Hannah Green interviews Josh Oppenheim Asia Times Online :: Skeletons in Indonesia's closet

Asia Times Online :: Skeletons in Indonesia's closet

INTERVIEW
Skeletons in Indonesia's closet
By Hannah Green 

LOS ANGELES - Joshua Oppenheimer's The Act of Killing is a transformative film. It presents a glimpse into one of the 20th century's lesser-known political mass killings: the extermination of suspected communists in Indonesia from 1965 to 1966. Unlike many other documentaries, however, The Act of Killing tells history through the eyes of the perpetrators. 

Oppenheimer said that when he first started working in Indonesia, he was shocked to hear former executioners boasting about their many killings. The paramilitary groups that helped perpetrate the genocide still had power, and society continued to uphold them as heroes. In order to understand their boasting, Oppenheimer and his crew asked Anwar Congo, a retired executioner, and other members of the paramilitary group Pancasila Youth, to tell their story by reenacting their killings on film. 

The result is as haunting as it is absurd. Anwar, the film's central figure, jumps from genre to genre as he struggles to capture his past. He casts himself first as a tough guy in a riff on American gangster films, then later as a bloodied corpse in a nightmare scenario where one of his victims seeks post-mortem revenge, and later as a victim of the same violence he perpetrated against others.... 

How I wish I could get an unbundled subscription to the Wall Street Journal

I cannot do my job without reading it, and its reporters are still excellent, even in the Murdoch era.  And in general, I have learned to ignore the rantings of the editorial page, which basically say that if a policy is first-order good for poor people, it is bad for poor people, and if a policy is first-order bad for poor people, it is good for poor people.

But there is one worthy in particular, sitting high in his aerie at the tip of Manhattan, whose misogynistic braying should be issued (if at all) from his parents' basement: James Taranto, the eager defender of sexual assaulters.  That I am sending any money at all his way is a constant annoyance.

Hannah Green writes on the problem of how victims of rape who are college students are treated

In Open Magazine (an Indian newsweekly), she writes:

Angie Epifano always wears the same necklace. It is simple—a round blue stone set in silver on a silver chain. When something reminds her of her rape, she holds the pendant in her palm and concentrates on how it feels. This brings her a sense of calm.

“It’s called ‘grounding,’” she says, touching the pendant during a Skype interview. It’s a technique psychological counsellors teach those who have experienced rape or other types of trauma: when something occurs in their daily life that reminds them of what happened—whether it’s seeing their rapist, or a certain smell or sound—they must concentrate on something else that will bring them back to the present.

“Some people have a memory that they think of, or a place that they felt safe in, like a wooded space. Or they’ll think of their favourite food or just anything that will bring them back to reality. If you were to run into or see your rapist—that’s the kind of tool that will help you get through the encounter.”

Read the rest here.

Ten Favorite Metro Systems--A Personal View (reposted from Forbes blog).

10) New York.  Butt ugly, smells bad, too many rats, but gets you a whole lot of places at reasonable speeds.

9) Washington, DC.  Very pleasant, beautiful stations, and when working properly, fast.  But its major design flaw (lack of double tracking) means that if one train goes down, the whole system gets gummed up.  And it is not maintained well enough.

8) London.  See New York, except I haven’t used it enough to see a rat.

7) Delhi.  Modern and fast, but you sure better like your fellow human if you are going to use it.

6) Tokyo. Miraculously efficient, but see Delhi.  As such, it reflects its city.

5) Kiev.  Metros may have been the only economic thing the Soviets did well.

4) Seoul.  Longest system in the world.  Clean and reliable.

3) Taipei.  Almost luxurious.

2) Paris.  If i weren’t for the strikes, it would be as close to perfect as a metro system gets.  The Louvre-Rivoli station is so beautiful, you wouldn’t mind waiting for a long time there.  On the other hand, you rarely have to.

1) Barcelona.  Goes everywhere, swiftly, cheaply, comfortably.

[Update: Hong Kong needs to be on the list too.  Maybe 2.5?]

Who Moves? Not Old People? (reposted from my Forbes blog)

A meme is out there that baby boomers, having raised their children, are ready to downsize.  (See here).  Some scholars, such as Arthur Nelson at Utah, say that as the population ages, there could be a mass sell-off of houses which will lead to a collapse in house prices.

One of our Ph.D. students here at USC, Hyojung Lee, and I are redoing a paper I did with Patric Hendershott about 17 years ago on the impact of age on the demand for housing.  Back then, Pat and I found that the effect of age was pretty minimal.  But times have changed, and so Hyojung and I decided it would be worth redoing the exercise using current data–the 2006-2010 American Community Survey.  We decided to look at moving behavior over the entire five years, and in 2006 and 2010 individually, since 2006 was a boom year for housing and 2010 was a bust year.

