Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

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An Election 2012 cheat-sheet – where to watch out for

This roots of this blog actually lie in some miscellaneous thoughts on the U.S. Presidential election of 2008. Four years on, and another election less than a week away, I thought it would be useful – for me if for no-one else – to have a quick look through what’s “in play” this time around.

The U.S. Presidential election is not so much an exercise in democracy – on a number of occasions, the victor has not been the person with most votes – as it is a race to 270. There are, as many know, 538 Electoral College votes and these are (almost always) given at state-level in a winner takes all contest. He who gets 270 or more (Obama won 365 in 2008) is President.

Given it is not so much one vote as it is the aggregation of a number of winner-takes-all contests, this actually makes it a good bit easier to talk about probabilities of winning. (Certain pundits have actually embarrassed themselves in this regard in the last couple of days, by showing a total lack of understanding of either the college system or more likely basic statistics.)

The bankers

Like every good democracy, a candidate needs the support of bankers to get up and running. Analysts typically write off 26 of the 51 States (yes, I know D.C. isn’t really a state) as bankers one way or another, with sixteen (Alabama, Alaska, Arkansas, Idaho, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, North Dakota, Oklahoma, Tennessee, Texas, Utah, West Virginia and Wyoming) staunch Republican and ten staunch Democrat.

Advantage Romney? The problem for Republicans is that just one of these sixteen – Texas, with 38 – is a big hitter in college votes. Tennessee and Alabama together bring another 20, while the remaining lucky thirteen account for seventy in total.

The ten Democrat states are split evenly between big and small. California, with 55 votes, is huge, while Illinois (20) and New York (29) also matter a lot. Maryland (11) and Massachusetts (10) are also double-digits, while the remainder (D.C., Delaware, Hawaii, Rhode Island, Vermont) account for just 3 or 4 each. The end result is that, on the road to 270, it is advantage Democrats after accounting for the bankers, 142-128.

The likely lads

Those thinking to themselves that a system where voters in just half the states have any chance of influencing the outcome does not sound like much of a democracy, turn away now! A further 14 States are considered (by Real Clear Politics among others) to be likely or leaning one way or the other. Likely means a double-digit lead in the polls for one candidate, while leaning means a lead of 5-10 percentage points (statistically significant, one might say).

Good news for Republicans is that three states – worth 37 votes in total, Georgia, Indiana and Missouri – are likely Republican states. Indiana (with its 11 college votes) is the only state choosing Obama in 2008 that appears to have reconsidered – Romney is ahead by 12% in the polls. Missouri is a funny one as Romney’s double-digit lead in the polls is at odds with much tighter margins in the last three elections. In addition to those three states, there are four GOP-leaning states also, most significantly Arizona (11 votes) but also South Carolina (9), South Dakota (3) and Montana (3).

There also seven states likely or leaning Democrat. Five states accounting for 42 votes  – Connecticut, Maine, New Jersey, New Mexico and Washington – are “likelies”, while Minnesota and Oregon account for a further 17 votes leaning Democrat. All of these – except New Mexico in 2004 – have been blue states since 2000, so it is relatively safe to bet that they will stay that way.

After the bankers and the likely-lads are all totted up, the Democrats can effectively count on getting 201 electoral college votes, while the Republicans are looking at 191, assuming Missouri polls are accurate.

The toss-ups

So the kernel of the U.S. election is that its outcome will almost certainly come down to just 11 states, Colorado, Florida, Iowa, Michigan, Nevada, New Hampshire, North Carolina, Ohio, Pennsylvania, Virginia and Wisconsin.

Of these 11 states, five currently have Obama ahead by more than 2 percentage points (skirting the bounds of statistical significance). What is crucial for the outcome of the election is that these five account for a meaty 70 college votes: Michigan (16 votes), Nevada (6), Ohio (18), Pennsylvania (20) and Wisconsin (10). If these five states were to hold for Obama, that would be that – 271 votes with six states still to account for.

College votes, by degree of analyst confidence (target of 270)

The only toss-up currently going Romney’s way is North Carolina (15). From a GOP viewpoint, it would want to – if Romney can’t take a state that only gave Obama a 0.3% margin in 2008, and was double-digit Bush territory in 2000 and 2004, then he’s in trouble. These forty-six states are shown in the graph above, and point to an Obama win.

A Romney win?

