November 09, 2003
Brazil's Near-Term Future

After a lousy 2003, the Economist is looking forward to a good 2004 for Brazil--and thus to the success of President Luiz Inacio Lula da Silva's economic policies of detente with the IMF....

Posted by DeLong at 04:35 PM

November 08, 2003
Khodorkovshchina II

The Economist meditates on security of property in Russia: Economist.com | Russia: INVESTING in Russia, a country where property rights are always someone else's, is for the brave, the connected or the Russians. Even all three attributes may not be enough, as the careers of Simon Kukes and Mikhail Khodorkovsky, the incoming and outgoing bosses of Yukos, Russia's largest oil company, attest. In the late 1990s, the two aroused roughly equal loathing among western businessmen. As the boss of another oil company, Simon Kukes had masterminded a strategy in which his outfit, TNK, bankrupted a subsidiary jointly owned with BP in order to buy it on the cheap. That Mr Kukes, a Soviet-era émigré, had an American passport and western manners counted for nothing. “A creep fronting for a crook” was one British official's characterisation of him. Mr Khodorkovsky was worse. He had assembled Yukos from a ramshackle collection of Soviet-era industrial assets, acquired in circumstances that bore little scrutiny. His management culture was impenetrable and autocratic, the accounts murky. An American investor, Kenneth Dart, who had unwisely bought stakes in Yukos's production subsidiaries, lost many millions of dollars as Mr Khodorkovsky stripped their assets and shovelled money offshore. What...

Posted by DeLong at 06:36 PM

October 20, 2003
Tacitus Is Not Talking About Africa

Tacitus is not talking about Africa: t a c i t u s: Unfortunately, after a perilous, terrifying flight on a corroding, ill-maintained 727 from Livingstone to Johannesburg; and after various thuggish customs officials at multiple airports threatened to confiscate (alternately) my baby wipes, my AA batteries, and my laptop; and after our Kenya Airways pilot on the Nairobi-Entebbe run decided to just take the day off; and after the umpteenth shocking exposition of wholly preventable raw human misery, I'm not in a mood to talk much about Africa. So I won't....

Posted by DeLong at 09:22 AM

October 02, 2003
Neocolonial Origins of Comparative Development

"The examples of Taiwan and Korea do not fit Acemoglu, Johnson, and Robinson's story of the colonial origins of development and underdevelopment very well." "Why not?" "The colonial power was Imperial Japan. And it viewed the two very differently. Taiwan was to become one of the Japanese Empire's heartland islands. The Japanese Empire sought its rapid economic development, built roads, bridges, factories, and so forth. It had every incentive to introduce 'developmental' institutions in Taiwan, and tried hard to do so. Korea, by contrast, was to be plundered and used as a stepping-stone to Manchuria. In Korea Imperial Japan worked hard to introduce 'exploitational' institutions. Yet both have grown spectacularly." "Ah. That's very interesting." [pause] "But consider what happened later. Both South Korea and Taiwan become front lines in the Cold War. Their successful development becomes an aim of U.S. policy. Lots of economic and security aid. An eagerness on the part of the U.S. government to see them successfully export manufactured goods to America. In both countries the decapitation of the landlord class left them with a remarkably egalitarian land distribution which is one of the objectives and supports of 'developmental' institutions..." "But Imperial Japan did not kill off...

Posted by DeLong at 08:54 PM

July 30, 2003
You Do Need a Weatherman

This is probably the last generation for which this is true, but it's still the case that the health of the Indian economy depends on the quality of the monsoon... Morgan Stanley: We have been highlighting the positive trend in monsoons for the past six weeks.  The trend observed in this period makes us believe that the F2004 agricultural output will be significantly higher than normal.  Hence, we are revising our GDP growth estimate for F2004 and F2005 to 6.2% and 5.9% from 5.3% and 5.5%, respectively.  While the higher agricultural growth should push up the headline GDP growth in F2004, the impact of this on the industrial activity will likely be seen only in F2005.  We therefore expect industrial growth, the key to corporate earnings, to remain weak until end-F2004 before recovering from the quarter ended June 2004. The monsoon has been better than normal this year on all measures.  Despite agriculture%u2019s declining share in GDP, we believe the importance of the monsoon season and its influence on agriculture growth continues to be critical for overall economic growth, especially industrial growth......