After controlling for marital status, income, educational levels, race and ethnicity, and geography, we estimated the impact of age on the propensity to have moved in the previous year.  The results are summarized in the graph below (for those who want to know, these are the coefficients from a linear probability model):

As you can see, basically the propensity to move peaks in the early 20s, and then declines to about age 50-55, and then stays pretty flat for the remainder of life (although in 2010 the very oldest seem to have a slightly greater propensity to move).

Some other findings: those never married are most likely to move, while those widowed are least likely to move (after controlling for age).  This implies that the typical elderly person is even less like to move than is implied by the graph above.  Asians are the racial/ethnic group most likely to move–non-hispanic whites, hispanics and African-Americans have similar propensities.  Mobility increases with educational attainment.  Higher income people move less than low income people.

We are doing a lot more work with this data as we prepare it for a paper, but in the meantime, our findings suggest that a mass sell-off (which means mass moving) arising from aging is unlikely.

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House Prices in Southern California need to Rest now (reposted from Forbes).

From my Forbes blog:

DataQuick today reported that house prices in Southern California have risen 28 percent from the last year.  A year ago, people who were buying houses in this part of the world were getting a good deal.  Now, the deal is so-so.

Take a look at the table below (it is something I constructed for my class on mortgages and mortgage backed securities).  The numbers on the vertical axis (.03,.05,.05..)are cost of capital numbers–the financing costs of owning a house.  Generally speaking, the cost of capital for owning a house is the mortgage rate plus one percent, which reflects that the cost of the equity in the house (the down-payment) is higher than the cost of the mortgage.  The numbers across the horizontal axis (10, 15,20…) are rent-to-price ratios.  Suppose you can own a condo for $360,000; the rent on the same unit is $1500 per month or $18,000 per year.  The price to rent ratio is then 20.

In the example given here, we are looking at a household that pays a federal marginal tax rate of 25 percent, a state marginal tax rate of 7.9 percent, faces closing costs of 3 percent, annual maintenance cost of 2.5 percent, a property tax rate of one percent, a Realtor commission of 5 percent, and expects to hold the property for five years (feel free to email me at richarkg@usc.edu if you wish to put your own assumptions in the spreadsheet that produced the numbers listed below).

As it happens, I have been looking at costs and rents in Westwood, a neighborhood just west of Beverly Hills and on the other side of the 405 from Brentwood.  Rents on 2 bedroom units run around $28 per year per square foot; prices are around $650 per square foot, so the price to rent ratio is around 23.  With current mortgage rates at 4.5 percent, the cost of capital is 5.5 percent.  So lets look at the cells that are bolded: a price to rent ratio of 23 and a cost of capital of 5.5 lies in the middle of them.  The numbers in the cell is the amount of appreciation that is required each year that one holds a property for renting and owning to break even with each other.

So right now, for owning to be a better financial deal than renting, prices must rise around 4 percent each year.  Is this feasible in the long run for Los Angeles?  Yes, because over the long term, prices in LA tend to rise by about the rate of inflation plus one percent, so if we think 3 percent steady state inflation is in our future, we should be fine.  But will it rise much more than inflation plus one percent for a long time?  I doubt it.  And of course, CPI growth is less than two percent right now.  House prices are about where fundamentals say they should be, but it is time for increases to slow down.

				Price to Rent Ratio
		10	15	20	25	30
	0.03	-0.031	0.003	0.020	0.030	0.036
	0.04	-0.024	0.010	0.027	0.037	0.044
	0.05	-0.017	0.017	0.034	0.044	0.051
Cost of Capital	0.06	-0.009	0.024	0.041	0.051	0.058
	0.07	-0.002	0.031	0.048	0.058	0.065
	0.08	0.005	0.039	0.055	0.066	0.072
	0.09	0.012	0.046	0.063	0.073	0.079
	0.1	0.019	0.053	0.070	0.080	0.087

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The Internet is Truly Awesome (Leonard Bernstein Mahler edition).

David Denby wrote a nice piece in the New Yorker a little over a year ago about this ten most "perfect" orchestra recordings of all time.  Coming in at Number 5 was Leonard Bernstein's Mahler 7 (the second time through) with the New York Philharmonic. (FWIW, I know seven of his choices, and love them all).

If one looks it up on the NY Phil's website, one finds a link to Lenny's marked up score of the piece, allowing us to see, among other things, directions from the composer he really wanted to make sure got  emphasis.  As such, the internet allows us to see how Leonard Bernstein went about thinking about one of the great, quirky pieces of all time, at any time we wish.

