September 2010

Gender discrimination in insurance to be made illegal

At least it will if this fathead at the European Court of Justice gets her way.

Kokott advised the Court to declare invalid the provisions allowing for the taking into account
of statistical differences between the risks of insuring men and women when setting premiums. She said it was incompatible with the principle of equal treatment for men and women.

Women are often given cheaper life insurance because on average they live longer and cheaper car insurance because they have fewer and less serious crashes on average.

Kokott said that if her view is adopted by the ECJ it should only apply to future policies and a transition period of three years should be implemented to ensure stability in the insurance sector.

Yup, really. She wants to abolish reality in favour of gender equity.

And guess what kiddies? There\’s absolutely fuck all any of us can do about it. Can\’t vote against it, can\’t change government to get it changed, can\’t do sweet FA.

Can we leave yet?

How excellent!

According to Labour party rules at least 6 women have to be elected to the shadow cabinet…….There are 13 women on the list……Of these – Yvette Cooper is a shoo-in. Caroline Flint and Tessa Jowell also very likely. I wonder if Diane Abbott and Emily Thornberry will split Labour MPs on the left. I don’t know much about the others – but they have just under a 50% chance of being elected.

Isn\’t that lovely? Gender tokenism means that peeps that even a hardened political anorak like Sunny have no clue about must, must, get elected.

And then there are those whose brains have fried

Via, this.

From the above problematic modern texts deduce that intersystemic trade is economically beneficial to all concerned (and harmful to none) if, and only if, the laborers of each system specialize in the production of that commodity for which the “relative cost,” given in the commodity-exchange ratios of the respective closed systems, is more favorable.  In the example detailed below, the laborers of system I should specialize in F because F costs half as much as C in system I, given the original (closed system) commodity-exchange ratio (1 F = 1/2 C); while F costs three-fourths as much as C in system II, given system II’s autarky exchange ratio (1/3 F ? 1/4 C, i.e., 1 F ? 3/4 C).  The “comparative advantage” of system I is thus in the production of F.  (The “?” sign stands for “equals” or “exchanges for.”  Under Ricardo’s labor theory of value “exchanges for” signifies equality of labor content only if the exchange transpires within either closed system; intersystemic exchange in accordance with Comparative Advantage proceeds by the calculation of mutual benefit described below.)

From a disproof of Ricardo\’s comparative advantage.

From a site called \”Real World Economics\”.


Prostitution and civil rights

Here\’s a court that seems to have it right:

An Ontario court has struck down several key provisions in Canada\’s anti-prostitution laws, saying they are dangerous to sex-trade workers.

A ruling by the Ontario Superior Court of Justice said the laws against keeping a common bawdy house, communicating for the purposes of prostitution and living on the avails of the trade \”are not in accord with the principles of fundamental justice.\”

\”These laws, individually and together, force prostitutes to choose between their liberty interest and their right to security of the person as protected under the Canadian Charter of Rights and Freedoms,\” Justice Susan Himel wrote her in 131-page decision, which struck down those provisions.

\”I find that the danger faced by prostitutes greatly outweighs any harm which may be faced by the public.\”


Young said the case was based on the fact that the provisions the court struck down compromised the safety of sex workers. For instance, the prohibition on communicating for the purpose of prostitution prevented sex workers from screening their clients, while the provision against operating a bawdy house prevented them from moving their business off the streets, where it is more dangerous.

Wonder how a challenge like that would work under the European Court of Human Rights?

Who? Who?

A married TV star has won a court gagging order to prevent details of his private life being published.

The celebrity, who has a huge public profile, has obtained an injunction stopping his ex-wife writing about their relationship and claims that they had a sexual affair after he remarried.

Neither the married man nor his ex-wife can be identified, but he becomes the latest figure to use the courts to protect his privacy.

Yesterday, it emerged that another married public figure had won a footballer-style gagging order to hush up his infidelity.

He had claimed it would be ‘very distressing’ if his sexual encounters with a woman, which took place in his home, were revealed.

