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Debacle in Quebec

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Paul Krugman writes in the NY Times:

For all their pomp, most multilateral summit meetings are boring and of little consequence. I once spoke to a State Department official who had a role in putting these meetings together; he described his job as “policing the nuances,” which gives you an idea about how much is normally at stake.

Occasionally, however, such meetings do have real consequences, good or bad. The 2009 G20 summit, at which nations agreed to provide economic stimulus and loans to troubled countries in the face of the financial crisis, played at least some role in helping the world avoid a full replay of the 1930s. The 2010 summit, by contrast, effectively endorsed a turn to austerity that significantly delayed recovery and, arguably, partially set the stage for the rise of political extremism.

Still, there has never been a disaster like the G7 meeting that just took place. It could herald the beginning of a trade war, maybe even the collapse of the Western alliance. At the very least it will damage America’s reputation as a reliable ally for decades to come; even if Trump eventually departs the scene in disgrace, the fact that someone like him could come to power in the first place will always be in the back of everyone’s mind.

What went down in Quebec? I’m already seeing headlines to the effect that Trump took a belligerent “America first” position, demanding big concessions from our allies, which would have been bad. But the reality was much worse.

He didn’t put America first; Russia first would be a better description. And he didn’t demand drastic policy changes from our allies; he demanded that they stop doing bad things they aren’t doing. This wasn’t a tough stance on behalf of American interests, it was a declaration of ignorance and policy insanity.

Trump started with a call for readmitting Russia to the group, which makes no sense at all. The truth is that Russia, whose GDP is about the same size as Spain’s and quite a bit smaller than Brazil’s, was always a ringer in what was meant to be a group of major economies. It was brought in for strategic reasons, and kicked out when it invaded Ukraine. There is no possible justification for bringing it back, other than whatever hold Putin has on Trump personally.

Then Trump demanded that the other G7 members remove their “ridiculous and unacceptable” tariffs on U.S. goods – which would be hard for them to do, because their actual tariff rates are very low. The European Union, for example, levies an average tariff of only three percent on US goods. Who says so? The U.S. government’s own guide to exporters.

True, there are some particular sectors where each country imposes special barriers to trade. Yes, Canada imposes high tariffs on certain dairy products. But it’s hard to make the case that these special cases are any worse than, say, the 25 percent tariff the U.S. still imposes on light trucks. The overall picture is that all of the G7 members have very open markets.

So what on earth was Trump even talking about? His trade advisers have repeatedly claimed that value-added taxes, which play an important role in many countries, are a form of unfair trade protection. But this is sheer ignorance: VATs don’t convey any competitive advantage – they’re just a way of implementing a sales tax — which is why they’re legal under the WTO. And the rest of the world isn’t going to change its whole fiscal system because the U.S. president chooses to listen to advisers who don’t understand anything.

Actually, though, Trump might not even have been thinking about VATs. He may just have been ranting. After all, he goes on and on about other vast evils that don’t exist, like a huge wave of violent crime committed by illegal immigrants (who then voted in the millions for Hillary Clinton.)

Was there any strategy behind Trump’s behavior? Well, it was pretty much exactly what he would have done if he really is Putin’s puppet: yelling at friendly nations about sins they aren’t committing won’t bring back American jobs, but it’s exactly what someone who does want to break up the Western alliance would like to see.

Alternatively, maybe he was just acting out because he couldn’t stand having to spend hours with powerful people who will neither flatter him nor bribe him by throwing money at his family businesses – people who, in fact, didn’t try very hard to hide the contempt they feel for the man leading what is still, for the moment, a great power. . .

Continue reading.

