Wednesday, December 31, 2014

The State Dept. is shocked!...shocked!...

To discover that our new best friend, the Cuban government, is oppressing its citizens;
We are deeply concerned about the latest reports of detentions and arrests by Cuban authorities of peaceful civil society members and activists, including Luis Quintana Rodriguez, Antonio Rodiles, Danilo Maldonado, Reinaldo Escobar, Marcelino Abreu Bonora and Eliecer Avila. We strongly condemn the Cuban government’s continued harassment and repeated use of arbitrary detention, at times with violence [our bold], to silence critics, disrupt peaceful assembly and freedom expression, and intimidate citizens.
Freedoms of expression and peaceful assembly are internationally recognized human rights, and the Cuban government’s lack of respect for these rights, as demonstrated by today’s detentions, is inconsistent with Hemispheric norms and commitments. We urge the Government of Cuba to end its practice of repressing these and other internationally protected freedoms and to respect the universal human rights of Cuban citizens.
We have always said we would continue to speak out about human rights, and as part of the process of normalization of diplomatic relations, the United States will continue to press the Cuban government to uphold its international obligations and to respect the rights of Cubans to peacefully assemble and express their ideas and opinions, just like their fellow members of civil society throughout the Americas are allowed to do.
Which speaking out will get the State Dept. exactly what it got the Eisenhower Administration in 1959, when they rushed to recognize (within a week of Castro's march into Havana) the revolution of Fidel Castro as the legitimate government of Cuba. Let's hope it doesn't get them what Gerald Ford and Henry Kissinger got when they started discussing normalization of relations in 1974--50,000 Cubans sent to Angola.  Or Jimmy Carter (the Mariel Boatlift when hardened Cuban criminals were outsourced to Florida). Or Bill Clinton ....

Behind the top down mind

With apologies to Bob Newhart. Who, in the early 1960s, used to do a routine called The African Movie, in which a Hollywood director attempts to get African villagers to cooperate in his latest Stewart-Granger-lost-in-the-Dark-Continent movie (Chief, ...Bwana, ... ... That's what it means? I thought it meant something like 'friend' ....). We thought of that when we read this Wall Street Journal interview with Obama Administration Labor Dept. official David Weil, who seems equally lost in Darkest Industry;
[Weil:] We see it a lot in the area of misclassification [of independent contractors]. The job descriptions and the duties and even the supervision don’t change, but the employer is simply finessing the definition. The implications of that [change in how a worker is categorized] are significant for a working person. Suddenly they lose benefits, access to overtime pay, vacation, and they’re responsible for the expenses related to their job. And the system loses tax revenue, both federal and state.
WSJ: As an academic, you coined the phrase “fissured workplace” to describe how companies are contracting out many aspects of their businesses, from back-office to customer-facing functions. You’re very critical of this shift. Why?
Mr. Weil: There’s nothing inherently wrong with companies finding ways to create flexibility. The capital markets [want companies to be] very focused on core competencies.
But the question of who is responsible for adherence to labor standards gets murkier and murkier. The more levels [of subcontractor firms] there are, the more people are taking a piece of the margins along the way, and the tighter the margins get. As you go lower and lower [down this chain], the bulk of the costs tend to be labor. So if margins are tight and labor is just about the only [flexible expense] you have to play with, that’s where violations are likely to occur.
Weil's operating with an early 20th century industrial mentality ... while it's now the early 21st. In the competitive pressure to produce a saleable product for consumers, employers and workers have to dodge and weave, improvise, around the academics and politicians who just can't realize that they're the problem.

Or, who don't want to admit it, since, as Paul Krugman used to be fond of saying, When your paycheck depends on 'not getting it', you won't.

Maybe Uber could transport the booze

Prohibition in Spain--via exorbitant taxation--defeated by the marketplace;
Operation Cactus was launched 18 months ago after Portuguese police contacted their Spanish counterparts for permission to wiretap a gang that was shipping alcohol into Spain illegally. Officers from both forces have spent months listening in to conversations between the gang on both sides of the border.
Orujos de Galicia, the denomination of origin that represents around 100 companies in the sector, has called on the Spanish government to set an example and end the trade in illegal alcohol. The organization’s president, José Antonio Feijóo, says that many well-known restaurants throughout Spain are serving contraband booze.
“You go to restaurants in Madrid, and they all have contacts in Galicia that send them home-made spirits. The authorities here are obliged to stop this. We have to be more aware of the dangers to the public.” So, next time you’re offered a chupito at the end of your meal, you might want to ask to see the label.
Or, say  'José sent me.'

Should have called Uber

The Seattle blind couple denied a ride by public transit would have been welcomed as just another profit opportunity;
Cindy Bennett and Michael Mello were trying to catch the bus on Capitol Hill on Sunday when they say the driver insisted they get off the bus and wait for the next one because no priority seats were available.
"He was making an assumption that the only seats we could sit in were those designated as ADA seats," Bennett said. "We felt that it was a pretty clear indication that we were not welcome on that bus."
"He started kind of getting louder and more irate with me and saying, 'the ADA section is full.' I said, 'that's fine. We can sit anywhere else on this bus. It's no problem,'" added Mello.
Maybe not for them, but the bus driver has his problems serving the public.

Tuesday, December 30, 2014

When carpooling is outlawed...

Only outlaws will carpool, say the taxi cab companies in Philly;
“Not since the days of bootlegging has there been a criminal enterprise so brazen and open as to attract hundreds of millions of dollars in investment from investment bankers and to operate in blatant violation of federal and state law as the Uber enterprise,” Checker Cab Philadelphia Inc. and other cab companies said in a federal court complaint on Dec. 23.
Oddly enough, that's likely correct. And the solution would be the same; repeal Prohibition.

Most Courageous Journalist Award of 2014

If there was one, it would have to go to the Wall Street Journal's Jason Riley for proving the H.L. Mencken was correct that the truth is ever a rock, hard and harsh, but solid under the feet.

