tag:blogger.com,1999:blog-17232051.post5640710411459855491..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: "This time it's different": China editionNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-17232051.post-73496377688814386402012-07-23T17:13:41.709-04:002012-07-23T17:13:41.709-04:00"without any of the trappings of a modern eco..."without any of the trappings of a modern economy (good legal system, free markets etcetera) I'd be very surprised if China even gets as far as the middle income trap,"<br /><br />The US doesn't have a good legal system any more. Does this mean that we're going to drop out of the high-GDP economies? Maybe we already have.<br /><br />Actually, by all accounts China's legal system is pretty much as good as the US's. This is not a compliment to the US. But remember that China has a *very* long legal tradition, being in fact the inventor of what is now known as "Legalism".neroden@gmailhttps://www.blogger.com/profile/07475686367097445497noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-3461610340017282952012-07-23T17:11:25.807-04:002012-07-23T17:11:25.807-04:00"Yet it is exactly the nature of China's ..."Yet it is exactly the nature of China's command economy and one party rule that makes such a change so difficult. "<br /><br />Really? Seems far easier in China's command economy and one-party system than it is the US's economy and two-party system.<br /><br />One of the things is, in China's command economy, the elite *can* (I don't know if they *will*) restructure the economy while still keeping their own lives relatively cozy.<br /><br />In the US economy, we have psychopaths in the elite who will not be satisfied with merely being set for life and having a couple of mansions; they have to have MORE MORE MORE MORE forever. Therefore they refuse to restructure the economy while keeping their own lives relatively cozy, because they can't stand the concept of merely being relatively cozy.<br /><br />If China has *THAT* problem, they're screwed. But I think they don't. If they have an elite who is content to merely be rich and powerful, rather than demanding MORE MORE MORE, they can simply restructure the economy and win.neroden@gmailhttps://www.blogger.com/profile/07475686367097445497noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-70783756913020096602012-07-23T17:07:07.288-04:002012-07-23T17:07:07.288-04:00I don't know what the Solow Model is, but it&#...I don't know what the Solow Model is, but it's clear what the escape valve is: after building your booming industrial economy based on bubbles, when the crash starts, you promptly implement socialism, 100% tax rates on the rich, direct cash transfers to the poor.<br /><br />This is how England avoided revolution; by installing the Labour Party after WWII. They had done much the same thing for previous bubbles; after each massive bust, left-wing redistributionist parties got into power and alleviated the social problems.<br /><br />Will the Chinese government do the same? No idea. It's a question of their political entanglements. I think their current master of the economy is willing to do so, but I don't know if the power structure around him will allow him to implement actual Communist policies all of a sudden.neroden@gmailhttps://www.blogger.com/profile/07475686367097445497noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-24732716124132313042012-07-15T08:38:32.109-04:002012-07-15T08:38:32.109-04:00Private Equity DNE Venture Capital.
Really, you p...Private Equity DNE Venture Capital.<br /><br />Really, you partisans need to get the terminology right if you are set on making this argument because getting the terminology wrong makes you look daft from the outset.<br /><br />Venture capital indicates funding new companies (startups) and hopefully taking them public.<br /><br />Private Equity is about using leveraged buyouts to buy pre-existing companies, often taking publicly traded companies private (I'll leave it up to you do figure out what sort of advantages taking a public company private confers on the private equity management team).Luzl4l1f3noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-85989007927261321032012-07-14T18:04:39.080-04:002012-07-14T18:04:39.080-04:00...because most of the economy was farming; with f......because most of the economy was farming; with farming, you get recessions when there are bad harvests. The same was true in the West.<br /><br /><br />I like this-The Weather was "The Decider"-individuals weren't dependent on the "weather" of humans. The Amish in me liked that. Thanks!<br /><br />Another thing that's worth noting is that in the 1930's FDR was often talking about "the price level" and it was very effective communication and made sense at the time because most of the people were FARMERS at that time and most importantly they were PRODUCERS of "stuff' that they had to sell. Nowadays, when you talk about NGDP targeting or price level targeting you are talking to a lot of hands in many ways. We have become a nation of RENTIERS. Hmmm, what do we do when we are mostly rentiers to pull us out of the hole we're in?Doc at the Radar Stationnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-87501672916349175792012-07-14T03:28:10.283-04:002012-07-14T03:28:10.283-04:00Actually, I didn't know that fact. But in any ...Actually, I didn't know that fact. But in any case Noah, could you please respond to my e-mail?Blue Aurorahttps://www.blogger.com/profile/02044362251868221897noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-66210501106528807322012-07-13T19:34:49.016-04:002012-07-13T19:34:49.016-04:00Yeah. While sometimes gut hunches, intuition and p...Yeah. While sometimes gut hunches, intuition and prejudices make one look incredibly smart, most of the time,not at all. People have to be careful in speaking from their gut or reaching snap judgments over board games, or culture, or television. Breaking Bad may one day convince many Europeans that all Americans are meth heads.