Tuesday, June 16, 2009

The Group of Friends of the UN Secretary General on the UN Observer Mission in Georgia Resolution

Joint Statement by the Group of Friends of the UN Secretary General on the United Nations Observer Mission in Georgia Resolution
Bureau of Public Affairs, Office of the Spokesman
US State Dept, Washington, DC, Tue, 16 Jun 2009 17:35:10 -0500

Following is the text of a Joint Statement by the Spokespersons of the United Kingdom, the United States, Germany, and France as members of the Group of Friends of the UN Secretary General.

Begin Text:

We deeply regret Russia’s decision to veto a resolution on the United Nations Observer Mission in Georgia (UNOMIG), which has resulted in the termination of the Security Council mandate for the Mission after 15 years of valuable service providing military transparency on the ground, promoting the human rights of the local population, and seeking to create conditions for the voluntary, safe, and dignified return of internally displaced persons and refugees. We note that Russia had twice accepted a reference to UNSCR 1808 since the August conflict, in resolutions 1839 and 1866. The closure of the UN mission, like that of the OSCE mission, is a setback to international efforts to resolve this conflict.

We call on all parties with forces on the ground to exercise the utmost restraint and to abide by the August 12 and September 8 ceasefire agreements. We call on all participants in the Geneva talks to commit themselves to continuing efforts to find a peaceful and political resolution to the conflict and to alleviate the plight of refugees and IDPs. We reaffirm our firm support for the European Union Monitoring Mission.

We also reiterate our strong support for Georgia's independence, sovereignty and territorial integrity within its internationally recognized borders.

PRN: 2009/602

The Language of Macroeconomics: The National Income Accounts

Paraphrasing Macroeconomics: Understanding the Wealth of Nations. By David Miles, Imperial College, and Andrew Scott, London Business School. Chichester, UK: John Wiley & Sons, 2005

Chapter 2
The Language of Macroeconomics: The National Income Accounts

2.1 What Do Macroeconomists Measure?

At the foundation of macroeconomics is a concern with human welfare[, but it] is notoriously hard to calculate, particularly in macroeconomics where the relevant measure is the welfare of society as a whole. Even if we could accurately measure individual welfare, how can we compare levels of happiness across individuals and construct an aggregate measure?

Rather than try and directly measure welfare, macroeconomists take a short cut. They focus on the amount of goods and services—the “output”—produced within an economy. The justification for this is simple—if an economy produces more output, then it can meet more of the demands of society. Using output as a measure of welfare [now begs] many questions[, since there is no consensus on values and half of the population worries about the environment, inequality, etc.]

These questions suggest that output will only be an approximation to wider concepts of welfare ... But producing more output should enable a society to increase its standard of living.

2.2 How Do Macroeconomists Measure Output?

> Real vs Nominal output

Chained weights

GDP deflator = Nominal GDP/Real GDP

Real GDP focuses on how production in the economy changes by using constant prices. Nominal GDPchanges because of changes in production and changes in prices.

2.3 Output as Value Added

Value added is the difference between the value of the output sold and the cost of purchasing raw materials and intermediate goods needed to produce output.

2.4 National Income Accounts

Output, income and expenditure

AD: aggregate demand
AS: aggregate supply

AD = Y output + M imports = C + I + G + X, or Y = C + I + G + (X-M) (net exports)
I = Ik gross fixed capital formation (the new capital stock installed) + Iinventories (output not sold)

Is it true that AD = AS = Y? No:

Desired AD = C + Id + G + X, Id = Ik + Iidesired
Actual AD = C + Ia + G + X, Ia = Ik + Iiactual

---------> Actual AD = AS = Y

GDP can be measured either as value of output produced, the income earned in the economy by capital and labor, or the expenditure on final products.

> GDP or GNI?

GNI = GDP + remittances_nationalcompanies + remittances_nationals + Foreign aid you receive - remittances_foreigncompanies - remittances_foreignindividuals - Foreign aid you give to others

2.5 How Large Are Modern Economies?

Comparing countries' GDP via exchange rates

Comparing countries' GDP taking into account PPP

GDP per capita

2.6 Total Output and Total Happiness

GDP measures economic activity, but is a good measure of standard of living?

There are two separate issues lurking here. The first is a measurement one—is GDP correctly measured (which is not) and, if not, does this reduce its ability to approximate the standard of living? Some see corrections to make:

Families frequently have money earners and people that provide services (cooking, child caring, elderly caring, administration). Purchasing these services and goods in the market is a substantial amount. For 2000, the U.K. Office of National Statistics estimates that compared with GDP of £892bn, household production provided services that would have been worth £693bn if purchased through the market with childcare accounting for £220.5bn.

Another measurement problem for GDP is environmental pollution and the destruction of natural resources.

The second is a conceptual one—even if it is properly measured, does GDP really capture our concepts of welfare? For economists, measures of aggregate output are still the dominant indicators of the standard of living, but alternative measures have been suggested: Human Development Index (HDI).