Crying in the Rainier

Luise Rainier, dead at 104, after winning back to back Best Actress Oscars in the 1930s;
Rainer may well have sobbed herself to her first Oscar, playing actress Anna Held, wife of impresario Florenz Ziegfeld, in The Great Ziegfeld. The film featured a classic telephone scene during which Anna, tears running down her face, congratulates her now ex-husband on his marriage to another actress. Her next Oscar was for playing a virtuous Chinese peasant in the screen adaptation of Pearl S Buck's epic novel The Good Earth.
Suddenly Rainer [born in Vienna in 1910] - now nicknamed the "Viennese Teardrop" - was famous, her beauty and emotional intensity winning many fans. But stardom, she later said, did not bring happiness.
Years later, she recalled how she had just had a fight with her husband, American playwright Clifford Odets, when she got word that she had won her second Oscar. In those days, winners were announced hours before the ceremony began.
"I hadn't even dreamed of getting another Academy Award, and there I was unhappy in my private life and miserable," she told the AP in 1999. "I remember Odets drove me three times around the Biltmore, where the Oscars were given out, because I was so full of tears."
That, and being passed over for the part of Maria (Ingrid Bergman got the role) in For Whom the Bell Tolls. Since she wouldn't be saying the earth moved, she moved to New York with Odets to work on Broadway. Though she did manage to do a Love Boat episode, much later in her career.


Monday, December 29, 2014

A society of dunces

Young man from Iowa ain't buyin' Maggie Thatcher's line. He just plans on being anti-society;
Ryan Moon of Des Moines, Iowa, graduated from college in 2013 with a bachelor's in political science, and is still hunting for a permanent job with benefits. He expects to pay a fine of $95. A supporter of the health care law, he feels conflicted about its insurance mandate and fines.
"I hate the idea that you have to pay a penalty, but at the same time, it helps other people," said Moon, who's in his early 20s. "It really helps society, but society has to be forced to help society."
Presumably there were no requirements to take an economics course to get that PoliSci degree. If there had been, this might have been avoided;
In Des Moines, recent college graduate Moon has held a succession of temporary local and state government jobs that don't provide affordable coverage. The penalties are on his mind.
"When it gets up to $325, I hope I have a career that actually offers me a good health care plan," he said.
Maybe he can't get started in a career BECAUSE of society being forced to help society.

One down, two to go

Christmas in Bethlehem is a moveable feast;
Christmas comes but once a year - unless you live in Bethlehem, where three different Christian denominations celebrate on three different days.
Traditional, on the 25th of December. Then the Orthodox (using the Julian calendar) celebrate on what is, according the the Gregorian calender, January 7th. Followed by the Armenian Christmas on January 18.

All three make merry;
On each Christmas Eve, Bethlehem gives a warm welcome to church patriarchs and priests when they enter Manger Square.
And as waiting crowds of the faithful munch chocolate Santas and sip at sahlab - a hot Ottoman-era drink made from orchids - it's the marching bands that keep them entertained.
 Marching bands and Santa Claus, it's traditional, says one priest;
"This is the birthplace of Christ and we're the oldest congregation in the world. If we don't light our trees and hang decorations here, then we'll die out."

Saturday, December 27, 2014

Ring out the old Obamacare

Or perhaps, wring its neck, says The 2017 Project, and replace it with a better deal for the average bear.

For starters, level the playing field for people who don't get their health insurance through a tax free employer provided plan. Not by the politically foolish idea, supported by some, to repeal the tax exemption on that type of health insurance, but by offering tax credits to those who currently have to buy their health insurance with their post income tax money;
Using the tax credits recommended in this proposal, ...[people] could have purchased insurance through the individual market in any of the 50 states, either just by using the tax credit or else by supplementing it with no more than $15 of their own money....
By contrast;
Under Obamacare, the typical person who makes $40,000 a year cannot get health insurance for ten times that price. That bears repeating: he or she cannot get health insurance for ten times that price.
....the median amount that a 26-year old who makes $40,000 has to pay per month for Obamacare's cheapest "bronze" (lowest tier) is $159. ....the typical 36-year old has to pay $191 a month, the typical 46-year old has to pay $202 per month ....
Ring in the new.

Friday, December 26, 2014

Taking their lumps of coal

The minimum wage law tribe of increasers had a couple of disappointments this Xmas. Second (most recent) to deliver to the stockings were Michael Wither and Jeffrey Clemens--thanks to Russ Roberts--in November;
The Minimum Wage and the Great Recession: Evidence of Effects on the Employment and Income Trajectories of Low-Skilled Workers
By exploiting the fact that several states had their own minimum wages laws already above the 30% increase in the federal minimum of 2007-09 (from $5.15 to $7.25), and thus were immune to its effects, the two economists found;
...that [these federal] minimum wage increases reduced the national employment-to-population ratio by 0.7 percentage point between December 2006 and December 2012. ...this accounts for 14 percent of the national decline in the employment-to population ratio over this period.
The severity of the recession accounting for the balance. Even more ominous;
We also present evidence of the minimum wage’s effects on low-skilled workers’ economic mobility. We find that binding minimum wage increases significantly reduced the likelihood that low-skilled workers rose to what we characterize as lower middle class earnings. This curtailment of transitions into lower middle class earnings began to emerge roughly one year following initial declines in low wage employment. Reductions in upward mobility thus appear to follow reductions in access to opportunities for accumulating work experience.
I.e., if low skilled people can't get their first foot on the economic ladder...

Then there was, from February, Thomas MaCurdy of Stanford. He ceded, for the sake of argument, what we can call the Card-Krueger point that large disemployment effects aren't found in the wake of increases in minimum wage laws. We find that to be highly dubious, but, even if it were true, MaCurdy then asks, So, who pays the bills for the increase?

Almost everyone agrees that it isn't the owners of the businesses (through lower profits). Which leaves consumers, through higher prices. He looked at the redistributional, from rich to poor, effects from a 1996 increase. Concluding that that increase acted like a sales tax in its effects on consumer prices, a tax that is even more regressive than a typical state sales tax.

If advocates of raising the minimum wage are doing it to help the poor, they're tragically mistaken. Because about as many high income families--through having a minimum wage earner in the family--get the benefit of higher income, but low income families find that a larger share of their consumption is affected by the necessary higher prices that pay for those higher incomes.

MaCurdy finds that three in four low income families were net losers from the 1996 law.

