Like the rational consumer I am, I see no reason to buy Bryan Caplan’s new book The Myth of the Rational Voter when there are skimmable summaries available for free online. As I understand it, Caplan’s thesis is that decisions about economic policy are too important to be left to ordinary people, because they are generally too stupid to understand what’s good for them. So democracies should have less influence over economics, and the size of government should be reduced according to the sagacious prescriptions of wise economists such as the author himself, who should perhaps be given some sort of ceremonial robes to wear (okay, I made up the last bit).
Caplan’s prime example is trade. People are too protectionist for their own good, he says, and this is due to...
Shame on you, Brad De Long. Not for slagging off Anthony Giddens, but for doing so from a position of ignorance: ignorance not just of sociology (which is nothing new in an economist) but, apparently, of international economics. Here is Giddens:
Market fundamentalism is disappearing from the scene. The stage is set for a return to the social. After all, even the IMF these days gives social and political factors a significant place in development processes …
And here is Brad:
I would be less alarmed by Tony Giddens if I were sure that he knew that of the two Bretton Woods institutions it is the IMF–the “Fund”–that is focused on international capital flows, reserves, and exchange rates; and that it is the IBRD–the “World Bank”–that...
I really like the sound of Joseph Stiglitz’s new book (Making Globalization Work), at least from the description of his recent World Bank talk on it by Christine at PSDblog:
The theme was the ways in which globalization has contributed to rising inequality, both across and within countries, and what to do about it. Rather than a rising tide to lift all boats, globalization is better described as “a riptide that can destroy lots of small, unprepared boats” … I’ll just pull out a few of his comments:
* The global intellectual property regime is a matter of life and death for developing countries. Negotiators of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) “signed the death warrants for thousands of people in...
I’m a sucker for a beautiful chart, and New Economist is right - this one from the IMF’s World Economic Outlook chapter on commodities is a humdinger.
China does rather stand out there, doesn’t it? This seems to provide graphic support for Dani Rodrik’s argument that “China has somehow managed to latch on to advanced, high-productivity products that one would not normally expect a poor, labor-abundant country like China to produce, let alone export”.
I like this kind of ‘trend’ chart, with income or some other indicator of development on the X axis, because it means we can pick out patterns that seem common to countries at a similar stage of development regardless of when they each reached that stage (a similar illustration for trade...
Dani Rodrik is producing some very interesting stuff these days. Below the fold are extensive extracts from his new paper Industrial Development: Stylized Facts and Policies. Trust me, it’s more exciting than it sounds. The main message, for me, is the importance to development of increasing the ’sophistication’ of manufactured exports, and the importance to that in turn of learning, spillovers and technology transfer. There’s also some good theory on why the results of import liberalisation have been so disappointing in many cases. He contrasts the failure of governments like those in Latin America who, following orthodox advice, tried to just ‘get out of the way’ of businesses and watched their economies stagnate with the deliberately interventionist...
Like Adam Smithee, I think this paper from Francisco Rodríguez is pretty important. Basically, he says that most of the cross-country growth regressions beloved of so many economists are seriously and inherently flawed, but we don’t necessarily know how flawed or in which direction. The reason, as far as I understand it, seems to be the presence of “strong non-linearities in commonly used growth data sets”, in other words the problem that a given proportional change in a particular factor will have a different effect on growth depending on the level of that factor or of income.
Rodríguez finds that “the set of assumptions necessary to justify fitting a linear function to the data is so restrictive as to practically make the linear specification the true...
What a good idea: the ID21 service of Institute of Development Studies is running a series of articles summarising ‘classics’ of development research. Here’s the initial batch:
Unfair trade: commodity producing poor countries lose out
‘Industrialised and developing countries do not benefit equally from
international trade and investment.’ This was the argument Prof Hans
Singer put forward in 1950. He argued that poorer countries became
locked into exporting primary products (food and raw materials) to
support industrial advance in richer countries. This resulted in a
long-term transfer of income from poor to rich countries
********
The meaning of development
The focus on national income as a target for achieving poverty reduction
avoided the real...
Last week Harvard University hosted a conference on ‘Equality and the New Global Order’, with an great collection of speakers on some interesting topics. Jon Mandle has an excellent write-up at Crooked Timber and you can download many of the papers here....
It’s funny, but in almost the same breath that that they have been using to denounce (with what seems to be increasing urgency and even desperation) John Kenneth Galbraith as irrelevant AND a threat to the western civilization AND a commie-lover, the blogosphere’s free-marketeers can’t help but remind me how right he was about many things (though certainly not all) and how relevant he remains.
Take the twin anti-May Day rants unleashed by the Adam Smith Institute and Tim Worstall. First Madsen Pirie informs us without qualification that is only “the wealth-generating power of capitalism” that has improved workers’ lots, presumably as opposed to all that nasty freedom-stifling stuff like paid holidays, maternity leave, workplace safety regulation,...
I was very sad to hear of the recent death of Hans Singer, but what a life he had! He received his doctorate in 1936 under Keynes after a recommendation from Schumpeter, and until a week before his death at ninety-five was still teaching. Having fled to Britain from Nazi Germany, his application for citizenship was supported by Keynes, William Beveridge, Archbishop Temple and the vice-chancellor of Manchester University (’overkill’, thought Singer) and, when interned in 1940, Keynes pressed for his release. He contributed to the war effort by researching the German economy, after which he worked for the Ministry of Town and Country Planning and then in New York for the United Nations, returning to Britain at 59 for a remarkably lengthy and productive tenure as a research...