The Filter^

Removal costs

Alex Tabarrok:

The International Crisis Group (ICG) says some Zimbabweans are in favor of a retirement package, which would be attractive enough for President Robert Mugabe to step down.

Tyler Cowen:

Less than a month before the U.S. invasion of Iraq, Saddam Hussein signaled that he was willing to go into exile as long as he could take with him $1 billion and information on weapons of mass destruction

Pete Boettke:

During the 1990s, the Polish economist Jan Winniecki provided a detailed accounting of what it would take to provide the current rent-holders of the Soviet system to take a lump sum payment equal to the present value of their future income stream from their position of power.

Combine this somewhat stark Coaseian economic "rationalism" with a dose of constitutional liberalism that suggests we forgive and move forward:

"the demand for justice, if given full play, can undermine the fragile political conditions for the powerful development of a liberal constitution. The better part of wisdom is to keep the demand for corrective justice under control while channelling energy toward the construction of an enduring constitutional order"
Ackerman (1992:4)

The question is: Who's doing research into whether removal costs work?

All Eyes on Burma/Myanmar

There's a constitutional moment in Burma/Myanmar: the eyes of the world should be attuned to the developing story.

You've got to admit, it's getting better

Hat's off to Gordon Brown. It takes an impressive amount of nerve to maintain that the decision to make the Bank of England more independent absolves the Treasury over blame for financial market chaos, whilst simultaneously claiming credit for the economic growth and low unemployment that a relatively stable macroeconomic environment has provided. The rule of thumb is that the bad stuff is the fault of the Bank of England, whilst the good stuff is down to the Treasury. Never mind that the Treasury sets the targets that the Bank of England follows. Never mind that Mervyn King realises that a reputation for economic competence is built on more than just repeating the word "prudence".

But aside from recent fluctuation, and aside from the future problems that the Treasury's short-sighted response will create, the bottom line is that - fortunately - the gains from economic development tend to exceed the costs of political interference. Despite bad stewardship, we are getting richer.

Mark Perry has a nice series to demonstrate this (here, here, here, here, here, and here), and I'd like to add my own proxy. Imagine asking all the students currently embarking upon their university lives, to create an inventory of the possessions they've brought with them. And compare that to the inventories of years past. Televisions, Playstations, kettles, designer clothes - the paraphernalia is staggering. A years supply of baked beans no longer seem necessary as a trip around Asda can provide a low cost, healthy diet. It seems bizarre that supermarkets feel they have to remind us that low prices make us better off, but Walmart have done precisely that.

Yes, the possessions students take with them to university is a simplistic proxy for standard of living. It might all be debt, it might be gifts. But then again, university is a more egalitarian endeavour than in times past and I dare say that this generation of students arriving at Liverpool John Moores are better equipped, and better off, than an Oxbridge intake of times past. Isn't it elitist to think otherwise? 

Freedom to Listen

in universities, we have a deep and almost single-minded commitment to pursue the truth.  We do not have access to the levers of power.  We cannot make war or peace.  We can only make minds.  And to do this we must have the most full freedom of inquiry.

Bollinger's opening remarks at Columbia are well worth a read.

British Heart Foundation

"Piss and Wiggle! Piss and Wiggle!" I yelped last night, as I noticed my former local in the background of the new British Heart Foundation TV campaign. The short film (called "The Beat") is set in Liverpool, and features some fantastic views of the city. I've not been in for a while, can anyone confirm this depressing (if true) rumour:

A superb traditional interior with a real fire in the main bar, and there's also a small side room. The menu looks good, and the barmaids look very good! The sign shows a pig playing a whistle, running away from Melton Mowbray! An "Emigrants Served Here" notice refers back to when provisions for the journey had to be obtained by passengers before sailing to the New World, as the passage they had purchased from the ship owner did not include food or drink. Currently CLOSED for what looks like a major refurbishment. I am told this involves completely destroying the historic interior whichj, if true, is a terrible act of vandalism.

What I think of the BBC

To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.
Thomas Jefferson

Discover Your Inner Economist

If you haven't already seen it, I heavily recommend Tyler Cowen's "Discover Your Inner Economist". The  review in The Economist was spot on: it's more self-help than strict economics:

It stands apart from its predecessors by making its revelations not so much about the way the world works as about the way we ourselves work (and play) and how we can take practical steps to do both better.

The interesting thing about it is Tyler's Austrianism. He acknowledged in an interview with Russ Roberts that writing the book brought him back to his subjectivist roots, and seems to take a more radical view than his previous work on business cycles or entrepreneurship. The Economist declares:

The version of economics advanced here has nothing to do with algebra or interest rates. It is economics in Ludwig von Mises's formulation of a “logic of choice”.

Maybe everyone's inner economist is an Austrian.

Michael Palin visits Eastern Europe

For those of you who missed the first episode, Michael Palin's new series on Central and Eastern Europe is on BBC One at 9pm, Sunday. I'm expecting to be frustrated at some elements of the economic history, but overall Palin's humble enough to uncover rich narratives rather than impose them. It's what makes him a masterful travel journalist. (This contrasts starkly with Kirsty Wark's "Tales from Europe", which I thought was horrible.)

Last weeks visit to the former Yugoslavia majestically spliced present-day footage with images from the war, reminding us all how fresh, violent, and senseless it was, and how culpable "old" Europe should feel. I get the genuine impression that Palin isn't simply going through the motions, but bringing both focus and depth to on of the chief cases of the impact of ideas on society.

Buy the series on DVD. Unofficial blog here. Daily Telegraph article here. The Times here.

The end of the myth of New Labour credibility

The regulatory institutions founded to prevent bank runs are failing, as Northern Rock customers demonstrate that the UK government and treasury lack credibility. In an unprecedented move the Chancellor, Alistair Darling, has stepped in to offset a short term calamity, and set off a time bomb. He has declared that taxpayers will bail out any bank that gets bitten by the credit crunch - all UK savings are now guarenteed by the state. Incredible.

The frustration is that this shouldn't be a surprise, and is a classic piece of revisionism - it is a state generated problem, it is the very problem the state regulates the financial sector to prevent, and yet it will inevitably lead to a larger, deeper, role for the government.

In March:

Bottom Line: Central Bank Independence isn't a binary issue; contemporary Central Bankers have yet to be properly tested;  there's a lot more credit available than blunt proxies illustrate.

In April:

We've been living beyond our means, and the crunch is coming. When that happens, remember who's to blame

Theoretical point: the attention is all on moral hazard, but as I've argued before the problem is also due to adverse selection

You get what you vote for... (Part 4,572)

Gordon Brown, Prime Minister:

We must never return again to those days when reckless promises that you could simultaneously cut taxes, raise spending and cut borrowing were made.

Regarding Gordon Brown, former Chancellor of the Excheqour:

I think you'll find he denies raising taxes, cutting spending or raising borrowing.

(The Times)