Europe not by rail

Take the BlaBlaCar and leave the driving to the chauffeur...that's a French word!
“The model we have was to create a massive European footprint, and then a massive global footprint,” and later to make money from it, said Mr. Brusson, the company’s chief operating officer.
BlaBlaCar was originally called—simply the French word for “carpooling”—but its founders changed the name to BlaBlaCar to ease international expansion with a non-French brand they could own.
And Uber, Lyft and Sidecar were taken.
The name stems from the realization that in-car chattiness was an important part of the experience. The company requires users to create a profile describing their car and a series of personal characteristics such as tolerance to pets, smoking habits and the gift of the gab, from “Bla” to “BlaBla” to “BlaBlaBla.”
“Drivers’ profiles are usually very exhaustive so you can choose people you feel will be a good fit,” said Clément Gardette, 25, who regularly uses BlaBlaCar as a passenger and driver.
La discrimination, quelle horreur!
The startup has sought to walk a finer regulatory line than some of its peers. Because it keeps fees so low that drivers are sharing costs rather than making profit, the company argues it is quite different from a company like Uber, which also uses some nonprofessional drivers and bills itself as “ride-sharing.”
Well, in France you need some ingenuity to get around the regulations. Of course, this wouldn't be possible without the predictability of  l'etat;
BlaBlaCar’s ascent has come partly on the back of a deteriorating public-transport system across the continent. Europe’s prolonged economic stagnation is depriving many governments of the ability to maintain, let alone broaden, transport networks. France’s national audit office has urged the SNCF to stop building new high-speed tracks because many existing lines generate losses. Germany, known for its superfast trains, is struggling with aging fleets and tracks. In Portugal, the government recently had to shelve plans to build new bullet-train connections.

Wednesday, December 24, 2014

Elfin economists!

Laura (Birg) and Anna (Goeddeke), being naughty, have snuck away from the drudgery of the toy assembly line near the North Pole (Sweden) to eavesdrop on the discussion between Santa and his CEA (Christmas Economic Advisors);
After examining airfare and gasoline prices, the general price development is of interest for the CEA report. Therefore, as a next topic, Santa wants to discuss the price dynamics during the holidays. Some prices fall. Donner explains to Santa that price development during Christmas is easy to predict. The demand for presents and groceries is especially high during Christmas seasons. The supply and demand model predicts that demand shifts outwards and thus equilibrium price as well as quantity demanded increase.
Rudolph strongly disagrees. Donner’'s explanation is much too simplifi…ed and contradicts empirical evidence. Rudolph shares the …findings of Warner and Barsky (1995), showing that prices for a wide variety of consumer goods – from action fi…gures over bicycles to power tools and food processors – fall at demand peaks prior to Christmas. For groceries, MacDonald (2000) and Chevalier et al. (2003) show declining prices during the holiday period. Santa is stunned. What are the reasons for price decrease before Christmas? That seems to contradict everything he ever learned about economics. Rudolph shares his thoughts of the four possible reasons with the CEA...
Back to the workshop, Elves. Santa knows who's naughty and who's nice.

Coming tonight to our town

Tuesday, December 23, 2014

Save the rhinos!

By using the most powerful weapon at hand; pricing of their prized horns;
South African conservationist economist Michael't Sas-Rolfes....proposes legalizing the trade.
"The rationale is to bring the price down to a manageable level through constant, legal supply." A lower price, he argues, would provide less incentive for poachers to kill the rhinos. Right now, the poaching business is too profitable for poachers to stop.
It's like the cocaine business.
Another benefit of legalizing the trade would be the income that is created, which in turn could be used to protect the rhinos, says Sas-Rolfes. "It has become expensive to protect rhinos, and conservation organizations simply don't have sufficient funds to invest in the level of field protection that is needed to sustain the number of rhinos we have," he said.
Legalizing the trade would provide a legal, market solution that could work, Sas-Rolfes thinks.
But if your income depends on moralizing about endangered species, it might not work for you.
But any legalization of the trade won't happen fast. The body that decides on such trade is CITES, or the Convention on International Trade of Endangered Species - which has 180 member states. It banned international trade of rhino horn in 1977.
David Morgan, head of the CITES scientific unit, explains: "If there is to be any change in the existing situation, that has to be proposed by one of the member country of CITES at the next conference of parties in 2016.
And in order for any proposal to pass, it needs two-thirds of the present countries' votes. This can only happen if the South African CITES delegates can put forward a convincing proposal - which is by no means a sure thing.
Or buy off the special interests.

Cochrane's Keynesian Christmas gift

Via Scott Sumner's The Money Illusion, we re-gifting U of Chicago's John Cochrane's Christmas cheer;
By Keynesian logic, fraud is good; thieves have notoriously high marginal propensities to consume. That’s a hard sell, so stimulus is routinely dressed in “infrastructure” clothes. Clever. How can anyone who hit a pothole complain about infrastructure spending?
.... Stimulus advocates: Can you bring yourselves to say that the Keystone XL pipeline, LNG export terminals, nuclear power plants and dams are infrastructure? Can you bring yourselves to mention that the Environmental Protection Agency makes it nearly impossible to build anything in the U.S.? How can you assure us that infrastructure does not mean “crony boondoggle,” or high-speed trains to nowhere?
Now you like roads and bridges. Where were you during decades of opposition to every new road on grounds that they only encouraged suburban “sprawl”? ....
Keynesians tell us that “sticky wages” are the big underlying economic problem. But why do they just repeat this story to justify inflation and stimulus? Why do they not advocate policies to undo minimum wages, labor laws, occupational licenses and other regulations that make wages stickier?
Good questions to ponder (in our bold above) after an eggnog or two.

Monday, December 22, 2014

Was it only thirty years ago?

