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LQD from Rocky Mountain Institute

by paul spencer Wed Feb 12th, 2014 at 01:44:48 AM EST

Most of my experience with these folks finds them to be quite sane and often just enough ahead of conventional wisdom to help to shape it. This article is eurocentric, so I'm very curious as to y'all's critiques.

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Propaganda works

by Cyrille Sun Feb 9th, 2014 at 04:59:31 AM EST

As I recently wrote about, we are once again hearing calls for selling, well,everything public. And a French nominally (yes, already only nominally) socialist president is announcing a major turn rightwards -economically, that is- despite being at the helm of a country that has been performing markedly better than tenants of Aust(e)rian orthodoxy, such as the Netherlands or Finland.

And, you know what: he's getting praise for it.

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Autumn on the Arlberg railway

by DoDo Wed Feb 5th, 2014 at 02:54:56 AM EST

The westernmost state of Vorarlberg is separated from the rest of Austria by the water divide between the Rhine and the Inn (and thus Danube) rivers. Since 1884, a single railway provides connection across the mountains, with steep approaches to a summit tunnel over 10 km in length under the Arlberg Pass. On my two holidays in Switzerland in the summer and autumn of last year, I also stopped here. Beyond steep climbs with spectacular bridges in spectacular landscape and an eventful history, the line is notable for an arrested development: a modern double-track mainline in some parts and a single-track line with sharp curves in other parts.

The end of an eastbound (descending) railjet atop the Trisanna viaduct below castle Wiesberg (the tip is visible on the left) and above a 110-year-old hydroelectric power plant restored after massive floods damaged it in 2005

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The Morality Of Taxation

by afew Sun Feb 2nd, 2014 at 09:28:34 AM EST

From Frances Coppola on Pieria:

Laffer and the Yeti

we need a serious discussion about the morality of taxation. While the rich believe they are morally entitled to low tax rates, they will continue to avoid higher rates by taking advantage of the global mobility of capital and the fact that tax arbitrage is a survival strategy for small countries. For higher tax rates to be economically effective, therefore, the moral case for them must be so clearly made that the rich themselves buy into it because they cannot in conscience do otherwise.

Can this be done? How?

Comments >> (70 comments)

Old and new in Austria

by DoDo Sun Jan 26th, 2014 at 05:15:09 AM EST

On my way to and from the Gotthard railway last summer, I went through Austria. I got to see a lot of recent developments up-close: new lines with semi-high-speed traffic, open-access competition, the fruits of stimulus spending, and a recently refurbished narrow-gauge mountain railway.

100-year-old narrow-gauge electric locomotive 1099.14 with its train of heritage cars stands ready in Mariazell for the return journey to St. Pölten

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Lincoln's team of rivals

by DoDo Wed Jan 22nd, 2014 at 03:23:48 AM EST

Ever since I read a glowing review of Steven Spielberg's Lincoln (which I still haven't seen), I longed to read its main basis: Doris Kearns Goodwin's book Team of Rivals: The Political Genius of Abraham Lincoln. This biography used the novel approach to put the personal histories of the main contestants in the 1860 Republican Party presidential nomination race side by side, to show how and why Lincoln rose above all of his rivals.

I finally got to read the book during the holidays. It is a difficult read, with over 750 pages even without footnotes (it takes 250 pages just to get to Lincoln's nomination on the Republican ticket), and the author's style is at times annoying (frequent reproductions of insubstantial praise for personal qualities, descriptions of the vanity festival that was Washington social life, the first-person plural focus on an American-only audience and the need to 'excuse' Lincoln's weak religiosity), but I highly recommend it for the broad and detailed view of the age and its issues. There is also some modern relevance in relation to centrist politics. I thought I share some of the insights I came away with.

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When a refutation is anything but

by Cyrille Mon Jan 20th, 2014 at 12:19:58 PM EST

For decades, many academics and pundits have pronounced that the 70s conclusively proved that Keynes had been completely wrong, and that it proved that Friedman had been completely right.

You see, there was a recession, and it should have created deflation, except if inflation was actually determined by expectations based on previous experience, in which case it would not be brought down by depression. Friedman went on to state that "inflation is always and everywhere a monetary phenomenon" which, if you think twice about it, is the most laughable statement.
And to this day, I keep reading articles, even by professors of economics in the UK, saying that the episode of inflation over 2% in the UK in the early years of the current Government is a clear indication that any stimulus would have had little to no effect, being swallowed by inflation.

That's what happens when you start believing that your model matters more than reality.

