Today's Buggy Topic Is . . . 

. . . a direct continuation of the analysis set out in the previous buggy post.  It will help if you read that post first, though both link to the same web-site: Economist's View, run by Professor Mark Thoma.   Click here

Today's Buggy Topic

As usual, it's found at Economist's View --- the admirable web-site run by Professor Mark Thoma, a macroeconomist at the University of Oregon.  And as usual, the subject-heading above captures adequately the nature of the topic.

The thread where the bugged-out commentary is found --- lengthy, full of comparative data --- started when Prof. Thoma linked to an article by a good political science scholar who argued that the employment rates in the EU West European countries (EU-15) have noticeably outperformed the US rate in this decade and show that there isn't any problem for highly regulated welfare-state countries to create jobs. 

Prof bug examined the data, found all sorts of problems with its presentation; found additionally all sorts of difficulties that the aggregate data mask --- such as the percentage of jobs created in the EU compared to the US reflected temporary jobs and involuntary part-time work; noted, too, that the unemployment rate in the recent study the political scientist used for his data on employment rates --- the % of the 16-64 year old population is working --- is misleading for the last two years; and then quoted some EU specialists on how the welfare systems deliberately provide subsidies to 16-24 year-olds and 50-64 to stay out of the job market.

None of This Means the EU-15 Didn't Do Better Compared to Their Past in Creating New Jobs, Good or Bad

What the political scientist's study, the larger study he drew on, and the comments of prof bug's fellow posters --- all who have a dreamland image in mind of the advanced welfare-state countries in the EU --- all ignored was that the better job-creating performance there in this decade reflected consistent efforts to free-up their labor markets from all sorts of regulatory impediments in the past: such as the ability of firms to lay-off or fire workers.  For if firms can't do that, especially in a recessionary period, they will be reluctant to hire more workers in different times. 

Similarly, the unemployment benefits were cut markedly in France and Germany earlier in this decade --- at least in duration.  After a year, either you have found a new job or the benefits are cut.  In Germany, that means you are required to take a minimum-wage job that the government will create.

None of this means that there aren't certain policies that the EU West Europeans do better than us.  In particular, virtually any health-care system there would, if we emulated it, likely reduce the huge costs of our system and solve the problem of those uninsured here (about 12-13% of our population).  The likeliest one we will adopt --- which President Obama's reforms seem to be nudging toward --- would be Switzerland's, the country itself not in the EU.  There all the adult population is required to buy health-insurance offered by competing insurance firms.  If an adult (or family unit) pays more than 10% of its income up to a threshold level, then the Swiss government subsidizes the difference.

For the Prof Bug Stuff,

...click here.

Today's Buggy Topic Is . . . Well,

a little wonkish, but not to worry: no math or anything --- just more of an abstract set of comments by buggy, which do manage toward the end to deal with the US trade balance and the related role of the $US as the key currency in the world: for trade purposes (even, say, between Brazil and China), for quote-purposes --- the dollar the base-currency in which all other currencies are calculated as exchange-rates --- and above all its pivotal role as a reserve currency.

Even today, about 65% of all foreign exchange held by the Chinese, the Japanese, the other Asian manufacturing exporters, the Arab oil-exporters, and trade-surplus countries like Germany are in dollars still.  About 25-30% are now in euros.  The rest are tiny amounts of British pounds, Japanese Yen, and Swiss Francs. 

The Reserve Role of the Dollar Entails Benefits and Costs

Yes . . . for both sides: those countries like China and Japan with well over $2 trillion dollars that their Central Banks hold as a result of long-term trade surpluses, and the US on the other side.

For the trade-surplus countries, their dollar-holdings reflect their governments' interests in maintaining a lower value of their currencies --- Yen and Renminbi (Yuan for trade purposes) --- in dollar terms, precisely in order to run up a trade surplus with the US and other countries using dollars.  In return, the dollars that flow into their banking system end up mainly in their Central Banks.  They then deposit these in a variety of US financial assets --- US Treasury bills or long-term bonds, Fanny Mae and Freddie Mac bonds, stock-market equities and bonds, or real estate.  These pay them a certain interest return . . . or in the case of stock equities and real estate, possibly capital gains.

The downside for them? 

If the $US depreciates noticeably against the Yen or Renminbi --- say, 25% --- they lose 25% of their American financial holdings in terms of their own currencies.  And if --- as the dollar depreciates --- they try to sell off their dollar holdings, that would only accentuate the rush out of dollars, its fall in exchange-rate markets against those (and maybe other) currencies, and their losses.  On top of that, a noticeably depreciated dollar would undermine a major pillar of their economic growth yearly: huge trade-surpluses with US businesses and consumers.