This is truly awesome.

John Roberts is supposed to be a smart man.

But he makes a specious argument.  He says that because in the presence of Voting Rights Acts, there is no disparity in voter turn-out, there is no need for a Voting Rights Act.  Huh?

Are models that assume linear utility useful?

I just saw a paper on how the desire of households to match with particular houses could explain housing market dynamics--in particular why house prices are more volatile than incomes.

Performing such an exercise is very difficult, and requires simplifying assumptions.  One of the most important simplifying assumptions in the paper is that utility is linear--that people value their last unit of consumption just as much as their first.  This assumption is clearly wrong--we know that marginal utility diminishes in consumption.  Yet the assumption was necessary to make the model tractable.

So do we know more about the world because of the model or not?  I really don't know.

If in 1987 you bought the average house in the average place...

…you have about broken even relative to the consumer price index. The Case-Shiller National Index for March 1987 was 62.03; for March 2013, it was 136.70.  The Consumer Price Index in March 1987 was 112.7; in March 2013 it was 232.77.  So the Case-Shiller Index has risen by  120.4 percent in 26 years; the CPI has risen by 106.5 percent.  So in inflation adjusted terms, the average house in the average place has risen by 13 percent over the past 26 years, or a little less than half of one percent per year.

[At the suggestion of Austin Kelly, I looked to see what would happen if I used the unit-weighted FHFA index instead of the value-weighted Case-Shiller index.  I found that based on FHFA, real house prices rose by 11 percent since 1991 (the first year for which data are available), or a little less than .5 percent per year.  So even though the index is different, the result is the same.]

Reposted from Forbes.

Could someone explain the market failure that protecting car dealerships solves?

The Wall Street Journal has a good story today about how car dealerships are (successfully) lobbying legislatures to ban Tesla Motors from marketing their cars directly to consumers.  GOP legislators, who get the willies about regulation that actually solves real problems, are on board with supporting protectionist policies for auto dealerships.

Does anyone really think that the industrial organization of the automobile retail industry works well?  My family buys a car every five years or so, and our experience is that no one tries to exploit asymmetric information like auto dealers.  I have lots of reasons to believe that our experiences are not unique.

What amazes me is that even in the age of the internet, when one can use sites like Edmunds to figure out what to pay for a car, dealers start out by assuming that the consumer is stupid, hope they get an absurdly marked up price, and only get reasonable when they find out their customer actually knows something.

Elon Musk is a visionary in many ways.  With the Tesla, he might make two important contributions--he might free  from petroleum, and he might free us from car dealers.

A metaphor for why Goodness of Fit tests are, well, not very good.

I am proud to say I learned my econometric from Art Goldberger, who had little use for R-squared.

Anyway, a smart friend of mine (who works in industry and therefore might not want to be named) pointed out that he could probably fit the brushstrokes of a Jackson Pollack painting with a 17 degree polynomial and get an excellent R-squared.  But he still couldn't predict what a next brush stroke might look like.

A painting by Morgan Green

Reposting from my Forbes blog: the debate on Debt and GDP

My two cents:

Within the past day or so, economics conversations have been all about Rogoff and Reinhart and their critics, Herndon, Ash and Pollin.  The Rogoff and Reinhart (RR) paper purported to show that countries with more debt grow more slowly than countries with less; Herndon, Ash and Pollen (HAP) show that Rogoff and Reinhart’s data contains mistakes, and there is not much dispute about whether Herndon, Ash and Pollin’s corrections are right–they are.

HAP also do a pretty good job of showing that connections between debt to gdp ratio are not robust–they are sensitive to time period and country.  But they do not ask the question about direction of causality between debt and growth (page 3):

For the purposes of this discussion, we follow RR in assuming that causation runs from public debt to GDP growth. RR concludes, “At the very minimum, this would suggest that traditional debt management issues should be at the forefront of public policy concerns” (RR 2010a p. 578). In other work (see, for example, Reinhart and Rogo (2011)), Reinhart and Rogo acknowledge the potential for reverse causality, i.e., that weak economic growth may increase debt by reducing tax revenue and increasing public expenditures. RR 2010a and 2010b, however, make clear that the implied direction of causation runs from public debt to GDP growth.

But the question of direction matters a lot.  Consider a country whose GDP weakens–both tax revenues fall and social spending (on things like unemployment insurance) rises.  This means that in the absence of a policy change, weak GDP leads to higher debt.

