Quotulatiousness

March 7, 2014

Breaking news – Satoshi Nakamoto isn’t really “Satoshi Nakamoto”

Filed under: Economics, Media — Tags: , , , — Nicholas @ 08:00

Self-described Bitcoin detractor Colby Cosh explains how “Newsweek” got conned by “Satoshi Nakamoto” (yes, both sets of scare quotes are ‘splained):

Newsweek’s Satoshi is a 64-year-old Japanese-American living in Temple City, California. “Satoshi Nakamoto” is the name on his birth certificate, although he goes by Dorian. Mr. Nakamoto has a physics degree and has done computer engineering for a number of military-industrial firms, as well as one online stock-price provider. Much of his work history is shrouded in official secrecy, or perhaps just the habitual truculence of defence-tech professionals. He is known to have a libertarian streak, has had some run-ins with the financial system, and is thought by friends and relatives to capable of cooking up something like Bitcoin.

But it is now looking as though he had the square root of bugger-all to do with it. Newsweek concluded its investigation of Dorian S. Nakamoto with a police-supervised doorstep interview in which the gentleman is supposed to have said “I am no longer involved in that and I cannot discuss it. It’s been turned over to other people.” Dorian has now told the Associated Press that when he said “no longer,” two words on which Newsweek hung an entire feature, he was referring to the engineering profession generally. He denied being involved in any way with what he repeatedly called “Bitcom,” explained the work he had briefly done for a financial-information company, and read the Newsweek piece to himself, displaying increasing confusion and annoyance as he did so.

I have to say, having read New Newsweek’s article, that it does appear to rest on a fairly slender foundation. Aside from that “no longer,” the evidence that Dorian Satoshi Nakamoto equals “Satoshi Nakamoto” amounts to the obvious coincidence of names and a bunch of quotes from the man’s semi-estranged family. Unfortunately, neither “Satoshi” nor “Nakamoto” are uncommon names for individuals of Japanese ancestry; the article acknowledges that there are several more just in the United States. The Bitcoin-inventing “Satoshi” clearly does not much want to be found; the name is obviously a pseudonym, has always been taken to be one until now, and was probably chosen precisely for its red-herring flavour.

Okay, so Satoshi Nakamoto is probably not “Satoshi Nakamoto”, but why is Newsweek actually “Newsweek” in scare quotes?

A lot of people are asking how something like this could happen to Newsweek, not realizing that the Newsweek nameplate has basically been asset-stripped and repurposed in order that the remaining credibility and familiarity might be squeezed out of it. (This will happen to Maclean’s someday — two years from now, or 200. I’m hoping it’s 200.) No one expected this cred-squeezing process to happen quite so quickly and powerfully, but IBT Media, buyer of Newsweek, seems to have blundered into a singular piece of ill luck: the wrong reporter matched at the wrong time with the wrong story, one in which an informed intuition about any number of subjects might have saved the day.

March 5, 2014

MazaCoin is now the official currency of the Lakota nation

Filed under: Economics, USA — Tags: , , — Nicholas @ 16:07

Adrianne Jeffries talks about a Bitcoin-like currency that the Lakota have adopted as their official currency:

The programmer and Native American activist Payu Harris raised a gavel Monday night and vigorously banged the bell to open trading at The Bitcoin Center, a meeting space for virtual currency geeks that looks like an empty art gallery in the middle of New York’s Financial District.

Harris was there to promote MazaCoin, a cousin of Bitcoin that is now the official currency of the seven bands that make up the Lakota nation. After an hour of questions, Harris thanked the small crowd and was promptly accosted by a tall man and a woman in red who wanted to buy some MazaCoin, which Harris was selling for 10 cents apiece. The two trailed him around the room as he hunted for a printer so he could issue the digital currency on paper. MazaCoin is a month-old cryptocurrency based on the same proof-of-work algorithm as Bitcoin, the virtual currency that approximates cash on the internet — but no one in the room was equipped to make a digital trade.

