Quotulatiousness

January 10, 2012

What a difference a decade makes

Filed under: Economics, History, USA — Tags: , , , — Nicholas @ 10:53

Megan McArdle reports from her business school’s ten-year reunion on the fates of her fellow MBA students:

It was my 10-year reunion at the University of Chicago Booth School of Business. Obviously I wanted to see if people had gotten fatter, balder, and wrinklier. (Surprisingly, not really.) But I also wanted to know what had become of us, and our careers.

Ten years ago, we graduated into a country where the Twin Towers were still standing, Webvan was a going concern, and the unemployment rate was 4.5 percent. Many of us headed to New York or other cities to become what Tom Wolfe, in The Bonfire of the Vanities, called “the Masters of the Universe” — the financiers who can earn lottery-size sums on a single deal. Others went to Silicon Valley start-ups, or became the consultants who worked with them. I couldn’t find anyone at the reunion who admitted to trading dodgy residential mortgage-backed securities, but we participated in all the other madness of two decades of financial froth—and got smashed in two crashes.

We weren’t the people who inflated the bubbles; we were the ones hired, and then fired, by those people. We were the ones who happened to be standing next to the guy who was pushing the buttons when everything went to hell.

[. . .]

I have a theory about what happened to us, and our nation: when too much money is piled together in one place, it starts to decay, and as it does, it emits some sort of unidentified chemical that short-circuits the parts of your brain controlling common sense. When my class matriculated in 1999, ads for a firm called Discover Brokerage featured a tow-truck driver whose passenger notices in the cab a picture of the home — an island — that the driver has purchased with his fabulous online-trading profits. The passenger looks taken aback while the driver muses, “Technically, it’s a country.”

What’s even more amazing than the fact that this ad was ever made is that this sort of triple-distilled balderdash could intoxicate a large group of very smart people at one of the nation’s top finance schools.

Oh, don’t get me wrong: none of us was simpleminded enough to take those ads literally. Oh, ho-ho, no, not us! No, we made only the most erudite and sophisticated sorts of mistakes, like gang-rushing banking internships, and telling ourselves we were “consumption smoothing” as we used student loans to finance vacations. Believe it or not, many of us talked frequently about the echoes of 1929 — but we still didn’t necessarily act on that insight, as the markets cratered in the early 2000s.

For my summer 2000 internship at Merrill Lynch, I chose the technology-banking group despite having watched the March 2000 NASDAQ crash from the lobby of Merrill’s auditorium, where we were supposed to be undergoing orientation. Ignoring the helpless, angry flapping of the HR staff, a bunch of us spent the afternoon telling nervous jokes and watching the eerie flicker that billions of dollars give off when they evaporate on live TV.

When “everyone agrees” about excessive executive pay, something else is being sold

Filed under: Economics, Media, Politics — Tags: , , , , , — Nicholas @ 09:45

Tim Black on the amazing unanimity of thought that the most pressing problem in the world right now is big pay packets for corporate CEOs:

Occupy London, the Labour Party, the Lib-Con coalition, the Archbishop of York… It doesn’t matter to what or to whom you look, you’ll find the same simple-minded sentiment: the root cause of our economic and social problems is greed. The greed, that is, of bankers, of overpaid CEOs, of those at the top of society who simply have and want too much.

[. . .]

If there was ever a striking indication of the deadening political conformism, the dearth of social imagination, that so characterises our contemporary impasse, it is there in the sheer ubiquity of the Greed-is-Bad argument.

So what is driving this pervy, across-the-board obsession with the pay packets of super execs? It’s certainly not impelled by a desire to get to grips with the economic crisis that holds most of the developed world in its grip. No doubt there are some simple-minded souls in a state of Occupation who believe that blaming and bashing company CEOs or bankers is somehow to understand the economic crisis. But just as the remuneration packages of a few bankers and bosses did not bring about the current crisis, so seeking to limit their wages, to impose a maximum national wage, will not solve the crisis. And while £3million or £4milllion for a CEO’s annual salary does seem huge, such figures amount to very little in the grand economic scheme of things. As the Investor’s Chronicle points out: ‘The average FTSE 100 CEO is paid £3.9million year. But this is only one four-thousandth (0.025 per cent) of the average market capitalisation of a FTSE 100 company.’

