Economics, Literature and Scepticism

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I am a PhD student in Economics. I am originally from South Africa and plan to return there after my PhD. I completed my M. Comm in Economics and my MA In Creative Writing (Poetry) at the University of Cape Town, where I worked as a lecturer before starting my PhD.

Thursday, September 13, 2007

Three (Separate) Things: Abe, Pensions and China

Posted by Simon Halliday | Thursday, September 13, 2007 | Category: |

As always, lots to talk about. The hot topics today have to do with firstly, the resignation of Japanese Leader, Shinzo Abe, and my opinions on the appeals to the constitutional court about inequality in social security. I’ll also comment on a couple other random things I’ve read.

The first issue, with respect to Japan is who is going to lead the country now that Abe has resigned? There are a couple of possible candidates in the Liberal Democratic Party (Abe’s Party), the Secretary-General Taro Aso (Not General Taro Aso as some papers reported) and Finance Minister Fukushiro Nukaga. Aso was the first to be told of Abe’s intentions to resign and is fairly close to Abe in the policies that he would implement, being hawkish and aligned to Abe on a number of other issues. Nukaga has other factors affecting his candidacy, such as scandals (twice stepping down from positions because of said scandals), but he is a political veteran in Japan. All very interesting. That being said, one of the most interesting outcomes from this will be the dispute over whether Japan will aid US ships looking to refuel in Afghanistan. This is one of the most contentious issues at the moment and could have the largest impact on Japan’s relationship with the US and its constitutional pacifist stance. Very interesting – watch this space. The other interesting impact is on the Japanese markets – they took a bit of a hit yesterday after the announcement with the Yen devaluing against the Dollar and the Euro. Fun times ahead. Even more fun for the Japanese Democratic Party I assure you...

With respect to the equality of pensions w.r.t. social security I think there are numerous problematic issues. In terms of a moral/equality issue, it is ‘right’ for the SA government to adjust the laws and to ensure that the money is disbursed to all people over 60 (rather than the cynical approach of increasing the pensionable age to 65 across the board). The only problem is that, empirically, it has been shown that there aren’t any statistically significant poverty or welfare consequences in households where there is a male pension eligible individual, or a male individual receiving a pension (sometimes actual pension receipt is under-reported in surveys because the households worry about what the surveyors will do with the information). However, when females receive the social grant (the pension is a social grant even if you mightn’t think it is), there are benefits that are directly transferred to the welfare of grandchildren and most significantly to granddaughters. There is no empirical evidence to support such an effect for male receivers of the pension. In terms of this evidence I don’t think it is worthwhile to increase the access of the grants to older men – there just isn’t evidence to show that it will do what Chaskalson and co. say it will. I also don’t think that the argument about it discriminating against gay men is particularly important, but I would like to see evidence on the matter. The problem ultimately depends on what government is attempting to do with the policy – if it is meant as an individual welfare improver or happiness helper then by all means provide it to these men. If, alternatively, it is meant as a ‘social security net’ for entire households (which is what I suspect it is intended for), then maybe this should be stated outright and maybe the system should be altered as a consequence. It’s a difficult one.

Otherwise, I was intrigued to read Thom Friedman’s article about a recent visit to Dalian, China and a commentary on focuses on energy, the Olympic games and other factors to improve domestic welfare, rather than the obsession with foreign policy that the US has as the world’s watchdog. At the Dalian University of Technology there are currently 100 PhD candidates all working on energy research, the Chinese government is opening its national energy innovation research center at the university. Friedman was attending an international conference where the Chinese Prime Minister, Wen Jiabao, was speaking about the successes that China has had and the challenges it faces in terms of energy, sustainability and so forth. All really interesting. China is one of THE places to be. I really hope to do research there at some point. Friedman retold the following story about a US Officer in Baghdad:

His unit was on a patrol in a Sunni neighborhood when it got hit by an I.E.D. Fortunately, the bomb exploded too soon and no one was hurt. His men jumped out and followed the detonation wire, which led 1,500 feet into the neighborhood. A U.S. Black Hawk helicopter was in the area and alerted the U.S. soldiers that a man was fleeing the scene on a bicycle. The soldiers asked the Black Hawk for help, and it swooped down and used its rotor blades to blow the insurgent off his bicycle, with a giant “whoosh,” and the U.S. soldiers captured him. That image of a $6 million high-tech U.S. helicopter with a highly trained pilot blowing an insurgent off his bicycle captures the absurdity of our situation in Iraq. The great Lebanese historian Kamal Salibi said it best: “Great powers should never get involved in the politics of small tribes.”

I love that image – the US as a Helicopter using its rotors to blow Iraq off its bicycle. Very entertaining.

Other cool article: Energy and South Africa – are we on a road to poverty with our growth plan? I don’t know, have to think about this more. Will comment another time.

Last thing – is Fred Thompson a valid candidate for the US presidency? I liked this comment by Gail Collins: “If it turns out that mixing a race for the most powerful job on the planet with two preschoolers is too much for any one 65-year-old man to do, millions of women will say, welcome to the club, Fred. We know how you feel.”



Comment on Energy:

Comment on Equality of Pension Laws

Shinzo Abe and Ensuing Leadership Battle

Iraq Idea vs. China Idea – Thom Friedman

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