The US Side: Benefits and Costs

The big benefit for the US is that the US financial system --- including our Treasury, at any rate when it has to finance government fiscal deficits with monthly sales of US Treasuries (bills or bonds) --- is that we can as a country use foreign financial investments in US Treasuries and semi- and fully private financial assets to keep our interest rates lower than otherwise.  That stimulates investment . . . though, of course, as the huge runaway housing market in the US showed by the middle of 2007, the extravagantly high housing boom (in which foreign private and Central Banks were involved) could suddenly collapse --- with big losses for both the US and foreign economies, including their private and Central Banks.

The downside for us? 

Well, contrary to what you hear, it has nothing to do with overall employment rates.  Those are determined by the supply and demand of labor and wage-adjustments.  What has happened --- as long-term trade deficits always entail --- is a reallocation of labor and capital out of declining industries hurt by a growing lack of competitiveness in markets both abroad and at home . . . above all, in the US case, an accelerated decline of the manufacturing industries' employment.

A more flexible exchange rate --- a steady appreciation of the Chinese Renminbi in dollar terms, say (which could easily have occurred if the Chinese leadership wanted it by floating freely the Renminbi or managing a wider depreciating band around the $/Rmb rate  --- would have slowed down the decline as our comparative advantage shifted to newer, more high-tech industries in areas where we have experienced major technological breakthroughs over the last three decades or so: in communication and information technologies, computer software of all sorts, heavy machinery, aerospace, pharmaceuticals, chemicals, petrochemicals, and biotech, plus of course agriculture.  In fact, contrary again to urban myth, the US produces $2.50 worth of goods for every $1.00 China does.  And we export the large bulk of them.

Enough Said

Click here for the buggy commentary, left last week at Economist's View.

Today's Buggy Topic

As usual, it's found in three lengthy buggy commentaries left in a thread at Economist's View, the estimable web-site run by Professor Mark Thoma, a macroeconomist at the University of Oregon.  The thread started with a post left by Professor Thoma that linked, essentially without comment, to some misleading  claims about the nature of terrorism and its causes around the world by Professor Jeffrey Sachs, formerly at Harvard and now at Columbia. 

Those claims --- which reflect, alas, ignorance on his part --- also included some misleading references to US military interventions abroad, delivered in an ex cathedra manner that further reflected ignorance.  No matter.  The Sachs-pronunciamentos predictable fodder for most of prof bug's fellow posters at Economist's View  . . . mental nourishment for a torrent of utterly predictable amd reflexive hokum of politically correct nostrums. strewn about additionally mishmash of bits and pieces of Marxism, dependency theory (itself always at odds with Marxist views of under-development), and socialist longings.  Well, not Professor Thoma's fault.  His own posts are almost always thoughtful, illuminating, and informed; they also show a proper scholarly concern for the complexities of the subjects he tackles. 

Prof Bug's Own Contributions

The trio is found here.  Please note that he has promised a fourth one, at any rate when he finds some time. 

Today's Buggy Topic Is . . .

. . . found, in a lengthy bugged-out commentary, at Economist's View, the laudable economic web site run by Professor Mark Thoma of the University of Oregon.  The thread began with a link by Professor Thoma to an article on the role of social norms as a way to promote changes in our economy, along with his own comments that thought a more specific economic approach to encourage new and desirable behavior --- say, reducing the high fat intake of Americans (with the resulting health dangers related to obesity) --- would likely be to impose higher taxes on fast-food.  That would raise the price, reduce the consumption, and eventually lead to a desirable outcome.

Such an approach is the standard way economists endorse for almost all policy changes --- such as putting a tax on polluting industries.  An alternative is equally endorsed in the latter case: cap-and-trade.  Which is to say, cap the amount of pollution in a region or country like the USA, then sell permits to the polluting firms.  This raises the price of their production and reduces consumption, just as a tax would.  The more efficient firms would reduce pollution to lower levels, then sell the permits to less efficient firms.  Just as taxes could be raised regularly if more pollution-reduction is desired, so the cap on polluting output could be changed or the permits made more expensive (or both). 

Social Norms

Others, like the economists and other social scientists who produced the article on social norms, think that they can be used to improve the diets of Americans --- a desired result.  Or, to return to the pollution-problem, to encourage behavioral changes by industry and consumers that would lead them to switch away, say, from fossil-fuels to alternative fuels . . . especially if, as most climatologists (but hardly all), the dangers of global warming materialize noticeably. 

(Elsewhere, please note, prof bug has also advocated reducing our reliance on imported oil and for national-security reasons --- the best way he can think of to offset the undue and dangerous importance of the volatile Middle Eastern Arab and Iranian oil-producing countries in current American foreign policy.  That security motive would lead to a variety of government taxes on fossil-fuels over time, plus --- as some alternative fuels become promising substitutes in cost/benefit terms --- some subsidies as well to those industries producing them.   These subsidies would have to be short-lived and the costs shared with those new promising industries.  Otherwise, we'd be back in the disasters of the Energy Department in the Jimmy Carter era of the late 1970s.)

