Assorted links

by on March 13, 2013 at 11:29 am in Uncategorized | Permalink

1. History’s greatest monsters.

2. Can China escape the middle income trap?

3. Acemoglu and Robinson respond to Gates.

4. East India Company: the original too big to fail firm?

5. Should musical instruments have passports?

6. Is there anything special about a balanced budget?

NPW March 13, 2013 at 11:53 am

Is there anything special about a balanced Federal budget? How should I know? I’ve never seen one………

libert March 13, 2013 at 1:47 pm

Were you born in 2002?

JWatts March 13, 2013 at 7:51 pm

The US debt has grown every year since 1956.

JWatts March 13, 2013 at 7:52 pm
Ricardo March 13, 2013 at 10:36 pm

That’s not what balanced budget means and you are using the wrong measure of debt anyway. The correct measure to track would be debt held by the public and this did indeed decline from FY 1998 through 2001. See CBO’s historical budget tables for more info.

Brian Donohue March 14, 2013 at 7:55 am

Why is this the correct number? Do you intend to stiff Social Security taxpayers?

Dan Weber March 14, 2013 at 10:47 am

There is no Right Answer, either way. I’ve personally witnessed people suddenly switch from one definition to the other in a manner of minutes if it happened to suit their particular political argument.

TallDave March 13, 2013 at 11:23 pm

They’ve been stealing the SocSec surplus every year. If the executives of a private company budgeted that way, they would be sent to prison.

Floccina March 18, 2013 at 4:36 pm

I disagree Social Security recipients will get what voters and politicians want to give them and that can be changed and so it is not a really debt.

Floccina March 18, 2013 at 4:37 pm

Further than is as it should be. FICA is a tax not a voluntary payment fro some future annuity.

RR March 13, 2013 at 12:11 pm

4. Loved this sentence:
“Here, Chinese tea bought with Bengali money by a British corporation was dumped in the sea by American patriots dressed as “Indians.” This was globalization 18th-century style.”

Rahul March 13, 2013 at 12:12 pm

#3 Acemoglu and Robinson are gratuitously mean and defensive in that response.

Questioning whether your reviewer actually read your book is a cliched yet irritating and unproductive response. Further, if their complaint that reviewers don’t understand their book is serious, sadly they only have themselves to blame for it.

Seth March 13, 2013 at 12:55 pm

I disagree. After reading Gates’ review, I also wondered how much of the book he read.

Also, I don’t believe the authors complained that “reviewers” don’t understand their book, at least not in this piece. They were addressing one reviewer specifically and provided good counters to Gates’ review that I hope Gates considers.

Rahul March 13, 2013 at 1:05 pm

I don’t think their whining was targeted at Gates alone:

“But we spent more than 15 years researching, writing, and thinking about these topics, and we would be thrilled if the reviewers actually read and understood the book in the first place. “

Also, that “15 years” bit was a non sequitur.

Seth March 13, 2013 at 5:01 pm

Which ‘reviewers’ other than Gates do you think they were referencing?

Rahul March 14, 2013 at 12:55 am

Arvind Subramanian? Sachs? Jared Diamond? Dunno. But I’ve seen quite a few not-so-positive reviews of “Why Nations Fail”

Perhaps more relevant, why do Acemoglu and Robinson feel the need to provide a rebuttal to every review of their book out there?

TallDave March 13, 2013 at 11:14 pm

Agreed Seth. If you’ve read the book, it’s almost impossible not to react that way. Gates totally missed the main thrust of the book.

Finch March 13, 2013 at 1:00 pm

FWIW, _many_ reviewers seem not to have read the book they’re reviewing. I often find myself asking “what did you read?” when reading a review of a book I understood. You often get reviews that note only things present in the first few pages of the chapters, for example, often missing caveats and deeper explanations that make up the meat of the book but not the topic sentences. I suspect time pressure plays a role.

Urso March 13, 2013 at 1:24 pm

Reviewers, especially of popular reviews, read under extreme time pressure and can miss some nuance. Bug or feature?

I read too many ripostes that say things like “the authors anticipated this criticism and addressed it in paragraph 3 of page 312.” Well so what? Readers are not going to parse every sentence and footnote of a book. They read for the big ideas and central concepts. Hell even Prof. Cowen stops reading once he has the gist of a book. If your central concept is flawed, that’s your problem as the author.

Put more simply, if the reviewer “misunderstands” your book, odds are high that other readers will too.

Finch March 13, 2013 at 2:19 pm

I don’t really disagree with this.

mrmandias March 14, 2013 at 5:28 pm

There is no “central concept” that doesn’t have some obvious objections to it. The point of a book is to address some of those objections. Otherwise it would be a tweet.

Careless March 13, 2013 at 9:51 pm

On a related subject, Ebert wrote at least one movie review based on Wikipedia of a book and maybe the ads. http://rogerebert.suntimes.com/apps/pbcs.dll/article?AID=/20100324/REVIEWS/100329994 (how to train your dragon)

Dan Weber March 14, 2013 at 11:02 am

By coincidence I saw this book on a nightstand this morning and remember how the movie had basically no relation to the book. (Which I don’t mind, but sure seems to bug some other people.)

Why do you think Ebert based his review on the book?

derek March 13, 2013 at 12:16 pm

One year’s deficit is effectively paid off by later economic growth, especially if a government is investing in public goods like roads and schools.

Nope. All it does is keep the debt servicing costs as a proportion of GDP the same. The costs go up, but so do the revenues. Presumably.

