Showing posts from August, 2014

Gerrymandering explained

What is gerrymandering? The simplest explanation would be: instead of voters choosing their politicians, politicians choose their voters. 
Confused? Take a look at the following video from Ezra Klein.

Basically, politicians redraw the electoral district boundaries so as to maximize their support in the newly created district. They split the state into as many districts as possible, each tailored based on the voter support they receive at the particular territory. The obvious outcome is that you can get more seats for less votes (a typical quirk of the first-past-the-post electoral system - just ask the LibDems in the UK). To get a better sense of what it is take a look at the following few maps of the US Congressional Districts: There's many more, less obvious, examples but one thing is clear - in these districts politicians literally choose their voters. And, as said, the outcome is getting more seats with less votes. For example in the 2012 US House elections, Democratic candid…

What happens if the "right" people don't hold power?

A bit of bureaucratic wisdom by Sir Humphrey Appleby (Yes Minister TV series).

If the video doesn't work, see it on this link.

Argentina's default - what's it all about?

Two weeks ago Argentina has once again declared default on its debt (the last time being 13 years ago during the infamous Corralito in 2001). This makes it their 9th default since they got their independence almost 200 years ago (Reinhart and Rogoff have the numbers: Argentina defaulted on its debt in 1827, 1890, 1951, 1956, 1982, 1989, 2001). In the slow summer months this is obviously the top story: New York Times organized a debate questioning the justice behind the default (since after all it was the New York federal court which ruled that Argentina must pay a small group of bondholders $1.5bn by the end of July), Kenneth Rogoff and Joseph Stiglitz propose solutions on Project Syndicate, coupled with the usual reports from The EconomistForbesWSJThe Economist (2), Financial Times, etc. 

What happened? 
After last minute talks being held in New York with a small group of its bond holders, colloquially referred to as "vulture fund" investors (see definition here) but …

Week links (9)

Some texts that caught my attention over the past few weeks:

1. Argentina's default
As you may or may not noticed in these summer weeks, Argentina has declared a bankruptcy for the second time in 13 years. They place the blame on a US (vulture) hedge fund and its owner Paul Singer. A "vulture fund" buys cheap debt (bonds) of countries in financial distress for a discounted price and then profits by suing the debtor country, usually striping it of its assets. The coverage: The EconomistForbesWSJWashington PostNew York TimesKenneth Rogoff, etc. 
2. Inheritance flows in Sweden, 1810-2010, VoxEU
An impressive database covering a very sensitive issue of inequality based on inheritence, one of the topics emerging through the works of Atkinson, Piketty and Saez. "Overall, our analysis of inheritance flows in Sweden since the early 19th century point out two major lessons with respect to the development of capital and its impact on inheritance. Historically, Sweden d…

"The state of humanity is improving"

In my previous blog post I called upon some of the evidence from a very interesting website called Human Progress. Once you go to their website the first thing that welcomes you is the sentence from the title. So let's look at the evidence to evaluate is this really so: 
Before you do, have in mind that I'm looking at aggregate numbers and trends of some of the main development indicators of human progress in (mostly) developing nations. 
1. Poverty is declining worldwide 

Looking at the four chosen regions, all of them are experiencing a decline in the headcount of people living below $1.25 a day (adjusted for inflation and PPP, and in relative terms). This is particularly obvious for East Asia (the orange line), and in general for all low and middle income countries (light blue line). Even though this hardly suggests that their living standards are now better, the process of globalization and rapid growth of international trade in the past 30 years has indeed made people in p…