There have been a slew of copycats since the rise of Bitcoin in 2009. The first wave attempted to improve on the basic Bitcoin protocol. The second wave, which includes the meme-based Dogecoin and the Icelandic Auroracoin, are catering to specific groups.

February 27, 2014

Ukraine and the EU – why the easy answer won’t work

Filed under: Economics, Europe, Russia — Tags: , , — Nicholas @ 09:09

At the Adam Smith Institute website, Eamonn Butler explains why there won’t be an easy economic fix for the EU/Ukraine trading relationship:

The trouble with EU membership is that it is such a big deal. A country that wants to be part of the club, and enjoy its free trade benefits also has to accept a mountain of regulation and to sign up for the common currency. It is all or nothing.

That puts countries like Ukraine in a fix, just as it put the UK in a bit of a fix in the early 1970s. The UK did not want to raise tariff barriers and lose its trading relationships with its historic trading partners such as Canada, Australia and New Zealand, from which it imported a great many agricultural products — butter, lamb, fruit, bacon and much else. But thanks to the Common Agricultural Policy, it did not have much choice. Today, the UK is inside the EU’s tariff wall, which makes trade with the rest of the world more expensive, and naturally focuses UK trade on Europe.

[…]

As a logical matter, that does not have to be. If the EU allowed Ukraine the same sort of status enjoyed by (neutral) Switzerland, the country would be free to trade with the EU as part of its customs-union club – but would remain free to preserve trading links to other countries as well. It would also be free to retain its currency and its legal and regulatory structure. A free trade pact with the EU that would help grow the Ukrainian economy, without threatening Russia or the Russian-speaking Ukrainians that the country would be wholly swallowed up into a Western political alliance.

A genuine free-trade deal, rather than full membership. That would probably be ideal for Ukraine (and for other nearby countries not already in the EU), but it won’t be on offer, because too many existing members of the EU would also prefer to have that kind of trading relationship without all the legislative/regulatory overhead that full membership requires. In many ways, the EU cannot afford to offer Ukraine such a deal, for fear of undermining the basis of the current integrated model.

Update: Daniel Hannan on the possibility of partition in Ukraine.

These two views — Ukrainians as a historic people, Ukrainians as a strain of Russians — frame the present quarrel. Most Russian nationalists allow, albeit reluctantly, that Ukrainian national consciousness exists. Alexander Solzhenitsyn grumpily accepted that western Ukrainians, after the horrors of the Soviet era, had been permanently alienated from Mother Russia; but he insisted that the frontiers were arbitrarily drawn under Lenin. If Ukrainians claimed independence on grounds of having a separate national identity, he argued, they must extend their own logic to the Russian-speakers east of the Dnieper.

[…]

Plainly a pro-Russian regime can’t govern the whole country: the recent uprising has put that fact beyond doubt. If the Slavophiles can’t rule the West, might the Westernisers win the East? The way of life they propose ought to be more attractive. But we should not underestimate the importance, in such a region, of blood and speech. Nor should we underestimate how much more Ukraine matters to Moscow than it does to Brussels. Vladimir Putin has mobilised troops on the border. Does anyone imagine any EU government, with the possible exception of Poland’s, contemplating a military response?

If neither the Slavophiles nor the Westernisers can carry the entire territory, some kind of separation starts to look inevitable. Such a separation might come about as paramilitary groups establish local supremacy. Or it might happen as a result of Russian intervention, as in Armenia, Moldova and, later, South Ossetia. It is easy enough to imagine Russian security forces crossing the border at the request of local proxies and establishing a de facto Russophone state. The Trans-Dniester Republic still exists, unrecognised but very much in force, on Ukraine’s western border; why not a Trans-Dnieper Republic to its east?