Written by LeisureGuy

11 June 2018 at 5:57 pm

Jennifer Rubin: After Trump’s G-7 summit fiasco, be afraid

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Jennifer Rubin, a conservative Republican, writes in the Washington Post:

After President Trump’s atrocious and irrational behavior leading up to and at the Group of Seven summit, the disintegration of the liberal world order in place since the end of World War II and the potential for a serious international crisis no longer seem hard to imagine. The president, unmoved by history, ignorant of facts and guided by sycophants, has not been forced to grapple with the real world nor to hear views that don’t coincide with his twisted worldview, in which allies are ripping us off and aggressive strongmen are to be admired and accommodated.
Trump — after departing the G-7 meeting early — reversed his earlier decision to sign on to the joint statement with other member nations. He no doubt was reacting to the public tongue-lashing from Canadian Prime Minister Justin Trudeau, who told the press, “I highlighted directly to the president that Canadians did not take it lightly that the United States has moved forward with significant tariffs on our steel and aluminum industry.” Trudeau continued by declaring that the Trump administration’s decision to invoke “national security” to justify tariffs was “insulting” given Canada’s alliance with the United States in multiple wars. As Trudeau put it, “Canadians, we’re polite, we’re reasonable, but we also will not be pushed around.” Trump can never tolerate criticism, let alone such public and direct criticism, so he accused Trudeau of making “false statements” and reneged on the decision to sign the joint communique.
Trump demonstrated once again that he is erratic and untrustworthy — with his own allies! The contrast between his antagonistic relationship with democratic allies and his never saying a bad word about Russia defies explanation, unless one is to buy into the theory that he is indebted in some fashion to Russian President Vladimir Putin, whose campaign to interfere in the U.S. elections helped land Trump in the White House.
Even before this diplomatic disaster, Trump was already grumbling about his failure to get our allies to capitulate. The Post’s Damian Paletta and Anne Gearan report:

President Trump told foreign leaders at the Group of Seven summit that they must dramatically reduce trade barriers with the United States or they would risk losing access to the world’s largest economy, delivering his most defiant trade threat yet to his counterparts from around the globe.
Trump, in a news conference before leaving for Singapore, described private conversations he held over two days with the leaders of Britain, France, Germany, Italy, Japan, and Canada. He said he pushed them to consider removing every single tariff or trade barrier on American goods, and in return he would do the same. But if steps aren’t taken, he said, the penalties would be severe.
“We’re the piggy bank that everybody is robbing,” Trump said. “And that ends.”

I have no idea what he is talking about. Our allies are not stealing anything. It is far from clear what, if anything, would satisfy him. If — and it is a big if — Trump is serious about erecting barriers to U.S. markets, we are looking at a full-blown trade war with our closest allies and trading partners, along with the trade wars with China and Mexico. All this would redound to the benefit of exactly one country, Russia. A worldwide recession would not be hard to imagine.
Trump becomes irrational and unhinged when contradicted, and given the degree of contradiction permitted within his inner circle (none), it must be unnerving indeed to discover that our allies view him with disdain if not contempt. Arriving late and leaving early from the G-7 gathering, Trump played the petulant child, trying so very hard to say that he didn’t want to be part of their group anyway — so there! Worse still, his disturbing invitation for Russia, the United States’ most worrisome foe, to join the G-7 suggests he really cannot tell who is a friend and who is an enemy.
Trump’s Republican enablers, who ridiculed liberal Democrats for coddling dictators and ignoring allies (ah, the good old days when they groused, inaccurately, about the return of a Churchill bust!), should see what their groveling has wrought. They now back a president who does not put America or the West first. A Manchurian candidate could not show greater fealty to Russia nor more diligence in helping Russia pursue its goals. Senate Majority Leader Mitch McConnell (Ky.), who refuses to consider reclaiming Congress’s role in trade, will see the consequences that flow from his and his fellow Republicans’ neglect of their constitutional obligations. Republicans have rejected their obligation to restrain an unfit executive and lessen the damage by reasserting Congress’s rightful power in areas such as trade. They are now Trump’s facilitators in his apparent desire to blow up the international world order — the world order America helped created and has always led. In that sense, McConnell, too, is helping, wittingly or not, to make Russia great again.
Last week, McConnell bragged that the past 16 months have been the best he’s ever seen for conservatism. Unless “conservativism” means the anti-liberal regimes in Europe and Russia, that evaluation is daft. Starting trade wars, coddling enemies, inflating the debt, tolerating widespread corruption and fanning despicable racial animus make for “success” in conservatives’ minds? No wonder many former Republicans cannot abide the current GOP. These political outcasts have for decades been against every one of the things I just listed; the GOP now accepts and even celebrates every one of them. The question is not why former Republicans have left the party but what purpose the party serves beyond sustaining Trump.
As Trump is poised to meet with North Korean dictator Kim Jong Un, he declares he’ll know within a minute whether the meeting will be a success. Here is a man declaring his gullibility and waiting to be snookered with a few smiles, some stomach-turning flattery and many empty promises from a calculating adversary. Trump seems not to know that the first meeting between the U.S. president and the dictator of North Korea is not an amazing achievement for the United States; it’s a huge win for Pyongyang.
In the case of the Singapore summit, we really do see a zero-sum equation. Trump, for fear of failing, seems to have defined “success” down to a photo op, thereby giving a massive victory to Kim, who obtains legitimacy and reduces, if not eliminates, any real risk of military action against his regime. Kim will do what North Korea has done again and again: speak nice words, pull the United States into fruitless discussions and give up nothing of consequence. The empty gesture of formally ending a war that has been over for 65 years achieves nothing for the United States but will burnish Kim’s image.
The notion that real denucelarization is even possible needs to be rethought. How could an entirely closed regime, replete with secret labor camps and a substantial military, ever allow inspectors to rove the entire country to determine what it has and what, if anything, it is giving up? How could Kim give up the jewel of his regime, the very thing that got him a summit with the world’s only superpower? Getting “investment” or economic aid from the West likely sounds like colonialism redux to the North Korean regime. Taking “help” from the West would be inviting the fox into the henhouse from their perspective. Surely someone in the Trump administration understands this, right? (Where is national security adviser John Bolton when you need him?)
Trump is now so desperate to show he’s “right” — a master negotiator who breaks every precedent — that it is becoming more and more likely the  . . .

