ROIs on various lobbying efforts range from a whopping 5,900% (oil subsidies) to a gargantuan 77,500% (pharmaceuticals).


Paul Campos, via the Daily Dish:

In effect, the system allows any 22-year-old American University chooses to admit to borrow a sum equal to the average home mortgage, but without a single one of the actuarial controls that are supposed to minimize the risk that homeowners will borrow too much money.

Kofi Annan’s plan for a diplomatic end for the Syrian violence, terms which would have Bashar al-Assad’s Syrian forces withdraw troops from battle zones and cease the killing that has marred the country for more than a year, is crumbling as the death toll ratcheted up over the past few days.

Via Al-Jazeera;

Damascus had agreed to a Security Council-backed Tuesday deadline to withdraw troops from and stop using heavy weapons against Syrian towns, to be followed by a full ceasefire by the army and rebels on Thursday morning.

Annan still holds a bit of hope that the cessation of violence can stop, but Monday alone saw 160 Syrian martyrs, one of the highest death tolls in months of fighting, and violence in cities in all regions of the country. In the past 8 days alone the Syrian National Council has the death toll at 1,000 Syrians while the Local Coordinating Committees of Syria has a more conservative estimate of over 600. EA Worldview reports that Tuesday’s death toll has reached 101. Violence has also sprung up along the Syria-Lebanon, and Syria-Turkey borders, where many refugees are fleeing from state violence. This border violence is sure to become a powder keg for potential crises as Turkish Prime Minister Tayyip Erdogan has already denounced the Syrian forces firing over the border into Turkey, wounding four Syrian refugees and two Turkish refugee camp staff workers. The situation in Lebanon is also on knife’s edge as Hezbollah’s support within Lebanon has been hurt and renounced by Sunnis in Syria because of its previous support of Assad during the uprising.

It is inconceivable that any talks will bring the two sides close to a ceasefire. It is clear that the government forces and shabiha raids have not stopped one bit. This conclusion is not a very surprising event, as Assad has pulled this bluff before. Many opposition leaders have already rejected the U.N. plan as the bloodletting has not abated one bit, and Assad still refrains that his forces are battling terrorist groups bent on destabilizing the country. Once the deadline passes on Thursday and the provisions have not been met, what is left on the table for diplomacy?

Looking ahead, it is extremely unclear as to what the international community will decide on Syria. The commitment of Russian and Chinese governments to stop the violence does not put them directly behind the opposition. In a meeting with the Walid Muallem, Syria’s foreign minister, Russia’s foreign minister, Sergei Lavrov, wants equal international pressure on the opposition to lay down their weapons. While they may be for sanctions or strongly worded decrees, I would not bet the house on Chinese or Russian support of any kind of U.N. led peace keeping ground forces. The Local Coordinating Committees of Syria have called for the SNC/FSA fighters to comply with the six points of the U.N. plan, which would bring their plight in to a clearer view while the Syrian government forces continue with their horrific non-compliance. Perhaps this is one way in which international sentiment will crystallize in the coming days.

If the deadline passes and Assad continues to kill his own citizens in ever greater numbers there will surely be an even greater groundswell of Syrian hawks in the U.S.; whether it be to aid the opposition through arms, air strikes, or an international ground force. Only the last option would have any real means of the success the hawks desire. Arming the Free Syrian Army would ensure much more bloodshed on both sides, prolonging the civil war, and entrenching each side’s positions. Arms in such instability could even produce even more sectarian violence. Aiding escalation would invariably pin the bloodshed on the intervening. Air strikes have all but been proven ineffective, as it did little to hurt Gaddhafi’s forces in Libya. Al-Assad’s army is even bigger and more conventional than Gaddhafi’s army. The last option, using ground troops to force a regime change, would most likely devolve the region into many more unintended consequences than even the Libyan campaign had (destabilizing its neighbors and causing a civil war in Mali). And while the most likely for regime change, would also be the most likely to end with a reconciliation worse than we started with.

The West has a moral obligation to support the Syrian opposition in the face of mass murders of the men, women, and children of Syria, but that support has to be checked by rational plans for a more stable outcome lest we have another Libya or Iraq on our hands. We know that the U.S. government’s goal is to dethrone Assad and clip off another Iranian satellite, but using our own military forces would defeat any gains of such an occurrence. The risks are too high and this is a test to see whether or not America can resist from inserting its military influence in any and every global conflict. While a Syria less in the hands of Iran is in America’s interest, it may not be in the best interest of the region. A Sunni majoritarian ruled Syria would further polarize the Saudi Arabia Sunni satellites and Iran and its Shi’a client states. We can, however, use our efforts to secure borders and aid countries like Turkey and Lebanon with the huge influx of predicted refugees. This type of non-intervening goodwill may pay dividends with the sentiment of many Middle Easterners.

