most Chinese wealth is concentrated 200 miles from the coast. The next 500–1,000 miles west is a land of Han Chinese living in Third World poverty. The China that most Westerners think about is the thin strip along the coast. The fact is that China is an overwhelmingly poor country with a thin veneer of prosperity.
His main point is that Chinese leaders will be more obsesssed with internal issues than with external issues.
The book offers a historical interpretation of the Great Depression as a monetary phenomenon. My review is here. This paragraph may be a bit terse:
The price index that Sumner uses is the Wholesale Price Index. This is a volatile index that largely excludes finished goods and instead tracks goods that are intermediate inputs to other producers. From the standpoint of those final-goods producers, an increase in the WPI indicates not a positive demand shock but an adverse supply shock. Sumner did not succeed in convincing me that the causality runs from increases (decreases) in the WPI to increases (decreases) in output, rather than the other way around.
Suppose that the idea is that when monetary policy is expansionary, prices for finished goods go up and nominal wages remain sticky. Then producers will increase output, and this will raise the demand for goods that are intermediate inputs. The price of intermediate goods could rise by a much higher percentage than the price of finished goods, provided that intermediate goods are not a large share of the cost of producing finished goods and provided that the supply of intermediate goods is somewhat inelastic.
Using this story, the Wholesale Price Index is not really the “P” that goes into the real wage rate, W/P. Instead, it is an indicator that production is rising (or is expected to rise). We still have to take in on faith that a decrease in W/P is what caused the rise (or expected rise) in production.
Like most of the questions, it was backed up by a sea of finger snaps — the sort you can hear in the infamous Yale video, where a student screams at Prof. Christakis to “be quiet” and tells him that he is “disgusting.” I had never heard the snapping before. When it happens in a large auditorium it is disconcerting. It makes you feel that you are facing an angry and unified mob — a feeling I have never had in 25 years of teaching and public speaking.
You will find me posting quite a bit on Roger Scruton’s recent book, Fools, Frauds, and Firebrands, which is mostly about left-wing European philosophers. I am inclined to dismiss the significance of these characters. However, their totalitarian impulses are frightening, and the way that they have permeated part of the academic culture is depressing.
In Institutions, Institutional Change, and Economic Performance, he wrote (p. 58),
players may devise an institutional framework to improve measurement and enforcement and therefore make possible exchange, but the resultant transaction costs raise the costs of exchange. . .The more resources that must be devoted to transacting to assure cooperative outcomes, the more diluted are the gains from trade. . .The more complex the exchange in time and space, the more complex and costly are the institutions necessary to realize cooperative outcomes. Quite complex exchange can be realized by creating third-party enforcement via voluntary institutions. . .ultimately, however, viable impersonal exchange that would realize the gains from trade inherent in the technologies of modern independent economies requires institutions that can enforce agreements by the threat of coercion. The transaction costs of a purely voluntary system of third-party enforcement in such an environment would be prohibitive. . .there are immense scale economies in policing and enforcing agreements by a polity that acts as a third party and uses coercion to enforce agreements. But. . .If we cannot do without the state, we cannot do with it either. How does one get the state to behave like an impartial third party?
Think of two ways to organize a pee-wee baseball league, with players aged 8 to 10. The anarcho-capitalist approach would be to have the players on the teams meet before each game and agree on rules and enforcement mechanisms. The state-based approach would be to have a league commissioner articulate the rules and arrange for their enforcement. If you’ve ever observed 8- to 10-year-olds involved in a discussion over rules, you know that the an-cap league would never play any baseball. The negotiations would occupy all of the time scheduled for the games. What North is saying is that the equivalent would happen to an an-cap economy–it would be buried in the transaction costs involved in trying to enable the sort of market exchanges that we take for granted.
As you know, I am re-reading North because of the overlaps between his work and that of Peter Turchin and other theorists of cultural evolution. I have suggested that North in 1980 anticipated their major insights. The quotation above is from 1990. By that time, some of the seminal papers in cultural evolution had appeared, and North cites them. But no one in the field cites North. If his work were more widely known, I believe that: (a) North would be considered a founder, perhaps even the founder, of the study of cultural evolution; and (b) scholars of cultural evolution would still be mining North’s books for insights.
in our intellectual world, usually there just is no “debate”; there are just different sides who separately market their points of view. Just as in ordinary marketing, where firms usually pitch their products without mentioning competing products, intellectuals marketing of points of view also usually ignore competing points of view. Instead of pointing out contrary arguments and rebutting them, intellectual usually prefer to ignore contrary arguments.
Or cherry-pick the weakest contrary argument. Or make up straw-man positions for the other side.
As information becomes abundant, he writes, “the regime accumulates pain points.” By this he means that problems like police brutality, economic mismanagement, foreign policy failures and botched responses to disasters “can no longer be concealed or explained away.” Instead, “they are seized on by the newly empowered public, and placed front and center in open discussions. In essence, government failure now sets the agenda.”
She says that Gurri’s thinking is that notwithstanding their greater awareness of failure, people are expecting more from government and other organizations.
In my mind, I keep going back and forth between seeing our political sectarianism as unprecedented on the one hand and seeing it as a replay of 1968 on the other. In the 1968 election, the public, preferring a representative of the existing order against the forces of rebellion, ultimately turned to a familiar face, even though he was widely disliked and viewed as unscrupulous. Thus, although right now I do not know a single person who is positively disposed toward Hillary Clinton (and almost all of my friends are Democrats!), it is conceivable that she will win a landslide.
Read Postrel’s whole essay. I will put Gurri’s book on my list of items to read. And is Martin any relation to Adam?