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Sunday, 27 January 2013

ΟΤΑΝ ΤΟ ΕΣΡ ΑΝΑΚΑΛΥΨΕ ΤΟ POVERTY PORN

Δεν συνηθίζω να γράφω στα Ελληνικά, πόσο μάλλον δε επί μη τεχνικών θεμάτων. Οι παλιοί αναγνώστες θα ξέρετε ότι για να το κάνω ένας είναι ο πιθανότερος λόγος - οι Τρομακτικάριοι έχουν ξεμυτίσει πάλι από τα γεφύρια τους.

Τους δελέασε καθώς φαίνεται μια πρόσφατη υπόδειξη εκ μέρους του Εθνικού Συμβουλίου Ραδιοτηλεόρασης (ΕΣΡ), η οποία λέγεται ότι απαγορεύει στα κανάλια να προβάλλουν εικόνες από 'φτωχούς και άστεγους'.

Τα περισσότερα σχόλια που πρόλαβα να δω (δείτε πχ. εδώ, εδώ,  εδώ αλλά και μια άλλη epic fail οπτική εδώ) υποθέτουν ότι η υπόδειξη υποκινήθηκε από πολιτικές σκοπιμότητες - συγκεκριμένα την ανάγκη της κυβέρνησης να κρύψει από τον κόσμο το μεγάλο πλήθος των εξαθλιωμένων συνανθρώπων του στις μεγάλες πόλεις (δείτε π.χ. εδώ). Απώτερος σκοπός, φαντάζομαι, υποτίθεται ότι είναι η συγκράτηση της δίκαιης λαϊκής οργής.

Ας δούμε τώρα τα στοιχεία, τα οποία παραδόξως αναπαρήγαγαν σχεδόν όλα τα τρομακτικάρια blog χωρίς να αντιληφθούν τις αντιφάσεις τους.

Το ΕΣΡ έχει ιστοσελίδα και στην ιστοσελίδα του αναγράφονται όλες οι υποδείξεις του προς τα ΜΜΕ. Συγκεκριμένα μας ενδιαφέρει μία μόνο από αυτές, η υπόδειξη της 22ης Ιανουαρίου 2013 με τίτλο
Μη προβολή εικόνας α) προσώπων ευρισκομένων σε κατάσταση κοινωνικής εξαθλίωσης ή ενδείας άνευ ρητής ή σιωπηράς συναινέσεώς αυτών,και β) προσώπων οδηγουμένων ενώπιον των δικαστικών ή εισαγγελικών ή αστυνομικών και λοιπών αρχών άνευ ρητής ή σιωπηράς συναινέσεώς αυτών
την οποία μπορείτε να διαβάσετε και να κατεβάσετε παρακάτω:

Υπόδειξη ΕΣΡ 12-01-13

Τι λέει η υπόδειξη;


"[Τ]ο Εθνικό Συμβούλιο Ραδιοτηλεόρασης [...] [υ]ποδεικνύει προς όλους τους τηλεοπτικούς και σταθμούς [sic] της χώρας όπως [μ]η προβάλουν [sic] την εικόνα α) προσώπων ευρισκομένων σε κατάσταση κοινωνικής εξαθλίωσης ή ενδείας άνευ ρητής ή σιωπηράς συναινέσεώς [sic] αυτών, και β) προσώπων οδηγουμένων ενώπιον των δικαστικών ή εισαγγελικών ή αστυνομικών και λοιπώναρχών άνευ ρητής ή σιωπηράς συναινέσεώς αυτών."

Μεταφράζω τα επίμαχα σημεία από την άτσαλη και περιττή καθαρεύουσα, η οποία όπως μαρτυρά ο τονισμός του 'άνευ συνενέσεώς αυτών' πειράχτηκε για να γίνει ακόμη πιο αρχαιοπρεπής.

Δεν μπορείτε να προβάλλετε κόσμο σε κατάσταση εξαθλίωσης αν δεν σας το έχουν επιτρέψει οι ίδιοι είτε ρητά ('ναι να τραβήξεις, δεν έχω πρόβλημα') είτε σιωπηρά (σας βλέπουν να τραβάτε, γνωρίζουν ότι γνωρίζετε ότι σας βλέπουν και εντούτοις δεν σας δίνουν καμμία ένδειξη ότι ενοχλούνται). Η διάκριση αυτή είναι σημαντική και γι' αυτό την τονίζω παραπάνω - δεν είναι τονισμένη στο πρωτότυπο.

Τι λοιπόν θα πρέπει να κάνει ένας καλόκαρδος ρεπόρτερ για να παραβεί αυτή την οδηγία που χαρακτηρίζεται ως


Χούντα του ΕΣΡ (εδώ)


παραβίαση του Συντάγματος [...] ωμή και χειρότερη καταστολή από τις στρατιωτικές δικτατορίες (εδώ)

ΥΠΟΠΤΗ ΑΠΟΦΑΣΗ ΤΩΝ ΜΑΝΔΑΡΙΝΩΝ ΚΡΑΤΙΚΟΔΙΑΙΤΩΝ ΔΟΤΩΝ ΤΟΥ ΕΣΡ [...] διαποτισμένη με άρωμα απριλιανής λογοκριτικής διάθεσης (εδώ);



Ένα από τα εξής τρία:


1. Βρίσκεις έναν άστεγο, ή οποιονδήποτε άλλο συνάνθρωπό μας που φανερά ζει υπό συνθήκες εξευτελιστικής φτώχειας. Αρχίζεις να βιντεοσκοπείς. Ο δυστυχής σου ζητά ρητά να σταματήσεις να βιντεοσκοπείς ή φαίνεται φανερά ενοχλημένος από το γεγονός ότι τον βιντεοσκοπείς ή τον τρόπο με τον οποίο τον βιντεοσκοπείς. Εσύ συνεχίζεις. 

