A formal apology from the Boring Statesman

To my readers:

There are many ways to bore, piss off and antagonise a group of people. It can be difficult to do all three. But across a span of approximately 11 months I have discovered an incredible method to do all three.  Here's how you too can do it (Doctors are dying to find out my secret!) -

1) Bore your audience
Make very long posts about issues that no one cares about. No, really, issues that no one cares about and that don't exist outside of your own mind. Take tentative feedback from encouraging "readers" (i.e, teachers I forced to read my blog and my mother's friends) as an endorsement of how excellent my posts are. In my  delusional state, continue to make more extremely long winded, boring posts.

(Also, because all you do is read economics blogs by American economists with PhDs, write like one. Except you obviously don't have their intelligence, so what's left is just terrible writing.)

2) Now piss them off
Neglect your blog. For long and sporadic periods of time. Each time, promise that you're turning a new page. Don't do it.

3) Finally, antagonise them 
Despite doing all of the above; still hold your blog in extremely high regard (for some reason). Maintain an "about me" page that literally stinks of pretentiousness and self righteousness. Keep it that way, while all of your mum's friends, your teachers, and former mentors think "Christ... she really thinks that having a website on the internet qualifies as an achievement. Oh to be young and deluded."

Sound familiar? That's because I just described the entire short, sporadic 11 month life span of the Budding Statesman (aka the Boring Statesman). Through the  combined efforts of 23 blog posts; and despite only posting sporadically (after promising change multiple times), I believe I have bored, pissed off, and antagonised all of you.

Sorry. When I first started the Budding Statesman I had entirely grand and, in hindsight, entirely pretentious ideas of what this Lovechild of my Creative Thought and Mind  was going to be. Instead I left the lovechild to die in  a ditch in a sad corner of the internet.

So to all my readers - a sincere apology. I am sorry you had to witness first hand the pretentiousness of a 17 year old with access to a blogging platform. I'm sorry that, because you were Facebook friends with my mother, you had to read my blog. I'm sorry that you stumbled onto my blog for whatever reason. Because it really was terrible, and, worse than that, terribly boring.

From now on, I can't and won't promise that I'll post regularly.  I can't promise that the posts will be of the best quality, because I'm still a student and in all honesty I'm doing my best. And I can't promise that the posts won't still be a little long. But what I can say for certain is that this blog will Absolutely Not  Be Boring. I'll write as myself. So here's to a new era of the Budding Statesman - I'll do my best not to bore you, piss you off, or antagonise you. High standards indeed.

Comment down below, or email me at buddingstatesman(at)gmail(dot)com, a post of mine that either bored you, pissed you off, or antagonised you. I would, in all honesty, love to know!

P.S  Here's an interesting story - what prompted this epiphany? I checked my stats and saw that one person from Estonia had viewed my blog. And all of a sudden I just felt really, really bad for them - that the only insight they had into an Australian economics student was this terrible blog. Sorry, Estonia!

Links - 28/07/17

Two days ago there was a little excitement in the Science Community when the remains of an extinct bird were discovered... little did they know that I personally have uncovered another fossil... a links post!

It's been a rather long time. Fortunately I still remember how to copy and paste links - obviously a difficult skill to master. I'm listing points by dot points instead of numbers now - sorry Dewey, it's time for a change.

Some interesting stuff I read/stumbled across the past week, and some cool things to think about.

•  Welcome to the new cash economy - in urban China, cash has increasingly become obsolete in favour of electronic payments:

“...China is systematically and rapidly doing away with paper money and coins.

 Just as startling is how quickly the transition has happened. Only three years ago there would be no question at all, because everyone was still using cash.

Even the buskers were apparently ahead of me. Enterprising musicians playing on the streets of a number of Chinese cities have put up boards with QR codes so that passers-by can simply transfer them tips directly.

• Something that's got the criminology community rather excited: a new study bolstering the "lead crime hypothesis." Apparently higher exposure to lead = higher tendency to commit crime. This sounds very promising, and if causation can be thoroughly established, what implications does this have, in terms of policy, for how we address crime and criminal offenders? Definitely something to keep an eye on - I'll keep you all updated. 

•   An interesting perspective on the minimum wage debate: when Maine (U.S) tried to lift the minimum wage, restaurant workers actually protested it. If you're not familiar with the ins and outs of  the minimum wage debate, the general perception is that minimum wage is said to be mostly beneficial for restaurant workers:

But in Maine, servers actively campaigned to overturn the results of a November referendum raising servers’ hourly wages from $3.75 in 2016 to $12 by 2024,  saying it would cause customers to tip less and actually reduce their take-home income.

•  A (surprisingly) great article about why it matters that Melania Trump wore Dior in Paris last week.   Some great and very eloquent discussion about historical perceptions of fashion in France and how that influences political and cultural discourse. Not one for the econophiles though.  

• And finally, to conclude, something to warm the hearts of any free market liberals, an article about Ford's "super smellers":  

Car designers are increasingly competing to deliver the perfect car scent in each market. For Ford Motor Company, smell is a crucial aspect of delivering high quality vehicles to customers.

Every year Ford runs an application process to select its team of super smellers in China. Would-be testers can come from any department within the company and are asked to judge material samples in 16 jars. They are judged on their smelling ability and consistency, but must also meet other requirements to qualify for a spot on the prestigious panel.

“You can’t smoke or have allergies and sinus issues,” says Mike Feng, a Ford smell tester for four years. “Wearing perfume, leather jackets or nail polish is also not allowed, and you shouldn’t use strongly scented shampoo to ensure your senses aren’t compromised.”

Ford’s super smellers must requalify annually to maintain their position on the panel and must be available to attend regular odor tests throughout the year. A small group of six panelists form the smell jury for each test and an average of their scores is given to each material sample.