Our favorite Jesse Jackson-Fidel Castro moment came back in 1984. When Jackson orchestrated a release of political prisoners from Castro's prisons and, upon landing back in the USA, announced that,
''We made a moral offensive in the summer to stop a military offensive in the fall''
This was part of a plan to defeat Ronald Reagan's policy of challenging Castro's allies, the Sandinistas, who then controlled Nicaragua. Reagan wasn't as gullible as Barack Obama today;
Before leaving the Nicaraguan capital for Havana [to pick up the freed prisoners], Mr. Jackson said he would like to meet with President Reagan and Secretary of State George P. Shultz to discuss the results of his talks with President Castro.
''There are some rather definite things we must share with them from the meeting with Fidel Castro,'' he said. The White House spokesman, Larry Speakes, said that ''we don't see any urgency for such a meeting.'' The Justice Department said it intended to arrest some of the [freed] Americans [who were wanted for drug smuggling] as soon as they landed in the United States.
President Reagan, when asked last night what he thought of the return of the Americans to the United States said, ''I'm glad they're home.'' Asked if he would meet with Mr. Jackson to congratulate him, the President said: ''I don't have time to talk about things like that.''
Nor was he the only one to be suspicious of Jesse Jackson's motives. One of the Cubans spoke out;
Mr. [Vargas] Gomez was the only former prisoner to speak at the airport news conference. He took issue with Mr. Jackson's view of Mr. Castro.
''To go to Cuba to join in a moral offensive with Fidel Castro is more than morally offensive, it is a moral offense.''
Mr. Gomez said that one could not find ''humanitarianism in the Communists.''
Our bold above, to highlight what we think Barack Obama ought to keep in mind about what works with Cuba.

Best opening sentence of the past six years

By Xavier Vives of IESE, at;
The recent financial crisis has exposed the failures of regulation.
Not of de-regulation, we stress. Nor does he appear to be overly impressed with the re-regulation of Basel III. That that approach may prove problematic, because;
... there is a range of fundamentals of the investment portfolio of the bank for which the entity is solvent but illiquid. The intermediary faces a coordination failure that leads to fragility in the sense that a small change in the environment may move the equilibrium of the investors’ game from safe to unsafe.
Which is not exactly a news bulletin, but maybe regulators don't pay enough attention to, or fully appreciate, it.
 In an environment with weak balance sheets and market stress, bad news provided by a strong public signal may coordinate expectations on a run equilibrium.
This is what seems to have happened with the SIVs crisis in 2007.
Again, that's not new. SIVs are structured investment vehicles, i.e. non-banks . They earn their profits on credit spreads between long and short term securities.
The SIVs were mostly funded short term in the wholesale market, and investors had poor information when deciding whether to roll over their loans given the opaque nature of residential-based subprime securities.
Which were a tiny part of the mortgage business until the 1990s, when the federal govt decided to mount an assault on traditional home lending.
The introduction of the ABX index [of credit derivatives] in 2006 provided a potent public signal about the state of subprime mortgages, and when this index started to decline in early 2007 it eventually triggered a run on the SIVs.
And the ensuing financial crisis. Thanks to a failure on the part of the regulators;
With hindsight, and according to my analysis, the regulator should have tightened liquidity requirements when the ABX index was established. If properly calibrated, the liquidity requirement would have decreased the profitability of SIVs but avoided the run.
Which is why we said this is the best sentence we've read lately; The recent financial crisis has exposed the failures of regulation.  The most recent version (2013) of Vives's academic paper can be found here. Abstract;
We show how the balance sheet composition of a financial intermediary, precisions of public and private information, and market stress impinge on fragility through the degree of strategic complementarity of investors' strategies. We show how a solvency and a liquidity ratio are required to control the probabilities of insolvency and illiquidity: With more competition the solvency requirement has to be strengthened, and with higher fire sales penalties and more conservative fund managers the liquidity requirement has to be strengthened while the solvency one relaxed. Higher disclosure may aggravate fragility and require an increase in the liquidity ratio; the regulator should set together disclosure and prudential policy.

Sunday, December 21, 2014

Have yourself a merry little Christmas, Barack, but...

We who don't celebrate the colonial, imperialist, exploitative holiday, are sticking with Marx and Lenin;
Cuban President Raul Castro: ''We can't pretend that by improving ties with the Unites States, Cuba will renounce the ideas for which it has fought for more than a century''
...en la tierra, buena voluntad para los hombres.

Saturday, December 20, 2014

Obama-Yatsenyuk Divide

While Barack Obama declares unconditional surrender to the chief troublemaker of the Americas;
President Obama on Wednesday ordered the restoration of full diplomatic relations with Cuba and the opening of an embassy in Havana for the first time in more than a half-century as he vowed to “cut loose the shackles of the past” and sweep aside one of the last vestiges of the Cold War.
A new broom sweeps the Castro brothers out of power? We doubt it, but we are in no doubt that the Castros had a good laugh at el gringo's expense. They know they've won, and will die peacefully in their beds.  However, as usual, the NY Times puts the best face on Obama's humiliation;
The historic deal broke an enduring stalemate between two countries divided by just 90 miles of water but oceans of mistrust and hostility dating from the days of Theodore Roosevelt’s charge up San Juan Hill ...
Har, har, har. Releasing Cuba from its Spanish bonds in 1898 created mistrust and hostility! We assisted Cuba in its fight to be free of Spain (started in 1868), and that's the thanks the NY Times thinks we deserve.  Well, of course, there was a little unpleasantness later;
 ... and the nuclear brinkmanship of the Cuban missile crisis.

“We will end an outdated approach that for decades has failed to advance our interests, and instead we will begin to normalize relations between our two countries,” Mr. Obama said ....
 And anyway, history only begins with me; so let's move beyond a “rigid policy that is rooted in events that took place before most of us were born.”

Speak for yourself, son. We remember Cuban adventures in Angola, Mozambique, Eritrea, Algeria, Chile and ... Venezuela. Barack Obama may not be interested in geopolitical hardball, but the Castros still are.That outdated approach that...  has failed to advance our interests, probably looked a little more successful to all those South American countries who cut off diplomatic relations with Cuba, along with the USA, in the 1960s.  And survived the depredations of Fidel, Raul, Che and Manuel (Pineiro). I.e., Cuba failed to export its revolution to them, largely thanks to that outdated approach.

Something, it sounds like the new Prime Minister of Ukraine might appreciate as he struggles with his vestige of the Cold War;
[Arseniy] Yatsenyuk: The West's room for maneuver vis-a-vis Putin is limited. It is positive that the United States and the European Union show a great deal of unity. Putin did not expect that. He thought he could split the EU, but the opposite happened: The EU imposed sanctions and even scaled them up. Of course we need more financial and military aid, the supply of lethal weapons is of crucial importance to us.
SPIEGEL: NATO stated clearly that there's no military solution to the conflict. But you seem to think differently.
Yatsenyuk: A military solution would not be the best. My aim is not to start a new offensive against Russian soldiers, but to deter Russia from further aggression. The thing is that the EU is always playing by the rules. Putin is always playing with the rules.
As are the Castro brothers. And they just got Barack Obama's cooperation, which will strengthen the hand of whomever takes their place (soon). South Americans in countries like Venezuela, Bolivia, Ecuador will take note of that.