2. Βρίσκεις έναν άστεγο, ή οποιονδήποτε άλλο συνάνθρωπό μας που φανερά ζει υπό συνθήκες εξευτελιστικής φτώχειας. Ο δυστυχής δεν αντιλαμβάνεται ότι τον βιντεοσκοπείς. Ξέρεις ότι υπάρχει περίπτωση να μην εγκρίνει τις εικόνες που καταγράφεις και τον τρόπος με τον οποίο σκοπεύεις να τις παρουσιάσεις. Εντούτοις δεν μπαίνεις στη διαδικασία να τον ρωτήσεις αν τον πειράζει, ούτε να αποκρύψεις την ταυτότητά του στο τελικό σου προϊόν. 

3. Μπαίνεις στον υπολογιστή της δουλειάς και κατεβάζεις πλάνα αρχείου από άστεγους και εξαθλιωμένους στο Κέντρο τα οποία τραβήχτηκαν χωρίς τη συγκατάθεσή τους. Τις παρουσιάζεις χωρίς να αποκρύψεις την ταυτότητά τους. Έξω έχει κρύο και πού να τρέχεις. 

Αυτές οι τρεις παρατυπίες δεν είναι μέρος της καλώς νοούμενης δημοσιογραφικής πρακτικής για να σκίζουν τα καλσόν τους οι τρομακτικάριοι (οίτινες βέβαια δεν έχουν γενικά καλές σχέσεις με τη δημοσιογραφική δεοντολογία). Το 1 είναι παλιανθρωπιά. Το 3 δεν είναι ρεπορτάζ, για να πει κανείς ότι υπόκειται σε λογοκρισία - δεν παράγει νέο υλικό, ούτε περιέχει κάποια χρήσιμη πληροφορία πέρα από το 'ορίστε πώς είναι ένας άστεγος.' 

Το πιο ενδιαφέρον όμως είναι το 2, αυτό που ορισμένοι Αγγλοσάξονες ονομάζουν 'poverty porn' - 'πορνογραφία της φτώχειας'  είναι η προφανής μετάφραση, αλλά μεταξύ μας ακόμη καλύτερη θεωρώ τη μετάφραση 'εκπόρνευση της φτώχειας.'  Μεταφράζοντας από το κείμενο στο οποίο παρέπεμψα μόλις παραπάνω:
"[Στην εκπόρνευση της φτώχειας συντελεί] κάθε είδος μέσου, γραπτού, φωτογραφικού ή κινηματογραφικού, που εκμεταλλεύεται την κατάσταση στην οποία βρίσκονται οι φτωχοί για να εξασφαλίσει την συμπόνοια που απαιτείται ώστε να πουληθούν εφημερίδες, να αυξηθούν οι φιλανθρωπικές δωρεές, ή να αυξηθεί η υποστήριξη του κόσμου για έναν κοινό αγώνα. [...] Τα αντικείμενά της είναι στη μεγάλη πλειοψηφία τους παιδιά,  με το υλικό να χαρακτηρίζεται από εικόνες ή περιγραφές ανθρώπων που υποφέρουν, πάσχουν από υποσιτισμό ή είναι καθ' οιονδήποτε άλλο τρόπο ανήμποροι. Το στερεότυπο της εκπόρνευσης της φτώχειας είναι το παιδάκι από την Αφρική με την πρησμένη κοιλιά, που κοιτά με άδειο βλέμμα προς την κάμερα, προσμένωντας τη σωτηρία."
Όπως σημειώνει ο συγγραφέας, αυτό που πραγματικά διακρίνει την εκπόρνευση της φτώχειας από την ενημέρωση για τον πόνο του συνανθρώπου είναι η αποσιώπηση της προσωπικότητας αυτού που υποφέρει και η παρουσίασή του ως απόλυτα εξαρτημένου από τη γενναιοδωρία κάποιου τρίτου, τον οποίον πρέπει να βοηθήσει ή να επηρεάσει ο θεατής. 

Τι απαγόρευσε τελικά το ΕΣΡ; Το να εκμεταλλεύεσαι ένα βασανισμένο άνθρωπο για να πουλήσεις διαφημίσεις ή επαναστατηλίκι, χωρίς να του δίνεις λογαρισμό, ή οποιονδήποτε έλεγχο πάνω στο τελικό προϊόν. Το να λες, σαν κράχτης κάποιου Βικτωριανού freak show, 'και τώρα, κυρίες και κύριοι, ένας άστεγος! Δείτε πόσο εξαθλιωμένος είναι!', όντως απαγορεύτηκε. 

Από την άλλη, το να απεικονίζεις και να σχολιάζεις την έκταση της φτώχειας σε μια συνοικία συνεχίζει να επιτρέπεται. Το να μεταφέρεις τις προσωπικές μαρτυρίες των εξαθλιωμένων συνεχίζει να επιτρέπεται. Το να κριτικάρεις την κυβερνητική πολιτική ως υπαίτιο των δεινών τους συνεχίζει να επιτρέπεται. 


Η 'εντολή της κυβέρνησης' την οποία επικαλούνται οι επαναστάτες-πουαρώ-κρεμλινολόγοι των πορτοκαλί blog είναι το υπό αριθμό πρωτοκόλλου 157/10.01.2013 έγγραφο της Γενικής Γραμματείας Ισότητας των Φύλων που υπάγεται στο Υπουργείο Εσωτερικών. Εκεί, υποθέτω, γίνεται έκκληση για την προστασία όσων βρίσκονται σε κατάσταση εξαθλίωσης από τυχόν ανεπιθύμητη δημοσιότητα. Ομολογώ ότι δεν κατανοώ γιατί η ένσταση προήλθε από ένα κρατικό όργανο που σκοπό του έχει την προώθηση της ισότητας μεταξύ των φύλων. Εδώ και η ΓΓ Ισότητας μας τα χαλάει και το ΕΣΡ - αν είχαν αναρτήσει κάπου το κείμενο της επιστολής ή την είχαν επισυνάψει στην υπόδειξη θα είχαμε κάποια επιπλέον πληροφορία.