Everything used in a Ford vehicle – like seat fabric, plastics or carpet – is odor tested.  

 It's pretty awesome how much time, effort, and minute details goes into small aspects; and all in the name of competition and innovation.

Also, Adam Smith really knew what he was talking about - specialisation of labour is pretty cool.

Another photo of a super smeller - not associated with Ford. 

Brexit, gold, a growth rate of 167.7%... wait, what?!

I'm doing a research project on Australia's composition of trade at the moment, so I'm looking at Australian trading stats. Scintillating stuff.* But I stumbled on something a little weird.

 So most countries had year on year growth of 2-3%. But one country had current trading growth consistently in the double digits .... and no, it wasn't China. Even China could only manage single digits (albeit approx. 8-9%... Japan can only wish). It was something that:

• has experienced stagnation compared to its more adaptable peers
• has a fairly unpopular leader at its helm
•  whose glory days remain in the past.

Pencils down. No, it's not the Canadian band Nickelback. In fact it's the United Kindgom that is managing 25.4% YOY growth in two way trading and 71.6% YOY growth in exports with the Oz. Merchandise trade grew 167.7% - and this is all around Brexit, damn! What's in the water in the U.K? Today, the Budding Statesman investigates. (Cue boring analysis below.)

On further inspection its exports that has been driving this growth. Since exports of services actually declined, it can only be Australian goods... which is probably gold, since proportionally it occupies a larger share of total exports. So the stats suggest that for some reason Britain had an absurd hankering for gold in 2015-16.  

After patting myself on the back for discovering (what I thought) was the second coming of the Gold Rush, I dug a little deeper... and alas, it was not to be:

Britain's trade deficit with the rest of the world is L6 billion larger than previously thought -- and at a record high -- because the nation's beancounters made a mistake in their sums.

The Office for National Statistics yesterday admitted to a big "processing error" that meant it had miscalculated the value of everything that the country exports and imports for almost two years.

The problem was found in the collection of "non-monetary gold" data, which measures the amount of gold traded privately rather than used in jewellery. For every other quarter from the start of 2015, the corrected numbers improve the trade picture, suggesting that UK investors have been net sellers of gold. Since Brexit, the data shows that they have become large importers of the dollar-denominated asset in an apparent flight to safety. 

So those record growth rates were a little exaggerated, to say the least. Darn. But still, I think the Nickelback/United Kingdom comparisons are still strikingly accurate. See below: this is Nickelback's "how you remind me", with some of my own personal annotations. Remind you of any country?

And this is how you remind me

This is how you remind me

Of what I really am (a country in structural decline)

This is how you remind me

Of what I really am (a country in secular decline)

It's not like you to say sorry

I was waiting for a different story...

** I actually do enjoy it quite a bit. Although I think my economics teacher might read my blog so its in my interest to say so anyway.

Many a broken promise...

It has been almost 3 months since I announced the return of the prodigal son/daughter. On April 25th, I proclaimed, rather grandly, "a return from the hiatus", implicitly promising more posts. I followed up on that by remaining inactive for three months. Caesar's backstabbing friends seem rather honest folk compared to some of my (rather ambitious) broken promises.

Since then, the trend line of the Budding Statesman's stats has followed the same life cycle as that of a souffle with too few egg whites: showing great promise, before sadly stagnating. This is entirely my own fault.

So because my lack of posting has caused my downfall, I have decided to grab the bull by the horns (the blog by the horns?) and write as often as possible (hopefully even every day) and in a more conversable manner.  This means more photos and more hip cultural references (and bad jokes). This will also mean, on average, shorter posts. But it'll also cut down on a lot of drabble, and I think overall it will improve the quality and readership of this blog. Especially considering my readership is mostly my mother's friends, who probably don't have time for 3,000 word posts.*  As Snow White proclaimed, "the mirror doesn't lie" - and neither does Google Analytics.

 So, judging by the success of some other blogs, I think I am on the right track - and so begins another day, and another approach. Hopefully this time it sticks.

(Gif courtesy of Riffsy.)

** I do appreciate your readership, but I think it may be time to branch out. Nevertheless, if some Ancient Roman armies were as loyal as you, we'd probably all be speaking Italian.

Links - 26/04/17

A new links post - finally. And a consequent (possibly temporary) return from the hiatus.

Over the past few weeks I've been busy with exams, so some of the links may be slightly dated. Nevertheless, they remain as interesting.

1. There was AirBnb, then Uber: is it now time for the 'kidney sharing economy'?

2. The effects of British colonialism on India: how bad was it really? I found this stat very revealing:

Another way to make the historical comparison is to consider which Southeast Asian economy never fell under colonial rule. That would be Thailand, which has a per capita income in the range of $16,300 by World Bank estimates, compared with India’s $6,100. 

3. Data collection in the 21st century: face scanners placed in public toilets in China to prevent toilet paper theft.  Toilet paper has some monetary value, but because of its social benefit, it is given to the public for 'free' as a common good. When you think about it, the only thing that stops widespread toilet paper theft is probably a fairly fragile belief in the common good. Its a rather unusual, yet widespread,  phenomena that disrupts the theory of the tragedy of the commons - so it's interesting to see what happens when this rather fragile "social belief" is upended by the more understandable individual desire.

4. Belarus has implemented a sort of "reverse-welfare" law (to put it crudely), where the underemployed have to pay a 'compensation tax', to make up for the taxes they aren't paying because they're underemployed. This policy seems self-perpetuating and counter - intuitive to me -- and needless to say, it has been hugely unpopular. This also invokes a pretty interesting discussion about the politics of Belarus, where political discourse has produced the label "the law against social parasites."

