Gringos in China

A semi-distant cousin of mine is currently teaching English in China for the year, to young children. Like many on study- and teach-abroad trips, she is keeping a blog, and on that blog, she sometimes says things that bewilder me.

On recent demolitions near her bus route to school:

I met a university student from Belgium who was interviewing villagers who had moved to Nanjing. A few of those villagers lived in housing that was going to be demolished by the government and who would then move to a new apartment (which was paid for by the government). The few people that she interviewed were happy to be moving to a new apartment since it would be more modern- indoor plumbing. But the sense of community is vastly different in an apartment complex. More time spent inside, less socializing, etc.

So. People who live in high-income times and places spend a lot more time at leisure, because they don’t have to work as much to earn a living. That they spend less time outside to “wash clothes, wash their hair, brush their teeth, etc” is a good thing.  Continue reading

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Greece should leave the Euro

Just a quick note, inspired by reading this and this from the Economist. Here is the unemployment rate in Greece from 1976-2011 (the blue line is an annual series and the red line is a more recent series calculated in slightly different ways, hence the slight divergence):

wtf this is terrible.

More recent updates suggest that the unemployment rate in Greece is higher than it was in the US in the depths of the Great Depression. The world was largely on a gold standard system of fixed exchange rates (much like Greece, Germany, and the rest of the Euro-zone are on a fixed currency), and as countries left the gold standard, they tended to experience an immediate and large increase in production and employment. While the pain of leaving the Euro would surely be great, currently 1/4 of Greeks who would like to have a job, do not have one and cannot find one. That pain is real, immediate, severe, ongoing, and palliable. This outcome is a terrible outcome, one of the worst outcomes* and–in the absence of my preferred currency arrangement–leaving the Euro is the only answer for Greece.

*One of the worst outcomes short of global war, the last of which broke out in response to, amongst other things, 23% unemployment.

Women’s Health, Texas-Style

From the NY Times:

Texas enacted a similar tiered system and also sliced its two-year family planning budget from $111 million to $38 million, cuts that the nonpartisan state Legislative Budget Board estimated would eliminate services for nearly 284,000 women, lead to 20,500 additional births and cost Medicaid about $230 million. The board had recommended expanding family planning as a way of saving money. Now, the Medicaid-financed Women’s Health Program is in jeopardy.

Texas signed regulations prohibiting clinics affiliated with groups that provide abortions from receiving funds, even though the clinics do not perform abortions themselves. The federal government says excluding qualified providers in this way is illegal, requiring it to withhold $35 million — about 90 percent of the program’s financing — if the regulations, which take effect on Wednesday, are not rescinded. That would effectively end the program, increasing the number of women without services to about 400,000.

Texas–home of low taxes and small government–has finally found a cause that it’s willing to raise spending for. Sadly, they are only willing to raise spending if it means that poor women are less able to access healthcare–not more able, like a sane place, or even a place that wanted to balance the budget. This cutting off one’s nose to spite someone else’s face.

On Gentrification

Just a quick followup about a point that Matthew Yglesias has been making lately: the best way to make housing affordable is to make a lot of it.

I wanted to relate this to gentrification. There is, quite reasonably, a lot of concern about the negative impacts of gentrification, and (relatedly) a push in lots of places for local governments to establish more affordable housing for folks with low income. Alternatively, we could ignore all of that, and go the other direction: overpower the NIMBYs and allow developers to build skyscraping apartment buildings in the richest parts of cities. Continue reading

Thoughts on Governance

Here’s my opinion on governance in the US: it is not sufficiently democratic, it is not usefully republican (in the political philosophy sense of republicanism), and it is inappropriately federal. The US senate apportions political power according to arbitrary lines, resulting in enormous iniquity of representation. Individual members of congress have enough power to single-handedly delay the functioning of our government–even when the bills thus delayed have overwhelming bipartisan support. Major cities are hampered by state lines that bisect these cities, limiting their ability to provide public services and infrastructure to their citizens. On the other hand, small neighborhoods can defect from their broader cities and institute exclusionist policies that harm nearby residents–regardless of the dependence such neighborhoods always have on the broader cities to which they belong.

One fantasy solution would be to redraw state boundaries, maybe like this:

Continue reading

Modern Macroeconomics

I wrote this comment  in response to a question here about modern macroeconomics, where someone asked if “Seriously??”, many basic macroeconomic models ignore inequality:

Seriously! But with a couple of caveats.

First, there are a number of other important questions that can be partially (and usefully) answered while ignoring the unequal distribution of wealth within an economy, and focusing instead on the behavior of averages. In comparing GDP across countries, these models predict that places with higher investment in physical and human capital will have higher GDP; these basic models do a fairly good job of describing GDP–even though they ignore important inequality within these countries.  That’s an old example, but there are many others within macro that don’t have an obvious need to include inequality in order to get at many aspects of their respective problems.

And second, a number of models do incorporate inequality in a variety of ways. Many New Keynesian models (like those used by Christina Romer, Ben Bernanke, Greg Mankiw, and other current/recent government economist bigwigs) have initial equality, but have inequality after the fact: some portion of people end up unemployed (usually at random) and worse off than they could be, and that sort of thing. These unemployed people are worse off than they otherwise would be, and these models frequently imply that the government has a role in helping them (cf the stimulus!)….

Continue reading