From the monthly archives:

January 2013

The current issue of the online journal Intereconomics features stories about the politics of adjustment in Greece, Ireland, Spain, Italy, and Portugal. Aidan Regan and I contributed the article about Ireland. Each paper outlines the measures that have been taken in recent years, and the major challenges each country now faces. All five countries share many common features of course, including the difficulty of keeping on track with deficit reduction targets in the context of no growth and truly awful unemployment figures. But the challenges discussed by authors are quite varied too: in Greece, for example, it’s governance problems that are highlighted; in Portugal and Italy, productive capacity and export performance; in Spain, problems over sustaining the revenue base of the state.

In Ireland’s case, we outline the ongoing problems involved in trying to reduce the large government deficit. We also note that the legacy of the financial crisis complicates Ireland’s recovery strategy. The government has staked a great deal on getting some relief on a portion of the deficit and debt issues that arise from recapitalizing the banks. What the government is looking for at the moment is not a debt restructuring or a default by this or any other name, but a rescheduling of a portion of the costs of unwinding the full liabilities of the now-defunct Anglo Irish Bank. From the Irish point of view, the ECB has given mixed signals on this: positive indications about the design of the ESM in June 2012, but in September, a statement that was construed by UCD Professor of Economics Karl Whelan as ‘Germany to Spain and Ireland: Drop Dead’.

Yet the backroom diplomacy continued, and the government certainly seemed to that that an agreement would be possible before the next critical deadline for Ireland of 31 March. Right now though, things are not looking so good. There are fears that, as in other areas of crisis management, there is a tendency for EU decision-makers to pull back from new commitments unless crisis is staring them straight in the face. ‘They are under-performing again’, a senior EU official said in December. Even as Germany reported a downturn in economic activity earlier this month, José Manuel Barroso said that ‘the existential threat against the euro has essentially been overcome’. Well, that’s alright then.

For all that, the game is not over yet in Ireland’s negotiations with the ECB. The Irish Congress of Trade Unions has taken up the case too. With the call to ‘Lift the Burden: Jobs not Debt‘, it’s calling for protests on 9 February. We’ll wait and see.

Is college education really expanding ?

by John Quiggin on January 31, 2013

In his (relatively) new gig as business and economics correspondent at Slate, Matt Yglesias is really churning out lots of material. Often, it’s useful and insightful, but, inevitably quality control is imperfect. Arguably, there’s still a net benefit from the increase in output, provided readers apply their own filters. Nevertheless, I got a bit miffed by this post, which makes a mess of a topic, I’ve covered quite a few times, namely the question of whether US middle class living standards are declining as regards services like higher education.

As I’ve pointed out, the number of places in most Ivy League colleges has barely changed since the 1950s, and many top state universities have been static or contracting since the 1970s. In addition, the class bias in admissions has increased. College graduation rates have increased modestly since the 1970s, but an increasing proportion of post-school education is at lower-tier state universities as well community colleges offering only associate degrees.[1]

(Added in response to comments): Given static numbers at the top institutions, increasing populations, and a reduced share of admissions going to the middle class, education at the kinds of colleges usually discussed in this context (the top private and state universities) is an example where the middle class (roughly, the middle three quintiles) are getting less than they did 40 years ago. They’ve substituted cheaper second-tier and third-tier institutions where tuition, while rising fast, is much lower than at the Ivies, top state unis etc. But the chance of getting into the upper middle class (top quintile) with a degree from these schools is correspondingly lower. So, education as a route out of the middle class and into the top quintile is less accessible than forty years ago – this is leading to a reduction in already limited social mobility.

Yglesias says “Colleges charge much higher prices today than they did 40 years ago but many more people have college degrees” and backs this up with the following graph

YglesiasCollege

What’s wrong with this picture?
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Aaron Swartz Memorial in Washington DC

by Henry on January 29, 2013

For those who can be there:

Members of House, Senate Join Family and Friends of Aaron Swartz for Public Memorial Event at the Cannon House Office Building in Washington, DC

WASHINGTON, DC – On Monday, February 4th, family and friends of Aaron Swartz will join members of Congress at the Cannon House Office Building to honor and celebrate the life, work, and legacy of Aaron Swartz, the accomplished activist and technologist who took his own life on January 11. Aaron’s supporters will also discuss possible reforms and other steps that can be taken to honor his memory

WHAT: Public Memorial Event for Aaron Swartz in Washington, DC, free and open to all

WHO:

Aaron’s father Robert Swartz, his partner Taren Stinebrickner-Kauffman, his friends David Segal and Ben Wikler, and several members of Congress. Likely attendees include Sen. Al Franken (D-MN), Sen. Ron Wyden (D-OR), Rep. Darrell Issa (R-CA), Rep. David Ellison (D-MN), Rep. Alan Grayson (D-FL) and Rep. Jared Polis (D-CO), as well as others to be announced.