Να ξεκαθαρίσω ότι δεν είμαι σε καμμία περίπτωση πεπεισμένος για την πραγματική ανεξαρτησία ή αντικειμενικότητα του ΕΣΡ, το οποίο, όντως έχει αμαρτίες στο ιστορικό του. Από την άλλη καλό είναι όταν από τη μια αμφισβητούμε τους θεσμούς και από την άλλη μιλάμε για χούντα, να ξέρουμε για τι μιλάμε. Ειδάλλως είμαστε απλά τρολ.

Η όλη υπόθεση είναι, στην τελική, αστεία: άνθρωποι που δεν ενδιαφέρονται για την πραγματική είδηση και δεν έχουν διαβάσει ούτε την υπόδειξη του ΕΣΡ αλλά ούτε καν το πρωτότυπο κείμενο που αντέγραψαν, λένε ό,τι τους κατέβει γιατί ξέρουν ότι κανείς δεν πρόκειται να ελέγξει τα λεγόμενά τους - όλοι συμφωνούν ότι η απαγόρευση ακούγεται σαν κάτι που κάλλιστα θα μπορούσε να είχε κάνει η κακή κυβέρνηση και όλα τα υπόλοιπα τους είναι αδιάφορα. Η όλη λογική μου θυμίζει λίγο αυτό.

Εντούτοις, αξίζει να δούμε σε πόσα επίπεδα κάνουν λάθος οι Τρομακτικάριοι: γιατί αυτή η συζήτηση αποκαλύπτει εν μέρει και τι σόι μυαλά κουβαλάνε ορισμένοι και εκ δεξιών και εξ αριστερών. Ας πούμε λοιπόν ότι η είδηση ισχύει όπως μεταδόθηκε: απαγορεύτηκαν οι εικόνες από φτωχούς και άστεγους.

Βασική υπόθεση σε ολόκληρη αυτή τη φιλολογία είναι ότι η κυβέρνηση έβαλε το ΕΣΡ να απαγορεύσει τις απεικονίσεις της φτώχειας για να αποκρύψει την έκτασή της. Εντούτοις, τρία χρόνια μετά το μνημόνιο ίσως να είναι κάπως αργά για να το επιτύχει αυτό. Η μεγάλη αύξηση της φτώχειας έχει ήδη συντελεστεί και ο κόσμος το γνωρίζει από τις καθημερινές μετακινήσεις του, από ιστορίες που ακούει, από blogs, ακόμη κι από επίσημα στοιχεία. Κι όμως, με διορθώνει ο συνομιλητής: υπάρχουν παππούδες και γιαγιάδες που δεν κατεβαίνουν Κέντρο και μαθαίνουν γι αυτά τα πράγματα μόνο από τα ελεγχόμενα κανάλια. Αυτούς θέλουν να επηρεάσουν.

Αλήθεια; Γιατί; Αυτοί οι γηραλέοι τηλεθεατές - ψάρια είναι που φοβούνται οι κυβερνώντες ότι θα μπουκάρουν στη Βουλή και θα συντρίψουν τον καπιταλισμό; Τι ακριβώς προσπαθούν να αποφύγουν; Ίσως το θέμα είναι ψηφοθηρικό. Έλα όμως που εκλογές για άλλα τριάμιση χρόνια δεν θα έχουμε, κι ως τότε πραγματικά παίζει να έχει σταθεροποιηθεί η κατάσταση. Γιατί μια τόσο ωμή (δήθεν) επέμβαση όταν δεν υπάρχει ανάγκη; Απλά δεν υπάρχει λόγος.

Το άλλο που άκουσα και εκ δεξιών και εξ αριστερών είναι: 'Ντάξει κανείς δεν θέλει να τον τραβάνε ενώ τρώει από τα σκουπίδια ή κοιμάται στο δρόμο, αλλά αυτό είναι ρε συ το πρόβλημα των άστεγων; Μην τυχόν τους τραβήξει η κάμερα χωρίς την άδειά τους λες κι είναι ο Justin Bieber; Δεν είναι η ίδια η εξαθλίωση το πρόβλημα, και καθήκον μας να την προβάλλουμε;'

Το μόνο που μπορώ να πω είναι ότι μπορεί π.χ. ο εξαρτημένος συμπολίτης μας να έχει μεγαλύτερες έγνοιες από το αν θα τον πάρουν από το καλό του προφίλ ενώ βαράει ένεση στο πέος του, αλλά την αξιολόγηση αυτή πρέπει να την κάνει ο ίδιος κι όχι κάποιος άλλος. Ειδάλλως καταλήγουμε σε αυτό.




Monday, 21 January 2013

A VERY DIFFERENT VIEW OF THE FAILED GREEK STATE

I love Google Scholar.

Like all things hyperlinked, Google Scholar's number one unintended attribute is that it makes serendipity not just possible, but inevitable. You look for X, you find Y along the way.

Tonight I found myself looking, for the umpteenth time, for and at papers explaining Greece's record of Total Factor Productivity Growth after the 50s, as part of my efforts to expand this article. If you'd like to follow that thread, the best I found for you tonight was this paper on the incomplete convergence of Total Factor Productivity between Greece and other European countries.

Anyway, as I was leaping, monkey-like, from citation to citation with about 30 tabs open, I stumbled onto this paper, a review of about 60 years of productivity growth in Europe. In itself, it seemed to me like  the EU-KLEMS stuff I've read so much of, only a little out-of-date. I know I'm doing some solid researchers a great disservice in saying this but hey, it's my evening, I demand something slightly more interesting.
Then suddenly I stumbled on this phrase, which sounded eerily familiar:
"Harrison (2002) considers a game between the Dictator (D) and the Producer (P) to investigate when it will pay both parties to maintain a high coercion, high effort with monitoring equilibrium."
I love that phrase: 'high coercion, high effort with monitoring equilibrium' - it implies there's an opposite equilibrium involving low coercion (well, by the standards of an abstract Dictator), low effort and monitoring. And that, my friends, sounds a little like Greece.

