by Tyler Cowen
on July 17, 2013 at 1:28 pm
in Uncategorized |
1. Edinburgh’s most mysterious restaurant.
2. ZMP and gender.
3. America is flat.
4. Granny’s gold bars and dong.
5. Drone quadcopter drops ring at wedding ceremony.
6. The Chinese gdp numbers.
Believing Chinese GDP numbers down to the third decimal place is a big mistake. An even bigger mistake is to think that Chinese growth is ‘over’ or even drastically slowed. The hard numbers (physical production of coal, electricity, cement, global export share, etc.) show continued strong growth. Every successful nation in Asia has reached at least 60% of U.S. per-capita GDP.
Why would anyone expect China not to do at least as well? At 60% of U.S. per-capita GDP, China’s economy will be 160% larger than the U.S.
Third decimal place? He is claiming that the most significant digit is bogus and, assuming the data he uses is correct, it’s hard to conclude that he is wrong.
“Why would anyone expect China not to do at least as well? At 60% of U.S. per-capita GDP, China’s economy will be 160% larger than the U.S.”
Asked and answered?
“Asked and answered?”
I am not sure what you mean. Do you think China will fail to reach 60% of U.S. per-capita GDP? Why? China has a long list of very strong fundamentals. Perhaps as strong, if not stronger, than any country in history at its level of development.
I’m always surprise when people assert this about China, because their institutions are uniformly terrible. Their education system is rife with cheating, the judiciary a tool of the Chicoms, the political system highly extractive and unrepresentative, innovation rare, competition with state industries assiduously repressed, the environmental problems probably the worst any country has ever experienced… about the only thing China ever had going for it was the fact they were transitioning from a completely dysfunctional Maoist basket case to a one-party crony-capitalist kleptocracy, which allows for large economic gains but has a definite ceiling well below the likes of Mexico.
Eventually they will run out of empty cities to build. China is not going to collapse, but much of their “growth” has been padded with pointless government projects. Throw in a credit bubble that dwarfs what brought down the US economy and there is every reason to be both skeptical and bearish.
China still has vastly less housing per-capita than the U.S. The empty cities are rather likely to fill. China still has a much larger rural population (as a percentage) than the U.S. That percentage will fall to U.S. / European / Developed Asia levels.
The empty cities look huge. China was 1.344 billion people to occupy them with.
“The empty cities are rather likely to fill.”
Why do you think that? Do you believe that if the U.S. government replicated Manhattan in the plains of North Dakota that it would fill up?
“China still has a much larger rural population (as a percentage) than the U.S.”
Why are you sure that moving to a city randomly built in the middle of nowhere will improve the lot of the rural population? Other than the current lot of the rural population being so bad.
Even if the empty cities do feel up, it’s irrelevant if the future occupants don’t or can’t pay market rates for the housing stock. Without sufficient payments, the housing stock won’t get maintained, the infrastructure won’t be maintained and the entire edifice will become a giant ghetto.
What exactly is the point in taking 100s of millions of Chinese peasants and concentrating them into giant housing project?
You could build ghost cities in Bangladesh or Chad, too. The problem isn’t filling them with people, but rather whether those people are productive enough to afford the investment.
You could build ghost cities in Bangladesh
The people of Bangladesh would very much like to see you try.
Why would we expect China to be as successful as South Korea or Japan when they’re run by the same Communist Party that rules Vietnam and North Korea?
Those numbers are probably not as “hard” as you think.
#5, for once a drone is a welcome guest at a wedding.
As an American this makes me want to both chuckle and cringe.
can’t wait for the first wedding crash.
Have you met Alan Peacock ?
#3: One the flaws of economics is to assume all the other stuff does not matter. America has been going through a Cultural Revolution the last fifty years. Old weird America, as John Derbyshire calls is, is being replaced with the dreary monoculture of the managerial state. The fact that this is turning up in the economic makeup of the country is to be expected. The slow in population movement naturally follows. After all, people move to something better, not something the same.
Thirty-five years ago we were frequent customers of a different Edinburgh mystery restaurant – Georgian (as in Caucasus not Confederacy). When it served, it served in a former steamie (public washhouse). By golly the food was a delight and preposterously good value. The atmosphere was jolly too, as we sat around communal tables sluicing Bulgarian red. Them wuz the days.
Could the increase in ideological concentration in certain regions have an impact on mobility? Are Blue Californians less likely to move to Dallas in 2012 than they were in 2002?
#4: if the VN currency develops a futures market, will it be more advantageous to be long dong or short dong?
I’ll guess longer is better…
6th: Just use nominal GDP data in dollars. Let the world market measure the Chinese GDP. If China has an overvalued currency, producing an overvalued nominal GDP, the market forces will either force China to devalue it’s currency or China will have to deflate. While in the short run the exchange rate can be temporally overvalued or undervalued, the long run trend is clearly shown by the nominal GDP data, for instance, it’s increased from 6% of the US level in 1980 to 60% in 2012.
Though I admit it is much harder to figure out Chinese GDP on the short run.
Whether it’s lasering lines on their palms to fool palm readers or tinkering with GDP numbers or buying answer books for the SATs East Asians do not care about how they arrive at a result as long as they get the result. There is a pervasive, deep culture of cheating with East Asians.
What will be interesting like the Soviet Union is how long the Chinese economy can go on as usual with phony numbers. There might be a collapse like the Soviet Union but the Chinese want to keep this system so they will try to pilot a soft landing where they release bad news sporadically instead of at once causing an upheaval.
6. Another problem is that like U.S. GDP during WW II, China’s GDP doesn’t tell the whole story — their pollution is already worse than any industrialized country ever experienced. Median living standards may not even be rising anymore. I’m surprised more people on the left haven’t made an issue of this.
To what extent does the transfer of psychologically fragile people out of institutions and into the population affect labor force participation rates. Men who would have been institutionalized back in the day (and kept out of both the numerator and the denominator) now show up in the denominator but have little prospect for being part of the labor force. Obviously this would only be a small part, but it struck me on number 2.
Comments on this entry are closed.
Previous post: The Puzzling Return of Glass-Steagall
Next post: How does insurance eligibility affect labor supply?
Email Tyler Cowen
Follow Tyler on Twitter
Email Alex Tabarrok
Follow Alex on Twitter
Subscribe in a reader
Follow Us on Twitter
Marginal Revolution on Twitter Counter.com
Get smart with the Thesis WordPress Theme from DIYthemes.