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Transatlantic Trade and Investment Partnership

by A swedish kind of death Thu Jan 16th, 2014 at 01:27:47 AM EST

The EU informs us that the Transatlantic Trade and Investment Partnership that is presently being negotiated under much secrecy will have positive results.

Transatlantic Trade and Investment Partnership (TTIP) - Trade - European Commission

Independent research shows that TTIP could boost:
  • the EU's economy by €120 billion;
  • the US economy by €90 billion;
  • the rest of the world by €100 billion

That should be, according to Dean Baker:

Research by a pro-deal think tank shows that TTIP could in the best case scenario boost:

  • the EU's economy by €120 billion;
  • the US economy by €90 billion;
  • the rest of the world by €100 billion
in the year 2027, in 2027 euros. However it also shows that the more likely scenario is about 50 USD per person and year.

The US-EU trade deal: don't buy the hype | Dean Baker | Comment is free | theguardian.com

As growth policy, this trade deal doesn't pass the laugh test, but that doesn't mean that it may not be very important to a number of special interests and, for this reason, bad news for most of the public. Since conventional barriers to trade between the US and EU are already very low, the focus of the deal will be on non-conventional barriers, meaning various regulatory practices.

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A two-speed model country …

by Colman Tue Jan 14th, 2014 at 07:07:06 AM EST

Fintan O'Toole lays out the Irish situation for Americans and other aliens:

For conservatives, in particular, Ireland is the Tyra Banks of nations: a model country. The only problem is that they can’t quite decide what Ireland is a model of.

For a long time, when Ireland was booming, it was the perfect face of light regulation and low taxes. (With impeccably bad timing, Senator John McCain cited Ireland’s low corporate taxes as a model for the United States in his presidential election debates with Senator Barack Obama in 2008 - just as Ireland was sliding into crisis.) Now, with Ireland tentatively emerging from its long slump, it is being cited as the great exemplar of the virtues of austerity.

As the German finance minister, Wolfgang Schäuble, a fiscal hawk, put it in October: “Ireland did what Ireland had to do. And now everything is fine.” Ireland was a success story when it was partying wildly and it is a success story when it is the Grim Reaper of international economics. Binge or purge, we can do no wrong.

We Irish are eternal optimists, but Mr Schäuble’s belief that everything is fine is a rare example of a German outdoing us in irrational exuberance. It is certainly true that, if you were to walk around the rebuilt Dublin docklands, with their shiny European headquarter offices for Google, Twitter, Facebook and Yahoo, and their slick cafes and hotels, you might conclude that if this is what an Irish crisis looks like, an Irish boom must be quite something to behold.(Irish Times)

It's sort of fun that the commentariat are picking up on the diverging economies with Ireland that I've been muttering about for a while: the economy that's linked to the outside world is doing just nicely. The domestic economy is screwed. Shocking, isn't it? Who could have expected that?

Comments >> (3 comments)

Hungary and the perils of 'upward mobility'

by car05 Tue Jan 7th, 2014 at 09:51:05 AM EST

Some time in the middle of last year, political theorist József Böröcz wrote a blog post regarding the direction of Hungarian society, and it was pretty powerful stuff.

 Arguably, Hungary is showing some powerful symptoms of a fascist transformation. Special thanks for that to the elites--both the right wing and the middle (there is of course no "left" visible in politics in Hungary)--that managed the transformation from a somewhat bureaucratic and perhaps a bit boring, upwardly mobile state socialist society, producing, at its peak, food for twice its population, with better-than-expected scores on the quality of life, culture, health, etc., engaged, at the time of the collapse of state socialism, in bold and extremely creative experimentation in many areas of social and economic life to a small, insignificant, desperate, self-hating, xenophobic, classist, racist, sexist, ageist snake pit with widening social inequalities.

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The horse race is on! (with poll)

by Migeru Thu Jan 2nd, 2014 at 10:42:13 AM EST

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LQD: French Intellectual Melancholia

by das monde Mon Dec 30th, 2013 at 05:16:35 AM EST

The Economist has a provoking article in the Christmas issue on French noir moods. It should stir some discussion here.

ONE of the most perplexing questions of the early 21st century is this: how can the French, who invented joie de vivre, the three-tier cheese trolley and Dior's jaunty New Look, be so resolutely miserable? [...] polls suggest that the French are more depressed than Ugandans or Uzbekistanis, and more pessimistic about their country's future than Albanians or Iraqis ....