February 26, 2014

MtGox Bitcoin “owners” didn’t actually own their Bitcoins

Filed under: Business, Economics — Tags: , , — Nicholas @ 09:09

I haven’t been following the Bitcoin situation too closely — although if I’d had extra money lying around over the last year or two, I might have dabbled — but it’s hard to figure out what really happened from the media reports. At Samizdata, Bruce Hoult explains the details:

What has happened is that people who bought Bitcoins on MtGox thought they owned them. They did not, according to the Bitcoin system. MtGox did. MtGox kept their own records of who ‘owned’ what. And MtGox were incompetent.

Which should have been apparent from the start: MtGox learns Bitcoin

The proper way to use Bitcoin is to keep your wallet of Bitcoins on your own computer. And back it up. Several times. Print it on paper if you want — it will likely fit on one side of A4 in not very small print. Keep it secret. Keep it safe. It is a bearer certificates. If you lose your wallet or forget the password then those Bitcoins are gone out of circulation forever.

That is not what happened with MtGox. They gave Bitcoins that people thought they owned (but did not) to other unauthorised people. It is theft. Just like a bank robbery. Those Bitcoins still exist, just in other hands.

This has absolutely no effect on people who keep their Bitcoins on their own computer (or phone). There are the same number in circulation as before. Bitcoins still can’t be counterfeited or inflated.

If you want/need to use a place similar to MtGox to turn normal money into Bitcoins then DO NOT LEAVE THEM IN YOUR ONLINE WALLET THERE. Make yourself an identity and wallet on your own computer and make a payment from your account on the Bitcoin exchange to your own identity. Then you are perfectly safe.

Well, you are if you do your backups diligently.

Or, if you want to turn normal cash into Bitcoins, find someone who has Bitcoins and wants cash, agree a price, have them do a transfer of Bitcoins from their wallet to yours (using the actual Bitcoin system, not an exchange), and hand them the cash.

“The Up Side of Down: Why Failing Well Is the Key to Success” (featuring the author, Megan McArdle)

Filed under: Business, Economics — Tags: , , , — Nicholas @ 00:01

Published on 25 Feb 2014

Featuring the author Megan McArdle, Columnist, Bloomberg View; with comments by Brink Lindsey, Vice President for Research, Cato Institute; moderated by Dalibor Rohac, Policy Analyst, Center for Global Liberty and Prosperity, Cato Institute.

Nobody likes to fail, yet failure is a ubiquitous element of our lives. According to Megan McArdle, failing often — and well — is an important source of learning for individuals, organizations, and governments. Although failure is critical in coping with complex environments, our cognitive biases often keep us from drawing the correct lessons and adjusting our behavior. Our psychological aversion to failure can compound its undesirable effects, McArdle argues, and transform failures into catastrophes.

Video produced by Blair Gwaltney.

February 24, 2014

Paul Krugman on Scottish money

Filed under: Britain, Economics — Tags: , , — Nicholas @ 09:40

I rarely find much of interest in Paul Krugman’s blog, but he’s pretty good in this brief analysis of Scotland’s monetary future in a post-independence scenario:

Whether it’s overall a good idea or not, however, independence would have to rest on a sound monetary foundation. And the independence movement has me worried, because what it has said on that that crucial subject seems deeply muddle-headed.

What the independence movement says is that there’s no problem — Scotland will simply stay on the pound. That is, however, much more problematic than they seem to realize.

[…]

In fact, Scotland-on-the-pound would be in even worse shape than the euro countries, because the Bank of England would be under no obligation to act as lender of last resort to Scottish banks — that is, it would arguably take even less responsibility for local financial stability than the pre-Draghi ECB. And it would fall very far short of the post-Draghi ECB, which has in effect taken on the role of lender of last resort to eurozone governments, too.

Add to this the lack of fiscal integration. The question isn’t whether Scotland would on average pay more or less in taxes if independent; probably a bit less, depending on how you handle the oil revenues. Instead, the question is what would happen if something goes wrong, if there’s a slump in Scotland’s economy. As part of the United Kingdom, Scotland would receive large de facto aid, just like a U.S. state (or Wales); if it were on its own, it would be on its own, like Portugal.

