Measuring the dependency of different variables

The EU has a fairly weak central government, which handles only foreign trade and trade between the member-states (including, to some extent, a common currency). Other than that, the states can have their own tax, retirement, and (mostly) judicial systems. A weak centre with strong states that can be laboratories of democracy and all that. Isn’t this what state-rights, this isn’t what the founders intended federalists argue for.

Yet, I have yet to find a single American states-rights advocate point in the direction of the EU as a model. Even to discuss its flaws (there are actually a bunch of rights that American states have that EU states no longer do).

The EU has a fairly weak central government, which handles only foreign trade and trade between the member-states (including, to some extent, a common currency). Other than that, the states can have their own tax, retirement, and (mostly) judicial systems. A weak centre with strong states that can be laboratories of democracy and all ...

Megan McArdle has a followup with thoughts on the question “What are the Greek protesters thinking?”

There is one important factor that is not mentioned (actually I do not know if this important in Greece, but it is in Portugal). We start with a thought experiment:

Imagine that there was a new political group in the US, the We Keep Our Taxes League. Not necessarily small-government conservatives (it would actually include many public union employees), but a group of people who earned high incomes and did not want them taxed to provide services and welfare to lower-income groups. It’s fine to spend on roads or the military, just not on the low-income groups. The League was very popular, with millions of active members and its president would say things like “if people want to make as much as we do [on average, League members would earn around 70k/year], then they should work more instead of playing so many video games.” There would be other similar groups, such as the Keep Poor People Out of Our Neighborhood action committee.

I can tell you that some people would be pretty at these groups (as it is, many liberals think that small government conservatives are just a We Keep Our Taxes League hypocritically claiming that it would be good for the economy).

Now, imagine that instead of League and such, we call these groups Germany (the most vocal), Holland, France…

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Many people in Portugal support the notion that, in a time of crisis, the most well-off should bear a bigger burden than the least well-off (how many people would argue the opposite?). Who is vocally well-off and telling them they should work more? Well, Germany.

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There is currently enough feeling of Europeaness that Portuguese compare themselves to German living standards and feel poor, but not enough that Germans accept large, permanent, transfer payments on those grounds. Maybe the Germans (and the other richer member-states) should accept these transfer payments as just. Some economists have made exactly this argument, which isn’t much of a stretch if you accept redistribution in general on justice grounds and avoid introducing blood-rights into the discussion. Still, there is no way that that will actually happen. Blood-right feeling is too strong (if generally unacknowledged).

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A related, but different issue, is whether the European Central Bank should kowtow to the German line as it has been doing. It is the European Central Bank, not the German Central Bank. They had a loose policy when Germany needed it lose even if Ireland and Spain were in a bubble, and are tightening now when Germany wants it tight even if other countries need it looser. This argument gets too technical really fast for the general public, though.

Megan McArdle has a followup with thoughts on the question "What are the Greek protesters thinking?" There is one important factor that is not mentioned (actually I do not know if this important in Greece, but it is in Portugal). We start with a thought experiment: Imagine that there was a new political group in the ...

Greece should leave the Euro. Portugal should leave the Euro. You read this a lot (for example, here Megan McArdle just today).

But how? Other countries have broken currency pegs (most famously Argentina, but they managed to do it in one of the most stupid ways possible). Here’s how you, if you were the highly placed government official, would do that:

1. You announce that the peg will no longer be maintained.

There. Then you might have to ride out the storm that ensues, but you are done.

Why can’t the Greek government do the same?

Because it doesn’t have a peg to the Deutsche Mark, it has the same currency as Germany.

Which contracts would be in Euro and which would be converted to the New Drachma? I assume that all of the bonds would, but what about private contracts? Particularly those between Greek citizens and companies and citizens and companies from other EU countries. What are the rules? As far as I know, this is a breach of international treaties.

Argentina confiscated all the dollars in its banks, but Greece is not as sovereign as Argentina as it is bound by EU law (would it be allowed to confiscate all Euros in local branches of foreign banks)? Confiscation of foreigner’s property is the sort of thing that used to get your country invaded by Britain. I don’t think that that will happen (at least not officially, but Germans might start playing a long-term role in Greece’s government), but it does raise the question: would Germany agree to let its banks and firms lose a lot of money on Greek public and private bonds? Wouldn’t those private investors sue Greece? Could they win?

Another question is where would the coinage and paper currency come from? Tyler Cowen proposed stamping Euro notes. This would actually be the easy part, it’s sorting out the legal implications that would be tricky.

I have yet heard anyone even attempt to address this issue: which contracts would be honored in Euro, which would be forced into New Drachma? Would Germany acquiesce?

In the end, I don’t think that Greece can do anything that really, really upsets the EU or its most powerful countries. They are already not the most beloved member (and were not before the crisis, fruits of years of playing hardball on the Cyprus and other issues). A war or invasion is out of the question, but economic payback is not.

Greece should leave the Euro. Portugal should leave the Euro. You read this a lot (for example, here Megan McArdle just today). But how? Other countries have broken currency pegs (most famously Argentina, but they managed to do it in one of the most stupid ways possible). Here's how you, if you were the highly ...

