Friday, 22 August 2014

"Borders" Workshop materials

The SIRE ‘Country Size and Border Effects in a Globalised World’ workshop keynote speaker presentations are available:

Keynote Lecture 1: JAMES E. ANDERSON (Boston College) – "Border Effects: Canada-US Lessons"

Keynote Lecture 2: ENRICO SPOLAORE (Tufts University) – “The Political Economy of National Borders”

Wednesday, 13 August 2014

Deutsch Hausaufgaben

Translating an article from 20 Minuten (Zürich equivalent of the Metro) - but it is borders and independence/union related...

What the new Swiss superpower looks like
Always more neighbouring regions want to join Switzerland. Over 80% of 20 Minuten readers find this a good idea. We have put the pros and cons together.

After Baden-Württemberg and Lombardia, South Tirole now also shows interest in joining Switzerland.

A non-representative survey of more than 44,000 participants shows that over 80% of 20 Minuten readers want Switzerland to receive these new cantons from abroad. "They are a great expansion for a great country," writes reader Bruno, 13. Mike finds "These are all "cantons" which would do well in Switzerland."

Some of the readers would be willing even to barter: "We take the Welshland from the French" or "For this we let Zürich belong to Germany".

Reasons for letting border regions join:
- Bath seaside holidays: Switzerland gets a seaport due to the "Maritime Canton" of Sardinia.
- Pizza, Pasta and Veltliner wines become the official Swiss cuisine.
- Thanks to the friendly South Tyrol, we can score even more points with the tourists.
- Thanks to the Germans, Switzerland can be football world champions in four years time.
- The Brenner Pass would belong to Switzerland. Therefore, it would have a monopoly on the (Alpine) "North-South axis"
- The new economy in Switzerland-Baden-Wuerttemberg-South Tirole strengthens Switzerland.

Reasons against letting border regions join
- When Baden-Württemberg is in Switzerland, we can no longer go abroad for cheap shopping.
- The "original" Swiss population would be outvoted against the interests of the big cantons of Bavaria and Baden-Württemberg.
- Armed conflicts threaten: in the example of Ukraine one sees the devastating effects that expansionary policy can have.
- Bavaria or Baden-Württemberg do not fit - in terms of the language - in Switzerland.
- Swiss motorcyclists in South Tyrol would have to gamble with nasty speed traps.

Monday, 11 August 2014

Towards a Citizens' / Basic Income

Bit of self promotion here - but in a good cause...

The Scottish Green Party have published their Green Yes Briefing Note on a Citizens' Income for Scotland (press release here) - and I was responsible for the numerical calculations. These were done using the same model as was used in Comerford & Eiser (2014) "Constitutional change and inequality in Scotland" - which is forthcoming in the Oxford Review of Economic Policy.

I have no idea how politically feasible a Citizens' Income is, but it's interesting that this issue also seems to be being discussed in the US econ blogs at the moment - see e.g. Noah Smith: Basic Income is good because it's basic.

Tuesday, 1 July 2014

End June Links

# Having just moved to Zürich in Switzerland, this post, Alive and awake in the dreaming time from the Wee Ginger Dug, makes me a bit wistful and homesick! "Sleepwalking? This country has never been more alive. ... We’re excited at the countless possibilities that are springing up like Scottish bluebells after a long cold winter of the soul. We’re not sleeping walking to independence, we’re casting off our crutches and getting up on our own two feet, we’re running towards the future with hope in our hearts, we’re dancing towards it with our own rhythm, we’re singing dreams into being with our own tunes. We’re following the songlines to a future we seize in our own hands. It’s good to be alive in the Scottish summer, and it’s even better being awake. Alive and awake in the dreaming time."

# I never liked Angela Knight when she used to feature in the media on behalf of the British Bankers Association, so I'm kind of pleased to have my prejudices confirmed by finding that she is a former tory MP who opposes renewable energy: time to rethink 'green' power policies in Brussels. The article shows that Scotland's huge comparative advantage in renewable energy is objectively ill-served by the UK political establishment.

# I think I agree with Matthew Kahn that Krugman is wrong (!!!) on Carbon Mitigation, Self Interest and Ideology: sub-urbanites with a high rate of time preference (and no infinitely negative utility attached to civilisational risks) rationally oppose carbon pricing. Krugman's point is that the cost is low in aggregate GDP terms, but those individual sub-urbanites stand to lose a lot.