WHERE:

Cannon Office Building, Room TBA,
Independence Avenue SE. Washington, DC 20515

WHEN:

Monday, 4 February 2013. 7:00pm – 9:00pm EST

For details or to RSVP, please visit http://bit.ly/aaronswDC

For more information, or for interviews please contact Trevor FitzGibbon at 202-406-0646 or by email at trevor@fitzgibbonmedia.com.

# # # # #

Remembrances of Aaron, as well as donations in his memory, can be submitted at http://rememberaaronsw.com.

Everyone’s a winner!

by John Quiggin on January 26, 2013

I was way behind the rest of the Interworld in catching up with the Eden Hazard ballboy kicking, but coming late has its advantages. As is presumably well known to followers of this particular competition, but not to others, the “ballboy” is a minor match official whose job it is to return the ball when it goes out of play. Traditionally, this was done by actual boys, aged in their early teens, who volunteered to help out in this way – giving out this coveted job being a minor perk for the senior officials of the club. Naturally, they were supporters of the home team, but this was unimportant.

But, now, it seems, the typical “ballboy” is a young man, under instructions to make life easy for the home side and difficult for the visitors. This is a new twist on the standard practice of grimy visitors’ dressing rooms with unreliable hot water and so on. All of this helps to create a home ground advantage.

This raises some interesting points about the business of sport.
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Does anyone ever get the revolution they asked for?

by John Holbo on January 25, 2013

We’re going to be having a book event soon: Envisioning Real Utopias. I’m not jumping the gun with this post – or maybe I am.

Anyway, here’s my question. But first, the set-up: there are two ways for revolutions to succeed, and two ways for them to fail. [click to continue…]

BReakout?

by John Quiggin on January 25, 2013

I thought I would follow up on Chris’ post, from a position of even less expertise, but focusing more on the consequences of a referendum vote in favor of a British exit (BReakout?) from the EU. I’ll start by thinking about two polar cases.

One is the Norway/Switzerland model. Initially, the only thing that changes is that Britain gives up its political membership of the EU and institutions like the European Parliament, Council and so on. Otherwise things go on as before – Britain pays into the EU Budget, is bound by current EU regulations and subsequent changes, keeps its optouts on things like Schengen, at least initially, and maintains its current access to EU markets, free movement and so on. This seems to work well enough for Norway and Switzerland, but doesn’t seem likely to satisfy UKIP or Tory Eurosceptics. And, of course, it depends heavily on the goodwill of the EU. Britain could seek to negotiate further exemptions from EU rules, but, the EU could scale back the existing British optouts over time.

At the other extreme, Britain could unilaterally abrogate all the existing arrangements and start over from the position of, say, Russia – a major EU trading partner without any special rights or obligations other than those agreed on a case by case basis. Prima facie, that would include applicability of the standard third-country tariffs in each direction, non-tariff restrictions applicable to goods not compliant with EU (or, in the opposite direction, UK) regulations, standard visa requirements for travel, residence and work, controls on capital flows and so on. It seems clear that this would be damaging for the EU, and disastrous for the UK. Still, it also seems clear that this is what the Eurosceptics have in mind, though typically with a liberal dose of wishful thinking about how easy it will be to negotiate FTAs, visa-free travel etc.

Is there an intermediate path? I can’t immediately see one. Presumably, there is a notion that Britain would stay in while the terms of exit were negotiated. But that could last many years, and would effectively amount to the Norway/Switzerland situation in the interim.

Update Tory MEP Daniel Hannan argues that the differences between Norway and Switzerland are important, and that the UK could cut a better deal than Switzerland (again here) This seems like it would be wishful thinking, even if the exit were amicable, which seems unlikely.