The current fashion for attacking large pay packages, then, is economic neither in impulse nor intent. Rather it is driven, in the first instance, by a narrow moralism. For its numerous proponents, either in party offices or in spartan tents, it represents an easy posture, a cheap critical pose. One Guardian columnist virtually gave the game away: ‘Like phone hacking or MPs’ fiddled expenses, this is an issue that only needs to be described to seem reprehensible.’ That is, to the right-thinking types on liberal broadsheets, criticising large salaries is just too good an opportunity to miss. Indeed, like attacking tabloids and MPs, it is a mark of one’s membership of the right-thinking to have a pop at the really, really rich.

But there’s a deeper, darker impulse driving this cheap attack on exorbitant pay packages than just preening self-righteousness. And that’s the belief that the large pay packets pursued by the undeservedly wealthy are a symbol of a society-wide pathology. The cheap attack on top earners is also an attack on the material aspirations of the rest of us. We are, in short, just too greedy now to be left to our own unregulated, uncontrolled devices. A report from the High Pay Commission — a grandiosely monikered body established by centre-left think tank Compass, a few trade unionists and business secretary Vince Cable — makes this clear by drawing the highly questionable link between this putative celebration of ‘greed’ — or ‘an elevation of the concept of the rational self-interested man to unprecedented heights’ — and the August riots. ‘It should not perhaps surprise us’, the report states, ‘that the rioters took the trappings of wealth that they could not afford — the TVs and designer trainers. It reflects a sense of entitlement that pervades society from the very top to the bottom.’

Political geometry

Filed under: Economics, Government, History, Liberty — Tags: , , , , — Nicholas @ 09:16

L. Neil Smith on the inadequacy of “left” and “right” to properly describe the political spectrum:

When I took my one and only Political Science course in college, in 1966, the instructor told us that when certain opinions show up in the polls he and his colleagues conduct — chiefly those of admirers of Ayn Rand, or followers of Henry George — their opinions have to be thrown out, since they don’t fit anywhere on the traditional political spectrum.

This is science? When the data refuse to fit the model, throw out the data, rather than the model? If this is “science”, it’s exactly the same “science” that brought us Global Warming. And it is from at least forty years of corrupt, lazy, irresponsible academics like this poli-sci instructor that we get our present generation of news media “personalities”.

Let’s throw out the model, instead, and see what happens.

Imagine a triangle, with a lower right corner, a lower left corner, and a corner, or apex, at the top. Even at this stage — when the picture is far from complete — such a diagram comes closer to representing the real shape of our political landscape than a simple line.

Label the right-hand corner paternalistic. Those who occupy this corner, and the positions they take, tend to be autocratic, strongly oriented to the past, concerned with what they believe (often falsely) is history and tradition, and with, above all, punishment, which they offer as a cure for every social ill. Their mysticism tends to focus mostly on an ancient, angry father-god. In their view, others should be adequately organized, even regimented, properly disciplined, and controlled. They maintain a posture of perpetual threat-display. People of the right either want to be spanked, or to do the spanking, themselves.

Think of the patrician George F. Will or the late William F. Buckley.

Individuals who occupy the left-hand corner are inclined to be maternalistic, majoritarian — as long as the vote goes their way — oriented toward the present (they call it “living in the now”), and prone to medicalizing social problems and “healing” everybody whether they wish to be “healed” or not. They substitute animism and other mystical nonsense for traditional religion. They believe people must be watched over, taken care of, institutionalized, and medicated. When their veneer of altruism is stripped away, they become hysterical and violent. People of the left either want to be mommied, or to be Mommy, themselves.

Think of Nancy Pelosi, Harry Reid, or the repulsive Elizabeth Warren.

Inhabitants of the upper corner of the triangle typically think of themselves as self-determined, self-motivated, individualistic, and oriented toward the future. It is less common for them to be mystical or religious than otherwise. They display a live-and-let-live attitude of respect toward others — believing they should be left alone rather than meddled with — and favor restitution rather than punishment or therapy in the case of wrongdoing. The other two positions, right and left, are basically infantile. The apex is the only place for real adults.