Posted by DeLong at 10:36 AM

July 27, 2003
Land Reform in Brazil

This may turn into Lula da Silva's biggest problem: Poor Press Brazil's Leader on His Promise of Land: ...Founded in 1984, the landless movement, which claims 1.5 million members nationwide, is today a formidable political and social force with a substantial war chest that comes from tithes paid by peasants it has successfully resettled. Its demands, which have expanded to include an end to agribusiness and a promise not to relocate squatters, can be ignored only at political peril. In early July, Mr. da Silva met for four hours with movement leaders at the presidential palace in Brasília. He was hoping to reduce tensions, but may have achieved the opposite. When the meeting ended, he was photographed wearing the movement's red baseball cap and feeding cookies to the visitors. As a result, he was widely criticized for appearing to support the movement's violations of the law, including land occupations. "The amount of noise being made about this is way out of proportion," José Genoino, the president of Mr. da Silva's Workers' Party, said in an interview here. "The president has met with various other groups and organizations and put on their hats and no fuss was ever made before." But...

Posted by DeLong at 08:10 AM

July 22, 2003
What's Going on in Brazil?

The Economist is relatively optimistic about President da Silva's chances for making his term a big success: Economist.com | Country Briefings: Brazil: Brazil's president, Luiz Inácio Lula da Silva, remains popular, but his Workers Party (PT) government is beginning to face policy challenges that could bring his honeymoon period to an end. The biggest task is an overhaul of the public-sector pensions system, which the president hopes to reform in order to shore up the progress made on stabilising the country's finances. Though strikers on the streets and old-guard leftists within the PT hope to stymie the pension reforms, Mr da Silva's popularity, and the tacit agreements with opposition parties to support the reform bill, give it a good chance of passing without too many crippling compromises. Interest rates, currently sky-high, are expected to fall over the rest of 2003, as decelerating inflation gives the central bank room to cut rates. The Economist Intelligence Unit expects consumer prices to rise by 12.2% in 2003 and 6.8% 2004.... Though strikers opposed to the pension-reform plan promised to shut down Brasilia, they failed to do so--the government estimated that around 30% of federal civil servants had stayed away from work, while the...

Posted by DeLong at 08:16 PM

A Look at Emerging Financial Markets

The Economist's Buttonwood Tree takes a look at emerging financial markets. The overall lesson I get is one of the extraordinary magnitude of political risk of various types in first-world investors' valuations. Economist.com: ...Earlier this year, investors had piled into emerging-market bonds for a number of reasons. Low interest rates made people feel as though problems had evaporated. Returns had been good for a couple of years, which sucks in more money. And the market was a good place to search for yield. All of these factors are reversible--and may already be reversing. American long-term interest rates have been rising sharply of late. After the Federal Reserve cut short-term rates by a less-than-expected quarter point in mid-June, investors lost some of their faith in Treasuries but emerging-market bonds suffered more. At one point, their spreads widened by 70 bps. Growing signs of global growth, however anaemic, may herald further woes for emerging-market bonds. Equities are a different proposition. As any economist will tell you, classifying emerging stockmarkets as an homogenous group is misleading. Russia is different from, say, Argentina, which itself has little in common with South Korea. The same economist will then go on to say with a straight...

Posted by DeLong at 12:47 PM

July 21, 2003
The World Bank Starts Rethinking Utility Privatization

The World Bank starts rethinking the benefits of utility privatization. On the one hand, when a public utility doesn't cover its costs--either because it has become a dumping ground to pay salaries to the politically well-connected, or because governments like to promise low rates--somebody else pays. In developing countries, that somebody else is usually somebody poorer than the customers who are hooked up to the water and power lines. On the other hand, utilities are natural monopolies--and we know that markets don't work very well and are not very competitive in the case of natural monopolies... WSJ.com - The World Bank Wonders About Utility Privatizations: The World Bank, the apostle of privatization, is having a crisis of faith. What seemed like a no-brainer idea in the 1990s -- that developing nations should sell off money-losing state infrastructure to efficient private investors -- no longer seems so obvious, especially when it comes to power and water utilities. Investors who once seemed eager to risk their money on Brazilian power plants or African sewers are pulling back. Commercial banks' power-project financing in the developing world and former Eastern Bloc nations, which peaked at $25.9 billion in 1998, totaled just $5.7 billion last...

Posted by DeLong at 09:41 PM

July 07, 2003
Neoliberalism Rides Again?

