EU farming subsidy reform

Good to see at least some progress made on abolishing the Common Agricultural Policy subsidies, AKA “let’s destroy the developing world’s ability to feed itself”.

Under this reform the size of the subsidy stays the same (£31 billion a year) but the size of each payment is now decoupled from quantity produced. This should check excess production and the environmental and social damage it caused.

A better explanation can be found here.

[/economics] posted at 23:19 #

John Kay

Financial Times columnist John Kay has some great articles on his site including, but by no means limited to…

Bayesian probability and the law:

Thomas Bayes, an 18th-century Nonconformist clergyman, discovered that his game of billiards was improved by an understanding of contingent probabilities - the likelihood that an event will occur if some other event has already occurred.

The demise of economics:

Back in the 1960s, when I decided to take up the subject, economists were living in a golden age. The world economy had experienced two decades of unprecedented growth and stability. It seemed that Keynesian policies could cure unemployment and control the business cycle.

[/economics] posted at 15:51 #

The Phone Co-op

One of my Grandfathers believed in the The Co-operative Group and worked for them for many years. He also worked for British Telecom. When they were privatised he refused on principle to take any of the shares options he was entitled to.

He would have been pleased to see The Phone Co-op.

Marketing appears to only work on a profit motivated basis though.

[/economics] posted at 12:09 #

US current account deficit

This piece about the current account deficit has been all over the blogosphere recently. It’s position reminded me of one of the things this guy/crank has been saying for years.

The idea that imperialism has a tendency to financially overstretch is comforting, and has historic precedence, but I don’t have the economic understanding to know whether it is correct as presented.

The Economist has this which gives a slightly more credible correction scenario.

[/economics] posted at 09:49 #

Britain and the Euro

An economists view on the arguments for and against Britain joining the Euro. Brad Delong has interesting commentary and pointers.

[/economics] posted at 21:35 #

Iraqi Debt Write Off

Here’s a good idea from an Economist article about Iraqi debt. Writing off the debt of deposed dictatorships will discourage lending to active ones.

Some economists, such as Michael Kremer of Harvard University, argue that, after a change of regime, a country’s new government should have no legal obligation to service the “odious debt” of an illegitimate predecessor, an idea dating back to the Spanish-American war of 1898. In theory, establishing the right of a country to write off odious debt would have potentially huge benefits, not least by discouraging banks from lending to nasty governments that might one day be overthrown. Indeed, says Mr Kremer, setting out precise rules for what counts as an “odious regime”, and thereby making it harder for such regimes to borrow, may be a better form of economic sanction than the traditional approach of obstructing trade. Restrictions on trade hurt ordinary people, whereas making it harder to borrow hurts the baddies in charge more directly.

However:

As Harold James, another Princeton economist, has argued, this could destabilise the global credit markets by making creditors fearful that other countries might one day describe their debt as odious. It is not hard to imagine circumstances in which, say, a newly democratic China might try to shed the external debt “$170 billion at the end of 2001” of the “odious” undemocratic regime it replaced.

Still, in the UK, memories of the dodgy arms deals bailed out by the ECGD make me hope it could work.

[/economics] posted at 06:23 #

EasyCinema

EasyJet’s Stelios Haji-Ioannou pushes his yield management techniques into the cinema industry:

It’s a novel system because it depends on the price incentive. At the moment, there is no incentive to book early; it’s entirely untested. But if you make it blatantly obvious that people who book early will pay much less, that can only be attractive. Commit now and it’s 20p. Come back in a week’s time and it’s a pound. Turn up on the evening of the show and it will be five pounds.

And runs into the MPAA (or their UK lapdogs):

I’ve promised them that I will remove the risk to their revenue by paying them a lump sum, somewhere between a few hundred and a few thousand pounds, to screen their releases; that way they get paid even if I turn out to be incompetent. But they’re not budging; they believe that when their $200m blockbuster can be seen for 20p, it cheapens the product.

… it may transpire that what they are doing is illegal. They can’t tell me how much to charge the customers.

This kind of pricing scheme can be taken a long way. How far depends on how people can adapt to it, not on the technology underpinning it.

[/economics] posted at 15:01 #

You can take my money but you can’t take my grades

Sometimes D-Squared is good:

If there was a revolution tomorrow then my binman would presumably still be in his old job, but Warren Buffet would be looking at a seriously reduced standard of living. So Warren Buffet ought to pay more than my binman for the cause of keeping the proles contented.

And sometimes he’s awesome:

I suspect that the class would agree to some sort of progressivity in the redistribution schedule, but not as much as they might suggest for the marginal rate of income tax. The difference between the answers would be a useful quantitative measure of exactly how hypocritical left-wing students are, a question that I suspect a lot of us would be mildly interested in.

[/economics] posted at 11:16 #

Cuba was part of the developed world in 1957

Brad DeLong offers excellent counterpoints to those who have (economically - at least) tried to give Castro some credit.

The hideously depressing thing is that Cuba under Battista—Cuba in 1957—was a developed country. Cuba in 1957 had lower infant mortality than France, Belgium, West Germany, Israel, Japan, Austria, Italy, Spain, and Portugal. Cuba in 1957 had doctors and nurses: as many doctors and nurses per capita as the Netherlands, and more than Britain or Finland. Cuba in 1957 had as many vehicles per capita as Uruguay, Italy, or Portugal. Cuba in 1957 had 45 TVs per 1000 people—fifth highest in the world. Cuba today has fewer telephones per capita than it had TVs in 1957.

You take a look at the standard Human Development Indicator variables—GDP per capita, infant mortality, education—and you try to throw together an HDI for Cuba in the late 1950s, and you come out in the range of Japan, Ireland, Italy, Spain, Israel. Today? Today the UN puts Cuba’s HDI in the range of Lithuania, Trinidad, and Mexico. (And Carmelo Mesa-Lago thinks the UN’s calculations are seriously flawed: that Cuba’s right HDI peers today are places like China, Tunisia, Iran, and South Africa.)

[/economics] posted at 10:55 #

Amazon.com actually very healthy

Damn, while I was waiting for them to die, Bezos was doing a really good job sorting them out.

[/economics] posted at 09:33 #

New Zealand Leads the Way

We all know farm subsidies are a disgrace, but how many knew that New Zealand has almost none.

The buycott idea espoused in the Spectator link above is also a good one. Although it possibly conflicts with my scheme to buy from poor EU countries, the plan being that it will reduce their subsidies in the long-term. Maybe I have been thinking backwards…

via samizdata

[/economics] posted at 10:17 #