Sunday, April 16, 2017

Which people were rescued from Communism by military conflict?

Communism has done, and continues to do, a lot of harm to the people subject to it (North Korea is above that terrible average). But how many of those people were rescued from Communism by military conflict? To help with your answer, here is a list of Communist regimes lasting more than 5 years:

  • Soviet Bloc
  • Yugoslavia
  • Cuba
  • China
  • Cambodia
  • Vietnam
  • Laos
  • North Korea
  • Ethiopia
  • Afghanistan
  • Mozambique
  • Benin
  • Angola
  • Somalia
  • South Yemen
  • Congo
Perhaps you can make a case that the Soviet Bloc would have been larger if it weren't for Western European battles won by the Allies in WWII. The Korean War kept South Korea from Communism, but not North Korea.

Cambodia's first and worst Communist regime was ended by military attack and occupation by Vietnam and Laos, both of which were Communist.

But the far more typical rescues came from within -- internal government changes (essentially every other case above) and people running beyond their Communist country's borders (especially, Cuba).  


Saturday, April 1, 2017

Machine proves Paul Krugman wrong about the recession

Click for short video

Click for short video


For more on the two "sides" to this argument, see

See more examples of economics questions answered by machine.

Thursday, March 23, 2017

Puerto Rico - Cuba comparison

Puerto Rico and Cuba make an interesting comparison because both Caribbean islands were once Spanish colonies and then part of the United States after the Spanish-American War.  Cuba then went its own way, especially with the Castros and their communist system.

I have already compared the two on the basis of some national statistics, e.g., that; (i) Puerto Rican income per capita is now four times that in Cuba, when in 1950 they were essentially the same, (ii) Puerto Ricans are now more educated than Cubans, even though education is something that the Cuban government brags about.

My purpose here is to share some other impressions I had during recent visits to both places.

Cuban buildings are literally falling apart.  Puerto Rican buildings look essentially like buildings elsewhere in the United States.  Even the public housing in Puerto Rico looks much better than most Cuban buildings.  The Puerto Ricans also keep their yards looking nice (moreso than, say, Chicagoans).

There are abandoned structures in Puerto Rico.  I don’t remember seeing any in Cuba, except the (many) that were too unsafe to be habitable.

Satellite dishes for TV reception are very common in Puerto Rico, even in poor neighborhoods.  For the first fifty years after the Revolution, Cubans were prohibited from watching foreign TV (but with ingenuity and generous bribes, some Cubans broke this law).  I don’t remember seeing any residential satellite dishes in Cuba.

Although some Puerto Ricans told me that Cuba is less polluted, I got the opposite impression, especially the big smokestack in the middle of Havana.  Puerto Rico does have plenty of cars – supposedly more per square mile than any country in the world.  Few Cubans can afford a car.

I was amazed at the quality of the cars (and pickup trucks) even in the poorest Puerto Rican neighborhoods, both urban and rural.  Below is an example from the neighborhood known as La Perla.



[the video is not mine, but allows you to take your own La Perla tour]

Even at national franchises, food and services are often cheaper in Puerto Rico than in, say, Illinois.  But, in Cuba, restaurant meals, taxi rides, beverages, etc., have essentially the same dollar price as in Illinois even while Cuban incomes are an order of magnitude lower.  In other words, Cuba is terribly inefficient: even with cheap labor Cuba cannot manage to make things cheaply.

By all statistics, Puerto Rico is poorer than any U.S. state.  This was not obvious from walking around, but I admit that I have not seen, say, Mississippi in many years.  Also, there may be a lot of informal/underground-economy income in Puerto Rico, so that its official income statistics are not indicative of consumption.

I asked Puerto Ricans what they thought about Cuba, and typically they proclaimed that Cuba doesn’t have a public debt problem!  I presume, but did not confirm, that they are (i) not interested in trading their cars, nice houses and yards, internet, high-school diploma, cheap and available food, etc., for debt-free bragging rights and (ii) unaware that Castro’s Cuba was 30 years ahead of Puerto Rico when it came to defaulting on public debt.  Puerto Ricans do admit that people move from Cuba to Puerto Rico rather than vice versa.  

Tuesday, January 24, 2017

Who wrote this?

"High social transfers not tied to work incentives emerged as the most likely explanation for the low participation rate. The phase-in of ... minimum wage ... may have also helped to drive down participation rates."


But the Brookings Institution, which refused to consider nationwide explanations like mine, wrote this!

about Puerto Rico (see p. 29)!

Monday, January 9, 2017

Labor-market growth turns negative, with many coincidences

Below is an index of hours worked per person, which reflects both the amount of employment and the number of hours that employees work up through Dec 2016. It shot up when the Emergency Unemployment Assistance program was finally canceled. Its growth was especially slow when the new health care law began to penalize employers. Over the most recent twelve months, the trend is (infinitesimally) negative.





