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What "austerity"?, by Scott Sumner

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The New York Times has a long article on the cost of British "austerity", which begins as follows:

PRESCOT, England -- A walk through this modest town in the northwest of England amounts to a tour of the casualties of Britain's age of austerity.

The old library building has been sold and refashioned into a glass-fronted luxury home. The leisure center has been razed, eliminating the public swimming pool. The local museum has receded into town history. The police station has been shuttered.

The article is full of similar examples. I read the entire piece, but was not able to find any evidence that the UK's problems were caused by "austerity". So I decided to see if I could find such evidence. Let's start with cross sectional evidence, and then switch to time series. Here are the ratios of government spending to GDP in some major economies:

Germany: 43.9% (2017)
Britain: 41.1% (2017)
Canada: 40.8% (2017)
Australia: 36.2% (2015)
Switzerland 34.0% (2015)

So the UK is a fairly normal developed economy. In case you think I cherry-picked the data, this graph shows the UK is pretty normal:

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It's true that there are many examples of European countries with larger welfare states, and less poverty than the UK, such as Sweden (G/GDP = 49.6% in 2015), but there are also examples of European countries with high spending and lots of poverty, such as Italy (50.2%) and Greece (53.8%). So high government spending is no cure-all.

It's not obvious why a country devoting 41.1% of its GDP to government spending is not able to provide basic government services and a safety net for the poor. Does the NYT produce similar pieces for the other 4 countries listed above, with similar G/GDP ratios as the UK? I've never seen such articles.

Admittedly, cross sectional data is not the complete story. Perhaps the UK differs in some fundamental way from Canada, and requires much higher government spending. So let's look at time series data:

Britain's G/GDP ratio:

2000: about 35%
2010: 47.8%
2017: 41.1%

The NYT might claim the recent decline in the G/GDP ratio shows that Britain is engaging in austerity. But this ignores the cyclicality of government spending. During a deep slump like the Great Recession, GDP falls and government spending on automatic stabilizers rises sharply. In addition, the Labour government did substantial discretionary fiscal stimulus, which pushed the G/GDP ratio up to an unusually high peak in 2010. No one expected spending to stay at those levels; indeed even the Labour Party promised a significant reduction, had they won the 2010 election.

Right now, the UK has very low unemployment (4.2%), and thus fiscal stimulus is not needed. Indeed in some respects they are doing even better than the US, because unlike in the US, British labor force participation is quite high:

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Notice how the ratio has recently soared far above levels of 2000-07, a period when the UK was widely viewed as doing quite well. There is no current need for fiscal stimulus. (In addition, the UK is not at the zero bound.)

Now consider the big rise in the G/GDP ratio from 2000. At the time, the Labour government of Tony Blair had been in power for 3 years and was extremely popular. It was a period where the UK was widely viewed as doing well (remember "cool Britannia"?) And yet at the time government spending was only about 35% of GDP, and had been falling.

The increase in the ratio from 2000 to 2018 was not due to the business cycle; as we've seen the UK job market is very strong, according to virtually any measure. Rather it is a secular increase, reflecting a decision by various UK governments to expand the size of the state. It's hard to overstate the size of that increase---an extra 6% of GDP is HUGE. It's nearly three times the UK defense budget, or almost twice the US defense budget. And yet despite that massive growth in government, and despite the fact that British spending is comparable to many other developed countries that are doing just fine (and which also face the challenge of growing numbers of retirees), the NYT presents the UK as a sort of dystopia, created by severe "austerity".

I have an alternative explanation. Progressivism leads to a virtually infinite number of "unmet needs" Patch one hole (say health care) and lots more will pop up, such child care, or free college education. Patch those holes, and still more unmet needs will pop up, such as housing and high speed rail. Combine that with the inefficiency of big government, as well as all the problems identified by public choice models (i.e. special interest groups), and you have a recipe for continual disappointment.

Each time I visit France my first reaction is; "Where the heck did all these homeless people come from?" Doesn't the French government spend 57% of GDP? Yes they do, and yet somehow Paris has homeless people all over the place. Maybe they need to spend 67%. Or 77%.

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PS. Italy's spending over 50% of GDP. How's that Western European welfare state working out?

PPS. Those who believe that economic performance reflects "culture" should expect Italy to do better than America. After all, the poorest performing major group in Italy (southern Italians) are an above average success story in the context of America's ethnic mix. That data point presents problems for conservative cultural determinists, but also for any progressives who want to brush off Italy's failures by pointing to the dysfunctional culture of the "Mezzogiorno".

