"When the regulation is in favour of the workmen, it is always just and equitable...

"When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters."

who said that??? you will be surprised

Iceland's economic gangsters

Thorvaldur Gylfason, writing on VoxEU, helps us understand what happened in Iceland:

• Two Icelandic brothers who produced TV dinners for export became bank shareholders, and went on to buy themselves a yacht that used to belong to Giorgio Armani.

• Another bank owner bought himself a penthouse in Manhattan, but – this is actually in the SIC report – the bank “forgot” to ask for collateral.

• At a small dinner party for favoured bank clients on the Riviera, where Tina Turner stood for the music, the main course was sprinkled with – you couldn’t possibly have guessed this one – gold flakes.

• And then there was the dinner party in Reykjavik where singer George Michael had been scheduled to land on the glass roof in a roaring helicopter, but to the great embarrassment of the bank’s director of entertainment the plan fell through.

• One of the bank owners, the afore-mentioned Mr. Guðmundsson, declared bankruptcy in 2009 to the tune of $750 million, of which $500 million is owed to the bank he owned and directed. Not even Texas has seen a personal bankruptcy of such proportions.

UBS on overvalued teams and World Cup predictions

In order to understand the distinction between a team’s sporting successes and the market value of its players (the sum of estimated transfer values of the individual players), UBS’ wealth management research has tried to calculate the ’fair value’ of the world’s top 100 national teams. By ’fair’ they mean the price a team should have, if we only consider variables related to its sporting quality, like previous successes, current ranking, and the average age.

England has the most overvalued squad, followed by France, Argentina and Spain. In contrast, the US, Greece, Paraguay and Mexico have the most undervalued, or ’quality-for-money’ teams. As UBS warns us, “whether or not this will help the US to defeat England in their group stage clash is a different question though”.
As for clubs, the talk about German efficiency...

In 2006, UBS had correctly predicted Italy would win the Cup. This year, it says Brazil is most likely to win, with a likelihood of 22%. More World Cup predictions and advice on how to invest in Africa in their investor’s guide.

Esther Dulfo wins the medal

Esther Duflo just won the John Bates Clark Medal (the baby Nobel). She's the one who brought randomized experiments into mainstream development economics. Check out a summary of her research here.

Do football players choose to play where taxes are lower?

Last November we blogged about the possible repeal of Spain's "Beckham's law", a flat 25% tax rate on the super wealthy. Real Madrid and other spanish teams were complaining against the repeal, arguing they would lose this locational advantage to attract talent. But do tax rates really determine where players choose to play? Apparently, yes. A new paper by Emmanuel Saez says it matters a lot, and it even translates into significant effects in the performance of football clubs across countries.

By the way, Saez is last year's Clark Medalist. This year's winner is to be announced later today, with Esther Duflo, a randomista, being the clear favourite.

Cocoa smuggling from Ghana to Cote d’Ivoire

Ghanaian cocoa farmers can only sell their crop to the Cocoa Marketing Board, at a fixed price, which “ensures that cocoa farmers receive some healthy income irrespective of world market prices”. But in Cote d’Ivoire, merchants are now paying 160 CHF for a 64kg bag of cocoa while the Ghanaian government purchases it at 113 CHF. That’s a 42% premium (source), an incentive big enough for Ghanaian cocoa farmers to sell illegally to the Ivorian market. Plus, if they sell to smugglers they get “special gifts”.

Anas Aremeyaw Anas, a Ghanaian journalist recently went undercover and got on tape the bribing of border officials by cocoa smugglers (check his amazing YouTube video). The government reacted by increasing its buying price and arresting the corrupt border agents. Will it work?

A 2008 paper shows that a recent boom in cocoa exports was due to a reversal in price incentives to smuggle to Cote d’Ivoire and not due to productivity gains. An older IMF paper suggested that the long-term gap between potential and actual outputs, “the missing cocoa”, could be explained by smuggling to Cote d’Ivoire. In the last years, tons exported went down as the price went up...

So why the export board? It shifts rents from farmers to government, acting as an export tax, whose proceeds are supposed to go in infrastructure, fertilizer, insecticide, and equipment investment…and it creates smuggling and tax evasion...Would it be better to let farmers sell to who they want and tax their income? If the government was a benevolent economist, what would he do?

Corruption and fiscal deficits in rich countries

This is from Daniel Kaufman's new work summarized by himself here and by the Wall Street Journal here.

Bond girls econometrics

From barking up the wrong tree:

A quantitative content analysis of 20 James Bond films assessed portrayals of 195 female characters. Key findings include a trend of more sexual activity and greater harm to females over time, but few significant across-time differences in demographic characteristics of Bond women. Sexual activity is predicted by race, attractiveness, size of role, and aggressive behaviors. Being a target of weapons is predicted by size of role, sexual activity, and weapon use, while being harmed is predicted principally by role. End-of-film mortality is predicted by sexual activity, ethical status (good vs. bad), and attempting to kill Bond. This identification of a link between sexuality and violent behavior is noted as a contribution to the media and sex roles literatures. 

Source: "Shaken and Stirred: A Content Analysis of Women’s Portrayals in James Bond Film" from the journal "Sex Roles", 2009

Wikileaks

Wikileaks is a must for all fans of investigative journalism. The recent and probably most famous publication is the following:

"WikiLeaks has released a classified US military video depicting the indiscriminate slaying of over a dozen people in the Iraqi suburb of New Baghdad -- including two Reuters news staff. Reuters has been trying to obtain the video through the Freedom of Information Act, without success since the time of the attack."

Others include publications on private and government financial flows in relation to Iceland or a report which was not made public by the German economic ministry since its results were not deemed appropriate.: The responsible minister is member of the LIBERAL party!