Friday, December 19, 2014

Spy who was brought in from the Cold War

Quietly, and a quarter century after it ended. While the press was busy hearing Alan Gross--if Cuba's medical care is so good, how did he lose all those teeth while confined on Fidel's island paradise?--say how he supported President Obama, the real hero slipped into the United States to be debriefed;
He was, in many ways, a perfect spy — a man so important to Cuba’s intelligence apparatus that the information he gave to the Central Intelligence Agency paid dividends long after Cuban authorities arrested him and threw him in prison for nearly two decades.
Rolando Sarraff Trujillo has now been released from prison and flown out of Cuba as part of the swap for three Cuban spies imprisoned in the United States that President Obama announced Wednesday.
Apparently he wasn't executed, as most traitors to the Castro cause have been, because his parents were both high officials in the Cuban government. We eagerly await the memoir.

Shucks and darn!

You know that Washington's Governor Jay Inslee just hates that this is necessary, but...
Gov. Jay Inslee wants more money for schools, mental-health treatment, state worker salaries and more in a two-year budget that would spend 15 percent more than the last one.
He wants to finance it mainly with a tax on high income from capital gains and a charge on large emitters of greenhouse gases — two years after he ran for governor on a no-new-taxes pledge.
“I have hoped to avoid this route. I have tried to avoid this route. But we now have an obligation to our children,” he said of his reversal, adding that he had tried to raise revenue by closing tax exemptions but the Legislature has failed to “muster the gusto” to close about $500 million worth of loopholes the past two years.
Then there is the little problem that Bill Gates II (pere) failed, in 2010, to pass an initiative that would have instituted an income tax on high earning Washingtonians. An ex-football player, Gov. Inslee must appreciate the end-run made around that failure this fall, by first getting voters to support an initiative calling for downsizing class sizes in public schools...without saying how the state would come up with the funds to hire more teachers to enable it.

Spend first, tax later! Those devils made him do it.

Read more here:

AHIP; No hurray for Cromnibus

Elise Viebeck reports in The Hill that the health insurance industry has had its apple cart upended by Republicans;
America's Health Insurance Plans (AHIP) blasted legislation changing ObamaCare's "risk corridors" program and predicted that it would raise healthcare costs for families.
"American budgets are already strained by healthcare costs, and this change will lead to higher premiums for consumers and make it more difficult to achieve affordability," said Clare Krusing, AHIP spokeswoman.
What, you ask, are risk corridors?
Risk corridors, a commonly used tool in public policy, were included in the healthcare law to spread risk among insurance companies participating in the new health insurance exchanges.

Firms that do better than expected in 2014, 2015 and 2016 pay the government, and firms that do worse than excepted can receive those funds.
Which funds were to come from where, if more insurers do worse than expected? The American taxpayers through the backdoor. But, according to the Dept of Health and Human Services, the law just passed ends that possibility.

Bunker mentality

At the Washington Center for Equitable Growth, Nick Bunker tells us;
The clear winner for the most cited mathematical formula of 2014 is Thomas Piketty’s famous inequality: r > g. The relationship concisely summarizes the argument at the heart of his “Capital in the Twenty-First Century”— the difference between the return on capital and the growth rate of the overall economy is a powerful force for economic divergence.
We beg to differ. Because r > g isn't a formula at all. And when it's followed by a prediction about income inequality (i.e., economic divergence), it's a non-sequitur.
r is a price--the price an entrepreneur needs to pay to use other people's money to bring his idea to fruition--it's not a rate of growth. g on the other hand, is the opposite; a growth rate (of GDP), not a price. So, when Nick Bunker follows with;
In the months since the book was published in English, economists and others have fought about the Paris School of Economics professor’s relationship.
One of the reasons for the intensity of this debate is that Piketty’s argument doesn’t seem to mesh with widely cited models of economic growth.
He's simply missing the point about why Piketty's argument doesn't seem to mesh. It's because comparing two dissimilar things makes no sense. Even when you can pin a number, expressed as a percentage, on those two different things.

Bunker goes on to cite a new paper;
A new National Bureau of Economic Research working paper [by Charles I. Jones, Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality] argues that the relationship between r and g can be best understood in the context of the Pareto distribution.The distribution is named after Vilfredo Pareto, an Italian economist who wrote about the unequal distribution of land.
So we'll cite one we think makes a lot more sense, by Deirdre McCloskey; Measured, Unmeasured, Mismeasured, and Unjustified Pessimism: A Review Essay of Thomas Piketty's Capital in the Twentieth Century. In which the interested reader will find a 55 page, detailed, explanation of what we said above.

Thursday, December 18, 2014

Smile for me, Argentina

La hermana grande will be nagging you from now on;
Argentinean President Cristina Kirchner announced on Monday that her speeches will be mandated for airing on prime-time national television. The measure, she claimed on December 15, will help disseminate important information that would otherwise be disregarded by the media.
What's so important that Argentines have to miss their telenovelas?
Kirchner used her first televised address to announce a new public dental plan dubbed Argentina Sonríe (Smile Argentina). The project envisions free treatment and the extended use of mobile clinics. She further announced grants of AR$387 million (roughly US$30 million) for schools nationwide.
Which took her 20 minutes.

Bon anniversaire

It's been a decade since French communists discovered the benefits of capitalism, and allowed the private sector to build a bridge. And what a bridge the Millau viaduct is;

As Wiki put it;
The bridge's construction cost up to €394 million...with a toll plaza 6 km (3.7 mi) north of the viaduct costing an additional €20 million. The builders, Eiffage, financed the construction in return for a concession to collect the tolls for 75 years, until 2080. However, if the concession yields high revenues, the French government can assume control of the bridge as early as 2044.

ONE of France's most impressive modern architectural achievements, the Millau viaduct, is celebrating its 10th birthday this week.