The Wall Street Journal says to watch what the new government's economic policy is, not what it says that it's policy is: WSJ.com - Argentina's Rebound Shows IMF's Principles Still Thrive: ...New Argentine President Nestor Kirchner agrees with the latter assessment, arguing that the "neoliberal model" had failed his country. Yet his economic team promises an agenda that Washington Consensus advocates would applaud: inflation-targeting, fiscal restraint, tax overhaul, financial restructuring and market-driven infrastructure solutions. Utilities, trapped in a postcrisis rate freeze and facing contract renegotiations, can be forgiven for doubts. But, at the same time, there is no great movement to renationalize their businesses, especially after the most left-leaning candidates did poorly in recent elections. What is emerging is a distinction between the image of the Washington Consensus as a whipping boy and the continued, if less dogmatically applied, implementation of its principles. Argentine policy makers seem conscious of the good things privatization brought -- healthier water, lower electricity rates, functioning telephones -- they don't really want to turn back the clock. What they are doing is selling the idea differently: They are bashing the 1990s "model" but still embracing the language of the market. Economy Minister Roberto Lavagna argued...

Posted by DeLong at 10:25 AM

June 22, 2003
Indonesian Recovery?

Morgan Stanley sees signs that Indonesia's six years of recession and stagnation are over. This would be very good news indeed. Morgan Stanley: ...Since Mrs. Megawati assumed the presidency in July 2001, her appointed economics management team has quite successfully executed the macro rehabilitation program laid down by the IMF.  This program in a nutshell includes fiscal consolidation and reforms (removing inefficient state subsidies for consumption and reining in the deficit) as well as administrative and political reform (regional autonomy and direct presidential elections to name two). The macro result has been impressive.  There has been relative domestic demand resilience as well as good economic growth in the past two years despite the nasty external shocks and challenges posed by the terrorist attacks on the US, the Bali bombing, as well as the war in Iraq and the SARS outbreaks.  Inflation and interest rates have fallen dramatically and the rupiah has strengthened substantially.  In fact, Indonesia is the best performing global emerging market in the world thus far in 2003......

Posted by DeLong at 10:31 AM

June 05, 2003
Gains From International Trade and Investment

An Irish-Arizonian-Australian cross-disciplinary alliance of Kieran Healy and John Quiggin is thinking about Pierre-Olivier Gourinchas and Olivier Jeanne's brand-new "The Elusive Benefits of International Financial Integration"--the conclusion of which is that in standard neoclassical models freeing up capital flows across nations has the capability to boost economic welfare by an amount on the order of magnitude of one percent: John Quiggin: (Small) gains from trade: (Small) gains from trade: Kieran Healy links to a paper by Pierre-Olivier Gourinchas and the missing-from-the-web Olivier Jeanne in which a calibrated growth accounting model is used to show that the gains from unrestricted capital mobility are likely to be of the order of 1 per cent of GDP. Gains from risk sharing aren't mentioned but other papers are cited to say that these are of a similar magnitude. Those who listen to the general pronouncements of economists might be surprised by the modest size of the estimated gains. But for those who have looked at similar exercises in the past there is no surprise here. One of the better-kept secrets of economics is the fact that most studies suggest that the replacement of a typical high-tariff regime (say Australia's in the 1960s) will yield...

Posted by DeLong at 07:09 AM

May 16, 2003
Still Optimistic About Brazil

The Economist is still optimistic about Brazilian President Lula's chances for pushing through his planned reforms of pensions and taxes... Economist.com | Reforms in Brazil: ...What matters now is how many votes Lula can muster in Congress. Neither proposal is likely to pass unscathed. Both involve constitutional amendments, which must pass twice by three-fifths majorities in both the Chamber of Deputies and the Senate. A lot can happen on the way. To mild surprise, Lula included a contentious clause to reduce the pensions of existing retirees, a measure demanded by the states to shore up their finances. This may be watered down--perhaps by raising the portion exempted from the new charge--or eliminated. Although that would denude the pension reform of much of its immediate fiscal impact, it would not trouble the financial markets much. "If they keep the rest, it's still meaningful," says Carlos Kawall, chief economist at Citibank in Sao Paulo. The tax bill is a hotch-potch, rather than a thorough overhaul. It would unify 27 different state value-added taxes and convert a separate tax on company turnover into a proper VAT. Though less controversial than the pension plan, the tax bill benefits some sectors at the expense of...

