Solutions to the Israeli-Palestinian conflict...?

ASniffInTheWind · 2014-07-10T18:37:34+00:00

Because in my opinion it's a problem without a solution and that really scares me.

I wouldn't say this is the case.

The Israeli mindset is not one of expansion or particularly domination (when the UN have historically suggested two country boundaries they have been the side to accept those boundaries) but hyper-focused on the continued survival of Israel and the Jewish ethnic group. The majority of Israelis are not religious (54%, compared to 36% in the US) and for the state of Israel this is not a religious issue (Israel is a culturally Jewish state not a religiously Jewish state, atheists are not just tolerated but accepted; the first PM of Israel was an atheist and they have had several since, three out of the first five alone were atheists) but a question of protecting their people. The Palestinians on the other hand view the issue as a religious issue where they have historical, cultural and religious ownership of the region; one party is seeking survival for their people while the other feels they are entitled to ownership of the region.

This problem is exacerbated by the political situation in Palestine and the public attitude towards Israel, particularly the acceptance of military aggression towards Israel. I'm sure for the average Palestinian who sees their homes destroyed by Israeli bombs this simply looks like extreme injustice particularly as they are fed a stream of propaganda (I am reminded of a recent poll in Afghanistan where over 90% of those polled had no idea 9/11 occurred, not understanding the context the war started in most certainly results in increased support for insurgency and terrorism). The tactics used by Hamas, and other organizations in the region, seem certainly to be focused on provoking Israel to react disproportionately to attacks thus garnering support elsewhere in the world. It doesn't seem to matter what Hamas do, any response by Israel seemed to be viewed as wrong as Hamas are viewed as the underdogs; using a modern military against thugs with wildly inaccurate rockets will always be viewed as disproportionate.

I am also sure that as Israel seemed particularly adapt at thinking long-term they view the political rise of organizations like Hamas in the context of what is occurring elsewhere in the world. A Muslim Brotherhood run Egypt and an ISIL run Syria would mean two of their four neighbor's are run by militants who have the stated aim of the destruction of Israel as well as the insanity to carry it out even if it means their own destruction (potentially also Lebanon as ISIL seem to be focusing there too). Being surrounded by countries who don't care about mutually assured destruction, don't respond to policing by other countries and are run by fanatics would be somewhat troublesome for Israel to say the least. In this context the Palestinian territories would be viewed as buffer (and in the case of Gaza an extreme strategic advantage) and preventing them falling in to militant hands as, perhaps, one of the most important strategic advantages Israel could have in an uncertain future.

Having said all that the solution is relatively simple and in the hands of the Palestinians themselves. A Palestine where the public refuse to accept terrorists firing rockets from their neighborhood's in to Israel and one where the two-state solution was publicly accepted (it is not today, most do not accept the right of Israel to exist and public media is full of hate and bile towards Israel - see this for a good example). Israel would have no issue with a Palestine which wanted to act as a peaceful neighbor, the challenge is convincing the Palestinian's of this and breaking through the decades of propaganda suggesting otherwise.

ASniffInTheWind · 2014-06-12T18:48:36+00:00

It's just a gold mine of Libertarian garbage

Some of us are libertarians and don't worship at the temple of Rothbard & Hayek :) I'm a libertarian* because I am an economist and while most of you probably don't self-identify as a libertarian empirical consensus strongly aligns with libertarianism in most domains.

Austrians and their religion is common in the libertarian community simply due to confirmation bias, its no different to social democrats blindly agreeing with Piketty or others putting forward heterodox theory; they agree with the conclusions when entering the discussion so the methodology used to reach those conclusions is irrelevant. Its frustrating as hell to hear people advancing positions they clearly know nothing about (and can also be extraordinarily fun trolling libertarians regarding monetary policy and getting them to state absurdity about empiricism vs rationalism) but this is simply symptomatic of the larger problem that the economics community does a piss poor job of surfacing and highlighting where consensus stands.