Continue reading.

Written by LeisureGuy

10 June 2018 at 8:26 am

How Airlines Explain Our Screwed Up Economy

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Marshall Steinbaum writes in the Washington Monthly:

By now the nature of the economy’s market power problem is clear: decades of lax antitrust policy have permitted a concentration of economic power in the hands of dominant corporations, their executives, and their boards of directors not seen since the Gilded Age. This has disadvantaged the economy’s many other stakeholders: consumers, workers, entrepreneurs, communities, and everyone who benefits from economic growth as a whole. The question now is what to do about it.

It’s instructive to look at the airline industry as a case study in policy gone awry. It isn’t just your imagination that flying has become increasingly miserable over the past decade: a wave of mergers has left us with four major airlines who are free to offer us take-it-or-leave it terms—extra fees, smaller seats, fewer routes—while reaping consistent record profits. The bloody face of a passenger being dragged off a United flight last year is only the most memorable image of how unpleasant air travel has become.

How did we get here? The federal antitrust statutes, passed more than a century ago, are supposed to let the government keep big businesses from abusing their power. But, since the 1970s, Supreme Court decisions influenced by conservative economic theories have greatly diluted those laws, leaving the government with very few effective enforcement tools. As I explain in a new research paperfor the Roosevelt Institute, the one lever left to antitrust enforcers to guard against consolidation that squeezes out competition—merger review—has not been up to the task. Under existing judicial precedents, there’s no way to rescue the airline sector or the economy as a whole from the structural decrepitude into which they have sunk. Instead, it’s time for new comprehensive federal legislation to revive enforcement against dominant firms in airlines and elsewhere, to undo decades of consolidation, integration, predation, and exploitation and reconstruct an economy that serves everyone’s interests.

Antitrust in an era of deregulation

Commercial air travel used to be highly regulated by the federal Civil Aeronautics Board (CAB), which controlled how routes were allocated, what prices could be charged, and which areas had to be serviced. At the time, the sector was dominated by legacy incumbent carriers at the regional and national levels. Airlines were required to provide affordable service on unprofitable routes, in exchange for retaining their scarce, valuable slots on high-traffic routes where they could earn a profit.

