Random notes
Here are a few articles that caught my eye:
But on the central question—whether Uncle Sam will pay ransoms—Mr Obama was firm. American officials cannot brook the idea of funding the groups they want to destroy, and they claim that kidnappers specifically avoid taking American (and British) hostages because they do not expect a return on the investment.
There is some empirical support for that theory. In a forthcoming study of over 1,000 kidnappings by terrorists in 2001-13, Patrick Brandt, Justin George and Todd Sandler of the University of Texas at Dallas found that the number of Americans and Britons abducted each year stayed constant, whereas the totals for countries known to meet captors’ demands rose steeply. They estimate that if a non-paying government were to start offering ransoms, the number of its citizens taken hostage would jump by at least 30%.
I’d love to see the demographic breakdown of that 25%.
According to a study from the Institute of Economic Affairs, Swedish-Americans are considerably richer than the average American—as are other Scandinavian-Americans. The poverty rate of Americans with Swedish ancestry is only 6.7%, half the national average. Swedish-Americans are better off even than their cousins at home: their average income is 50% higher than theirs, a number used by opponents of the Swedish model as an argument against the shackles of big government.
Their success in America seems solidly grounded in old national virtues. They have more trust in each other and in government; they tend to obey rules (leading to many jokes about “squareheads” and “dumb blondes”). The Protestant work ethic is strong: in Minneapolis in particular, the number of Lutheran churches is striking. Scandinavian-Americans also display a keen civic sense, whether in shovelling snow or helping elderly neighbours, from which everyone benefits.
I am 1/8th Swedish and 1/8th Norwegian.
3. Good forecasters are just lucky
At times, Lord [Mervyn] King can be refreshingly frank. He is no fan of austerity policies, saying that they have imposed “enormous costs on citizens throughout Europe”. He also reserves plenty of criticism for the economics profession. Since forecasting is so hit and miss, he thinks, the practice of giving prizes to the best forecasters “makes as much sense as it would to award the Fields Medal in mathematics to the winner of the National Lottery”.
4. Never trust an America official
DEVIN NUNES raised eyebrows in 2013 when, as chairman of a congressional working group on tax, he urged reforms that would make America “the largest tax haven in human history”. Though he was thinking of America’s competitiveness rather than turning his country into a haven for dirty money, the words were surprising: America is better known for walloping tax-dodgers than welcoming them. Its assault on Swiss banks that aided tax evasion, launched in 2007, sparked a global revolution in financial transparency. Next year dozens of governments will start to exchange information on their banks’ clients automatically, rather than only when asked to. The tax-shy are being chased to the world’s farthest corners.
And yet something odd is happening: Mr Nunes’s wish may be coming true. America seems not to feel bound by the global rules being crafted as a result of its own war on tax-dodging. It is also failing to tackle the anonymous shell companies often used to hide money. The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong. All this adds up to “another example of how the US has elevated exceptionalism to a constitutional principle,” says Richard Hay of Stikeman Elliott, a law firm. “Europe has been outfoxed.”
I can’t believe the Europeans actually trusted us. Reminds me of those naive conservatives like Ann Coulter who thought him Trump was sincere, and then were outraged when he picked a VP who doesn’t agree with his stated views on the key issues.
5. Piketty is just as left wing as I claimed
The heart of the complaint is that a Socialist government, meant to be the guardian of workers’ rights, is pandering to corporate bosses by dismantling them. Worse, goes the charge, it is making the disingenuous claim that this will help employers create jobs. “Who could possibly believe that making redundancies easier will create jobs?” reads a union flyer handed out at the rally. “Thomas Piketty agrees,” says one student triumphantly, referring to an article in Le Monde, a newspaper, in which the best-selling French economist argued that reducing redundancy costs will not curb unemployment.
Yet Mr Piketty was not the only rock-star French economist to opine on the labour reforms. In his own piece in Le Monde, Jean Tirole, a Nobel prize-winner, argued the opposite: that the insecurity of the young is precisely the fault of over-protected “insider” jobs. Because businesses fear being burdened with such employees, 90% of new hires are now for temporary jobs, and young people can be stuck with short-term contracts for years. The new labour law, argued Mr Tirole, should lead to more permanent hires and curb youth insecurity.