<br /><br />Japan seems like an extraordinarily creative place, although strangely I've been playing a lot more Western videogames in recent years; where once Grandia, now Fallout 3. Apparently it's hard to get food there that isn't excessively salty/MSG-y. I don't know, I've never been.Azizhttp://www.azizonomics.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-51435809313144096872012-07-13T16:09:38.604-04:002012-07-13T16:09:38.604-04:00Well, actually it's not doing so hot right now...Well, actually it's not doing so hot right now, thanks to the nuclear thing plus weak demand in Europe and the U.S. A China crash would mean serious trouble for Japan.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-48976577767144039742012-07-13T15:37:07.027-04:002012-07-13T15:37:07.027-04:00Noah @ 11:17 said:
"Japan's economy tank...Noah @ 11:17 said: <br />"Japan's economy tanked in the 90s. It did pretty well in the 00s."<br /><br />Thanks, in no small part, to booming bubblicious trade with China. Back in the tank in the 10s?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-54594104569452909942012-07-13T14:46:31.665-04:002012-07-13T14:46:31.665-04:00Inexact sciences (and "sciences") could ...Inexact sciences (and "sciences") could still benefit from ridding themselves of biases ingrained by centuries of cultural stereotyping dating back to imperial propaganda.<br /><br />For example, the stigma that Japan is "uncreative" has always been my pet peeve. That was the piece of BS that really opened my eyes to how insidious these ancient stereotypes are.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47605726618027911902012-07-13T14:39:43.393-04:002012-07-13T14:39:43.393-04:00Did you reach a conclusion with this piece? Citing...<i>Did you reach a conclusion with this piece? Citing some model about development is nice, and this time is different is always eye opening. But what is your point?</i><br /><br />1. Analyzing countries' growth prospects by trying to make broad generalizations about their culture is a losing game.<br /><br />2. China's government probably does not try to manage the economy for the benefit of all, as the analyst claims.<br /><br />3. It is important to be extremely skeptical of any claim that a certain country, economy, or market is immune to bubbles and crashes.<br /><br />4. China's average growth rate can be expected to slow from the 10% pace it enjoyed for the past 30 years. This slowdown may happen smoothly or via a crash and recovery. <br /><br />How is that?Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-84411706784028209192012-07-13T14:20:11.089-04:002012-07-13T14:20:11.089-04:00Did you reach a conclusion with this piece? Citin...Did you reach a conclusion with this piece? Citing some model about development is nice, and this time is different is always eye opening. But what is your point?<br /><br />Using a western lens to examine china always seemed problematic to me. I mean....when did they get any property rights, like 1998? You think comparing that market to any other housing market is really warranted?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-10740847199405655042012-07-13T13:36:57.130-04:002012-07-13T13:36:57.130-04:00"It's very weird that after all these yea..."It's very weird that after all these years, we're still trying to extrapolate countries' futures based on what kind of board games they play."<br /><br />Whoever said economics was an exact science?<br /><br />China has massive problems — mostly (in my view) the misallocation of capital via graft, poor central planning and animal spirits. That's fine; plenty of countries both capitalist and non-capitalist have gone through phases of very extreme capital misallocation and emerged the other side the better. But the breakdown is painful. And by running massive trade deficits with China, and being dependent on many products and components they export (e.g. rare earths) the West has opened up a huge gulf of volatility.Azizhttp://www.azizonomics.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-78797564819574737772012-07-13T11:17:01.223-04:002012-07-13T11:17:01.223-04:00Japan's economy tanked in the 90s. It did pret...Japan's economy tanked in the 90s. It did pretty well in the 00s.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-61276823848136869862012-07-13T10:53:27.188-04:002012-07-13T10:53:27.188-04:00Facetiously is also the shortest word to contain a...Facetiously is also the shortest word to contain all of the vowels in the English language, including y.