Results for “China” 2938 found
Nothing to Envy
Based on hundreds of interviews with escaped North Koreans, the novel-like Nothing to Envy is a fascinating portrait of North Korea, a sociological investigation of how a totalitarian state operates and a love-story with an O. Henry like ending. Here is one stunning excerpt that describes a defector as she crosses over into China.
Dr. Kim staggered up the riverbank. her legs were numb, encased in frozen trousers. She made her way through the woods until the first light of dawn illuminated the outskirts of a small village.…
Dr. Kim looked down a dirt road that led to farmhouses. Most of them had walls around them with metal gates. She tried one; it turned out to be unlocked. She pushed it open and peered inside. On the ground she saw a small metal bowl with food. She looked closer – it was rice, white rice, mixed with scraps of meat. Dr. Kim couldn’t remember the last time she’d seen a bowl of pure white rice. What was a bowl of rice doing there, just sitting out on the ground? She figured it out just before she heard the dog’s bark.
Up until that moment, a part of her had hoped that China would be just as poor as North Korea. She still wanted to believe that her country was the best place in the world. The beliefs she had cherished for a lifetime would be vindicated. But now she couldn’t deny what was staring her plain in the face; dogs in China ate better than doctors in North Korea.
Highly recommended. I will say more in future posts.
Hat tip: Bryan Caplan.
Assorted links
Assorted links
1. Can a woman lobby a guy she has already rejected?
2. The Baltimore Poe house might be closing.
3. What should Obama have done in 2009?
4. Are the Chinese liberals in decline? (link now fixed)
5. Scott Adams: “A lack of creativity always looks like some other problem. If no one invents the next great thing, it will seem as if the problem
is tax rates or government red tape or whatever we’re blaming this week.”
On the Debt Deal and the unBBA
TIME has five economists react to the debt deal, Mohamed El-Erian, Douglas Holtz-Eakin, Simon Johnson, Stephen S. Roach and yours truly.
Holtz-Eakin really works his apocalyptic imagery:
The river of entitlement red ink courses through a broken budgetary landscape. America is borrowing $58,000 every second—more than the median income of its households—and the gross debt already exceeds the level (90% of gross domestic product) that has historically been seen as toying with danger. Even worse, the federal debt promises to explode in the next decade, which will surely result in a Greece-style debt crisis. Erskine Bowles, co-chair of the President’s fiscal reform commission has called it the “most predictable crisis in history.”
When the crisis inevitably arises, the painful memories of 2008—panic; no credit; monthly job losses in the hundreds of thousands; Main Street businesses shuttering their windows and closing their doors; highly-qualified college graduates despairing of ever finding real work—will seem quaint and mild by comparison.
Stephen S. Roach wonders what will happen as China rebalances.
For China, the fiscal crisis and Great Recession was a wake-up call — a signal to rebalance away from unsustainable external demand toward untapped internal consumption. Such efforts now appear to be underway. And that’s where it comes full circle. China, the world’s biggest surplus saver, gets it. It will now save less and consume more. Conversely, the United States, with world’s biggest savings deficit, doesn’t get it. At least, that’s the message to take from the disappointing outcome of the debt ceiling debate.
…Absent the Chinese buyer of Treasuries, who will step up and fill the void? And on what terms? That latter point is key. With increasingly skittish foreign lenders now likely to require concessions in the form of a weaker dollar and higher U.S. interest rates, there will be new pressures on U.S. inflation and growth.
The timing of Roach’s comments are odd since interest rates are falling madly. On the other hand, the Chinese credit rating agency did just downgrade US debt.
I discuss the virtues of an unbalanced budget amendment. I won’t repeat what I wrote earlier but here are a few added remarks:
The idea of an unbalanced budget amendment is not new. Sweden’s government has been required since 2000 to budget for a 1% surplus over the business cycle. Since implementing their unBBA, Sweden has successfully brought their budget into balance and created a surplus.
Even more ancient sources are supportive of an unBBA. In the Bible, Joseph doesn’t advise the Pharaoh to balance the budget instead he tells the Pharaoh, save during the seven fat years so you are prepared for the seven lean. An unbalanced budget amendment reflects this simple and ancient wisdom.