Enter Prof Bug's Views

Virtually all the posters in the thread that followed endorsed the use of social norms as a way to encourage desirable economic and social change.  As prof bug noted, none of them seemed to recognize that social norms are hard to define --- at any rate, with specific references to inter-disciplinary work, he shows that there is no consensus on what they are, let alone how they originate and change over time.  Dealing with these problems is what his own lengthy commentary tried to do.  And though at times the buggy analysis is more abstract than he'd prefer if he had enjoyed more time or space for setting out his argument, it does use a fair number of examples by way of illustration toward the end. 

These include, please note, the effort over several paragraphs to draw on the admirable Showtime series, The Tudors, as well as the US and British roles during WWII and afterwords in Japan and Germany . . . where major institutional changes were imposed upon the defeated countries, which in turn encouraged a whole series of cultural and normative changes in the behavior of the Japanese and German publics.

For the Buggy Comments,

. . . click here.  Please be sure to read the initial post by Professor Thoma, and --- if you are interested --- the link to an outstanding multidisciplinary book on Social Norms --- the actual book title (2005) --- that prof bug provides.  That link is to the Google-book version, which (as many of you knew) is pretty complete, with only an occasional page missing deliberately from each chapter.

Today's Buggy Topic

It's found in a thread at Brad Setser's web-site, run by the Council of Foreign Relations, that operates under the name of "Follow the Money" . . . Setser himself a former USA Treasury official, who specializes in financial relations between the USA and others --- including, among other key topics, the contentious exchange-rate mechanism that China runs with the $US.  Setser probably knows more about this politically charged financial and trade mechanism and the overall Chinese-American economic relationship than any other specialist in the world.  Prof bug, interested in this relationship for its own sake --- but even more for the diplomatic, economic, and military implications of China's rapid rise in economic prowess for the overall American global role --- reads most of Setser's daily columns with ongoing regularity and appreciation.

Doubly so, please note, because China's huge investments of its 1.5 trillion US dollars --- an outcome of its large annual bilateral trade surplus with the US for well over a decade now --- in US Treasury bills and bonds, as well as in other US financial assets, is partly hidden and hard to trace.  All in all, Setser traces it more effectively than anyone else in public writings . . . or so it seems.

Click here for the Setser post that started the thread, then run a buggy search --- or for Michael Gordon --- and then note a reply two or three posts later from Dr. Setser to the bugged-out comments.   (Observe that Dr. Setser corrected a buggy error.  Prof bug thought that Thailand's reserves of foreign currency were virtually all US dollars; Dr. Setser noted that it also holds a lot of euros.  That means the Thais could, in principle, swap euros for Chinese Renminbi (Yuan) and use it as a reserve currency, without Beijing having to take on more dollars for its reserves than it might want to hold.)

Note: Before You Click on the Setser Link, Do Two Things First

1. Read the rest of the buggy commentary here.  It will provide you with a broader perspective on the question of China's future role in the global financial system.  
2. And, for an even rounder perspective on the challenges and problems that the Chinese Communist Party leadership faces in guiding China's overall economic development --- in particular, in achieving the CP's aspirations that China become a rich, technologically advanced country and hence an eventual great power --- you might find it worth while to read this lengthy buggy commentary that prof bug set out a few weeks ago at Economist's View.  Click here for that bugged out stuff

And now back to today's buggy comments.

The Overall Economic Relationship Between China and the US Clarified

Start with China's epochal developmental transformation since 1979, the start of the post-Maoist shift of the Chinese Communist Party leadership to move toward a state-directed market-economy not that much different, three decades later, than the kind of statist economy that, say, South Korea operated under in the era of its military dictatorship between the 1960s and the later 1990s. 

The result is an economy that is increasingly market-oriented, but still under the CP's direction in key areas: dominance by the government of major banks, controls over investment flows in and out of the country, restrictions on imports, subsidies to exports ---- the major subsidy a managed exchange rate that keeps the Chinese Yuan (called the Renminbi for external use with foreign countries) under-valued in dollar-terms ----and a large sector of state-owned giant firms that the CP has trimmed mightily in employment the last two decades, but still important enough to influence the overall economy's functioning.  Among other things, that means these state-owned enterprises have more investment capital allocated to them by the government-controlled banks than would otherwise be the case in a free-market.

The major difference between the current Chinese economy and the South Korean economy in the military dictator era is that China has been markedly more open to multinational investment from abroad: mainly from Taiwan, South Korea, Japan, Singapore, the USA, and the EU.  The result has been an increasingly fast climb up a ladder of manufacturing skills, output, and productivity.  In effect, about 60-65% of China's manufacturing exports yearly to the rest of the rest are pass-through of foreign multinational technology and component-parts, with these multinational firms using disciplined, fairly skillful Chinese labor as a low-wage assembly plant on a vast scale for exports. 

The Outcome?

