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Marking My Beliefs to Market
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Re: Former Soviet Union. I lived in Kiev, Ukraine for two years. I was besides myself trying to figure out what the Ukrainians just didn't get about political and economic development. After all the steps to be taken were simple, and before them them was laid out a rational system of carrots and stickes to reach that end. Upon returning to New York, I stumbled across Edward Said's Orientailism in a vain attempt to make sense of it all. His writing about the West has traditionally manufactured knowledge about other cultures, especially colonized peoples, and for whom they produce this knowledge (the West itself) is right on the mark We use Western concepts to undertand non-Western cultures. We were in effect talking to ourselves. Said wrote that in its pure form Orientalism is laughable; e.g., Islam is sort of like Christianity without Jesus. It ain't so. Well, Russia and the whole of the former Soviet Union are sort of like the West, too! No amount of policy prescription based on the experience of the advanced liberal democratic industrial West would have made sense in the FSU. I was part of the group that just didn't get it. It was their way of life that should have influenced the policy choices, not mine.
Contributed by Ted Schrader (email@example.com) on May 22, 2000.
Nope. I would not have expected that, and I did not.
I have seen Morgan Stanley Vice Presidents set across a table from Cisco Vice Presidents and say that Cisco is far too big for *any* principles of valuation to justify anything near its current equity value. And the people from Cisco smile... It's scary...
Contributed by Brad DeLong (firstname.lastname@example.org) on May 22, 2000.
Interesting piece. However, did you really believe that the "noise traders" would be as powerful as they have turned out to be?
Contributed by Chris DeLong (CDeLong@taconiccap.com) on May 22, 2000.
The way the exchange went was: Alvin Hansen: "But Maynard, you yourself said (such and such)."
Keynes: "But Alvin, surely I have learned something since that time." The context was pre-war to post-war.
Hansen never did learn anything after the General Theory that any of us could spot, and we weren't too sure how much of that he had learned.
Contributed by Paul Cook (Paulwcook@aol.com) on May 22, 2000.
On Russia: With deference to Douglas North, one might suggest that the missing link in the Russia success story had to do with who wrote the rules. Your idea of a democracy is that the voters write the rules, and this will eventually fix things. Perhaps in Russia (and parts of Africa and historically in S. America), the culture votes for the richest or most powerful men as leaders, with the vague idea that they are most capable of trickling down wealth and protection. The idea that gate-keeping destroys wealth is not in the voters minds. Nor is the idea that voters can shop for a bigger trickle. At some point, elections become uncontested. If this description fits, the question becomes do the rulers find themselves better off taking what they can from a poor populace, or encouraging wealth so they can take more. The latter approach (called stock options in this culture, and crony capitalizm in SE Asia these days) does not seem to have been the historically dominant behavior of rulers. Nor have wealth increases been the historically dominant result. All of which trys to say that Russians don't get richer until who writes the rules changes. The assumption that democracy does it soon may not be compelling.
Contributed by bill swan (email@example.com) on June 19, 2000.
Hi, Brad. Nice piece.
This is the kind of essay where I wish I had automated hyperlinks to use to find out more.... I'd like to be able to click on Nelson Aldrich or Pyotr Stolypin or Ivan Kalusha to find out who they were... :-)
OK, back to work on my JEP piece... I probably won't take the time to try to look up these names for myself on the Web...
Contributed by David Lucking-Reiley (firstname.lastname@example.org) on June 19, 2000.
Brad DeLong states here (and a bit snippishly, I thought) that my views in opposition to the NAIRU can be dismissed because I stated similar views back in the 1980s.
I am, first, curious as to DeLong's source for this claim. While I have frequently written in recent years that I never fell prey to the Nairu dogma, I doubt he can cite a writing of mine from the 1980s that deals in depth with the issue.
Certainly I did not take the view then,which I have actually come to hold in the 1990s, that anti-inflation policy could be prudently placed on the back burner -- at least for the time being.
Quite to the contrary. My writings on inflation in the 1980s were not complacent. Rather, they stressed the importance of incomes policy and other measures to deal with the inflation threats that still existed at that time. My 1989 book, Balancing Acts, is largely devoted to this question. I may in fact have over-stated the extent to which inflation threats still existed by the time that book appeared.
What I never accepted was that full employment, as such, was a cause of inflation, and therefore something to avoid. I have consistently argued that inflation threats, when they exist, are largely separable from the unemployment rate, and should be dealt with by means that do not require sacrificing employment.
The notion of a rigid inflation/employment tradeoff was a bit of silliness perpetrated on the profession over thirty years ago, in the face of very thin evidence. DeLong's perplexity seems to me mainly to reflect his unwillingness to give up on a very cherished, deeply held, but very little supported belief.
Contributed by James K. Galbraith (Galbraith@mail.utexas.edu) on July 11, 2000.
Hernando De Soto's book The Mystery of Capital offers some ideas on former communist countries. His thesis is that the poor actually have considerable assets, but with out legal ownership; therefore they cannot use them as collateral for bank loans, and cannot extend side-walk shops into real businesses. They are what we would call squatters, with an actvie informal economy, but unable to expand scale as they do not have formal title to their holdings and therefore cannot participate in the larger financial structure.
Contributed by David Cohen (email@example.com) on December 21, 2000.
of Economics J. Bradford DeLong, 601 Evans Hall, #3880
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