5. In Africa, why do women's rights advance so quickly after major conflict? Or, why are changes related to women's rights developing more rapidly in Africa than in Western countries, despite the former's relatively traditionalist and masculine culture:

 How were post-conflict countries able, in a relatively short span of time, to advance women’s status in key areas? They not only accomplished what the Nordic countries had done over the course of 100 years by increasing legislative representation, but, in some cases, even exceeded their rates almost overnight.

 Basically, major conflicts result in disruptions in traditional gender relations and structures - men are called upon during times of war to act as soldiers, etc. -   leaving a supply gap of sorts left behind, which is then filled by women.

This explains why Rwanda, despite have a male-dominated culture, has the highest proportion of females to males in Parliament. This is just another case of Markets in Everything, a.k.a the economics of gender politics in post conflict regions. It doesn't quite ring...


6. Yet another case study of black markets in fishing. Warning: plenty of puns in the link:

Federal prosecutors say a Massachusetts fishing magnate known as Carlos “The Codfather” Rafael has agreed to plead guilty in a scam involving catch quotas and smuggling money to Portugal. 

According to Hakai magazine, the malevolent fishmonger was selling his illegal catch to mob associate Michael Perretti. Perretti — a convicted felon — ran South Street Seafoods in the heavily mob-infiltrated fish market in New York.

I recall that Iceland also had rampant corruption in its catching quotas too. What is it about the fish market that seems to invite the festering of black markets? My closest guess is that its a 'tragedy of the commons': individual market players act according to their self interest, at the cost of the common good of all players, by depleting that resource through collective action. So, seemingly abundant and immeasurable resources such as the sea, and fish, seem limitless - and people fish to their heart's content, without consideration of the gradual erosion of a common good.

Challenging western voter demographics

Why are young voters turning out in droves for Le Pen?

Since Brexit and the election of Trump, there seems to be a general consensus in the mainstream media about western voter demographics. The narrative seems to be that older voters (say 50+), vote for the isolationist, protectionist option (that is, Brexit and Trump); while young people, having grown up in the era of social media, are more likely to vote for the socially and economically liberal option. American voters aged 18-24 preferred Clinton over  Trump by 55% - 37%; 75% of British voters aged 18-24 voted to remain, with the proportion of voters who voted to exit the EU increasing with age. 

So a general belief has emerged in Western voter demographics: older people = more conservative; and young people under the age of 30 = socially liberal.

So with the upcoming French election, I very much expected to see the aforementioned trends replicated in polls. The election has much of the same features that have been seen across recent elections in the Western world: an ideological clash between the  populist protectionist vs. the social liberal, a disenchanted populace, poor economic conditions. 

Not so!

A new poll on the French election shows that it is in fact younger voters who are throwing their support behind Marine Le Pen, the French presidential candidate of the anti-immigrant, anti - EU Front National  (FN) party. And older voters are more likely to vote for pro business, pro - free trade  Emmanuel Macron. 

See the graph below. Thanks to Ben Judah for the pointer. Unfortunately I wasn't able to find the original source of the graph: 

Form Trump & Brexit  trends shown, one would expect that Le Pen polls particularly well with older voters.  But support for Le Pen (the nationalist candidate)  decreases very strongly as the voters get older, while her support remains comparatively high among younger age groups, peaking at 35% in the 18-24 yrs. 

Meanwhile Macron polls (in my perspective) shockingly low amongst 18-24 group at 11%; ranging from 11-19% for those under 50 years. Adversely, his support has the opposite trend to Le Pen: it decreases as the groups get older, peaking at 28% in the 65+ group.

I find this fascinating - even though older voters tended to support Brexit and Trump, young French voters have completely rejected this pattern - so the question is, why is France not following the trend shown in other Western elections?

For the purpose of succinct analysis, I am only going to focus on Le Pen and Macron, the two candidates who:

1) are polled as the most likely candidates to make it to the final round

2) represent two vastly oppositional positions on most stances (pro EU vs. anti- EU; pro free trade vs anti free trade)

3) represent the seemingly 'ideal' candidates for two different groups: millennial (30 years and under) vs. baby boomers (50 years and older).

Why is there a difference? I have three hypotheses to this fascinating phenomena, listed from most to least relevant:

1. Young French voters have been disproportionately effected by France's economic downturn.

Political activism fundamentally stems from poor economic conditions. Voters who cannot see, or feel, a rise in living standards will turn towards unorthodox options, such as Le Pen. And in the case of young voters, their economic conditions, namely their inability to find a job, have necessitated political action. 

Firstly, youth unemployment in France is 23.6%, and has averaged 20% from the late 1980's to now - overall unemployment is 10%. This means that generally, French youths have been the unfortunate bearers of France's economic stagnation. This inability to find a job can be attributed to a number of factors - overall stagnant growth is one of them - but fundamentally, it comes down to the inflexibility of the labour market.  France's labour market has very generous conditions that greatly benefit those who are already employed - but unfortunately, those very benefits make it very difficult to hire people who are beginning to enter the market, such as young people. 

This systemic rigidity is compounded somewhat by the 'job market culture' in some Western Europe labour markets, such as France and Italy, that incorporate socialist benefits. The culture is generally geared to older, more experienced workers vs. young, entrepreneurial yet untested workers. 

Like fleas to a dog, France's labour market is partially responsible for unemployment and young people becoming inseparable from each other.  While employment prospects of French youths become more doubtful, their counterparts in the U.S and the U.K experience better job prospects. 
So young voters will begin to pivot to alternatives, such as Le Pen, when the political norm doesn't seem to be working. 

2. The memories of the 'dirtier' FN party linger among older voters; but are less familiar to millennials.

The FN was originally founded  in the 1970's, but only achieved prominence during the 1980's to the early 2000's. During this time, it became known for a number of controversial issues - most famously, their reinstatement of the death penalty  and their leader's denial of the Holocaust - leading to the party's slow decline in the 2000's. Marine Le Pen's modern leadership has since revamped the party, altering many of their previously xenophobic connotations. Perhaps older voters restrain from voting for the FN, due to their historic polarisation - but young voters, having grown up in the era of the transformed FN, do not maintain these connotations. 