Good examples would be LeFevre, Robert A. Heinlein, or Dr. Mary Ruwart.

It should be reasonably clear by now that the left-hand corner is where socialism lives — if you want to call it living — the ethical view that the rights of the group come before those of the individual. However the right-hand corner is often misidentified, as with the case of Mussolini, Hitler, and the Nazis. Look over the characteristics associated with it: the correct political expression of the right is monarchism. Long after revolutions in the 18th and 19th centuries, loyal advocates of the king are still out there, pressing his royal case.

January 9, 2012

Calling it “austerity” doesn’t make it so

Filed under: Economics, Government, Media, USA — Tags: , , , , , — Nicholas @ 10:11

Nick Gillespie provides a reality check on some particularly imaginative use of “austerity” in describing the end of the Bush administration and the start of the Obama administration:

In constant 2010 dollars, the federal government spent about $2.3 trillion in 2001. By 2010, the total was around $3.6 trillion. And though the federal government has not passed (and will not pass) a budget for a third straight year, the two plans currently on the table envision spending either $4.7 trillion or $5.7 trillion in 2021. The lowball figure comes from the budget that passed the GOP-controlled House last spring. The higher number comes from President Obama’s budget proposal.

If austerity is the new black, the news has yet to reach the people who actually wield power in the capital. And if the Washington elite aren’t serious about cutting spending, they sure aren’t hell-bent on cutting red tape and regulations either.

For self-evident reasons, George W. Bush and the Republicans soft-pedaled the fact that, over the course of his presidency, he hired 90,000 net new regulators, signed the Sarbanes-Oxley bill that radically complicated corporate accounting practices, passed a record number of “economically significant” regulations costing the economy $100 million or more and, says economist Veronique de Rugy, spent more money issuing and enforcing federal regulations than any previous chief executive.

Obama is continuing the trend by increasing employment at regulatory agencies by more than 13 percent and issuing 75 major rules in his first two years.

All this happened during what Frank calls “the golden years of libertarianism.” So I have problems understanding what he is talking about when he issues dicta such as “free-market theory has proven itself to be a philosophy of ruination and fraud.”

January 8, 2012

George F. Will on big government

Filed under: Bureaucracy, Economics, Government, Politics — Tags: , , , , — Nicholas @ 10:54

Even fans of bigger government should recognize the accuracy of this short summary:

Liberals have a rendezvous with regret. Their largest achievement is today’s redistributionist government. But such government is inherently regressive: It tends to distribute power and money to the strong, including itself.

Government becomes big by having big ambitions for supplanting markets as society’s primary allocator of wealth and opportunity. Therefore it becomes a magnet for factions muscular enough, in money or numbers or both, to bend government to their advantage.

The left’s centuries-old mission is to increase social harmony by decreasing antagonisms arising from disparities of wealth — to decrease inequality by increasing government’s redistributive activities. Such government constantly expands under the unending, indeed intensifying, pressures to correct what it disapproves of — the distribution of wealth produced by consensual market activities. But as government presumes to dictate the correct distribution of social rewards, the maelstrom of contemporary politics demonstrates that social strife, not solidarity, is generated by government transfer payments to preferred groups.

[. . .]

The tax code, government’s favorite instrument for distributing wealth to favored factions, has been tweaked about 4,500 times in 10 years. Generally, the beneficiaries of these changes are interests sufficiently strong and sophisticated to practice rent-seeking.

Not only does redistributionist government direct wealth upward; in asserting a right to do so it siphons power into itself. A puzzling aspect of our politically contentious era is how little contention there is about the ethics of coercive redistribution by progressive taxation and other government “corrections” of social outcomes it considers unethical or unaesthetic.

The Joyce Estate provides useful ammunition to those opposed to longer copyright terms

Filed under: Books, Economics, Law, Media — Tags: , — Nicholas @ 10:42

The works of James Joyce have finally (re-)entered the public domain:

On the last day of 2011, the 70th anniversary year of his death, James Joyce’s work finally passed out of copyright. It was the dawn of a new age for Joyce scholars, publishers and biographers who are now free to quote or publish him without the permission of the ferociously prohibitive Joyce estate.

