David Brooks argues that Egypt is the real target of the Hamas missiles.

After the recent military coup in Egypt, the military leaders closed roughly 95% of the tunnels that connected Egypt to Gaza. In 2013-2014, Egypt’s military has destroyed most of the 1,200 tunnels which were used to smuggle food, weapons and other goods into Gaza, including flooding them with sewage.

Hamas derived 40% of its tax revenue from tariffs on goods that flow through those tunnels. One estimate puts the economic losses at nearly a fifth of the Gazan GDP.

Hamas couldn’t strike at Egypt to end the blockade so it attacked Israel  in a proxy war.

If Hamas could emerge as the heroic fighter, if Arab TV screens were filled with dead Palestinian civilians, then public outrage might force Egypt to lift the blockade.

When Mousa Abu Marzook, the deputy chief of the Hamas political bureau, dismissed a plea for a cease-fire, he asked

What are 200 martyrs compared with lifting the siege?

Hamas is firing rockets at Tel Aviv and sending terrorists through tunnels into Israel while aiming at Cairo.

The Gaza Strip has two borders: both Egypt and Israel restrict trade with the Gaza. The Egyptian blockade of the Gaza Strip is biting much more than the Israeli blockade.

HT: marginalrevolution.com

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  1. People need to be in intimate contact to spread the virus.
  2. Ebola is much harder to spread than respiratory infections, such as influenza or measles.
  3. Ebola also can only be spread by people with active symptoms.

People in developed countries seek treatment when they feel ill and submit to quarantine if diagnosed with a contagious disease.

HT: reason.com

For the three years ended March 2014, 14.10% of large-cap funds, 16.32% of mid-cap funds and 25.00% of small-cap funds maintained a top-half ranking over three consecutive 12-month periods. Random expectations would suggest a rate of 25%.

After five years, two funds are still beating the market in each of the last five years.The rest of fallen by the wayside.

via Who Routinely Trounces the Stock Market? Try 2 Out of 2,862 Funds – NYTimes.com

The ability to pass the burden of the tax depends on price elasticity of demand and price elasticity of supply.

  1. Many states have passed mandatory arrest laws, which require the police to arrest abusers when a domestic violence incident is reported. These laws were justified by a randomized experiment in Minnesota which found that arrests reduced future violence.

  2. Using the FBI Supplementary Homicide Reports, Iyengar found that mandatory arrest laws actually increased intimate partner homicides. He hypothesized that this increase in homicides is due to decreased reporting.

  3. Iyengar investigate validity of this reporting hypothesis by examining the effect of mandatory arrest laws on family homicides where the victim is less often responsible for reporting. For family homicides, mandatory arrest laws appear to reduce homicides.

  4. This study provided evidence that mandatory arrest  laws may have perverse effects on intimate partner violence, harming the very people they were seeking to help.

  5. Finding  that mandatory arrests deters victim reporting rather than perpetrator abuse provides valuable insight into the intricacies facing attempts to decrease intimate partner violence.

Source: Radha Iyengar “Does Arrest Deter Violence? Comparing Experimental and Non-experimental Evidence on Arrest Laws” in The Economics of Crime (2010) Chapter 12.

Figure 1: Plot of fifteen-year compilation of 911 calls and arrests for simple assault in Colorado Springs versus increase in population

But see “Explaining the Recent Decline in Domestic Violence” by Amy Farmer and Jill Tiefenthaler in Contemporary Economic Policy (2003) who found that three important factors  were likely to have contribute to the decline in domestic violence in the USA in the 1990s:

(1) the increased provision of legal services for victims of intimate partner abuse,

(2) improvements in women’s economic status, and

(3) demographic trends, most notably the aging of the population.

When Simon Chapple in 2000 wrote “Māori Socio-Economic Disparity”, which showed that disadvantage in New Zealand is more closely tied to age, marital status, education, skills, and geographic location than it is to ethnicity, broadly conceived, such as Māori ethnicity:

  • He was summoned before the Māori Affairs Committee of parliament to defend his paper! His chief executive at the Ministry of Social policy went along with him to defend what he wrote while employed as a senior analyst at the Department of Labour.
  • The head of the Māori Affairs Ministry accused Simon of breaching the public services code of conduct.

Chapple also found that there are important differences in socio economic development by Māori self-identity. Those who identified only as Māori did worse than those that are identified as Māori and another ethnicity. Identifying only as Māori also correlated with living the rural New Zealand.

In terms of employment discrimination discrimination, employers would not know whether a Māori job applicant identified as only as Māori also with another ethnicity, so discrimination is not a good explanation of Māori disadvantage because of this counterfactual. A major driver of Māori disadvantage is simply unknown to discriminating employers as a basis for their action.

There was an editorial in the Dominion Post, which I cannot find online,  and the New Zealand Herald. The latter said:

The Government is being prodded to recognise that Maori deprivation has more to do with socio-economic factors than ethnicity.

This was the conclusion of a report by the Labour Department’s senior research analyst, Simon Chapple. Helen Clark might well have had that finding partly in mind when she referred to a lot of water having gone under the bridge since the Government first formulated legislation.