A High Court judge agreed that it would breach his human rights and granted him an injunction after hearing that the woman was trying to blackmail him by threatening to expose their relationship unless he paid a ‘very substantial sum’ of hush money.

The latest injunction contains the same anonymity provisions which protect the identity of the TV star, raising questions over whether blackmail is involved in this case.

Of course, I don\’t need to know and the law says I shouldn\’t know either.

But who are these peeps?

I mean, who moves on and then comes back for a nooner with the ex-wife?

Zoe Williams again

Advertisers could have invented this constituency: and they need it now, more than ever, since as businesses become more global, ever more complex ways must be devised to discover the specificity of each market – or, more simply, who they\’re supposed to be selling to. If nobody operates locally, there will be things about customers that can only be discovered via Facebook\’s dodgy privacy settings.

There\’s no point, in other words, of either courting or repelling advertisers. You could try to create a place where people gather and isn\’t immediately swarming with salespeople, but you would fail. People congregate because they\’re looking for distraction; those people are the lifeblood of consumerism; the congregation gets bombarded; and one day it tires of the bombardment and dissipates.

There\’s something really quite joyous about a woman so ignorant of business that she bemoans the advertising, the commercialism, the specific slicing and dicing of the market to maximise the value of those ads, when that same woman\’s salary is paid by the advertising, the very specific advertising in The Guardian\’s jobs section for example, which is carried by the newspaper in which she writes.

Dear Ms. Lucas


As a result, we face the prospect of a Conservative-Lib Dem coalition determined to use the financial crisis to smash the postwar consensus on public services, and make the poor pay for the greed and incompetence of the rich.

Actually, no.

These \”once in a generation cuts\” aren\’t going to get even close to overturning the postwar consensus. They\’re not even going to try and return us to the status quo in 1997: without a lot of luck and a sailing wind they\’re not even going to get us back to 2001/2.

The cuts in future planned expenditure are, at very best, an attempt to get us back to where we were before Brown turned up the ratchet on public spending.

As can be seen here. Pre war spending was in the high 20s, low 30s of GDP. Post war (ignoring immediate post war paying down of debts etc) has been mid to high 30s to mid 40s. It\’s now at the very top end, 45% or so, of that \”post war settlement\” and the aim is to bring it down into the middle of that past war settlement range.

2002, as an example, govt was about 35% of GDP. They\’re not even trying to get back to that level!

We can tell how this is going to go, can\’t we?

Human impact on world\’s rivers \’threatens water security of 5 billion\’

Study on effect of all human intervention on water supplies finds water security and biodiversity severely damaged

OK, fully willing to believe it, then I read the article underneath.

They\’re saying, in part, that the things we do to improve water security (dams etc) reduce biodiversity.

The study, conducted by institutions across the globe, is the first to simultaneously look at all types of human intervention on freshwater – from dams and reservoirs to irrigation and pollution. It paints a devastating picture of a world whose rivers are in serious decline.

While developing countries are suffering from threats to both water security and biodiversity, particularly in Africa and central Asia, the authors were surprised by the level of threat posed to wildlife in rich countries.

\”What made our jaws drop is that some of the highest threat levels in the world are in the United States and Europe,\” said Prof Peter McIntyre, one of the lead authors, who began the project as a Smith Fellow at the University of Michigan.

But we do know how the message of this report is going to morph, don\’t we?

It\’ll be \”threatens water security of 5 billion\”, not, \”removal of wetlands and creation of dams increases water security but damages biodiversity\”.


So, great picture got by photographer is celebrated at The Guardian.

He brought us to see a young woman, Lina. She was 28 – although she looked older – and very beautiful. She told us about her husband, who was murdered. She wouldn\’t tell us why he was killed; we got the impression it was over money or drugs. Kanun dictates that the family of the victim has to take revenge, so her goal was to kill her husband\’s murderer. The revenge target is forced to stay inside: he could be stuck at home two years, four years, 10 years, maybe all his life. If Lina killed him, she would then become a target – and have to stay indoors indefinitely herself.

Well, OK, but the Albanian blood feuds only apply to the men, not the women as well.