For more, Ed Dolan has a good post on Sweden’s fiscal rules. See also this IMF paper for an extensive look at fiscal rules around the world. A hat tip to Ennuigogo.
Assorted links
1. Netflix revenue vs. Blockbuster revenue, graph, sorry folks it is in nominal terms!
2. Is government about the supply of public goods?
3. “It is a science fair project, but it turned out very well for me.” And he has a blog, good post on the Apollo program.
5. How is China doing as an innovator?
6. Profitable biases of NBA referees; interesting hypothesis, although I am not convinced the referees are the active factor.
Update on the credit rating agency vigilantes
It’s not the default that strikes the most fear in the White House and Congress these days. It’s the downgrade.
…what really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor’s, that Barack Obama could go down in history as the president who presided over his country’s loss of its gold-plated, triple-A bond rating.Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs, but it’s not just that. It would be a psychic blow to a nation that already looks over its shoulder at rising economic powers like China and wonders, what’s gone wrong? And it would give the president’s Republican rivals a ready-made line of attack that he’s dragging the country in the wrong direction.
The full story is here. These vigilantes are real, but they are being scorned, dismissed, and moralized about rather than heeded.
The bottom line is that the nation’s long-run fiscal outlook matters now, even though you’ve had many top economists telling you for years that it does not. I know all about the stability of Japanese bond rates following their credit downgrade. In the American case, the mechanisms by which the long run matters can be as simple as Presidents seeking reelection and stubborn, irresponsible Republicans, not to mention spooked global markets latching on to scary focal points.
I see two lessons:
1. Moralizing about Presidents seeking reelection and stubborn, irresponsible Republicans does not remove their analytic impact.
2. The nation’s long-run fiscal outlook matters now.
*Stealth of Nations*
The author is Robert Neuwirth and the subtitle is The Global Rise of the Informal Economy. Excerpt:
The merchants here are Chinese. But most of the customers, like Chief Arthur, are from Africa. The trade is generally brisk — on Fridays it can be overwhelming — and it’s accompanied by what seems like a permanent sound track: the rasp of unspooling packing tape and the whir of currency counters. Each box that leaves the market is heavily sheathed in plastic tape — to ensure a secure seal and to make it hard to tamper with. And the economy here, as in almost all haphazard markets around the world, is cash-only. All payments are made in yuan, and, as the largest denomination in Chinese currency is one hundred yuan — worth about $14 — people making big deals carry massive bundles of cash. Chief Arthur, for instance, who was carrying a wad of four hundred hundred-dollar bills, had to convert them into almost three thousand hundred-yuan notes — a stack of bills large enough that he needed a briefcase or duffel bag to carry it around.
Much of this book draws from Nigeria, China, and Ciudad del Este in Paraguay. Black markets are a well-worn topic, but I found a lot of the material here to be fresh and vital. The book is due out in October.
Assorted links
1. How to maximize the value of Larry Summers, and the interview is here.
2. This superhero cartoon spans many excellent themes.
3. The Age of the Infovore is now out in a Penguin India edition.
4. A crude look at some mortgage agency cumulative default rates.
5. Markets in everything, invisible art.
A realistic portrait of Argentina
…beyond the stellar growth numbers, the picture is mixed. To start with, the boom owes much to global factors. Amid a surge in global prices, Argentina is a leading food commodities producer, with agriculture making up 35 per cent of foreign sales. Furthermore, not only is China clamouring for Argentina’s natural resources, but the middle class in neighbouring Brazil – its main trading partner – are also avidly buying cars, its biggest manufacturing export.
“The terms of trade are now at a historic high. This is the best possible world for Argentina,” says Lucio Castro of Cippec, a Buenos Aires-based think-tank. “But take out the natural-resource intensive sectors and productivity in the rest of the economy is bad and informality extremely high.”
Unemployment, at 7.4 per cent in the first quarter, is low, but investment is lacklustre – 19.4 cent of gross domestic product. Meanwhile, productivity is “not bad, it’s dismal”, says Mr Castro.
Moreover, following years of underfunding, the country’s once admired education system is a shadow of its former self.
Repeat after me three times: real shocks really, really matter. That adds up to six “reallys.” The link is here.