Inaugurated by then French president Jacques Chirac on December 14 2004, the tallest bridge in the world carries almost five million vehicles a year over the Tarn river in Aveyron and is due to welcome its 50 millionth by next summer. - See more at:

They'll make it up on volume

What's a little corruption among comrades;
...the Kremlin has introduced a bill to decrease fines for small-scale graft — because nobody pays them anyway, a presidential envoy said.
....The initiative apparently stems from the lackluster performance of the anti-corruption measure. Only between 15 and 20 percent of fines imposed over lesser bribes are actually paid, presidential envoy Garri Minkh said earlier in comments carried by the TASS news agency.
....Russia ranked 136th out of 175 countries in Transparency International's latest annual Corruption Perceptions Index, which was unveiled earlier this month. The watchdog estimated losses from corruption at $300 billion in 2009, the latest year for which statistics are available.

Wednesday, December 17, 2014

Maple syrup socialism

A spoonful helps you take your medicine, just ask Bernie Sanders;
I applaud the president for beginning discussions to establish full diplomatic relations with Cuba, just like most of the rest of the world. This is a major step forward in ending the 55-year Cold War with Cuba. Normal diplomatic relations would mean not only that Americans have the opportunity to visit Cuba, but businesses in Vermont and elsewhere can sell products there.
Since Cubans have so much dinero just sitting around collecting dust.

Once upon a time, in Ecuador

There was buen vivir (literally, to live good)...and a ministry to enforce it. Which naturally appeals to the Morning Star (The Peoples Daily);
The constitution of Ecuador is based on plentiful living and it comes from an indigenous Kichwa concept, a form of socialism that the Incas practised, “Sumak Kawsay.”
.... The conclusion they came to is that the meaning of life is to be happy or at least as happy as we can be.
As defined by the government of Ecuador, not those nasty, poor, brutish, short Ecuadorans themselves;
Beforehand we had struggles focused on better pay and conditions, but if people were successful they became consumerists. People went from poverty to consumerism, which is worse for the world than poverty. You can get out of poverty — but it’s hard to escape from consumerism. Very few people leave consumerism. This is the theory that we work with in the Ministry of Plentiful Living. 
Too much consuming, as the Minister decides, is bad, so;
We are creating small units in every area of government to consider and aim for happiness in everything we do. This is our aim.
If we build a road or an airport, we need to ask if it will make people more happy or not.
We are following the example of Bhutan. We are changing from measuring the Gross Domestic Product of the country, which is purely economic, to measuring the Gross Domestic Happiness of the country.
And if any Ecuadorans would rather have food, clothing and shelter, screw 'em.We're going to make them happy...or else.

The left hand of Obama needs to meet his right

Barack Obama trades three Cuban spies for one American communications specialist (without even getting a minor league outfielder thrown in);
“This morning, Alan Gross left Cuba in a US government plane headed for the United States,” a senior government official told the press on Wednesday. Gross was serving a 15-year sentence for, according to the Cuban authorities, “violating Cuban law, by implementing a subversive program financed by the United States government, via the establishment of illegal and covert communications, with the use of non-commercial technology.” He was freed for “humanitarian reasons on the request of the US,” added the same source, without giving further details.
Such a horse trader! Meanwhile, Cuba's great good friendly nation Venezuela is whining, ¿Y nosotros?
The Bolivarian Alliance for the Peoples of Our America (ALBA) marked its 10th anniversary in Havana over the weekend in nostalgic mood. At its 13th summit, the group reminisced over important moments in its history – Fidel Castro and Hugo Chávez signing the agreement that created the forum in 2004, as well as the 20th anniversary of the first meeting between the two men in 1994, back when the late Venezuelan president was a lieutenant colonel who had just been released from military prison and the Cuban leader seemed like the last Mohican of socialism on a planet wrapped up in a neoliberal frenzy.
Back when the made of sterner stuff Bill Clinton was POTUS. Now;
Included on the event program, as well as in its 40-point final declaration, were expressions of solidarity with the administration of Venezuelan President Nicolás Maduro and condemnation aimed at the United States, where lawmakers are pushing for sanctions against some Venezuelan civil servants and military officials. On December 10, both houses of the United States Congress passed the Venezuela Defense of Human Rights and Civil Society Act of 2014, a bill sponsored by the Republicans. The measure will allow authorities to seize the properties and freeze the assets of 56 Venezuelan officials who participated in efforts to repress demonstrations that took place in several cities throughout the country in February 2014. The law, which will also allow the American government to deport those individuals and revoke their visas, awaits the president’s signature.
Maduro, who co-chaired the ALBA summit with Raúl Castro, has mobilized all available diplomatic resources to respond to those potential US sanctions and use them to stir up patriotic indignation. He has called a massive demonstration for Monday along Caracas’s Avenida Bolívar to protest against Washington’s “interventionist” stance.

Tuesday, December 16, 2014

Hungarian family values

Include being closed on Sunday, unless you're friends with the ruling politicians;
Hungary’s Fidesz-KDNP controlled parliament passed a law on Monday requiring most shops to remain closed on Sundays.  The law was sponsored by the Christian Democratic People’s Party (KDNP) [because of, the necessity to prevent retailors from overworking their employees, as well as to “keep Sundays a family event.”].  ... electronic, specialized and convenience stores whose floor area exceeds 400 square meters are to remain closed on Sundays.   Sundays in December are exempt from the law.  Affected store owners may choose one additional Sunday each year to remain open.
The law does not apply to pharmacies, airport and train station shops, gas stations, or stadium buffets.  Or major Fidesz supporters, like CBA, a Hungarian owned chain of grocery store, few of which are situated in shopping malls and all of which are under 400 sqm.
[Our bold above]