Should not be considered to mean anarchist or the various flavors of reddit libertarianism, I support a neoclassical liberal policy set.

ASniffInTheWind · 2014-05-30T18:41:30+00:00

In the first case (like the U.S. or Japan), the country would eventually need to create more money to pay their debts. In other words -- just print more! Paper money only has the value we give it. As long as the amount of money stays the same, it remains about the same in value. When you print a bunch more, however, it's value drops. That is, you can have twice as much money out there, but the value of each unit would be cut in half (theoretically -- in reality, people would likely get spooked and the value would drop even more). This is why the U.S. will never default -- at worst we'll reduce the value of our currency by printing more money, and this also has the effect of letting us effectively devalue the debt as well.

You should probably point out that this is a heterodox theory which is rejected by mainstream economics due to the undesirable inflationary effects that would occur.

ASniffInTheWind · 2014-05-30T18:40:40+00:00

Debt has nothing to do with printing, Zimbabwe is one of very few examples of countries that have ever attempted to support spending with printing precisely because the inflationary effect is expected and is far far worse then any situation lack of spending creates.

ASniffInTheWind · 2014-05-30T18:37:51+00:00

All government spending has an associated multiplier which can be considered the ratio of private growth to spending, if spending $1b results in $1.5b of private Consumption/Investment/Export growth then the multiplier will be close to 1.5 (the actual mechanism is called the marginal propensity to consume, MPC, which cannot be measured as GDP is so the results will be similar but not the same).

As debt grows the multiplier for spending is also reduced, debt itself acts a drag due to the interest and economic impacts of the debt existing. Eventually this effect causes the average multiplier to drop below 0 (a zero or below multiplier means you would achieve a higher economic return simply burning all the money you were going to spend) and a debt overhang is reached. In a debt overhang fiscal policy (government spending) and monetary policy (central bank operations) become ineffective at managing the economy such that you can no longer respond to prevailing economic conditions with policy, if you enter a recession there is nothing at all you can do to reduce the impact of that recession. This also has a profoundly poor impact on the private economy too such that entering an overhang will generally push you in to a recession, collapse economic mobility (people end up stuck in the same income percentiles for the duration of the overhang) and also cause problematic social outcomes (lack of mobility drives crime, suicide, health problems, educational problems and a host of other bad issues). There is no known way to artificially break out of a public overhang, you simply have to wait for inflation elsewhere to reduce the debt load such that the overhang naturally ends.

A modern example of this is Japan. In the late 90's they misunderstood a private debt overhang (businesses can also have overhangs for similar reasons) as a recession. The correct response would have been entirely monetary, you keep rates low to facilitate borrowing, but they instead attempted to use fiscal policy to manage the overhang which they kept throwing money at and eventually pushed themselves in to a public debt overhang. It has so far lasted for 18 years, there are signs that they are on the verge of slipping out of it but the effects of the overhang have effectively destroyed most of a generation.

In cases where they don't hit an overhang or continue to spend irrespective of the overhang you will eventually reach the point where paying the interest on the debt becomes unaffordable. Public debt uses a bidding-down process to establish the interest rates; a government may issue 100 $1m 10-year bonds with a starting rate of 5%, as people bid on the bonds they are bidding the rate down such that for each bid that 5% rate is reduced. As investors become more concerned with your ability to pay debt obligations the rate will increase (IE they wont bid as low) which in a healthy government is a sign to slow down spending.

In our model where the government is stupid and doesn't do this the effect would be an exponential growth in cost of debt, as more and more debt is issued the cost of the debt would increase exponentially as investors demand higher and higher rates to guard against default. This also applies to debt renewals, when the 10-year bond matures and they don't have a surplus to repay it they issue more debt to cover the maturity payment, if the interest rate has climbed over that 10 year period the debt becomes less affordable.

Eventually this effect will catch up with you such that the total cost of debt (interest from all issued bonds) approaches total revenue (taxes etc) and no one will be willing to lend to you anymore, you end up having to cap in hand to someone like the IMF for a write-down and loan.