When I reviewed Piketty’s book on inequality, I pointed out that his views were surprisingly left-wing. He’s far to the left of France’s Socialist Party, and France is one of the most socialist countries in Western Europe. Even very modest and sensible market reforms are too much for Piketty.
And as far as the young people in France, don’t they realize that the current system discriminates against them?
6. (Human imperfection)X(US legal system) = $∞
FOR an inkling of how good intentions can go awry, consider Title III of the Americans with Disabilities Act (ADA). Passed by Congress in 1990 with the laudable aim of giving the disabled equal access to places of business, it has been supplemented with new Department of Justice standards (in 2010, for example, the DOJ said that miniature horses can qualify as service animals). . . .
What’s next? Omar Weaver Rosales, a Texas lawyer, has sued about 450 businesses in the past two years; more than 70% paid up to avoid a trial. But even more lucrative pastures are coming into view. In March a California judge ordered Colorado retailer Bag’n Baggage to pay $4,000 in damages and legal fees thought to exceed $100,000 because its website didn’t accommodate screen-reading software used by a blind plaintiff. Mr Rosales says extending ADA rules to websites will allow him to begin suing companies that use colour combinations problematic for the colour-blind and layouts that are confusing for people with a limited field of vision.
The DOJ is supporting a National Association of the Deaf lawsuit against Harvard for not subtitling or transcribing videos and audio files posted online. As such cases multiply, content may be taken offline. Paying an accessibility consultant to spot the bits of website coding and metadata that might trip up a blind user’s screen-reading software can cost $50,000 for a website with 100 pages. Reflecting on the implications of this, Bill Norkunas, a Florida disability-access consultant who was struck with polio as a child (and who helped Senator Ted Kennedy draft the ADA), says that removing videos that lack subtitles would deprive wheelchair users and the blind, who could at least listen to them. Mr Norkunas hopes that won’t happen, but reckons it very well might.
I’m proud to say that I’m one of the few who opposed the ADA back in 1990.
Here’s an interesting factoid about contemporary policing: In 2014, for the first time ever, law enforcement officers took more property from American citizens than burglars did. Martin Armstrong pointed this out at his blog, Armstrong Economics, last week.
Officers can take cash and property from people without convicting or even charging them with a crime — yes, really! — through the highly controversial practice known as civil asset forfeiture. Last year, according to the Institute for Justice, the Treasury and Justice departments deposited more than $5 billion into their respective asset forfeiture funds. That same year, the FBI reports that burglary losses topped out at $3.5 billion.
8. Is modern science an offshoot of economics?
In the dialectically structured thought-world of the late-thirteenth- and early-fourteenth-century universities (Latinscholae or schools, hence the adjective “scholastic”), the understanding of nature and the practice of natural science underwent profound change. A universe governed by hierarchically fixed and absolute values, Kaye argued, gave way to one characterized by change and motion. Observation and measurement displaced abstract speculation as the ways to understand nature, and that shift from deduction to quantification laid the foundations for a modern understanding of science.
That much was conventional enough. Kaye’s originality lay in his claim that the cause of this radical shift in thinking about nature was to be found in thought-patterns derived from the rapidly changing world of economics and transferred to scientific inquiry. Late medieval economic thinking was dominated by Aristotle’s discussion of value in the fifth book of his Nichomachean Ethics, where money features as the medium that makes possible comparison, measurement, and exchange between apparently unrelated things: How many shoes are equal to a house? What is the right proportion between goods and the labor that produces them?
Aristotle’s intellectual preeminence, newly restored to Europe from Arab sources, was of course foundational for the scholastic intellectual enterprise. But the rediscovery of Aristotle was not the only impetus to new thinking. In the booming mercantile economies of the thirteenth-century cities, and with the spread of the use of money, concepts rooted in the realities of the market were rapidly evolving.