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20 days ago
Los Angeles, CA
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20 days ago
Posts like this are why I read Sumner.

The Last of the Moon Walkers

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NPR May 26, 2018: Alan Bean, the fourth man to walk on the moon who later chronicled the experience as an artist, died Saturday in Houston after a short illness. He was 86.

In 2012, I wrote the following when there were 8 moon walkers yet living. Today there are 4.

Neil Armstrong, first moon walker, died yesterday.

In total, there have been twelve. Armstrong who was first, Peter Conrad who was 3rd, Alan Shepard who was 5th and James Irwin who was 8th, are gone, leaving just eight. Just eight of 7 billion. Alan Shepard was the oldest, he was born in 1923, the others were all born in the 1930s at a time when Orville Wright still lived. The youngest, Charles Duke, will be 77 this year.

Could we soon have an age where all the moon walkers are gone? Will children then wonder whether it happened at all?

The post The Last of the Moon Walkers appeared first on Marginal REVOLUTION.

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*Parking and the City*, edited by Donald Shoup

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This is the definitive book on the economics of parking, here is one short summary bit by Shoup from his introduction:

Remove off-street parking requirements.  Developers and businesses can then decide how many parking spaces to provide for their customers.

Charge the right prices for on-street parking.  The right prices are the lowest prices that will leave one or two open spaces on each block, so there will be no parking shortages.  Prices will balance the demand and supply for on-street parking spaces.

Spend the parking revenue to improve public services on the metered streets.  If everybody sees their meter money at work, the new public services can make demand-based prices for on-street parking politically popular.

You can order the book here.  Here is my earlier NYT column on the economics of parking.

The post *Parking and the City*, edited by Donald Shoup appeared first on Marginal REVOLUTION.

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38 days ago
Everyone in Boston should read this.

More Pitchers Are Getting Pulled from No-Hitters

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On Friday night, in just his third major-league start, Walker Buehler delivered on the promise that the Dodgers envisioned when they made him the 24th pick of the 2015 draft out of Vanderbilt. Pitching on a rainy night at Estadio de Beisbol Monterrey, in the opener of the three-game Mexico Series, the 23-year-old righty held the Padres hitless for six innings while striking out eight and walking three. But with his pitch count at 93, one short of his professional high, manager Dave Roberts did not waver in his decision to put the brakes on the kid’s bid for a slice of baseball immortality.

Via the Orange County Register‘s Bill Plunkett, Beuhler said that Roberts “told me I was out of pitches and I was out of the game.”

This wasn’t the first time that Roberts pulled a starter who had yet to allow a hit, but it was the first time that his decision paid off in full, as relievers Yimi Garcia, Tony Cingrani,and Adam Liberatore each chipped in a hitless inning, thus completing the 12th combined no-hitter in big-league history and the first in franchise history. Prior to that — and jusy five games into his managerial career, on April 8, 2016 — Roberts had removed Ross Stripling after 7.1 innings of hitless ball against the Giants. The 26-year-old Stripling, who himself was making his major-league debut, had thrown 100 pitches and had walked four batters when Roberts called for the bullpen. Having missed all of 2014 due to Tommy John surgery, he understood the precautionary move, even though it backfired, as reliever Chris Hatcher promptly gave up a game-tying home run to the next batter, and the Dodgers eventually lost.

Things worked out better for the team when Roberts pulled 36-year-old Rich Hill after seven perfect innings on September 10 of that year. Though Joe Blanton surrendered a single with two outs in the eighth, the Dodgers did get the win.

On Sunday, just two days after the combined no-hitter, 25-year-old Yankees righty Domingo German, who was making his first major-league start, spun six no-hit innings against the Indians while striking out nine and walking two. For as effective as he was, he too was done in by his modest pitch count of 84. “We were slightly over where we wanted him to go,” said manager Aaron Boone afterwards. Because German’s season-high pitch count was just 61 — set on Tuesday, when he tossed four innings in relief of Jordan Montgomery, who had departed with a flexor strain — Boone’s best-case scenario had German providing five innings and 70 pitches. He was cruising to the point that, in a scoreless game where the Yankees themselves had just one hit off Mike Clevinger, Boone sent him back out for the sixth with his count at 68, and German set the side down 1-2-3.

German’s teammates weren’t as obliging as Buehler’s. While Dellin Betances retired the Indians in order for the seventh, he yielded three straight singles to start the eighth, and Jonathan Holder allowed a bases-clearing double by Francisco Lindor plus a sacrifice fly that placed the Yankees in a 4-0 hole. They came back to score three in the bottom of the eighth and win on Gleyber Torres‘ walk-off three-run homer in the ninth.

