Lake Wobegon, Europe/December 5, 2011, 11:01 AM

Lake Wobegon, Europe ヨーロッパのレイク・ウォビゴン村

Ezra Klein reports on his conversations with Germans:

The German embrace of austerity raises an obvious question: If Southern Europe is to cut and tax, how will they grow? The German answer, put simply, is, “like we did.” Ten years ago, the Germans are quick to note, unemployment in Germany was 10 percent and structural deficits were large. Germany was called “the sick man of Europe.” They attribute their subsequent success to a series of painful reforms they made to their unemployment insurance system, their health-care sector, and other pieces of their social safety net. Many figure that if they could do it, so too can Southern Europe. In truth, it’s probably not that easy ― Southern Europe doesn’t have the industrial strength that Germany does, and no longer even controls its own currency levels ― but it makes sense to the man on the street.
ドイツが緊縮財政を奉じていることについて明白な疑問がある:もし南ヨーロッパが支出削減をして増税をしないといけないのなら、彼らはどうやって成長すればいいのか? ドイツ人の答えは簡単に言うと「我々がやったようにやればいい」だ。 10年前、ドイツ人は失業率が10%にもなり、構造的赤字が巨額であることを迅速に認めた。ドイツは「ヨーロッパの病人」と呼ばれた。彼らはその後の成功を失業保険システムやヘルスケア部門、その他の社会保険システムになされた一連の痛みのある改革に帰している。多くの人は、彼らがそれをできたのなら南ヨーロッパにもできるだろうと考えている。実際には、おそらくそれほど簡単ではない―南ヨーロッパはドイツほどの産業力を持たないし、通貨をコントロールすることさえもはやできない―それは一般の人でもわかることだ。

Actually, it’s much worse than Ezra says. Here’s the key to the German recovery:


Germany moved from small current account deficits (the current account is a broad version of the trade balance) to massive, and I mean massive, surpluses.

So what the Germans are in effect saying is that everyone should run huge trade surpluses.

May I humbly suggest that this poses an arithmetic problem?

And this isn’t trivial ― the adding-up constraint, the point that if Southern Europe is going to shrink its trade deficits somebody has to move in the opposite direction, is the core of the problem.

翻訳の感想:Lake Wobegonとは、レーリー・ホーム・コンパニオンというラジオ番組に登場する架空の村のこと。その町に住む人々は「誰もが平均以上」の能力を持っている……と思っている。転じて、意識調査などで対象者のほぼ全員が「自分が平均以上」という意識を持つというような、事実と矛盾するような状況をさす。ソース

Things That Never Happened In The History Of Macroeconomics/December 5, 2011, 5:28 PM

Things That Never Happened In The History Of Macroeconomics マクロ経済学の歴史に起こらなかったこと

Via Mark Thoma, David Warsh finally says what someone needed to say: Friedrich Hayek is not an important figure in the history of macroeconomics.

These days, you constantly see articles that make it seem as if there was a great debate in the 1930s between Keynes and Hayek, and that this debate has continued through the generations. As Warsh says, nothing like this happened. Hayek essentially made a fool of himself early in the Great Depression, and his ideas vanished from the professional discussion.

So why is his name invoked so much now? Because The Road to Serfdom struck a political chord with the American right, which adopted Hayek as a sort of mascot ? and retroactively inflated his role as an economic thinker. Warsh is even crueler about this than I would have been; he compares Hayek (or rather the “Hayek” invented by his admirers) to Rosie Ruiz, who claimed to have won the marathon, but actually took the subway to the finish line.
それなら、今、どうして彼の名はこんなにも引き合いに出されるのか? それは『隷属への道』がアメリカの右派の政治的感情を喚起させて、彼らがハイエクをマスコットとして採用したからだ―そして、遡って経済思想における彼の役割は釣り上げられた。ウォルシュはこの事にかつての僕よりもずっと手厳しい;彼はハイエクをマラソンでの勝利を宣言したが、実際にはゴールに着くまでに地下鉄を使ったロージー・ルイズになぞらえている(あるいは、「ハイエク」は崇拝者によって発明されたとまで言っている)。

Now, given my criticisms of where macro has gone since the 1970s, I of all people should be careful to say that ideas ignored or rejected by the professional mainstream aren’t necessarily without value. To take the most obvious example, Hyman Minsky now looms large in many peoples’ thinking, my own included, even though he died a very marginal figure.

But the Hayek thing is almost entirely about politics rather than economics. Without The Road To Serfdom ? and the way that book was used by vested interests to oppose the welfare state ? nobody would be talking about his business cycle ideas.