Money itself was increasingly conceived as a dynamic medium connecting the constantly shifting values of commodities, labor, demand, and economic risk. The university thinkers responsible for the great shift in the understanding of the natural world, Kaye maintained, were themselves deeply immersed in this innovatory world of economics, as agents and administrators for their colleges and religious orders, and as members of the vibrant urban communities in which their universities were located. They were not only natural philosophers and theologians, but often also economic theorists and moralists, concerned with practical matters such as economic justice and especially the religious and ethical limits on usury in moneylending. And so the dynamic and shifting values of supply and demand in the marketplace, and the “monetization” of the cities, came to provide paradigms for a new and more dynamic understanding of the world as itself a dynamic realm best understood in terms of proportion, relativity, and mathematical measurement.
. . .
Kaye believes that there emerged after 1275 a novel and transformative conception of balance that revolutionized the thought of an age. A single if complex development, the emergence of “a new model of equilibrium” transformed thinking across many disciplines—economics, political theory, natural sciences, and mathematics among others—bringing to them an entirely new level of sophistication, flexibility, and explanatory power.
Food for thought.
Tags:
16. July 2016 at 14:15
Re: Incentives:
Price targeting or NGDPLT requires an implicit promise of bailing out the banking system which is necessary for the management of the money supply and volume of spending. Does Sumner’s theory account for the moral hazard in the existence of a “lender of last resort”?
Re: The passage about science being an offshoot of economics:
It is an interesting thesis. However, economics as a distinct discipline arose after the time period in question. Perhaps “proto-economic” thinking is more apropos.
16. July 2016 at 15:27
It’s ironic that Lutheran churches are cited as examples of “Protestant Ethic” since IIRC Weber’s original work singles out Lutheranism as the exception (in terms of protestant success) that proves the rule because Lutheranism emphasized a return to inner spirituality over the Calvinist emphasis of worldly affairs. I’m growing more and more skeptical of the religious explanation, more likely genetic factors: http://slatestarcodex.com/2016/04/27/book-review-albions-seed/
16. July 2016 at 15:31
“I am 1/8th Swedish and 1/8th Norwegian.”
-No wonder you’re #NeverTrump. Just like no wonder Bryan Caplan is pro-open borders.
BTW, I do assorted links at the Marginal Counterrevolution every day. Only my commentary is authored by someone with fewer IQ points than Scott Sumner.
“I’m proud to say that I’m one of the few who opposed the ADA back in 1990.”
-Very good. Thumbs up! Now I wonder why you c**ked so hard about Rand Paul and the 1964 Civil Rights Act. More of that Captain Sweden DNA?
#8 Betteridge’s law.
#3 -Nah.
“I’d love to see the demographic breakdown of that 25%.”
-???
In any case, Make America Great Again! Trump/Pence 2016!
BTW, going with boring conservative former congressmen doesn’t always work out. Just look at Dick Cheney.
16. July 2016 at 15:41
How about: “How a Surprise Upturn in U.S. Growth Could Trigger the Next Recession”
http://blogs.wsj.com/economics/2016/07/14/how-a-surprise-upturn-in-u-s-growth-could-trigger-the-next-recession/
16. July 2016 at 15:47
Frankly, I’m disgusted that the you invalidate the ADA because of its lamer parts. Classic fallacy of composition. I’m biased because my parents are deaf, but this means I’m hyper aware of the ADA’s protections. The deaf are discriminated daily in all aspects of life. We are only as strong as our weakest links.
16. July 2016 at 15:52
The ADA is up there with the VA and USDA in the good intentions become entrenched miseries for taxpayers and commerce department.
But a trifle next to property zoning….
