Archive for the ‘economics’ Category

Chinese growth prospects

Wednesday, October 22nd, 2014

A politically correct Harvard paper “Asiaphoria Meet Regression to the Mean” by the politically correct authors Lant Pritchett and Larry Summers tells us, or seemingly tells us, that China’s rapid growth is unlikely to last. They examine fifty or so periods of rapid growth, and, almost always, sad to say, there is regression to the mean. In the long run, the periods of rapid growth make little difference.

These are, unlike your usual Harvard intellectual, genuinely smart people, and, for smart Harvard people, surprisingly truthful. And, if you take a powerful microscope, read between the lines, read what is unwritten, you will read the truth. If you listen to what they are not saying, you will hear the truth.

There are a near infinite variety of ways to have bad or negative economic growth. There is one way to have good economic growth, and if your country is Cathedral Compliant, it is not allowed to do things that one way.

Instead of just noticing that periods of rapid economic growth tend to come to a sad end, Lant and Larry took a look at these sad ends.

nearly every country that experienced a large democratic transition after a period of above-average growth (more than the cross-country average of 2 per cent) experienced a sharp deceleration in growth in the 10 years following the democratizing transition.

In other words, the reason that periods of rapid economic growth come to a sad end is that the Cathedral comes after you. It is not regression to the mean, but Cathedral reconquest.

Lant and Larry notice that China is anomalous, different from all their other examples, in that unlike all their other examples, with the partial exception of Singapore, large and long economic growth has not resulted in “Democracy” – their prediction that China will not continue to grow is not a prediction that some mystery factor like “exhaustion of the low hanging fruit” will end China’s growth. It is in fact a highly pious prediction that the Cathedral will soon enjoy its inevitable victory, due, no doubt, to the forces of history.

When making highly pious predictions, Lant and Larry are less reliable than usual.

China’s real GDP passes US

Monday, October 13th, 2014

For many years, US statistics have been obviously fake, understating inflation by about two and a half percent a year, thus overstating real GDP growth by about three percent a year, and understating the fall in living standards by about three percent a year.

Thus, according to official statistics, US real GDP is still higher than that of China.

Yet, by every measure of actual stuff and technological capability, Chinese production is substantially greater than US production, though Chinese GDP per head is still below the US. China produces more cars, more concrete, more electricity, Chinese buy more cars, more concrete, more electricity, China exports more stuff, China imports more stuff. China produces and consumes more beer, more pork, and far, far, far more steel.

And it is not just tee shirts. China exports twice as much high tech stuff as the US does. China produces and consumes more high tech stuff than the US does. We sell them low tech stuff like wheat, we import high tech stuff like phones. China has the fastest trains in the world, and very large numbers of ordinary people using those very fast trains. China has the coolest airports, and these airports have far more people using them than the US.

OK, what about GDP per capita?

Officially, US GDP per capita is growing. In actual fact, it is obviously falling. Last time I walked around familiar places in America everything was shabbier, older, dirtier, more in need of a coat of paint. US GDP is falling at about two percent a year (used to be falling at about one percent a year, but the decline is visibly accelerating).

US population growth is about 0.6% per year (white population collapsing rapidly due to inability to reproduce without an enforceable system of marriage) so real GDP per capita is falling at about two and half percent per year. This represents a rapid acceleration in the rate of decline.

Chinese real GDP per capita is rising at about seven and a half percent a year. Assuming current trends continue, rather than continuing to accelerate, Chinese real GDP per capita will exceed US real GDP per capita in sixteen years, in 2030.

The Spandrellian trichotomy

Wednesday, August 13th, 2014

trichotomy

Technology capitalism: libertarianism

As the left gets ever lefter, it gets every crazier.  Since the libertarian tries to make a separate peace with the left on behalf of capitalism, its craziness necessarily flows into libertarianism.