Posted by DeLong at 08:53 PM

May 14, 2003
Let's Get Even More Depressed About Cuba

Just because people begin their papers with quotes from Ludwig von Mises does not automatically mean that they are wrong: http://lanic.utexas.edu/la/cb/cuba/asce/cuba8/30smith.pdf http://lanic.utexas.edu/project/asce/pdfs/volume12/perezlopez.pdf The hideously depressing thing is that Cuba under Battista--Cuba in 1957--was a developed country. Cuba in 1957 had lower infant mortality than France, Belgium, West Germany, Israel, Japan, Austria, Italy, Spain, and Portugal. Cuba in 1957 had doctors and nurses: as many doctors and nurses per capita as the Netherlands, and more than Britain or Finland. Cuba in 1957 had as many vehicles per capita as Uruguay, Italy, or Portugal. Cuba in 1957 had 45 TVs per 1000 people--fifth highest in the world. Cuba today has fewer telephones per capita than it had TVs in 1957. You take a look at the standard Human Development Indicator variables--GDP per capita, infant mortality, education--and you try to throw together an HDI for Cuba in the late 1950s, and you come out in the range of Japan, Ireland, Italy, Spain, Israel. Today? Today the UN puts Cuba's HDI in the range of Lithuania, Trinidad, and Mexico. (And Carmelo Mesa-Lago thinks the UN's calculations are seriously flawed: that Cuba's right HDI peers today are places like China, Tunisia, Iran, and South Africa.)...

Posted by DeLong at 10:46 PM

Notes: Grigore Pop-Eleches, "Refracting Conditionality: IMF Programs and Domestic Politics During the Latin American Debt Crisis and the Post-Communist Transition"

I have to read a political science dissertation tonight. It's very good... Grigore Pop-Eleches (2003), "Refracting Conditionality: IMF Programs and Domestic Politics During the Latin American Debt Crisis and the Post-Communist Transition" (Berkeley, CA: U.C. Berkeley Ph.D. Diss.). To the extent that neoliberal reforms are consolidated in any but the most developed countries of the two regions, the relative success stories discussed in this dissertation (Bolivia and Bulgaria) revealed a highly contingent pattern of deep initial economic crisis, skillful political coalition building, and generous Western support... the importance of taking advantage of the initial economic crisis... to forge a more durable political coalition in support of economic reforms. While.. the importance of such coalitions is easy to ignore during the post-electoral honeymoon period, governments that succumb to the temptation of insulated economic policy decision-making have a much more difficult time sustaining economic reforms once their popularity is undermined by the sometimes sizeable social costs of such reforms.... another interesting dilemma... the statistical results and the discussion of Bolivia's unlikely neoliberal reform coalition confirm the importance of rent sharing as the glue that binds together social and political actors.... On the other hand, the increasing neoliberal emphasis on privatization, deregulation,...

Posted by DeLong at 05:18 PM

May 10, 2003
The Causes of Slavery or Serfdom: A Hypothesis

Paul Krugman's post, Serfs Up!, reminds me of one of my major sins this spring (for which I must atone): my cutting Evsey Domar (1970), "The Causes of Slavery or Serfdom: A Hypothesis," Economic History Review 30:1 (March), pp. 18-32, from my spring 2003 Economics 210a reading list. As Krugman summarizes Domar's main point: Domar was motivated by his knowledge of Russian history. Serfdom in Russia, he knew, wasn't an institution that dated back to the Dark Ages. Instead, it was mainly a 16th-century creation, contemporaneous with the beginning of the great Russian expansion into the steppes. Why? He came up with a simple yet powerful insight: there's no point in enslaving or enserfing a man unless the wage you would have to pay him if he was free is substantially above the cost of feeding, housing, and clothing him. Imagine a pre-industrial society where population is pressing on limited land supplies, and the marginal product of labor - and hence the real wage rate under competitive conditions - is barely at subsistence. In that case, why bother establishing property rights in human beings? It costs no more to hire a free worker than to feed an indentured laborer. Indeed,...

Posted by DeLong at 10:08 PM

May 08, 2003
Linguistic Externalities

Edward Hugh reads Stephen Roach, and asks a very good question about future prospects for economic growth around the world: BONOBO LAND: In yesterday's post Stephen Roach was once more eulogising about the growth (and deflationary) potential of services outsourcing. He now has a two part story: manufacturing in China and services in India (and Ireland??? - what no-one has quantified yet in all this is the language-based externality attached to being a country with a large English-speaking community. By the way what about South Africa in this context?)......

