, a new firm that is investing in human capital in the developing world:
Lumni designs, markets and manages “Human capital funds”, an innovative investment vehicle for financing education. Students agree to pay a fixed percentage of their individual incomes for a predetermined number of months after graduation. The arrangement traspases part of the risk of investing in education from the student to the investor, who is in a better position to diversify it.
Lumni is the brainchild of economics professor Miguel Palacios. Here is his book and Cato paper on human capital contracts.
Adam Wheeler’s resume
You'll find it here. He's the fraud who lied his way into Harvard. Here is the description of his "book" (supposedly) under review at Harvard University Press:
The Mapping of an Ideological Demesne
– Under review with Harvard University Press 2008-2009
The massive proliferation, from the fifteenth through the seventeenth century, of technologies for measuring, projecting, and organizing geographical and social space produced in the European cultural imaginary an intense and widespread interest in visualizing this world and alternative worlds. As the new century and the Stuart era developed, poets and dramatists mediated this transformation in the form of spatial tropes and models of the nation. I examine the geographical tropes by which Tudor and Stuart writers created poetic landscapes as a mode of engagement with the structures of power, kingship, property, and the market. Accordingly, each of the texts that I examine betrays an awareness of writing as a spatial activity and space as a scripted category. The critical topographies that these writers created are maps of ideology, figural territories within which social conflict and political antagonism are put into play.
I've read worse. How you react to that description is a Rorschach test of sorts, especially if you are not thinking it is fraudulent. Here is a TNR post on Wheeler. Here is a Princeton University Press post about Wheeler and the book he claimed to have under contract with them, to be co-authored with Marc Shell, a very well-read scholar.
Why are none of the sources reporting how well he actually did at Harvard and elsewhere? Isn't that an interesting question? How much would the world differ if Harvard reserved a fifth of its entering class for those individuals who showed the most talent for fraud? I don't mean that question in a cynical light, it is one genuine way of trying to think about how education adds value to labor market outcomes.
Social welfare expenditures in the United States and the Nordic Countries
Price Fishback has a new paper and perhaps this abstract should be screamed from the yttertak:
The extent of social expenditures in the U.S. and the Nordic Countries is compared in the early 1900s and again in the early 2000s. The common view that America spends much less on social welfare than the Nordic countries does not survive closer inspection when we consider the differences in the structures of social expenditures. The standard comparison examines gross social expenditures. After adjustments for direct and indirect taxes paid, the net social expenditures in the Nordic countries are much closer to American levels. Inclusion of mandatory and private social expenditures raises the American share of GDP devoted to social expenditures to rank among the middle of the Nordic countries. Per capita net public social expenditures in the U.S. rank behind only Sweden. Add in the private spending, and per capita spending in the U.S. is higher than in all of the Nordic countries. Finally, I document the enormous diversity across time and place in public social expenditures in the U.S. in the early 1900s and circa 1990.
Fishback does discuss how, in line with intuition, the U.S. system is more porous and less universal. He also stresses how common it is that people do not claim or apply for benefits for which they are eligible.
Here are some of Fishback's papers on-line, but I do not see an ungated copy of this one.
Middle East peace proposals
This one is new to me:
An even more radical idea has been put forward by Swedish diplomat Mathias Mossberg and UC-Irvine professor Mark LeVine. They do not believe giving settlers Palestinian passports would solve anything. The two propose creating overlapping states between the Jordan River and Mediterranean Sea, delinking the concept of state sovereignty from a specific territory. There would be an Israel and a Palestine, but rather than divide the land, the two states would be superimposed on top of one another. The plan would permit individuals to live where they wish and choose their political allegiance. This, they argue, would resolve the seemingly intractable questions of how to divide the holy city of Jerusalem and whether to allow Palestinian refugees “the right of return” to their old communities.