Over the past 20 years the right to quote from or publish Joyce’s work has been a matter of increasingly heated debate. The estate’s most vocal trustee, Stephen Joyce, the author’s grandson, earned himself the reputation as the most intractable defender of any copyright in modern times. His truculence (often verbal and colourful) towards those wishing to quote or publish his grandfather’s words dated from the mid-1970s, when biographer Richard Ellmann published some of Joyce’s “pornographic” letters to his wife Nora and some suggestive ones to a clandestine lover in Zurich. On becoming a trustee, Stephen was determined to prevent any further such revelations.

He outraged a meeting of Joyce scholars in Venice in 1988 by announcing that he had destroyed around a thousand letters to Joyce from his troubled daughter Lucia, as well as some to her from Samuel Beckett, the love of her young life. The following year he forced Brenda Maddox to delete a postscript concerning Lucia from her biography Nora: The Real Life of Molly Bloom. However, in 1991, the 50th anniversary of his death, Joyce’s copyright lapsed and for a time he could be quoted freely without permission. But in 1995 copyright in Europe was extended to 70 years, so the rights reverted to the estate.

[. . .]

The intention of the literary guardian is often not just to protect the reputation and prestige of an individual or family but also to safeguard the integrity of a work against experimentation, revision or trivialisation. Samuel Beckett, for example, refused to allow women to take the leading roles in Waiting for Godot, an indignant Orwell stopped his publisher publicising Nineteen Eighty-Four as a romantic thriller and the Joyce estate refused Kate Bush permission to include the final, seductive words of Molly Bloom from Ulysses in a song.

But there is also a certain power and prestige in being the literary executor of a famous writer. People pay heed to one’s words, come cap-in-hand to one’s door with requests, and the trustee of manuscripts is free to grant or deny favours with a lordly nod or dismissive gesture. It is a power jealously guarded and sometimes remorselessly implemented.

January 7, 2012

Conrad Black: Current events vindicate Margaret Thatcher

Filed under: Britain, Economics, Europe — Tags: , , , , , — Nicholas @ 11:25

The current situation in Europe proves that British prime minister Margaret Thatcher was right all along:

Though it is probably happening too late to be overly gratifying to her, events are piling on to vindicate Margaret Thatcher completely in her reservations about British integration in Europe. Her response to the proposal to reduce Britain to a local government in a federal Europe was, memorably: “No, no, no, and never.” And her reward for her refusal to get on board what was then the thundering bandwagon of Eurofederalism, was to be sent packing by her own ungrateful party, though she was the only British political leader who had won three consecutive, full-term election majorities since before the First Reform Act expanded the electorate in 1832.

She was immensely popular with millions of Britons as a patriotic and courageous leader who took Britain off financial life support, saved it from strangulation by over-mighty, almost anarchistic unions, built a prosperous, home-owning democracy, threw the Argentinians out of the little corner of the British Empire they had wrongfully seized (the Falkland Islands), and played a starring role in winning the Cold War.

[. . .]

And as she liberalized the economy; imposed a free, secret ballot for labour strikes; lowered all taxes; privatized industry, housing, airports, almost everything except the National Health Service and the BBC; jolting economic growth resulted. Unfortunately, its most conspicuous exemplars included many successful entrepreneurs and financier types who offended British sensibilities by their garish and spivvy ostentation. The basis of Margaret Thatcher’s support was the Daily Telegraph-reading, gin and tonic-drinking, cricket-loving middle class, the backbone of the nation. But her enemies identified her with an infelicitous combination of Colonel Blimp fuddy-duddies and sticky-fingered, vulgar parvenus.

She had a somewhat hectoring manner in debates, and was notoriously impatient with what she considered pusillanimity from senior colleagues, sometimes calling cabinet members “blanc-manges,” or “suet puddings,” or even “spineless, boneless, men” (not necessarily inaccurately). Naturally less known was her exquisite courtesy and unaffected and egalitarian kindness to subordinates and strangers. It annoyed feminists that she was such a traditionalist, and weak men that she was a strong woman. But she triumphed by perseverance and courage; to the end, though a stirring speaker, she was nervous before a speech. She was a strong woman, but not at all a mannish one.