It's three-fold:

• Outcome One: China's economy has become heavily dependent on export-led growth as the major stimulus to overall domestic production.  Its trade with the outside world between 1998 and the start of 20o8 expanded by 500%.  Between 2003 and the end of 2007, as the global economy's growth mushroomed, its exports were growing at an astounding 17% or so a year.  In 2007, its $1.3 trillion of exports were about 37% of China's total GDP.  Together with domestic investment, the result is that domestic consumption in China is AN astonishingly low 39% of GDP (again at the end of 2007, before the global economy's recent meltdown).  There's never been an economy in Asia or elsewhere where domestic consumption has had such a low share of GDP.

Some clarification seems in order here:

1. China's main export partners are the US 19.1% of the total, Hong Kong 15.1%, Japan 8.4%, South Korea 4.6%, and Germany 4% (2007)   And its main import partners are Japan 14%, South Korea 10.9%, Taiwan 10.5%, US 7.3%, Germany 4.7% (2007)
2. Note in passing that Germany was the world's largest merchandise exporter in 2008, its sales abroad totaling about $1.5 trillion (about 49% of Germany';s GDP!).  That gave it 9.1% of total goods exports in the world economy.  China came in second with $1.4 trillion worth of exports and placed it second at 8.9% of global export-trade in goods.  The US was third: its exports of goods totaled $1.3 trillion or 8.1% of global export-trade.  Japan was fourth, with 4.9% of the total, and Holland was 2nd with 3.9%.
3. If you add in goods-imports to trade, the US bill was $2.17 trillion or 13.2% of total imports world-wide.  Germany came in second, with $1.21 trillion worth of imported goods or 7.3%.  China came in third ($1.13 trillion or 6.9% of total global imports); Japan fourth ($762 billion or $4.6%) and France fifth ($708 billion or 4.3% of the total).   
4. Add in commercial services --- financial services, transports of goods, tourism, movies, TV, and so on ---the US remains by far the biggest overall trader (with a big surplus in such services) among countries world-wide, but with the EU as a whole (again excluding internal trade) holding a slightly higher percentage.  Remember here: the US population is about 300 million, and the EU's about 500 million.  The overall US GDP in Purchasing Power Parity is about the same as the EU's --- roughly $14.5 trillion last year.  In per capita income calculated in PPP terms (not existing exchange rates) ---- PPP measures seek, recall, to overcome fluctuations in exchange rates by trying to equalize price-levels in different economies ---- the US's was $47,000 and the EU's about $33,400.  Germany's, France's, and Britain's per capita income are slightly higher than the EU average.

What emerges?  In effect, the US remains one of the two biggest traders in the world, with about 26% of the total; and its import-buying consumers are much richer than those elsewhere . . . two data-points that are relevant to its maintenance of the $US as the primary reserve currency globally: about 64% of the total.  The EU as a whole --- excluding its internal trade --- is a close rival of total world trade, and with the Euro accounting for about 26% of the reserves held by foreign Central Banks.  The remaining reserves are small amounts of Yen, Swiss Francs, and British pounds, plus some SDR's (special drawing rights furnished by the IMF, based on a basket of currencies). 

Today's Buggy Topic Is Found . . .

at Economist's View, the laudable web-site maintained by Professor Mark Thoma of the University of Oregon . . . a savvy and balanced macroeconomist. 

The lengthy buggy commentary on the topic --- captured faithfully by the subject-title here --- is found in the same thread where the buggy prof commented at length earlier this week: on Adam Smith's views, always a source of controversy, on balancing societal pressures with individual rights.  The newer bugged-out stuff was posted on May 16th, 2009 at 9:02 A.M.   You can run a search for "buggy" to find it.  And in case you haven't read the initial buggy post, you might find that relevant to the later post.

Click here for the relevant thread and prof bug posts.

Note Something

The fellow posters in the thread keep strictly --- without exceptions --- to abstract generalizations, reinforced by "I think this" and "you, you fool, think that" . . . always a sign of not just weak arguments but also ideological proclivities protected by all sorts of group-think psychological defenses. 

Prof bug, over his scholarly lifetime, grew weary of such abstractions early on.  His lengthy new post reflects that weariness.  It deals with two morally charged controversies --- abortion rights and the death penalty; notes public opinion results on these controversies; links them to the problems of democratic rule and accountability to . . . well, to whom?  And compares the big differences in democratic rule and legal systems on the issue of the death penalty in the USA compared to West European countries as well as Canada.

Surprisingly, as you'll see, majority support for retaining the death penalty in the US, for good or bad, is not much different from what such opinion happens to be in Canada, Britain, or on the Continent of Europe.  And yet the US remains exceptional in the maintenance of the death penalty in 39 of our 50 states.   Why the difference?.