If seems like instances of pitchers being pulled with no-hitters in progress are increasingly frequent, well, you’re not imagining things. German’s start was the fifth time in this young season where a starter threw at least five hitless innings and got the hook before he could surrender even a measly single, after the Twins’ Kyle Gibson (versus the Orioles on March 31), the Pirates’ Trevor Williams (versus the Tigers on April 1), the Marlins’ Jarlin Garcia (versus the Mets on April 11), and then Buehler. Since 1908, as far back as the Baseball-Reference Play Index goes, that’s one shy of the highest total in a season, set in 1991 — and we’re barely into May.

Of the six starters who were pulled with no-hitters in progress in 1991, two had their efforts preserved as part of combined no-hitters, one started by the Orioles’ Bob Milacki against the A’s on July 13, and the other by the Braves’ Kent Mercker against the Padres on September 11. Milacki, a 26-year-old righty, threw just 80 pitches but had to depart after taking a Willie Wilson comebacker off his pitching hand in the sixth-inning. The shot ricocheted off the pitcher’s hand and upper left leg over to first baseman Randy Milligan, who made the putout; Milacki completed the inning and wanted to continue, but manager Johnny Oates wouldn’t let him. Mercker, a 23-year-old lefty making just the third start of his big-league career (against 81 relief appearances), was pulled after 82 pitches, 15 more than the season-high 67 he’d thrown five days earlier.

While 1991 was rife with such outings, it would take two years before the next time a manager pulled a pitcher with a no-hitter in progress. It was actually Mercker again, on September 9, 1993 against the Padres. Reliever Mark Wohlers gave up a hit in the eighth in that one, but Mercker would get a solo no-hitter of his own on April 8, 1994 against the Dodgers.

Here’s a look at the number of times pitchers were pulled after at least five no-hit innings since the start of 1995:

Of the 51 such outings over this span, 23 have happened since the start of 2014. It’s not hard to understand the confluence of factors that has helped to make such games more common — and no, it’s not because today’s players and managers have gone soft. An MLB-wide downward trend in batting averages (.255 or lower every year since 2011, whereas it hadn’t been that low since 1989) has helped create a flood of actual no-hitters (34 solo and combined since the start of 2010, compared to 16 in the nine seasons prior). That’s been complemented by the disappearance of complete games (there were 59 last year, compared to 165 in 2010 and 173 in 2011) and increasing awareness of the times-through-the-order penalty. From 1998 (when the Rays and Diamondbacks began play) until 2014, there were at least 2,000 100-pitch starts every year except for 2007, when there were only 1,981. In 2015, that number fell to 1,862, and it has continued to fall. Here are the rates of 100-pitch starts and complete games over that span:

If a pitcher isn’t going to last nine innings given his pace, managers appear to have become more willing to give him the hook before that first hit rather than after. In 15 of the 51 hitless outings, the pitcher threw at least 100 pitches; nine of those have been in the past four seasons. In 28 of those outings, the pitcher threw at least 90 pitches; 15 of those are from the past four seasons.

The time of year may have something to do with it, less with regards to the weather (a factor I could not check via the Play Index) than managers’ reluctance to push pitchers to the maximum early in the season. Ten of the 23 hitless outings since 2014 occurred in March and April — a total that doesn’t include Buehler or German — compared to only two of the previous 28 from 1995-2013.

Roberts may be the most famous (or infamous) when it comes to pulling pitchers with no-hitters in progress, but he’s not alone. Since the start of 1995, three other managers have pulled such pitchers at least three times. Don Mattingly has yanked four Marlins with no-hitters in progress: Adam Conley (April 29, 2016 against the Brewers), Dan Straily (April 16, 2017 against the Mets), Wei-Yin Chen (April 18, 2017 — two days after Straily — against the Mariners), and the aforementioned Garcia, who was making just his second career start.