Although there are these patterns of outliers, the overall correlation remains strong—GDP seems a useful approximation for even broader measures of welfare.


FAST ANWSERS, not checking the literature

1. (Section 2.2) “[An economist] is someone who knows the price of everything and the value of nothing.” (Adapted from George Bernard Shaw.)

Besides mediocre economists, who damage the profession with badly communicated opinions, there are truths (the state of knowledge at least) that are inconvenient for others to hear, and this knowledge seems too cold, rational and unsensitive to the needs of the poor. If 90 pct of the people had an economic education probably the number of bleeding hearts would diminish. Or not.

2. (2.3) Coffee beans cost only a few cents when imported. But to buy a coffee at a coffee bar costs far more. What does this tell you about value added?

3. (2.3/2.4) Try to explain to someone who had never thought about measuring the value of economic activity why the output, income, and expenditure ways of measuring national production should give the same answer. It helps to think of a simple economy producing only two or three different things.

4. (2.5) Would you expect that a country where the share of wages and salaries in GDP was falling, and the share of profits and interest was rising, to be one where consumption as a percent of national income was also shifting? Why? Would you expect the distribution of income to
become more unequal? Suppose the trends were due to demographic shifts, more specifically to a rapidly aging population. Would this change your answers?

5. (2.5) Do you think it is easier to evaluate the relative welfare of different generations of people in one country (by comparing per capita GDP over time), or to compare the relative standards of living in different countries at a point in time (by converting current per capita GDPs into a common currency)?

6. (2.5) How would you treat the activities of criminals in GDP accounting? What about the activities of the police force?

.1 Parasites
.2 A waste of resources, a tax on the economy.

7. (2.6) The Beatles claimed that “I don’t care too much for money, money can’t buy me love.” (Shortly after first making this claim they joined the ranks of the richest people in the world.) Does their claim undermine the use of GDP to measure welfare?


For another day.

We're unable to read our own body language

We're unable to read our own body language
British Psychological Society, Monday, Jun 15, 2009

Reference: Hofmann, W., Gschwendner, T., & Schmitt, M. (2009). The road to the unconscious self not taken: Discrepancies between self- and observer-inferences about implicit dispositions from nonverbal behavioural cues. European Journal of Personality, 23 (4), 343-366 DOI: 10.1002/per.722

A fascinating study has shown that we're unable to read insights into ourselves from watching a video of our own body language. It's as if we have an egocentric blind spot. Outside observers, by contrast, can watch the same video and make revealing insights into our personality.

The premise of the new study is the tip-of-the-iceberg idea that what we know about ourselves is fairly limited, with many of our impulses, traits and beliefs residing below the level of conscious access. The researchers wondered whether people would be able to form a truer picture of themselves when presented with a video of their own body language.

In an initial study, Wilhelm Hofmann and colleagues first had dozens of undergrad students rate how much of an extrovert they are, using both explicit and implicit measures. The explicit measure simply required the students to say whether they agreed that they were talkative, shy and so on. The implicit measure used was the Implicit Association Test. Briefly, this reveals how much people associate ideas in their mind, by seeing whether they are quicker or slower to respond when two ideas are allocated the same response key on a keyboard.

Next, the participants recorded a one minute television commercial for a beauty product (they'd been told the study was about personality and advertising). The participants then watched back the video of themselves, having been given guidance on non-verbal cues that can reveal how extraverted or introverted a person is. Based on their observation of the video, they were then asked to rate their own personality again, using the explicit measure.

The key question was whether seeing their non-verbal behaviour on video would allow the participants to rate their personality in a way that was consistent with their earlier scores on the implicit test.

Long story short - they weren't able to. The participants' extraversion scores on the implicit test showed no association with their subsequent explicit ratings of themselves, and there was no evidence either that they'd used their non-verbal behaviours (such as amount of eye contact with the camera) to inform their self-ratings.

In striking contrast, outside observers who watched the videos made ratings of the participants' personalities that did correlate with those same participants' implicit personality scores, and it was clear that it was the participants' non-verbal behaviours that mediated this correlation (that is, the observers had used the participants' non-verbal behaviours to inform their judgements about the participants' personalities).

Two further experiments showed that this general pattern of findings held even when participants were given a financial incentive to rate their own personality accurately, as if from an outside observer's perspective, and also when the task involved anxiety personality ratings following the delivery of a short speech.

What was going on? Why can't we use a video of ourselves to improve the accuracy of our self-perception? One answer could lie in cognitive dissonance - the need for us to hold consistent beliefs about ourselves. People may well be extremely reluctant to revise their self-perceptions, even in the face of powerful objective evidence. A detail in the final experiment supports this idea. Participants seemed able to use the videos to inform their ratings of their "state" anxiety (their anxiety "in the moment") even while leaving their scores for their "trait" anxiety unchanged."

When applied to the question of how people may gain knowledge about their unconscious self, the present set of studies demonstrates that self-perceivers do not appear to pay as much attention to and make as much use of available behavioural information as neutral observers," the researchers said.