# Research on VoxEU to read: Are large headquarters unproductive?

Thursday, 5 June 2014

'Pooling & Sharing' versus 'Local Control'

The BBC has an interesting article up entitled Why is Glasgow the UK’s sickest city? Harry Burns's theory is particularly striking: "Harry Burns ... raised a few eyebrows when he compared Glaswegians to Australia's Aboriginal people. Yet he believes deindustrialisation in a city where tens of thousands once worked in the factories and the shipyards has deeply wounded local pride. As a result, people here have much in common with demoralised indigenous communities."

This I think allows us to consider an alternative history which may be informative about the visions presented in the SNP (White Paper) & Labour (particularly the pronouncements of Gordon Brown) contributions to the referendum campaigns. Suppose we were back in the early to mid 1970s. It is widely recognised that Glasgow's shipbuilding capability is becoming uncompetitive and that the capital stock is in need of major investment. Likewise London needs a great deal of investment, and some are forecasting a major growth in financial services worldwide that London will be well placed to take advantage of. Let's assume for simplicity that the investment required for both these projects is roughly the same, and that when the civil servants crunch the numbers, the expected returns on the London project are higher. Assume the risk premiums associated with both projects are the same.

Finally, let's assume that investment funds are in short supply such that borrowing for both projects pushes up the rate at which you can borrow. The impact of this is such that, while the NPV of both projects (considered separately), each under the higher rate (charged by capital markets for funding both projects), is still positive; combined it is lower than the NPV of the London project done in isolation at the lower rate (charged by capital markets for funding only one of the projects).

The pooling and sharing vision set out by the Labour party is consistent with funding only the London project. This maximises value (in NPV terms) at the UK level, and some of the surplus is distributed to Glasgow to pay the unemployment, disability and health costs that result. Maximise wealth, pool it to some extent, and share from rich to poor. This is a fair description of what actually happened.

Given the importance of Glasgow to Scotland (Greater Glasgow is 2 5ths of the total population), it is inconceivable that this is what would have happened if there had been sufficient local control at the time. [Clearly the independence argued for in the SNP's White Paper constitutes a sufficient degree of local control (though other constitutional options may also meet this description).] The Glasgow project would have been funded, and NPV would not have been maximised. Economic contribution would have a more even geographical distribution, as would the location of talent and human capital, and likely the destination of investment capital too. Self esteem in Glasgow would be enhanced - without, I'd argue, damaging the self-esteem of communities in London.

Without specifying a social welfare function it is impossible to say which of the two paths maximises welfare. But I know which path I prefer...

Monday, 2 June 2014

End May Links

# "If you want r to get under g and stay there, inflation and financial-repression is a big part of the picture. And for this to be of any use, it has to be proper inflation – i.e. the sort that includes wages." Inflate! says A Fistful of Euros

# "in an economy that operates on prices, as ours ... clearly does, the economic quantity of consumption is not tethered to the physical quantity of resources people consume. ... Think about it: how can economic growth be “bad” and recessions, with all the cutbacks they entail, not be “good”? ... replacing a capital stock built up over decades in response to insanely low fossil fuel prices with one that runs sustainably is going to require a lot of economic activity—you know, GDPEconoSpeak Finally Can’t Take Naomi Klein Any More

# Adam Ramsay's series again on reasons to support independence: The flotilla effect and why smaller countries are richer

# Martin Wolf doesn't sit on the fence: Wipe out rentiers with cheap money

Western Antarctic ice sheet collapse has already begun, scientists warn. And so it begins...

# I'm a bit wary of endorsing this post from Business for Scotland, but properly qualified they are on to something. Why Quantitative Easing has been bad for Scotland could be read as an indictment of QE as a whole, but Scotland needed an extreme monetary policy response to the financial crisis, in common with the whole of the Western world. However the post should be read as making the (correct) point that this particular form of loose money meant that the distributional benefits were towards those with large financial holdings - and this resulted in geographical imbalances. If new money had been created and distributed on an equal per capita basis then we could have had the required loose money policy without favouring the already wealthy, and implicitly the South East of England at the expense of the rest of the UK.

# Lev Ratnovski, Luc Laeven, & Hui Tong ask Are banks too large? in VoxEU