You see, Greece is a paradox of both over- and under-regulation, where an overbearing, omnipresent state coexists with a truckload of employer misconduct, poverty, rent-seeking, anticompetitive practices and cronyism. You can't call it socialism because profits (often in fact rents) are widely tolerated and the state's safety net was full of holes in the best of times. You can't call it capitalism, because price signals are either supressed or hopelessly distorted by state intervention. So here's my hunch: the low-coercion, low effort and monitoring equilibrium that Harrison blames for the collapse of the Soviet Union is in fact also responsible for the failure of the Greek State, which, despite undisputedly democratic elections, remained unreconstructedly authoritarian in its function except where it was forced by outside stakeholders (usually the EU) and the threat of a popular backlash to act otherwise.
Harrison (2002) is in fact this paper and I urge you to read it. Some of it is game theory; most is in fact economic history illustrated by facts, figures and equations. Harrison, as we've seen, set up a game with two agents: the producer and the dictator.
"The dictator maximises a payoff made up by the value of rents less his costs and losses, while producers maximise their income received in wages and bonuses and appropriated through theft, less the costs of effort and punishments."  
In the Greek case, for 'producers' read 'businesses and the self-employed' - the mix of 'wages' and 'bonuses' would be different to what Harrison expected under this reading but I doubt this changes much. For 'Dictator' read, of course, the State, but in a broader sense, reflecting the particular social classes and interests that hold the State captive for a particular period of time. Output theft relates to entrepreneurs' failure to render the tax and social contributions and regulatory compliance expected by the State, whether through avoidance (legal) or evasion (illegal). Of course calling these things 'output theft' is not the libertarian view of tax, but it definitely fits the authoritarian view quite well. For a quick analysis of how regulation is a tax, I would refer you to pg 14 here. You might argue that Harrison doesn't have regulation in mind when speaking of Dictator's rents, but actually he does - just check out page 21 here.
"The dictator sets coercion high or low by deciding whether or not to monitor. Without monitoring the dictator cannot stop producers stealing output. The dictator raises coercion by monitoring output, which efficiently eliminates stealing, but monitoring is costly and is a deduction from their rents. When output is monitored, high output can be rewarded and low output punished."
"Output depends on both effort and the scale of punishments. Producers decide whether effort is to be high or low. When effort is low, the value of output is positive and the producer cost of effort is zero. When effort is high and has a positive cost, the value of output is raised by the value of effort. Output depends also on the scale of punishments, because firing and forced labour reallocate workers towards employments of lower intrinsic productivity. Output is high when effort is high, low when effort is low and low output is unpunished, and lower still when low output is punished. (Because planners know who is being punished, the dictator can discriminate between the output loss arising from low effort and that arising as an indirect cost of the punishments he has imposed, so he does not try to punish the latter twice." 
In the long run the scope for high coercion depends positively on the dictator’s return from high effort, the cost to the dictator of not monitoring, and maximum feasible or credible punishments, and negatively on the costs of effort and monitoring. It also depends positively on the excess of the dictator’s discount factor over that of producers. The more the dictator is orientated towards the long run, the more he will pay to sustain coercion in the present; the more producers are orientated towards the short run, the less they will sacrifice to persuade the dictator to abandon coercion. 
So how does the system collapse? For Harrison the two key variables are the cost of monitoring the economy and the Dictator's reputation. He argues that post-industrial economies are much harder to monitor than agrarian or industrial ones, making it unsustainable for the command economy to maintain a high-monitoring equilibrium. Some reforms can, of course put things back on track rather than undermine the Dictator - but in Greece's case the reforms would have had to increase tax administrative capacity - which never worked. In fact, even to this date the reaction to every effort at increasing the State's capacity to monitor is staggering, as the IMF's most recent review of the Greek bailout reveals:


To cut a long story short, here is a summary of Harrison's findings:

  • The system remains stable right up to the point of collapse.
  • Command economies can secure stable high output through artificial incentives, under given historical circumstances.
  • Coercion can be legitimate socially but not legally. Authority that rests on coercion cannot make binding commitments. Rather, the credibility of commitments rests on the Dictator’s reputation, which is fragile and may be lost if coercion is relaxed once. The absence of binding commitments results in a time-consistency problem for central planners.
  • In exercising coercion the dictator is rationally secretive. Both the dictator and producers may exploit information asymmetries to shift payoffs in their favour. Specifically, the dictator will conceal monitoring and punishment costs, and producers will exploit the difficulty of observing effort to overstate its subjective costs and secure improved rewards.
  • Command economies may be undermined by adverse trends in monitoring costs. Changes in the means and complexity of production can raise the costs of monitoring producers. When monitoring becomes unprofitable, the dictator will abandon high coercion.
  • Command economies may also be undermined by bad policy. Too much and too little coercion are both destructive. Too much means overreliance on penalties. Too little means tolerating rent–seeking and erosion of the dictator’s reputation. Both can undermine the profitability of monitoring.
  • Command economies can be undermined by economic reforms. Moreover, the cycle of reforms and counterreforms can harm the dictator’s reputation.
  • The dictator’s surrender, not workers’ resistance, triggers the system’s collapse.
  

Monday, 14 January 2013

U CAN HAZ LOST DECADE!

Readers may have guessed by now that most of my method in preparing this blog consists mainly of three things: 1. scanning my regular newsletters from the World Bank, the IMF, the OECD and other eee-vil New World Order organisations for interesting research papers, 2. going through the latest updates on Eurostat and ELStat looking for juicy new data, and 3. going to Google Scholar, and putting random economics-related phrases into Google Scholar's Advanced Search, filtering for papers released in the last year that mention Greece. It is literally that simple to maintain an amateur economics blog, although I'm not saying it's also easy. These tales have a way of growing with the telling and it can be hard to know where to finish.