<br /><br />Double fact day!Shawnnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-41008046233643467812012-07-13T10:42:10.372-04:002012-07-13T10:42:10.372-04:00Entertaining post, but one of the things I have be...Entertaining post, but one of the things I have been noticing over the years is that any opinion on economics that includes the premise that Japan's economy has "tanked" is likely to be full of observations that are half-truths at best. It is true that Japan's economy is not the juggernaut that it once seemed, but by almost any measure, it still is more successful, and on a more sound basis than any economy in the West.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-29207162674054548932012-07-13T10:37:38.594-04:002012-07-13T10:37:38.594-04:00Notice the tongue emoticon, Noah...I was being fac...<i>Notice the tongue emoticon, Noah...I was being facetious.</i><br /><br />Actually, the tongue emoticon is not always used to indicate facetiousness!<br /><br />By the way, did you know that "facetiously" is the only word in the English language that contains all the vowels, including y, exactly once, in alphabetical order?<br /><br />FACT OF THE DAY!Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-35748448412266603372012-07-13T10:34:28.108-04:002012-07-13T10:34:28.108-04:00I tend to think the relevant question is are they ...<i>I tend to think the relevant question is are they done catching up? Seems like there is plenty left to do, so over the medium term the answer is no, even if there are bumps along the way.</i><br /><br />I agree. But people who had gotten the idea into their heads that 10% Chinese growth is a physical constant of the Universe think a shift to 7% growth is a disaster. Nope! It's just the Solow Model...Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-54855996288742457062012-07-13T09:08:58.936-04:002012-07-13T09:08:58.936-04:00I've seen this before, where I'd swear tha...I've seen this before, where I'd swear that a book about Chinese culture and business practices was a search and replace job on a book about Japan.<br /><br />Similarly, I've seen the same writings about 'what's new about the [generation]' repeated for the Boomers, Gen X-ers and Millenials/Gen Y's.<br /><br />It's the same sh*t, mostly worthless, with a fresh coat of cheap paint as needed.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-71515409845331591262012-07-13T08:47:12.032-04:002012-07-13T08:47:12.032-04:00I tend to think the relevant question is are they ...I tend to think the relevant question is are they done catching up? Seems like there is plenty left to do, so over the medium term the answer is no, even if there are bumps along the way.Adamhttps://www.blogger.com/profile/00848821084269314215noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-40769158006653526022012-07-13T08:13:31.850-04:002012-07-13T08:13:31.850-04:00Clearly the lost decade would have never happened ...Clearly the lost decade would have never happened if only Japanese people played Go.<br /><br />...wait, that's not right.UserGoogolhttps://www.blogger.com/profile/07451696693372858067noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-46372566186212990612012-07-13T07:19:15.928-04:002012-07-13T07:19:15.928-04:00Notice the tongue emoticon, Noah...I was being fac...Notice the tongue emoticon, Noah...I was being facetious. I know that there were periods of great inflation in Chinese history. I'm not saying that this time is different for China, I'm just stating an observation from my knowledge of Chinese history.Blue Aurorahttps://www.blogger.com/profile/02044362251868221897noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-13271597535713399602012-07-13T06:03:42.030-04:002012-07-13T06:03:42.030-04:00When I was doing my MBA in the early 1990s we had ...When I was doing my MBA in the early 1990s we had similar discussions about Japan and the "Asian tigers" - why were they doing so well, was this the end of Western economic dominance? There was an assumption that their success was due to intrinsic cultural factors, and that the West needed to adopt practices from their cultures if it wished to survive. There were whole seminars on "Japanese business" - not just how to do business WITH Japanese, but how to do business LIKE Japanese. There was also a belief that their success would never end.....<br /><br />Cue the Asian crisis of 1997. Yes, the Asian tigers recovered, but Japan, which was the dominant economy in the East, has had 20 years of stagnation. Why do we NEVER learn? China's growth is a bubble and the signs are already there that it will burst. We should be preparing for the consequences.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-34418447563201057572012-07-13T05:47:18.456-04:002012-07-13T05:47:18.456-04:00Yes, I think your analysis is very reasonable. Tha...Yes, I think your analysis is very reasonable. That financial repression point is particularly pertinent. Falling inflation means that SOE borrowing rates are becoming more expensive, which could be what causes the sh*t to hit the fan.the idler of marchnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-39949958476588764562012-07-13T05:31:58.073-04:002012-07-13T05:31:58.073-04:00"...entrenched superstitions (especially abou..."...entrenched superstitions (especially about health), reliance on extra-legal mechanisms for contract enforcement and business expansion, and heavy reliance on relationships and connections."<br /><br />Aren't people saying the same things about Wall Street today? Plus ça change....Anonymousnoreply@blogger.com