“The game of thrones in general is a game of cronyism because it’s all about forming political alliances, especially with people who can make you better off economically speaking,” says Auburn University Economics Instructor Matthew McCaffrey.
McCaffrey has recently written about the economics involved in the popular Game of Thrones novels by George R.R. Martin as well as the HBO series based on the books. He sat down with ReasonTV’s Tracy Oppenheimer to discuss the various economic concepts that develop alongside the character-driven plot line, such as sin taxes, coin clipping, and the ever-present cost of borrowing.
According to McCaffrey, Martin extensively researches historical economic systems to make “the Realm” as plausible as possible.
“As part of his process he ends up uncovering a lot of historical details that usually get lost in a fantasy book of this kind,” says McCaffrey, “just practical difficulties of running a kingdom, how public finance works, how the game of thrones corrupts the people who play it and how it ends disastrously for the people who don’t play it well.”
May 31, 2013
Reason.tv: What Game of Thrones teaches about crony capitalism
March 2, 2013
February 23, 2013
February 21, 2013
February 18, 2013
February 5, 2013
Ontario facing fiscal crisis that is worse than California’s
In the Financial Post, Jason Clemens and Niels Veldhuis look at the under-reported fiscal problems Ontario has to deal with … and soon:
‘I do not want Ontario to become like California,” Ontario Finance Minister Dwight Duncan once proclaimed. And it’s not hard to understand why — California is a fiscal nightmare. It has the lowest bond rating in the United States and its own treasurer, Bill Lockyer, referred to the state budget as “a fiscal train wreck.”
Yet, despite all that is said about California’s finances in the media and financial markets, Ontario is in much worse shape.
Back in 2002-03, the fiscal year before the governing Liberals took office, Ontario’s net debt (assets minus liabilities) stood at $132.6-billion. In the ensuing decade, the province’s debt ballooned by almost 78% to $235.6-billion (2011-12). Most worrying, however, is that if Ontario continues on its current path (status quo in terms of spending and revenues), its debt will balloon to over $550-billion (66% of GDP) by the end of the decade (2019-20).
[. . .]
On a per-person basis, Ontario’s bonded debt (the concept of net debt is not used in U.S. public accounting) currently stands at nearly $18,000, over four-and-a-half times that of California at $3,800. As a share of the economy, Ontario’s debt (38.6%) is more than five times that of the Golden State (7.7% of GDP). This is a stunning difference in the burden of debt, particularly given the attention and concern focused on California compared with Ontario.
While the two jurisdictions face similar average interest rates for their debt, the large difference in the stock of the debt means equally large differences in interest costs. Specifically, Ontario spends almost double what California does on interest costs in dollar terms and a little over three times what California spends as a share of the revenues collected, 8.9% compared to 2.8% of revenues. This is money that could have been spent on health care, education, public safety.
February 4, 2013
Argentina’s real inflation rate is a state secret
Argentina has lots of issues, but one of the biggest problems is that their official statistics fall somewhere along the spectrum between “a bout of wishful thinking” and “a tissue of lies”:
Argentina, the only country in the world that threatens private economists with jail terms for disputing the government’s obviously bogus inflation numbers, is now the only country in the world to be censured by the IMF for unacceptably bad economic statistics. In a rare move by the 24 member board of the world’s most prestigious financial institution, Argentina’s government was censured for failing to improve the quality of the numbers it uses to calculate things like GDP and, especially, the inflation rate.
The current president’s husband fired the professional economists in the statistical office in 2007. Ever since, the patent bogosity of Argentina’s statistics has undermined the government’s credibility at home and abroad. Inflation is a deadly sensitive subject in Argentina, where past bouts of hyperinflation have wiped out the savings of whole generations. Currently the government claims inflation is no higher than 11 percent; when the thought police aren’t watching them, private economists whisper that the real rate is more than 25.
This isn’t a new story: The Economist stopped using the official figures in their weekly economic summaries about a year ago. Argentina’s economic policies have become a valuable primer on “what not to do” for other countries. Argentina could be a South American version of Canada, but the political class ensures that will not happen.
January 31, 2013
January 30, 2013
Sequestration cuts must be more likely to happen because the sob stories are getting traction
Tad Dehaven thinks the upsurge in horror stories about what sequestration will do to the US economy means it’s more likely that those cuts will actually take place:
The odds that $85 billion in “unthinkable, draconian” sequestration spending cuts will go into effect in March as scheduled are looking better. The odds must be getting better because, as if on cue, the horror stories have commenced.
A perfect example is an article in the Washington Post that details the angst and suffering being experienced by federal bureaucrats and other taxpayer dependents over the mere possibility that the “drastic” cuts will occur. You see, the uncertainty surrounding the issue has forced government employees to draw up contingency plans. Contingency plans? Oh, the humanity!
[. . .]
I certainly believe that Washington’s bouncing from one manufactured fiscal crisis to the next is detrimental to the economy, but my sympathy lies with the private sector – not the federal bureaucracy. It’s the private sector that has been suffering under the constant uncertainty surrounding federal tax and regulatory policy. And let’s not forget that there is no public sector without the private sector – the former existing entirely at the latter’s expense.
