Assorted links



A discussion of "growth-killing socialist economics" needs Harold Laski to be mentioned. Laski's role in posthumously screwing India's economy in its first 50 years is under-appreciated.

Bhagwati's piece is just bizarre. His argument against Grameen is based on (i) the fact a microfinance operation in India does not get enough recognition and (ii) that Bangladesh has not had an Indian style economic boom. Leaving aside the impression that India can do no wrong, what does do either have to do with Grameen? Doesn't Bangladesh's economic condition make it that much more critical to preserve an institution like Grameen? Is Grameen really a "rival" to the government? Here's the cherry on top: after saying that Hasina is "the daughter of the first president of Bangladesh" he notes without irony that "she is one of the few women to have gained the premiership not by inheriting it, but in her own right". Hmmmmm. Bhagwati is usually pretty solid but this piece suggests a major axe to grind.

You're right. Bhagwati neither details any of his ideas nor presents any evidence. I wonder whether Tyler would have linked to this column if John Smith had written it.

#3: "When the House rejected TARP, the stock market fell 7 percent. When Congress eventually passed TARP, the stock market fell 40 percent. I know which of those two numbers I prefer. I don’t claim that the 7 percent was totally caused by the rejection of TARP. I don’t claim that all of the 40 percent was caused by the passage of TARP."

Isn't this just sophistry? You can object to TARP through moral hazard, but this is a bit much.

Tyler, regarding TARP, I hope you can link to studies of how ALL policies implemented since early 2008 have affected the financial system. In the interview, Garett Jones talks largely about what government should have done on the basis of what was known in September 2008. I'd like to know the ex-post evaluation of the effects of TARP AND ALL OTHER POLICIES on the financial system and how what we know today could have affected the decisions taken in 2008 and early 2009. My guess is that the FED policies have been more important than TARP to strengthen big banks and other financial institutions, perhaps to the point that thanks to these policies the banks and the other institutions have been able to repay TARP (unfortunately the many accounting tricks make too costly to assess what has happened).
Most likely, serious studies have yet to be finished, but I hope you can at least link to ongoing studies.

Note that Hayek fought for the Austro-Hungarian Empire on the Italian from during World War I

Its nice to read Garret Jones make blanket statements like ". Normal economics tells me that when the government takes over an industry, it’s bad."

Stocks up, unemployment down. There is no jobless recovery. The jobs and the recovery are happening together. Yet every economic blogger in the world wants to argue that this time it's different. Let's see what the unemployment rate is once stocks get back on trend. Oh yeah: and when someone finally buys a house.

gramen was expeled form his bank

Tyler, why did you link to Bhagwati's awful piece? Much as I love his work, here he has done an absolute hatchet job. He seems utterly ignorant of Bangladesh's economic history. The Grameen Bank was a pioneer for financial liberalisation - it was the first Bank with (partly) private ownership allowed after the socialist madness of Sheikh Mujibs government that nationalised all banks and industry. Bhagwati criticises Bangladesh for not following India's example of liberalisation and hence having no growth, but Bangladesh liberalized in the 1980's, before India, and as a result it has grown by a respectable 5% a year with almost no volatility since 1990, and by 6% the last few years. Bangladesh's agricultural liberalisation in 1988/89 went much further than anything India has done and has led to significant improvements in rural poverty. So while I certainly agree with Prof. Bhagwati that liberalisation is good, his claim that Bangladesh hasn't had any is bizarre.
As to the Grameen Bank, it got very little foreign money for its core banking operation except a little seed money from IFAD and the Ford foundation in the 1980s. The major donor money went into new ancillary ventures, and was not used to subsidize the bank; as far as I know, the criticism was directed against shifting liquidity between different Grameen companies. That may have been a bit too creative, but there is no evidence of misappropriation, and such shifting around of liquidity between projects is not unusual in development work.

Two responses to the Bhagwati article from Bangladeshi bloggers:

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