Marginal Revolution and the Martial Arts
It surely ranks high in the annals of the improbable that the August 2011 issue of Black Belt: The World’s Leading Magazine of Martial Arts contains an article (not online) in which your loyal authors are featured. Mark Hatmaker, writes:
“I’ll borrow the phrase “marginal revolution,” a term coined by economists Tyler Cowen and Alexander Tabarrok. This esteemed duo defines marginal revolution as the tiny changes that can be made to a system that result in large changes at the end point–gold vs. silver, for example. These tweaks, these marginal improvements, are what steadily accrue into large rewards.
…Once you gain a fundamental level of skill and conditioning, you must make tweaks to nudge your progress upward. As a marginal revolutionary, you must recognize that small is fine, that shaving off one-tenth of a second can be an eternity and that one-eighth of an inch can be a great distance. Every gain is important, no matter how small.
The picture is from the Shaolin Temple. Here are previous MR posts on Kung Fu.
Hat tip to Carl Close.
Assorted links
The Art of Bribery
Interesting piece on bribery in China. The following four scenarios all have counterparts elsewhere but, as relayed by the author, in China the elegance of the art and the elegance of the bribe are all brought together with true appreciation.
The First Scenario:
The corrupted official can sell a fake painting at any rigged gallery. After coordinating with the official, the briber will go to the designated gallery and buy it at the agreed price plus the commission of the gallery owner. All of the three parties know that the painting is fake, but eventually they are all benefited. This fake painting can be reused and it can go through another bribery circulation of other “elegant” buyers and sellers.
The Second Scenario:
The briber puts a real and expensive painting at the gallery. The gallery marks down the price as if it were a fake painting. The official buys it as if he has the greatest bargain on earth. Sooner or later, the official can resell it at the right place, at the right time, and at the right price.
The Third Scenario:
The briber visits the official and gives him/her a real or fake painting as a present. Three days later, a seemingly unrelated person knocks the door of the official and buys that particular painting at an unreasonably high price. This buyer is actually a trusted subordinate of the briber, and, by doing so, the whole process does not involve the gallery whose owner will certainly ask for a commission.
The Fourth Scenario:
There are rigged auction houses all over China and they become the most suitable places for elegant corruption. The briber, first of all, gets a fake painting either from a gallery or a fake painting factory. Then, s/he provides relevant document proof of scholars and experts to take care of the problem of authenticity. These scholars and experts are paid to confirm the authenticity of this fake painting. They falsify every historical detail, evidence of painting style and scientific verification of the materials used. The forged painting is then given to the official as a gift and is auctioned at a very high price. Eventually, there is always someone coming from nowhere who wins the bid. Again, the bidder is a trusted person of the briber. These auction houses get hush money before the whole corruption process is completed.
Hat tip: Daniel Lippman.
Brazilian consumer debt
The average rate of interest on consumer lending has jumped from 41 per cent in 2010 to 47 per cent most recently in May 2011. This rise from an already elevated level reflects the cumulative effect of tightening by the Brazilian central bank in order to contain inflation.
The consumer debt service burden, which stood at 24 per cent of disposable income in 2010, is now slated to rise to 28 per cent in 2011.
This compares with 16 per cent for an “overburdened” US consumer and a mid-single digit reading for other emerging markets such as China and India.
In short, the cash flow burden is astronomical and rising.
We calculate that the debt service burden for the so-called “middle class” in Brazil has now breached 50 per cent of disposable income…
Read more here. Loan delinquencies, by the way, are rising, and that is in a rapidly growing economy. Is it a good or bad thing that their real interest rates are twelve percentage points higher than in some of the wealthier nations?
Sentences to ponder
“US interest rates are near zero, UK interest rates are near zero, Japanese rates are near zero and Brazilian rates are 12.25 per cent – I would say that’s the crux of the matter,” said Neil Shearing of Capital Economics in London.
Here is more. Is it time to short commodities?
Assorted links
1. The economics of the NBA lockout.
2. Do migrants improve their hometowns through remittances?
3. Yet where are the bond market vigilantes? Few people invoke this concept consistently. Explaining such apparent tensions is exactly why every columnist should have a blog.
5. Left-wingers love graduate school, conservatives do not as much (pdf).