[...] Le Monde ran three pages under the title "Liberté, Égalité, Morosité", in a bid to decode its fellow countrymen's "persistent melancholy". France, it turns out, has the highest suicide rate in western Europe after Belgium and Switzerland. An American psychiatric study showed that, among ten rich countries, the French were the most likely to have a "major depressive episode" at some point in their life. Even the French language seems to be particularly well stocked -- morosité, tristesse, malheur, chagrin, malaise, ennui, mélancolie, anomie, désespoir -- with negativity.

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Transformation of an economy

by Frank Schnittger Fri Dec 27th, 2013 at 03:09:50 AM EST

Since 2007 the number of people employed in the Irish economy who do not have a secondary education qualification has reduced by 50%. The numbers of people employed who do have only a secondary educational qualification has reduced by 20%.  But the numbers of people employed with a tertiary educational qualification has increased by 12%.

Many will view this as confirmation that Ireland is being transformed into a knowledge based economy. Another way of looking at it is that the working class in Ireland has been devastated by the recession, whereas the middle class has (relatively speaking) prospered.

There are many factors at play here: The devastation of the Irish construction sector since 2007; the rise in participation rates in tertiary education; and the growth of the mostly foreign owned multinational companies in the ICT, pharmaceutical and services sectors.

Many employees who did not have a third level qualification in 2007 will have retired from the workforce or have achieved a third level qualification since. Most of the new entrants into the workforce since 2007 will have had a much higher level of education than previous cohorts, and some of these will have come from a working class background.

However the educational system is still overwhelmingly the mechanism by which the middle class can propagate itself:

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Citizen ET in Lithuania - EYCA Conference (1)

by Bjinse Fri Dec 20th, 2013 at 04:14:52 AM EST

So let's unpack this step by step.

The EYCA Policy Recommendations for improving EU citizenship form the end product of the European Year of Citizens Alliance (EYCA). They were presented to the European Commission last Friday, December 13. The EYCA was formed, as previously explored, in 2011 through the bundling of 'civil society organisations' and the liaison of the European Economic and Social Committee, a consulting body for the EU. The over 60 members of the EYCA represent numerous national and internationally active organisations. The initiative itself was started, and funded, by the European Commission with the aim to "foster citizens' participation in the democratic life of the European Union".

Thus, an exercise initiated by the European Commission, through an alliance funded by the European Commission, resulting in a report predominantly written by NGOs under the auspices of the EU-funded umbrella organisation.

The word missing in this summary is, of course, citizens.

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Happy Bailoutmas

by Colman Fri Dec 13th, 2013 at 09:56:23 AM EST

Ireland officially leaves the EU/IMF bailout today, heralding a new era of irish sovereignty and so on and forth … (The Irish Timeshave a mini-site if you really want a flavour of the bullshit being spewed here.)

So far, the highlight is Noonan saying "We can't go mad again", followed by talk about tax cuts (for the sake of jobs and growth, naturally), the sale of the semi-State gas company and only 2 billion in cuts in the next budget. I'm feeling saner already.

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LQD: A Way Out of Austerity

by ARGeezer Mon Dec 9th, 2013 at 11:16:36 AM EST

How to Exit Austerity, Without Exiting the Euro  Rob Parenteau  New Economic Perspecitves

First of all, if a government stops having its own currency, it doesn't just give up `control over monetary policy'...If a government does not have its own central bank on which it can draw cheques freely, its expenditures can be financed only by borrowing in the open market, in competition with businesses, and this may prove excessively expensive or even impossible, particularly under `conditions of extreme urgency'...The danger then is that the budgetary restraint to which governments are individually committed will impart a disinflationary bias that locks Europe as a whole into a depression it is powerless to lift.

So wrote the late Wynne Godley in his August 1997 Observer article, "Curried Emu". The design flaws in the euro were, in fact, that evident even before the launch - at least to those economists willing to take the career risk of employing heterodox economic analysis. Wynne's early and prescient diagnosis may have come closest to identifying the ultimate flaw in the design of the eurozone - a near theological conviction that relative price adjustments in unfettered markets are a sufficiently strong force to drive economies back onto full employment growth paths.

Rob Parenteau notes that countries caught in the deflationary vise brought about by the EMU and the associated policies would face a high cost for exiting the Euro and proposes an alternative.
(Corrected name for Syriza leader)

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Nelson Mandela RIP

by Frank Schnittger Fri Dec 6th, 2013 at 02:09:57 AM EST

I first became aware of Nelson Mandela in a personal way, when, as a 17 year old undergraduate student, I came in contact with South Africans who had been banned by the Apartheid regime for their political activities and who were now campaigning for an end to Apartheid throughout Europe.

