The death of Osama bin Laden has inevitably produced a gigantic volume of instant reactions, to which I’m going to add. Doubtless I’m repeating what others have said somewhere, but it seems to me that most of the commentary has understated the likely impact, particularly as regard US politics. That impact is by no means all favorable – while the Republicans are the big losers, Obama will also be strengthened as against his critics on the left, among whom I’d include myself (admittedly as a citizen of a client state rather than the US proper).
Following on from Henry and John’s piece on ‘hard Keynesianism’, here is another angle on the politics of the EU. Economic historian Kevin O’Rourke has an excellent paper setting out a very nice framework for thinking about the Eurozone. It was presented at a conference of the Institute for New Economic Thinking held recently in Bretton Woods (yes, surely a good venue for such an event). There is also a short summary here.
Kevin’s creative insight is to combine the impossibility theorems from two bodies of literature – Mundell-Fleming on monetary policy, and Dani Rodrik on global governance – and to show that the Eurozone occupies an uneasy half-way house in both economic and political governance. The particular merit of setting out the issues like this is that it demonstrates why there are no optimal policy solutions, only difficult trade-offs, with different potential losers in each case. It is an innovative and stimulating exercise in political economy that deserves to gain a wide readership.
Mundell and Fleming’s economic trilemma posits that you can only achieve two of three objectives in monetary policy: that is, open capital markets, domestic control over monetary policy, and fixed as opposed to floating exchange rates. ‘European Monetary Union has thus solved the economic trilemma in a particularly radical way: capital mobility combined with the complete abandonment of national monetary sovereignty’.
The political trilemma, drawing on Dani Rodrik’s work, says that if you go for increasing globalization, you cannot simultaneously have both nation-state politics and democratic accountability. If you want the latter two (as in the ‘Golden Age’ of postwar capitalism), you need restrictions on capital mobility. If you go for closer economic integration, you could do it by imposing all the adjustment costs onto your own citizens, as in the era of the Gold Standard. But as Polanyi and others have pointed out, this is hard to sustain without massive repression, and pretty well impossible in the long run with universal enfranchisement. So the alternative is to construct a collective decision-making capacity at the transnational level. As O’Rourke notes:
What makes European Monetary Union such a radical solution to the political trilemma is that it not only abandons national monetary policy-making, but delegates it to a technocratic Central Bank… Moreover, this has occurred without common Eurozone policies in complementary areas, notably financial and banking regulation; and it has occurred without a move towards a common fiscal policy, which most economists also regard as a desirable complement to a common monetary policy.
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The most recent data from Eurostat bring out starkly the implications of the current policy mix in the Eurozone. The peripheral economies continue to be spun around by an inflexible centre, and whether they fly off in a crisis remains anyone’s guess.
On the face of it, as the following graph suggests, some economies are easily diagnosed as having fiscal deficit problems. It is not hard to see how German public opinion can be persuaded that fiscal profligacy is the problem and that a dose of austerity will bring them back into line with German fiscal virtue.
Italy and Belgium actually have larger accumulated debts than Portugal or Spain, but they have no immediate problems keeping their debts rolling over. Britain falls into the same cluster with its combined debt and deficit problems, but no-one is seriously worried about its policy options.
The peripheral economies have problems that are different in kind, different from Germany and also from each other.
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Matthew Yglesias is puzzled that women still want liposuction even if the fat comes back in other places. That doesn’t surprise me. If you had a pill that just induced redistribution of fat from unwanted places, a lot of people would take that pill. What strikes me about the study is the sheer weirdness of fat sort of migrating from you belly to your … triceps? Seriously?
It turns out, Dr. Leibel said, that the body controls the number of its fat cells as carefully as it controls the amount of its fat. Fat cells die and new ones are born throughout life. Scientists have found that fat cells live for only about seven years and that every time a fat cell dies, another is formed to take its place.
This seems like an obstacle not just to successful liposuction but to fat reduction by diet or exercise. How does anyone lose fat? Googling around, it looks as though there is some controversy about whether you can lose fat cells, or just make the one’s you’ve got smaller. Hmmm, learn something new every day. [click to continue…]
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“It sure seems like Obama’s job as secret Muslim operative imposing Sharia law on the US just got a whole lot harder.”
We probably should have an open thread on Bin Laden’s death. Consider this that thread.
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Its been a busy couple of weeks — we were on vacation sort of, and then catching up. It is wonderful to me that Wisconsin 2011 I learned of Sarah-Jane’s death from a bunch of 14 year olds I’d just made a really good dinner for. But I’d rather it weren’t true. Barry Letts, the Brig, and now Sarah Jane, its been a tough couple of years.
Grauniad obit here.