Posted by DeLong at 11:15 AM

May 07, 2003
Notes: World Bank Private Sector Development Forum

PSD FORUM History--JMK and HDW. Feared a world in which the capital requirements of development were immense (think Alex Gerschenkron), and in which sovereigns had a very difficult time borrowing. When you think about it, after all, given experience from start of WWI, why should sovereigns have been able to borrow on a large scale? Bulow and Rogoff. Hence World Bank. Broadly speaking, belief in the US during the 1930s and 1940s that successful growth and development required three things: Public investment in infrastructure. Social democracy--understood as full employment, safety net, income distribution sufficiently equal to make politics a positive rather than a zero-sum game in which, say, rich in U.S. inheritance taxes poor in Ghana take the cocoa export revenues fron the Ashantl. Third: market competition: Low tariffs, stable currencies, exports, comparative advantage, markets, and private businesses. Extraordinary success in nw and s europe. Extraordinary success in East Asia. Had you asked people in 1945 economic destiny of France... One of my teachers, David Landes, reputation France family capitalism... Italy... Argentina. Elsewhere. Disappointing. Glass half-empty. Indicative planning administrative guidance seemed to work fine in France and East Asia--for a while at least. Elsewhere... Infrastructure... Exchange rates... Regional development... If...

Posted by DeLong at 09:45 PM

May 05, 2003
Q&A: Global Investment and Development

Question: how can investment in information technology be adjusted so that it is good for the entire developing world, and not just for the industrial core and for small enclaves like Bangalore? Answer: It's a huge problem. Investment in the developing world depends on (a) financiers placing large bets on developing-country growth, or (b) developing countries successfully exporting to earn the hard currency to buy the capital equipment they need. It's hard to see the first happening as long as large U.S. budget deficits and huge U.S. trade deficits mean that the U.S. is not just the only working cylinder for global growth but also a vacuum cleaner sucking up every loose financial dollar. As far as the second--Pervez Musharraf of Pakistan asked for one important thing in October 2001: an increase in Pakistan's textile export quota. He didn't get it, even though a Pakistani working in a textile factory is one who is not studying in a fundamentalist madrassah....

Posted by DeLong at 04:41 PM

April 27, 2003
The Economist Calls for More Aggressive Pro-Market Reforms in Latin America

The Economist calls for "second generation" neoliberal reforms in Latin America: "The way forward, Mr Williamson concludes, is to 'complete, correct, and complement the reforms of a decade ago', not to reverse them. But can this new formulation command a consensus? However cautious, references to selective capital controls, the role of the state, and income distribution all point to the reform agenda moving towards the centre. Some free-marketeers will object. On the other hand, the region's new centre-left governments, such as that of President Luiz Inácio Lula da Silva in Brazil, might agree with much of this new agenda. One interpretation of the past six months in the region is that the left has signed up to the 'Washington consensus', at least in practice. Lula's government has not only tightened monetary and fiscal policy, it is pursuing the structural reforms espoused by its predecessor. This is not simply tactical, insists a member of Mr da Silva's inner circle of advisers. The government's targets include doubling the efficiency of existing social spending in four years, and raising exports by 10% a year... " Certainly Latin America (outside Argentina) looks like it has a very bright potential economic future. But it has...

Posted by DeLong at 01:19 PM

April 03, 2003
Europe's Business Cycle and Monetary Policy

As time passes, and as the European periphery becomes richer and richer, its real exchange rates vis-a-vis the European industrial core have to rise. This is the Balassa-Samuelson effect: poor countries have low real exchange rates because international trade is concentrated among the capital- and technology-intensive goods in which rich countries' absolute advantage is greatest, and so as countries catch up to the industrial core, their real exchange rates rise. In the case of poor countries inside the euro zone, convergence and the consequent rise in real exchange rates requires faster inflation than in the industrial core. If development on the European periphery is successful, and if growth on the European periphery is rapid, then inflation on the European periphery will be rapid too. This means that, if eurozone-wide inflation is to be low, there must be deflation--falling prices--in the German-Belgian-French industrial core of the euro zone. Deflation is, in general, a bad idea for lots of reasons, one of the chief of which is the catastrophic consequences of nominal wage cuts for worker morale. Yet as long as the ECB takes its goal to be low inflation eurozone-wide--rather than low inflation in the eurozone's industrial core, with the developing...