Libertarians notice that capitalism, in particular the joint stock corporation based on double entry accounting, provides a great, humane, and highly productive system for creating wealth, advancing technological progress, and maximizing liberty. They therefore propose to accept the entire left wing program, only without its anti capitalist elements.  Supposedly the non aggression principle supports all left wing conclusions, except anti capitalism.

Thus a libertarian believes that people should be able to make binding contracts. So a young and naive woman can bind herself to an enormous debt for a PhD in hating dead white males and capitalism, a debt which cannot be expunged by bankruptcy

However, because leftists believe that female sexual autonomy is sacred, therefore has infinite utilitarian weight, absolutely trumping all other human, moral, and utilitarian considerations, a libertarian also believes that that same woman cannot bind herself to always be sexually available to one man, and never to any other, to submit to him, and to bear his children, in return for him protecting her, loving her, looking after her, supervising her, and fathering his children by her.

But it turns out that without the capacity to make a binding contract, it is mighty difficult to reproduce.  It also turns out that the reproductive contract has to be unequal.  A ship cannot have two captains, and neither can a household. (more…)

Why the art, literature, and science of decadent civilization is decadent

Thursday, August 7th, 2014

Gibbon called the art and literature of the latter days of the Roman Empire “the second childhood of human reason”.

Back in the days when European art was the greatest the world has ever seen, the wealthy and powerful Cornaro family patronized the artist Bernini because he was a great artist.  Because high status people like the Cornaro family patronized great artists, great art was high status, and, circularly, the Cornaro family gained status by patronizing great art, such as The Ecstasy of Saint Teresa, which features the Cornaro family as much as a Coca Cola advertisement features coca cola.

Similarly, in Restoration England, high status people patronized science because it was high status, and it was high status because high status people patronized it, starting with King Charles the Second.

Then the government gets into funding art.  But the large bureaucratic government funding organization inevitably gets captured by recipients, as Cornaro family could never be captured, as King Charles the Second could never be captured.  Funds are distributed for grantsmanship, not art quality.  The greatest experts in grantsmanship could draw no better than a small child.

So drawing like a small child comes to be deemed high status.

Neo reactionaries are fond of authority, but need to remember that there is lot that centralized authority cannot do, starting with operate a modern economy.  Large organizations suffer from diseconomies of scale, and a severe agent/principal problem.  Without aristocrats, kings are not much good.

The cure for IQ shredders

Friday, July 18th, 2014

Our best hopes for a high tech future, for avoiding a dark age, are consuming the genes needed for a high tech future. Smart people go to Hong Kong and Singapore and fail to reproduce.

Singapore has taken numerous measures, similar to those of the Nazis and Emperor Augustus, to improve fertility, which will doubtless be as ineffectual as those of the Nazis and Emperor Augustus.

Just as the cure for Chinese poverty was to import the economic laws and customs of Hong Kong into Shanghai, the cure for Singaporean infertility is to import the marital laws and customs of Timor Leste, where women cannot own property, because they are wards of their parents until they become wards of their husbands.

Dubai already has a system where low status expat workers are effectively wards of their employers. This typically applies to Indian construction workers (who are all male and unaccompanied by their wives and families) and Filipino “maids”, who are all female and normally single when they arrive. If an employee’s sponsor is her employer, the employee is effectively a ward of the employer. A higher status employee usually has the free zone authority is his sponsor, not his employer, even though his employer asked the free zone to sponsor the employee so the process looks very similar.

An employee sponsored by her employer normally resides in accommodation provided by the employer. The employee cannot change jobs without her employers permission. If the employer dismisses the maid, he normally cancels her visa, her bank accounts, her phone, and gives her a ticket back to her homeland. He has to give her a ticket out, because he paid a deposit to obtain her work visa, and because if she fails to leave by her employer’s fault, the employer is in trouble. If the employer cancels his employees visa, he is supposed to provide the employee with the means to leave. Often however, she fails to show up by her fault, in which case the employer still loses his deposit, so if he can, he drags her off to the airport whether she will or not.