January 6, 2012

Ten years later: Ron Paul’s 2002 predictions

Filed under: Economics, Government, Liberty, USA — Tags: , , , , — Nicholas @ 10:31

January 5, 2012

The MPAA over-cooks their numbers to support SOPA

Filed under: Economics, Law, Media, Technology, USA — Tags: , , , , , — Nicholas @ 09:53

Techdirt reports on the work done by Julian Sanchez at the Cato Institute to actually scrutinize the “loss” numbers used by the MPAA:

One of the things we’ve noticed in the debate over SOPA and PIPA is just how the other side is really lying with statistics. We’ve done a thorough debunking of the stats used by the US Chamber of Commerce to support both bills, as well as highlighted the misleading-to-bogus stats used by Lamar Smith in his support of the bill.

But every day, more bogus stats are rolled out. Julian Sanchez, over at the Cato Institute, has decided to dig into one specific bogus number, the supposed claim of $58 billion in “losses,” and to show how the numbers don’t hold up to any scrutiny. In fact, using the details of where the numbers came from, Sanchez makes the case that SOPA won’t save a single net job for the US economy. Read on to find out how.

First off, the $58 billion comes from an absolutely laughable report for the Institute for Policy Innovation, done every year by Stephen Siwek at a firm called Economists Incorporated. We’ve challenged this ridiculous number in the past, but not to the level of detail that Sanchez has here. He starts out by bringing up (as we have many times), Tim Lee’s excellent debunking of the ridiculous “ripple effects” that Siwek/IPI always use, despite them being a trick to double, triple, quadruple, etc count the same dollars [. . .]

January 4, 2012

Santorum is the “Spock with a beard” universe version of Ron Paul

Filed under: Economics, Government, Liberty, Politics, USA — Tags: , , , , , — Nicholas @ 09:55

Michael Tanner enumerates the Santorum attributes his evangelical conservative fans seem to find most attractive:

There is no doubt that Santorum is deeply conservative on social issues. He is ardently anti-abortion, even in cases of rape and incest, and no one takes a stronger stand against gay rights. In fact, with his comparison of gay sex to “man on dog” relationships, Santorum seldom even makes a pretense of tolerance. While that sort of rhetoric may play well in Iowa pulpits, it will be far less well received elsewhere in the nation.

[. . .]

Santorum’s voting record shows that he embraced George Bush–style “big-government conservatism.” For example, he supported the Medicare prescription-drug benefit and No Child Left Behind.

He never met an earmark that he didn’t like. In fact, it wasn’t just earmarks for his own state that he favored, which might be forgiven as pure electoral pragmatism, but earmarks for everyone, including the notorious “Bridge to Nowhere.” The quintessential Washington insider, he worked closely with Tom DeLay to set up the “K Street Project,” linking lobbyists with the GOP leadership.

He voted against NAFTA and has long opposed free trade. He backed higher tariffs on everything from steel to honey. He still supports an industrial policy with the government tilting the playing field toward manufacturing industries and picking winners and losers.

In fact, Santorum might be viewed as the mirror image of Ron Paul. If Ron Paul’s campaign has been based on the concept of simply having government leave us alone, Santorum rejects that entire concept. True liberty, he writes, is not “the freedom to be left alone,” but “the freedom to attend to one’s duties to God, to family, and to neighbors.” And he seems fully prepared to use the power of government to support his interpretation of those duties.

A call to reform the welfare state … from the pages of the Guardian

Filed under: Britain, Economics, Government — Tags: , , , , — Nicholas @ 09:27

Brendan O’Neill links to Liam Byrne’s column in the Guardian, suggesting not only is Byrne right, but that he doesn’t go far enough:

The Left won’t thank him for it, but in the Guardian Liam Byrne has tried to kickstart a potentially interesting debate about the welfare state. For many well-off Liberal commentators — who, notably, have no interaction with the welfare state, except in the sense that buddies of theirs probably manage huge chunks of it for a fat wage packet — the welfare state is a sacred thing and criticism of it is the equivalent of blasphemy. Yet Byrne surely has a point when he says the welfare state is in need of “radical reform” and we should seriously explore how to get “communities working again”. Indeed, I would go further and say that the expansion of the welfare state into more and more areas of less well-off people’s lives is one of the worst developments of recent years, seriously zapping resourcefulness and social solidarity from working-class communities.