Posted by DeLong at 07:41 PM

March 22, 2003
Brink Lindsey Is Very Good Indeed

I've been rereading Brink Lindsey's book, Against the Dead Hand. God, it's good! When I compare it to other books that have gotten much more attention like... Ummm.... Well! Here's what I said about Brink's book on an earlier occasion: Now Brink Lindsey has written a book: Brink Lindsey (2002), Against the Dead Hand: The Uncertain Struggle for Global Capitalism (New York: John Wiley: 0471442771). The purpose of the book is to celebrate the end of one of what Lindsey sees as one of the great obstacles to human progress. The obstacle is "the dream of centralized, top-down control over the course of economic development" (p. 2). In Lindsey's mind, whether the policies were the bloody collectivization of agriculture by Stalin, Mao's command that peasants smelt steel in their backyards, French bureaucrats providing indicative guidance to enterprises for capacity expansion, the UK Labour Party nationalizing the "commanding heights" of the economy, Franklin D. Roosevelt commanding the separation of investment from commercial banking and decreeing the creation of the TVA, or Park Chung Hee offering large subsidized loans to chaebol that would successfully export--it was all one dream: the dream that government controls could successfully manage the economy. It is this...

Posted by DeLong at 08:40 AM

March 06, 2003
When Is the Right Time to Fix the Roof?

The Economist surveys India's public finances. The urban Indian economy is booming. The rural Indian economy is undergoing a (we hope) transitory drought. Because the overall urban-economy news is good, there is very little pressure on the Finance Minister to try to close the budget deficit. But by the time the economic news turns bad, it will be too late to be able to close the budget deficit without severe economic distress. The time to fix the roof is when the sun is shining, after all. Jaswant Singh will probably get away with it: as Rudi Dornbusch always said, unsustainable economic policies nearly always manage to sustain themselves longer than you would believe. But Rudi always added a second sentence: when the collapse begins, it almost always comes faster and is more terrible than you could have imagined. It makes me want to bang my head against the wall... Economist.com: ...The countryside, where 70% of the population live, has been afflicted with one of the worst droughts in decades, affecting nearly a third of the country. Agricultural production, still about a quarter of Indian output, is forecast to have fallen by 3.1% in the fiscal year that began in April...

Posted by DeLong at 03:26 PM

August 29, 2002
European Economic History Reading Course: Fall 2002: Second Draft Syllabus

1. Basics September 12: Robert Bates and Avner Greif (1998), Analytical Narratives (Princeton: Princeton University Press). Massimo Livi-Bacci (2001), A Concise History of World Population (Oxford: Blackwell). September 19: Douglass North (1981), Structure and Change in Economic History (New York: Norton). Douglass North (1990), Institutions, Institutional Change, and Economic Performance (Cambridge, UK: Cambridge University Press). Jack Goldstone (1987), "Cultural Orthodoxy, Risk, and Innovation: the Divergence of the East and West in the Early Modern World," Sociological Theory, 119-135. September 26 Jared Diamond (1999). Guns, Germs, and Steel (New York: W.W. Norton). 2. Europe Before the Industrial Revolution October 3: Carlo Cipolla (1980), Before the Industrial Revolution (New York: Norton). Philip Hoffman (1988), "Institutions and Agriculture in Old Regime France," Politics and Society, 16, 241-264. October 10: Jan de Vries and Ad van der Woude (1997), The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500-1815 (Cambridge, UK: Cambridge University Press). Jan De Vries, “The Industrious Revolution and the Industrious Revolution,” Journal of Economic History 54 (1994): 249-270 3. The European World Economy October 17: Kenneth Pomeranz (2000), The Great Divergence: Europe, China, and the Making of a Modern World Economy (Princeton: Princeton University Press). Richard Easterlin (1981),...

Posted by DeLong at 09:44 AM

July 27, 2002
The Daughter-in-Law Who Doesn't Talk Back

Dan Kohn finds a... Dan Kohn's Blog ...inspiring WSJ story on automation improving women's lives in rural Mali. Not only is the peanut butter better -- and Mrs. Doumbia's selling easier -- so is the quality of life in the 300 Mali villages that have the machine. Girls who were kept home to help with the domestic work from dawn to dusk are now going to school. Mothers and grandmothers who would have spent a lifetime pounding and grinding now have the free time to take literacy courses and start up small businesses, or to expand family farming plots and nurture a cash crop such as rice. They have dubbed the durable, uncomplaining machine "the daughter-in-law who doesn't speak." This is the simplest, best description I've ever seen on explaining why productivity improvements (which can often be socially wrenching) are the only way to improve the standard of living... WSJ.com - Mali's Makeshift 'Cuisinarts' Create Peanut Butter and New Possibilities...

