Monthly Archives: February 2014

Ukraine: A battle for the future of Europe


From Yuriy Gorodnichenko:

Squeezed between European super powers, Ukraine is no stranger to tensions, but it has been a remarkably peaceful country in the modern history. The recent waves of protests and government-sponsored violence moved Ukraine to the brink of a civil war with far-reaching consequences for Europe as well as Russia and other post-communist countries in the region.

The Yanukovich Era and the uprising

How could Ukraine get into such a terrible state? What can happen next and what can be done to save peace in this country with a population of 45 million people?

aerial photo of protest

When Ukraine separated from the former Soviet Union in 1991, it marked its first real era of independence since World War I. While other former Soviet states immediately found themselves controlled by corrupt and dictatorial regimes, Ukraine stood out in the strength of its political institutions and civil liberties.

The attachment of the population to the democratic process was illustrated most vividly in 2004 when Viktor Yanukovich –- at the time Ukraine’s prime minister –- first tried to be elected president through electoral shenanigans. That effort was met with widespread popular protests , dubbed the “Orange Revolution, ” which forced new (and fair) elections and the defeat of Yanukovich in favor of Victor Yushchenko, then a leader of the opposition and the freedom movement in Ukraine.

Unfortunately, political divisions among the Orange Revolution’s reformers generated a popular backlash, through which Yanukovich was legally elected president in 2010. Since then, he has systematically undermined the constitutional process and the rights of individuals in Ukraine. For example, political power has become increasingly concentrated in the hands of Yanukovich and his inner circle, virtually replacing the constitutionally-enshrined parliamentary nature of government with a presidential regime.

This concentration of power has been matched by rising levels of corruption, enriching Yanukovich’s family and inner circle while the Ukrainian economy has become progressively more impoverished. Television and radio stations are under the almost-exclusive control of the ruling party. Political opponents, such as the former Prime Minister Yulia Timoshenko, have been jailed and beaten. The rights of individuals have been increasingly curtailed, with new laws passed limiting freedom of speech, freedom of association and freedom of movement.

The recent protests began rather innocuously, as a result of Yanukovich turning away from accession to the European Union in response to an offer of financial aid and gas subsidies from Russia. But the heavy-handed response of authorities, including violent attacks on protesters, transformed a small-scale protest into a general popular uprising with hundreds of thousands of people descending daily on the main squares of Kiev and other Ukrainian cities in the middle of the bitter cold Ukrainian winter and the persistent risk of being beaten, imprisoned, and tortured.

A rising number of protesters have met with an increasingly violent response by authorities, including widespread arrests, torture and death. But as the protests have continued to grow, Yanukovich has begun to appear to cede some ground, with his prime minister resigning and some of the more heinous laws restricting personal freedoms being abridged. However, even now it’s not clear how sincere his moves are and if he is not just trying to buy himself some time to consolidate his powers for another crackdown on peaceful protesters.

Why lies ahead?

Given the size and intensity of recent protests, combined with the visible desperation of authorities, one can foresee at least four scenarios for the future of Ukraine.

1.  A peaceful, political resolution: The most positive outcome is one in which Yanukovich accedes to immediate and free elections which put in place a new administration committed to rebuilding the institutions and civil liberties for which Ukrainians have fought so hard. But as discussed below, achieving such an outcome will not be easy, and failure could lead to other, less desirable outcomes.

2.  A bloody victory for the protesters: If the authorities continue to respond to protesters with  violence and torture what has so far remained a remarkably peaceful protest movement could rapidly become much more violent. There are certainly among the protesters some who would prefer to fight more aggressively against the authorities, and further provocations by the police or armed gangs hired by the government could give them cause to lash out. Violent uprisings have in the past often meant unsavory endings for authorities (e.g. Ceaucescu, Qadaffi), and the consequences of such an outcome would likely cast a long shadow over the future of the Ukrainian political process.

3.  A victory for the regime: Yanukovich has already tried to buy out and divide the leadership of the protest movement by offering them prominent political roles, but this wooing has had little success. Given that protests have not faded despite the cold and the brutal response of the regime, a scenario in which protests peter out quietly is unlikely. But, if backed into a corner, the regime’s armed forces could overwhelm protesters and ensure the continuation of the regime. This would almost ensure that Yanukovich would reinforce his hold on power and become a dictator. The consequences for the Ukrainian people would be dire.

4. A civil war: The most dire outcome is one in which Yanukovich tries to put down the protests violently but unsuccessfully, thereby generating a civil war between the Ukraine’s Western and Eastern regions. A violent and persistent struggle between these factions would induce large-scale refugee movements into neighboring countries, instability on the border of Europe and Russia, and possible proliferation of the arms and nuclear materials currently held in Ukraine. This outcome could be catastrophic not just for Ukraine, but for the entire region (just imagine Syria in Europe with European energy supplies from Russia being cut).

What will success look like?