Cameron’s gamble

by Chris Bertram on January 24, 2013

Most readers will know by now that the British Prime Minister, David Cameron, yesterday pledged an in-out referendum on the UK’s continued membership of the European Union, to be held in the event that the Conservatives win the next general election. Cameron says that he will try to negotiate better terms for UK membership and that he hopes that he’ll be able to recommend these to the British people in 2017 or thereabouts. I thought CT should have a post on this, but the remarks below are very much off-the-cuff and not written on the basis of any expertise re EU politics.
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Veneer of What?

by John Holbo on January 23, 2013

Victor Davis Hanson on ‘the meaning of the Inaugural Address’:

Three, the bitter election wars to achieve and maintain a 51–53 percent majority (the noble 99 percent versus the selfish 1 percent, the greens versus the polluters, the young and hip versus the stodgy and uncool, the wisely unarmed versus the redneck assault-weapon owners, women versus the sexists, gays versus the bigots, Latinos versus the nativists, blacks versus the “get over it” spiteful and resentful, the noble public sector versus the “you didn’t build that” profiteers, Colin Powell/Chuck Hagel/reasonable Republicans versus neanderthal House tea-party zealots), in Nixonian fashion have left a lot of bitter divisions that lie just beneath the surface of a thinning veneer.

Now that’s a sentence! Please feel free to award points for style and content.

Is he trying to say that America is divided, because the Democrats (but not the Republicans?) are a partisan force? Or is he trying to say that Democrats are perilously divided against themselves (because they have tried to turn America against Republicans?) Or is he trying to say that there are bitter divisions in the Republican party (because Democrats have found some wedge issues), and as a result the possibility of civil, orderly government/society is threatened? Your guess is as good as mine, I suppose.

Ecco l’Euro!

by Henry on January 22, 2013

DSC_6378

When going through a jar of old coins during the weekend, I found one that I’d gotten when I lived in Florence in 1999, a kind of proto-euro, issued in Fiesole as a combination test/publicity stunt in the run-up to the real thing. It’s acquired a considerable coat of tarnish in the meantime, which is fitting, and I thought it might be no harm to make a photo of it (together with a number of other similarly verdigrised European coins) available, under a CC license, for anyone who might want to use it for blogposts or the like on the ongoing slow-motion calamity.

Creative Commons License
Ecco l’Euro! by Henry Farrell is licensed under a Creative Commons Attribution 3.0 Unported License.

Africa Cup of Nations open thread

by Chris Bertram on January 21, 2013

We haven’t had a thread on the Africa Cup of Nations since 2006, but I see that the latest competition has just started. There’s a solitary win so far with Mali beating Niger. The bookies are fairly clear about who the favourites are: Ivory Coast. Makes a lot of sense, since they have strength in all parts of the team, with players like the Touré brothers and Didier Drogba. Coverage in the UK media is pathetic, with the competition not even having a dedicated BBC webpage and the games being shown on ITV4 and British Eurosport. Francophone reporting is, predictably in this case, a bit better: L’Equipe has a page.The twitter hashtag to follow is #Afcon2013 . Predictions?

The White Moderate: The Greatest Threat to Freedom

by Corey Robin on January 21, 2013

Every year on Martin Luther King Day, I’m reminded of these words, from Letter from a Birmingham Jail:

I must confess that over the past few years I have been gravely disappointed with the white moderate. I have almost reached the regrettable conclusion that the Negro’s great stumbling block in his stride toward freedom is not the White Citizen’s Counciler or the Ku Klux Klanner, but the white moderate, who is more devoted to “order” than to justice; who prefers a negative peace which is the absence of tension to a positive peace which is the presence of justice; who constantly says: “I agree with you in the goal you seek, but I cannot agree with your methods of direct action”; who paternalistically believes he can set the timetable for another man’s freedom; who lives by a mythical concept of time and who constantly advises the Negro to wait for a “more convenient season.”

Calories or kilojoules?

by John Quiggin on January 21, 2013

Like many of us, I’m engaged in a constant struggle to maintain a healthy weight and fitness level, and being an economist, I naturally like to think about this in quantitative terms (I’m not alone in this).

The basic equation is simple[1]: Energy used – energy consumed = fat burnt. But to make sense of this equation, we need units, and that raises the immediate questions:

Calories or kilojoules? and
How much do I have to burn to lose 1kg of fat?

The short answers are: Calories and 9000 Cal[2]

More over the fold

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Trifecta

by John Quiggin on January 16, 2013

If there were still magazine stands, I’d be all over them today. Three pieces of mine have (coincidentally) come out on in the last day or so, in fairly disparate publications

* In Aeon (a new British “digital magazine of ideas and culture, publishing an original essay every weekday”), I have a followup to my first essay there, which argued the case for a Keynesian utopia, with a drastic reduction in market working hours. In my follow-up, I look at the environmental sustainability of the idea. The tagline for the essay “For the first time in history we could end poverty while protecting the global environment. But do we have the will? ”

* Continuing on the utopian theme, Jacobin magazine has published The Light on the Hill, a reply to Seth Ackerman’s piece on market socialism, which has already been debated a bit here at CT

* And, at The National Interest, a piece with the self-explanatory title, Will Banks Finally Be Brought to Heel?