Irish Competitiveness (Wonkish)/December 19, 2011, 9:20 AM

Irish Competitiveness (Wonkish) アイルランドの競争力(オタク風)

More abut Ireland: one of the reasons it has been touted as a great success story for austerity is the fact that unit labor costs have fallen sharply, suggesting that Ireland is well along in the process of “internal devaluation”.

But there’s a puzzle here. If you look at Irish nominal wages, they have fallen only slightly:


That still adds up to a significant fall in relative costs, because wages have risen elsewhere in the euro area. But it’s nothing like the big competitiveness gain we’ve been hearing about. That, it turns out, comes in large part from a surge in measured productivity, calculated, as best I can tell, by real value-added per worker.

And I had a suspicion here, which I shared with Kevin O’Rourke, who it turns out had the same suspicion ― and who pointed me to work by the Irish central bank (see Box A in the first-quarter 2011 report) that lends support to this argument. It seems likely that a large part of the apparent gain in Irish competitiveness is a statistical illusion.

How so? Well, Ireland is an economy that generates a lot of GDP ― but not much GNP ― out of capital-intensive, foreign-owned export sectors, such as pharma. And what has happened in the austerity era is that these sectors, which aren’t selling to the domestic market, have held up much better than labor-intensive sectors serving that domestic market. And this causes a spurious increase in labor productivity: if you lay off a construction worker but don’t lay off a pharma worker who basically watches over very expensive machines that produce a lot of output, it looks as if productivity has gone up, but in any individual sector nothing has happened.
どうしてそうなるのかって? アイルランドは製薬会社のような資本集約的な外資の輸出部門によって多額のGDP(国内総生産)を生み出す経済だ―だがGNP(国民総生産)はそれほどではない。財政緊縮の時代に起こったことは、それらの国内市場では販売をしていない部門が国内市場に従事する労働集約的な部門よりもずっと上手く持ちこたえていたということだ。そして、このことがうわべだけの労働生産性向上をもたらした:もし建設作業員を解雇する一方で、基本的には大量の製品を製造する非常に高価な機械を監督している製薬会社の社員を解雇しないなら、生産性が上昇しているように見えるが、個人に目を向けるとそんなことは起きていない。

The Irish central bank has tried to tease out these effects; here’s a picture up through 2010:


It’s a bit small, but the line at the bottom shows relative unit labor costs the way they’re often reported; the blue line at the top shows what happens when you correct for compositional effects.

I’d like to see an update, of course. But it looks as though much ― not all ― of the apparent success of Ireland in achieving internal devaluation may be a statistical illusion.

They Have Made A Desert, Ireland Edition/December 17, 2011, 9:05 AM

They Have Made A Desert, Ireland Edition 彼らは砂漠を作り、アイルランド版

And called it a successful example of austerity, of course:


Like that other implausible candidate for role model, Latvia, Ireland has been hailed as a success story ― and a challenge to Keynesians like me ― when there was never anything that looked like real success and nothing that posed any sort of puzzle. (Even in a Keynesian world, internal devaluation will work in the long run if you can stick to it ― but in the long run, well, you know the rest.)

The sad thing here is that textbook Keynesian macro has been a very good guide all through this crisis ― but nobody will believe it.

Kenen, Mundell, and Europe/January 14, 2011, 8:47 AM

Kenen, Mundell, and Europe ケネン、マンデル、そしてヨーロッパ

In my euro article I managed to avoid even using the phrase “optimum currency area”, but as some readers no doubt realized, OCA theory (pdf) is at the heart of the piece. In the course of writing the article, however, my views shifted at least a bit.

Optimum currency area theory started with Mundell, who emphasized labor mobility. (It’s ironic that Mundell is sometimes called the “father of the euro”, given the fact that his own model strongly suggested that Europe was not an optimum currency area.) And my thinking about the subject has tended to follow Mundell’s emphasis.

There are, however, other things to consider. McKinnon emphasized openness ? the share of traded goods in the economy ? as a factor in making adjustment easier. I didn’t say anything about that, partly because my sense is that the share of nontraded goods in value-added is quite large even in very small economies. And my colleague Peter Kenen emphasized fiscal integration.

So what I found, as I worked on this piece, was that I was getting more into Kenen and less into Mundell. On one side, European labor mobility, although not up to US levels, has clearly risen. On the other, this crisis has manifested itself in large though not exclusive part as a fiscal shock, which makes the Kenen approach especially relevant.

Some readers have pointed out that there are fiscal transfesr within Europe, via cohesion funds and the Common Agricultural Policy. Yes, but they’re trivial compared with interstate transfers in the US.

One thing about my conclusion that Kenen > Mundell, at least for Europe, is that it suggests that making the euro work is more feasible than I used to think. True American-style labor market integration isn’t possible unless you have a common European language, and jokes about Germanized English aside, that’s not going to happen. But more fiscal integration could.

We’ll just have to wait and see.