Byrne’s mistake is that he seems motivated by a narrow desire to save the state money. The financial cost of social welfare is “simply too high”, he says, and we should “bring down [the] benefits bill to help pay down the national debt”. That is a Scrooge’s approach to the problem of the welfare state. The really terrible cost of ever-expanding welfarism is measured not in cash, but in the impact welfarism has on working communities, on those who have been made increasingly reliant upon the charity, largesse and therapeutic meddling of the massive and monolithic welfare machine. Relentless financial and therapeutic intervention by the state into poor people’s lives has, not surprisingly, had a pretty devastating impact both on social interaction and individual aspiration.

When people come to be more reliant on the state than they are on each other, community bonds fray and social solidarity falls into disrepair. When the struggling mum looks to the state for help, rather than turning to family, friends, neighbours, the end result is that she becomes more isolated from her community. When a 17-year-old school student short of cash turns to the state for a weekly handout, he never really develops skills of self-sufficiency or dependency on friends and neighbours.

January 3, 2012

Gary Johnson tops ACLU campaign report, beating Barack Obama and Ron Paul

Filed under: Economics, Liberty, Politics, USA — Tags: , , , , , , — Nicholas @ 08:56

The American Civil Liberties Union is doing something different this year to assist voters in finding the candidates who most clearly support civil liberties. This “ACLU Campaign Report Card” highlighted the good and bad aspects (at least in the ACLU’s view) of each of the current GOP candidates and President Obama:

We may surprise some people in that the scores in the report card — which is viewable here — don’t divide along party lines. In fact, the report card reveals a deep ideological rift in the GOP.

Our experts found that Republicans Ron Paul and Jon Huntsman earned solid scores, with four, three and two torches across most major categories, although both received one torch on marriage equality and none on reproductive rights.

President Obama also achieved solid scores or better across most categories, including four torches for ending the “Don’t Ask, Don’t Tell” policy. However, he received just one torch and none for keeping Guantanamo Bay open and continuing unconstitutional surveillance under the PATRIOT act, respectively.

Republican-turned-Libertarian Gary Johnson scored even better than Paul, Huntsman and Obama, earning four and three torches on most major issues. They stand in stark contrast to the other major GOP candidates, three of whom — Michele Bachmann, Mitt Romney and Rick Santorum — didn’t earn a single torch in any of the seven major categories.

Rick Perry and Newt Gingrich received torches in only one category: two torches each for promoting a humane immigration policy, including their support for a path to legal status for some long-term residents.

Ultimately, the good news from the report card is that genuine support for our constitutional values and freedoms has no partisan boundaries. Indeed, Ron Paul’s recent surge in Iowa has been attributed to his adherence to the Constitution and civil liberties.

January 1, 2012

Bargain hunting: pay only $103,000 for a car costing $2.2 million

Filed under: Economics, Environment, Government, Technology — Tags: , , , , , — Nicholas @ 12:41

They’re pretty exclusive: so far they’ve only made 239 of them, and they start at $103,000 per unit. They have, however, taken on a bit of US federal government funding:

It’s another example of USA tax dollars at work — in Finland:

From ABC News, Oct 20th, 2011:

    With the approval of the Obama administration, an electric car company that received a $529 million federal government loan guarantee is assembling its first line of cars in Finland, saying it could not find a facility in the United States capable of doing the work.

    Vice President Joseph Biden heralded the Energy Department’s $529 million loan to the start-up electric car company called Fisker as a bright new path to thousands of American manufacturing jobs. But two years after the loan was announced, the company’s manufacturing jobs are still limited to the assembly of the flashy electric Fisker Karma sports car in Finland.

Let’s do the math.

239 cars produced for 2012 model year.

$529,000,000 USD in Government loans

That works out to $2,213,389 (2.2 million) per car.

Selling price $103,000 USD, that leaves only $2,110,389 in taxpayer funded overhead per vehicle. And, they’ve only sold 50 so far.

Such a deal.

