Economies of Scope, Indian edition

Krishan Kutti Nair used to sell tea to passersby outside a cemetery in Ahmedabad.  When business got increasingly brisk, he decided to take advantage of economies of scope by building a brick and mortar restaurant named New Lucky in the same location.  But what about all the dead bodies, you ask?

Mr. Kutti Nair, determined to turn what might be considered a “bug” to many into a feature instead, made the gravestones part of the restaurant.  Now people “have to shimmy by corpses to reach their tables” and it doesn’t seem to have hurt business any.  This article notes that “patrons don’t seem to be phased by the strange setup, in fact, many people flock to New Lucky not just for the food, but simply for the novelty of eating in an enclosed graveyard.”

As you might imagine, the photos that accompany the article are the best part.



h/t to the always great @stevesilberman


Despite the Virginia primary result, are Americans are becoming less anti-immigrant?

Yes! According to this report in the NY Times at least. Here’s a couple quotes:

Today, six in 10 Americans say immigrants “strengthen our country because of their hard work and talents,” according to the results, while roughly three in 10 say immigrants are a burden “because they take jobs, housing and health care.” In a survey in 2010 with the same questions but different participants, Americans were almost evenly divided, with 45 percent saying immigrants helped the country and 43 percent calling them a burden.

and this too:

The poll is based on interviews with a random sample of 1,538 Americans who took the same survey last year. Support has remained “remarkably steady,” the survey found, for a path to citizenship for more than 11 million illegal immigrants in the country “if they meet certain requirements,” declining one percentage point from 63 percent a year ago.

The poll found that 17 percent of Americans favor legal permanent-resident status, but not citizenship, for those immigrants, while 19 percent favor identifying and deporting them. Those figures have also changed little from last year.


The article also notes that the Tea Party is a huge outlier from these numbers (in the anti-immigrant direction).





Markets in Everything, Venezuelan edition

Financial globalization has reached the world’s oldest profession in Venezuela.  Since prostitution is legal there, but trading dollars is not, sex workers have been able to supplement their income by selling dollars on the black market.  And by supplement, I mean more than double!  Here is an article by Bloomberg on the phenomena.

Because the bolivar is pegged at an untenable exchange rate, a thriving black market exists for dollars.  The article notes that “greenbacks in the black market are worth 11 times more than the official rate as dollars become more scarce in an economy that imports 70 percent of the goods it consumes.”

Economy Vice President Rafael Ramirez stated in March that “We are going to defeat the parallel dollar.”  My response is two-fold:  (1) no you’re not with current policies in place and a president who calls the black market “perverse” and “designed by the bourgeoisie to destroy his Socialist government”  and (2) what the heck is an Economy Vice President? Given the state of Venezuela’s economy, this guy (and the Economy President) should be fired stat.

So how are prostitutes in port cities helping to abet this “perverse” market created by the bourgeoisie?  Well, they charge sailors for services in dollars.  And services has expanded beyond what you might expect to include things like helping “foreigners arrange rooms, telephone cards and taxis, charging them in dollars and then paying the landlords and drivers in bolivars.”

One lady broke it down succinctly, “We can make more in two hours here than working in a shop in a month.”

As a final, odd postscript, Bloomberg tried to reach various government spokespeople for comment but none of them are allowed to be named because of “internal policy” (and none of them wanted to talk anyway).  Does it not seem oxymoronic to have a spokesperson for the Finance Ministry and for Maduro himself be anonymous?  How do they do their speaking?  through secret code left at special drops throughout the city.  To be fair, if I were a Venezuelan government spokesperson, I wouldn’t want to be identified either.


Gimmie that old time (macro) religion

In yet another post that stubbornly ignores the common pool problem aspect of climate change, our hero PK also makes what to me is a show-stoppingly astonishing statement:

“US employment is determined by the interaction between macroeconomic policy and the underlying tradeoff between inflation and unemployment”

I have been holding off posting while thinking about this for 10 days now, trying to figure out a reasonable reading.

To me, he’s saying that the government chooses the national employment level by using monetary and fiscal policy to pick its desired point on the Phillips Curve.

You know, like Alvin Hansen in 1951!

He’s not saying short term fluctuations in US employment, or putting any qualifiers on the statement. It’s one of the most amazing things I’ve seen written in quite a while.

Am I nuts? Isn’t US employment largely determined by demographics, preferences, technology, & regulation. You know, the demand and supply of labor?

Maybe somehow PK is subsuming all those elements into the “underlying tradeoff”?

