GDP (PPP) per capita

Power and Happiness (President Obama in India)

Jacques Delacroix Current Events, Economics , , , , , ,

There is widespread confusion around between two ideas that should be easy to separate from each other. I keep bumping into it. I had several lengthy discussions of it with strangers on Facebook. Some were of the left, some of the right. I found it in my morning paper under the pen of no less than columnist David Brooks of the New York Times (“Midwest at Dusk”11/7/1)).

I refer to the confusion between the happiness of a country’s citizens and the country’s standing in the world. David Brooks wrote:

“If America can figure out how to build a decent future for the working-class people in this (mid-Atlantic) region, then the US will remain a predominant power. If it can’t, it won’t.”

Like this.

President Obama’s post- “shellacking” visit to India is a good time to clear the confusion.

It may be that there is some sort of connection between the happiness of a country’s citizens (or some) and being a “predominant power.” It may be but it’s far from obvious. You would have to demonstrate it. It would be hard; casual evidence does not support the idea. Deeper research does not either. Continue reading →

The Oppression of American Labor

Brandon Christensen Current Events, Liberty, Politics , , , , ,

Over at the Real-World Economics blog, economist Edward Fullbrook presents a graph of labor’s demise in the United States as well as an article from Al-Jazeera English titled America in Denial that promotes Fullbrook’s new book.

Fullbrook brings it to the attention of work-weary Americans that they work far too many hours per year compared to other rich societies in the West (there are, of course, no rich societies outside of the West, but that’s a different blog for a different day).

Behold! The cold, hard facts informing American workers of their own oppression! Continue reading →

One Sure Thing About Globalization – The American Motion Pictures Industry World Hegemony Part 3

Jacques Delacroix Economics, History , , , , ,

[Editor’s note: this lecture was delivered to the Leavey Institute of Santa Clara University in 2003. You can find it reproduced in whole here]

Broken Promises

Harm to the poor on a considerable scale occurs when rich countries suddenly violate the principles of free trade they publicly support, on the main. The US government and those of other post-industrial countries will periodically make a show of vaunting the merits of free trade on stages (such as the World Trade Organization) that guarantee worldwide publicity. These actions must encourage at least some of the most enterprising poor in poor countries to produce for distant markets they are not in a position to understand.

When the governments of rich and large entities, such as the US, Japan and the European Union, suddenly inhibit the free movement of products, those enterprising poor people in poor countries suffer, and suffer disproportionately. Thus, the recent passing of new American farm subsidies legislation (in 2002) makes it difficult or impossible for small farmers in the Sahel area of Africa to compete on the world ‘s cotton markets with American growers (Thurow and Kilman, 2002)(6). The steel tariffs erected by the Bush administration – with the full complicity of Congress – must have similar effect on steelworkers in some of the Third World and Eastern European steel-producing countries.

Neither of these policies nor the broken promises they imply, can be easily defended on moral or rational grounds. Directly, it can probably be shown that the economic actors of poor countries who embraced free trade end up worse off than they would be if they had toed to a more parochial (“autarkic”) line. Indirectly, such breaches of faith by powerful rich countries contribute to the stagnation of the Third World by seeming to prove wrong those who adopted a stance leading most surely to economic development: embracers of production for worldwide markets. (In my experience, well-educated defenders of national economic ”self-sufficiency” rarely care to argue against free trade in principle; instead, they rely on evidence that there is no real free trade but a poisonous international game where the dice are loaded against the poor in poor countries. Sometimes, they have a point.)

The American Motion Pictures Industry’s Hegemony Continue reading →

“European Project Trips China Builder”

Brandon Christensen Current Events, Economics, Liberty , , , , , ,

That is the headline of this piece in the Wall Street Journal. An excerpt:

Chinese companies have wowed the world with superhighways, high-speed trains and snazzy airports, all built seemingly overnight. Yet a modest highway through Polish potato fields proved to be too much for one of China’s biggest builders […]

It remains unfinished nearly three years after contracts were awarded to Chinese builders. The Polish government is warning there will be detours around the highway’s “Chinese sections” when the soccer championships begin […]

The project raises questions about Beijing’s strategy of pitching state-directed construction firms as the low-cost solution to the world’s infrastructure needs […]

Covec [the state-run construction company responsible for the failures] was thin on management expertise, lacked financial skills and didn’t understand the importance of regulations and record-keeping in public works projects in the West, according to numerous people involved in the project […]

Organizing actual construction proved harder. To manage the project, Covec brought in Fu Tengxuan, a 49-year-old railway engineer, who spoke only Chinese and appeared to have little authority, telling colleagues that headquarters in Beijing needed to approve even the purchase of an office copier […]

Although the funding of Chinese projects in other areas such as Africa and Asia is often murky, analysts say that Beijing regularly foots the bill […] Continue reading →

The Corporate State and High Liberalism: A Love Story

Brandon Christensen Current Events, Liberty, Politics , , , , , , ,

I have been following the symposium on “free markets and fairness” over at Bleeding Heart Libertarians with some interest. One of the things that has always bothered me about the Left’s despicable tactics concerning liberty is its demagoguery concerning markets. As a former Marxist who has hung out with the right people in the right places, I can assure you that the Left is not so much concerned with the plight of the poor as it is with the plight of the rich.