Sunday, January 8, 2017

Getting rid of ACA subsidies is easy, politically and economically

The conventional wisdom is that creating a subsidy program creates a sense of entitlement that, via political pressures, prevents it from being phased out later. This wisdom applies, perhaps, to a number of federal programs.

But the Affordable Care Act's premium assistance subsidies (technically, they are "tax credits" administered with the personal income tax) are different because, unlike beneficiaries of Social Security, Food Stamps, and so many others, a recipient of a premium assistance subsidy must also pay SOME OF HIS OWN MONEY. Many of them are doing so because of the individual mandate, which could be eliminated with little political cost. With the individual mandate gone, these people would voluntarily forgo their subsidy in order to keep their own money.

A few states have already seen something like this with their Medicaid program -- asking program participants to pay a small part of the overall cost -- and many participants voluntarily exited.

In addition, the rules setting minimum benefits could be eliminated. Some of those previously receiving subsidies would rather get a plan with fewer benefits but also requiring less of their own money (I wrote about them in my book). They too would voluntarily exit the ACA's premium assistance program.

Yet another step would be to cap the subsidy at the DOLLAR AMOUNT that persons with the same income and same state of residence were ACTUALLY RECEIVING during the Obama administration. The amount that the recipient would have to pay out of pocket would be the difference between the premium and that dollar amount. As premiums inevitably rise over time, that amount increases and participants would continue to voluntarily exit the program, never to return.

(A more dramatic version of this would be to cap the subsidy at the dollar amount that the SAME PERSON ACTUALLY RECEIVED during the Obama administration).

Presumably, exit from the subsidy program would not be random -- those whose participation had been more costly to the insurance plan would differentially remain in the program. As they did so, premiums would further rise above what they would have been with the ACA intact, which would further increase what participants have to pay out of pocket, and thereby further encourage voluntary exit.

Approaches like this not only make political sense, they make economic sense. Why should the American taxpayer pay, say, $200/month for a person's insurance coverage when that person himself is unwilling to pay $50/month for it? The answer: the primary beneficiaries of the subsidies are health providers (more paying demand for what they sell) and high-income Democrats (feel good when the official statistics say that coverage rates are high), and it need not be not politically unpopular to take away what is effectively a subsidy to health providers and high-income Democrats yet advertized as something else.

As with many things about the ACA, the conventional wisdom is wrong.

Thursday, December 22, 2016

Popular vote count: directions of causality

I live in Illinois, where it was well-known that Mrs. Clinton's votes would far outnumber Mr. Trump's.

This fall, I did not see any Trump-for-president ads on local TV or in local newspapers. Perhaps the absence of Trump ads was to be expected, because the Trump campaign saw no electoral-vote gain by advertising here.

But I saw MANY Clinton-for-president ads. If Trump ads would not affect electoral votes, then why would Clinton ads?

One could argue, even without the benefit of hindsight, that the Clinton campaign was wasting ad dollars in Illinois. But my view is that Clinton did expect non-Illinois electoral votes from advertising IN Illinois because of the campaign donations that it would induce.

Of course Trump supporters are arguing that Mr. Trump would have won the popular vote, if it were the relevant metric, because he would have campaigned differently.

But my point here is different: that the popular vote is an indicator of campaign style. The Clinton campaign's style was campaign-cash intensive and EVERY state's cash is valuable even in an electoral-college contest. As long as eliciting donations is correlated with eliciting votes, the campaign-cash intensive candidate should be getting a lot of votes in non-swing states.

The Trump-campaign's style was rally intensive. It's more difficult to move, say, an Illinois rally's results to Ohio than it is to take Illinois cash to buy Ohio ads. So it's no surprise that the rally-intensive candidate focused his appearances in the swing states whereas the cash-intensive candidate campaigned more nationally.

Monday, December 12, 2016

New Law Interacts with the ACA

The "21st Century Cures Act" has passed Congress and is presumed to get a signature from President Obama. Among other things, it changes rules for employer healthcare payments and thereby has important interactions with the ACA, especially the degree to which the latter reduces employment and productivity.

But the ACA may not last. So the effects of the 2CCA are largely unknown because they depend on the unknown (if any) replacement of the ACA.

Saturday, November 26, 2016

Cuban education lags

It is probably true that Communist Cuba destroyed its education system less than it destroyed other things.  But if you look on an absolute scale, the average education of the Cuban population has been lagging.


Some of the lag is due to the fact that Communism either killed or drove away comparatively educated people. But if that is masking Castro's success, that's no success!

Update: The Barro-Lee data say that, as of the year 2000, the majority of adults in Cuba had NOT graduated high school.  At the same time, the majority of adults in Puerto Rico HAD graduated high school (Table 5-3 of this book).