European terror alerts

This is from my inbox (and can be found many other places on the internet). Snopes has a discussion of whether or not it should be attributed to former Python John Cleese, as it was in the email I received. My sense is that it should not.

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ANNOUNCEMENT

The English are feeling the pinch in relation to recent terrorist threats and have therefore raised their security level from "Miffed" to "Peeved."

Soon, though, security levels may be raised yet again to "Irritated" or even "A Bit Cross." The English have not been "A Bit Cross" since the blitz in 1940 when tea supplies nearly ran out. Terrorists have been re-categorized from "Tiresome" to "A Bloody Nuisance." The last time the British issued a "Bloody Nuisance" warning level was in 1588, when threatened by the Spanish Armada.

The Scots have raised their threat level from "Pissed Off" to "Let's get the Bastards." They don't have any other levels. This is the reason they have been used on the front line of the British army for the last 300 years.

The French government announced yesterday that it has raised its terror alert level from "Run" to "Hide." The only two higher levels in France are "Collaborate" and "Surrender." The rise was precipitated by a recent fire that destroyed France's white flag factory, effectively paralyzing the

country's military capability.

Italy has increased the alert level from "Shout Loudly and Excitedly" to "Elaborate Military Posturing." Two more levels remain: "Ineffective Combat Operations" and "Change Sides."

The Germans have increased their alert state from "Disdainful Arrogance" to "Dress in Uniform and Sing Marching Songs." They also have two higher levels: "Invade a Neighbor" and "Lose."

Belgians, on the other hand, are all on holiday as usual; the only threat they are worried about is NATO pulling out of Brussels .

The Spanish are all excited to see their new submarines ready to deploy. These beautifully designed subs have glass bottoms so the new Spanish navy can get a really good look at the old Spanish navy.

Australia , meanwhile, has raised its security level from "No worries" to "She'll be alright, Mate." Three more escalation levels remain: "Crikey!", "I think we'll need to cancel the barbie this weekend", and "The barbie is cancelled."

Kate v. Michelle

The Daily Mail thinks Kate won the sartorial battle running away, while Yahoo Shine! praises Michelle.

Bottom line: nationalism rules here as elsewhere.

Double bottom line: why, oh why, does anyone care about what these people wear?

Addendum: it turns out there was a scandal about Kate's dress because it was not made by highly paid Italians but rather by poorly paid Romanians. The most damning evidence of their oppression:

Many of the women who filed out of the factory gates this week barely knew who Prince William’s wife was, let alone that they were behind her outfit.

The horror.

Rule of Law, Austrian edition

An arduous tale of legal abuse by local officials in an Austrian town. But there is a happy ending!

Hat tip: Lars Skipper

The rise of economics in Europe

The Economist notes a recent IZA working paper that shows the increasing representation of scholars at European Universities in economics journals.

I think, though, that the Economist gets the explanation partly wrong. In particular, the emphasis on the Bologna process is, well, bologna. It is important, but not for this, and it comes along too late.

I would argue instead that, first of all, the explanation differs by location within Europe. The UK has always been plugged into the world of academic economics in North America, as have, so a somewhat lesser extent, the Netherlands and the Nordic countries, particularly Sweden. Those countries have experienced gradually increasing integration due to decreased travel costs and (with the obvious exception of the UK) ever-increasing skill in English.

The big changes have been in the countries without strong traditions in neoclassical economics, such as Germany, which is still putting down the last bits of institutionalist resistance, France, Spain, Portugal and Italy. In the last 30 years, neoclassical economics has advanced rapidly in those countries. Neoclassical economics proceeds in English, so if you want to play the game, you learn the language, just like 100 years ago if you wanted to do chemistry, you learned German.

Hat tip: Herr President Direktor Prof. Dr. Klaus Zimmerman

Data, evaluation and the quality of public policy

This new working paper describes an evaluation data set that researchers can use to study the effects of active labor market policies in Germany. The data set combines administrative data drawn from multiple sources with innovative survey data.

There is nothing like this available in the US or Canada. Under the guise of privacy concerns, the political process in the US and Canada avoids assembling the sorts of data that would allow very high quality non-experimental evaluations (as well as descriptive analysis useful for understanding program operation and informing program implementation and design) of active labor market programs. Part of this is, at least in the US, due to the fact that both political parties have strong, but different, prior beliefs, about the effectiveness of such programs. To many democrats they are obviously effective (how could more schooling be bad?) while for republicans they are obviously ineffective (how could bureaucrats increase anyone's employment chances?) thus the demand for quality empirical analysis is low regardless of who is in power.