Achieving a successful and peaceful outcome appears to require that Yanukovich deliberately and willingly agree to surrender political power. Because this political power ensures both his wealth and personal protection, as well as that of his family and associates, achieving this outcome is fraught with difficulties. But the strength and endurance of the protest movement has made this unlikely outcome a possibility. Achieving it, however, will likely require several additional steps.

First, the international community can help by reducing the benefit Yanukovich receives from holding power. For example, countries can freeze foreign assets held by Yanukovich and his family. The international community can also help make a peaceful transition more likely by undermining the sources of support to the Yanukovich regime. For example, some of the oligarchs that have supported Yanukovich so far have been reticent to oppose the protests. Many could likely be induced to support a transition if access to foreign markets was facilitated for Ukrainian companies, or if economic assistance is provided to the Ukrainian government during the transition period.

Because Russia is unlikely to continue its aid to Ukraine during a transition (and may likely try to hamper the transition itself), it will be essential for the international community to make up for this negative shock. The U.S. and Europe could threaten to freeze assets of oligarchs abroad, and restrict their travel to foreign countries if support for a transition process is not forthcoming. Finally, the international community must stand up to Putin directly to ensure that Russia does not unduly pressure or influence the situation in Ukraine.

The Ukrainian people are, of course, the primary agent through which change can happen. And their behavior during this difficult time, particularly in the face of appalling behavior by authorities, has been exemplary. Continuing to ensure that protests remain peaceful is central to enabling a peaceful exit by Yanukovich. Street violence and the threat of retribution would likely induce Yanukovich to instead cling to power.

So facilitating the protest movement –by providing financial aid, doctors, supplies, etc.–is a key contribution by the international community to a successful transition in Ukraine. Public backing, such as U.S. Sen. John McCain’s (R-Ariz.) recent visit to Maidan Square in Kiev, also provides direct support to protesters who are engaged in a long and brutal struggle and for whom sustaining their morale cannot be underestimated.

A successful outcome in Ukraine will be a victory for the forces of peace and democracy. The international community can help both through official policies of the U.S. and European governments and through the support of individuals. World War II and the Cold War were ultimately victories for freedom, but the struggle actually continues today in many countries. The international community should support those who continue this battle. Today’s front line is Maidan Square in Kiev, Ukraine.  Success of protesters in Ukraine could be as important as the fall of the Berlin Wall was for the modern Europe.


Ukraine: A battle for the future of Europe
Sat, 22 Feb 2014 22:14:28 GMT

Ted Nugent

So Ted Nugent called President Obama a chimp in essence.

Then he “apologizes”  and uses softer words to show the same contempt, but with less apparent racism.

We love forcing apologies by pressure and shaming.

What is the point of that?  I tend to think Mr. Nugent’s first comments pretty well demonstrated where his head at.  Why demand that he lie and then think we should feel better?  He’s a bigot, and why not let him be open about that.

Making him conform to social standards that he doesn’t accept is the same as forcing gays to hide who they are.


If a little money doesn’t solve (poverty; bad schools, etc) then get more.

 'Now, minions, I'm off to inspect our shark cages.' 'Do you really need to inspect them this often?' 'PRISONERS MUST NEVER ESCAPE.'

Wed, 05 Feb 2014 00:00:00 GMT

Style Versus Content


Paul Krugman pauses to wonder why he’s been characterized as immoderate when — according to him — “there’s not a lot of air between my views and those of, say, staff economists at the Fed.” His conclusion: “What was radical, if you like, was my style, not my content.”

Bingo. Krugman’s detachment from mainstream economics is indeed a matter more of style than of content. But one symptom of that detachment is his failure to recognize that style is all that matters. Economics is most valuable not as a repository of received truths, but as a way of thinking — a way of thinking that has proved itself extraordinarily valuable as a bulwark against nonsense and claptrap. It’s that way of thinking — the style of economics — that Krugman so often and so depressingly abandons.

Here’s an example: The minimum wage is much in the news these days. There’s some controversy over whether a minimum wage hike would substantially reduce employment. Krugman, in a recent column, reported that he’d reviewed the evidence and concluded that the employment effect would be quite small. From this, he jumped to the conclusion that a minimum wage hike is a good thing.

But the economic style of thinking does not allow such leaps in logic. It demands that we recognize that any income transferred to low-wage workers has to come from someone else, in this case from the owners and customers of businesses that employ a lot of low-wage workers. (Probably more from the owners in the short run and more from the customers in the long run, as some of these businesses disappear and prices accordingly rise.) And then it demands that we ask why these particular people should foot the bill. Why not finance a transfer to low-income workers through general tax revenues, or via a specific tax on, oh, say, newspapers, as opposed to an implicit specific tax on McDonald’s hamburgers?

Anyone, left, right or center, can write about how minimum wages might affect low wage workers. The economist’s unique contribution is to insist that you’re not done until you think about how it might affect the typical Wal-Mart shopper (who, incidentally, has a substantially below-average income). By ignoring that question, Krugman chose to write not as an economist, but as a partisan hack. That’s a style choice, and it goes to the heart of why so many economist have stopped taking him seriously.

