"After all, the really existing socialist economies were, to a kremlin, authoritarian: they, theoretically, at least, had no difficulty in suppressing consumption to promote investment. And the world as of 1990 was still a very capital-scarce one, with a high marginal return on investment.—at least in potential."
I would like to note here that the US has been in a universe of high-capital availability and a decade+ of reduced consumption (aggregate demand falling short) and that this has NOT resulted in massive economic growth in the United States. If the schema (lots of investment, drastically reduced demand) doesn't work well in a capitalist economy, why in God's name would it work in a economy with nothing but state-controlled companies?
Rana Faroohar's piece from the FT is paywalled, so I can't see the argument. But I do wonder what the US is "reacting" to in this view, and if that (whatever it is) is not itself a reaction to the actions of the US over the last several years (such as the previous blocking of advanced tech sales to China).
Yes. We are on a ladder of escalation. But declaring a “no limits” global partnership with a country lauching a massive full-scale war is a **huge** rung to climb.
Those two words seem to be doing a lot of work. If I'm not mistaken (corrections welcome), the statement is that there“no limits to Sino-Russian cooperation… no forbidden zones", and not that the two states are in lockstep. Indeed, the "cooperation" is explicitly not an alliance.
The argument also seems somewhat disingenuous, given that the US is not "escalating" against other states who continue to cooperate with Russia.
Yes. "[T]hat does not get us into a 'forbidden zone'." That is, Russia is free to ask. But because there is no alliance, China is free to say 'no'. And all available evidence indicates that Russia will not (publicly) ask, as China would indeed say 'no'. (One can only speculate as to whether there have been any private asks.)
To be sure, if China were to commit troops to the war in Ukraine, then that would be a very large escalation. But, to my knowledge (it is possible I may have missed something) there is no evidence that China has any interest in doing this.
There was a story in the FT in 2010 about an CEO type at a company that made jet engines for private jets complaining that to set up a factory in China he had to give the Chinese all the info about the engines, train all the workers and supervisors on how to reproduce the entire supply chain &c. So he did that and then one of the Chinese state-owned companies and built a factory that produced clone engines. The company began selling their engines worldwide at drastically reduced prices. The exec was shocked that the Chinese weren't respecting 'intellectual property' and I had to laugh - no communist party anywhere has ever respected 'intellectual property' even in the less onerous forms practiced in the early 20th century.
So Thomas Friedman, ultimate China dove journalist had a whole column out today ( https://www.nytimes.com/2022/11/01/opinion/china-united-states-trade-economy.html ): "When China joined the W.T.O. and won immense tariff-free or reduced-tariff access to Western markets, it promised to sign on to a W.T.O. side agreement on government procurements that would have limited China’s ability to discriminate against foreign suppliers when making huge government purchases. But China never signed it. Instead, it kept steering its tremendous state buying power to its state-owned industries — and continued subsidizing them as well.
Way too many Chinese industries just copied or stole intellectual property from Western companies that had built factories in China. The Chinese industries then used their protected domestic market to gain scale — and then they competed against those very same Western companies at home and abroad — AND got subsidized by Beijing.
As I explained in a 2018 column: Even when the U.S. protested to the W.T.O. — as happened when China unfairly kept U.S. credit-card companies out, then lost the arbitration case at the W.T.O. — China still slow-walked making good on a 17-year-old promise to open up to them. By then, Chinese companies, like UnionPay, so dominated China’s credit-card market that U.S. companies, like Visa, were left with crumbs. Any wonder that E.U. exports to China today are only slightly larger than those to Switzerland?"
There was this paragraph too: "I got a taste of this in 2018 when I was in China talking with business and government figures. When I raised China’s unfair trade practices, the pushback sounded like this: “You realize that you Americans are too late? We’re too big to be pushed around anymore. You should have done this a decade ago.” I responded that that kind of hubris gets countries in trouble."
The policy based on a basic misunderstanding of what happened in the Soviet Union that led to its' collapse ('the Soviet Union collapsed because people wanted McDonald's'). Whereas the Soviet Union as far as I could tell, the USSR was bad at management (economic or otherwise) and people didn't like that; when Gorbachev tried to loosen up things to do deal with the problems, the lid came off.