“Over a long period of time, you’d have a higher standard of living if you moved to a balanced budget and stayed there,” said Joel Prakken, a senior managing director at Macroeconomic Advisers, a forecasting firm in St. Louis. “But you suffer some short-run pain, and you don’t want to inflict that when the unemployment rate is already high, the economy is still recovering from the legacy of the Great Recession, and the Federal Reserve has used up most of what’s in its quiver.”

The Federal Reserve over the last few years has been doing two things; capitalizing the banks and controlling interest rates so that the Treasury doesn’t have to deal with increasing debt costs. The ability of the Fed to respond to economic situations is constrained by the second imperative.

When the monetary authorities are forced to set policy to counteract fiscal irresponsibility you are over the hump into low growth stagnation territory.

RR March 13, 2013 at 12:18 pm

1. So Nick Bolton is History’s greatest monster??

anon March 13, 2013 at 12:33 pm

a few different ways to interpret the link…no clue what the intended meaning was: 1) No. this is too PC a take down of Bilton, leave those ego centrics be as they are people too. 2) Yes. over-optimization of life and treating people, including self, like machines (as Bilton seems to aspire to) saps the life blood out of humanity, all the ‘great’ monsters de-humanized others. 3) Who knows, and who cares? both articles had amusing bits in them, so just enjoy them.

Alex' March 13, 2013 at 4:59 pm

I don’t get all this backlash. Voicemail is annoying- it conveys no information that a text or even just a missed call doesn’t. If I didn’t also use my personal cell phone for work, I’d turn voicemail off or tell people to text me instead in my message.

Ekaluvya March 14, 2013 at 1:00 am

I would like to know the connection between the link title and the article. Who exactly are the monsters?

Gerry March 14, 2013 at 10:19 am

I’m pretty sure he meant it tongue-in-cheek…polite people being so horrible…get it

dan1111 March 13, 2013 at 12:34 pm

I’m a little confused by the title as well, but it did get me to read an article that turned out to be hilarious. So, no complaints here.

Nick March 13, 2013 at 12:36 pm

1. This was pure gold!
“My friends cooked me a dinner when I came back from my trip to Europe. But the potatoes they served weren’t cooked in duck fat. Why don’t they just kick me to death with steel-toed boots?”

libert March 13, 2013 at 1:52 pm

1. Jimmy Carter?

(reference: http://en.wikipedia.org/wiki/Marge_in_Chains)

mw March 13, 2013 at 2:48 pm

I really like the claim that “incredible period of growth and innovation in China between 800 and 1400″ “didn’t translate into sustained economic growth.” So if 600 years of Chinese history isn’t “sustained,” I assume all claims about US history, the totality of which has yet to reach 600, are pointless.

Jared N March 13, 2013 at 2:57 pm

That seemed a little strange to me too. 600 years of growth sounds pretty sustained to me. Are there regions of the world that have had uninterrupted periods of continual growth for longer than that?

Seth March 13, 2013 at 6:21 pm

My guess is that they meant sustained beyond 1400.

They claimed that the institutions turned more extractive and closed beyond 1400, but I believe they did credit absolutism for the growth prior to that. I was expecting to learn that growth period was built on inclusive institutions that then became extractive, but I don’t believe the authors make that claim. In my own mental model, which I’m sure isn’t always true, wealth generated by inclusive institutions often spawns extractive institutions that then spend that wealth down. But, I’m sure some absolutists can have good ideas, at least for awhile.

TallDave March 13, 2013 at 11:19 pm

They seem to have meant “:why didn’t China have the Industrial Revolution?”

To put China 800 – 1400 in perspective, the economic growth of the United States in the 1990s was probably larger both in absolute per capita and absolute aggregate terms than that entire 600 years. The Industrial Revolution was something unlike anything that had come before, the Singularity of its time.

Finch March 14, 2013 at 9:42 am

> The Industrial Revolution was [...] the Singularity of its time.

I like that.

Brock March 13, 2013 at 3:13 pm

2. Is Shanghai still middle income?

There’s a less than 1% chance of them getting stuck in the middle-income trap, in my opinion. Countries stuck in the middle-income trap have non-diverse, often resource-based economies. Or they have some cultural or legal feature which restricts investment or entrepreneurialism. China is none of these things. Yes, their government is imperfect. So was South Korea’s and Taiwan’s at this point in their development. But consider that China is designing, building and exporting (in some cases) its own nuclear power plants, aircraft carriers, computer systems, cars, machine tools, skyscrapers, etc. They are highly entrepreneurial as a culture, are good savers, and care deeply about educating their children. Obstacles such as pollution or political reform will not stop them any more than it stopped America or Britain.

Dismalist March 13, 2013 at 7:26 pm

Middle income trap? Recently read somewhere that the trap observations were clustered around 1973/74 and a little later. Seems an oil price hike temporarily reduces growth. Who’d a thunk it?

TallDave March 13, 2013 at 11:12 pm

3. As Ryan Avent said earlier: “Rather, they would say that Mr Gates is skipping the hardest questions: why some countries go down the infrastructure, education, and market-pricing path while others don’t.”

Gates’ review did not show much comprehension of the material, I’m not sure he actually read the book, perhaps not even a Cliff notes version prepared by an aide.

If you haven’t read the book, I strongly recommend it, very persuasive. I was more in the culture side of the argument but they present a compelling case that institutions shape culture much more so than the other way around. This might someday be remembered as one of the most important books of the time.

Rahul March 14, 2013 at 3:04 am

“This might someday be remembered as one of the most important books of the time.”

Now that’s one assertion I’m very skeptical about.

Time will tell……

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