Today we had a meeting of @RenewEurope to discuss Ukraine. I share here a few proposals on #EconomicWarfare I prepared for the Group to discuss (link at end).
Given the failure of Putin´s initial plans, tough economic sanctions are crucial NOW.
Starting point: this is warfare, even if economic-- thus we, the EU countries (and US!), will need to incur serious costs. No free lunch.
My view is that there we must act on 4 axis:
- Swift
- Central Bank Assets
- Oligarchs money
- Energy: Zero-gas
2/12
First: SWIFT, paired with several other measures, including blocking alternative payment systems linked to bank accounts, and blocking access of all banks to the financial system (more on energy later!).
Painful to Putin: EXTREMELY
Painful to us: VERY
3/12
Second, cut off Russian Central Bank, block its assets abroad.
Putin has done a huge effort diversifying away from US Dollars etc but there is a huge amount (10% is 60 bn in Europe) to seize just in EU, probably GER.
Painful to Putin: Very
Painful to us: Little (short run)
4/12
Third: @gabriel_zucman@PikettyLeMonde confiscatory tax on assets of oligarchs.
Their two key insights
- Wealth in Russian is extremely concentrated
- It is held offshore in extremely high proportion
5/12
So how to do it? Zucman, in personal commmunication proposes a tax (left slide). PIketty in blog too. Legally, sounds dubious.
So here is a new idea. Everyone linked to this war of aggression is a war criminal. A lot of regime honchos seen on TV supporting aggression.
6/12
This has never been done, but there is no reason why it cannot be done- e.g. there is space for this in the Guideliness of the Council.
Painful to Putin: Hugely
Painful to us: Not at all
7/12
Final idea: Zero-gas.
Starting point here is that we are subsidizing this war.
WE, the EU citizens are the evil people givin Putin the cash for this crazy advanture.
8/12
We can survive 0-gas.
Winter is almost over, we have huge LNG surplus capacity, we need to bring back nuclear and other closed plants (yes, thermal plants) but we can do it.
WE CANNOT CONTINUE PAYING FOR THE WAR EFFORT OF PUTIN!
9/12
One caveat: this shock is very asmmetric. Different countries incur very different costs. Thus Europe needs to absorb the cost of this policy with a new facility modeled after NextGEn.
Like Covid, we are facing a one off, massive supply shock. Europe needs to absorbe it.
10/12
Conclusions:
Do it all
Do it hard
Do it now
11/12
I know it is a pain to read slides like this.
Here is a link to the full PDF . I hope it can stimulate a good discussion
12/12 dropbox.com/s/0g599p297cbu…
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New data shows that the EU Commission has blown the chance the NextGen gave it to get the EU on a growth path. Two key elements. 1. Pensions in Spain. 2. Reforms in italy.
The new data is from the ageing report of the EU Commission on the budgetary impact of the pension "reforms"- more below
( h/t @rdomenechv @fernandosols with official data from the Spanish government.)
The EU NextGen plans gave an unprecedented and powerful stick to the EU Commission to demand reforms and investments in exchange of money. Never has the Commission had the chance to get states to get some reforms going.
In Spain, the EU Commission has been complicit (in spite of numerous warnings) in setting Spain on an unsustainable Fiscal path
(2/7)
Under cover (!!!) of the "reforms" required by the European NextGen plan, the Spanish government abrogated the 2012 reforms of pensions (the single reform done by the Rajoy government), based on an automatic adjustment mechanism, without putting anything else meaningful in place.
The cost is 3.3 points of GDP higher than before the reform.
Some reactions to the (wonderful) Levitt interview. 1) On the @uchicago PhD program and the atmosphere in the department in the 90s (toxic?). 2) On Price Theory and its future at @uchicago and beyond. 3) On the "technification" of economics and the blurring of the "theory-empirics" boundaries.
(link to interview: )
(Thread)
1/npodcasts.apple.com/us/podcast/ste…
1) On the Econ PhD Program. I went in 1992, graduated in 1998. I did not feel the ambiance was toxic. It was tough work, almost brutal, not toxic. I was given a chance I would not have gotten elsewhere. There was nothing personal about the standards. We were getting trained by the best and that was intellectually invaluable -we got the chance of a lifetime. Here are some profs of my first two years (note 5 nobels):
Macro: Sargent, Lucas, Cochrane, Woodford, Stokey, Townsend.
Micro: Becker, Rosen, Murphy, Scheinkman
Metrics: Hansen, Heckman, Zellner.
It was extremely hard, by far the hardest thing I have ever done. But it should be hard. They were trying to put a bunch of kids at the frontier of knowledge.
It was not for everyone, but we knew what we were getting into. My admired supervisor, Sherwin Rosen, then department chair, gave us a "superstar" (he wrote THE paper after all) talk on the first day. He told us half of us would fail in the first year Core (and exit with an MA, is that so bad?), half of the rest would not make the prelims. Of the 50 we were there, maybe 10 would finish the PhD, most of those would never get any citation.
And yet we persisted. We wanted to learn, and were grateful for the hance.
2/n
2) On Price Theory. What is the Chicago Price Theory style? Best thing I can recommend is to experience it yourself by listening to the playlist of Kevin Murphy's classes. . He is an amazing teacher, and makes economics come alive.
Is it true as Levitt says, quoting Mulligan to Friedman, that this style of Micro lost in the market place of ideas?
3/nyoutube.com/@chicagopricet…
Prometí hacer un pequeño hilo con datos sobre el estancamiento de la economía española, al hilo de mi entrevista en @elmundoes.
Aquí van 4 gráficos. Al final del hilo, el texto de la entrevista completo.
La economía crece por demografía o por productividad.
Demografía: somos 47 millones.
La ONU estima que a finales de siglo seremos 30.8 millones, con una orquilla entre 21m y 43m: en el mejor caso (con mucha inmigración) estancamiento de la población.
We have seen much about Bob Lucas' macro contributions these days, but he also had a highly influential contribution to the theory of the firm: the "assigment theory of the firm", which explains, for instance, why Musk earns so much (and controls so many resources).
THREAD
Before Lucas 1978, we had Marshall-Viner: individual firms have U-shaped long-run average cost functions. In equilibrium, each firm produces at the minimum point of this curve, with firm entry or exit adapting to get aggregate production. Resonable for plants, but not for firms!
The size distribution which emerges is a solution to the problem: allocate production over firms to minimize total cost.
It goes without saying that this is counterfactual for firm size.
Here is the actual firm size distribution (Axtell, Science 2001).
🚨Stunning document, leaked today supposedly from GOOGLE, on whether there is a "moat" (Barrier to entry) in the LLM space.
The author argues neither Google nor OpenAI have a moat, and open source wins. Thread with critical comment at end: semianalysis.com/p/google-we-ha…
The question of whether one-three players dominate the industry (like Operating Systems or Search) or it is perfectly competitive is hugely important: 1) For consumer welfare: more competition is better. 2) For control of direction/ethics: more competition makes it harder.
To answer the question requires answering: what are the barriers to entry protecting the incumbents? What can their competitive advantages be?
If there are huge barriers, then the winner (Google in search) takes it all in AI, like Google did in search or MSFT in Office.
1. Including battery back-up, cost of electricity from renewables is 3x/4x more expensive than from fossil fuels.
2. Same for cars. Oil prices need to be quite high for EVs to be less costly: you need oil price at €129 for battery powered car to be more economical.
3. Fossile fuels will not just run out on their own.
On the contrary we are finding oil faster than we can use it:
We had 30 years worth of oil in 1980, 40 years today. Huge reserves of coal and gas.