As Stephen Gordon points out, this is “another analysis where you can substitute Qc/RoC for Scotland/UK”.

February 21, 2014

Delingpole’s “love” letter to Scotland

Filed under: Britain, Economics, Food — Tags: , , — Nicholas @ 12:12

He spends just about as much time trying to persuade Scots to stay as he does in winding them up:

Anyway, here are my ten reasons why I think Scotland and England are much better together than apart.

[…]

3. Deep Fried Mars Bars.

As every Englishman knows, these are the staple diet of inner city Scotland*, usually served with a side order of deep fried pizza, washed down with Irn Bru, and followed with a heroin chaser, which makes them vomit it all up again, as seen in Irvine Welsh’s hard-hitting documentary Trainspotting. (*Although we of course are aware that outside the cities, you subsist on haggis and whisky)

Some Scots like to claim that this a grotesque caricature which is typical of the contempt in which they are held by the snide, ignorant, condescending English. But then, the feeling’s mutual, isn’t it? In any international sporting event, the Scots will always support whichever foreign team is playing England.

And isn’t that exactly what’s so wonderful about our relationship? All the best marriages are based on partial loathing: look at Anthony & Cleo; Taylor and Burton; Petruchio and Katherina. It’s the spark that keeps it all alive.

4. The Pound.

As Bank of England Governor Mark Carney has made perfectly clear, an independent Scotland is not going to keep the pound. Why not? Well look at what Greece did when — with a little book-balancing sleight of hand from its friends at Goldman Sachs — it snuck into membership of the Euro.

So if you want a future where you travel abroad, my Scottish friends, or indeed where you want to be able to be able to import anything at all, it’s very much in your interests to maintain the Union. Otherwise you’ll have to find a currency more in keeping with your new global status: the Albanian Lek, perhaps, or the West African CFA franc, as used by your economic soul-mate Burkina Faso.

5. The economy.

Let’s be blunt: apart from the whisky industry, and what’s left of the tourist industry that hasn’t been wiped out by Alex Salmond’s wind-farm building programme, Scotland doesn’t really have one. It is a welfare-dependent basket case, with near Soviet levels of government spending and a workforce who’d mostly be out of jobs if they weren’t sucking on the teat of state employment.

For various historical and emotional reasons, the English taxpayers who bankroll most of this welfarism — e.g. through the iniquitous Barnett Formula, whereby around £1000 more per annum is spent by the government on Scottish citizens than English ones — have decided generally to be cool about this.

But when we hear about Scotland’s plans to go it alone economically, we’re about as convinced as the parents of stroppy teenage kids are when they threaten to leave home right this minute. The difference is that when in ten minutes’ time we get the phone call “D-a-a-d. Will you come and pick me up? I’ve run out of pizza money” we’re not going to come running.

February 19, 2014

Federal Liberals begin to outline their economic agenda

Filed under: Cancon, Economics, Politics — Tags: , , — Nicholas @ 08:46

Stephen Gordon examines what is said (and left unsaid) in Justin Trudeau’s video on the economy.

For example, the video offers a definition for what means to be middle class in all those Liberal talking points:

    the people who live off their incomes, not their assets

This is a bit of a head-scratcher: everyone lives off their incomes. The people who live off their assets have incomes – it’s just that their incomes are generated by their investments and not by working. If Trudeau is referring to people who depend on their earned income, then he’s including most of the one-percenters: the surge in income at the top has been driven by earned income, not their asset holdings. He’s also excluding retirees: their incomes are generated by their asset holdings. (Raising this point gives me an excuse to point people to the CBC Radio series The Invisible Hand, and especially the “Your Grandmother is a Capitalist” episode.) Trudeau probably does not want to include one-percenters in the middle class and almost certainly doesn’t want to ignore retirees, but his definition appears to do just that.

As I said, it’s a head-scratcher.