That regulatory apparatus was dismantled during the Carter administration through legislation sponsored by Ted Kennedy and strongly influenced by his staffer, then law professor Stephen Breyer. Deregulation meant that instead of applying to the CAB for permission to charge a certain price for a given route, airlines were free to charge what they thought the market would bear. While the scarcity of landing slots at airports meant there would never be entirely free entry in the sector,  deregulation allowed airlines to compete on routes that had previously been divvied up among a few chosen incumbents. The premise of deregulation, following a decade of rising fares in response to oil shocks and government-guaranteed profit margins, was that competition and the “free market” were better at allocating scarce resources than the CAB. Inefficiencies would be washed out of the system and consumers would benefit.

Deregulation did at first seem to deliver on some of its promised benefits. Airfares plummeted on the routes that remained in service (though this was in part due to the combination of increased fuel economy and the decline in oil prices following the end of OPEC’s effective global monopoly). Airlines like Southwest, which began life operating solely within Texas, and was hence never subject to the CAB regime, exploded outward to put pressure on comfortable legacy carriers. In many ways, air travel went from being an elite to a mass phenomenon. But this came with downsides that many deregulation advocates have underplayed: reduced status and job security for airline workers, a greater capacity for incumbents to price-discriminate among passengers. In order to economize after their profits ceased to be guaranteed, legacy carriers designated certain airports as hubs (think of Delta in Atlanta or United in Newark), and most trips would involve passengers passing through those hubs. With fewer direct flights, the quality of the product on offer was reduced. The hub system also effectively segmented the national market into geographically-subdivided monopolies or oligopolies—certain airports became dominated by one or two airlines, and non-hub airports would be serviced by at most a few routes linking them to each airline’s nearest hub.

The division of the national market into regional monopolies had an even more dire impact: Airlines simply stopped service on routes too sparsely traveled to remain profitable, which had the effect of cutting off whole swathes of the country from regular commercial air traffic. Nowadays, even cities as large as Saint Louis and Cincinnati suffer from a lack of service. When Amazon released its request for proposals for cities to house its “HQ2,” it specified that the chosen location would have to have direct air links to its existing headquarters in Seattle, San Francisco, New York, and Washington, D.C. Fairly few cities fit the bill.

Another consequence of deregulation was that running an airline became a far riskier business proposition. Until the last decade, the sector operated in a perpetual boom-and-bust cycle. Price wars and recessions made revenue extremely volatile, while the fixed cost of maintaining a basic level of coverage remained high. For example, airlines need to insure a minimum number of flights reach a given hub in order to fill their flights out of that hub. Each of those incoming flights may be individually unprofitable, but the profitability of the whole system depends on servicing them.

These dynamics are inherent in unregulated, infrastructure-dependent networked industries like telecoms and railroads, and so, as in the Gilded Age, the solution to protect incumbents from hard times was to merge. After the last round of airline bankruptcies in the mid-2000s, the antitrust authorities permitted the remaining firms to consolidate to increase profits. Where there were nine major airlines in 2005 (remember Northwest?), today there are four.

In any industry, consolidation gives a small number of firms market power: the ability to charge customers more (or treat them worse), and pay employees and suppliers less, without fear of being undercut by the competition—because there is no competition. Too much market power is bad for the economy for the same reason that it’s attractive to companies: it allows them to make higher profits without raising quality or efficiency.

Antitrust enforcement gets neutralized

In the late 1990s, the government tried to prevent airlines from abusing their market power. The Department of Justice under Bill Clinton filed suit against American Airlines for predatory pricing at the Dallas-Fort Worth airport. Predatory pricing is when a monopolist attempts to exclude competitors by aggressively reducing prices whenever a new entrant tries to get into the market, eating the temporary losses until the competition is crushed. This was the first major predatory pricing case brought by the DOJ Antitrust Division after the Supreme Court decision in Brooke Group v. Brown and Williamson, in 1993. Before Brooke Group, to prove predatory pricing, the government or any plaintiff just needed to show that a company was charging prices below cost. But following the decision, the DOJ would have to not only show that American Airlines priced its tickets below cost—a relatively simple thing to prove— but also prove that it would be able to “recoup” its losses through later profits. In 2001, a federal judge ruled that the government had failed to meet that burden in its suit against American. The result was to effectively take away an important tool the government could have used to prevent airlines from carving up the market.