16. July 2016 at 16:45
Wage theft (the denial of wages or employee benefits that are rightfully owed to an employee) appears to be much bigger than burglary and civil asset forfeiture. For example, https://en.wikipedia.org/wiki/Wage_theft#Overtime
16. July 2016 at 16:46
5. I like to tell people that France’s strict labor laws and very worker-friendly labor court setup actually emerged in the early 1970s, with a host of labor law reforms that changed everything from the burden of proof on dismissal (before then, it was on the employee to prove unfair dismissal) to stuff like severance and work councils. Unsurprisingly, the number of unemployed in France shot up over the next decade as soon as growth slowed down, and then never recovered – the lowest it ever got was 6% unemployment in 2007 IIRC. And of course, like even the ILO recognized in a 2013 report, states with strict labor laws tend to have tons of temporary workers.
That said, I think I can understand why the students are protesting this. They have a higher than average chance of getting one of the Permanent Contract jobs, and I’ll bet it’s seen as having “made it” once you get one of those. Major reforms might make it easier to find work that lasts longer than the current legal limits on temporary contracts, but your position would always be tentative – the whole “you can be fired for any reason at all” thing is not popular, certainly not in Europe and elsewhere, and not even really popular in the US anymore even if we still have at-will employment in 49 states.
16. July 2016 at 18:43
I love the rhetoric around wage theft. Most of what’s called wage theft is voluntary exchange that doesn’t meet the states approval. For instance, the logic goes, it’s a law now to have a 50% discontinuity in pay at the 40 hour mark, so that discontinuity is a moral imperative. It leads to gems of logic like this (from the link):
“According to the FLSA, unless exempt, employees are entitled to receive overtime pay calculated at least time and one-half times pay for all time worked past forty hours a week. Some exemptions to this rule apply to public service agencies”
So, it’s “theft” if a private firm doesn’t pay 50% overtime bonuses, but it’s not theft for public agencies to do that, because they’re exempt, you see.
16. July 2016 at 19:37
Scott,
5. “the insecurity of the young is precisely the fault of over-protected “insider” jobs. Because businesses fear being burdened with such employees, 90% of new hires are now for temporary jobs, and young people can be stuck with short-term contracts for years.”
As Brett said, this has been going on for a long time. Anecdotally in the mid 80’s it wasn’t rare that the top job wish for a teenager was to become “fonctionnaire” = civil servant. Guaranteed tenure for life.
And the attempts at reform are just as old. The situation you describe was glaringly obvious by the early 90s. It had already become near impossible to get a “real” job for the young. An ironic twin evil to temp contracts is massive government investment in worker re-education. Why is this an evil? Well, incentives: many jobs in France are temp jobs subsidized by the state because they count as some kind of apprenticeship or other education. The job exists only as long as the programme pays. It’s also often underpaid, like internships, because it counts as education. Governments are complicit because workers in re-education don’t count as unemployed. I don’t have statistics on this btw but enough insight from people I know and from living there in the 90s.
The problem isn’t confined to France, it’s European style social democracy at work, but it’s in France that reform seems the most difficult. The privileged part of the population, or those who hope to soon be privileged, just take to the streets at any attempt of reform, and burn down cars.
16. July 2016 at 23:28
@Kevin Erdmann
Public employees get compensated time off at 1.5 times hourly pay, so they’re not totally exempt.
“Voluntary” is a strong word there.
17. July 2016 at 03:50
@ Brett:
So prospective employees are *forced* to work for a particular employer, and present employees are *forced* to continue to work for their present employer?
17. July 2016 at 04:26
Theft is not what state laws say it is. There could be some similarities and overlap for specific actions, but it does not follow that if the state calls an action theft, or not theft, that does not imply the action is indeed theft, or not theft.
foosion and Brett, you need to understand the concepts of aggression and non-aggression.
17. July 2016 at 08:41
@Philo
I have more nuanced view on consent, which recognizes that it’s a gradient and not a simple “yes” or “no” question when it comes to work. Employers stealing the overtime pay of their workers because they know said workers are either poor or kids with limited options otherwise counts as “coercion” in my book.
17. July 2016 at 10:39
Culture matters, but you know what else matters? The personality space the genomes of a population produce. Swedish Americans pretty obviously aren’t all that culturally ‘Swedish’ anymore, yet they still have those genes that thousands of years of cold winters selected for, and a thousand years of Christian-enforced outbreeding. Hence, they act just like modern Swedes, rich lemmings, over the cliff.