Later on, Trudeau brings up a compelling point, one that has been raised by many others (including myself):

    I worry that at some point, Canadians will say: “Why should we support a growth agenda if it doesn’t help my family?”

I don’t know how the Liberals intend to answer this challenge, but this is a good and constructive way of framing the problem. It is far more likely to generate a useful answer than putting it in terms of terms of class warfare.

February 18, 2014

“No-one knows where the Canadian dollar is going”

Filed under: Cancon, Economics — Tags: , — Nicholas @ 10:13

In Maclean’s, Stephen Gordon assures you that there is no mastermind at work, determining what happens to the Canadian dollar:

The Canadian dollar fell from 97 cents US to below 89 cents US in the weeks following the Bank of Canada’s decision to shift its monetary policy stance away from a tightening bias. (It has recently rebounded to hold steady at around 91 cents as I write.) These developments have provided additional fodder for those pundits who are in the habit of offering their views about where the dollar should go and/or where it will go (the two are separate issues). These views fill up media space, but they shouldn’t be taken too seriously. The foreign exchange market is one where the “semi-strong“ form of the Efficient Market Hypothesis holds: movements in exchange rates cannot be predicted using publicly-available information.

If everyone really believed that the Canadian dollar will end up at (say) 85 US cents, then everyone would sell CAD at its current price to buy USD, wait for the price of USD to increase – which is the same thing as waiting for the CAD to depreciate – and then sell at the higher price. But if everyone does that, the CAD would be bid down to the point where it is no longer profitable: 85 cents. This is why you should take predictions about foreign exchange movements with a grain of salt: if you could actually predict them, the last thing you’d do is tell anyone.

This doesn’t mean that exchange rate movements are completely random: some of the fluctuations can be ascribed to variations in the ‘fundamentals’. But what really drives these movements are the unexpected changes in the fundamentals. And unexpected changes are, by definition, unpredictable. The most reliable forecasting model is a random walk: the exchange rate next period is the current exchange rate plus a white noise error term. The best prediction for where the exchange rate is going is where it is now.

February 12, 2014

In praise of Frédéric Bastiat

Filed under: Economics, Europe, France, History — Tags: , , — Nicholas @ 08:48

Douglas Carswell wishes more people knew about nineteenth-century economist Frédéric Bastiat:

I reckon that one of the greatest Frenchman of all time is a fellow called Frédéric Bastiat (1801-1850). Not heard of him? France, I reckon, would have remained a truly global nation if more people had.

A free market, Classical liberal thinker, Bastiat grasped how wealth is created — and how parasitical elites and vested interests will seek to live off the productivity of others.

Nations rise, he could see, when various naturally parasitical interests were reined in, making production more fruitful than parasitism. Nations sunk into mediocrity, or remained there, when the parasites got their way — and other people’s wealth.

Far from being just a creature of his time, Bastiat speaks to us today. His spoof petition of the candlestick makers (they lobbied politicians to block out unfair competition from sunlight) tell us a great deal about the behaviour today of energy renewable interests and central bankers.

As a free market thinker, Bastiat was up there on a par with Adam Smith or Richard Cobden. Yet unlike Smith and Cobden, for all his brilliance, Bastiat had little impact on the French body politic. French lassies faire gave way to dirigisme. In terms of French politics, it is almost as if Bastiat might never have existed. And a once global player, presided over by a succession of enarques and corporatist cliques, sunk slowly into Hollandesque mediocrity.

My fear is that free-market thinkers on this side of the Channel could turn out to be little more than British Bastiats. Already the land of Adam Smith is run by a big, bloated state bureaucracy. The country that produced Cobden trades with the world on the basis of quota, not free competition.

February 10, 2014

The difference between money and wealth

Filed under: Economics — Tags: , , , , — Nicholas @ 11:37

At Ace of Spades HQ, Monty gives an introduction to Say’s Law:

Jean-Baptiste Say, an 18th-century economist and follower of Adam Smith, recognized one of the most fundamental laws in all economics: the entirely common-sense observation that consumption requires production. This axiom is called Say’s Law of Markets.