This is not an isolated lapse. When Krugman wrote to endorse boycott threats to enforce better working conditions in Third World countries, he wrote about the potential good that could come from those threats, while completely ignoring the potential harm. You don’t need an economist, let alone a Nobel laureate, to point out the potential benefits of boycott threats, just as you don’t need an economist to point out the potential costs. What you need an economist for is to insist that you account for both the costs and the benefits and that you try to construct some sort of intellectual framework for weighing them against each other. Krugman was so interested in stating his conclusion (i.e. his content) that he forgot to include any of his reasoning — or even to acknowledge that reasoning is called for. Once again, he adopted the style of a hack.

What might he have done better? Let me offer this old blog post of mine as an example. Unlike Krugman, I drew only tentative conclusions. But also unlike Krugman, I tried to lead the reader to see both sides of the story, and more importantly to suggest ways of estimating the relative importance of various factors. I’m sure it’s imperfect, but it’s at least an honest attempt to engage the reader in the economic way of thinking. Krugman, by contrast, prefers to do your thinking for you, except on those occasions when he skips the thinking part altogether.

These are not isolated lapses. If you want more examples, start here.


Style Versus Content
Steve Landsburg
Wed, 05 Feb 2014 07:01:21 GMT

Wise words from Rudy Penner on the debt limit


The real place to negotiate over spending and tax matters, including entitlements, is when you’re debating the budget resolution. That’s when we set our targets for spending and revenues.
Having a separate debt limit—I don’t think it has served much of a purpose. It certainly hasn’t brought about fundamental reforms in entitlements.

Wise words from Rudy Penner on the debt limit
Tue, 11 Feb 2014 02:24:00 GMT

Big oil companies spending more and producing less

Don’t expect cheap gas soon.

From the Wall Street Journal:


Big oil companies spending more and producing less
Fri, 31 Jan 2014 19:57:44 GMT

Nothing to Tweet About


The outlook for Twitter is blah;

Is it having its final hurrah?

They’re losing morale

With a growth rationale

That is premised on je ne sais quoi.

The secret to growing more revenue

Is something the company never knew,

But it’s more of a feat

Getting newbies to tweet

Than skeptical analysts ever knew. 


Twitter (NASDAQ: $TWTR) held its first earnings call as a public company, and investor reaction showed just how high the expectations are for this company. Although quarterly revenues of $243 million exceeded the $218 million consensus forecast, participants in the call were spooked at how few new users had signed up to send their first tweets. The 241 million users in December were only 4% more than those in the previous quarter. Apparently, the new-user experience is not as friendly as it ought to be. 

This perhaps explains the lackluster growth in the number of followers for @DrGooseEcon?

Nothing to Tweet About
Dr. Goose
Thu, 06 Feb 2014 12:55:00 GMT

Winter Olympic Sports


I’m sure we’ll see the usual TON of olympic graphics in the next few weeks, but I thought this one showing the growth of sports included in the Winter Games was interesting:


Winter Olympic Sports
Fri, 07 Feb 2014 02:50:33 GMT

Only About One-Third of Labor Force Dropouts Will Return


Millions of people have dropped out of the labor force since the start of the recession in late 2007, and only about a third of them will come back in the years ahead when the economy is stronger, the CBO said in a new report.

Only About One-Third of Labor Force Dropouts Will Return
Victoria McGrane
Tue, 04 Feb 2014 23:49:25 GMT

Is tech outcompeting other forms of signaling, such as clothing expenditures?

It is amazing to think about how much of the reason we want money and wealth isn’t what it can  for us.  It’s what we hope it can do for our status.

The car you drive, and house you live in once you are past a certain level doesn’t make you much more comfortable, but  it may affect how you think others think about you. 

That’s often what motivates striving – status and affecting what others think of you.  If you care less you are much more free.

The article below relates to how spending is crucial  for teens, who may be the most status conscious of all.

For teenage boys, maybe:

Another factor chipping away at teenage retailers may be the shifting priorities among young people. Where clothing was once the key to signaling a teenager’s identity, other items may have become more important and now compete for their dollars.

“Probably the most important thing a teenage boy has is his smartphone,” said Richard Jaffe, an analyst at Stifel Nicolaus. “Second, is probably his sneakers. Third, maybe, we get to his jeans.”

What may trump all of those, Mr. Jaffe said, are gaming systems, especially over the last few months, because Xbox and PlayStation both released new game consoles in 2013. That may have taken a bite out of what teenagers had to spend on clothes.

The Elizabeth A. Harris article, which focuses on declining teen expenditures on retail clothing, is interesting throughout.

Is tech outcompeting other forms of signaling, such as clothing expenditures?
Tyler Cowen
Sun, 02 Feb 2014 17:25:22 GMT