There are five states that are too close to call, most importantly Florida (29), but also Virginia (13), Colorado (9), Iowa (6) and New Hampshire (4). Romney is ahead in both Florida and Virginia at the moment (just).

Suppose he won those two. Adding them and North Carolina to the GOP total so far gives 248 votes. Pennsylvania looks beyond Romney’s reach so hence the focus on Ohio, where Obama is ahead by 2.3% in the polls. An Ohio win added on would leave Romney on 264 votes, just shy of the 270 needed. Colorado is a state that twice voted for Bush and has Obama only marginally ahead currently. Its nine votes would be enough for a Romney victory.

The cheat-sheet redux

So, what should you watch out for in the wee hours of next Wednesday morning?

Nevada and Ohio are Obama’s most fragile possessions of the 271 votes outlined above. Without their 24 votes, Obama would need Florida – or Virginia plus two of New Hampshire, Colorado and Iowa – to win. If he keeps those two, though, he is on course for re-election, barring surprises.

Potential surprises include an Obama win in North Carolina, if news of which broke early in the evening, you could retire relatively safe in the knowledge that Obama would be re-elected, or alternatively Obama struggling in any of Michigan, Pennsylvania or Washington.

Romney’s route to victory requires winning not just Florida and Virginia, where he is currently ahead, but also Ohio and Colorado.

If Arizona or Minnesota – or indeed anywhere else – is being discussed by pundits on the night as a possible upset, then it’s probably best to get the popcorn out, it’ll be a long night!

The origins of the Beausang surname II – Hugue-yes or Huguenot?

First things first: this is not a post about economics, so for most readers of the blog, this is one you can skip! By way of background, when this blog was set up initially, I explored a mix of topics, including history and genealogy. One of my genealogy blog posts, “The origins of the Beausang surname I – French Revolution? Try East Cork” was a two-parter… only I never got around to writing the second part! A few interested parties, though, have kept in touch and encouraged me to finish what I started, so here it is. Read more

Automobiles, e-commerce and immigration

This week’s recommended reading and some latest stats and facts…

First up, some research:

  • Economists almost always decline to involve themselves with the specifics of particular industries and goods, preferring instead to talk about widgets and other abstractions. However, that’s not very realistic when you look at economic history or think of, for example, the central nature of the construction and automobile industries in the ongoing economic downturn. In that vein, the OECD has just released a study called “The automobile industry in and beyond the crisis“. After setting out the importance of the industry, it examines the collapse in car sales during the crisis and looks ahead to the future of the industry, country by country. In particular, Western European manufacturers – and those in Japan and Korea – have capacity significantly above domestic demand, meaning that their export performance will be critical in determining the health of these industries. China – and to a lesser extent India – are not unpredictably growth markets for the industry.
  • Secondly, some interesting academic research in the Journal of International Economics on the long-term effects of colonialism. The paper, called “The erosion of colonial trade linkages after independence”, is available in its gated (official) form on ScienceDirect, but a just-as-good version is available to all from Sciences-Po. The authors use the fact that most countries today were part of empires as late as 1945 to examine bilateral trade since then. They find little short-run effect on trade, except in the case of “hostile separation”, but thirty years after independence, trade with the colonizer shrinks by more than 60%. It seems to be more the unwinding of trade diversion rather than economic revenge, as the effect extends to “Commonwealth partners”, fellow colonised countries.
  • Edgar Morgenroth presented a paper at the ESRI a couple of years ago on how immigration into Ireland has boosted imports of consumer goods from the home countries – think Polish food taking up Spar’s shelf real-estate. Giovanni Peri and Francisco Requena-Silvente consider the alternative: an increase in exports to home countries. They present evidence from Spain suggesting that doubling the number of immigrants leads to a 10% increase in exports to their country of origin, an effect that is larger when the countries are “culturally different”.
  • Lastly, the OECD welcomes Chile into its club of high-income members with an inaugural review, highlighting two priorities for its policymakers: solidifying its economic growth base and tackling inequality.