However, this axiom is often mis-stated as “production creates its own demand”. This is incorrect — production is necessary for consumption to take place, but production anticipates demand, it does not cause it. Production is speculative in this sense. The simple act of producing some good or service does not, in and of itself, create demand for that good or service. (This is true even for basic commodities.)

What Say’s Law really says is that production is the source of wealth. Market-driven production creates value and provides choice to consumers. Inventors and innovators bring new products to market, and as consumers are exposed to these new products, demand rises with the utility or desirability of these new products. New markets are opened by innovators who are able to tap into needs and wants that consumers didn’t even know they had until a new product or service is offered.

And he explains why money is not wealth:

So what is “wealth”, really? (I could write a whole book on the difference between “wealth” and “money”, but I’ll try to boil it down.) Wealth is options. Wealth is choice. Wealth is variety. Wealth is agency — being able to do what you want to do when you want to do it. Wealth is surfeit — having more than the essentials of life. It is comfort, leisure, ease — or at least the agency and option (those words again) to avail oneself of leisure. Simply put, wealth is stored value that can be drawn down in various ways, only some of which involve the exchange of money for goods and services. And how is wealth created? Through production, because production must necessarily precede consumption.

Money correlates with wealth because money is a medium of exchange and a store of value. Rich people have a lot of money because they are wealthy, not the other way around. Wealth allows us to buy a bigger house or better car or nicer furniture. It pays for a nice dinner for two at an upscale restaurant. Note well: wealth buys these things, not money per se. Consumption is the draw-down of wealth, not the simple expenditure of money.

Money is the oil in the machine of an economy, but money is not in and of itself wealth. If I am stranded on a desert island with a thousand gold coins, I am just as poor as if I were a homeless vagrant living in an alleyway somewhere, because I cannot exchange my gold for things I want or need. It does not give me options or variety or comfort. My gold facilitates neither production nor consumption absent a market mechanism that makes use of it.

February 8, 2014

New Viking stadium “seat licenses” a good reason to watch the game on TV

Filed under: Economics, Football — Tags: , — Nicholas @ 11:49

Perhaps I misunderstand the economic argument here, but I’d always had a pretty basic notion about buying season tickets or individual game tickets for most professional sports. You either bought a season ticket package for x number of games (up to the full season of home games) or you bought a single ticket for a particular game. Over the years, I’ve bought tickets to individual Viking games in Buffalo and Detroit where the purchase was simple and straightforward … I paid the fee and received a ticket. Nice and simple. Apparently that sort of stone-age arrangement is long in the past: at least in Minnesota, you need to buy a “seat license” in order to then buy season tickets. The Daily Norseman‘s Ted Glover explains:

In an effort to raise $100 million of their portion of money for the new stadium, the Vikings released their ‘stadium builder’s plan’ for folks that want season tickets.

What’s a stadium builder’s plan? Well, it’s a one time fee that allows to you get season tickets … and you’ll also have to pay for those. Basically, the better the seat, the more cabbage you’re going to have to cough up. For example, if you want a season ticket in the ‘Valhalla Club’, your one time seat license fee will be $9,500, plus the cost of season tickets.

Damn, son.

The Vikings will have SBL’s for approximately 75% of the seats in the stadium, and the farther away you get from the field, the cheaper they are. The cheapest SBL is $500, and you have two payment options, 3 years with no interest, or 8 years with an as yet TBD interest charge.

On the one hand, I approve of the idea that the fans should pay more of the cost of building a new stadium rather than non-football fans among the state’s taxpayers. On the other hand, the prices seem incredibly steep for a mere “license”. You can get a virtual look at what you’ll be licensing a tiny bit of:

However, in an effort to relieve the sticker shock of said licenses, they released a virtual tour of what the new stadium will look like. And it’s pretty damn cool.

So, grab your checkbook. And your ankles.