While I’m plugging my own work, I thought some readers might be interested in this paper on financial liberalisation and asset bubbles, written in the leadup to the global financial crisis. There’s not much I would change now, and it’s still a pretty good summary of how I think about the financial bubble that created the crisis. The linked working paper version is from 2004, and it eventually appeared in the Journal of Economic Issues, the main journal of the institutionalists who carry on the tradition started by Veblen and Commons in early C20. Not surprisingly, given this obscure outlet, it hasn’t had a lot of attention.

Obama should pardon Aaron Swartz … and Bradley Manning

by John Quiggin on January 15, 2013

I was planning this post yesterday, but other events intervened[1]. I woke up this morning to see that Corey had already written my post, but with the opposite conclusion. Corey’s 1905 analogy is a good one. Obama is not a “good father standing above the fray”, but the ruler who gives orders to Cossacks like Carmen M. Ortiz. The vindictive pursuit of Aaron Swartz is of a piece with the Obama Administration’s whole approach to the security state, from drone assassinations to the persecution of whistleblowers (Obama is worse even than Bush in some aspects of his civil liberties record).

But the Czar had choices[2], and so does Obama. Under current procedures, the White House must respond to a petition with 25 000 signatures, and the answer in this case must be “Yes” or “No’. So, this is one of the very few ways that Obama can be pushed to take an explicit stand one way or the another on an issue he prefers to address through leaks and ambiguities.

A pardon for Swartz, however qualified, would undercut the case for severe punishment (including, possibly, the death penalty) of Bradley Manning and others. It would amount to an acceptance that Swartz’ motivation in seeking the free distribution of information was a noble one, and that his offences should have been judged in that light. Perhaps some people would see it as exonerating the state, but I think more would see it as a signal of a new direction, and a precedent to be followed.

A refusal or evasion would serve the same function as the Czar’s orders to his Cossacks in 1905. Those who still believe Obama’s pledge to run the most transparent administration in history would see the reality, and might be moved to protest a bit more.

fn1. Among them, a stoush with a silly Oz politician
fn2. I don’t want to refight the whole “individual in history” debate, but Nicholas could have chosen to meet Father Gapon, could have promised reforms and could have delivered at least some of them. And, in the light of subsequent events, it would have been far better for him, his family, his class, and just about everyone else in Russia had he done so.

The State Should Not Pardon Aaron Swartz

by Corey Robin on January 15, 2013

There is a petition seeking the pardon of Aaron Swartz. It states, “President Obama has the power to issue a posthumous pardon of Mr. Swartz (even though he was never tried or convicted). Doing so will send a strong message about the improportionality with which he was prosecuted.” I understand the sentiment that underlies the petition. But I think it is wrong-headed and misplaced. It grants the state far too much.

It’s not simply a matter, as some have claimed to me on Twitter, that Swartz was never tried nor convicted of a crime; Ford, after all, pardoned Nixon before he was tried and convicted in the Senate could be charged, tried or convicted in a court of law. The real issue is that in the court of public opinion, Swartz is the innocent—no, the hero—and the state is the criminal. It is the state, in other words, and not Swartz’s supporters, that should be seeking a pardon—from Swartz’s family, from his supporters, and from the public at large. Though, I hasten to add, it should never receive one.

Asking the state to pardon Swartz doubly empowers and exonerates the state. It cedes to the state the power to declare who is righteous and who is wrong (and thereby obscures the fact that it is the state that is the wrongful actor in this case). The petitioning language to Obama only adds to this. The statement depicts Obama as somehow the good father who stands above the fray—much like how the Tsar was depicted in the petition of the Russian workers who marched with Father Gapon on the Winter Palace in 1905 and were summarily slaughtered.

Pardoning Swartz also would allow the government, effectively, to pardon itself. As my friend Michael Pollak pointed out to me, “Under our laws, Swartz was still innocent. Therein lies the crime of what the state did to him. This would remove it.” I would merely add that even if Swartz would have been (or had been) found guilty under the law, Michael’s stricture would still hold.

I want the death of Swartz, and the prosecution that helped produce it, to hang around the neck of the state for a very long time. If the state wishes to remove it, let it start by curbing its prosecutorial zeal, of which Swartz was sadly only one victim.