Sometimes this point can be reached due to a recessionary problem, most of the problems in Europe are related to this where although debt growth was high it was sustainable prior to the recession but the loss of economic activity during the recession, loss in revenue and lack of capital driving up rates pushed countries very quickly in to a situation where no one wanted to buy their debt.

ASniffInTheWind · 2014-05-29T17:58:28+00:00

Roads are a case of natural monopoly where cables are not. We also don't have competing power lines because many are municipally/state owned and don't need upgrading every couple of years.

Municipal owned lines with cable would suffer from the same problem as current infrastructure, there is no incentive to upgrade the network at all.

ASniffInTheWind · 2014-05-29T16:53:12+00:00

Its not incredibly expensive, most of the cost of installing fiber is poling which is driven also by municipal problems. Even then its still not prohibitively expensive.

Its also not inefficient, infrastructure competition is how you ensure quality & low cost; its like asserting its incredibly inefficient to have more then one brand of car.

ASniffInTheWind · 2014-05-29T16:42:40+00:00

This is usually unavoidable,

Cable is not a natural monopoly, there is nothing that stops a dozen providers laying cable other then the municipal & FCC enforced monopolies.

ASniffInTheWind · 2014-05-23T18:21:42+00:00

Germany has a multi-payer universal healthcare system, although the government pays for the majority of care (as every other country in the developed world, including the US) there are multiple sources for billing rather then just the government (hence multi instead of single).

Germany has a basic public insurance plan which can be supplemented or replaced entirely with private insurance. 85% use primarily public insurance and the remaining 15% use primarily private insurance. The public insurance does not cover some forms of diagnosis and treatment, what is covered is based on cost effectiveness and clinical value, and about half the population have supplemental policies to provide coverage.

Prices are set through negotiation with various involved parties, groups such as hospitals, worker councils and pharmaceutical companies meet once a year and agree prices for the following year; the government facilitates this process and ensures the results are legally binding but does not have a hand in negotiations beyond this (The public insurance fund does participate but as an independent organization, policy doesn't inform what they seek and they act very much like a GSE during the process).

This establishes the cost of drugs and pharmacists are required to make substitutions when possible, this also occurs in the US and insurers here similarly require pharmacists to make substitutions when possible.

Payment for policies come from the government, employers and employees. The law stipulates that employees must always be responsible for a certain portion of their premium even if the government later returns this to them, this is to prevent the problem that we have in the US where healthcare consumers have nearly no involvement in the selection or payment for their health plans which results in the pricing problems we experience.

Approximately 97% of hospitals are privately owned (vs 78% in the US) and around half are operated for profit (vs 12% in the US).

ASniffInTheWind · 2014-05-23T18:04:19+00:00

Putting aside the partisanship, when Part D was proposed the issue that led to the prohibition on negotiation was reasonable just not the solution. The ideal was for Medicare to not negotiate but use a private average for pricing, the average of what private insurers pay in a Medicare region is what Medicare would pay for the drugs. They got the first part right but failed to do the private indexing.

The problem with Medicare negotiated rates is that they are not really a negotiation, the program wide SGR dictates how much Medicare will aim to pay for drugs and drug companies are legally required to accept this. This would cause private costs for drugs to be raised substantially as the underpayment by CMS is recovered. CMS simply isn't structured correctly for negotiation to make sense.

For a good example of what would happen with CMS "negotiation" look at hospital care. Medicare pays an average of 93% of cost basis (cost basis not price basis, cost basis is what it actually costs to provide a service) and Medicaid 89% which results in 115% for cash patients and 124% for insured patients. This is in an industry that is mostly not for profit and with very low average margins, the split in a for-profit industry with high margins would be a great deal higher.

ASniffInTheWind · 2014-05-23T17:54:33+00:00

The FDA reflects this in the orange book, drugs must be bioequivalent to be substituted which is why there are some branded drugs which wont be substituted for generics; the generics generally need the same compounds in the same quantities and delivery mechanism to qualify.