Does anyone really still think that the government uses monetary/fiscal policy to putthe aggregate demand curve where it needs to be to get the employment the government wants from the Phillips Curve relation?

I guess I now understand why PK has been so mad these past few years. In his view as articulated in the quote above, the government has deliberately chosen to keep US employment low.

People who ascribe such omnipotence to the government whether from the left like PK or the right like Scott Sumner, scare the crap out of me.


“We are bringing the battlefield to the border”

I just found a good interview with Todd Miller, author of Border Patrol Nation.  I take issue with what he has to say about “neoliberal economics” at the end of the interview, but I think he’s right on for the rest of it. Here are a few of my favorite nuggets:

I think the whole official framing around border policing has to be challenged. The word “border security” is state speak and implies that a border build up is to protect “us” from something heinous, a terrorist, a criminal, something less than civilized.

Only a few years ago, StrongWatch was only selling its wares to the military. But now things have changed. StrongWatch is now just one example of many companies – including such monoliths as Raytheon, Boeing and Lockheed Martin – who are turning their attention to this border enforcement market that, according to one projection of the Homeland Security and Emergency Management market, will reach as high as $544 billion by 2018. As the StrongWatch vendor told me at the end of our conversation, “We are bringing the battlefield to the border.”

In Border Patrol Nation, I document a number of instances that could seem as if they were a part of an area under a state of exception. I describe people pulled out of cars and handcuffed, as gunmen crouch with their rifles pointed. I describe a Native American man pepper-sprayed by agents, pulled out of his truck and knocked briefly unconscious with a baton. I describe instances of home invasions and the Homeland Security tactic of the early morning raids, pounding on people’s doors while they are still asleep, and handcuffing people who are still in bed and disoriented. In a way, you can describe the United States as a country in a constant low-intensity wartime posture, and if you fit a certain profile, if you have a certain skin complexion, an accent to your tone, are from a particular place in the globe, if you are associated with certain communities, or even carry certain political ideologies, you could be easily targeted by this enforcement regime.

In the early 1990s, there were less than 4,000 US Border Patrol agents. Now there are approximately 22,000. Customs and Border Protection (CBP), the parent agency of Border Patrol (and now the largest federal law enforcement agency at 60,000), didn’t exist. Immigration and Customs Enforcement, now at 20,000 agents, didn’t exist. The types of border and immigration enforcement programs that these Homeland Security agencies have, with their “force multipliers,” more than 650,000 state and local police nationwide – didn’t exist.

20 years after the EZLN manifesto, Chiapas not in much better shape

Here is a heartbreaking piece (in Spanish) from Viridiana Ríos

Poverty rates are higher, primary school completion is lower than in 1994.

Chiapas continues to be the Mexican state with the most inequality (Highest Gini) and most illiteracy.

The only good news to be found (according to the article), fewer people live in housing with dirt floors and Chiapas has passed Guerrero and it no longer is the most marginalized state in the country (“El Chiapas de hoy ya no es el estado más marginado del país, es el segundo”).

I guess Subcommandante Marcos hung up his boots and balaclava too soon.

A Million Ways to Die in Tampico

Kurt Hollander, author of Several Ways to Die in Mexico City: An Autobiography of Death in Mexico City has an excellent but grim article on the decline of Tampico, Mexico.

The city has essentially been taken over by drug cartels and almost everyone that can leave has.  It’s almost impossible to sell a house or business because no one wants to come to Tampico, so buildings sit empty.  Hollander notes though that its a misnomer to call these cartels “narcos,” as their activities is much more broad than drugs:

“These cartels control all major criminal activity in Tampico, from prostitution and table-dancing clubs to arms and drug trafficking, pirated goods and extortion. The cartels control the newspapers, publishing warnings to rival groups and periodically killing reporters and editors who disrespect them (the state has one of the highest murder rates of journalists in Mexico).

The cartels also control the armoured trucks that deliver cash to the city’s banks. They make bank executives hand over information about clients, and get notaries to sign away properties at gunpoint. Most of the local law-enforcement officers were on the cartel’s payroll until the army recently decommissioned the police; only traffic cops are to be seen on the streets of the city these days.”

He writes that things really got went downhill for Tampico in 2007, when “almost 12 tons of cocaine were confiscated and the cartel bosses in Reyonsa, on the US border, told those in Tampico that they had to cover the losses. This started a wave of kidnappings…[and]…after that, wealthy citizens began fleeing the city. And when the wealthy left town, the cartel began targeting doctors and other middle-class professionals for kidnappings, provoking a further, middle-class exodus from the city.”