To close, a few things we didn’t know last week:

China, the EU (Greece), the US and the economics of paying for news online

To my shame, my Recommended Reading section on the blog has fallen somewhat by the wayside of late. While I can’t promise I’ll fully rectify that overnight, I can do my bit here and now. Without further ado, here are ten articles on the world economy that I’ve found interesting in the last week:

  1. From the excellent VoxEU, an important step in understanding some of the massive implications of urbanisation and economic growth in emerging markets comes in a paper called ‘How Green is China?‘. Per capita emissions in China’s most polluted city are still just a fraction of what they are in the typical US city.
  2. Patrick Love, over on the OECD Insights Blog, gives some perspective on the development of Haiti, formerly the Jewel of the Antilles.
  3. Some mildly good news – recessions won’t drive up violent deaths that much, according to researched cited on the Irish Economy blog.
  4. Over at Reuters, Felix Sammon discusses the economics of the New York Times’ generally much-discussed introduction of a paywall. It leads him to discuss the concept of bundling, itself closely related to price discrimination, for example in the digital TV market, as per the commentator a couple of days ago.
  5. Today, an Englishman, an Irishman and a South African had an exchange of views about which major currency has the best/worst long-term prospects, largely on the back of developments in relation to the Greek economy. None of us, however, thoguht to mention the Canadian and Australian dollars!
  6. Mark Perry is always good for a provocative post – he doesn’t disappoint on the EU-vs-US debate that seems to have risen, unprompted, in the past couple of weeks, as the successor to the Sachs-Easterly-Collier debate that raged among economists last summer. I have a whole host of reasons I disagree with him, but that’s the subject for a full blog-post in itself (makes note on to-do list).
  7. On a completely unrelated topic, Tim Harford, the Undercover Economist has a nice short explanation of heavy traffic on Mondays and rainy days.
  8. The Conference Board is one of the world’s premier sources for data on productivity. Their latest report on productivity shows the strong gains in emerging markets, some the WSJ views as an economic threat.
  9. All this talk of emerging markets and China – what with its booming economy at the moment, is China headed for a crash?
  10. And all this talk of productivity and competitiveness… I talked a couple of weeks ago about the 2010 Lisbon Strategy adopted by the EU almost 10 years ago, designed to make the EU the most competitive economy in the world by now. Charles Wyplosz argues it’s time for a new model of competitiveness for the EU.

And a non-economics link to boot: it turns out “status updates” are at least a hundred years old!

A Budget daydream: “Sorry sorry, Brian”

In my opinion, there’s no better way to break the tension before a major economic decision than to adopt the style of Weird Al and write some song parodies. A few months ago, Leonard Cohen’s Hallelujah became ‘Board Snip Nua’. Before that, we had Copa-Obama. Today is of course Budget Day and I’d like to recompense blog readers for not re-writing YMCA as NAMA a couple of months ago, by recreating a dream Don McLean had where he was Taoiseach and a luckless lawyer was Vincent Van Gogh.

Sorry, sorry Brian
Taint your career in a day
Took you from the DoJ
To Finance at the darkest time of all
With a deficit that kills
Sketch the cuts and the bitter pills
Catch them on prescription bills
With price hikes that nobody understands.

Now I understand what you tried to say to me,
About staying in Justice and equality
How you took that job with glee
I would not listen, I did not know how.
Perhaps I’ll listen now.

Sorry, sorry Brian
Inflaming tensions with cuts in pay
Surly unions, violent days
Reflect in Lenihan’s eyes of china blue.
Talking to SIPTU can age you with all the strain
Weathered faces lined in pain,
Are irked by the Budget’s humble plans.

Now I understand what you tried to say to me,
How you loved Justice and equality
How you took that job with glee
I would not listen, I did not know how.
Perhaps I’ll listen now.

For they could have loved you,
And still many do like you.
But when no hope was left in sight
On that cold December night,
You cut their pay, as Ministers often do.
But I could have told you, Brian,
This post was never meant for one
With a legal mind like you.

Sorry, sorry Brian
Arguments in empty halls,
Bearded heads and nighttime calls,
With PAs that watch the news and can’t forget.
Like the voters that you’ve met,
The ragged men in ragged clothes,
Children with a bloody nose,
Lie waiting while you handle the IMO.

Now I think I know what you tried to say to me,
How you suffered in your popularity,
How you tried to shift the blame to me.
I would not listen, I’m not listening still.
Perhaps I never will…

And now back to work…

Teacher performance, class size? Does it even matter?