Anyway, in my latest dive into Google Scholar, I dug out a paper that truly surprised me. Gogos et al (2012) sets out to prove that over the period of 1979 to 2001 the Greek economy fit all of the technical criteria for a great depression. In their own words, ‘to be a great depression, a negative deviation of real per capita GDP from trend […] must satisfy three conditions:

  1. It must be a sufficiently large negative deviation (20% or larger). […]
  2. The deviation must occur rapidly (with a negative deviation of 15% in the first decade) […]
  3. The deviation must be sustained, in the sense that real per capita GDP cannot return to trend for a decade.’
I must admit, this struck me as a very bold statement. I have discussed the economic policies of 1981-89 before here and readers will know I am not a fan, but I wouldn't have dreamt of saying that real output per capita fell over that period: many in Greece still recall this fondly as the only time in living memory when politicians actually did what they are supposed to do (i.e. dole out cash to their clientele). 

I know three things about the Greek 80s. First, that people were generally more satisfied with the function of democracy in Greece during this period than at any time prior to (briefly) 1999 or 2004. Participation in elections was also high, and remained so until 1992. Second, Greece's
public debt exploded at a rate we have only seen again after 2008. And third, as Pseudoerasmus has shown, Greece's per capita GDP diverged from both the Eurozone core and the Eurozone periphery (as they would later become). But a depression? Really?

Yet it's hard to argue with the evidence, as presented by Gogos et al, and which I reproduce on the right.  Essentially, the entire period of 1979-91 was one long episode of stagnation during which the Greek economy performed very poorly. Recall that y is GDP, c is consumption and i are interest rates.

Importantly, Gogos et al suggest that the slowdown between 79 and 91 was not really a matter of policy (otherwise it would have started in 81, I should think) but rather a matter of demographics. Without sustained investment in human capital, falling population growth tends to reduce long-run economic growth too. Between 1960 and 1975, the growth rate of the Greek population collapsed, as a result of a drop in fertility rates starting in 1955, falling by about half in 60-65 compared to ten years earlier (data here). In 1955, first birth age in Greece bottomed out at 24 (an age largely unheard of today), possibly as a result of the increase in female education in the country - a good thing, by all accounts.

Except for that fact that, 19 to 26  years later, when that cohort of new labourers was set to enter the labour market, output per capita stopped growing. Unfortunately, the Greek governments of the time decided to spend prodigious amounts of money in the teeth of a demographic mega-trend. Bad idea.

Could this have been predicted at the time? Possibly, if it weren't for the Greek state's long history of ignoring population statistics.

While it's given me some excellent food for thought, I also have some reservations about this paper. First of all, the idea that economic performance must be benchmarked against some supposed 'trend' output (see right, and also here for a smug self-congratulatory discussion), is absurd to me. At best, it assumes that there is an intrinsic value to human and physical capital that is relatively stable through time, and was moreover priced correctly in the reference period used to calibrate the model. Not to mention the assumption that economy-wide production functions are laws of nature, varying in their parameters but not in their essence. This industrial-revolution-era thinking should have been abandoned long ago but somehow it still persists.

Second, to disaggregate growth into what is attributable to inputs and what is attributable to Total Factor Productivity (see right below) is all right when the emphasis is on the role of the individual inputs, but it's plain daft when it ends up emphasising the role of TFP itself. Like dark matter or dark energy in the calculation of the mass of the universe, TFP is a residual and hence it's not an insight to be celebrated. We don't know what it is, only that it doesn't behave in any manner our model can account for. There's no call for an 'aha' moment when it turns out to be the dominant force. It's like celebrating how small the R-square value of a regression is.

Finally, while I cannot find any better figures anywhere, I am a little worried about taking dictatorship-era national statistics at face value, and it is these that set the trend for later decades. The Greek junta was exceptional in that it was one of relatively few dictatorships in recent history that achieved growth rates higher than the democratic governments that succeeded them; in fact, growth rates were surprisingly high by any standards. Moreover, unlike the longer-lived Spanish and Portuguese dictatorships of the 20th century, the Greek junta pursued significant levels of welfare spending, though unsurprisingly it was less generous when it came to education (discussion here). I have yet to find any better data though, so I'll accept what I have for now.

What's also very interesting about Greece's lost decade, of course, is how all of the remedies offered to Greece's current woes (fiscal and monetary stimulus, as well as devaluation) were tried during this lost decade and failed spectacularly. The chart to the right demonstrates quite how little these remedies worked. (Money supply data here; real gdp data here; inflation data here; exchange rate data here).

'Surely though,' some of the newly contrite Socialist voters of the 80s will say, the Change was a valuable project to entrench equality in the country? I'm not sure about that. A quick dive into the OECD's database will show you what happened in that regard. Sure, the after-tax income distribution among workers was much more equitable in the mid-1980s compared to the mid-70s, but this trend continued almost unbroken till the crisis struck, under different policies, with perhaps a little hiccup in the late 90s. But the real change was among retirees - the legacy of the Change was primarily a false equality of pension income through massive redistribution to the old.





Monday, 7 January 2013

@LOLGREECE ON TOUR

While I haven't been writing much over the last year, I have been speaking, in both my professional capacity and as an amateur econblogger. Unfortunately, I've rarely been able to link to a recording (with a significant exception here).

So here's a little nameday treat for all the Johns and Joannas reading the blog, and the rest of you can be freeloaders in one of the rare instances that I will tolerate such. It comes from ACCA's 4th international public sector conference and is part of a session with Brian Quinn (director - loan department, World Bank) and 
Mario Marcel, deputy director - public governance and territorial development directorate, Organisation for Economic Cooperation and Development, OECD). 
You can watch a video of the session here.

