Tyler Cowen's Blog, page 384

Irish bank strikes 1966-1976

That is the title of this Wikipedia entry:

The Irish bank strikes between 1966 and 1976 were three strikes of about a years total duration which closed down all the clearing banks in the Republic of Ireland. The strikes provided economists a unique opportunity to study the functioning of a modern economy without access to bank deposits.[

The strikes affected all the associated banks which comprise of the Bank of Ireland, the Allied Irish Banks, the Northern Bank and the Ulster Bank. The strikes lasted from:

May 7 – July 30 1966
May 1 – November 17, 1970
June 28 – September 6, 1976

The longest strike was of six months in 1970. The Central Bank made limited facilities available to non-associated banks to issue cash. Not just financial transactions were affected, many property deals were also affected because the documents were kept in the banks. The country came through reasonably well in business terms despite the bank strike, a large firm Palgrave Murphy failed when the strike ended and settlements were made but its failure was probably inevitable anyway. The strike had little effect on the main economic concerns which were unemployment and industrial unrest caused by inflation.

Of course in contrast to current-day Cyprus, these were not banks otherwise attacked by runs and subject to insolvency.  So it is far from obvious that this Irish success (relatively speaking, that is) would be repeated.  Still, it is one example of how an economy copes once its banking system is shut down.

Here is further information about Ireland, note that “a highly personalized credit system without any definite time horizon for the eventual clearance of debits and credits substituted for the existing institutionalized banking system.”  Furthermore “Public houses and shops emerged as a substitute banking system.”

From al-Qaeda, on potential targets

The plan, which was sent to Bin Laden in March 2010, proposes attacks against large tunnels and bridges, dams, and financial centres. It also suggests attacking thinktanks, and names the Rand Corporation, a US government-funded research institute in California. The Love Parade, a dance music festival in Germany, is another proposed target.

The article is here, and for the pointer I thank Natasha.

My talk at Arlington Public Library

WEDNESDAY, APRIL 3, 2013

6:00 p.m. – Food Trucks Open for Business

7:00 p.m. – Lecture, Q&A with the Author

Arlington Public Library

1015 North Quincy Street

Arlington, VA 22201

RSVP at the Event Page.  It’s an excellent library!

Assorted links

1. How are statistics and technology and analytics changing basketball?

2. U.S. grants first license for 3-D printed guns.

3. Sweden has night nurseries.

4. My Google+ hangout, with The Economist, on American competitiveness.  You can see my Antoine voodoo flag hanging in the background.

5. Judge Douglas Ginsburg to return to GMU faculty.

6. A short history of Cypriot prosperity.

Puzzles in search of answers: why are men losing ground?

“I think the greatest, most astonishing fact that I am aware of in social science right now is that women have been able to hear the labor market screaming out ‘You need more education’ and have been able to respond to that, and men have not,” said Michael Greenstone, an M.I.T. economics professor who was not involved in Professor Autor’s work. “And it’s very, very scary for economists because people should be responding to price signals. And men are not. It’s a fact in need of an explanation.”

Most economists agree that men have suffered disproportionately from economic changes like the decline of manufacturing. But careful analyses have found that such changes explain only a small part of the shrinking wage gap.

That is from a very excellent article by Binyamin Applebaum, on why men are (along some but not all margins) losing economic ground, especially below the ranks of the top earners.  I liked this sentence at the end:

Instead of making marriage more attractive, he [Christopher Jencks] said, it might be better for society to help make men more attractive.

As I once asked Bryan Caplan, “How many marriageable men do you think there are?  And what are the other women supposed to do?”

Sylvia Nasar is suing Columbia

A tenured professor at Columbia’s Graduate School of Journalism and co-director of that school’s business program filed a lawsuit on Tuesday accusing the university of misdirecting $4.5 million in funds over the last decade.

The professor, Sylvia Nasar, who is the John S. and James L. Knight professor of business journalism at Columbia and the author of the book “A Beautiful Mind,” which inspired the movie of the same name, charges in the suit that the university mishandled funds from a $1.5 million endowment provided by the Knight Foundation to improve the school’s teaching of business journalism.