Today's Buggy Topic

 Set out in clear fashion in the subject-title here, that topic --- which is dealt with in a lengthy bugged-out post at Economist's View --- appears in a thread at that web-site that deals with the controversy surrounding Adam Smith's two best-known works.   The first: The Theory of Moral Sentiments  published in 1759 when Smith held the chair in moral philosophy at Glasgow University.  The other is The Wealth of Nations, which appeared about two decades later.

Every educated person knows that the Wealth of Nations sets out the framework of a free-market economy, along with the necessary public goods that only government can provide: a legal system, the protection therefore of private property and persons, the police, and national defense.  In the process, the book shows how the pursuit of self-interest is guided by market signals --- call them the price system (Smith called it the "Invisible Hand") --- in ways that maximize societal interests . . . in particular, maximizes the wealth of a country.   Free-trade at home and with other countries needs no other governmental direction than what these minimal public goods, supported by limited taxes, provides. 

The Result: Free Reign Given To Individual Self-Interest Within A Society of Limited Night Watchmen Government Will Also Maximize Societal Well-Being , Or So . . .

. . . libertarians claim today, more than two centuries later.  Enter the problem of this view though. 

For The Theory of Moral Sentiments --- a lengthy philosophical discourse on human nature and ethics --- offers a different view of individual human nature than the Wealth of Nations:  in it, humans appear as greedy, wretched, quarrelsome, and prone to exploit one another.  True, they can develop the ability to cooperate with others in society and even nurture certain "moral sentiments", but the sphere of such morality and empathy ("shared sympathy") is very limited in individual relations with others . . . in particular, dependent fully on self-interest and self-command and, outside of friendship and family, is overwhelmingly instrumental ---- which is to say how each other's pursuit of self-interest relates to his or her own pursuit..   

In such a view, there's little evidence that such individuals --- pursuing their strict self-interest in economic life beyond what we would now call, presumably, reciprocity ---- would simultaneously maximize societal well-being, however defined.

The prevailing libertarian view --- which has been around since the end of the 18th century --- is that Adam Smith therefore changed his views about stark individualism and how it relates to societal benefit between the two books.  Not so . . . at any rate, not so in the view of Alec L. Macfie, who held the Adam Smith chair in political economy at Glasgow University in the 1950s, and in whose honor a new chair was created after his retirement.

Enter the Buggy Post

Click here for the relevant thread and post.  Please be sure to read the entry on Smith's work that starts the thread before you look at the buggy post and, if you're interested, the other posts left there too.

Today's Buggy Topic

The subject-title captures most of it pretty faithfully, though it omits the way the buggy analysis ends in some predictions about how much the US is likely to change its limited welfare-state and regulatory systems in the Obama era.  Mainly it sets out a systematic analysis of why the USA --- in company with the other English-speaking countries: Britain, Ireland, Canada, Australia, and New Zealand --- have never developed the kind of strong statist direction of the economy and social-engineering that mark the prosperous West European democratic countries.

The Buggy Stuff Is Found At Economist's View. 

Click here and run a buggy search.  The longest post starts with Michael Gordon, rather than the buggy professor . . . mainly because I had trouble posting it under the usual pseudonym, a problem with the typepad blog's posting software.  In effect, if you start a post there, then --- as prof bug does --- get a line of thought going, and finish in Word, you won't be able to post the Word-completed commentary if typepad's posting software stays open too long.  Life on the Internet, no?

Note that the thread was started by Professor Mark Thoma, who runs his laudable economic web-site with deft skill, in a link to a lengthy commentary of Professor Gary Becker, a Nobel Prize-winning economist of strong libertarian bent at the University of Chicago.  In it Becker urges that libertarians separate clearly from the more zealous Moral Majority conservatives who, he believes, have brought the Republican Party into disrepute.  As Prof bug noted, among other things, the Republican Party is an uneasy amalgam of libertarians, Moral Majority types, and nationalist anti-free trade, anti-immigrant, and anti-Semitic right-wingers headed by Pat Buchanan.  They have little in common except a preference for limited government and free-markets. 

Mainly Though . . .

. . . Prof bug --- using some of his fellow posters' comments as a springboard --- sets out a systematic analysis, backed with historical data that range widely, that shows how statism generally has been more limited in its scope over society compared to the now strong democratic countries on the Continent of West Europe.  And he ends with some prognosis of how likely, given this historical context ---- institutional, legal, cultural, and political --- our existing state-economy relations are likely to change in President Obama's current administration.

Strange Topic As It Stands, No?

Well, note that it captures more or less what the thread at Economist View, Professor Mark Thoma's laudable web site, deals with . . . where prof bug posted his own views on the problems, more technically stated, of data-mining and model fiddling by scholarly researchers ---- and not just in economics. 

Though the topic sounds wonkish, the initial fascinating article linked to by Prof Thoma is easy to follow and documents a study carried out by a physicist who did, in fact, find that rats guessed better the color of the next toss of two balls --- red or green (which rats perceive differently, color-wise, from humans; but see the difference anyway) --- than humans did. 