What we might call the "data gap" (a play on the historical "missile gap") has the effect of leading US researchers, at the margin, to spend their time working on non-US data, as with Dale Mortensen's ongoing research project in Denmark and Sandy Black's ongoing use of the Norwegian register data. Now, to be sure, no one actually moves outside the US because the salaries are much too low, but they do change their travel plans and their research agendas. In some ways this is good, because it leads to more interactions between North American and European researchers. However, the US is a big country, and policy unguided by serious evaluation in the US affects a large number of people and one of the world's most important economies.

There are real, low-cost opportunities for dong some good here. Will anyone in DC pick up the ball and run with it?

Not a good time to be Greek

My friend Nat Wilcox points me to this thoughtful piece that provides some historical context to the current crisis in Greece.

The piece is well worth reading and there is much to like about it. Americans are quite prone to forget, in part because we devote quite a lot of effort to not remembering, that our history of foreign policy interventions is not uniformly pure and good. Moreover, even when our motives our good, or at least partly good, they are often not understood by those who are the subject of our interventions, who see the world in different ways that we do.

On the negative side, I would have liked to see more in the way of a distinction between liberalism and capitalism. They are close cousins, of course, but by no means the same thing. I would have also liked some recognition that there is a crucial distinction between pining for some lost (and often never-existing) pre-capitalist communitarian and equalitarian past and wanting something for nothing and voting over and over again for politicians who promise to provide it. The article gently conflates them but they are quite different.

I also disagree with this bit:

But whatever happens in Greece, we need to remember that its problems are not unique, and the clash between those who like the world that capitalism has made and those who hate it is not going away.

I am more optimistic here. There are not a lot of folks around any more who miss hereditary monarchy (or, for that matter, communism). I think the same will eventually be true of liberalism's other resisters.

Greek unions at play

From the WSJ:

On Thursday, the country’s generally docile tourism workers’ union planned to officially announce strike plans for later this month — their first in ages. But somebody there overlooked the fact that Greece’s journalists union was striking on the same day, in a move likely to generate an empty press haul for the tourism union’s big moment. When nobody showed up, the news conference was canceled and rescheduled for Friday.

More generally, do the Greek unions have any idea how ridiculous and self-defeating their behavior looks to outsiders?

One hopes that the events of the past few months can provide an opportunity to change the political and social equilibrium in Greece in ways that will bring greater honesty and a deeper attachment to the realities of economic life as well as, in the medium and long runs, greater economic growth, but this is by no means a sure thing.

Hat tip: anonymous VIP

Iceland government makes it harder to get warm

My casual impression has always been that regulation of the sex industry tends to be pro-cyclical, with laxer regulation in bad times, perhaps because the general public has more sympathy with people who will take "any job" when there are fewer jobs to be had in general.

Iceland provides some evidence against this theory, as they have just banned strip clubs, despite being in a fairly dire economic situation. Matt Yglesias has some comments, with which I largely agree.

I still find it odd that anyone would think it feminist to either deny female sexuality or to put women out of work. This is just good old fashioned puritanism, dressed up in secular clothes. In my view, a serious feminism aims to empower women, not treat them as metaphorical little girls who need the protection of the state.

Evaluating partial employment service privatization in Sweden

I get regular emails from the IFAU (a labor market policy research institute) in Uppsala, Sweden about their new working papers.

Today this one arrived:

Effects of outsourcing employment services: evidence from a randomized experiment

Helge Bennmarker, Erik Grönqvist, Björn Öckert

In many countries welfare services that traditionally have been provided by the public sector are increasingly being contracted out to private providers. But are private contractors better at providing these services? We use a randomized experiment to empirically assess the effectiveness of contacting out employment services to private placement agencies. Our results show that unemployed at private placement agencies have a much closer interaction with their placement worker than unemployed at the Public Employment Service (PES). In particular, unemployed at private agencies receive more assistance in improving their job search technology. We do not find any overall difference in the probability of employment between private placement agencies and the PES), but this hides important heterogeneities across different types of unemployed. We find evidence that private providers are better at providing em¬ployment services to immigrants, and also indications that they may be worse for adolescents. Any effects tend to fade away over time.

What makes this cool?

First, it is a social experiment conducted in a developed country other than the United States. Those are rare birds indeed.

Second, it is an evaluation focused not on the question of whether or not a given service should be offered but rather on how best to organize its delivery. In particular, the evaluation examines privatization of employment service services. The opportunities for evaluations of this sort are nearly endless, and experiments that consider how to deliver services should raise fewer political issues than experiments that deny services to a control group in order to estimate the effect of services relative to no services.

Third, the evaluators here focus not just on the final product, namely labor market outcomes, but also on the process, by reporting on impacts on things like time spent the caseworker. This helps in understanding where the impacts on labor market outcomes come from.

Nobel WTF

This is just bizarre.

The press release is here. Key paragraph:

Only very rarely has a person to the same extent as Obama captured the world's attention and given its people hope for a better future. His diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population.

Maybe next year they can give it to Santa, who has had a similar worldwide impact on hope, especially among THE CHILDREN.