There is a simple way to take a first cut at the question of direction of causation–by using a technique known as Granger Causality.  The set up is to try to explain something (such as GDP growth) by looking at its own lagged values and the lagged values of another variable (such as debt-to-GDP ratio).  I took the  data set in Herndon, Ash and Pollen and ran Granger tests using one lag explaining real GDP growth and debt-to-GDP ratios; I ran separate regressions for each country in the data set. I tested for significance at the 90 percent level of confidence.  I am happy to share my results with anyone who is interested (richarkg@usc.edu).

In the tests where I was exploring whether debt-to-GDP “caused” GDP growth, I found that debt’s impact was negative in five countries (Austria, Germany,Italy, Japan and Portugal); positive in four countries (Australia, Canada, New Zealand and Norway), and zero in 11 countries (Belgium, Denmark, Finland, France, Greece, Ireland, the Netherlands, Spain, Sweden, the UK and the US; although France was close to being statistically negative).

RR emphasize that there is a critical point at which debt becomes toxic, and that is at a debt-to-GDP ratio of more than 90 percent.  Doing Granger tests using this variable (on “on-off switch” for a country being at greater than 90 percent), we find that the impact of greater than 90 percent debt on GDP growth is positive in two cases (Australia and New Zealand), and is not statistically different from zero in eight cases (Belgium, Canada, Greece, Ireland, Japan, the UK and the US).  Ten countries have not had debt-to-GDP ratios above 90 percent.

When we look in the other direction, however, the impact of GDP growth on debt is negative 12 times (Australia, Austria, Belgium, Denmark, Finland, Germany, Greece, Ireland, Italy, Japan, Netherlands, and Sweden) and is not statistically different from zero in the eight other countries (Canada, France, New Zealand, Norway, Portugal, Spain, the UK and the US).  Reverse causality IS a big issue here, and until it is really sorted out, we can’t say what the true, structural relationship between GDP and debt really is.

Please follow me to Forbes

I am at http://www.forbes.com/sites/richardgreen/2013/03/13/california-has-a-shortage-of-rental-housing/.

Why not worry about the deficit right now?

Because if I did my math right, Federal Government interest payments are at a long-term low relative to GDP. [Update, after looking more closely, I see that the source of the data--the US Treasury--includes state and local interest payments as well]. Consider the chart below:

Federal Government Interest Expense on Debt Outstanding Relative to GDP

The numerator is annual Federal Government interest payments, which come from here.  I am pretty sure these numbers are in nominal dollars.  The denominator comes from the BEA, and is in nominal dollars. Years are fiscal years.

Note that interest rates would have to double for us to be in the situation we were in the late 1980s, the end of the (ahem) Reagan Administration.  Do we ultimately need a steady state in which debt to GDP doesn't rise?  Absolutely.  Just not tomorrow.

The American People agree with George Orwell

This video presents what the American people consider to be the ideal wealth distribution.  At 2:47, the narrator notes that under this ideal distribution, "the wealthiest folks are about 10 to 20 times better off than the poorest Americans."

George Orwell in Why I Write:

2. Incomes. Limitation of incomes implies the fixing of a minimum wage, which implies a managed internal currency based simply on the amount of consumption goods available. And this again implies a stricter rationing scheme than is now in operation. It is no use at this stage of the world's history to suggest that all human beings should have exactly equal incomes. It has been shown over and over again that without some kind of money reward there is no incentive to undertake certain jobs. On the other hand the money reward need not be very large. In practice it is impossible that earnings should be limited quite as rigidly as I have suggested. There will always be anomalies and evasions. But there is no reason why ten to one should not be the maximum normal variation. And within those limits some sense of equality is possible. A man with Ј3 a week and a man with £1,500 a year can feel themselves fellow creatures, which the Duke of Westminster and the sleepers on the Embankment benches cannot.

Good for Greg Mankiw...

..for supporting marriage equality.

Why is the luxury housing market recovering so well?

The fashionable thing to say is because of foreign money.  I suspect the actual reason is that the one percent have gotten 122 percent of the recovery (h/t/ Tim Noah).

The demand curve for housing among the rich has shifted out.

The future of efficient transportation

Might look like this:

I heard a lecture from Alain Bertaud on how networked, scheduled transportation is not a good solution for many people--even in poor parts of the world.  And I can testify that auto rickshaws are often the best way to get around cities in India--they are quick, cheap, and when fueled by natural gas, environmentally not too bad (those with two stroke engines are a whole other matter).

One of the most provocative things I learned from Alain is that buses are often less fuel efficient than cars--for a bus system to work, they have to run at periods where demand is fairly low.     As it happens, while sitting at dinner in downtown Los Angeles last night, we watched bus after bus on 6th Street go by nearly empty.