Choice quote: ‘Current producer Steven Moffat said: “Never meet your heroes, wise people say. They weren’t thinking of Lis Sladen.”‘
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In Australia it’s the evening of May Day, though as it falls on a Sunday we will (in Queensland at least[1]) celebrate it with that great Australian institution, a long weekend. Last year, I went on the march, this year I ran a triathlon instead[2]. My somewhat confused attitude is, I think, pretty characteristic of the position labour movement more generally.
Updated below
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Here’s some commentary on the Canadian general election from CT’s good friend up north, Tom Slee.
From Boring to Bizarre: Canada Votes 2011
For the second election in a row, Canada’s trip to the polls has, to use a technical term, gone weird. The big story this time round is the rise of the perennial third- or fourth-place New Democratic Party, making NDP leader Jack Layton the probable leader of the opposition and possibly even Prime Minister – something no one (and I mean NO ONE) would have believed possible three weeks ago. I was reluctant to accept Henry’s invitation to comment here because there are many people who know more about Canadian electoral politics than I do, but as NO ONE else had a clue this was going to happen either, it might as well be me to open the comment thread.
For any of you not completely up to date, here’s what’s been happening (note to self – switch to present tense here for that sports-commentator-like sense of immediacy):
- March 25: Stephen Harper’s minority Conservative government loses a no-confidence vote that found the government in contempt of parliament. (CBC report)
- March 27: The six-week campaign officially opens. The Conservatives attack Liberal leader Michael Ignatieff relentlessly for being too little Canadian (“He didn’t come back for you”) and too much academic (Harvard for God’s sake), but no issue catches fire with the public.
- April 12 and 13: The mid-campaign TV debates are held, one in English and then one in French. The French debate was moved forward a day so as not to clash with a hockey game. There is no big moment, no immediate announcement of a winner.
- Over the next few days, the NDP starts to pick up support from the Bloc Quebecois, despite never having a significant showing in that province.
- Around Easter, the Liberal vote starts to bleed to the NDP and support for the Grits falls from high 20s to low 20s, and all of a sudden the NDP has almost doubled its share from 17% up to about 30%, clearly in second place (see Andrew Heard’s page at Simon Frasier University, or ThreeHundredEight.com). The Google Trends results for the party leaders summarize the campaign as well as anything.
Which all raises two questions. What caused these dramatic shifts? And what happens next?
Causes first. The leaders are all known quantities; the policy platforms are basically the same as in the 2008 and 2006 elections; the Canadian economy was insulated from the worst of the financial collapse by a combination of oil and good fortune in its banking history; no political or economic issue has taken hold during the campaign. What gives?
It may be worth remembering that it’s the second time in a row that a Canadian election has gone from boring to bizarre. Back in 2008 the Liberals called an election and, then as now, everyone knew that the election would conclude with everything looking the same as before. The Bloc Quebecois would hold on to 50 or so seats in Quebec. The Tories, now a wholly-owned subsidiary of the Alberta-based Reform Party, were too socially conservative and too doctrinaire to make a breakthrough in seat-rich Ontario and would be limited to about 100 seats from the western provinces, the Liberals would get pretty much all of Ontario’s 100 seats plus some from the maritimes, and the NDP would stay at 20 or so seats. But Liberal leader Paul Martin stumbled and was labelled as “Mister Dithers”, the label stuck and the Tories took 40 seats in Ontario, enough to form a minority government. Once the Liberals started losing support, everything just went from bad to worse for them.
All I can see is that the self-referential nature of recent campaigns, in which poll results themselves have become the major daily news item, lends itself to wild and unpredictable fluctuations as voters’ opinions are shaped by their perceptions of the trends around the country. The patterns remind me of the Salganik, Dodds, and Watts studies of artifical cultural markets from a few years ago (PDF): social decision making leads to cascade-driven inequalities in outcomes, but the outcome is only obvious once you know the answer.
Despite talk of this being Canada’s first social media campaign, I think it’s uncontroversial to say that social media has had little impact. There has been publicity for student “vote mobs” and some questions about the legality of tweeting on election night (before the polls close in the west), but basically the campaign has been mass-media driven.
And as for what happens next? Well who the hell knows. The big questions are whether the NDP polling results will hold up and, in a country with strong regional distinctions, how the nationwide trends will be reflected at the level of individual ridings. It could be that the NDP surge leads to a majority conservative government, or it could be that an NDP-led coalition of the non-right will end up taking power, or it could be… well what? I look to commenters to tell us.
As for me, for the last few elections I have been actively involved in the local NDP campaign, and in 2008 that ended with the Conservatives winning over the Liberals by 17 votes; the closest race in the country. I have never previously considered tactical voting, but this time I have signed up at Pair Vote as my choice is strongly Anyone But Harper. I’d like to think it’s the right thing to do, but with this campaign, who knows?