Mr Chapple said, in essence, that place of residence, age, education and skills had more to do with poverty than race. In areas such as South Auckland, Northland and the central North Island, there were poor Maori, but there were also poor Pākehā and poor Pasifika.

The Minister attacked him and the paper as well the contradicting the Minister’s claim during the election campaign that everything it got worse for Maori in the 1990s.


Real equivalised median household income rose 47% from 1994 to 2010; for Māori, this rise was 68%; for Pasifika, 77% (Perry July 2014)

See Karen Baehler’s Ethnicity-based research and politics: snapshots from the United States and New Zealand for more information and a comparison with the similar response to Daniel Patrick Moynihan’s The Negro Family: A Case for National Action in 1965.

About a quarter of Negro families are headed by women. The divorce rate is about 2 1/2 times what it is [compared with whites]," Moynihan said. "The number of fatherless children keeps growing. And all these things keep getting worse, not better, over recent years."

Moynihan, now retired from the United States Senate, was a senior official in LBJ’s Labor Department in 1965. He wrote his report on a typewriter over a few weeks and had the publications office in the basement of the Labor Department print 100 of them, marked “For Official Use Only.”

  • He warned about the breakdown of the African-American family where deprivation and disorganisation had formed their own vicious circle.
  • Many civil rights leaders had labelled Moynihan’s report a subtle form of racism because of its unflattering portrayal of the black family (Wilson 1987).
  • These accusations of racism helped make the breakdown of the family a taboo subject and social policy in the USA

see The Moynihan Report Revisited: Lessons and Reflections after Four Decades for a review by the best and the brightest in American economics and sociology on Daniel Patrick Moynihan’s prophetic warnings. Holzer says, for  example:

Moynihan was extremely insightful and even prescient in arguing that the employment situation of young black men was a “crisis . . . that would only grow worse.”

He understood that these trends involve both limits on labour market opportunities that these young men face as well as skill deficits of and behavioural responses by the young men themselves.

More children are growing-up without a working father living in the home and glean the awareness that work is a central expectation of adult life (Wilson 1987, 1996).

Single-parent households increased from 13 per cent of all Māori households in 1981 to 24.4 per cent in the 2006 Census. In the 2006 Census, 70 per cent of Māori single parent households were on a low income compared to 15 per cent of other Māori one family households (Kiro, Randow and Sporle 2010).

Most of the skill gaps that are present at the age of 18 – skill gaps which substantially explain gaps in adult earnings and employment in all groups – are also present at the age of five (Cunha and Heckman 2007).

There is much evidence to show that disadvantaged children have lower levels of soft skills (non-cognitive skills): motivation, persistence, self-discipline, the ability to work with others, the ability to defer gratification and plan ahead, etc. (Heckman 2008). Most of the skills that are acquired at school build on these soft skills that are moulded and reinforced within whānau.

When I started working on labour economics in 2007 I found that the labour economics of Māori was very narrowly written and stayed well clear of the minefield that Simon braved about how ethnicity does not matter much to Māori social disadvantage.

Image  —  Posted: July 30, 2014 in comparative institutional analysis, constitutional political economy, Public Choice

Some bristle over the small size of the basic analytical tool kit of economists and the leanness of the behavioural assumptions therein (Stigler 1987). 

Simpler explanations and more parsimonious abstractions are better ‘engines for the discovery of concrete truth’ about how people will respond to changes in their economic and social environments.

A limited set of causes or postulates in a theory reduces the chances that one or more of the assumptions on a more extensive list inadvertently explains away in an ad hoc manner every possible anomaly, or allows for a deft reinterpretation and/or adaptation to temporise and escape refutation. An every growing number of auxiliary hypotheses and ah hoc assumptions to co-op inconvenient facts may forever immunise the basic theory under scrutiny against testing and falsification (Olson 1982; Popper 1963). More parsimonious abstractions are less likely to found theories that seem to have successfully explained a particular social phenomenon spuriously by chance.

Complex human objectives are not assumed in economic analysis because everything could be explained and nothing could be falsified. Every empirical anomaly could be covered in advance by assuming human objectives that are sufficiently complex and large enough in number that are pursued with a high frequency of error and inertia (Friedman 1990; Popper 1963).

Subsequent ad hoc reinterpretations that add new objectives or additional sources of human frailty can finesse major anomalies to make the basic theory compatible with the facts to side-step refutation. Heavily qualified theories and intricate explanations of narrow application rarely come in the open for long enough to be found wanting.

A good theory is a prohibition: the theory forbids certain things to happen. The more that a theory forbids, the better the theory is. Bold, novel and chancy predictions are even better still.

These predictions are less likely to explain social and economic behaviour spuriously by chance. If incorrect or incomplete, bold and novel predictions are more likely to be quickly found at odds with experience and the basic theory is either revised or is discarded (Popper 1963).

Image  —  Posted: July 30, 2014 in environmental economics, environmentalism
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