EDIT: And, just as I am writing and editing this post, Marine Le Pen has just announced that she is stepping down as head of the FN in order to "broaden her appeal."

3. The ramifications of a potential EU exit for older voters.
This theory is perhaps a little less plausible, but I've included it because I find this theory very interesting and unorthodox. One of the central messages of Le Pen's campaign has been the electoral pledge of a Frexit referendum. Exiting the EU - and subsequently abandoning the single currency would be more damaging to the elderly, who have higher savings rates and are more heavily exposed, than the young. 

Of the three theories, ultimately I believe that 1) is the likely cause. In an era where it seems that political affiliations seem to be increasingly decided by age, it is important to remember that at the end of the day, people vote with their feet, not their social media feed. 

Links - 11/03/17

1. Sweden complains it's citizens are paying too much tax (the Financial Times). This is also a pretty interesting side effect of negative interest rates:

Negative interest rates have made some of the world’s highest taxes a lot less painful as businesses and individuals race to hand cash to the state because of the relatively generous returns on offer. 

Data released on Wednesday showed Sweden’s government generated a budget surplus of SKr85bn ($9.5bn) in 2016, with approximately SKr40bn coming from tax overpayments. The government will have to repay more than £3.5bn to businesses and individuals who purposely paid too much tax in 2016. 

2. Why hasn't Spain experienced a rise in right wing nationalist populist politics despite similar conditions? (the Financial Times).
 Article is really interesting, and mentions the importance of one aspect: the structure of the Spanish welfare system. It grants generous access to public services such as health and education, but doesn't provide social housing/cash payments. So its less obvious that the state is making wealth transfers from one part of the population (the natives) to another (the immigrants), and there's less finger pointing when economic conditions turn sour. "When there are no resources to compete for, the potential for conflict decreases."

3. The economics of kidnap insurance. 

4. What happens when populist policies become a reality? (podcast) A case study of Argentina. After being elected President, Cristina Fernandez de Kirchner said banned exports, and mandated that if companies wanted to sell in Argentina, they would have to build in Argentina.

5. The markets in hacking. (podcast) Again, to repeat the age - old mantra : "Nothing is certain except death, taxes, and the existence of markets when there is demand for a certain good. " I think Benjamin Franklin said that...

Links - 25/02/17

1.  U.S Court of International Trade: "Snuggies are blankets, not robes or priestly vestments."

The U.S. Justice Department argued in court that Snuggies are apparel and should be subject to higher taxes than blankets. The court disagreed, and found that Snuggies should be considered blankets and taxed at a lower amount.

2. The advantage of being a black basketball player vs. a white basketball player in the NBA. 
Article interestingly suggests a reversal of typical racial roles in basketball.


3. "International Peacebuilding and Local Success: Assumptions and Effectiveness."  The question is not why peace - building doesn't work, but why it works at all:

 By contrast, programs that rely on different assumptions—such as: undesirable practices may help promote peace, peacebuilding efforts are not always necessary, and insiders have much of the required knowledge and capacity—are much more effective at supporting local actors to build long-term, sustainable peace.

4. In response to North Korea's nuclear tests, China banned all coal imports from North Korea.  Coal is North Korea's main export, and most of North Korea's coal is exported to China. It will be interesting to see the effect on North Korea's economy - GDP shrank 1.1% last year. Link is pretty interesting, perhaps even momentous - it indicates a change in China's normally lenient and supportive position of North Korea. Could the threat of North Korea wielding nuclear power be enough for China to pursue a stricter, more Western stance towards the rogue dictatorship?

5. The process of McKinsey & Company/BCG-style presentations.

Links - 18/02/17

1. Markets in cinema tickets: demand - based ticket pricing to be introduced in some Australian cinemas.

2. New study finds performance - enhancing drugs for chess. The article is fairly long. Basically, the drug actually slows the player down, but increases cognitive function, resulting in better moves.

3. Podcast recommendation: 99% Invisible.
It's about urban architectural/planning issues and stories. Previous podcast topics include: guerilla urban planners, unpleasant and hostile urban architecture (i.e benches that the homeless can't sleep on), and the politics of lawn maintenance.

4. "China: the economic story of our time." Interesting discussion regarding China and its economy.

5. Donald Trump's wall probably won't happen. Like all policy, it's getting bogged down in legal, bureaucratic and logistics problems:

None of the 38-member Texas delegation offered full-throated support of a complete border wall... that would impact Texas more than it would any other state.

Among many Texas Republicans in Congress, the concept, while popular with the party's base, collides with another conservative tenant: eminent domain. 

A wall would require the confiscation of ranching land near the Rio Grande, and several Texas Republicans expressed concern about the federal government taking away property — often held by families for generations — and the legal tangles that would inevitably arise from that. 

6. The liberalisation of China resulted in decreased productivity of American maths professors.

 The article also references the former U.S.S.R, another nation with a mathematically rigorous education sector whose liberalisation also had adverse consequences for American maths professors.
With gradually thawing relations between Cuba and the U.S, I wonder what the consequences of a loosening of Cuban  - American borders would have on the U.S high - skill labour market. My prediction is that professors can feel safe in their tenure - it isn't educators who are leaving for greener pastures but instead medical professionals. In an attempt to stem this "brain drain" from the medical sector, Cuba recently imposed a travel ban. It's merit as a viable solution is doubtful. More on this soon.

Improving reader engagement

New feature on the blog: reactions!

Below each post you can now "react" to certain posts. So far, there are only three different categories: 'interesting', 'challenging' and 'boring'.