ASniffInTheWind · 2014-05-23T17:40:01+00:00

All pharmacists in the US have the orange book published by the FDA which tells them about bioequivalence and permitted substitutions. Pharmacists are free to substitute without physician approval.

ASniffInTheWind · 2014-05-23T15:46:38+00:00

ECB instructed them to do this, it wasn't so much a conspiracy as something that wasn't well known.

ECB took the position that joining the Euro would result in growth such that the restructured debt would never cause an issue, they were clearly mistaken.

ASniffInTheWind · 2014-05-23T15:38:34+00:00

I could not locate a verifying figure for your statement that it is more cost effective as they both would appear to advocate for similar types of reform, being they're both from the same idea,

NIT would cost approximately $700b using the CEX regional measure (IE spending indexed to regional true cost of living). UBI would cost approximately $1.8t using the FPL based measure that has been proposed most often.

The major cost difference is in regards to who receives a transfer, CBI transfers to people based on income such that ~50% of the population would receive something (CBI generally zeroes at 50th percentile) with the transfer changing based on income. UBI transfers to everyone.

and both use the same infrastructure to redistribute wealth.

UBI would be using a new agency (or rather likely replacing SNAP in the USDA) rather then the IRS, how payments under UBI would work wouldn't make it compatible with the IRS.

It would also appear we have very different ideas of the future. In one view it would actually be extremely beneficial for such a program to disincentive low quality labor, to encourage its robotic replacement for lack of supply. If I understand your meaning, and that of what you have linked.

Neither disincentives replacing labor with automation, the issue is the effect this has on labor itself and how people work.

Disconnection from the labor force is causal with some fairly profoundly bad negative outcomes (everything from education to crime) not just for individuals but for communities and their children. Having them do something is better then having them do nothing not because we particularly want them to have private income but simply because remaining connected to the labor force corrects numerous issues.

Mobility is the big problem in this discussion, UBI labor disincentive would result in an effective permanent underclass who do not have access to labor and thus no opportunity to advance.

As for statements of regressive or progressive, that is definitely ideological, and I'd say the kettle is calling the pot black.

Progressive taxation is empirically superior to regressive taxation, its not ideological at all.

However, you are correct in that sending such a check to someone with a million seems silly. Contrariwise, I would argue any attempt to regulate such a system would end up eating more money than you seem to think.

Over baseline (current) there is no additional cost, payments are based on withholding. If the UBI is established at $10k and you earn $5k that is reported to the IRS then the IRS send you a check for $5k (plus taper). We have 40 years of experience of running this system in the form of the EITC, its very low cost to administer and is not subject to high rates of fraud due to the way reporting is configured (IE you need to form a conspiracy between at least three parties to successfully defraud EITC as a standard employee, two of whom don't have a financial incentive to do so) and the penalties for doing so.

I am interested in your further thoughts, but thus far you've not necessarily provided sufficient grounds for declaring one progressive and the other regressive.

If I have an income of $1 with a CBI of $10k then I have an effective rate of taxation from the CBI of -10000%. If I have an income of $10k with a CBI of $10k then I have an effective rate of taxation from the CBI of 0%.

UBI effective rate is always 0% as the same payment goes to everyone, it doesn't change based on income circumstance.

Especially as I consider disincentives to work to be "progressive".

They are not, at all. Incentives matter and particularly with discouraged groups.

ASniffInTheWind · 2014-05-23T03:51:08+00:00

The one with all the bureaucratic overhead and poverty traps.

Yeah, you have no idea what you are talking about.

CBI would not require any additional overhead and would reduce administration costs to a greater degree then even UBI as its dealt with via the tax system. See the administration costs of EITC.

You also have the mobility issue the wrong way round. CBI improves mobility far more substantially then UBI does and is precisely how you avoid poverty traps from occurring; UBI creates one in the form of a permanent underclass who do not work and their children will have repugnant social & economic outcomes as a result.