That Initial Article Is by William Easterly . . .

. . . a justifiably prominent economist, formerly for decades with the World Bank ---- with lots of field experience in Africa and elsewhere --- who specializes in the problems of economic backwardness in developing countries. 

A free-market specialist, he grew skeptical of all the nostrums pushed by the World Bank and other developmental agencies around the globe since WWII --- along with almost the entire bulk of the divergent theoretical work produced by economists --- and, in the end, concluded .that the developed world has really no formula for development that the more backward countries in Africa, the Middle East, parts of Asia, and parts of Latin America can use to overcome their backwardness.  His best book --- which is written with verve, insight, and clarity --- remains one that he published in 2001, called The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics. 

 In it, he sets out a variety of the best-known formulas; shows that none has worked --- other than, at some point, how the more rapidly developing countries in East Asia integrated gradually into the global economy and tried to develop manufacturing industries with multinational help that would export into rich countries; shows further that the major pre-conditions of such steady development require fairly honest politicians and bureaucrats, plus effective political and legal institutions that limit predatory elite behavior and corruption; and have let markets gradually operate.

It's a laudable book, easily read by non-economists --- and full of wisdom, theoretical and practical alike.

Back to the Subject of the Thread

What Easterly's article does is show how the theoretical models produced over the decades by hordes of economists who favor this or that nostrum --- large amounts of foreign aid now back in fashion --- are generally fraudulent . . . based on what statisticians call "data-mining" in order to pluck this or that sub-set of data from an already limited data-set as the basis for running their statistical models on. 

The discussion in the Thoma-thread is generally of high quality ---- the theoretical and especially statistical ones drawing replies mainly, it seems, from knowledgeable scholars.  Prof bug adds his own slanted stuff to the discussion . . . none of it, believe me, particularly technical or hard to follow.

Click here for the thread and the long buggy commentary, posted at 9:06 A.M. on May 10th, 2009.   Oddly --- the reason really for the date and time of the post --- is that right now, a little past noon in Santa Barbara, the buggy post is picked up at Prof Thoma's web site by Firefox and Opera, but not Internet Explorer 8.  Who knows?  Maybe a malevolent E.T. is trying to sabotage the buggy professor's web-blasted ratiocinations from a hidden space ship parked in his neighbor's backyard . . . the bugged out guy back, with his family, in his house in the steep hills right above downtown and somehow earning the enmity of our outer-space visitor. 

Today's Buggy Article

It's found at Economist's View, in a thread linked to in the last couple of buggy articles here . . . with the long buggy additional post there dealing with the problems of the homeless in the USA and EU.  The statistics might be surprising, though as prof bug notes the definitions of homeless vary a lot in the countries of the western half of the EU . . . the EU Council of Ministers and Commission never having agreed on a common definition.  That leaves the Eurostat --- the admirable statistical agency of the European Union --- fully dependent on occasional individual government statistical tracking, along with the use of divergent definitions. 

Click here for the latest prof bug post, which appeared at May 5th, 2009, at 1:50 PM.  There is a very short follow-up that appeared the next day not far below that.  Note that predictable responses from enraged left-wing zealots . . . prof bug himself, remember, a militant moderate who finds ideological claptrap of the right or the left fair game for intellectual probes, with his results always grounded in hard evidence.  And where the evidence is ambiguous or inadequate, he notes that . . . just as he has noted that he does not regard himself as infallible and will be happy to admit he's wrong and publish those admissions whenever they materialize. 

For instance, at Economist's View a couple of months ago, a fellow poster challenged prof bug's interpretation of a sentence in a source.  After he read her interpretation, he looked over the ambiguous paragraph in that source and quickly found her view more credible and thanked her publicly for the correction.  Professors aren't like the Pope when he's inspired by the spirit.  Hardly any will even participate in non-professional forums with others.  Don't want to be found shown up apparently by others. 

Thank You

Prof bug thanks those who've sent emails inquiring about his family's status in Santa Barbara, where a blazing fire in the high country --- climbing steeply up the canyons and their slope-ridges four miles inland, no further, toward the jagged ridge-line atop the Santa Ynez mountains --- started on Tuesday.  We evacuated on Tuesday evening, and since then, we've been joined by about 25,000 other evacuees in the Santa Barbara area. 

Fortunately, 

All of us, the 25,000 evacuees --- more than a quarter of the S.B. population --- are fine.  Those who evacuated earlier are staying with friends in safer zone or the large number of hotels and motels that fill the Santa Barbara area.  Dozens of shelters have been opened for those who can't find any more lodging of this sort, and --- according to the news announcement --- several thousand have had to find hotel lodging either in the Ventura area 30 miles down the coast or up the coast and inland in the northern part of Santa Barbara County. 

Fortunately, too,  all the hotels and motels charge evacuee rates, not to mention that fire-insurance should cover the costs as well.  We're staying in a plush 5-star hotel across the street from the beach near downtown that ordinarily charges $740 a day.  Our rate: $129.  Very decent, no?  And the less expensive motels and hotels charge about $99.