Now that they don’t have to worry much about customers going with the competition, airlines have exploited their market power to “unbundle” their fares, forcing customers to pay extra for checked bags, boarding priority, space in overhead bins, rebooking, and so on. Unbundling would be fine if the savings were passed on to consumers in the form of lower fares. But in practice, it appears to only slightly reduce baseline fares, while forcing passengers to pay for services they previously got for free.

Frequent flyer programs are another mechanism for price discrimination, and big data will only make this more extreme: the carriers will know when you have a can’t-miss family event versus surfing fares for a one-off vacation opportunity, and price accordingly. They’ll also know whether you personally are likely to get enticing offers from their competitors—which has a lot to do with your family background, race, and income. All of these strategies were once subject to much closer antitrust scrutiny, but today unilateral conduct—meaning behavior by a single dominant firm—is more or less immune from challenge. Even when airlines seem to be colluding, it’s hard for plaintiffs to prevail. In 2017, a private class-action lawsuit alleging that Delta and AirTran had conspired to introduce bag fees on routes from their mutual Atlanta hub was thrown out of court because the plaintiffs couldn’t prove that the carriers had actually acted in concert. It was possible, the court said, that this was mere “conscious parallelism”— doing the same anticompetitive action (introducing bag fees) without having explicitly planned to do so together. The federal agencies haven’t even tried a similar suit. The perversity of this situation is clear: under existing law, as long as all the airlines worsen their service, none of them can be accused of violating the antitrust laws.

 “Economics” in merger review

Decades of narrow Supreme Court precedents have made it all but impossible for the government  to police conduct like the coordinated introduction of bag fees, or to reduce geographic concentration by challenging the predatory pricing that preserves it. The only policy lever left is “merger review”. And when deciding to bring (or, more often, not to bring) challenges, the decisive consideration tends to be whether the government can show that airline consolidation is likely to increase fares specifically on routes that are served by fewer carriers as a result of the merger.

In each of the three major airline mergers that have closed since the Great Recession—Delta–Northwest in 2008, United–Continental in 2011, and American Airlines–US Airways in 2014—the Justice Department was presumably unable to show that fares on merger-affected routes would increase relative to less affected routes, and so they declined to challenge any of them.

That doesn’t mean antitrust enforcers weren’t worried about anti-competitive consequences of the mergers. In fact, the DOJ did file suit to block the American–US Airways merger, but it ultimately settled the case in exchange for minor concessions. A 2016 article in ProPublica reported that DOJ professional staff were overruled by political appointees in the matter, and since then, the DOJ has opened an investigation into collusion by all the major airlines—an outcome it predicted would take place in its initial complaint seeking to block the 2014 merger.

That complaint listed many harms to competition that would result from allowing the merger to proceed. But what ultimately ends up deciding the matter at trial is the extremely narrow question of whether increases in concentration on individual routes will cause the fares paid by passengers to increase. . .

Continue reading. There more.

Written by LeisureGuy

9 June 2018 at 8:51 am

Out of Poverty and onto The Ballot: The New Wave of Working-Class Candidates Trying to Take Congress

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Aida Chávez reports in the Intercept:

THE FIRST WEDNESDAY in August was a busy one for David Trone. In the morning, Trone, the co-founder of retail chain Total Wine & More, which has made him very wealthy, announced that he would make his second run for Congress.

Trone’s first bid for Congress had come the year before, when he had spent $13 million of his own money and still lost the primary in Maryland’s 8th Congressional District, to the east of his current target.

This time around, he said, he would raise some money from supporters. That would perhaps shed the image that he was trying to buy his way into Congress.

By the end of the day, he and his wife had cut four checks to the Democratic Congressional Campaign Committee, for a total of $267,200.

That was never an option on the whiteboard for Roger Manno, Trone’s opponent in the Democratic primary in Maryland’s 6th District.

Manno is now a Maryland state senator and the party’s majority whip, but it’s been a long road that has taken him through extended bouts of homelessness, unemployment, and other economic depredations rarely found in the biographies of members of Congress, who are much more likely to note that they are the sons or daughters — or even grandchildren — of millworkers or the like.