17. July 2016 at 10:55
@ Brett:
Of course, the “limited options” of the young and the poor are mostly due to government measures (minimum wage, occupational licensing, etc., etc.). I wouldn’t call the routine profit-maximizing behavior of firms operating in such an environment “stealing” or “coercion.” Let’s put the blame where it belongs.
17. July 2016 at 11:30
…a thousand years of Christian-enforced outbreeding.
Outbreeding is a bad thing? As opposed to inbreeding?
over the cliff to where? A rich civilized society?
17. July 2016 at 11:52
Brett,
If employers are actually failing to pay wages that they are contractually obliged to pay, then that is a black or white, yes or no, case of breach of contract.
This “nuance” you claim to have as an ability to use, seems to have not been used in your own example.
Coercion really is a binary concept. It is not a gradient. It is not a sliding scale. To claim otherwise would be to assume as true the absurd assumption that every action whatsoever is both coercive and not coercive. Even the extreme end of no coercion, the concept of a gradient means there is some coercion there, however small. Same thing for the other extreme. But even if you want to double down and insist that yes thst is true, then you aren’t actually saying anything, because the very concepts coercion and not coercion which you used to construct this gradient would themselves have no concrete meaning in which to distinguish one from the other.
Concepts are concrete. Even the concept of “gradient” is a concrete, black and white concept, since it is distinguished from that which has no gradient. If gradients are to have meaning and exist, then that which has no gradient must have meaning and exist.
17. July 2016 at 12:09
Some nice food for thought from Sumner, a break from the usual nonsense diet of ‘NGDPLT monetarism always wins’. You can quibble with the points, such as: “In a forthcoming study of over 1,000 kidnappings by terrorists in 2001-13, Patrick Brandt, Justin George and Todd Sandler of the University of Texas at Dallas found that the number of Americans and Britons abducted each year stayed constant, whereas the totals for countries known to meet captors’ demands rose steeply” – the relevant statistic is how many captured people died. If all Americans and Britons died, while the other countries abductees survived, then paying ransom is worth it.
17. July 2016 at 12:41
Brett, I congratulate you on your nuanced understanding of consent. I would only ask that you apply it more universally.
17. July 2016 at 12:57
Maybe you are 1/32 Cherokee, too. That could be the ticket into Harvard and/or the Clinton government!
17. July 2016 at 14:21
“At times, Lord [Mervyn] King can be refreshingly frank.”
Now that the ‘sinner’ has ‘repented’?
King said in his opening remarks: {Thursday 11 September 2008} :
“In the UK we face a difficult but, temporary, period during which inflation will remain high for a while and output growth at best weak. . . . But provided we do not impede the required adjustment we will come through this temporary period and resume a path of normal economic growth with inflation close to target.”
Provided we focus on bringing inflation back to target, our present difficulties will prove to be temporary. Inflation will fall back, and growth will resume.
http://www.bankofengland.co.uk/publications/other/treasurycommittee/ir/tsc080911.pdf
17. July 2016 at 14:24
“A single if complex development, the emergence of “a new model of equilibrium” transformed thinking across many disciplines…—bringing to them an entirely new level of sophistication, flexibility, and explanatory power.”
Yale Professor Irving Fisher – 1920: “The Purchasing Power of Money”
“If the principles here advocated are correct, the purchasing power of money — or its reciprocal, the level of prices — depends exclusively on five definite factors: (1) the volume of money in circulation; (2) its velocity of circulation; (3) the volume of bank deposits subject to check; (4) its velocity; and (5) the volume of trade. Each of these five magnitudes is extremely definite, and their relation to the purchasing power of money is definitely expressed by an “equation of exchange.”
“In my opinion, the branch of economics which treats of these five regulators of purchasing power ought to be recognized and ultimately will be recognized as an EXACT SCIENCE, capable of precise formulation, demonstration, and statistical verification.”