More Good Fortune

Santa Barbarans are accustomed to evacuations.  Last November, we had to evacuate for a fire that started in the lower mountain areas and headed toward our house, which is about 400 feet above downtown in the steep Riviera hills cut by canyons in several places.  That fire stopped a few hundred feet above us, and in the end it burned out with about 150 houses destroyed, with only one fatality (a heart attack) and no serious injuries to anyone else. 

Last summer, in Goleta --- which starts about 7 miles from downtown S.B. and runs for about 6 miles (including the UCSB on the coast) --- the Gap fire raged for several days in the high country, but no structures were lost.

The worst fire we experienced was in 1978, which also started in the high country above us and forced an evacuation as well.  It destroyed almost 1000 houses, but with no fatalities.

Our Community Services and Firefighters Deserve Admiration

Those who live in the Riviera hills --- including equivalent hills along the coast in Montecito and behind Santa Barbara out into Goleta --- have practiced evauation drills, organized by volunteers with city cooperation.  The community services, official and voluntary like the Red Cross, have prepared for disasters over the decades now. 

The same is true of our Fire-department.  It has agreements with other departments down to San Diego and up into the San Francisco Bay area for mutual help.  Right now, there are over 400 fire-trucks and 1500 or so professional Firefighters on hand.  Several hundred sheriff's and police officials from other communities have arrived too, to help control the abandoned areas and prevent looting. 

The police are needed.  Back in the 1978 evacuation, we no sooner left at around midnight --- flames 100 feet high only two blocks away and higher up roaring then --- than a neighbor, who worked for the city, was making the rounds on our short dead-end street that looks over a steep canyon, saw a car pull up our long driveway and three men get out . . .  predatory looters on the loose.  He was carrying his shotgun, walked fearlessly up the driveway and around to the back, caught them just in the process of forcing our door open, and fired a round in the air.  He told them to get out, made sure they did, taking their license plate and reporting it the next day to the police.

Then, as the fire neared our street --- just a hundred feet above us --- he was satisfied that everyone had evacuated and left with his wife.  Wonderful neighbors, right?

We're Planning To Stay at the Hotel Until ...

next week, making sure that our reservations are intact for that date.  If the fire is under control earlier, we can leave earlier.  If not, well at least we can always renew our reservation into the future.  

The problem with a fire like this as it moves up the steep canyons to the jagged ridge line of the Santa Ynez mountains is the gusty winds that can blow generally at times in the whole area --- but more especially because there are local gusts at times that just normal sunshine creates on warm days.  The heat rises, especially as the evening comes along.  That creates a sort of low-pressure area underneath the heat, which in turn creates something of vacuum that sets off strong hot winds.  The current fire has been fed by both sorts of fires.  Last night, the winds up in the mountain area were up to 60 miles and hour, spreading the fire out toward Goleta.  Meanwhile, on the beach where we were staying --- just three or four miles away --- the temperature was in the low seventies by 8:00 PM and dropped even further.   And today, the temperature throughout the city is the usual low seventies . . . in the summer a high temperature around 80 degrees and in the winter a low temperature at night in the 40's. 

Again, thank you for your inquiries.

Today's Buggy Topic

In the N.Y. Times  Weekly Magazine (May 3rd, 2009), a lengthy article appeared that set out the impressions of an American writer who moved to the Netherlands to take charge of an institute there.    In in the course of his commentary,  he indicated that he had bridled, initially, at the statist nature of Dutch life --- not least very high taxation ---- only over time to decide that the Netherlands is really a an admirable country . . . so much so we should try to emulate its socialist way-of-life.  Note:: socialism is his term, not the buggyf prof's.

The article was linked to by Professor Mark Thoma, who runs the laudable economic web-site Economist's View, where most of the posters, American and otherwise, seem to think that life in general is much better in the EU; that the United States is run by a financial capitalist oligarchy --- which, as prof buggy has repeatedly observed in the forum threads there, didn't seem able to prevent the election since 2006 of a Democratic Congress and a Democratic president --- and that the average American worker has been so cheated and even exploited since the 1960s that you'd think the USA had degenerated into a Dickens'-like society of the English sort early in the industrial revolution of the first part of the 19th century. 

 Weird, no? 