This doesn't seem practicable to me (no good mechanism for dispute resolution), but maybe in some other geopolitical setting it could be made to work,
Oil Spills, Tort Law and Libertarianism
Here is Paul Krugman's Nth reason why libertarianism doesn't work:
Thinking about BP and the Gulf: in this old interview,
Milton Friedman says that there’s no need for product safety
regulation, because corporations know that if they do harm they’ll be
sued.Interviewer: So tort law takes care of a lot of this ..
Friedman: Absolutely, absolutely.
Meanwhile, in the real world:
In the wake of last month’s catastrophic Gulf Coast oil
spill, Sen. Lisa Murkowski blocked a bill that would have raised the
maximum liability for oil companies after a spill from a paltry $75
million to $10 billion. The Republican lawmaker said the bill,
introduced by Sen. Robert Menendez (D-NJ), would have unfairly hurt
smaller oil companies by raising the costs of oil production. The
legislation is “not where we need to be right now” she said.And don’t say that we just need better politicians. If
libertarianism requires incorruptible politicians to work, it’s not
serious.
In other words, libertarianism can't work because government sucks. I am tempted to comment further on this creative line of reasoning but that is unnecessary since Paul has misunderstood the facts of the matter.
The Oil Pollution Act of 1990 (OPA), which is the law that caps liability for economic damages at $75 million, does not override state law or common law remedies in tort (click on the link and search for common law or see here). Thus, Milton Friedman's preferred remedy for corporate negligence, tort law, continues to operate and there is no doubt that BPs potential liability under common law alone would be in the billions of dollars.
Thus, Paul now has only (N-1) reasons why libertarianism doesn't work.
Moreover, Paul has actually been too unkind to government, a defect it falls upon me (!) to correct. The point of the OPA was not to limit tort law but to supplement it.
Tort law, as traditionally understood, could only be used to recover damages to people and property rather than force firms to pay cleanup costs per se. Thus, in the OPA as I read it–and take the details with a grain of salt since I'm not a lawyer–there is no limit on cleanup costs. Moreover, the OPA makes the offender strictly liable for cleanup costs which means that if these costs are proven the offender must pay them regardless (there are a few defenses, such as an act of war, but they are unlikely to apply). The offender is also strictly liable for up to $75 million in economic damages above and beyond cleanup costs. Thus the $75 million is simply a cap on the strictly liable damages, the damages that if proven BP has to pay regardless. But there is no limit, even under the OPA, on economic damages in the event that BP failed to follow regulations or is otherwise shown to be negligent (same as under common law).
Sentences to ponder
Turkey can afford to keep tax rates unchanged “for the foreseeable future” while other European governments struggle to repair the damage done by the financial crisis, Ali Babacan, economy minister, said on Wednesday.
His comments reflect Turkey’s pride in weathering last year’s turmoil without bailing out any banks or seeking help from the International Monetary Fund. In contrast with much of the European Union it aspires to join, Turkey won recent upgrades to ratings of its sovereign debt after setting medium term fiscal targets it is likely to beat in 2010.
They're also not planning on raising the VAT and the debt-gdp ratio is about 45 percent, an enviable level for many EU nations. For a while now I've thought that Turkey should refuse membership in the EU, on the off chance that it ever were offered to them. Here is the full article.
Buried scary ledes
The [ECB] bank reversed itself on buying bonds amid signs that the debt crisis was spreading to the banking system.
“The situation was already starting to get worse on Thursday afternoon and throughout Friday of the week before last,” Mr. Trichet said. “A number of markets were no longer functioning correctly. It looked somewhat like the situation in mid-September 2008 after the Lehman Brothers’ bankruptcy.”
I suppose…I am glad they have not screamed that from the rooftops. The full story is here.
Update: The scary lede has been removed altogether from any NYT story.
What makes an economist?
When you read about a shortage of women's restrooms, your first thought is whether there is some way of charging for usage.
As it stands, Congress is preparing a bill to regulate the ratio of men's to women's rooms in federal facilities. I would think the theatre and symphony orchestra is where reform is needed, not at the Treasury Department. Men might benefit too ("husband leaving" and "wife leaving" are often complements) and I wonder why Tiebout competition has not enforced better outcomes.