My piece begins at 38:38 and I apologise in advance for the close crop that makes it impossible to read my slides. You can, of course, see and download them here instead:


As for people looking for something new, there is my presentation of 8 January at the Grande Bretagne in Athens, entitled 'Greece and the Eurozone Endgame'. You can read through it (or download, if you prefer) below.

This was a new experience for me. If you haven't presented non-stop for an hour and a half, you can't possibly imagine how difficult it is to be a populistar, quasi-military 'socialist' leader. We may need to start figuring them out though, because I dare say whoever is prime minister in Greece next will probably sound like that anyway. Hell, even our current PM is trying to.
 




Tuesday, 1 January 2013

TEH BIIG PIKCHUR: 2013 EDITION (PREVIEW)


[This post is still under construction]


Dear friends,

It’s been ages since I wrote a proper post; we’re long past apologies so I’ll just explain that both my professional and personal life have become a lot more demanding; staying up till 4 am is no longer an option. Still, I’m aware I’m letting some people down and those of you who follow on Twitter surely know there’s a lot I could be discussing here that I simply choose not to. Please don’t take this the wrong way.

Still, some things need to be committed to the blog. A longtime reader has written to me recently wondering whether it’s not time to update my old scenarios page, since the blog’s third anniversary, and the year 2013, were at the time nearly upon us. He’s right and I rather cherish the opportunity.


PART I – EUROPE AND THE WORLD

The global economy grew by about $8.8tn between 2010 and 2012, which means that despite slowing growth and significant amounts of money printing (and only modest deleveraging outside of the US and a couple of other countries) it’s still roughly in line to grow into its balance sheet by around 2018. It’s particularly remarkable, though not surprising, how muted deleveraging has been in Europe – even countries such as Greece are as laden with debt as ever, juggling it between the private sector (where it can be destroyed relatively easily) and the public sector (where it can be refinanced relatively easily). 

This will begin to change in 2013-14 as the laggards join the deleveraging party through private and sovereign defaults, 'voluntary' haircuts, bank resolution, fiscal austerity, and indeed whatever other means are available to them.


The Worst Decent Countries in the World

The hunt is still on for the Worst Decent Country in the World - a position once held by Greece, which ensures never-ending demand for one's bonds regardless of short-term changes in the fundamentals, until the country blows up of course. Essentially we're looking for a country within the 'magic circle' of sovereigns that are seen as unlikely to default, but also riskier than the rest of their peer group of the same credit rating. The combination of higher yields for the same capital charge under Basel makes these bonds irresistible to banks.

As you can see on the graph to the right, Chile is currently in the sweet spot among emerging markets, while Slovakia occupies the same position among European sovereigns and Australia and New Zealand are soaking up demand in the Pacific. I should note here that I'm using the best-of-three credit ratings of sovereigns as opposed to any individual rating or a mean or median rating because best-out-of-three ratings are more closely correlated with bond yields than any alternative - a consequence of Basel which still largely determines the dynamics of demand for sovereign debt.


The Eurozone dominos fall

Back in 2010 when I developed the first batch of scenarios, I predicted that France would begin to feel the pinch as early as in 2012. Last year I also said that France is to the Eurozone endgame as iron is to stellar death; it's the point at which all guarantees have been tapped out and any further collapse will result in an explosion. The reason for this is that Europe is effectively underwriting itself and its collective solvency is not guaranteed as some federalists would like to think.

Therefore, it doesn't matter what collective guarantees (ESM, EFSF etc) its leaders come up with - the only effect of such guarantees will be to focus attention on the ultimate guarantors (see here, here and here). The ultimate guarantors are in any case France and Germany, and they can't bail everyone out; but investors are slow to come to terms with such realities. They really want to believe in ultimate creditworthiness just like some people want to believe in an afterlife. Therefore the creditworthiness of France (as the weakest of the two) will be tested now, not in one flight of vultures but gradually in the coming 2 years - perhaps to its limits. 

I don’t believe I got the magnitude of my original prediction right: I warned of a humiliating downgrade and a significant rise in borrowing costs. Sure enough, France did get downgraded by Standard and Poor's in January and by Moody’s in November (triggering a downgrade of the ESM and EFSF) and was put on negative watch by Fitch in December. By the end of 2013, it will no longer have any AAA-rating left and will probably be on negative watch with at least one of the Big Three, while French politicians will be fuming about evil specuLOLtors and the like (why not? There are people out there stupid enough to advocate a European Credit Rating Agency). And I don't mean Max Keiser by the way - although any man who writes this kind of stuff while on Putin's payroll will surely have no problem with EU governments rating themselves? 

Contrary to my prediction, however, the market reaction to all of this has been minimal so far, with France still paying historically low interest rates on its debt, making this carefully timed piece by the Economist sound a bit shrill and, well, British. You see, as my yields-v-ratings graph above demonstrates, France's long-term debt is trading as though it had lost its AAA-rating anyway (see right; ratings source; yields source), hence the lack of excitement. 


Into the silicon core 

Just as with Greece, it takes more than just fundamentals to sink a sovereign; markets don't want to believe in sovereign defaults, and the bigger the sovereign, the bigger and more aggressive the denial. So you need a combination of domestic events and contagion of some sort - even Greece might have taken a while longer to blow without the Dubai default, the 2009 elections and government audit, or the 2008 riots. 

Now I'm less familiar with France's social dynamics than many readers, so I won't bother trying there. Just read this whenever you can. I’ll stick to contagion, and it just so happens that we now have a proper set of data to help determine who France is vulnerable to. The top exporters of bond yield contagion to France are Belgium, Austria, and the Netherlands, according to this excellent report by N. Antonakakis and K. Vergos (see cheat sheet below). I’ve ranked the three in order of contagion potential but also in reverse order of creditworthiness. Somewhere between these three is what one might call the silicon core of the Eurozone supernova - that last stage of fusion before iron and kaboom.