I came across this excellent review and discussion, by Andrew Leigh of economics.com.au (a great site) of a very interesting paper on education performance (by Brian Byrne of the University of New England), during the summer. Essentially, it uses that treasure trove of the social scientist – identical twins – to attempt to measure the effect of teacher performance on educational outcomes. The entire post and its various links and comments are all worth a read, because the more you read about the subject, the more fascinating it gets.

For example, the paper could easily have been publicised as a measure of the effect of class size but – tell this one to teachers and indeed parents out there – the literature is generally agreed that class size, for most age groups, has no distinguishable impact, hence the authors chose to focus on teacher quality, which after all is much harder to measure, instead.

There’s also a good discussion of what percentages count as not important. For example, even if the bulk of performance is determined by the child, not the teacher or the classroom, an 8% boost to performance is still better than none.

The importance - or not - of class size
The importance - or not - of class size

The ‘everything comes back to Bord Snip Nua’ digression: if indeed class size is not the be-all-and-end-all when it comes to our children’s future, perhaps it could take a slightly lower priority on the pecking order of What Must Not Be Touched in our public expenditure.

Environmental Pillar workshop on NAMA, the Irish property market and economic sustainability

From one EP to another! Following Electric Picnic at the weekend, which featured Leviathan political and economic discussions as well as more food stalls and music acts than you can shake a stick at, today it was back to business and off to another type of EP altogether.

That was the Environmental Pillar, part of Ireland’s Social Partnership framework which comprises about 30 organisations in the environmental space in Ireland. They held a workshop on NAMA, the Irish property market and economic sustainability in Dublin. There were four speakers including myself. The other three were NAMA tag team Brian Lucey and Constantin Gurdgiev as well as Feasta founder and environmental economist Richard Douthwaite.

There was a good attendance and a great degree of interaction. Fortunately for those who couldn’t make it, including many prominent member of the Pillar who were meeting Cabinet members at the time, the whole thing is recorded.

The talk I gave is available on these three videos:

Blog readers may be a bit tired of my thoughts on these matters, though, in which case I’d recommend watching the other talks. The full list is available on the Environmental Pillar’s channel on Youtube. Some of Brian and Constantin’s thoughts in relation to how the government could have reacted to criticisms of the original NAMA proposal are very interesting, while the panel discussion at the end covers a whole range of topics from ‘What can I do?’ to  ‘Does it matter if environmental armageddon is just around the corner anyway?’!

Some of the key things I took away from the talk:

  • It does seem bizarre that journalists, financial services executives and foreign politicians are all prepared to listen to the anti-NAMA side, while the only way those opposed to NAMA can get to speak to government is through the media.
  • “Long-term economic value” could actually mean larger falls than current market value, because it means using yields/net present value as opposed to the catch-the-falling-knife which could still give totally unrealistic yields by the time rents have stopped falling.
  • The idea of a public trust that owns NAMA and that can decide on what to do with NAMA land tracts, for example, is worth exploring, regardless of whether or not we own the banks.
  • Our current crisis presents a huge opportunity to reorder things the way we want them. To a lesser extent NAMA, but to a much greater extent the lack of a broad strategy for the next five years and the oddly between-two-stools Commission on Taxation report suggest to me that we are wasting this opportunity.
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From property taxes to Ireland in 2020 – a foray into vlogs

This post outlines the content of a video discussion between myself and Karl Deeter. Topics included everything from property tax to how to price services like water and roads. Karl and I nail our colours to the mast by making specific predictions about population, unemployment and output per capita in Ireland in 2020 and we wrap up with a VoxPop in Dublin on Ireland’s economic future. Read more

Understanding deglobalization – measuring tariffs and enabling trade

With trade falling faster than output, the world is – in a technical sense – deglobalizing to some degree. In truth, though, it represents less a conscious choice made by consumers in one economy to switch to domestic produce and instead reflects the highly integrated nature of product markets.

A cause of concern, however, would be if countries started to raise tariffs and other barriers to trade. Earlier this month, the WTO made available for researchers a very detailed database on tariffs at a country and product level.

If all that detail is a little to mind-boggling (or spreadsheet-breaking), the World Economic Forum also earlier this month launched their 2009 Global Enabling Trade Report. The rankings in full show that small open economies are the best for enabling trade. Of note is that all the EU countries score very poorly in the ‘Market Access’ heading, due no doubt to the difficulties faced by agricultural exporters in other countries when trying to get their goods in the EU.