Don't just stand there like Piketty

Do something to help the would-be entrepreneurs, says Swiss Re Americas' CEO J. Eric Smith (as told to Stephanie K. Jones);
Underserved populations and market niches are ripe with potential for insurance innovators who are willing to take on the challenge of creating opportunities in areas that may seem unprofitable at first glance, says the chief executive of the Americas unit for one of the world’s largest reinsurance companies. And the ability to reach those markets digitally is key.
No one is more needy than the poor.
In Colombia, the economy has been in a growing at a steady pace for the past 10 years. The big global insurance companies have recognized the potential and now that the political and regulatory environment is enabling them to expand their offerings there, local insurance enterprises are being threatened, Smith said.
Oh, the politicians have to cooperate. Bummer.
One of Swiss Re’s clients, a Colombian insurer, decided it had to come up with a new approach to capturing and keeping its share of the market. The company’s CEO looked at segments of the market that were being underserved and realized that with Colombia’s booming economy there are “thousands and thousands and thousands of small businesses that have never had insurance,” Smith said.
That CEO decided he could market small business packages to these new entrepreneurs through digital channels, through their smart devices.
Smart devices. Very smart. Lesson for America;
Micro insurance and microfinance play an important role in high growth and developing world markets and they are areas in which Swiss Re is involved today, Smith said.
“But I also think [they are] going to play a bigger role in our market here in the U.S.,” he added.
Why? Because there are many young people that are unemployed in this country and big companies are not going to be creating all the jobs that are needed.
“A lot of these young people that are unemployed today, they’re going to have to create their own jobs. They’re going to have to become entrepreneurs and they’re going to have to figure out something and they’re going to have to go out and do it,” Smith said.
As they do in...Haiti!
“One thing that’s going to work for them is they’re going to have to get micro loans. … And what we’ve learned is that you can combine a micro insurance policy with a micro loan,” he said.
One place the combination is working well is in Haiti, where Swiss Re has partnered with the micro lending organization, Fonkoze.
“Most of those entrepreneurs in Haiti are women. It’s almost all women – they’re the doers. They’re the creative ones; they’re the entrepreneurs; they’re the ones making things happen. But they are terribly, terribly exposed to floods, winds, droughts, all sorts of things,” Smith said.
So the private sector insures them. If the government lets them.

Success is not poisoning your customers

SF Gate reports that the man who brought Mexican cuisine to the attention of middle America has passed away;
Larry J. Cano, the founder of the El Torito restaurant chain who helped popularize guacamole, fajitas and margaritas with the U.S. masses, has died at age 90.
.... Cano, who served as a fighter pilot during World War II, took over a closed-down Polynesian restaurant in Los Angeles in 1954 and turned it into the first El Torito.
Find an appetite, and fill it;
He served a mild version of Mexican food that was friendly to mid-century American tastes at a time when there was a burgeoning hunger for the cuisine. Cano said a more authentic cuisine might have scared off many American diners when he was starting out.
"You have to do what you have to do," he told the OC Weekly newspaper in 2011. "It would be ridiculous to have spicy food for the first time someone tries Mexican food and kill them."
RIP (burp).

Monday, December 15, 2014

Brain drain in Spanish mainly from the Venezuelan

So the Vice President of Venezuela, Jorge Arreaza, at an international conference uses Castro-Stalinspeak to hint at things to come, that news, right?

Anyone heard about fuga de cerebos?
“Queremos poner una alerta sobre la movilidad, porque la hemos sufrido. En Venezuela no solo sufrimos la fuga de cerebros (...), también sufrimos el robo de cerebros”, aseguró Arreaza.
Explicó que Venezuela formó a esos talentos con recursos públicos y los preparó en el extranjero “con divisas del pueblo venezolano, y luego se quedaron en el exterior”.
Por ello, reclamó que “cualquier estrategia de movilidad de estudiantes, de investigadores, de profesores” esté “muy bien regulada para que efectivamente vayan esos profesionales donde de verdad haya la necesidad y no se queden amparados en ese tipo de desarrollo de otros países en otras partes del mundo”.
Loosely translated using rudimentary Spanish, we'd say that Venezuela is about to announce that anyone educated in Venezuela, or even outside the country, owes the Maduro government.

In other words, there'll be no free agents. Everyone belongs to the state. The way it was in East Germany in happier times.

I'll be down to get you in un taxi, mon chéri.

Because next year vous won't be able to summon your preferred method of riding;
... [French] taxi drivers' wider lobbying efforts against rideshare apps appear to have succeeded. Pierre-Henry Brandet, a spokesperson for the French Ministry of the Interior, was asked Monday on a French TV station, iTélé, whether rideshare apps would be banned in the near future.

"Absolutely," Brandet said. "Not only is it illegal to offer this service, but it's a real danger for consumers."
Besides we still owe the taxi drivers for ferrying soldiers out to meet the Hun in 1914;
Gen. Joseph Gallieni, the military governor of Paris who concocted the plan, ordered the taxis to gather on a grassy esplanade in front of the gold-domed Invalides military museum, which honors war victims and is the burial site of Napoleon Bonaparte. The commute to battle through the Paris environs must have been quite a sight: A rumbling caravan of hand-cranked red cars with bright yellow spokes packed a half-dozen soldiers behind primly-dressed drivers.
In that day, a motorcade was as much a technological innovation as unmanned drones might be considered in conflicts today.
France intends to keep technological innovation to a minimum.

Got Thousand Year Reich in a box?

Not a WWII era joke played on pharmacies by boys over the telephone, but why doesn't Uruguay let it out?
A battle still goes on 75 years later.
This time, however, the matter in dispute is not the control of the South Atlantic but rather a controversial four-tonne bronze eagle that could fetch millions of dollars at auction.
The spread eagle with a swastika under its talons was recovered off the coast of Uruguay in 2006 by private investors.
That's right, a private citizen, using his own--or his investors'--money, recovered it from the seabed, but it's now under control of the Uruguayan government. Sitting in a large wooden box in a warehouse in Montevideo for the last nine years.
It was part of the stern of the Graf Spee, which was once one of the most modern battleships in the world.
The cruiser was scuttled by its captain in Montevideo Bay soon after the Battle of the River Plate. The captain had feared that if captured, the British would steal information about its state-of-the-art technology.
Now the Germans worry that Uruguay will sell it to someone who reveres Adolf Hitler, so it sitzt. If it's such a big deal for modern day Germany, why don't they buy it and destroy it?

Celebrate Decent Jobs Week

Instead of cursing the darkness, as Morning Star is wont to do;
TUC general secretary Frances O’Grady said: “The growth of zero-hours contracts, along with other forms of precarious employment, is one of the main reasons why working people have seen their living standards worsen significantly in recent years.
“It is shocking that so many workers employed on these kinds of contracts are on poverty pay and miss out on things that most of us take for granted, like sick pay.”
She warned that Britain will continue to have a two-tier workforce where many are stuck in in-work poverty if the government does not create more well-paid jobs with regular hours.
For the Yanks reading the above italicized (by HSIB) term, it simply means labour working without any requirement on the employers' part that they provide any guaranteed number of hours to the workers. AKA, employment at will, in the rest of the civilized world.