Once I began to grasp the basic insights of economists (thanks to Ron Paul’s 2008 Presidential campaign) it became increasingly apparent that less regulations and less restrictions are needed in this world in order to help the poor. What I have not understood about my friends on the Left is why they obstinately refuse to acknowledge the facts concerning how markets and the State work. As Deirdre McCloskey has recently pointed out, the narrative of high liberalism is factually mistaken, but this in itself is not enough to convince the True Believers that control over others needs to be abolished.

Two things stand out to me whenever I argue with Leftists: 1) the thin veneer of helping the poor is often used to cover up the base desire for control over others; the high liberal is an authoritarian through-and-through and 2) the Leftist is often unaware of this authoritarianism until you either scratch or cleave him.

Consider the following example. Continue reading →

“Stocks Slammed as Dow Erases 2012 Gains”

Brandon Christensen Current Events, Economics , , , , , , , , , , ,

That’s the title to a headline piece over at CNN.

The Dow Jones industrial average (INDU) plunged 275 points, or 2.2%, the biggest one-day drop since November. The blue-chip index gave up all its gains for the year, and is now 99 points below where it finished 2011. The S&P 500 (SPX) lost 32 points, or 2.5%, and the Nasdaq (COMP) dropped 80 points, or 2.8%.

Ouch. The cause of the plunge?

“The U.S. employment report was simply terrible,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

The May jobs report showed only 69,000 jobs were added to payrolls, less than half the 150,000 jobs forecast by economists surveyed by CNNMoney. The unemployment rate ticked higher for the first time in a year, rising to 8.2%.

I take three things away from this: Continue reading →

Some Mistakes Have Been Made

Brandon Christensen Politics , , , , , , , ,

I just finished up the readings for a class on the history of the modern Middle East. The main book issued is one conveniently written by the professor of the course (James Gelvin) and is aptly titled The Modern Middle East: A History. Below is an excerpt that I think sums up the problems facing the Middle East today:

American policy towards the Middle East [after World War 2] was instrumental in promoting both development and the civic order development was to sustain […] To promote development, the United States adopted a multifaceted approach derived, in good measure, from its own Depression-era wartime experiences.

Ooops.

Here is Murray Rothbard’s America’s Great Depression. Now, I know libertarians are infamous for condescending suggestions to “go read a book”, but I don’t think we can really help it sometimes. Hoover’s interventionist policies and Roosevelt’s New Deal were disastrous for the American economy. Most, if not all, of the Middle East’s problems today can be traced to the institutions currently in place, and these institutions in their turn were created and codified based upon models that had entirely failed the West.

For the record, the developmentalist approach led directly to, you guessed it, economic nationalism and political despotism. You can find a convenient ranking of the world’s states based off of GDP (PPP) per capita here. According to the IMF, the US ($48,387) is ranked 6th in the world (the US also repealed or rebuked many of the Depression-era policies of the Hoover and Roosevelt administrations; the few that remain are among the most pressing problems American society faces today). The world average is $11,489. Egypt is ranked 104th, Iraq is 128th, Iran is 69th (coming in slightly above the world average at $13,053), and Syria is 118th.

Greece: What’s Going On?

Jacques Delacroix Current Events, Economics, Liberty , , , , , , , ,

The Greeks are rioting in the extreme cold. They have been rioting now for weeks to protest austerity measures their coalition government is attempting to impose on them. It’s an emergency government trying like hell to borrow money from richer countries, especially Germany so Greece, the state can pay its bills. The creditors and would-be creditor countries headed by Germany are saying such things as (I am paraphrasing):

You have many more public servants per 10,000 citizens than we (Germans etc, ) have. You will have to reduce the number by so many thousands by such and such a year as a condition of our lending.

Your government’s tax receipt as a percentage of GDP is much smaller than ours. There is also abundant evidence of massive tax cheating that is unheard of in our countries. You are going to have to improve the collection of taxes by such and such. (Note that this say nothing about tax increases.)

The creditor countries are all democracies whose tax-payers have the ability to express what they think about the bailouts of other countries. It’s their money. Their national politicians are lending to a nation-state that my local banker in his best days would not have given a second look to. The long and the short of it is that Greece, the country, is a bad credit risk. That’s why its government would have to pay something like fifteen percent interest if it could borrow money on the open market. For a comparison, I have US Government bonds purchased six years ago that pay 4,6 %. That was considered very good then. It’s even better now.

Note that there is no info about what private Greek concerns have to pay to borrow on the open market. I would not be surprised if they were able to borrow at normal rates. I wonder why this information is lacking. Massive privatization surely looks good with respect to a country where government finances are such a debacle. Big innovations work out best when it’s impossible to say: Situation normal; everything working just fine.

Ordinary Greeks are rioting against the prospect of cinching their belts a lot tighter. They are even thinking Communism again because this all comes as a surprise. For thirty years, they were allowed to believe that Greece was economically more or less a kind of southern version of Germany, not quite as prosperous and productive but pretty damn close and on its way there. Continue reading →