Of course, when your promotion strategy revolves around a sitcom based on Charlie Sheen, such things are bound to happen

Gordon Chang still bearish on China

Filed under: China, Economics, Politics — Tags: , , , — Nicholas @ 10:54

He predicted the fall of the Communist China within a decade — back in 2001 — but he isn’t worried that his prediction hasn’t come true yet:

Why has China as we know it survived? First and foremost, the Chinese central government has managed to avoid adhering to many of its obligations made when it joined the WTO in 2001 to open its economy and play by the rules, and the international community maintained a generally tolerant attitude toward this noncompliant behavior. As a result, Beijing has been able to protect much of its home market from foreign competitors while ramping up exports.

[. . .]

Don’t believe any of this. China outperformed other countries because it was in a three-decade upward supercycle, principally for three reasons. First, there were Deng Xiaoping’s transformational “reform and opening up” policies, first implemented in the late 1970s. Second, Deng’s era of change coincided with the end of the Cold War, which brought about the elimination of political barriers to international commerce. Third, all of this took place while China was benefiting from its “demographic dividend,” an extraordinary bulge in the workforce.

Yet China’s “sweet spot” is over because, in recent years, the conditions that created it either disappeared or will soon. First, the Communist Party has turned its back on Deng’s progressive policies. Hu Jintao, the current leader, is presiding over an era marked by, on balance, the reversal of reform. There has been, especially since 2008, a partial renationalization of the economy and a marked narrowing of opportunities for foreign business. For example, Beijing blocked acquisitions by foreigners, erected new barriers like the “indigenous innovation” rules, and harassed market-leading companies like Google. Strengthening “national champion” state enterprises at the expense of others, Hu has abandoned the economic paradigm that made his country successful.

Second, the global boom of the last two decades ended in 2008 when markets around the world crashed. The tumultuous events of that year brought to a close an unusually benign period during which countries attempted to integrate China into the international system and therefore tolerated its mercantilist policies. Now, however, every nation wants to export more and, in an era of protectionism or of managed trade, China will not be able to export its way to prosperity like it did during the Asian financial crisis in the late 1990s. China is more dependent on international commerce than almost any other nation, so trade friction — or even declining global demand — will hurt it more than others. The country, for instance, could be the biggest victim of the eurozone crisis.

Third, China, which during its reform era had one of the best demographic profiles of any nation, will soon have one of the worst. The Chinese workforce will level off in about 2013, perhaps 2014, according to both Chinese and foreign demographers, but the effect is already being felt as wages rise, a trend that will eventually make the country’s factories uncompetitive. China, strangely enough, is running out of people to move to cities, work in factories, and power its economy. Demography may not be destiny, but it will now create high barriers for growth.

H/T to Chris Myrick for the link.

December 31, 2011

A billion here, a trillion there, pretty soon you’re talking about imaginary money

Filed under: Economics, Government, USA — Tags: , , — Nicholas @ 11:35

Mark Steyn on the crossing of the psychological Rubicon:

At the end of 2011, America, like much of the rest of the Western world, has dug deeper into a cocoon of denial. Tens of millions of Americans remain unaware that this nation is broke – broker than any nation has ever been. A few days before Christmas, we sailed across the psychological Rubicon and joined the club of nations whose government debt now exceeds their total GDP. It barely raised a murmur — and those who took the trouble to address the issue noted complacently that our 100 percent debt-to-GDP ratio is a mere two-thirds of Greece’s. That’s true, but at a certain point per capita comparisons are less relevant than the sheer hard dollar sums: Greece owes a few rinky-dink billions; America owes more money than anyone has ever owed anybody ever.

Public debt has increased by 67 percent over the past three years, and too many Americans refuse even to see it as a problem. For most of us, “$16.4 trillion” has no real meaning, any more than “$17.9 trillion” or “$28.3 trillion” or “$147.8 bazillion.” It doesn’t even have much meaning for the guys spending the dough: Look into the eyes of Barack Obama or Harry Reid or Barney Frank, and you realize that, even as they’re borrowing all this money, they have no serious intention of paying any of it back. That’s to say, there is no politically plausible scenario under which the 16.4 trillion is reduced to 13.7 trillion, and then 7.9 trillion and, eventually, 173 dollars and 48 cents. At the deepest levels within our governing structures, we are committed to living beyond our means on a scale no civilization has ever done.

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