Mankiw makes the main point here.

The Economist's Democracy in America blog offers competing accounts, but I think the "pro" account actually makes the negative case more strongly than the "con" account. Most of it consists of announcing things. Politicians are always announcing things. That's not the hard part. Not being George Bush is also not hard. McCain could have done that, so could Hilary Clinton. It is hardly award-worthy. It is like handing out pulitzers for not being Glen Beck or Lou Dobbs.

The Norwegians have made fools of themselves on this one. What were they thinking?

Addendum: another humorous take, this one from Dan Drezner.

Addendum 2: reason's "rapid response" video. Nick really is having too much fun.

Addendum 3: a remarkably prescient SNL skit

Hat tip (on addendum 3): Taylor Hui

Politicians worried about appearances in the Netherlands

The simple solution to the problem outlined in this story about parsimonious posing in the Netherlands would seem to be to raise the salary of the prime minister. Lowering the salaries of others just drives the competent out of government.

Hat tip: Lars Skipper

EU awareness training

A Danish politician suggests that members of the Danish parliament know too little about the EU and so should receive mandatory training about it in Brussells.

Good bit:

The Danish People’s Party’s Søren Espersen says such a study tour is unnecessary. “We know enough about the EU. We don’t need to know any more. Christel Schaldemose feels insulted because I was in a survey and couldn’t remember everyone in the European Parliament. But it’s not my fault that EU politicians aren’t any good at getting into the newspapers,” says Espersen adding that his party gets a lot of information about what is going on in the European Union.

I can only imagine what fun it would be spending a week learning the details of EU parliamentary and administrative institutions, though there would be the compensation of good Belgian chocolates.

Hat tip: Lars Skipper

The business of language protection

Concerns about the use of English by Danish businesses in the Copenhagen post:

The widespread use of English in Danish businesses has led the Danish Language Council to call for language protection initiatives to ensure the preservation of Danish as a business language.

A survey from the Confederation of Danish Industry in 2007 showed that one out of four companies uses English as its primary working language.

I was surprised by the "one out of four" number, but it probably understates the case as I suspect that larger firms, which will be more likely to do business internationally, will also be more likely to use English.

The language council has proposed that companies keep official tabs on their English and Danish usage. Those books, besides being a reliable source of information, would also allow the businesses to ‘reflect’ upon how much English is used in their everyday operations, according to Kirchmeier-Andersen.

I like this idea of having businesses "reflect". Maybe they can do some meditation too?

Of course, one could also argue that the goal of increasing labor mobility within the EU militates in favor of the use of English rather than local languages at businesses in EU member countries. Increased labor mobility would have both economic benefits and "solidarity" benefits in helping to further the cause of social and cultural unification within Europe.

Hat tip: Lars Skipper

More on Sweden

Swedish tax authorities are cracking down on webcam strippers who fail to pay tax, according to a BBC report. Says a Swedish bureaucrat:

"They are young girls, we can see from the photos. We think that perhaps they are not well informed about the rules," said Mr Hardyson, head of the tax authority's national project on internet trade.

Ah yes, young girls, so foolish as to not want to pay high marginal tax rates. No doubt it is all the result of spending too much time thinking about shoes and the latest reinvention of Aqua.

Apparently the Swedes were tipped off by the Danes, eager to protect their webcam strippers from the unfair competition of heretofore untaxed Swedish webcam strippers. Saith the Swedish bureaucrat:

He said the Swedish tax authorities had been tipped off about Swedish internet strippers by the Dutch authorities, who had started a similar investigation earlier.

Odd that webcam stripping is legal in Sweden but prostitution is not. Sweden's prohibition on prostitution is motivated by feminist concerns rather than traditional religious and moral ones, as reflected in the fact that in Sweden it is buying, rather than selling, sex that is illegal. I should think the same feminist arguments about the pernicious effects of objectification would apply to webcam stripping as well.

My favorite line, of course, is this one, again from the Swedish bureaucrat:

"When we investigated the sites manually it worked better," he added.

Who knew the BBC had a sense of humor?

Hat tip: marginal revolution

New directions in public finance

Denmark considers blazing a new trail in revenue generation and greenhouse gas reduction by taxing emissions of methane by farm animals.

Hat tip: Lars Skipper

National differences in sexual (and survey response) behavior

The economist summarize the findings of one David Schmitt at Bradley University who studies, among other things, cross-national differences in sexual behavior. The economist piece is here and Schmitt's website with more findings is here.

The Times of London focuses on large Western countries and finds that (pun surely intended) the UK comes out on top.

I have to say, these rankings do not coincide with my casual impressions, nor with what you would expect based on the relative religiosity of various countries. In particular, I would put Canada above the US and the UK below both of them.