I’ve never been to the city but the photos in the article are both impressive and sad.  Hollander writes that “the historic centre has long been compared to New Orleans for its French-style buildings with ornate steel balconies and art nouveau details, for its city’s rich musical tradition, and its draw as a tourist destination. These days it continues to mirror New Orleans but in its post-Hurricane Katrina phase: empty, abandoned, economically devastated, rife with crime. Over the past few years, more than 200 hotels, restaurants, bars and cafes, as well as half of all businesses in the centro histórico, have closed down. Hotels tend to remain empty, and most of its streets are deserted after dark.”

Here are a couple photos from the piece, which is worth reading in full.





Starting the indoctrination early

In my opinion, all government schooling involves a certain amount of indoctrination and whitewashing.  Not surprisingly, Venezuela is taking this to the extreme.  According to a Reuters story, the government has provided 42 million copies of a free textbook for elementary age students.  The textbook was originally going to be mandatory in public schools, but the government backed off after a huge backlash ensued.  Still, their price tag means that they’ve reached “an estimated 6 million kids at 80 percent of the country’s schools.”

So why is the opposition so mad about the book?  Here are some nuggets:

1. The first page of each [book] starts with the words “Hugo Chavez: Supreme Commander of the Bolivarian Revolution.” 

2. They describe Chavez as the man who liberated Venezuela from tyranny, at times making him appear more important than 19th century founding father Simon Bolivar. 

3. The books present a 2002 coup that briefly toppled Chavez as an insurrection planned by Washington while playing down the role of massive opposition protests in this deeply divided country.

4. They also frequently refer to social programs started under Chavez.  Here is a great example:

“Through the ‘My well-equipped House’ program, Juanita bought a 32-inch television and 12 kg washing machine for a total of 3,555 bolivars,” reads a math book for nine-year-olds.  “Had she had bought these goods in a store, she would have paid 25 percent more for the TV and a third more for the washing machine. What conclusions can we make by comparing the prices of one place with the other?”

I bet my conclusion is quite a bit different from the one the authors intended.  What does the former education minister have to say about the books? She argues that “the Juanita-type examples are ‘simple and seek to foment free thinking, emancipation.'”  

How does a math question foment free thinking and emancipation?  Emancipation from what?  logic and economic common sense?

h/t @GregWeeksUNCC

“As though we were a bunch of idiots who don’t know how to do things”

The WSJ had a recent article called “Hope Fades in Brazil for a World Cup Economic Boost.”  It was the sub-title that really caught my eye though. It reads “Amid Unfinished or Canceled Infrastructure Projects, Hopes Wane That Soccer Tournament Spending Could Spur Long-Term Growth.”  Given the grim experience of history, it surprises me that governments (or anyone) truly believe that these types of events will bring about long term economic growth.

It does make for a good news story though.  Here are some of my favorite quotes from the article:

1. “In Fortaleza, another poor northeastern city hosting six games, builders finished the Castelão stadium for $230 million. But fans arriving at Fortaleza’s airport will find a giant tent rather than a new planned terminal. Federal prosecutors are looking into whether corruption played a role in the failure of the $78 million terminal expansion project.”  Hmm, I wonder…

2. “The signature project was to be a $16 billion bullet train between Rio and São Paulo. Brazil put the São Paulo-Rio rail project out to bid in 2010, and then-President da Silva used the bidding ceremony to rebut critics of Brazil’s preparations. “They are already pressuring us: Where are the airports? Where is the subway? As though we were a bunch of idiots who don’t know how to do things,” Mr. da Silva said.”

Yikes, better for politicians not to ask questions like that.  So, was Lula right to cast aspersion on the doubters?

“But that 2010 bidding round was canceled. Potential rail builders balked on concerns that government-set limits on fare prices meant the train might not be profitable. Firms also feared cost overruns since Brazil’s legal system makes it easy for a single lawsuit to shut down a project. Brazil tried and failed to come up with terms that made sense. Bid rounds were announced and canceled three more times before the government shelved the project in 2013.”

3. My favorite politician quote though goes to Ms. Rousseff, who has on TV defending the government’s decisions.  Here is one of the least convincing defenses I’ve heard in a long while:

“The legacy of the Cup is ours. No one who comes here will leave with an airport, urban mobility projects, or stadiums, in their luggage,” Ms. Rousseff told hotel and tourism workers in Brasília.

That should quiet the protesters!