Posted by DeLong at 07:38 AM

July 05, 2002
Thirteen Years After the Fall of the Berlin Wall, Cuba Remains Reactionary

One would have thought--I certainly did--that there would be some movement in Cuba since 1989. Instead, the country remains locked in Brezhnevite stasis. One would think that the second and third ranks under Castro would have taken some action long before now: after all, the longer the current system lasts, the worst their chances when Castro finally becomes incapacitated. The Economist: Cuba's economy: The disaster is now "irrevocable" ONE more European firm suspended operations in Cuba recently. The company, a building firm working in partnership with the Cuban government, found that its partner was dipping into company funds and that workers were selling materials on the black market. Another European company wants to be available to serve its customers 24 hours a day, seven days a week; but company cars, easily identifiable by their licence plates, may be used only at certain times. No es facil, as people say all the time in Cuba. It's not easy for foreigners to do business here. Cuba, out of necessity, has allowed capitalism into its socialist system. But it then keeps capitalism down, as it feels it must, with a mass of complex and sometimes contradictory rules and regulations. Just when foreigners find...

Posted by DeLong at 07:18 AM

June 30, 2002
Commodities From Africa

I stopped by the display in the supermarket. "Nature's friend," it said, with a picture of a ladybug on the box. "100% juice." It was expensive: $3.00 for a single liter. It had a strange narrative on the back: "...a beautiful, fertile valley... nature's little helper, the Ladybug, protects the fruit and keeps it perfect... a taste... as beautiful as the valley they're named after--Ceres." I picked it up and put it in the shopping cart, but not because I had any need for a one-liter carton of guava juice (mixed with pear and apple juices). I picked it up and put it in the shopping cart because it--of all the items in the California suburban mega-Safeway--was the only commodity I had seen that came from Africa. Oh, I know there must be others--some of the coffee, surely; some of the chocolate (especially that processed in Europe) must have come from African beans. But a whole continent, and the only product from it I noted in the entire store was Ceres-brand fruit juices. Scary? Yes. Depressing? You betcha....

Posted by DeLong at 09:18 PM

June 28, 2002
From the Economist's Correspondent in Zimbabwe

Mugabe "has also targeted critical journalists, ten of whom, including this correspondent, are facing criminal charges for articles they have written". I do not know the name of the Economist's correspondent in southern Africa who is reporting on Robert Mugabe's campaign to make sure that he stays in power forever, even though his country becomes a wasteland around him. The Economist preserves its tradition of anonymity in its pages--even when it is "this correspondent" who will be sent to jail should Mugabe conclude that the hue and cry will be less over one writer in jail whose pen is stopped than if that writer is allowed to continue to tell the truth. | Economist.com | ...Mr Mugabe says that his "fast-track land reform" will redistribute wealth from rich whites to poor blacks, from whose families the land was stolen in colonial times. At a recent conference in Rome, he called the programme "a firm launching pad for our fight against poverty and food insecurity". But since the land is usually handed out to ruling-party loyalists, rather than skilled farmers, the result so far has been the opposite. Cereal production in Zimbabwe has fallen by 67% since 1999-2000, according to the...

Posted by DeLong at 07:04 PM

June 25, 2002
The Philippines Tries to Develop Using Its Only Abundant Factor of Production: Unskilled Labor Willing to Work Outside the Country

A very nice look, from the June Wired, at the Philippine diaspora. In many ways this pattern is not so unusual, or would not be so unusual if national governments allowed it. During the 1870-1920 period, after all, perhaps 1/7 of the world's population changed continents--and perhaps a good 1/3 of those who migrated across oceans later migrated back to their original home country. They were called "birds of passage. " Wired 10.06: One Nation, Overseas Need (hired) help? Try the Philippines, the forerunner of tomorrow's distributed economy, supplying nurses, teachers, techies, and sailors to the global village. By David Diamond They're known as bagong bayani, a Tagalog expression meaning "new heroes." That may sound a bit inflated, but at a succession of December celebrations in Manila, Filipinos who work on contract in foreign countries get treated something like the Series-winning Yankees coming home to New York. One day is Health Awareness Day, when thousands of overseas Filipino workers, also called OFWs, are treated to free medical care, and another is Family Day, when at malls all around the nation, the government throws a mass party. Bright welcome banners stretch from rafters. Christmas music spills from loud speakers. Returned workers,...