 Most of my posts manifest because I think the content is either interesting or challenging. It recently occurred to me that people might also find my posts boring. So I am interested in seeing, out of these specific categories, what my readers think of each post.

For now there will only be 3, but based on the response the categories may change.

Also, if you view the Budding Statesman on mobile, you will now see the desktop version instead. The desktop version will be displayed on all platforms. This is in response to some feedback about the difficulty in finding certain widgets on the mobile version, such as the "subscribe" widget.

Happy reacting!

Update: the importance of social values within productivity

A month ago I made a post commenting on the interesting contribution that social values - such as long weekends, family time, etc  - made to productivity. Specifically, the relatively short and flexible working hours associated with the labour market in France and Germany seemed to be a significant boost to the productivity of the labour force.

Then today I read about the extreme, strenuous Japanese work culture, which is apparently contributing to the suicides of 2,000 people a year due to work - related stress. There are certain  highly - publicised cases where employees  have worked up to 100 hours of overtime in the months preceding their deaths.

 From the Guardian:

In its first white paper on karoshi in October, Japan’s government said one in five workers were at risk of death from overwork. The paper found that despite attempts by some companies to establish a better work-life balance, Japanese workers still spend much longer hours in the office than their peers in other countries.

According to the paper, 22.7% of companies polled between December 2015 and January 2016 said some of their employees logged more than 80 hours of overtime each month – the official threshold at which the prospect of death from work becomes serious.

With the apparently significantly longer and more intensive nature of the Japanese workforce - which arguably lacks so much social work - life balance that is has contributed to a decline in the sexual activity of Japanese citizens - it got me thinking whether the supposedly huge number of hours worked by Japanese employees was a strain on productivity.  In light of the apparent boost in productivity associated with the shorter - hour, socialist, employee - centric Franco - German model, this hypothesis could give significant merit to the importance of social values within productivity.


Average annual hours worked

Here is a 2014 chart from OECD data on the average annual hours worked. Average annual hours worked is defined as the total number of hours actually worked per year divided by the average number of people in employment per year. Overtime is included.

The chart shows that Japan is actually in the middle of the pack in terms of hours worked. The chart doesn't suggest that Japan's average annual hours worked is an extremity - far from it. Interestingly, Japan is closest to Italy in terms of average annual hours worked. Below are exact figures for hours worked for each country in the G8, organised in ascending order:

Germany: 1366.4
France: 1473.5
U.K: 1677.0
Canada: 1703.0
Italy: 1718.8
Japan: 1729.0
U.S: 1789.0
Russia: 1985.8

The plot thickens. Among developed, wealthy nations, Japan's annual average number of hours worked is relatively high, but still not the highest. Yet in the U.S and probably Russia (my knowledge about Russian society, and by extension Russian work life, is pretty limited) there are less cases of work - related suicide. So why are concerns especially prevalent in Japan, if there seems to be no extremities in work hours?

I think it is partly explained by the (unmeasurable) nature of the Japanese workplace/ work culture.

"The nature of the American employment system makes a difference for minimizing the risk of overwork suicide. American workers can switch jobs when they are under excessive pressure, unlike their Japanese counterparts who have often been bound to their companies via lifetime employment, which can be either bliss or a curse.

Moreover, Japanese companies emphasises the value of the company vs. the individual: employees are pressured to express their loyalty for their company. The influence of a highly traditionalist, 'honourable' Japanese culture can be observed, even in the operation of the workplace.


Are higher hours worked a lag on productivity?
Also,  there is still the question of whether this work culture is a lag on productivity.
There is still a fairly large difference of 300-400 hours between annual average hours worked in Germany and France and average hours worked in Japan.

Below are OECD data charts measuring GDP/ hour worked, a measure of labour productivity. However, labour productivity only partially reflects the productivity of labour in terms of the personal capacities of workers or the intensity of their effort. I have yet to find a better economic indicator. (Ideally, I would calculate labour productivity by dividing GDP by total number of hours worked. Unfortunately I haven't been able to find these stats online.)

G8: GDP per hour worked 

There is a trend amongst G8 countries - countries that have lower annual average hours worked per year generally have high GDP/hour worked - perhaps indicating that these countries are more productive.

For a more visual comparison:

Annual average number of hours worked:                        GDP/Hour, ascending:

Germany: 1366.4                                                                       Germany: 106

France: 1473.5                                                                           Canada: 105.1
U.K: 1677.0                                                                                France: 104.3
Canada: 1703.0                                                                           Russia: 102.4
Italy: 1718.8                                                                                Japan: 102
Japan: 1729.0                                                                              U.S: 101.6
U.S: 1789.0                                                                                 U.K:101.4
Russia: 1985.8                                                                             Italy: 101.1

There is a pretty general trend here. Lower average number of hours worked can correlate to higher GDP/hour, but the data doesn't indicate that it is causal.

Some countries, specifically Germany and France, have lower average number of hours worked and higher GDP/hour. As the data shows, Germany and France both have the highest and third highest GDP/ hour. France is also the country with the second least number of average hours worked - after France, there the general trend of number of hours worked/ year is significantly higher (France and Germany remain close at 1300-1400 hours worked, whereas the rest of the G8 have a range of generally 1600-1700, with Russia as the outlier.) This is reflected in GDP/hour - the GDP per hour of the countries with a range of 1600-1700, such as Japan, the U.S, the U.K and Italy (with the exception of Russia and Canada) are generally similar and range from $102-101. It almost seems as if the data can be separated into two groups: the 1300-1400 hours group with higher GDP/hour of approx. $104-106; and the 1600-1700 group with lower GDP/hour  of $101-102.

However, the data set does not follow this clear trend -  it contains several outliers that disprove this theory.