Yet, what follows in the Post article is boo-hoo after boo-hoo without the slightest regard to those who are paying for it or whether the whiner’s agency could use some belt-tightening
January 27, 2013
Reason.tv: Two Cheers for the Coming Collapse of the U.S. Economy!
“At some point, holders of Treasury securities are going to recognize that these unfunded liabilities are going to affect the fiscal capabilities of the government and then you’re going to have the same situation that happened in Greece happening in the U.S.,” says Jeffrey Rogers Hummel, who is a professor of economics at San Jose State University and the author of a recent paper on the consequences of a U.S. government default. “In the short run it’s going to be painful, but in the long run it’ll be a good thing.”
Reason‘s Nick Gillespie sat down with Hummel at FreedomFest 2012 for a wide-ranging discussion on monetary policy, business cycle theory, the longevity of the welfare state, and why libertarians who rail against the Fed are like “generals fighting the last war.”
Held each July in Las Vegas, FreedomFest is attended by around 2,000 limited-government enthusiasts and libertarians a year. Reason TV spoke with over two dozen speakers and attendees.
January 16, 2013
January 15, 2013
“You kids are screwed”
Feeling optimistic about the future? Bryan Goldberg is here to slap that silly optimistic grin off your face:
Hey kids, you’ve all read “The Hunger Games,” right? Almost all young people have read the best-selling books or seen the Hollywood movie about Katniss Everdeen, a smart and ambitious young lady whose life prospects are diminished by historical events that predate her. What little hope she has is seemingly reduced to nil when a bunch of old people drop her into an arena and force her to fight with her fellow children in a battle royale to the death.
But that’s just fiction, right? Your loving parents and grandparents would never screw up their world and then throw you kids under the bus…or would they?
Actually, they already have.
Last week, the economics blog Calculated Risk ran a chart that tells a pretty compelling story. To an economist, this chart means that the magnitude and duration of the 2007 recession’s impact on unemployment outpaces that of any prior post-war recession. To young people, it simply means this…
You kids are screwed.
In fact, teenagers today probably aren’t old enough to remember the “Dot Bomb” recession of twelve years ago. But even at its peak, that really bad recession did not reach a level of unemployment that matched the one we are still currently experiencing. With the Federal Reserve losing its appetite for quantitative easing, the last bullet in their holster, and both political parties deciding to half-ass the fiscal policy debate, it’s safe to say that…
You kids are really screwed.
Pay careful attention to Lesson No. 4: it’s even more important than you think it is.
H/T to Jon, my former virtual landlord, for the link.
January 13, 2013
January 9, 2013
Why stop at a mere trillion dollars?
Zero Hedge on the trillion dollar platinum coin nonsense:
A year ago, out of nowhere, the grotesque suggestion to “resolve” the US debt ceiling with a platinum dollar coin came, and like a bad dream, mercifully disappeared even as the debt ceiling negotiations dragged until the last minute, without this idea being remotely considered for implementation, for one simple reason: it is sheer political, monetary and financial lunacy. And yet there are those, supposedly intelligent people, who one year later, continue dragging this ridiculous farce, as a cheap parlor trick which is nothing but a transparent attempt for media trolling and exposure, which only distracts from America’s unsustainable spending problem and does nothing to address the real crisis the US welfare state finds itself in. And while numerous respected people have taken the time to explain the stupidity of the trillion dollar coin, few have done so as an integral part of the statist mainstream for one simple reason — it might provide a loophole opportunity, however tiny, to perpetuate the broken American model even for a day or two, if “everyone is in on it.” Luckily, that is no longer the case and as even Ethan Harris from Bank of America (a firm that would be significantly impaired if America was forced to suddenly live within its means), the whole idea is nothing more than “the latest bad idea” straight “from the land of fiscal make believe.” We can only hope that this finally puts this whole farce to bed.
[. . .]
Taking these sorts of actions would almost certainly worsen, not ease, the coming battles over the spending — a second reason to be skeptical of the idea of the trillion dollar coin. As we have noted before, the debt ceiling is just one of three brinkmanship moments looming in the next few months. The across-the-board spending cuts that constitute the sequester have only been delayed for two months, and absent new legislation, will start in March. Even more troubling, on March 27 the latest continuing resolution ends and, absent new legislation, all nonessential government programs would have to shut down for lack of funding.
Third, throwing the trillion dollar coin into this mix would not only intensify these two other fights, it would likely poison the well even further in future budget negotiations. With split government, fiscal policy making requires bipartisan agreement. The cliff compromise earned support from both parties, marking a welcome — if brief — respite from partisan politics. The last thing Washington needs is a further escalation in gamesmanship.
Finally, there is a slippery slope from avoiding the debt limit to outright debt monetization. Although proponents see it as a technical fix to a problem that, in their view, never should occur, it means the Treasury would have established a precedent to thwart Congressional limitations on spending and the debt ceiling.
Outside of the legal questions, nothing precludes the Treasury from issuing a coin to pay down the full $16.4 trillion in debt in one fell swoop: true monetization. A trillion dollar coin also would subvert the whole budget process, undermining already fragile public confidence and spooking financial markets. And based on the criteria put forth by the rating agencies, it would represent a stunning failure to devise credible political processes to resolve the longer-term budget issues for the US. A downgrade would very likely follow, in our view.