Posted by DeLong at 06:12 PM

June 06, 2002
Cuba

Cuba - WSJ.com - Major Business News It remains astonishing and remarkable: thirteen years after the collapse of the Soviet Bloc, and Cuba continues to be frozen--politically and economically--in the pattern it took in the 1970s. There is something to be learned about the persistence of modern dictatorships from this, but I am not sure what... Cuba's Slumping Economy Means Shortages, Blackouts By JOSE DE CORDOBA Staff Reporter of THE WALL STREET JOURNAL MEXICO CITY -- Cuba appears headed for a long, hot summer of electrical blackouts, gasoline shortages and economic hardship as its tattered economy reels from a sharp fall in tourism, a cutoff of cheap oil from Venezuela and slumping sugar prices. In the latest development, Havana is preparing to close about half its 156 sugar mills in coming months and restructure the industry, which has been the backbone of the island's development for most of its history. Cuba's state-run media has yet to report the plan, which would close 71 mills, but government officials and sugar-mill employees confirm it, according to Reuters. Cuban government officials weren't available to comment. "Cuba is heading into another economic crisis," says Damian Fernandez, a Cuba expert at Florida International University near...

Posted by DeLong at 02:25 PM

PEIS--Notes on Reform...

For my sins, I have wound up as chair of an interdisciplinary studies major, Political Economy of Industrial Societies, here at Berkeley. The major has lots of eager and enthusiastic students--those who want to do interdisciplinary work are, in my experience, the most eager and enthusiastic, and often very capable as well. The major has next to no money. Therefore we survive through exploitation: paying lecturers $7000 a pop to teach courses, thus taking advantage of the large excess supply of academics in history, political science, and related disciplines that have--in an appalling failure of workforce planning--been pumped out of America's universities over the past decades. I had coffee with one of my lecturers yesterday. Jesse Goldhammer, a guy who has just moved to Berkeley from Austin, a newly-minted Berkeley Ph.D. in political science, a political theorist, with a just-completed dissertation (and, hopefully, soon a book contract) on French political thinkers' conceptions of violence as both foundation-making and foundation-breaking for political regimes. We have him slotted to teach one course--PEIS 101, Modern Theories of Political Economy--this summer, and two courses next spring. He is--as are all of our lecturers--smart, enthusiastic, a very good teacher, intellectually curious, and convinced at some...

Posted by DeLong at 10:54 AM

June 05, 2002
A Truly Loathsome Toad

So I stopped by Andrew Sullivan's weblog this morning to see what's what, and was confronted with a short item which read, in its entirety: SELF-PARODY WATCH: "Special Report: Zambian Copper," - a headline from this week's Economist. At first, I genuinely didn't get the joke. You see, I'd read the Economist's Zambian copper story. It was one of the most interesting (and depressing) articles in this week's edition: the failure of privatization in southern Africa, 15000 workers who may lose their jobs, a mining complex that once produced 10 percent of the world's copper so damaged by two decades of neglect during nationalization that now there appears to be no way--not even if the mineworkers of Zambia work for free--that the mines can produce more in value than they take in, the fact that Zambia has little else worth exporting besides copper, whether the key flaw lay in the decades of nationalization or in the transformation of the privatization program into a "looting exercise." Why, I wondered, does Andrew Sullivan consider this--interesting and important--story to be a big joke? But then I began to imagine what the inside of Andrew Sullivan's mind must be like... Look! The Economist thinks...

Posted by DeLong at 09:22 AM

May 06, 2002
Jean Dreze Sounding Neoliberal

Development economist Jean Dreze sounding amazingly neoliberal--shrink the (corrupt and incompetent) state and grow the market--as he rips into India's Food Distribution Program.

Posted by DeLong at 03:12 PM

April 03, 2002
Questions About India

Yet the more I think and learn, the less I think I know and understand about Indian economic development. There are fundamental and basic questions about which I am totally clueless...

Posted by DeLong at 04:05 PM

November 23, 2001
The Long Run Profit Share

U.S. Profits Over the long run non-financial companies' profits have fallen sharply as a share of GDP: by roughly half between the 1950s and today. * In the short run, the decline in profits since their peak during the second half of the 1990s is also impressive....

Posted by DeLong at 09:58 PM