With an explosion of grassroots energy this cycle, however, the new class of candidates has swept in some whose populist anger has been earned honestly.

Like Manno, they’ll have to overcome big money to get where they’re trying to go.

When political parties and outside groups begin to estimate the chances that a congressional candidate has of winning a race, the first thing they look at is fundraising — particularly money raised within the district. Those cash contributions from wealthy donors in the area serve as a proxy for support from the local elite and translate, in the party’s mind, into a high chance of victory.

The process has a culling effect on the field, which has left Congress with a total net worth of at least $2.43 billion, according to the political news outlet Roll Call’s conservative estimates, with nearly 40 percent of all members being millionaires.

That doesn’t mean there aren’t Democrats from poor and working-class backgrounds who run for Congress. It means that they’re often beaten back by wealthier, establishment-backed candidates who’ve been able to forge better connections. A new wave of candidates this cycle is hoping to change that.

Democratic congressional hopefuls Manno, Will Cunningham, and James Thompson all were in and out of homelessness as children. As a little girl, Karen Mallard had taught her father how to read. Other candidates like them slept on friends’ couches, lived in trailers, and worked multiple minimum-wage jobs to make ends meet.

For a party that purports to reflect the regular people of the United States, rather than the top 1 percent, these candidates are seemingly the perfect kind of representatives to have in Washington. Yet in almost every case, they have been met by the national party with either indifference or outright opposition. There are a select few candidates who’ve gotten Democratic Party support — those who’ve fully escaped the grip of poverty and climbed to the top rungs of the economic ladder.

As primary elections wrap up between now and August, these candidates are fighting to stay in the game.

Here are their stories. . .

Continue reading. There’s much more: the meat of the article.

Written by LeisureGuy

9 June 2018 at 7:24 am

Can a Canadian Company Put an End to the Era of Oil?

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Very interesting post by Kevin Drum:

Over at the Atlantic, Robinson Meyer describes a new process for creating fuel that releases no net CO2:

First, outside air is sucked into the factory’s “contactors” and exposed to an alkaline liquid….Second, the now-watery liquid (containing carbon dioxide) is brought into the factory, where it undergoes a series of chemical reactions to separate the base from the acid….Finally, the carbon dioxide is combined with hydrogen and converted into liquid fuels, including gasoline, diesel, and jet fuel.

….What does that mean? Consider an example: If you were to burn Carbon Engineering’s gas in your car, you would release carbon-dioxide pollution out of your tailpipe and into Earth’s atmosphere. But as this carbon dioxide came from the air in the first place, these emissions would not introduce any new CO2 to the atmosphere. Nor would any new oil have to be mined to power your car.

“Nor would any new oil have to be mined to power your car.” That sounds a bit like burying the lead, doesn’t it? Anyway, this new process sounds great, but the article skips a wee little step. Where does all the hydrogen come from?

Electrolysis of some kind, I suppose, or some other method of splitting water into hydrogen and oxygen. But that takes a lot of energy. That’s why we don’t have cheap, plentiful synthetic gasoline already. But then again, there’s this from last year:

University of Houston physicists have discovered a catalyst that can split water into hydrogen and oxygen, composed of easily available, low-cost materials and operating far more efficiently than previous catalysts.

….The catalyst, composed of ferrous metaphosphate grown on a conductive nickel foam platform, is far more efficient than previous catalysts, as well as less expensive to produce. “Cost-wise, it is much lower and performance-wise, much better,” said Zhifeng Ren, M.D. Anderson professor of physics and lead author on the paper. The catalyst also is durable, operating more than 20 hours and 10,000 cycles in testing.

There’s a lot of research going into more energy-efficient ways of splitting hydrogen out of water, and hydrogen is . . .

Continue reading.

And click the link in the post to read the Atlantic article.

Written by LeisureGuy

8 June 2018 at 10:31 am

The mystery of the Omani Real

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Kevin Drum writes in Mother Jones:

Yesterday I learned that Republicans are still obsessed with alleged violations of the Iran deal even though President Trump has killed it off. Their latest outrage comes over an effort by the Obama Treasury Department to help Iran get access to its frozen funds, as required by the agreement. The problem was a simple one: Some of the funds were held at a bank in Oman, and Iran wanted to convert them to euros. This was a two-step process: first rials to dollars and then dollars to euros.