The full story is here, but here is a bit more:

Terms of the agreement called for Columbia to pay the professorship’s salary on its own, and use foundation funds for additional salary and benefits, like research…

In 2000, the university hired Ms. Nasar…According to the lawsuit she was given a base salary, which the university paid for out of Knight Foundation funds, and was asked to pay most of her additional expenses out of her own pocket.

Ms. Nasar said in the suit that over time she spent $174,000 of her own money for research and other expenses. She is asking for punitive damages.

Ms. Nasar said in an interview that in September 2010 she had received an e-mail from the university listing more than $70,000 in what she described as “phantom I.T. charges” — expenses attributed to her that she says she never incurred.

Update on the bending of the health care cost curve

From Peter Orszag:

So is it possible to keep the trend going? On this, we have somewhat conflicting news. A recent report from the Altarum Institute found that slow growth is continuing at the national level, with total health-care spending rising slightly more than 4 percent in nominal terms from January 2012 to January 2013. On the other hand, incoming Medicare data suggest spending is speeding up a bit.

The Medicare data this year are complicated because the 2012 figures were artificially depressed by the calendar (the start of the 2012 fiscal year, on Oct. 1, 2011, fell on a weekend, so some payments were shifted back to fiscal year 2011.) Adjusting for these timing details, spending per beneficiary fell slightly in 2012. In the first five months of fiscal year 2013, by contrast, the adjusted spending per beneficiary figures show an increase of more than 2.5 percent. That is still very low by historical standards, but noticeably higher than in 2012. At this point, it is unclear what is driving the acceleration.

It seems, by the way, that if the last three years remain typical that about one-third of our long-term budget problem goes away.

What does a Cyprus deal look like?

Felix Salmon considers some possible scenarios, some of which involve the EU giving ground.  (Sadly the “sell northern Cyprus” option won’t be seriously debated.)  Daniel Davies offers numerous complex scenarios, some of which end badly.  Zero Hedge offers options.

How much is Cyprus per capita gdp lower if the country has no future as a financial center?  That is likely the case anyway.

If this is one of those waiting/bargaining games, for whom does the situation worsen most as time passes?  For how long can the Cypriot banks stay closed?  Can they ever really reopen again without a major bailout?  Germany seems to hold most of the cards.  Maybe Cyprus wins the stare-down game only if the costs of Cypriot collapse — to the Germans — appear higher as time passes.  That’s a difficult scenario to foresee, since it seems that only by having a Cypriot collapse do we get a much better sense of what those costs would be.

The broader problem of course is that Italy, Spain, and Portugal all have their eyes on any possible renegotiations.  It is very costly for the EU to give serious ground because then further and much larger demands come out of the woodwork.  Italian voters and political parties are encouraged too and I don’t have to tell you in which direction.

Cyprus concern of the day

The central bank chief Panicos Demetriades has raised concerns that 10% of deposits – that’s 80% of GDP – could flee.

Here is more, from Pawel Morski.

*Top Dog: The Science of Winning and Losing*

The authors are Po Bronson and Ashley Merryman and the Amazon link is here.  If you’re like me, by this point you have “popular behavioral economics book” fatigue.  Still, I bought and read this one through.  It doesn’t fall into the “designed to erase all doubts” category, but still it has some interesting ideas which you won’t find in the other popular behavioral economics books.  I am glad I bought and read it.  Here is one bit:

…Fehr also noticed a difference between children who’s grown up as siblings and those who were only children.  Contrary to the presumption that only children are more selfish than children raised in larger families, Fehr found the onlies to be the more cooperative and selfless.  They were completely untroubled by handing over toys to another child, whereas the siblings flatly refused.  Fehr came to the conclusion that the onlies didn’t know to be competitive because they’d never had to compete…They weren’t afraid of sharing toys, because they didn’t understand if you gave Barbie to another child, she might come back missing her leg or head.

It is claimed that, between the ages of three and seven, siblings clash 3.5 times per hour, on average (unless you are in the Caplan household).

Here is another interesting section:

…one study of every single pitch thrown during the 2005/2006 Major League Baseball season — some 1, 374,923 pitches — showed that most MLB pitchers are secretly prevention-focused.  As they get closer to finishing out innings, their pitch locations become more conservative.  A similar study of over 2 million PGA tour putts showed that pro golfers tend to leave it short as the stakes and pressure rise.