At the engrossing Why Nations Fail blog run by Daron Acemoglu and James Robinson;

Back in the 1950s development economists viewed poor countries as being stuck in various types of “poverty traps”. The basic idea was that poverty tends to breed poverty. And poor countries just happened to be poor and trapped in poverty. The most popular version emphasized the availability of capital. Poverty made saving and capital accumulation impossible, according to this view, and as a result, it persisted — come to think of it, there are still some who subscribe to this view, but we are digressing….

One of the most famous versions of this thesis was Paul Rosenstein-Rodan’s “Big Push” thesis. Rosenstein-Rodan’s argument was similar to what many others in the 1950s and 60s formulated: development was about moving people from “backward” to more productive “modern” sectors of the economy. And this could only happen if everyone coordinated their behavior and increased their investments — so the Big Push required a big push in capital accumulation.

One thing that all of these theories had in common— and, digressing again a little bit, one thing they share with several current theories of economic development — was that they were only about economics. Politics and institutions didn’t matter; only “economic fundamentals” mattered. The ones Rosenstein-Rodan emphasized were how much a society saved and how much foreign aid they got (which in the 1950s and 1960s was assumed to simply add to capital accumulation).

Of course, things didn’t quite work out that way. In fact, many of the economies about which Rosenstein-Rodan was bullish are not much richer today than they were in 1961. Liberia and Haiti’s economies contracted since then. Angola, Kenya, Nigeria and Uganda haven’t done so well either. We of course know that Afghanistan, India and Pakistan grew more slowly than South Korea, Taiwan, Thailand and Singapore. Argentina and Haiti were no match for Costa Rica, the Dominican Republic and Panama.

The main reason why Rosenstein-Rodan got it so wrong is because he completely ignored the role of institutions and politics.

Now the thing is that, though most economists today would espouse more sophisticated theories than those of Rosenstein-Rodan, much of development economics — especially when it comes to the practice of development — still ignores institutions and politics.

These two know economic development and if they say this kind of fundamental thinking is still widespread then that is an egregious problem since looking at solely economics gives such massively missed forecasts as Rosenstein-Rodan. Acemoglu and Robinson focus on extractive institutions a lot and the politics of how they keep countries mired in the same economic underdevelopment. To me the divergence in economic development makes a lot of sense for all formerly colonized countries. African nations, in particular, were treated vastly dissimilar based on which European nation was in charge of their institutions. Since women’s education and literacy is an incredibly important component for economies to jump-start development, looking at women’s educational attainment levels seems like a place to start forecasting. For example, colonial African educational policies differed which affects those countries well after colonial rule. Countries formerly under British control have a much greater percentage of women at all levels of educational attainment than countries formerly under French control. Luckily Acemoglu and Robinson are helping to spread the type of approach needed to continue the upward trajectory of economic development rather than seeking gain from an economic standpoint which does not see the whole picture.

The March BLS Non-Farm Payroll numbers came in with expectations of 205K, but hit just 120K today. The unemployment rate did fall from 8.3% to 8.2%, mainly due to the fact that there are nearly 88 million Americans not in the labor force, a record high. January was revised down to 275K while February was revised up to 240K.

Free Exchange via FT Alphaville’s view on the miss;

There is a 90% chance that employment rose by between 20,000 and 220,000 jobs. The change in the number of unemployed from February to March was probably between (roughly) -400,000 and 150,000, and there’s a good chance that the unemployment rate is between 8.1% and 8.5%. Reported changes for important subsectors are too small relative to the margin of error to be worth discussing.

A revision might make the number look better, but that will not help the economy feel better. We are so far from the old “normal”, that it really does seem that this is the new “normal.”

Will another month of less than stellar growth numbers reverse the Fed’s recent opposition of a new QE?

The Republican party just cannot step back from the same W. Bush ideology that led them to launch a decades long War on Terror. Most recently there is the presumptive Republican Presidential Candidate, Mitt Romney’s ridiculous gaffe, in the spirit of 1945, that Russia is our “number one geopolitical foe.” This could be relegated to the annuls of gaffe, but of course his adviser’s have the chutzpah to say that this Russophobia is a carefully thought out foreign policy. Luckily everyone basically takes Romney’s harping as a joke, except of course, Romney and the rest of the Republican Party doubling down on their take that you are either “with” or “against us.” Russian President Dmitry Medvedev praised the Obama Administration’s efforts on the U.S.-Russian “reset”, saying, “these have perhaps been the best three years in relations between our two countries over the last decade.”

Part of the problem may be that the Republican Party is unwilling to admit that the U.S. is not a global hegemon, and thus cannot impart its foreign policy objective with impunity. Compromise and selectivity are necessities in this day and age. A lot of the hullabaloo may also just be anti-Obama campaign riffraff, but foreign policy rhetoric from the Right comes from the ideology of American exceptionalism. Thus, anything close to a multipolar world scares them into feeling that American power is waning. More pieces in the pie means a smaller slice for America. And in a world with bipolarity, it must be the West that is leading the East. Romney’s campaign talk amounts to building up geopolitical bogeymen while he should be focusing on plans for international economic cooperation. All in all, Romney may pivot back during the general election, but his recent hawkishness surpasses many on the Right.