Consider Poverty in the USA

You'd never know from their repetitive posts that the 8-9% of Americans in poverty --- that percentage calculated with in-kind (non-cash) transfers to them, such as rent-subsidies, food-stamps, and Medicaid, added to cash-transfers --- are overwhelmingly there temporarily.  Or never know that the Census Bureau of the USA finds in yearly random surveys that they --- along with the rest of the bottom quintile of income earners in this country --- spend $2.40 for every $1.00 reported in income.  Or know, too,, that other Census Bureau studies show the following data for 2007 (click here for source):

• In the US, in the lowest 10 percent of households (all of whom are officially classified as "poor"):
• 43% own their  home.  The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
• The average poor American has more living space than the average non-poor individual living in Paris, London, Vienna, Athens, and other cities in Europe
• Almost 75% of poor Americans own a car; 31 percent own two or more cars.
• Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
• 97 percent own color TVs
• 55 percent own two or more color TVs
• 99.2 percent own a refrigerator
• 74 percent own microwave ovens
• 75% percent own VCRs or DVD players
• 57 percent own clothes dryers 
• 59 percent own stereos
• 37 percent own dishwashers
• 36 percent own computers
• 32 percent own garbage disposals

Back to the Netherlands 

In prof bug's lengthy commentary on the Times'  article, he shows that the Netherlands --- like the rest of the rich EU countries, the English-speaking countries (including the USA), and Japan --- are struggling with the same sorts of challenges and worrying problems and tackle them in different ways, with varying degrees of success . . . all in line, moreover, with their divergent institutional and cultural heritages.   To stay with the USA, the Netherlands and the other West European continental countries do some things better than us, and we do some things better than them; and some of the better things on both sides of the Atlantic can't easily be transferred into one another's institutional, cultural, and political systems. 

More specifically, prof bug --- who notes at the outset of his post that a "dreamland" fantasy of EU life is again being purveyed by the usual suspects: in this case, the Netherlands --- argues that given what he's just said a moment ago here,, a balance sheet can be drawn of what's admirable in the Netherlands and what's oppositely a source of concern and growing trouble for the Dutch themselves .  For instance, 7.5 Dutch have been emigrating out of their country for the last several years . . . most of them young and well educated, pushed to leave by growing concerns --- brought out by Dutch survey evidence that prof bug cites ---- over growing population density, pressures to conformity, growing violence, and growing pollution.

Enough Said

Click here for the thread at Economist's View, which starts with some easily read excerpts from the Times'  article on the Netherlands, with prof bug's comments found by running a find on the relevant web-page for the buggy professor.

Today's Buggy Topic

It's found in a thread in one of the NY Times blog-forums, this one on education.  The thread itself, which started three days ago --- and has hundreds of posts --- was inspired by a Times' article on the educational achievement gap between white American school kids compared with their black and Hispanic colleagues . . . at any rate, through grade 12.  Click here for that article and be sure to click on and enlarge the diagrams in the box on the left sidebar.

The Discouraging News

What the article shows --- nothing new for those who follow the topic, but well presented and with some useful interview-quotes --- is that the gap between black and white school performance as measured at ages 9, 13, and 17 noticeably narrowed between 1970 and the end of the 1980s, only to grow again and to remain more or less stuck where it was at that point. 

At the educational blog of the Times, four educational specialists commented on the failure of the gap to narrow . . . followed by the hundreds of posts that ensued.  By the time prof bug had found and posted in that thread, it was already filled near the bottom of page 9.  What he tried to show with his bugged out analysis was that there was a confusion in most of the posts between two topics: the one inspired by the article on the black-white-Hispanic gap, and the topic of alleged American educational mediocrity compared to other countries.  The latter, just assumed --- and backed by no hard evidence and lots of anecdotal stuff --- happens not to be the case. 

How So?

If you deal with the ethnic-racial gap in the Times article, then if you go to the results of the international exam in scientific, mathematic, and literacy performance across 57 countries --- 30 of them industrial countries in the OECD (Organization of Economic Cooperation and Development) --- you will find that those results for the latest of these exams, administered in 2006, shows a very different outcome of the American educational performance for white school kids age 15 compared to their black and Hispanic counterparts.

Specifically, as prof bug shows following the same breakdown by ethnic/racial classification that the Department of Education provides, the US overall performance in scientific and mathematics literacy raises the US comparative performance from 21st from the top --- and about 13 points below the average for the 30 industrial countries in Europe, North America, and Pacific Asia --- to 7th, with American white 15 year olds outperforming Koreans  and just a tad below the Dutch and Australians.  (As prof bug observes in his post, the differences between these three countries may not be statistically significant: you can't be sure with a likelihood of 5% or less that those differences aren't due to random chance).

Click here for the buggy post, with all the evidence and the link to the Department of Education study of the 2006 exams (known as Pisa and administered every 3 years).

Please Note

Prof bug's post is found at the bottom of page 9, no 214, with a date of May 1, 2009 at 4:44 pm.  The link to the thread should take you to that page, and the post is under the name of Michael Gordon, the alias for the buggy professor.  For the moment, the post --- probably because of its length --- has to be approved by the Times moderator, and prof bug will check tomorrow to see that it was approved.  No reason why it shouldn't be.  It's straightforward factual analysis, drawing on our Department of Education findings. 

Some of you might want to go to page 1 of the thread.  It's there that you'll find the comments of the four educational specialists.