The Chinese communist party decided, after Tianenmen Square, that they should never ever take the Party's boot off the neck of the Chinese people, otherwise they'd end up like Hungary et al, with people streaming out of the country and denouncing Communist government.
The US decided that the magic of the markets would loosen up the grip of the Communist Party, which was obviously wrong-headed.
If you look at Keynes' review of The Road to Serfdom, I accept all of it. There was no valid reason for Hayek to say Keynes had strayed from classical liberalism, other than he thought Keynes was allowing his ideas to be corrupted by big government types, and believed he was offering a reasonable assessment of the road to serfdom, whereas his fear of the welfare state was simply over the top. However, over the next few years after WW II a lot of people over the entire political spectrum offered over the top assessments of the political situation. I think it stems from the fact that lots of people underestimated Hitler, and that was a mind altering mistake.
My family didn't have many academic friends, but the one it did have was Carlo Cipolla. Let me offer him as the greatest economic historian Cal ever had.
The Soviet Union was about as much a planned economy as your average welfare state. It had a black market economy and a graft/exchange economy that was enormous. Let me recommend an author you might not have read named Gregory Grossman.
Central bank inflation targeting: I don't think we can reject 2% as the optimal target IF they were willing to "do what it takes" to prevent falling below it Still, It does look as if the size and frequency of demand and supply side shocks have increased and so then the optimal target.
Who knows what the text and readings were for a undergraduate "Comparative Economics" class taught by before he was Labor Secretary for LBJ, Ray Marshall. But it was great (greater in retrospect as I learned years later what I had learned). It contained the (I suspect) fable of the nail factory that was alternatively chargesdwith maximizing the number of nails and the then Kg of nails with and how Soviet engineers building hydroelectric dams approximately re-invented discounted present value.
"After all, the really existing socialist economies were, to a kremlin, authoritarian: they, theoretically, at least, had no difficulty in suppressing consumption to promote investment. And the world as of 1990 was still a very capital-scarce one, with a high marginal return on investment.—at least in potential."
I would like to note here that the US has been in a universe of high-capital availability and a decade+ of reduced consumption (aggregate demand falling short) and that this has NOT resulted in massive economic growth in the United States. If the schema (lots of investment, drastically reduced demand) doesn't work well in a capitalist economy, why in God's name would it work in a economy with nothing but state-controlled companies?
elm
efficiency paradox
Yes indeed...
Rana Faroohar's piece from the FT is paywalled, so I can't see the argument. But I do wonder what the US is "reacting" to in this view, and if that (whatever it is) is not itself a reaction to the actions of the US over the last several years (such as the previous blocking of advanced tech sales to China).
Yes. We are on a ladder of escalation. But declaring a “no limits” global partnership with a country lauching a massive full-scale war is a **huge** rung to climb.
Those two words seem to be doing a lot of work. If I'm not mistaken (corrections welcome), the statement is that there“no limits to Sino-Russian cooperation… no forbidden zones", and not that the two states are in lockstep. Indeed, the "cooperation" is explicitly not an alliance.
The argument also seems somewhat disingenuous, given that the US is not "escalating" against other states who continue to cooperate with Russia.
I.e., if Russia asks for Chinese troops to assist it, that does not get us into a “forbidden zone”, since there are none such?
Yes. "[T]hat does not get us into a 'forbidden zone'." That is, Russia is free to ask. But because there is no alliance, China is free to say 'no'. And all available evidence indicates that Russia will not (publicly) ask, as China would indeed say 'no'. (One can only speculate as to whether there have been any private asks.)
To be sure, if China were to commit troops to the war in Ukraine, then that would be a very large escalation. But, to my knowledge (it is possible I may have missed something) there is no evidence that China has any interest in doing this.
