Advocates of Reason: 13 November 2012

Man has only one tool to fight error: reason.

Ludwig von Mises

1.Two pieces on the state of Spanish industry. First, Argentina’s YPF — previously Repsol YPF, before being partially nationalized by Argentina — recorded a year-on-year loss of 51 percent in their third trimester. In contrast, Repsol has a higher net worth today than it did when it owned YPF. Second, Spain’s Iberia is not doing well. The firm is laying off roughly 20 percent of its workforce. Spain’s unemployment rate surpassed 25 percent in October. I used to fly a lot with Iberia, because during the 1990s they had a direct flight from Los Angeles to Madrid.

2. Eric L. Lewis, “A Second Chance on Human Rights.” This is a good, (I think) balanced take on some of the more questionable aspects of Obama’s human rights record: better than Bush, but still not good enough.

3. Two pieces on immigration. First, Matthew Yglesias on immigration reform. He argues that immigrants are exactly what we need, because immigrants demand products and therefore contribute to aggregate demand. I agree with the conclusion, but not the assumption. Immigrants are also a boon in the supply side sense that more labor means more output. The fact that we’re in a recession shouldn’t impact the immigration debate, because the solution to cyclical unemployment lies elsewhere and not with immigration restriction. Second, The Economist suggests that Republicans are becoming softer on immigration reform — one can only hope that they’ll change on a number of different issues.

4. Some neat graphs on what the election would have looked like without universal suffrage.

5. Eugene F. Fama’s explanation (page 2) for the 2007–09 crisis: banks were pressured to issue subprime loans and when these collapsed they impacted the U.S. banking sector. Other countries? These also resulted from the U.S. subprime crisis, since foreign banks held U.S. mortgage bonds. The take-away is to solve the “too-big-to-fail” problem by raising capital reserve minima, because these firms are cushioned by moral hazards and their management is induced to take greater risks. It’s difficult to find a worse explanation of the crisis, at least from a professional economist.

6. The Republican Party begins its post-election breakdown.

7. Barry Eichengreen, “Europe’s Populists at the Gate.” Eichengreen points out several green shoots in the European crisis, but warns that any celebration may be premature. He warns that growing anti-austerity movements threaten political stability and financial stability between Europe and the crisis governments.

8. 37 percent of international graduate students studying in the U.S. are Chinese. Melissa Korn writes that international enrollment in U.S. universities increased by 8 percent in 2012, the fastest pace in six years. Some of it may have to do with the fiscal conditions of U.S. universities. For example, San Diego State University has increased its enrollment of international students, largely because those students (or their governments) pay a tuition that’s around five times higher than the usual undergrad fee. It makes sense to take as many as you can.

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