February 5, 2014

NYT – reducing full-time employment by 2.5 million is a good thing

Filed under: Business, Economics, USA — Tags: , , — Nicholas @ 09:33

This New York Times editorial tries valiantly to make the case that the recent prediction by the Congressional Budget Office of 2.5 million full-time job losses is a good thing for the affected workers and the economy as a whole:

The Congressional Budget Office estimated on Tuesday that the Affordable Care Act will reduce the number of full-time workers by 2.5 million over the next decade. That is mostly a good thing, a liberating result of the law. Of course, Republicans immediately tried to brand the findings as “devastating” and stark evidence of President Obama’s health care reform as a failure and a job killer. It is no such thing.

The report estimated that — thanks to an increase in insurance coverage under the act and the availability of subsidies to help pay the premiums — many workers who felt obliged to stay in a job that provided health benefits would now be able to leave those jobs or choose to work fewer hours than they otherwise would have. In other words, the report is about the choices workers can make when they are no longer tethered to an employer because of health benefits. The cumulative effect on the labor supply is the equivalent of 2.5 million fewer full-time workers by 2024.

[…]

The new law will free people, young and old, to pursue careers or retirement without having to worry about health coverage. Workers can seek positions they are most qualified for and will no longer need to feel locked into a job they don’t like because they need insurance for themselves or their families. It is hard to view this as any kind of disaster.

Despite all the whistling as we stroll along the cemetery fence, the editorial does correctly point out that insurance benefits that are tied to particular employers do limit choices for many workers. I’ve made the argument a few times that this is something that unions should be pushing very hard for: to make benefits more portable for both unionized and non-unionized workers. The rest of the editorial isn’t quite as helpful … two and a half million current workers no longer working (and not through a voluntary switch to self-employment or retirement) isn’t the wonderful thing they claim it is. Those people and their families will still need income to provide themselves with food, shelter, and all the other necessities of modern life. Tough to do that without visible means of support.

Update: At the National Journal, James Oliphant rallies to the White House’s defence during what he calls “the worst day that Obamacare has had in weeks — and that’s saying something.”

To debate that point, the White House supplied as its first responder Jason Furman, the chairman of the Council of Economic Advisers, an academic and policymaker schooled in the intricacies of the labor market. Furman disputed any reading of the report that said the ACA was a net drag on the economy — but often doing so in head-scratching language of a Washington insider.

At one point, a reporter at Tuesday’s briefing asked Furman in frustration, “What the heck do you mean?”

Furman’s presence, however, outlined in neon the problem the Obama administration has been having since the ACA became law: a persistent inability to detail its benefits in language that resonates with the public. And in its defense, the ACA’s multiple mechanisms are not the easiest to explain. To that end, its critics, who often have relied upon hyperbole and scare tactics, have always held the political advantage.

But sometimes you just have to punch the bully in the nose — and Furman wasn’t the person for the job. That was the case Tuesday. The first takeaway from a complex CBO report was that the office had concluded that Obamacare is going to be a job-killer. Period. Full stop. It fell upon Furman — along with liberal bloggers — to attempt to explain that, no, it’s more complicated than that.

Follow along: The report doesn’t say that the ACA will result in 2 million jobs lost by 2017, but projects there will be 2 million fewer workers in the workforce, the White House says (a number it doesn’t necessarily agree with). It’s the difference, Furman underscored, between labor supply and labor demand. And they aren’t “jobs,” he reiterated, they are “FTEs.” (Full-time equivalents, if you are scoring at home.)

In other words, he explained, businesses will still want as many workers as ever, but the ACA will result in an increasing number of workers deciding to take themselves either entirely out of the job market or working fewer hours. Why? Because they may decide to keep their income below a certain level in order to qualify for government help to buy health insurance on the exchanges.

This is a good thing, Furman said, because the ACA will give workers more flexibility, whether they want to become entrepreneurs or take another, lower-paying job. And again, the press corps had some trouble with this concept. It’s good for someone to take a lower-paying job? And it’s good that the law encourages them to take it?

