Tyler Cowen's Blog, page 48
February 3, 2015
Assorted links
1. An impressive display of, um…Big Data (pdf), addressing how suppliers discriminate against customers in Singapore. There is also an NBER version, but I don’t see it on their site at this moment.
2. The religion that is Iceland.
3. “…the greatest work of journalism from the nineteenth century.”
4. The Hospital is no Place for a Heart Attack. And few from the EU side like the Greek debt swap idea.
5. Best films of the decade? Winter Sleep should be added to the list immediately, it is Ceylan’s masterpiece. That, along with Uncle Boonmee, should be very close to the top.
7. Timothy Taylor on the new corporate income tax proposals.
Gdp-linked loans and loan restructuring for Greece
Here is a new paper by Fratzscher, Steffen, and Rieth (pdf), advocating gdp-linked loans for Greece.
Here are older proposals for gdp-indexed bonds (pdf). Scott Sumner comments on the new Greek proposal. Here is an IMF paper on the topic (pdf). Greece already issues some gdp-linked warrants. Here is Argentina fudging its gdp stats to save on its gdp-indexed bonds. Here is more on related disputes.
p.s. they are not going to do it.
February 2, 2015
Should you tell your children how much you make?
This NYT article has been widely read and emailed. Ron Lieber argues yes, you should tell your children, but I’m not sure I can pull out the exact thread of his argument from the piece.
I say no you should not tell them. But you should tell them something about your monetary situation. If you are not so well off, you should tell your children that you are upwardly mobile, and will someday be more prosperous, through hard work. At the very least then they won’t be scared. If you are middle class, tell them a somewhat scaled-up version of the same. You don’t want to tell them anything they can use as a “club” against their possibly poorer friends, so leave creative ambiguity in your answer. If they boast about the family income, they will mostly end up embarrassing themselves, in addition to the negative externalities they might impose on others.
That said, you are marking out a range, so when they grow up and the time comes for them to learn the exact truth, they won’t feel you were tricking them or keeping family secrets. In the meantime you are a role model for upward mobility.
If you are well off or very well off, tell them “Yes, we are well off but the real metric of success is X,” depending on what you think they need to hear, within the bounds of realism of course. X might be how many friends you have, how happy your children are, how holy or pious or God-fearing you are, how many books you have read, or how much you have helped the world, among other candidates. Serve them up a weighted average of those Xxs over time, so as to a) avoid seeming like a monomaniac, and b) give them a sense that many values are important, and c) drive home that money is not at the top of the list, even if you think it is. They’ll have enough chances to learn to feel that way.
Remember, you’re trying to maximize some weighted average of covering your bases for future revelations, moral instruction, not scaring them with Piketty-like reasoning, stopping your kids from making fools of themselves with the information you give them, and stopping your children from making you look foolish or like a bad parent. You’re in essence the central bank here, and it’s creative ambiguity all the way.
Russo-German sentences to ponder
Ms Merkel is familiar with Mr Putin’s psychological operations. In 2007, he played on her well-known fear of dogs by allowing his black Labrador, Koni, into a meeting with her in his summer residence in Sochi. Photos show her tight-lipped as the Labrador buried its head in her lap.
Berlin officials say the chancellor does not allow Mr Putin to get to her through such displays or, for example, by turning up hours late for a meeting, as he did the night before the summit in Milan. Instead, she turns it to her advantage, treating the Kremlin chief’s bad manners as a sign of weakness.
From the FT, there is more here, interesting throughout. File under still an important relationship.
*Depopulation: An Investor’s Guide to Value in the Twenty-First Century*
That is the new eBook from my colleague Philip Auerswald and Anthony JoonKyoo Yun, you can buy it here.
Assorted links
1. When is male shame attractive?
2. Anacostia, which is in many ways the nicest part of DC with the best views, will flip. And L.A. shopping mall based on the set from a D.W. Griffith film.
3. What is going on with Greece and the ECB? And Woolen-coat economics.
4. History of Economic Thought Summer Institute at Duke University, highly recommended.
5. Are women studying economics more or less?
6. “Parents act more dishonestly in front of sons than daughters.”
