Wednesday, December 30, 2015

In memoriam Edward Hugh

I was shocked to learn this afternoon of the death, in Girona, of Demography Matters' founder Edward Hugh. Alas, the obituary written by Xavier Grau and published in Ara is, sadly, undeniable. The world is missing a wonderful man.

Wikipedia's summary of his life serves as a perfectly adequate introduction, and reminder, to the man and his work.

Edward Hugh, dubbed by The New York Times as "the blog prophet of Euro zone doom" was a Welsh economist based until his last days in Catalonia, Spain, where he lived since 1990. He spoke French, Catalan, Spanish and English.

Born in Liverpool, Edward Hugh, who "attracted a cult following among financial analysts", studied at the London School of Economics but was drawn more to philosophy, science, sociology and literature. His eclectic intellectual pursuits kept him not only from getting his doctorate but also prevented him from landing a full-time professor’s job.

By inclination a macro economist, his obsession with trying to understand the economic impact of demographic changes often took him far from Economics and towards fields like demography, anthropology, biology, sociology and systems theory. In particular his work was centred on the study of demographic changes, migration patterns, and the impact of these on economic growth.

In 2014 he published his first book entitled "¿Adiós a la Crisis?". He wrote the book in Spanish and it discusses the economic situation in Spain.

He worked on a book with the provisional working title "Population, the Ultimate Non-renewable Resource".

News of his death has spread quickly in the online communities where he was so actively until recently, on Twitter and (in the blogosphere) at A Fistful of Euros thanks to PO Neill.

As a long-time co-blogger and collaborator, all I can say right is that I will miss Edward. He was a man with a vision, a particular understanding of the way the world had developed and would develop, that merited sharing. On a more personal level, Edward's encouragement to me as a blogger and writer remains cherished.

He will be missed.

Wednesday, December 16, 2015

On Paul Krugman, Portugal and debt and demographic debt spirals

Paul Krugman's recent blog post, "Debt at Demographic Spirals", briefly considered if too much emigration could be a bad thing for Portugal, and countries like Portugal.

We used to think that high labor mobility was a good thing for currency unions, because it would allow the union’s economy to adjust to asymmetric shocks — booms in some places, busts in others — by moving workers rather than having to cut wages in the lagging regions. But what about the tax base? If bad times cause one country’s workers to leave in large numbers, who will service its debt and care for its retirees?

Indeed, it’s easy conceptually to see how a country could enter a demographic death spiral. Start with a high level of debt, explicit and implicit. If the work force falls through emigration, servicing this debt will require higher taxes on those who remain, which could lead to more emigration, and so on.

How realistic is this possibility? It obviously depends on having a sufficiently large burden of debt and other mandatory expenditure. It also depends on the elasticity of the working-age population to the tax burden, which in turn will depend both on the underlying economics — is there a strongly downward-sloping demand for labor, or is it highly elastic? — and on things like the willingness of workers to move, which may depend on culture and language.

We've looked at the specific example of Portugal before. I made a brief post in October 2009 about the resumption of mass emigration in Portugal and a longer post. Edward Hugh has written in greater detail, in March 2013 speculating that Portugal was being hollowed out by the shrinkage of its working-age population and in August of that year suggesting that Portugal's demographic issues had been hindering economic growth since at least 2000. Let's not forget a May 2015 guest post speculating that Portugal had been turning Japanese for some time.

My personal sense is that there is some risk of this, especially in countries with contemporary traditions of emigration. From the perspective of European Union policymaking, some sort of fiscal union uniting pension and other social welfare system might well be necessary, producing rather less problematic results than wholesale fiscal collapse in the worst-effected labor-exporting areas.

Saturday, December 05, 2015

"Refugee Crisis and the North"

Friend of the blog Jussi Jalonen has just posted, at the group blog History and Futility, the essay "Refugee Crisis and the North". Here, Jalonen takes a look at the way the Syrian refugee crisis has impacted both his Finland and neighbouring Sweden, looking at the political climate in both countries. One thing I particularly liked is his prediction of different outcomes for refugee assimilation in each Nordic country, based on--among other things--the two countries' very different recent histories of immigration.

Some time ago, my hometown on the West Coast made a decision to accept refugees from Syria. The decision was historic. Although the town of Rauma has always had a relatively substantial community of guest workers and immigrants, the town has not accommodated refugees or asylum seekers so far. This morning, the residential building which was supposed to be used as a reception center for asylum seekers became a target of arson attack. Only a few days before, an old garrison building intended for similar use was burned to the ground in Kankaanpää. Evidently some people in Western Finland do not like the idea of providing housing for asylum seekers.

Another piece of news today came from Sweden. The school teacher who was injured in the Trollhättan attack in October has now died from his wounds. The attack made international headlines two months ago, and was also a sign of the times; a sword-wielding masked young man with far right sympathies assaulted a local Swedish school, in a violent assault against the immigrant students. So far, no comparable incident has occurred in Finland, although occasional direct assaults against asylum seekers have taken place. Three weeks ago, an Iraqi asylum seeker was stabbed by three local men at the reception center of Kangasala.

While a good part of the people in both Nordic countries have participated in volunteer work on behalf of refugees and asylum seekers, the refugee crisis has also triggered a wave of xenophobia. The European refugee crisis has occurred at the moment when the Nordic countries are experiencing the apex of the ongoing radical right-wing populist reaction. Sweden, which appears to be accepting the largest number of refugees, is going through a massive political realignment, as the so-far isolated and solidly anti-immigration Sweden-Democrats have enjoyed record poll support, occasionally as the largest political party. The refugee crisis has contributed to additional political radicalization, and earlier this year, the Sweden-Democrats terminated all cooperation with the youth organization of the party. Already in the spring, a number of SD youth activists were discharged due to their links with neo-Nazi groups.

The situation in Finland is somewhat different from Sweden. The main populist party, the True Finns, which contains its fair share of hard-core anti-immigration extreme nationalists, is exercising political power, having accepted a position in the new center-right government coalition. The party has found itself in a very precarious position, especially since Finland, as the only Nordic member of the Eurozone, is now facing impending austerity measures, and the center-right coalition is also enacting new, tougher labor laws. So far, the True Finns have quietly abandoned their former social conscience and their commitment to the consensus society. The party has acceded to these packages, and even moderated their position towards the EU bailout programs. The disappointment of the party rank and file has been visible in the polls, and the support of the party has plummeted. This has generated additional pressure for the True Finns to somehow crack down hard at least on the refugee crisis, and the party has been clamoring for new anti-immigration legislation modeled after Denmark, including cutting the welfare benefits of refugees and asylum seekers.