Attaturk\’s yacht

Turkey\’s government has seized the one-time state yacht of Kemal Ataturk, the founder of modern Turkey, following media reports that a vice ring had used the vessel to throw sex parties with prostitutes.

Two reactions, slightly contradictory.

1) Isn\’t that what yachts are for? To have bevvies of birds aboard?

2) Why prostitutes? Everyone else with a boat manages to get bevvies of birds aboard without paying them.

(Actually reading the article they were running it as a brothel so the above is all nonsense.)

Timmy Elsewhere

At Foreign Policy.

About rare earths and Chinese export bans.

It\’s also a good example of how the US style of sub editing is, umm, complicated. It\’s only a blog post, they asked for and received it last week. But we\’ve been back and forth over edits they wanted since. And the edits made, by non tech people, did obscure the meaning. It\’s, on a technical level, still not as clear as I would like.

But, that\’s how they do it over there.

And so Basement Cat goes to meet Ceiling Cat

Our very own version of Basement Cat….well, I say \”our\” but of course he regarded us as his…shuffled off this mortal coil this morning.

A jet black tom he enjoyed the outside life and the female cats down the end of the road (and to get to them he had to get past his own father\’s territory which made for amusement on all sides) and only turned to us when he wanted something. Fred had picked up cat leukeamia some time ago and then when cat flu hit him a few days back it hit him hard.

A couple of days at the vets on antibiotics and drip fluids couldn\’t turn it around and, well, there, off he goes.

Hey, he was a cat, not something in short supply in rural Portugal.

But, you know, \’bye Fred, have a good time.

Ritchie\’s new report

Fun opening line.

About the author
Richard Murphy is a chartered accountant and
graduate economist.

It\’s an interesting use of the word \”graduate\” there, isn\’t it?

For it can indeed be used to say \”graduated from a course in economics\” as Ritchie did, from Southampton University in accounting and economics.

As I did at about the same time from the LSE in much the same course.

However, that\’s not the way the word is usually used in academia. There, it\’s more used to describe someone who went on to do post-graduate studies in that subject (Masters, etc).

Which neither Ritchie nor myself have done. Which is why I don\’t say I\’m a graduate economist but each to his own, eh?


And he followed up by saying that if the three premises of economics are wrong – there is imperfect information, high transaction costs and irrationality –

But the three premises of economics are not that there is perfect information, low transaction costs and rationality.

There are certain models which assume one or all of these things, sure, just as there are other models which assume their opposites.

Come on, Ackerloff got the Nobel for exploring imperfect information (the market for lemons….but do note that even he ruefully points out that there still is a market for used cars), Coase for exploring business structures with high and low transaction costs (high such lead to the creation of firms!) and so on.

Shouting \”High transaction costs!\” no more overturns \”economics\” than the imminent death of my cat does.

The threat to exit

So, Arnold Kling is asked why companies don\’t just up sticks and bugger off if government gets to greedy/intrusive.

In fact, the threat of exit does get used and it does work. \”If you do X, then this financial market will move to London\” was a threat that was often used to talk Washington out of doing X with respect to financial regulation. However, the threat of exit is often not credible, for various reasons.

True, but there\’s more to it than that.

In fact, we have one of those natural experiments going on right now. Those experiments which economists find exceedingly difficult to set up, but when they happen (ie, E v W Germany, 1945-1990) can tell us a lot about different policy choices etc.

Sticking with purely the movement of the actual company, so we\’re talking about the taxes and regulations that the holding company must suffer under, rather than simply locating a factory elsewhere but keeping ownership as was.

Until recently, in both the US and EU, to change the domicile of a company was akin to liquidating it and starting again. For example, all of the tax that was due (the accumulated captial gains taxes on that land bought in 1900 for the factory etc) became due on redomicile. This isn\’t wholly and exactly accurate, but it\’s a reasonable guide to the situation.

The US still has this sort of rule (indeed, it still has it for individuals, you want to give up your US passport then the IRS will be after you for all the tax you would have maybe paid in the future). As I say, not entirely, but it\’s a reasonable guide.