Contagion from Belgium to France is my most likely nightmare scenario, for many reasons. First, as the table to the right shows, Belgium is the non-PIIG most exposed to PIIG contagion. Second, it is one of the Euro sovereigns least able to raise taxes - Belgium can only raise about 1.8% of GDP more in taxes than it did back in 2010, according to Trabandt and Uhlig (2012), which I discuss here

Note, however, that according to these calculations, it will take real interest rates of 5.9% (or nominal of about 8.1%) to make Belgium insolvent - a long way off from today's below zero real rates, perhaps, but it took Greece just under a year and a half to cover this distance in basis points during our own sovereign debt crisis. I would say that, from the moment Belgium seriously hits the headlines, this is the amount of time it will take for France to be in trouble.

Finally, as you can see on the table to the right (source here), Belgium is up to its neck in bank guarantees – at 84.2% of GDP its guarantees are more extensive than Greece’s, or indeed any other European nation’s apart from those of Ireland and, oddly enough, Denmark. Famously, Belgium and France share an interest in the now-nationalised Dexia, with Belgium shouldering just over half of the bank's troubled assets and the repeated bailouts of the bank as well as underwriting its short- and medium-term financing. All this for a bank that still has more than a fifth of its credit risk exposure tied up in the PIIGSAdd these contingent liabilities to Belgium's debt and it doesn't look so sound anymore. Especially since it's about to go into recession.  And did I mention secessionist politics? And a recent history of being ungovernable? So there you go folks, Belgium is the link between France and the PIIGS and the link is about to tighten into a noose in the next two years. 

The plot, of course, thickens. As per our contagion cheat sheet above, any trouble in Belgium bad enough to truly reflect on France will first have to bounce off Austria - Belgium's no. 1 importer of contagion and incidentally France's number 2 source of contagion too. 

Recall that Austria, despite its generally healthy-ish financials, has more debt (as a % of GDP) in the hands of foreigners than Italy, which is why Italy keeps dodging the debt crisis bullet. Austria also has an additional problem - high exposure to Eastern Europe, where Austrian banks often dominate the market. So a perfect contagion storm will involve rising NPL rates in Eastern Europe coupled with sovereign debt pressure on Belgium, all of which could happen in 2013. Based on the latest data on non-performing loans, I'd say watch out for bad debt in Croatia and Romania


The Roadmap to Nowhere

2013-14 will be the years in which the EU's massive drive towards federalism hits a significant roadblock. By this I don't mean the usual cases of UK Euroscepticism or even the knee-jerk reactions of bailed-out countries. I mean a proper, mainstream current of integration skepticism. The beginnings of this were already evident in late 2012, when EU leaders delivered their road map to fiscal and economic integration.Check out the chorus of disappointment from federalists here and here, and an amazing analysis closer to my own heart from Protesilaos Stavrou here.


You see, apart from their dangerous assumption that Europe is collectively solvent, Europe's leaders and many of their cheerleaders are also mistaken in believing that a federal Europe would be seen as a saviour by the hard-pressed peoples of Europe.
I must concede that Europeans' desire for a faster-integrating 'Europe' has never been more ardent (see right), and it's important to note that this desire has risen fastest in the countries worst hit by austerity (see p. 70 here). This should be great news for federalists.


But in fact it isn't. For the first time ever, the European institutions have actually been unpopular in net terms since November 2011. And this isn't me talking, it's the Eurobarometer itself (this is also where the Eurodynamometer data for the first graph have come from). The interactive search tool provided by the EB website is a treasure trove of information but I particularly like the graphs to the right.

Anyway, the folks at Gallup have looked at the data in some detail in the latest edition of the Eurobarometer and seem clear that only France and Germany have registered marginal increases in faith in the European Institutions - and not all of them either.

So let me get this straight - people, especially in austerity-hit countries, want more Europe. In practice, though, more Europe is only ever delivered by more powerful European Institutions. But people, especially in austerity-hit countries, also want less of the European Institutions! Any guesses what it is that the Sainted People of PIIGland (and eventually other countries too) want?

Correct. They want money. Other people's money. The people will be sold 'Debt Relief Europe' and will end up with something completely different from what they were hoping for. Presumably armchair federalists  will queue up to explain how wrong this perception is and manage expectations? Probably not. They will campaign, as Prof. Varoufakis does, for the ECB to hoover up Europe's debt instead, and for the EIB and EIF to take up (and dramatically boost) its collective investment budget. As I'll explain later, I believe they'll see at least part of their wishes come true.


Rethinking austerity

Perhaps the biggest fiscal policy shift of 2012 was the IMF’s admission (right) that fiscal multipliers were much larger during recessions than it had assumed in the recent past – about three times as large in fact. One way of interpreting this is to say that ‘austerity doesn’t work,’ but I beg to differ.

First, it shows that any bubble sustained for long enough is bound to build a rent-seeking (and supposedly private) sector around it, much like a coral ecosystem will colonise the hull of a sunken ship. Second, it shows that countries with easy access to liquidity must take advantage of this luxury to adjust slowly – but not take it for granted and avoid adjustment. Essentially, fiscal slippage is a bit like Captain Hindsight – it reminds governments many years down the line that they should have made the tough calls earlier, when their economies were still growing.
Then again, high levels of both leverage and public sector spending mean that even very mild doses of austerity can plunge countries into recession – when further austerity presumably becomes unsustainable. The result is that it’s probably too late for most OECD countries to turn their public finances around – those that are not trapped in austerity are instead merely prisoners of their liquidity, until this runs out of course. 

