Saturday, December 22, 2012

GDP to the rescue?

Brad DeLong sends us (without comment) to Nicholas Oulton in defense of GDP as a measure of welfare.

On Oulton's piece, the LIMEW data are really interesting. I haven't thought about those data and maybe someone who knows them well would have an objection to the way they're used here, but I don't see a way that Oulton's point is obviously wrong.
I think he's on shakier ground with his critique of the idea that GDP growth doesn't make people happier.

"First, if people care mainly about their relative position, why has there been so much fuss about the financial crisis? After all, for most people in the UK, the drop in income has been (on this view) trivially small, no more than 8% – and at least initially, it fell disproportionately on the rich."

That's trivially easy. The same sorts of surveys report that people care not only about their position relative to others, but the change in their own position over time. If everyone goes down 8%, then nobody's worse off relative to anyone else, but everyone is worse off relative to their 2007 selves.

Thursday, December 20, 2012

What's money worth to you?

Brad DeLong has a fun post, on one level inside baseball, but with some more accessible macro content. On the surface he's disagreeing with Noah Smith over Smith's disagreement with DeLong's assessment that the state of macro is wrong. But DeLong's way of making his case is to pile up instances of Stephen Williamson writing things that, to me, look pretty silly.

Among the wreckage is a passage from Williamson about bubbles, in which he mentions that "Money, for example, is a pure bubble, as its fundamental [value] is zero." DeLong is justified in taking this down, but I think he makes an interesting error along the way.

Williamson starts by talking about how you would determine if something were a bubble: you figure out the fundamental value of an asset, based on its future payoffs, then look at the current market price of the asset; if there's space between the market price and the fundamental value, you've got a bubble. And at the end, he throws in his line about money's fundamental value being zero.

The essence of DeLong's reply is that money certainly does have value, because of what it is "a substitute for trust":

Tuesday, December 18, 2012

The Czech-Ukrainian connection

The website of the Czech newspaper Lidové noviny (The people’s news) has an arresting headline: Another Ukrainian politician has fled to the Czech Republic seeking asylum.
Ukrainian former opposition legislator with an ultranationalist past Andrij Shkil, facing criminal prosecution, has fled from Ukraine to the Czech Republic, where he may apply for political asylum.

Because he didn’t get enough votes for a legislative seat in this year’s elections, he has lost his immunity and, for the first time in ten years, Ukrainian authorities may prosecute him.
It’s a sticky issue for the Czech government. They’re no fans of the way the Ukrainian government handles itself, and the country has staked out a role as a clear voice for human rights. On the other hand (there’s always an other hand, isn’t there), the country is also heavily dependent on supplies of Russian natural gas, which transit Ukraine, so they don’t want to be cavalier about pissing them off.

Shkil is “another” refugee because of the following:
In January of this year the Czech Republic granted political asylum to Oleksandr Tymoshenko, the husband of the former premier [Julie Tymoshenko], who is in jail for alleged abuse of the premier’s authority in signing treaties concerning supplies of raw materials from Russia. Additionally, in February of last year, Bohdan Danylyshin received political asylum in the Czech Republic; the former economics minister is accused in Ukraine with misuse of ministerial authority in negotiating government purchases.
There's yet another Ukrainian asylum case garnering purient interest, that of Anastasia Hagen, a former porn star. She was facing jail for filming porn and would be separated from her three children. So she fled with them to the Czech Republic and has requested asylum there. So far, the Czech government is refusing, saying she doesn't meet the conditions for refugee status. So she stripped and stood outside the Czech parliament building holding one of her kids.

Never a dull moment.