 Canada has the second highest avg. number of hours worked, yet has the second highest GDP/hour of $105.1 (which would place it in the same GDP/hour group as France and Germany, countries that have average annual work hours of approximately 300 hours less). Furthermore, Russia works approximately 200 hours more in a year, yet its GDP/hour is not significantly lower than the rest of the G8, and remains in the $101-$102 range.


Conclusion

So in conclusion, this analysis shows that hours worked do not openly influence the productivity. Instead, the unclear trend of the data indicates that it is the specific work cultures of each country that primarily impact productivity, proving that there is some importance in social values within productivity.

Links

There is probably a growing surplus on the Budding Statesman of 'link' posts. I do apologise for this, but I try to make 'links' a weekly instalment and sometimes there is little time to write more in - depth posts.

To make up for this, there are some super interesting links this week - possibly even the best yet:

1. "Lessons from the TV flat screen industry on why trade protectionism may ultimately undercut domestic industry anyway." Pointer from Chris Blattman.

2. Ageing populations do not necessarily result in economic stagnation (study).

3. When a Japanese doomsday cult purchased a remote sheep station in Western Australia in 1997. This same cult was later responsible for the 1995 sarin gas attack on the Tokyo subway.

4. Finding Australian law blogs. I've had real trouble finding active blogs that discuss Australian law, which is a real shame. From my impressions so far it is one of the more diverse and interesting blogospheres within the humanities domain. The majority of the ones I've found are listed on the side bar on the right, under the "Legal" section.

5. Really, really interesting review of Hannah Arendt's book "Eichmann in Jerusalem."

The Eichmann mentioned in the title is Adolf Eichmann, who organised the logistics of the Holocaust (i.e organising the transportation of Jews to trains and then on to concentration camps, etc.) After he escaped to Argentina after the end of WWII, the state of Israel discovered and kidnapped him and put him on trial in Jerusalem in 1960.

If you care to read, more information below the link.

Does 'peak education' exist?

This is from a recent study reporting on new evidence on the casual link between education and male youth crime, based on data from Queensland, Australia. It inadvertently analyses the effects of the 2006 "Enactment of the Earning or Learning education reform", which mandated an increase in minimum school leaving age:

...the analysis shed[s] significant light on the extent to which the causal impact reflects incapacitation, or whether more schooling acts to reduce crime after youths have left compulsory schooling. The empirical analysis uncovers a significant incapacitation effect, as remaining in school for longer reduces crime whilst in school, but also a sizeable crime reducing impact of education for young men in their late teens and early twenties. 

First of all, it is fantastic that such a policy encourages the application of education as a policy tool to target social issues. The study's results are a testament to the widespread and often immediate benefits of education across all ages.

So with the effectiveness and flow - on benefits of education apparent and even seemingly endless, it has got me thinking, is there a limit, or 'peak education', where the capability of education  reaches its full potential and the benefits begin to secede?

So far it seems to me that 'peak education' doesn't exit. A recent paper using data sets from the first half of the 20th century shows that mafia members who attained more education got paid more in the underworld.  Mobsters reap high rewards from investment in their education - the paper found that "mobsters have significant returns to education of 7.5-8.5 percent, which is only slightly smaller than their neighbours and 2-5 percentage points smaller than for U.S.-born men or male citizens."

Another case study: Singapore's over 65's (the official retirement age in Singapore is 62) are choosing to re- skill and stay in the workforce. Most older workers work in labour intensive industries, as cleaners, machine operators, etc. According to the OECD, (article from Bloomgberg) Singapore’s employment rate for those between ages 55 and 64 is now 66 percent, among the highest of the 34 nations in the Organization for Economic Co-operation and Development. So even in old age the benefits of re - education and re- skilling outweigh the costs.

Without evidence to the contrary, the conclusion is that peak education doesn't exist. Education, as a policy tool, is the gift that keeps on giving. And it also happens to align with the one of the core values of this blog: "the belief in the constant re-appraisal and questioning of mindset - thus the blog header, from the perspective of a student with developing ideas."

Considering the current 'digital' economy and the constant need to innovate and re -educate in light of technology,  education is indispensable both as a policy and as - dare I say it - a value.

Links - 03/02/17

1.  Somalian pirates re - imagine self governance. And the economics of the 'pirate economy':

For Somalis who live in coastal communities, the pirate economy is a considerable source of employment and income: there is a need for crews directly involved in the hijackings, and a local ground crew to guard captured moored ships. Among this exercise are entire administrative, legal, and financial teams, a network of financiers and shareholders, and guards to police the territory in which the pirates reside.  

...Pirates also face heavy fines for bad behavior, such as non-consensual sex or mistreating other crew members, which carries a $5000 fine and dismissal.

2. Sales of luxury Swiss watches decrease by 10% following a crackdown on corruption in China.

3. Challenging 2017 perspectives of Putin.

4. Why a top university runs a London State School on Soviet lines.

5. Facial recognition, fingerprints to replace passports at Australian airports.

A testament to self - governance

A side - effect of self governance: forgiveness of genocide?

From the Guardian:

Laurencia Niyogira and her nextdoor neighbour, Tasian Nkundiye, have become firm friends. But 22 years ago, at the height of the Rwandan genocide, Nkundiye murdered nearly all of Niyogira’s family, and left her and her siblings for dead.

“I am very grateful to her,” says Nkundiye. “Ever since I wrote to her from prison, confessing to my crimes and asking her for forgiveness, she has never once called me a killer. Now, I often leave my children with her when I have to be away from the village. She has set me free.”

...almost 3,000 victims and perpetrators live in the six reconciliation villages, a success PFR attributes to its emphasis on forgiveness. 

Aside from attending group discussions on conflict resolution, villagers also look after livestock together, grow maize and cassava in a co-operative, and share a common bank account to pay for their health insurance.

“We are motivated by the fact that we run this whole place ourselves,” says Niyogira. “No soldiers, no governmental presence.”