Today, on the radio, they explained that the stockmarket was down on increasing worry about the economy and the decision to utilise the oil reserves. If the stock market had gone up, I’m sure they’d have said it was increasing confidence about the economy and the decision to utilise the oil reserves.

I imagine that in ancient Greece, had there been news programmes, they would have said things like “and today, the oracle cut open a chicken and it bled to the North because of the decision to use the strategic olive oil reserves.”

Today, on the radio, they explained that the stockmarket was down on increasing worry about the economy and the decision to utilise the oil reserves. If the stock market had gone up, I'm sure they'd have said it was increasing confidence about the economy and the decision to utilise the oil reserves. I imagine that ...

I make two predictions on the effect of the Obama presidency on low income earners in the US:

1. The health insurance coverage rates will be much larger, close to 100%, especially if Obama gets two terms.
2. Low income earners will have more trouble accessing health care. This will be especially true for the lowest income earners.

I think these are both compatible and, in fact, will come true. Obama will trumpet the first achievement, the second will be reported sometimes as a mistery with headlines reading “in spite of new law, poor worse off.”

I remember an economist on NPR commenting on the effects of the Massachussetts mandate: the law achieved its most important objective: almost everyone now carries a plastic rectangle with the words “health insurance.” ObamaCare, by relying so much on Medicaid to address the access problem for low income populations, will be similar. More and more people will carry a card with the word “Medicaid” written on it. Unfortunately, this is being done at the same time as Medicaid budgets are being cut. The per-beneficiary budget will go down. This can only mean one thing: people on Medicaid will not get many health care services.

The biggest losers are, of course, the people who were already elligible for Medicaid before Obama, the lowest income groups. They are now worse off. The people who were previously outside the system and now inside it might be slightly better off (after all, they will get some service). This is redistribution from the bottom to the near bottom of the income pile.

I make two predictions on the effect of the Obama presidency on low income earners in the US: 1. The health insurance coverage rates will be much larger, close to 100%, especially if Obama gets two terms. 2. Low income earners will have more trouble accessing health care. This will be especially true for the lowest ...

I often add papers to the collection that I plan to use for a specific document (currently, my dissertation), but then feel a need to check whether I have actually used them. As it turns out, the bibtool can do the opposite of what I want: it retrieves the references that were cited. However, we can just use diff to get at the ones that were not cited.

Here is a little shell script using bibtool for a bibtex database called references.bib and a latex file main.tex:

bibtool references.bib > all.bib
bibtool -x main.aux >cited.bib
diff -u all.bib cited.bib |grep '^-' |sed 's,.,,' > notcited.bib
rm all.bib cited.bib

We need to run the first bibtool command in order to normalise the references. Otherwise, the diff will pick up formatting differences.

I often add papers to the collection that I plan to use for a specific document (currently, my dissertation), but then feel a need to check whether I have actually used them. As it turns out, the bibtool can do the opposite of what I want: it retrieves the references that were cited. However, ...

The recent brouaha about whether rap is poetry or not is especially interesting for me.

More than once, my wife and I, have stood in the car, waiting for some reading of poetry on NPR to finish. Some prize-winning poet. We quote the poems for days. It often is just so unbelievably bad that we stand bemusedly aghast.

Compared to most prize-winning modern American poetry, the average rapper can write some pretty good rhymes.

The recent brouaha about whether rap is poetry or not is especially interesting for me. More than once, my wife and I, have stood in the car, waiting for some reading of poetry on NPR to finish. Some prize-winning poet. We quote the poems for days. It often is just so unbelievably bad that we ...

It is a testament to the possibility of progress in economic thinking that no one has (yet) proposed that auto makers get subsidies to not produce cars.

It is a testament to the possibility of progress in economic thinking that no one has (yet) proposed that auto makers get subsidies to not produce cars.

Heard someone from a very large wind power company. They have $7.5b in US assets. They employ 332 people. That’s 22m per employee.

Be green or create jobs, you must pick.

Heard someone from a very large wind power company. They have $7.5b in US assets. They employ 332 people. That's 22m per employee. Be green or create jobs, you must pick.

Megan McArdle talks of British austerity:

Even if you think that stimulus is a good idea for America, that wouldn’t mean that it was a good idea for the Brits. Britain has a much smaller, much more open economy than we do. That means that the country is more vulnerable to a run on its currency or its debt than we are. The ruling coalition would say that it also means that stimulus is less effective–stimulus dollars spent in Britain will “leak” more readily into other countries.

Actually, the main reason why the first sentence might be true is that Britain already had a high debt. In 2008, the US had a very low debt (when compared to the rest of the rich world), just over 40%. So, there was room to borrow and increase that to 80% (which Congress+Obama proceeded to do). Britain was already at close to 80%. There was simply no room to increase that to 120% without markets balking starting to ask for much higher yields.

The above is also why I’m skeptical on any proposals where the debt peaks in 2020 at around 80% and then starts going down. In 2020, we should expect that the economy will be close to the end of the cycle currently starting; when a recession will hit again. How is the US suppose to stimulate itself out of it?

Megan McArdle talks of British austerity: Even if you think that stimulus is a good idea for America, that wouldn't mean that it was a good idea for the Brits. Britain has a much smaller, much more open economy than we do. That means that the country is more vulnerable to a ...