Male Indian construction workers seldom do a run. If fired, they leave without any drama. “Maids” frequently do a run and fail to show up at the airport, because the usual cause of a falling out with her employer is raging hormones. If she does a run, her phone stops working, her credit cards stop working, her bank account stops working and if she does not withdraw any money in her bank account in a timely fashion, she loses the money. She cannot get a new phone, bank account or legal accommodation, and is subject to a large fine for every day she fails to show up. If caught, and unable to pay the fine, goes to jail for considerable time, then is sent out of the country and forbidden ever to return.

The future belongs to those that show up

Saturday, July 12th, 2014

Japanese fertility
A fertility of slightly over 2.0 is a stable population.

Sarah Perry on the Economic Value of Children

Thursday, July 10th, 2014

Sarah Perry argues that children have been nationalized, have become property of the state and ceased to be the property of their parents, so have become a cost to their parents and a profit to the state, so parents decline to produce so many.

Makes sense, certainly part of the story, but not what I seem to observe, not the main story.

What I seem to see happening is that the major cost deterring people from children is not economic, but rather loss of female sexual autonomy.  If a woman has children during her fertile years, then she is not longer able to respond promptly to a midnight booty call from Jeremy Meeks.

Your feelings differ from mine?  Let us look at Augustan Rome.

The Augustan reforms made children the property of their parents, but the wife even less the property of her husband than in the modern west.  Fertility continued to collapse, to levels that may well have been substantially lower than modern western levels.

On the other hand, the Pauline reforms, which were that a man and his wife were one person, and that person the husband, that the wife was part of the husband, did help substantially with fertility.

Further, I don’t think the nationalization of children is really separable from feminism.  Women really cannot look after themselves.  They will either attach to their fathers, their husbands, or Uncle Sam the big Pimp.  Thus feminism, in practice, means that children become the children of Uncle Sam the big Pimp.   If you denationalized children, women would spontaneously submit to patriarchy.  Conversely, if you enforce patriarchy, the patriarchs will claim their children.  To maximize fertility, need that form of patriarchy in which women attach to their husbands, rather than their fathers, and females are rationed out at only one wife per male, so that as many males as possible have incentive to attach to society, to work, and to invest in posterity.

The cause of population decline

Saturday, July 5th, 2014

At present, only poor countries have reasonable fertility.   The fertile age white population is everywhere declining, and the most intelligent and educated women reproduce the least. But quite recently affluent countries such as pre Weimar Germany had high fertility, and many poor countries have fertility as low as the worst of the west.

Conversely, Rome in its decline, and Sparta in its decline, had terribly low fertility, though their only methods of birth control were vice, abortion, and infanticide, and their living standards were relatively low compared to modern standards.

The demographic transition is nothing to do with whiteness, nor with wealth and economic development.  Nothing to do with having a Malthusian system.  It is not poverty that makes the difference.

Nepal is a good example of a very poor third world country with low fertility comparable to that of the advanced west – but its low fertility is a mix of very high fertility women and very low fertility women, which should make it easy to see what causes the difference. (more…)

Capitalism and entrepreneurial capitalism

Tuesday, July 1st, 2014

Capitalism, in the sense of wealth creating wealth, wage labor, power derived from wealth, and trade, is a bronze age social technology. “Capital” literally means “head” in the sense of “head of cattle”. Originally, the amount of capital one had was the number of beasts in one’s herds. The biblical bronze age patriarchs were capitalists, in that their wealth was their herds, and their power derived from their wealth, their power was their employees. The actual figures on whom the biblical patriarchs are based are probably considerably less ancient than they are depicted in the bible as being but since Moses dates from the collapse of bronze age civilization and he, or the people who wrote him up, are very early iron age, his predecessors have to have been at least late bronze age, possibly earlier. The biblical patriarchs are depicted as fighting, and winning, battles with kings, which would suggest that they were figures of the very late bronze age, since chances are that nomads only gave kings a hard time during the decline and collapse of the bronze age civilizations. The size of states, and the size of armies, declined during the collapse of bronze age civilization, to the point where the sword of a single hero could make a big difference, only to rise again in the early iron age.