Dusty Baker, who was once notorious for allowing his young starters to run up high pitch counts, nonetheless made two such moves during his tenure with the Cubs: Matt Clement on September 10, 2003 against the Expos, and Mark Prior on July 26, 2006 against the Reds. Clement, 28 at the time, got the hook after beginning the sixth inning by walking the bases loaded, running his total for the night to five; all three runs scored and the Cubs wound up losing. The 25-year-old Prior was removed after 5.2 innings, having issued his fifth walk of the day and thrown his 103rd pitch. The wobbly Prior was already close to the end of the line. Making just his sixth start due to rotator-cuff and oblique strains, and carrying an 8.14 ERA, he would appear in only three more big-league games. Baker did adapt with the times, and on July 3, 2016 pulled Stephen Strasburg after 6.2 innings and 109 pitches against the Reds. The Nationals’ 9-0 lead was probably less of a factor than the fact that the 27-year-old righty had just returned from a DL stint due to an upper back strain.

The fourth manager of this group is Torre, who removed three such pitchers during his 1996-2007 tenure with the Yankees. The last of those was 20-year-old Phil Hughes, who on May 2, 2007 pulled a hamstring while 6.1 innings deep into just his second big league start, making the decision a no-brainer. The previous two times were more preemptive, and both involved David Cone: September 2, 1996 against the A’s and September 25, 1997 against the Indians. In the latter one, Cone was in his second start back after missing 33 days due to tendinitis in his shoulder; he walked five in five innings and 74 pitches, at which point Torre pulled him in preparation for his first postseason start.

It’s the other one that’s more famous, for Cone was taking his first turn after missing four months due to an aneurysm in his right armpit that had required surgery. He was on his game that day, striking out six and walking three, but with his pitch count at a modest 85, Torre handed the ball to Mariano Rivera, then in the midst of his first full season in the majors, a brilliant 107.2-inning, 2.09 ERA campaign as a setup man. The 26-year-old future all-time saves leader set down the side in order in the eighth and didn’t allow a hit until Jose Herrera singled with one out in the ninth. “I went to him after the game and said, ‘Man, we almost had it,'” recalled Cone, who was in the YES Network both as an analyst during German’s outing on Sunday. “He said, ‘What are you talking about?’… Mo had no clue how many hits were on the board that day.”

As Cone’s experience shows, even if few of these preemptive hooks result in no-hitters, the bigger picture — keeping pitchers healthy (or at least trying to) and winning games — is more important. Once in a while, a Mercker or a Cone (who threw a perfect game on July 18, 1999 against the Expos) more conditioned to pitch deep into games can finish the gem he started, and sometimes, the stars align for the Buehlers of the world to claim a small spot in the record books with a little help from their friends.

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43 days ago
The pitchers being pulled seem to be early in their careers when they have not established the ability to go deep in games.

RT @MaxCRoser: Living in extreme poverty: 1820 – 1 billion 2015 – 0.7 billion Not in extreme poverty: 1820 – 0.06 billion 2015 – 6.6 bi…

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Living in extreme poverty:
1820 – 1 billion
2015 – 0.7 billion
Not in extreme poverty:
1820 – 0.06 billion
2015 – 6.6 billion

[how extreme poverty is defined and measured, country-by-country data etc. you find in our entry: ourworldindata.org/extreme-poverty] pic.twitter.com/tCq7P3DYiU

Posted by MaxCRoser on Tuesday, May 1st, 2018 2:14pm
Retweeted by mungowitz on Wednesday, May 2nd, 2018 2:07pm

802 likes, 538 retweets
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48 days ago
It's getting better all the time.

Quotation of the Day…

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(Don Boudreaux)

… is from pages 489 of the late Wesleyan University economic historian Stanley Lebergott’s great 1984 book, The Americans: An Economic Record:

For a thousand years the greatest share of labor in most societies has been supplied by adult women.  They produced and raised children.  They also produced much if not most of the good and services essential to human existence and comfort.  To do all this they typically worked from dawn to dusk, and even later once artificial light permitted it.

In the past 75 years, however, major changes have taken place in the pattern of women’s work in the United States. Between 1900 and 1975 the workday of U.S. housewives was cut in half.

DBx: It’s easy – and a signal of what are mistaken for higher sensibilities – to demean the hawking of, and the desire for, more and new’n’improved consumer products.  Electrical appliances such as frost-free freezers and refrigerators, dishwashers, blenders, and microwave ovens.  Teflon cookware.  Powerful detergents.  Prepared foods available at every neighborhood supermarket.  Disposable diapers that reflect our understanding that nature is often something from which we should be protected from rather than exposed to.  Spacious automobiles that allow the transportation of lots of disposable diapers and other groceries to be stored at home in spacious closets and cabinets that are part of modern, spacious homes.

When you are next tempted to decry – perhaps with a tweet broadcast globally from your smartphone – commercial society and the alleged shallowness of its materialism, remember the late Hans Rosling’s celebration of the washing machine.

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