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Well, now, seems like it’s about time for me to revisit <a href=”https://crookedtimber.org/2011/04/12/winter-sports-roundup/”>my predictions for the first round of the NHL playoffs (Eastern Conference)</a>, and … my stars, what do you know? My new method of choosing teams by way of citing random passages from experimental literary texts has proven to be spectacularly successful! To recap:
<b>Me</b>:
Caps in 5
Flyers in 6
Bruins in 7
Lightning in 6
<b>Reality</b>:
Caps in 5
Flyers in 7
Bruins in 7
Lightning in 7
I think this pretty much proves that <a href=”https://crookedtimber.org/2011/04/25/parents-can-rid-campuses-of-communists/#comment-356456″>Dreyfus was guilty.</a>
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On Twitter yesterday, “Daniel Davies asked”:http://twitter.com/dsquareddigest/status/63004206600167424,
bq. If AV is so god damned simple, why can nobody explain convincingly to me whether it screws the LibDems or not?
This seems like a fun question to work through at longer than Twitter length, even if it is purely hypothetical, since the No side “is going to win”:http://ukpollingreport.co.uk/blog/archives/3504.
One obvious answer is that as long as the “Liberal Democrats are polling 10%”:http://ukpollingreport.co.uk/blog/archives/3507 the voting system won’t make a lot of difference. Another obvious answer is that if the Lib Dems recover at all, then AV would seem to help them. There will be plenty of seats, such as “Oxford East”:http://news.bbc.co.uk/2/shared/election2010/results/constituency/d47.stm which they lost under FPTP, but would have a very good chance of winning under AV.
But if AV in England[1] plays out in a similar way to how AV played out in Australia, there is a big risk to the Lib Dems. They could lose a huge portion of their vote to the Greens.
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No-one will be fooled. I demand the White House release video of Obama being born on home plate during the 1961 World Series, with Roger Maris attending the delivery and being heard to remark “That’s a fine-looking future President you have there, Ann”. Oh wait, is the White House REFUSING to release this video? Or maybe—just maybe—are they in fact UNABLE TO? And why do you think that would be? Because the so-called President was IN AFRICA at the time? Because Hawaii wasn’t even a U.S. Territory in 1961? I think you can join the dots yourself. I rest my case.
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Bristol had a riot last Thursday night. I wasn’t there, although I’ve spoken to a number of people who were or who observed events from windows overlooking the action. The facts are still not entirely clear, but becoming clearer. As far as I can establish them they are:
Beyond this the facts are murky.
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John Quiggin and I have a “piece”:http://www.foreignaffairs.com/articles/67761/henry-farrell-and-john-quiggin/how-to-save-the-euro-and-the-eu on the eurozone mess in the new issue of _Foreign Affairs._ The piece is subscriber-only, but we’re allowed to post it (in Web format) for six months or so on a personal or institutional website. Accordingly, the piece can be found below the fold. The piece was finished some weeks ago, but I think it holds up quite well.
Four things worth noting. First – I suspect we would put our argument that the politics are more important than the economics even more strongly in the light of current events. It looks as though demonstrations against the austerity agenda are beginning to take on a European dimension. In addition, a dimension of the politics that we did not discuss – the rise of nationalist resentments in countries that are on the giving rather than receiving end of loans-linked-to-brutalism – has come more obviously to the fore with the success of the True Finns in the recent election.
Second – Paul de Grauwe has a “new paper”:http://www.econ.kuleuven.be/ew/academic/intecon/Degrauwe/PDG-papers/Discussion_papers/Governance-fragile-eurozone_s.pdf which points to a complementary mechanism through which monetary union plausibly damages political legitimacy at the national level (although his discussion is largely framed in terms of the economics).
bq. Once in a bad equilibrium, members of monetary union find it very difficult to use automatic budget stabilizers: A recession leads to higher government budget deficits; this in turn leads to distrust of markets in the capacity of governments to service their future debt, triggering a liquidity and solvency crisis; the latter then forces them to institute austerity programs in the midst of a recession.
Third: the Daniel Davies qualification. We refer to BIS data on bank holdings in the article – but as we specifically note (and as dsquared has pointed out in comments here and elsewhere), this data is biased by tax avoidance wheezes and similar. It is plausible to infer that e.g. German banks have some considerable exposure to PIIGS from the way that they are behaving, and the numbers are the best that there is, but they should be treated with caution.
Finally – the piece is written in the rhetorical style of US policy articles. This differs from that of blogposts and academic articles, in that it encourages emphatic claims rather than cautions and caveats, and self-assurance rather than social-scientific humility. Please read accordingly.
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These days the bow tie signifies the opposite, of course. Which only shows their disguises have improved.
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Matthew Yglesias points to this Arthur Brooks piece, “Obama says it’s only ‘fair’ to raise taxes on the rich. He’s wrong.” Brooks says he’s shifting from the usual perverse consequences argument – if we tax the rich it will actually cost more money – to a fairness argument. But really it’s just a twistier iteration of the perverse consequences argument.
Basically the first part of the argument goes like this. [click to continue…]
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