Economics is a science.
17. July 2016 at 17:32
What the Fed has just now orchestrated is a perfect storm. Stocks to the roof, followed by a crash. The Grinch will steal x-mas. Economy to flat-line next year.
18. July 2016 at 03:09
Brexit, Schmrexit
LONDON — (Business Wire)
Wells Fargo & Company (NYSE:WFC) announced today it has entered into an agreement with international developer HB Reavis to purchase the development at 33 Central, King William Street in London. With currently 850 team members in four locations throughout London, Wells Fargo is expected to begin moving to the new building in 2018. Terms of the transaction, including purchase price, were not disclosed.
“With this new building in London, we are able to bring our team members together in one location in order to more efficiently and effectively manage our operations,” said Frank Pizzo, Wells Fargo regional president for Europe Middle East & Africa (EMEA).
Wells Fargo serves corporate, commercial and financial institution customers doing business across EMEA, with the UK accounting for a large part of its regional operations. The building, which will be built to BREEAM Excellent standard, is expected to be completed in late 2017, and has approximately 227,000 square feet of office space.
18. July 2016 at 06:46
Swedish Americans pretty obviously aren’t all that culturally ‘Swedish’ anymore, yet they still have those genes…
I thought the same thing. The question is: How is this so-called “culture” transmitted? Heritage (via the genome for example) might play a huge role here. I assume around 50% or even more.
18. July 2016 at 07:56
O/T: Scott, you might get a kick out of this:
http://theresurgent.com/clinton-and-brock-crank-it-up-trump-ghost-writer-comes-clean/
“If he were writing “The Art of the Deal” today, Schwartz said, it would be a very different book with a very different title. Asked what he would call it, he answered, “The Sociopath.”
18. July 2016 at 08:34
How is this so-called “culture” transmitted? Heritage (via the genome for example) might play a huge role here. I assume around 50% or even more.
If we start out with no knowledge at all about this then a reasonable 1st guess as to nature vs nurture breakdown might indeed be 50% each. But are we really that much in the dark? What the body of current research on the subject suggest (if that exists)?
18. July 2016 at 13:06
Harold, You said:
“Frankly, I’m disgusted that the you invalidate the ADA because of its lamer parts. Classic fallacy of composition. I’m biased because my parents are deaf, but this means I’m hyper aware of the ADA’s protections. The deaf are discriminated daily in all aspects of life.”
If all the disabled were deaf and blind, I’d still oppose the ADA. Walter Oi, (a blind economist) opposed the ADA precisely because he thought it would make things harder for the disabled. And that seems to be the case, as the employment of the disabled declined after the ADA was enacted. Who would want to hire a potential lawsuit?
Justin, Thanks for sharing your expertise on the genetics of Swedes.
18. July 2016 at 13:45
Scott, I’m at least a quarter Swede too … that is my Swedish female ancestors were telling the truth (i.e. they didn’t sneak into the captured slave pen while their dude was out viking… if you know what I mean)
18. July 2016 at 14:17
A man came to the RNC today wearing a shirt that read “CUCK HUNT” and an assault rifle strapped to his back.
Harding, was that you?
18. July 2016 at 16:17
Sumner reasons from a price change on the ADA. It’s true the ADA made employing cripples harder, but, on the plus side, it also “imposes accessibility requirements on public accommodations” which frankly makes it easier to go up stairs using the ADA-imposed ramp, for every able bodied person. Sumner ignores these benefits. Side note: FRYS of California has a ramp escalator in some of their stores, very handy for going up a level with a fully loaded shopping cart. Same in some Russian supermarkets.
18. July 2016 at 16:29
Tom, No, I’m guessing Harding looks more like Dwight, from “The Office”.
18. July 2016 at 17:40
Scott, that’s funny!… although I think I found another candidate:
https://img.washingtonpost.com/rf/image_1484w/2010-2019/Wires/Online/2016-07-19/AP/Images/GOP2016Cleveland-14f86.jpg?uuid=-nXLuE1OEea_J0BRBoNvlg