The story is fascinating in itself. But what interests me is that these villages operate almost entirely autonomously, with no governing institutions such as local councils, law enforcement or any legal bodies. The people of these communities are essentially left to themselves.

A little context: After the assassination of the then - president of Rwanda in 1994, over the course of 100 days more than 800 000 ethnic Tutsis were murdered, as well as any Hutus that refused to participate in the mass human destruction. An entire breakdown of civil and social relations between communities ensued. The government actively encouraged and propagated the murder of fellow citizens.

The fact that victim and perpetrator are able to live side by side - harmoniously, no less! - is a testament, or perhaps a side - effect, of 'small community self governance'. Small, tight - knit communities, without the influence of the government, resort to self governance anyway in the name of self interest. It leads to the formation of close bonds and institutional bodies, aiding reconciliation and the integration of values - values that would perhaps be lost with larger yet more 'detached' government input in large cities.

In fact, this is a trend that often happens when government is absent. I recall that Somalian pirates in the 1800's formed quasi - democracies and created "governing" bodies within their groups, without any outside influence and entirely of their own self - volition.

As Winston Churchill said, "democracy is the worst form of government, apart from all the others."

On another note, it also opens an interesting discussion into the powers of the state. Through the instruction of the Hutu government and after months of extensive propaganda,  Hutu civilians were pressured to arm themselves with machetes, clubs, blunt objects and other weapons to rape, maim and kill their Tutsi neighbours. The fact that such massacres were carried out between neighbours, colleagues and villages demonstrates the chilling effect of propaganda and provides a very striking example of cognitive dissonance on an extreme scale.

U.S: Predicting voter trends through supermarket preferences

From the Economist:

Some years ago David Wasserman, an analyst with the Cook Political Report, spotted a way to predict the political leanings of any given county: check whether it is home to a Whole Foods supermarket, purveyor of heirloom tomatoes and gluten-free dog biscuits to the Subaru-owning classes; or to a Cracker Barrel Old Country Store, a restaurant chain that offers chicken and dumplings and other comfort foods to mostly rural, often southern customers. Mr Trump won 76% of Cracker Barrel counties and 22% of Whole Foods counties, the Cook Political Report calculates. That 54 percentage-point gap is the widest ever: when George W. Bush was elected in 2000 it was 31 points. Eight years later when Barack Obama took office, it was 43.

This is super interesting. I wonder if similar preferences are revealed by supermarket choice in Australia. In the U.S, the differences between Wholefoods and Cracker Barrel - and their respective markets/ target consumers - are pretty stark. The former markets itself as a clean, organic, niche (yet pricey) alternative. On the other hand, Cracker Barrel is the supermarket of the 'old American' consumer. Therefore, voter preferences between their consumers are likely to be more distinct.

In Australia, the two dominant supermarkets, Coles and Woolworths (combined market share of 69.8%, according to recent research by Roy Morgan) have few noticeable differences. In fact, their  marketing and pricing strategies tend to mimic each other. So perhaps it would be unlikely that there is any political preference between Coles and Woolies. Aldi, on the other hand, could reveal voter preferences-  the emerging discount retailer is thus far the biggest competitor to the Coles/Woolies duopoly with a distinctly different brand.

I wonder if certain groups of Australian voters have any particular supermarket allegiances. Do One Nation voters swear by Coles/Woolies due to their distinctly 'Aussie brand'? Are Liberals secretly discount shoppers? Are Greens' preferences not revealed in the data at all, because they grow their own food?

I will research this and update. Watch this space.

Links - 22/01/17

1. High blood pressure isn't the "disease of affluence" after all. 

2. Trump's rule and Berlusconi. The similarities between Trump and Berlusconi, relative to their leadership, really is striking. This article also helps shed some light on what I call the "Berlusconi Boggler" - why Berlusconi was in power for so long and why people continued to vote for him dispute his numerous corruptive and illegal scandals. (If Ronald Reagan was known as "Teflon Ron", this man was platinum - encased bullet-proof glass.) Everything I have read so far relies on the idea of an entirely forgiving and traditional Italian culture, but 'anecdotal' research is hard to measure.

3. Challenging the 'Edward Snowden as defiant revolutionary narrative.' Article (from the Economist) explores the perspective of both sides: Snowden's fans and foes.

4. Italy's tax on shadows. This really is desperate bureaucracy at its finest. It seems as if a shadow is being considered some sort of negative externality,  and those who choose to cast a shadow must pay a tangible price for the cost the shadow places on others. Desperate times:

The best thing about this policy (if you’re the government) is that taken to its logical extreme, you could charge everyone a fee on sunny days as unless you’re a vampire, you probably are using public land by casting a shadow.

5. How Iceland drastically reduced rates of drinking and drug intake in teens.

Mexico's card in the Trump v. Mexico debacle

From the Economist:

In 2009, after America blocked Mexican lorries from operating north of the border—to protect the jobs of American drivers—Mexico imposed tariffs on nearly 100 American products, from Christmas trees to felt-tipped pens, choosing industries with clout in congressional districts whose representatives had a say in the dispute. The American block was eventually lifted.

 A good thing to remember here is that Mexico isn't completely hopeless against Trump-style strongman policy. Yes, they are heavily reliant on America - to put it simply, bilateral trade between the Mexico and the U.S is responsible for half of the former's GDP.

But geographical and geopolitical closeness means that the two countries are inevitably tied. It would be impossible to hurt one without hurting the other. According to the Economist, the "design, manufacture, and servicing of everything from appliances to medical equipment is spread across both borders" - approx. 5 million American jobs depend on trade between America and Mexico.

Despite Mr. Trump's proposed policies, it is impossible to erase the fact that the two countries are literally; physically connected. They're literally on the same expanse of land. With this comes  a symbiotic interdependence, spanning over two centuries, and no "impenetrable physical wall" is going to change this.