But, obviously there is something importantly different about today’s capitalism, something that changed around the time of the restoration.

The phrase “Industrial Capitalism” is misleading, for it was this new form of capitalism that created industry, not the other way around.

The big difference, the social technologies that caused the big difference, were double entry accounting, which made the joint stock corporation possible, made it possible to separate ownership of capital from enterepreneurship. Investors could put an entrepreneur in charge of their capital, and use double entry accounting to keep an eye on him. This is the foundation of western civilization, which began to soar when Charles the Second cut joint stock corporations loose from strong government oversight.

This means that owners of capital can employ people smarter than themselves to manage their capital, increasing the effective intelligence applied to production.

Which caused productivity to consistently and substantially rise faster than population, for the first time in history.

Double entry accounting is a critical part of this system. Unfortunately, double entry accounting has been profoundly disrupted in America by Sarbanes-Oxley, making it impossible to tell how a business is doing. This ham fisted government intervention was officially intended to prevent businesses from misleading investors and creditors, but instead it has made it mandatory to mislead investors and creditors. Sarbanes-Oxley consists of thousands of pages of law, each page of law giving birth to thousands of pages of regulation. It is of course impossible to comply with all this, for if one was to comply with any one page of Sarbanes-Oxley, it would put you out of compliance with hundreds other pages of Sarbanes-Oxley, so what the big firms do instead is hire accountants sufficiently well connected with the government, accountants on the revolving door between regulators and regulated, so that any figures the accountant conjures up will be deemed compliant with Sarbanes-Oxley.

The practical effect of this became apparent in the financial crisis, when it became obvious that many banks simply had not been keeping track of their finances, and had no idea what assets they owned, what financial obligations others had to them, and what financial obligations they had to others. Sarbanes-Oxley replaced the intentionally misleading figures of Enron with fog, with meaningless figures.

Which brings us back to the old system, where rich people cannot, and do not, entrust their wealth to smart people.

“More Right” proposes communism

Saturday, June 28th, 2014

More right quoting “Men among the ruins”

The preliminary condition would naturally be the overcoming of the typical situation in democracies, where the political element makes promiscuous alliances with the plutocratic element, opening itself to corruption and pretending to represent a “Right” in opposition to Marxism. Again, the pure political power must be released from every bond—first from the bonds of capitalism, and then from those of the economy

This is, the state released from every bond, is the old communist fantasy. If the state is released from every bond, it can decree that everything be lovely.

The state does so. Strangely, everything fails to be lovely. Obviously evil people, wreckers, are disobeying the decree. They must found and destroyed. Then everything will be lovely.

But things still are not lovely. Obviously there must even more wreckers, who must be sought out even more vigorously and destroyed even more thoroughly.

At some point Stalin declares that Utopia has arrived, notwithstanding appearances to the contrary, thereby stopping the madness, or Vietnam invades Cambodia, thereby stopping the madness.

The state cannot be free from the bonds of capitalism, because it needs money and goods, and therefore needs capitalists to tax and to purchase technology from. As for being free from the bonds of the economy, we saw how that worked out for the communists.

Reality is that for the reasons explained by Mises and Hayek, and colorfully dramatized by Ayn Rand, the state cannot directly run the economy, nor directly sponsor science. Private individuals, with private wealth, have to be free to create wealth and knowledge, without which the state has nothing to tax, and no means to pay the army, nor any source for the technology to equip the army.

The state is at best a stationary bandit that keeps mobile bandits at bay. If it consumes everything, it destroys itself. Stalinist Russia kept itself afloat on an illegal but essential and tolerated black market, by letting capitalism that it had thrown out the front door in by the back door and by seizing and pillaging additional capitalist economies.

Stalin’s successors faced an ever more serious conflict between ideology – that everything should be devoured – and reality – that they needed the market and wealthy people, a conflict that gradually became more serious as no more advanced economies fell under their power.

Which eventually led to the open abandonment of the “seize everything” ideology