February 2, 2014

The “77 cents” meme

Filed under: Economics, Politics — Tags: , , , , , — Nicholas @ 09:08

President Obama recycled the old claim that women are systematically underpaid and only get 77 cents for every dollar earned by men. Christina Hoff Sommers says this is far from the first time he’s been corrected (by the Washington Post, among others) for this hoary myth:

These and other differences in employment preferences and work-family choices have been widely studied in recent years and are now documented in a mountain of solid empirical research. By now the President and his staff must be aware that the wage gap statistic has been demolished. This is not the first time the Washington Post has alerted the White House to the error. Why continue to use it? One possibility is that they have been taken in by the apologetics of groups like the National Organization for Women and the American Association of University Women. In its 2007 Behind the Pay Gap report, the AAUW admits that most of the gap in earnings is explained by choices. But this admission is qualified: “Women’s personal choices are similarly fraught with inequities,” says the AAUW. It speaks of women being “pigeonholed” into “pink-collar” jobs in health and education. According to NOW, powerful sexist stereotypes “steer” women and men “toward different education, training, and career paths.”

Have these groups noticed that American women are now among the most educated, autonomous, opportunity-rich women in history? Why not respect their choices? For the past few decades, untold millions of state and federal dollars have been devoted to recruiting young women into engineering and computer technology. It hasn’t worked. The percent of degrees awarded to women in fields like computer science and engineering has either stagnated or significantly decreased since 2000. (According to Department of Education data, in 2000, women earned 19 percent of engineering BA’s, and 28 percent in computer science; by 2011, only 17 percent of engineering degrees were awarded to females, and the percent of female computer science degrees had dropped to 18.) All evidence suggests that though young women have the talent for engineering and computer science, their interest tends to lie elsewhere. To say that these women remain helplessly in thrall to sexist stereotypes, and manipulated into life choices by forces beyond their control, is divorced from reality — and demeaning to boot. If a woman wants to be a teacher rather than a miner, or a veterinarian rather than a petroleum engineer, more power to her.

The White House should stop using women’s choices to construct a false claim about social inequality that is poisoning our gender debates. And if the President is truly persuaded that statistical pay disparities indicate invidious discrimination, then he should address the wage gap in his own backyard. Female staff at the White House earn 88 cents on the dollar compared to men. Is there a White House war on women?

February 1, 2014

Argentina’s economic end-game

Filed under: Americas, Economics — Tags: , , , , , — Nicholas @ 09:19

In Forbes, Ian Vasquez looks at the plight of the Argentine economy:

Argentina’s luck is finally starting to run out. It devalued its currency by 15 percent last week, marking the beginning of a possible economic crisis of the kind Argentina has become known for. Argentina’s problem is that it has followed the logic of populism for more than a decade and President Cristina Kirchner is showing no interest in changing course.

In the 1990s Argentina combined far-reaching but sometimes flawed market-reforms with irresponsible fiscal policies, culminating in its 2002 default on $81 billion in debt — the largest sovereign default in history. The country delinked its currency from the dollar, experienced a severe economic crisis, and initiated its current period of populist politics.

Those policies included price controls on domestic energy, reneging on contracts with foreign companies, export taxes, more pubic sector employment and vastly increased spending. When you don’t pay massive debts, you get temporary breathing room, so growth resumed. High commodity prices and low global interest rates that lifted demand for Argentine exports also helped produce Argentine growth.

But the government’s appetite has consistently grown faster, and, with little ability to borrow abroad, it has turned to other sources of finance. In 2008, Kirchner nationalized private pension funds worth some $30 billion, and has since nationalized an airline and a major oil company. As it drew down reserves, the government turned to printing money to finance itself, falsifying the inflation rate it says is about 11 percent, but which independent analysts put at about 28 percent. Economist Steve Hanke estimates it is much higher at 74 percent

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