But wait. Even after sanctions were lifted, Iran was banned from any access to the US financial system. That meant they couldn’t convert to and from dollars and therefore couldn’t get to their Omani funds. The Treasury Department eventually concluded that giving Iran access to its money took precedence and therefore looked into granting a one-time “license” that would allow a US bank to perform the conversion.

In the end, even though the license was granted, no US bank was willing to conduct the transaction. Republicans nevertheless spent months investigating this Obama-era outrage. God only knows why, and I don’t care. But I am curious about this:

In approaching the U.S. government, Bank Muscat claimed it would be impossible to complete Iran’s requested conversion to euros without first changing the Omani rials to U.S. dollars….A Bank Muscat executive also expressed frustration that the primary sanctions banning the use of the U.S. financial institution created a “challenge to convert one currency to another.”

In this case, the primary hurdle was that the Omani rial is “pegged” to the U.S. dollar. In 1986, Oman created a fixed exchange rate and established a .38 Omani rial peg to the U.S. dollar.

What’s the deal here? Why can’t Bank Muscat convert directly from rials to euros? And why does it matter that the rial is pegged to the dollar? Why wouldn’t, say, Credit Suisse be willing to accept rials in return for euros? Can someone with deep knowledge of currency conversion issues explain?

As for why Republicans are hot and bothered about this, I suppose it’s . . .

Update: The Omani Rial Mystery — Solved!

Written by LeisureGuy

7 June 2018 at 1:35 pm

Lead and Crime in Eastern Europe: A Hopeless Case

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Kevin Drum posts on latest lead-crime-hypothesis news:

Tyler Cowen has an odd Drum-bait headline today:

Why is there no lead-homicide connection in Eastern Europe?

Children growing up in former communist CEE [Central and Eastern European] countries during the 1980s were subjected to horrific amounts of industrial pollution, including extreme levels of prolonged lead exposure. Since lead is theorized to be a primary culprit in exacerbating violent crime, you would assume there would be a sizeable discrepancy in the homicide rate between, say, former East Germany and West Germany, or Western Europe and Eastern Europe as a whole. But the difference in the homicide/violent crime rate is negligible, with many former communist CEE countries having a lower homicide rate than Western Europe. I suspect the same is true when comparing the rate of mental disorders, which is another malady that is supposedly influenced by exposure to high levels of industrial pollution.

The text is from a commenter at Slate Star Codex, who references an ancient Cato study titled “Environmental Problems Under Socialism.” As near as I can tell, it references lead twice: first to note that children from the Upper Silesia area of Poland have “five times more lead in the blood than children from Western European cities,” and second to relate a brief anecdote about officials in the Bulgarian city of Kardszhali who were reluctant to shut down a lead smelter even though it was causing “massive health problems to area residents.”

This doesn’t say anything at all about whether Eastern European lead levels during the 70s and 80s were higher than in Western Europe. How do we figure that out? Generally speaking the biggest source of lead poisoning during that era comes from auto exhaust, so the first thing you’d want to look at is per-capita lead emissions from gasoline combustion. Since Eastern Europe was relatively poor compared to Western Europe during this period, I’d expect lower lead emissions there, not higher, and that’s pretty much what the data shows. Here it is for five big Western and Eastern European countries:

Continue reading.

Later:

Aside from all the usual measurement issues, there’s also a problem here with different population densities. Lead has its biggest effects where auto density is high, which probably means that Western Europe not only had higher overall lead levels, but that its effects were more concentrated. This would make Eastern Europe’s lead emissions even lower relative to Western Europe than the raw numbers suggest.

Ideally, of course, what you’d really like to see is measurements of blood lead levels, and for Western European countries these are often available. Eastern Europe, by contrast, is pretty much a black hole. However, here are some comparisons from a World Bank report that pulled together a very small number of studies of specific Eastern European locations: . . .

Written by LeisureGuy

5 June 2018 at 10:51 am

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