The EU doesn\’t. Part of the EU is that there is free movement of companies just as there is of individuals. And it goes outside the EU as well, to the EEA countries (Iceland, Lichtenstein and Switzerland).

So, we would expect to see greater mobility of companies in the EU across national jurisdictions than we would in the US out of that national jurisdiction. For international mobility for EU companies has now become of the same level of trivia as intra-State mobility is for US ones.

And, not surprisingly, we do:

Wolseley, the FTSE 100 plumbing and heating group, is relocating to Switzerland after failing to obtain a \”clear enough view\” from the Coalition government about their plans to overhaul the UK\’s corporation tax regime.

The claimed saving (which is all about how profits made outside the UK are taxed in the UK) is £23 million a year, say, $35 million. The costs are perhaps $10 million.

So, one reason US companies don\’t exit the jurisdiction is that the law makes it very difficult for them to do so.

A howlingly weird finding

Something which I absolutely do not understand from Dani Rodrik:

The main message of the scatter plot can be summarized easily. Labor has moved from tradable sectors (agriculture and manufacturing) where labor productivity growth has been rapid to non-tradables, especially wholesale and retail trade, where productivity growth has been negative.

This is the explanation for Latin America\’s dismal growth in relation to E Asia\’s.

But here\’s what I don\’t understand at all. Supermarkets have been expanding at a rapid rate across Latin America.

From perhaps 10% of sales in 1990 to 50-60 % in the mid 2000\’s. And India and Vietnam, which have, according to Rodrik, much higher labour productivity growth, have had much lower penetrations of supermarkets (2-20% over the same period).

Now, OK, supermarkets are not the only components of the wholesale and retail trades. But they\’re a useful indicator of them at least.

And yes, there\’s all sorts of things people do complain about supermarkets: like that they put small shops out of business. But that (and it\’s one of the things we think we know about modern retail, isn\’t it?) means that we would expect rising labour productivity in that sector.

Supermarkets are, at least we think they are and certainly see they are in developed economies, (vide nef\’s calculation that £250,000 of spending in local shops creates 5 jobs while the same spending in a supermarket creates 1), users of less labour: the same thing as saying they have higher labour productivity.

So, to the extent that we can use supermarkets as being representative of wholesale and retail trades, we seem to be saying that a technology (and yes, supermarkets are a technology) which we\’re pretty certain increases labour productivity is in fact reducing labour productivity.

Which is, umm, weird.

Now Rodrik is an economist and as we all know I\’m not. So I\’m entirely buggered if I know what\’s going on here.

A couple of ideas occur:

1) The amount of labour previously being used is mismeasured. Given that much would have been in the informal sector, as it becomes formalised we might see the apparent amount of labour being used rise but that is due to our earlier guesses of how much was in fact being used originally.

2) That 1) is nonsense but that the output of the new system is being mismeasured. As an example, to take those UK figures. We might say that £250,000 of sales is the same output, whether delivered by small shops or a supermarket. But is it actually? If the effect on the individual shopper is different then not necessarily. For it might take 45 minutes to do the shopping in a supermarket but 3 hours (entirely made up numbers) in a series of small shops. And if we say that £250k of sales is the same by either method, well, no, it\’s not, is it? We\’ve saved the consumer 2 hours 15 minutes so the consumer experience (umm, the consumer surplus?) of the supermarket is much greater than that of the small shops. Meaning that we\’re not correctly measuring the output of the supermarket labour, because we\’re just measuring it by sales and not the actual product of that labour: ie, the time saved by consumers.

3) Is linked to 2). That this new technology of supermarkets allows consumers access to a much wider range of goods. Chicken, beef, carrots, onions, are all always available while the diet from the small shops was, say, beans and rice only. Again, we\’re underestimating the value to the consumer and thus undercounting the productivity of the retail labour.

4) Supermarkets really do have lower labour productivity than Mom and Pop stores and wholesalers.

5) I dunno….anyone who does have a clue want to weigh in here? For it seems entirely bizarre to conclude that achieving the same result (the distribution of food and goods to the population) through a technology which we\’re pretty sure uses less labour will lead to a reduction in labour productivity.