There was a story in the FT in 2010 about an CEO type at a company that made jet engines for private jets complaining that to set up a factory in China he had to give the Chinese all the info about the engines, train all the workers and supervisors on how to reproduce the entire supply chain &c. So he did that and then one of the Chinese state-owned companies and built a factory that produced clone engines. The company began selling their engines worldwide at drastically reduced prices. The exec was shocked that the Chinese weren't respecting 'intellectual property' and I had to laugh - no communist party anywhere has ever respected 'intellectual property' even in the less onerous forms practiced in the early 20th century.
So Thomas Friedman, ultimate China dove journalist had a whole column out today ( https://www.nytimes.com/2022/11/01/opinion/china-united-states-trade-economy.html ): "When China joined the W.T.O. and won immense tariff-free or reduced-tariff access to Western markets, it promised to sign on to a W.T.O. side agreement on government procurements that would have limited China’s ability to discriminate against foreign suppliers when making huge government purchases. But China never signed it. Instead, it kept steering its tremendous state buying power to its state-owned industries — and continued subsidizing them as well.
Way too many Chinese industries just copied or stole intellectual property from Western companies that had built factories in China. The Chinese industries then used their protected domestic market to gain scale — and then they competed against those very same Western companies at home and abroad — AND got subsidized by Beijing.
As I explained in a 2018 column: Even when the U.S. protested to the W.T.O. — as happened when China unfairly kept U.S. credit-card companies out, then lost the arbitration case at the W.T.O. — China still slow-walked making good on a 17-year-old promise to open up to them. By then, Chinese companies, like UnionPay, so dominated China’s credit-card market that U.S. companies, like Visa, were left with crumbs. Any wonder that E.U. exports to China today are only slightly larger than those to Switzerland?"
There was this paragraph too: "I got a taste of this in 2018 when I was in China talking with business and government figures. When I raised China’s unfair trade practices, the pushback sounded like this: “You realize that you Americans are too late? We’re too big to be pushed around anymore. You should have done this a decade ago.” I responded that that kind of hubris gets countries in trouble."
The policy based on a basic misunderstanding of what happened in the Soviet Union that led to its' collapse ('the Soviet Union collapsed because people wanted McDonald's'). Whereas the Soviet Union as far as I could tell, the USSR was bad at management (economic or otherwise) and people didn't like that; when Gorbachev tried to loosen up things to do deal with the problems, the lid came off.
The Chinese communist party decided, after Tianenmen Square, that they should never ever take the Party's boot off the neck of the Chinese people, otherwise they'd end up like Hungary et al, with people streaming out of the country and denouncing Communist government.
The US decided that the magic of the markets would loosen up the grip of the Communist Party, which was obviously wrong-headed.
elm
our boys in washington are late to the party
If you look at Keynes' review of The Road to Serfdom, I accept all of it. There was no valid reason for Hayek to say Keynes had strayed from classical liberalism, other than he thought Keynes was allowing his ideas to be corrupted by big government types, and believed he was offering a reasonable assessment of the road to serfdom, whereas his fear of the welfare state was simply over the top. However, over the next few years after WW II a lot of people over the entire political spectrum offered over the top assessments of the political situation. I think it stems from the fact that lots of people underestimated Hitler, and that was a mind altering mistake.
My family didn't have many academic friends, but the one it did have was Carlo Cipolla. Let me offer him as the greatest economic historian Cal ever had.
Indeed yes!
The Soviet Union was about as much a planned economy as your average welfare state. It had a black market economy and a graft/exchange economy that was enormous. Let me recommend an author you might not have read named Gregory Grossman.
Central bank inflation targeting: I don't think we can reject 2% as the optimal target IF they were willing to "do what it takes" to prevent falling below it Still, It does look as if the size and frequency of demand and supply side shocks have increased and so then the optimal target.
What fun thinking about Cnut's empire having lasted. :) Or the Sicilian Normans having actually succeeded at Demetritzes.
Who knows what the text and readings were for a undergraduate "Comparative Economics" class taught by before he was Labor Secretary for LBJ, Ray Marshall. But it was great (greater in retrospect as I learned years later what I had learned). It contained the (I suspect) fable of the nail factory that was alternatively chargesdwith maximizing the number of nails and the then Kg of nails with and how Soviet engineers building hydroelectric dams approximately re-invented discounted present value.