Creative Employee Incentives

Recently I travelled overseas and made a stopover at Kuala Lumpur International Airport. I've travelled there a few times and visited the same little circle of restaurants. This time I noticed signs at the front of each restaurant:

"If no receipt is provided with your order, your order is free."

What an innovative way to ensure that your employees aren't shortchanging the customers (or the business)! One technique used by thieving employees is to not ring up the order and pocket all the money.  In another scenario, the employee rings up the order on the register for less than the real price and instead pockets the difference.

Say you order a hamburger for $5 and a soft drink for $3. Said thieving employee, in the first scenario, doesn't ring up the full order by providing a receipt and pockets the $8. In the second scenario, the employee could 'forget' to ring up the soft drink and only ring up for the $5 hamburger, thus pocketing $3 change. Bear in mind that, particularly with older registers, it can be difficult to track inventories of goods.

By providing free meals when no receipt is given, businesses are creating an incentive for customers to monitor their purchases and act as a check against the employee.

I live in Australia and this system is news to me. I believe that there is a newer type of cash register - generally widespread in Australia - that have a more efficient monitoring system and thus there is no use for this technique. But when I'm in Kuala Lumpur, I always hope that the employee forgets my receipt... but they never do.

Links - 15/01/17

1. "The 70-Year Sticky Price." (podcast)

2. The perils of practicing yoga in Russia.

3. Bernie Madoff dominates the hot chocolate market in prison. A natural businessman.

4. The Krispy Kreme black market. Just goes to show that if there's a demand for something, that demand will eventually be satisfied by the market:

"The business, whose name calls to mind notorious Mexican drug cartels such as La Familia Michoacana, survives because of the obsession many Mexicans have developed with Krispy Kreme’s signature recipes."

5. "Why hasn't the politics of immigration in Australia gone feral?" The most concise and thorough analysis of Australian political discourse of immigration I've read to date.

The economics of football: the $89 million dollar question

With all this hoo-ha about Diego Costa's transfer drama, it got me thinking about Carlos Tevez. About a month ago, the famed Argentinian footballer - who once graced the pitches of Manchester United, Manchester City and Juventus - joined slightly less famed club Shanghai Shenhua for $89 million US dollars. It makes him, a 32 year old with at most 5 years left of playing time, the 6th most expensive player in the world.

From the Guardian:

That hefty price tag would make Tevez the world’s sixth most expensive player, behind Paul Pogba, Gareth Bale, Cristiano Ronaldo, Gonzalo Higuaín and Neymar.

Tevez is also in line to become the sport’s highest paid player with the striker reportedly earning around £615,000 per week on a two-year contract with Shanghai Shenhua.

The fact that an aged (by football standards) 32 year old with at most 5 years left of playing time was sold for such an exorbitant fee, even considering today's footballer prices, boggles me.

Basic economics 101: price is determined by demand and supply. Competition and thus higher demand drives up the price. Similarly, constricted or lack of supply has the same effect. This is why top level players like Messi in their prime are worth so much - there is a high demand for their services, and a very small supply of people with his skill set, age, ability and commercial potential.

Footballer prices also share similarities with stock prices: their value is partly based on future valuations in terms of increasing 'returns'. Thus the $116.4 million price tag of Paul Pogba, the most expensive player in the world: he displays the potential to be one of the best players, and the return on investment is likely to be high.

The case of Tevez seems to completely defy all of the above.

For one, demand for Tevez cannot be that high. The transfers of players at his price point are often accompanied by flurries of commentary and price wars between clubs, feeding journalistic fervour for weeks. While journalistic interest doesn't result in higher demand, it is an indicator of high demand. Tevez's transfer came entirely out of the blue.

To compare, below is a graph detailing the interest over time of Paul Pogba, measured by the number of google searches.

Paul Pogba's search interest over time

Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. Likewise a score of 0 means the term was less than 1% as popular as the peak.

As the above graph shows, preceding Pogba's eventual sale on August 9th, there was a significant upward trend in search interest.

Compare this to Tevez's search interest:

Carlos Tevez's search interest over time

 Tevez's search interest was sudden and steep within only a few days. Even then, interest at its peak was only 63 whereas Pogba's peak was 100. 

A more striking visualisation is depicted below. Pogba's interest is in red, while Tevez's is in blue. 

Tevez vs. Pogba Search Interest

So demand and competition between clubs for Tevez was seemingly very low. Moreover, Tevez, at 32 years old, is a declining player. He has very few years left of prime playing time. Perhaps there is a shortage of quality strikers in the market - but not that many. His value will only decrease, so why spend all that money? 

I think the answer to this question lies in examining the situation of the buyer, Shanghai Shenhua. They belong to an emerging league that is attempting to attract high-profile players in order to increase the commercial viability, recognition and quality of the league. 

From their perspective, Tevez is highly appealing. Though he may be ageing and past his prime, there are few players with his commercial value. To Shanghai Shenhua, he is a valuable asset. 

Moreover, Tevez was only in the early stages of his contract, meaning that his 'release clause' was likely very high. In order to sign him, Shanghai Shenhua would pay a premium. Add in agent, club and other assorted fees and the price becomes only higher. 

It's difficult to entice a player like Tevez to the Chinese league that Shanghai Shenhua belongs to, given the poor reputation, reputed corruption and playing quality of the Chinese Super League. The incentive must be particularly high for Tevez to be tempted, hence the €615,000 weekly wage (before tax). 

The real winner of the situation (although Tevez is no doubt satisfied) is Boca Juniors. Indeed, they sold an ageing (but beloved) player for a record fee. In a statement announcing his departure, they said: "Good luck Carlitos. You will always be in our hearts." And our wallets, no doubt...

Another weird case study of soccernomics!