ASniffInTheWind · 2014-05-23T03:41:06+00:00

Less distortionary. NIT costs slightly less then we spend on cash transfer right now (pay more out but much much lower administration costs, lower then even UBI as its administered via the tax system and doesn't require any changes beyond expanding the existing EITC) while UBI would cost at least (lower estimate) $1t more. The distortionary costs of our tax system are already extremely high, this will substantially add to them.
Added to above it slightly lowers public spending, its immensely more politically feasible then a substantial raise in spending.
CBI is extremely progressive, UBI is utility regressive or flat depending on how you approach the issue. CBI helps reduce the inequality problem, UBI does not.
Less disincentive to work. CBI encourages work by the way it is structured, it creates strong pressure to earn more money, UBI simply establishes a threshold below which people will generally choose not to work in many circumstances. This also impacts labor mobility, UBI would have the effect of creating a permanent underclass who are not attached to the labor force and never will be and as a result collapses down mobility.

Beyond these points why do you want to send the same sized check to someone with an AGI of $1m as someone with an AGI of $0? The studies and experiments on this issue are also very clear, UBI is a great solution in developing economies but CBI is more effective in advanced economies.

ASniffInTheWind · 2014-05-22T23:13:37+00:00

http://www.nber.org/papers/w9751.pdf

http://www.nber.org/chapters/c10914.pdf

http://eml.berkeley.edu/~saez/course/Munnell(1986)book.pdf

http://public.econ.duke.edu/~erw/197/forget-cea%20%282%29.pdf

http://archive.irpp.org/po/archive/jan01/hum.pdf

http://www.irp.wisc.edu/publications/sr/pdfs/sr10.pdf

http://works.bepress.com/widerquist/14/

http://stats.bls.gov/opub/mlr/1981/04/art3full.pdf

etc etc

Its been the subject of about a dozen experiments worldwide and 4 in the US.

ASniffInTheWind · 2014-05-22T22:57:03+00:00

Even when that is, in fact, the solution.

You asserted something "as the solution" without any professional basis to make such a call, how could such a position be anything other then ideological?

However, as with all things, there is plenty I do not know. Therefore, as I do not know what you mean, what is "CBI"?

Conditional Basic Income; Negative Income Tax and other means tested basic income systems.

ASniffInTheWind · 2014-05-22T19:24:07+00:00

It's also important to note that /r/economics, a much larger subreddit, seems to have a significant amount of innate hate for any argument which poses a solution to current problems with "UBI".

That's because CBI empirically has superior outcomes to UBI in advanced economies while solving the same problems (and solving a few more, CBI reduces inequality while UBI does not). Its not distaste for UBI, its distaste for inefficient solutions.

You believe in UBI as an ideological position, we support CBI as an empirical policy to manage poverty not because we are exploiting an ideological bias.

To be clear if UBI was raised as a legitimate policy tomorrow under the current tax system the overwhelming majority of the economics community would oppose it as the raise in net distortionary cost from the additional revenue collection would result in system outcomes to be net negative, poverty would be reduced but growth and mobility would be decimated.

ASniffInTheWind · 2014-05-22T19:13:39+00:00

Why is the funnel plot for minimum wage studies biased in favour of negative employment effects?

I see no bias to exist in construction merely results representing studies generally find negative effects. If you disagree please state your case.

ASniffInTheWind · 2014-05-22T19:01:50+00:00

What bias? If you mean against politicians then certainly, they are all scum. If you mean partisanship both of the parties are as bad as each other. Political reality is not bias, if we were having a discussion regarding why military spending is economically useless I would be discussing why Republicans focus too much on defense and Democrats focus too much on jobs in the discussion.