Car tax in Denmark

This picture is of the informational sign that stood beside the new Volkswagen Passat in the lobby of the Radisson SAS Hotel in Aarhus.

At the bottom of the picture is the tax inclusive price of the Passat, which equals 579, 989 Danish Kroner. At the current exchange rate, this equals US$111,772 according to x-rate.com.

This is why you travel to foreign countries, to see things like excise taxes over 200 percent.

Oh, and this is a great hotel if you ever get to Aarhus. One of only a few that I really look forward to.

Workshop in Denmark

I have just returned from about 10 days in Europe. The first portion was in Denmark to attend this workshop on the (surprise!) evaluation of active labor market policies sponsored by the Aarhus Business School.

Highlights included Michael Lechner's work, which Markus Froelich and Stephanie Behnke, on Swiss caseworkers, which you can find (along with the other papers) by clicking through to the program above. Caseworkers are, to use an analogy I am really tired of but have no good substitute for, the black box of active labor market policy. I am glad to see more people studying them as I think they are interesting in their own right and also because we might learn some things that would either increase program effectiveness or decrease program costs. Plus I find the general question of professional expertise of interest. Caseworkers certainly think they are adding value, but it is not so clear in the literature that they really are.

I also quite liked Monica Costa Dias' work, with Richard Blundell and Costas Meghir, on the accumulation of human capital over the life cycle via formal schooling and learning by doing. We had a good talk afterward the presentation about whether you want to incorporate learning by doing or on-the-job training in the model. These may sound like the same thing but learning by doing assumes that human capital increases whenever you work, while on-the-job training assumes that you accumulate human capital on the job, but only during a portion of the work day set aside for the purpose. In a life cycle context, the early human capital literature shows that if human capital depreciates at some modest rate, you gradually decrease your investment in on-the-job training as you age, because the period over which you reap the returns is getting shorter. In contrast, learning by doing assumes human capital just keeps increasing with work until you retire. These two models have very different implications for wages over the working life. I think on-the-job training probably predominates but the fact is that we do not really know empirically. This is a tough (due to difficulties of measurement) topic but one well worth more attention in the literature.

The most entertaining presentation was Bart Cockx' paper evaluating an active labor market policy in Belgium. Bart got a lot of laughs from the audience (which consisted entirely of Europeans other than yours truly and one Australian) just be describing the Belgian unemployment insurance system, which includes benefits that never end. Getting Europeans to laugh at your country's unemployment insurance system is a much higher level of attainment than getting Americans or other Anglosphere types to do so. Even more laughter ensued when the dramatic policy reform evaluated in the paper was described. Basically, the new policy sends claimants a letter warning them that they will have to meet with their caseworker eight months in the future. The paper itself is quite nice.

At the top of this post is a group picture from the workshop. We toured the Jylland, an old wooden battleship kept in drydock, with a museum to the side, just next to our hotel in exotic Ebeltoft. Being one who tries to provide public goods whenever possible, I am the one in the sailor hat, which our (amazingly excellent) tour guide insisted that one of us wear.

UK prostitution law changes

The UK is revising its prostitution laws to make it a crime to purchase sex from a woman who has been "trafficked" with lack of knowledge of the woman's status not a defense. It is important to know as background to this that some forms of prostitution are legal in the UK, with the framework similar, but not the same as, that in Canada.

In thinking about the likely effects of the new law, my mind turned to laws against buying stolen property. Presumably there is some standard here that protects innocent consumers while not shielding knowing ones. Here is one legal website - probably not the best one. It suggests something like a reasonable person test. If you buy something at Macy's, you should be able to rely on it not being stolen. If you buy it from a guy in a truck by the side of the road who keeps looking suspiciously at every passing car, and you pay about 10 percent of the market price, you do not have a reasonable expectation that the good is not stolen.

The article suggests that the Brits do not intend to have such a reasonable person test, though one suspects that is how the law will evolve in any case. The article notes that there have not been any prosecutions in Finland, which has a similar law. At the same time, the law should be a boon to native British sellers of sex and a bane to those who, without being trafficked, come from lower income places within the EU to make some money. Perhaps it will be challenged under the EU's rules prohibiting trade restraints against other EU members?

It is interesting and somewhat surprising that the "English Collective of Prostitutes" (imagine those meetings) oppose the new rules to indirectly limit their competition. The new rules should raise market prices generally, which should reduce the quantity demanded of paid sex and increase the quantity demanded of substitutes, such as sex with unpaid female companions found in bars and on places like match.com. As such, the net public health effect may be a negative one, to the extent that prostitutes are more likely to use protection.

Mandatory collegiality in Denmark

Details here. Thankfully,

'The greeting requirement will only affect pedestrians. We obviously prefer that cyclists and motorists concentrate on the traffic over greeting someone.'

I hope no one tells the administration at Michigan about this idea.

Hat tip: Lars Skipper