Basil Moore, author of an anthology of Black Theology which included a contribution from Steve Biko had been banned for campaigning against Apartheid in his role as General Secretary of the South African University Christian Movement.  He lived under house arrest, his neighbours hung and strung up the the family pet from a lamp post outside their home, and he eventually escaped by sneaking across the border into Zimbabwe. Eva Strauss was banned for marrying a black man (and also perhaps for her outspoken political and feminist views). Colin Winter, Bishop-in-exile of Namibia had been deported for his opposition to Apartheid in Namibia and support for striking migrant workers.

All spoke with a moving personal touch. Politics was no longer some remote political struggle thousands of miles away. It wasn't just a cerebral and ideological battle: It was about how you lived your own life; it was also about the struggle against racism here at home. It was about the structures of international capitalism which made Apartheid possible, and which could also be part of its downfall.

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The long run... US agriculture and immigration

by Metatone Thu Dec 5th, 2013 at 10:44:38 AM EST

A few hopeful signs that this period we live in, where a large pool of labour has entered the world economy and as a by-product put "capital" in an incredibly strong position can come to an end:

Farmers Face Labor Shortages As Workers Find Other Jobs

FRESNO, Calif. -- With the harvest in full swing on the West Coast, farmers in California and other states say they can't find enough people to pick high value crops such as grapes, peppers, apples and pears.

In some cases, workers have walked off fields in the middle of harvest, lured by offers of better pay or easier work elsewhere.

The shortage and competition for workers means labor expenses have climbed, harvests are getting delayed and less fruit and vegetable products are being picked, prompting some growers to say their income is suffering. Experts say, however, the shortage is not expected to affect prices for consumers.

But farmworkers, whose incomes are some of the lowest in the nation, have benefited, their wages jumping in California to $2 to $3 over the $8 hourly minimum wage and even more for those working piece rate.

The shortage - driven by a struggling U.S. economy, more jobs in Mexico, and bigger hurdles to illegal border crossings - has led some farmers to offer unusual incentives: they're buying meals for their workers, paying for transportation to and from fields, even giving bonuses to those who stay for the whole season.

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Prudent financial management

by Colman Mon Dec 2nd, 2013 at 05:06:57 AM EST

German politician Peer Steinbrück – one of the fiercest critics of Ireland’s tax regime – used Irish letter box companies when finance minister to try to balance the German budget through financial engineering.

Mr Steinbrück – an unsuccessful candidate in the recent German election – and his Social Democratic Party (SPD) have been particularly vocal critics of Ireland’s tax laws.

He used the recent election campaign to attack failed finance market alchemy and condemn “tax oases” such as Ireland and the Netherlands. According to this morning’s Der Spiegel magazine, Berlin began doing business in Ireland to tap into pension funds of Germany’s post office, which was privatised and broken up in 1995 into three companies for telecoms, post and post office bank. (Irish Times)

I believe the declension here is: I manage my finances prudently, you engage in tax optimisation, he is a tax cheat.

This is, of course, pretty much the same sort of financial engineering as Italy and Greece engaged in to hide bits of their deficits.

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Prominent French economist says Germany should leave the euro

by afew Thu Nov 28th, 2013 at 02:42:20 AM EST

In a memo that we saw here, French bank Natixis' chief economist Patrick Artus, a well-known pundit on French media, describes Germany as a misfit in the single currency area, and outlines the macroeconomic case for D-exit.

This is a quick rundown of his points. The memo, in French, pdf, is here.

With the disclaimer that other fields than macroeconomics may be involved, Artus offers the following reasons for Germany to leave the euro:

  • asymmetry of cycles between Germany and Rest of Euro Zone (ROEZ)
  • weakening economic links between Germany and ROEZ
  • structural asymmetries between Germany and ROEZ
  • different foreign exchange needs between Germany and ROEZ
  • impossibility for ROEZ countries to carry out internal devaluations

Cycles: absence of asymmetrical cycles is a condition for a shared currency. But GDP growth and the unemployment rate show strong asymmetry:

(Real GDP, annual change in %)

(Unemployment rate)

The asymmetry stems from structural differences (see further down), and differences in how credit supports demand:

(Credit to households and business, annual change in %)

The result of this asymmetry is that common monetary policy is not adapted to the whole of the Euro area. Between 2002 and 2007, it was too restrictive for Germany, too expansionist for ROEX; since then, it has been the reverse:

(Repo rate and nominal GDP)

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