Patriots Used to Be Skeptical of the Military
The most recent issue of the Fletcher Security Review features a paper by Alex Nowrasteh and myself on Privateers! Their History and Future. One of the interesting side notes is that Americans supported privateering not just because it was effective but also because America’s greatest patriots, the founding generation, were deeply skeptical about standing armies and navies. Today, the right-wing, uber-patriotic brand of Americanism is pro-military and pro-empire. In contrast, the founders would regard the empire as deeply un-American. Quoting from the paper:
The founders feared standing armies as a threat to liberty. At the constitutional convention, for example, James Madison argued that “A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence against foreign danger have been always the instruments of tyranny at home.” For the founders, the defense of the country was best left to citizens who would take up arms in times of national peril, form militias, overcome the peril, and then to return to their lives.
As a result, the ideal military for the founders was small and circumspect (remember also that the second amendment was in part about the fear of standing armies, hence the support of the militia). The 1856 Treaty of Paris banned privateering but the United States refused to sign. Secretary of State William Marcy explained why in a great statement of patriotic American anti-militarism:
The United States consider powerful navies and large standing armies as permanent establishments to be detrimental to national prosperity and dangerous to civil liberty. The expense of keeping them up is burdensome to the people; they are in some degree a menace to peace among nations. A large force ever ready to be devoted to the purposes of war is a temptation to rush into it. The policy of the United States has ever been, and never more than now, adverse to such establishments, and they can never be brought to acquiesce in any change in International Law which may render it necessary for them to maintain a powerful navy or large standing army in time of peace.
Today the patriotic brand of anti-militarism, the brand that sees skepticism about the military and the promotion of peace and commerce as specifically American, is largely forgotten. President Eisenhower’s farewell address to the nation was perhaps the last remnant in modern memory. It’s a tradition, however, that true patriots must remember.
The battle at the margin is about wealth taxes and families
President Barack Obama will propose raising $238bn by levying a one-off tax on the cash piles held by US companies overseas to repair the US’s crumbling roads and bridges.
The measure, a key plank of the president’s budget to be outlined on Monday, would impose a 14 per cent “transition” tax on the estimated $2tn in earnings US companies have amassed overseas, the White House said on Sunday.
The FT story is here, Vox is here. Part of the plan also involves replacing the 35 percent rate — which many large corporations avoid — with a 19 percent flat rate which would apply to foreign earnings as well.
And what might these taxes eventually go to pay for? Matt Yglesias reports:
…there’s an emerging Democratic consensus over what’s next — children and family policy. There are a few different threads to this, including early childhood education, special tax benefits for working moms, child care subsidies, and paid sick leave and maternity leave.
February 1, 2015
Greece needs Thatcheropoulous
On Thursday, Russia announced that it would consider extending financial aid to Greece if the latter asked.
There is more here, of interest throughout, though not fundamentally surprising. Greece is seeking to auction its EU veto between the EU and Russia. And over the weekend Chris Calomiris told us that Tsipras is a longstanding admirer of Fidel Castro, and furthermore he named his youngest son “Ernesto” after [Ernesto] Che Guevara. He also has voiced his opposition to Nato in the past.
As I’ve said, these are the Not Very Serious People, enough to make you want to have the Very Serious People back. As Garett Jones has noted, Greece needs its Thatcheropoulous — strong, credible, pro-debt renegotiation, pro-capitalism, anti-corruption, pro-tax fairness, and pro-foreign investment. People, that is not what we are getting.
The best chance scenario is that this is all an elaborate bluff for a pivot toward sensible reform. The bluff I can see, the sensible reform sorry no. Is a Thatcheropoulous possible when one can read headlines such as “Death threats forced me to quit my job, says Greece’s top tax man“? How many of the cultural preconditions of successful reform are present in Greece right now?
Here is the FT on the evolving game of chicken:
Eurozone officials are increasingly worried that Greece’s €172bn bailout will expire at the end of the month and potentially plunge it into chaos, after a series of meetings with the new Greek government convinced them Athens is unaware of how perilous its financial situation has become.
Fortunately, 70% of the Greek public believes that Tsipras will succeed as Prime Minister.
Assorted links
1. The detailed program for the Coase conference, late March in DC.
2. The concept of tipping is spreading.
3. I am very happy to see my former Ph.D student, Shawn DuBravac, who recently finished his degree, at #10 on the NYT non-fiction bestseller list. His book Digital Destiny is here.
4. “The most unforgivable sin in the world,” Mr. McKuen told The Washington Post in 1969, “is to be a best-selling poet.” An excellent obituary.
5. Paul Krugman on how blogging is changing, or not.
7. Can you have a Chinese Communist Party without an ideology?
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