To cross-reference this, it's useful to look at this excellent paper looking into the demand for 'developed' country sovereign debt, and particularly the two graphs on the right: 

Essentially, these suggest that are only four OECD economies in the world right now that are enjoying the dubious luxury of both maintaining very high levels of debt and delaying austerity - the US, the UK, Germany, and Japan. Even France has spent much of the last couple of years on the naughty step, although demand for its debt has since improved substantially.

The rest will just have to suck it up and keep cutting. However, they will probably learn from the examples of Greece and others that, while levying taxes is easier and quicker than cutting government spending, it must be avoided at all costs as the effects of tax hikes are much worse than those of cuts. In fact, the best experiments will likely be with a combination of cuts to both tax and spending - effectively returning more income to the private sector, as opposed to government or its debtors.

The figures below (presented here, an event in which I ended up replacing one of the speakers) show the level and content of consolidation planned by OECD countries from 2012 to 2015 – some of this will by now have come to pass, but most remains to be delivered. Note that the smaller the initial level of consolidation, the more countries have relied on spending cuts. But once a country tries to cut more than 2% of GDP per year – more or less – it becomes very difficult to deliver consolidation without relying significantly on tax increases too. And then, as readers will recall, there’s a limit to how much countries can tax too – Italy, for instance, simply cannot deliver the amount of tax revenue planned for 2015 no matter what the government does, so prepare for more fireworks. Essentially, austerity will both fail and triumph over the next two years. Country after country will join the club and country after country will see their best-laid plans succumb to fiscal slippage.
 
With austerity failing to reduce the debt burden in much of Europe, I believe the consensus is likely to shift in favour of better spending, not necessarily less spending. In particular, I believe that public investment will receive a substantial boost in austerity-hit countries, but tied to substantial conditionality. The rationale behind this is that, with monetary policy at its current super-accommodative levels, public investment provides better stimulus than public consumption (see meta-analyses of fiscal multiplier studies here and here). 

This is where Varoufakis and other Federalists will begin to see their wishes granted. In fact, the EIB has somehow seen fit to give us a recap of its support for Greece recently, while the EIF is thinking mostly in regional terms. This is in any case just the beginning. Together the two sister institutions have one of the last remaining AAA-ratings in Europe; they are going to use it.

The ECB capitulates

6 September 2012 will be remembered by many as the Day the Bundesbank Died. The novel Outright Monetary Transactions (OMT) mechanism effectively allows the ECB to buy unlimited amounts of Eurozone sovereign debt from the secondary markets, provided these purchases are sterilised through sales of other bonds. A very detailed roundup of the critical reception of OMT can be found here. I believe I can add three points to this.

First, I'm sure I'm not the first person to point this out but sterilisation is an aspiration; it depends on finding enough buyers for the bonds one is trying to sell, at the time when one needs to sell. More importantly, it's failed before and will fail again, except on a larger scale. When it does, the markets will smell inflation.

Second, if the OMT is anything like the ECB's previous bond market operation, the SMP, then it could fail to work in the manner described. Remember, the ECB is not trying to finance sovereigns though bond purchases, hence its commitment to staying within the secondary market. The OMT is, rather, supposed to fix securities markets enough for the ECB to be able to do its job. You see, that was the idea behind the SMP too. Its explicit purpose (see here too) was to restore the monetary policy transmission mechanism by 'addressing the malfunctioning of security markets' through additional liquidity. R-iiiight. Importantly, as the Eurosystem is, after all, made up of the national central banks, this meant that it was up to them to purchase as they saw fit.

Unfortunately, a recent evaluation shows that this was not the way purchases really worked. . It wasn't liquidity that drove purchases, the researchers say: it was yields. Yields explained 85% of the variation in purchases. Here's what they have to say about this, in detail:


"We conclude that the ECB applied rather simple “rules of thumb” when purchasing Greek sovereign bonds. Most notably, it focused on bonds with larger outstanding volumes and higher yield spreads. In contrast, bond liquidity does not seem to be systematically related to bond purchases. Our findings also suggest that ECB bond purchases had a large causal effect on the yield spreads of the bonds that it purchased. These findings may be relevant for policymakers, as well as for investors currently holding distressed bond of Eurozone  peripheral countries."


So, essentially, the ECB was targetting its purchases in order to increase the prices of PIIGS bonds. Simple.

But there is a bigger problem here, which I don't think many people have pointed out. Unless the ECB is very careful, sterilisation could itself exacerbate sovereign risks. Bear in mind, the ECB can only purchase the debt of a bailed-out country under the OMT. So suppose Belgium asks for assistance. Given what we now know about the France-Austria-Belgium triangle, the ECB would never try to sterilise Belgian bond purchases with sales of French or, even worse, Austrian debt, because that would drive up their yields and end up pushing Belgian bond yields back up. Of course it would presumably never sell PIIGS debt (no buyers, very bad politics, the list goes on), although that's arguably what it should do, to minimise the amount of contagion back to Belgian bonds. It can only sell Core country bonds, and preferably those of a big sovereign with fairly liquid bonds. If, on the other hand, it relied on countries like Germany too much for its sterilisation practices, it would face an outcry. So it's France to the rescue again, with a hint of contagion spilling back out to Belgium but also to the rest of the Eurozone. To cut a long story short, the ECB would effectively have to save peripheral countries at the terrible price of weakening the already weak guarantees holding the Eurozone together. Good luck with that.


PART II: GREECE


Greece is no longer a problem - everyone else is

One consequence of the findings of Antonakakis and Vergos (2012) is that Greece is now broadly insulated from the rest of Europe, with bond yield spillovers from Greece to the rest of Europe and vice versa at truly minimal levels.  In fact, the countries that are both most vulnerable to Euro-contagion and best placed to contaminate Europe right now are Belgium, Italy and Spain, in that order.

Put simply, none of the things happening in Greece are now likely to create contagion in Europe. This is because Europe now has a plan for fiscal consolidation, a safety net of sorts for sovereigns and banks and a banking union underway, as well as a more activist Central Bank than people would have expected a year ago.