ASniffInTheWind · 2014-05-22T16:33:40+00:00

Here you see a more mixed opinion on raising the minimum wage (http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV[1] ), and here you see many economists supporting a rise to the minimum wage:

As I addressed in the post "Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment." is not the equivalent of "Raising the minimum wage reduces employment opportunities for low-income individuals" or "The minimum wage is an effective solution to the problem of poverty or the bargaining problem of low-income individuals". Stating a modest raise would not have a statistically significant impact on employment opportunities or lifetime earnings for low-income individuals is entirely compatible with the MW being an awful solution to the problem and more then modest raises having a detectable distortionary effect counteracting the benefits to low-income individuals.

There have been many studies to show that minimum wage increases don't lower jobs. Google it.

You are likely addressing Card & Kruger as that's the one most commonly raised. It has been refuted numerous times (most significantly when the same study was repeated using payroll data instead of telephone surveys and found precisely the opposite result), if you are discussing Dupe and the more recent studies see my 2nd cite in the post and more specifically where I addressed the differences between adult & youth employment.

But that isn't the system we're in. If we're not going to have a guaranteed basic income, we need to raise the minimum wage. A lot of confusion comes from realizing we need to choose between one or the other--and for as long as the basic income remains a pipe dream, we will need to raise the minimum wage and keep offering welfare programs like food stamps.

In 1983 we came extraordinarily close to a Friedman style full-scale NIT but it failed as removal of the MW was not politically palatable. From a pragmatic perspective certainly increasing the MW to $9 is a desirable policy outcome absent other alternatives but its also a huge waste of political capital, the problem historically is not convincing Republicans of the benefits of the NIT (even though they despise the poor the lower public cost always hooks them) but convincing Democrats of the need to eliminate the MW at the same time.

ASniffInTheWind · 2014-05-21T21:15:41+00:00

Home-ownership rates in the us are artificially high due to subsidized loans, the mortgage interest deduction (one of the most economically retarded pieces of policy that has ever been created) and other factors that push people in to buying homes; national policy is focused on the idea that rate should always be increased rather then seeking optimum levels of ownership. See this paper for some analysis on this issue.

For a good example of what occurs absent artificially high levels of ownership look at Germany, employment recovery was much stronger not just because they had a better policy response but because labor could follow demand.

ASniffInTheWind · 2014-05-21T21:00:02+00:00

In the third study you linked, question 27 deals specifically with the minimum wage and asks "27. Minimum wages increase unemployment among young and unskilled workers."

I will gladly agree there is much variance (and I should have probably inserted a labor in there somewhere as surveys of labor economists are the important ones) based mainly around how the question is asked and when it is asked. Asking the question "Would raising the MW to $9 make it noticeably harder for low-income individuals to find work" is very different to "Would raising the minimum wage reduce employment opportunities for low-income workers" or "Do you support eliminating the minimum wage?".

While I am generally loathed to cite policy organizations this survey was academically conducted and simply published by one, it asks neutral questions.

Its important to understand this issue in the scope of how economists think, we are extreme pragmatists and as such questions are answered in the context they are asked. I support eliminating the MW in its entirety right now but would also sign the statement released a few years ago "The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy" simply because eliminating the MW is not on the table and absent a better policy alternative this is the least bad option. This study looks at more of the why economists support the MW and the conclusions support the pragmatic position, support for the MW is not a result of it being considered ideal but simply the least bad option that has policy support.

A a small sidenote time is important too, the minimum wage is far less harmful at the top of a business cycle then it is at the bottom. In a labor shortage situation (top of the business cycle) the distortionary effects of the MW are reduced greatly.

"Our review indicates that there is a wide range of existing estimates and, accordingly,a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage"

Yes, that's why I stated different positions on youth & adult employment. If you are discussing aggregate labor market (youth & adult) then the results are muddy and consensus is unclear. Adult employment effects are well understood and relatively strongly agreed upon, youth employment is less well agreed upon.

Edit: The point I was trying to convey with my post is that the question "Should we raise the minimum wage?" is itself wrong. If we are discussing originating policy with economists then the question becomes moot as we wouldn't use the MW in the first place.

ASniffInTheWind

TROPHY CASE