It has passed over the heads of the editors of Morning Star (what's new) that that arrangement might be the only reason these workers have any employment opportunities at all, given their level of productivity--or the condition of the economy as a whole. I.e. it has raised the employment level of the UK.

So, light one candle, to read some Paul Krugman;

In Praise of Cheap Labor

Bad jobs at bad wages are better than no jobs at all.

As an added bonus

Not only do federal government employees not have to worry about job loss, they can read the NBER's papers for free;
After accounting for worker characteristics, during both recessionary and non-recessionary periods, the probability of job loss is higher for private sector workers than for public sector workers at all levels of government. ....the advantage of public sector employment in terms of job loss rates generally increased during recessions for all groups of public sector workers.
Thus ... public sector jobs, while not generally recession-proof, do offer more security than private sector jobs, and the advantage widens during recessions. These patterns are present across genders, races, and educational groups.

.... You may purchase this paper on-line in .pdf format from ($5) for electronic delivery. ....
You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name....

Sunday, December 14, 2014

Snow White on rent control

This part of her 5 hours of interviews opens with the story of how she and her new husband, Gower Champion, found out that the true price will out. In this case, they could rent an apartment in 1947 in NYC under 'wartime emergency' rent controls, but to get the key they had to pony up $1,000 (over $10,000 in 2014 money). We always say that economics is where you find it.

Earlier parts of her interviews explain how, as the daughter of Hollywood's most prestigious dance instructor she'd helped her father train Cyd Charisse, Gwen Verdon, Rita Hayworth and Shirley Temple. Then, her father being friends with (Uncle) Walt Disney, she was chosen to dance the story of Snow White for Disney's illustrators, who afterwards 'traced' her movements to produce the animated classic;

Marge Belcher, as she was born, also 'modeled' a character in Pinocchio and the hippopotamus in Fantasia. That the Disney artists 'traced' her movements wasn't revealed to her--Uncle Walt didn't want that fact known--until decades later when one of those illustrators, upon meeting her in person for the first time, said that he was so glad to finally meet the girl he'd spent so many hours tracing.

Saturday, December 13, 2014


Now that she's part of the problem, that is, according to McKinsey Global Institute;
Obesity is now a critical global issue. More than 2.1 billion people – nearly 30% of the global population – are overweight or obese today .... That’s nearly two and a half times the number of adults and children who are undernourished. Obesity is responsible for about 5% of deaths worldwide. Simon Stevens, chief executive of the National Health Service England, warned in September that “we are sleepwalking into the worst public health emergency for at least three decades.”
Thomas Piketty, call your office.
This was once a problem of relatively prosperous developed economies but, as incomes rise in the emerging world, the problem is spreading. Today, around 60% of the world’s obese people are in developing countries.
Naturally that calls for more money being spent to get people to eat less.
So what needs to be done? By reviewing around 500 obesity-reduction research trials around the world, MGI has identified 74 interventions to address obesity in 18 areas. These include subsidised school meals for all ...
Of course, the answer to obesity should be more food.
...calorie and nutrition labelling, restrictions on advertising of high-calorie food and drinks, and public health campaigns. There were sufficient data on 44 of these to be able to measure potential impact if scaled up to a national level.
Or go back to the good old days when governments created famines?

Remember when

It was not only cool, but noble to carpool? Encouraged by the political authorities in almost every state. As this law from New York puts it;
HOV lanes have been widely implemented in the United States since the 1970's in an effort to better manage highway capacity. If well used, an HOV lane can carry many more passengers than a general purpose land because the average number of occupants per vehicle in the HOV lane is higher. 
Nowadays (now that feelthy capitalists got involved in it) not so much, it seems;
Companies that allow drivers to use personal vehicles to transport riders in New Jersey would have to get a state permit and meet safety requirements under state legislation that’s been advanced by a New Jersey Assembly panel.
The New Jersey Assembly’s Transportation Committee approved legislation Thursday that calls for ridesharing companies like Uber and Lyft to get a permit from the Motor Vehicle Commission.
It's okay to be an upright, fossil fuel conservin' long as you're not making any money in the process?

Friday, December 12, 2014

... that taxi-in' town

Billy Sunday must have advised that, if you can't shut it down, join it;
Chicago has opened a new front in the war on ridesharing services like Uber, approving a plan to sponsor an app for riders to hail local cabs.
Usual suspects round-up;
The Chicago move also represents a political push from the American Federation of State, County, and Municipal Employees (AFSCME), a union which has organized drivers in two cities so far.
More than half of Chicago’s 7,000 active cabbies have joined AFSCME since June. In New Orleans, the second U.S. city where AFSCME has organized taxi drivers, more than 800 drivers have signed up, which represents more than half of the city’s fleet.
The Chicago Way; get the bumper under the tent;
Cheryl Miller, a Chicago taxi driver for 20 years, says the rideshare issue was key to making drivers organize this year. She says the app might serve to increase her customer base, but she says the more pressing issue is increased regulation and accountability of Uber drivers.
Bold by you know who.

Strictly, from Hungary

Journalists might step in the goulash if the head man gets his way (and he seems to) these days;
Prime Minister Viktor Orban, who has vowed to remake Hungary into a “non-liberal” state, now wants mandatory drug testing for journalists and politicians.
A member of his ruling Fidesz party earlier had suggested mandatory annual drug tests for 12 to 18-year-olds, but that plan has apparently been dropped. Critics see the latest announcement as an attempt by Orban to combat a drop in popularity and say it will be impossible to implement.
Or he could just sue the bastards;
The head of Hungary’s tax authority [Ildiko Vida] on Thursday sued a senior American diplomat in Budapest for libel after the envoy said the U.S. had knowledge of corruption at the tax office.
A little thing like diplomatic immunity, notwithstanding.
Vida is the only one of six otherwise unnamed public officials to have admitted having been banned from entering the U.S. because of corruption allegations. She has denied any wrongdoing.
Prime Minister Viktor Orban said Monday he would fire Vida unless she sued Goodfriend or if the corruption allegations were proven to be true.
When the Prime Minister in Hungary says jump....