Category Archives: International

Inequality in History

Catherine the Great, Empress of Russia, had a personal allowance of one thirteenth of national income, per p. 292 of Robert K. Massie’s Catherine the Great: Portrait of a Woman.

By way of context, this would be equivalent to about $2.7 trillion per year in the modern United States. This annual income is more than the combined lifetime fortunes of Silicon Valley’s wealthiest entrepreneurs. While that mathematical ratio isn’t particularly interesting, from an ethical standpoint it is crucial that Catherine did not earn this income by creating value for others. She took it away from them in a zero-sum game.

Today’s entrepreneurs gain wealth by creating value for others in exchange–about 50-fold more than their own earnings, by William Nordhaus’ estimate. Rent-seeking remains a significant problem, but fortunately is less severe than in Catherine the Great’s time.

Today’s economy has much room for improvement, but reformers on all sides would benefit from taking stock of how much things have improved over the last few centuries, and why.

Advertisements

From the Archives: Peter Navarro on China Trade

Trump trade advisor Peter Navarro is part of the travel team for upcoming U.S.-China trade negotiations. For an idea of what he will add to the discussion, see his book The Coming China Wars. I have also written about some of his economic ideas in the past:

Juan Reinaldo Sanchez with Axel Gyldén – The Double Life of Fidel Castro: My 17 Years as Personal Bodyguard to El Lider Maximo

Juan Reinaldo Sanchez with Axel Gyldén – The Double Life of Fidel Castro: My 17 Years as Personal Bodyguard to El Lider Maximo

Sanchez was Castro’s bodyguard for 26 years, and is now living out his old age in Florida. He saw a lot of things. The book contains plenty of juicy gossip, though from a well-placed source. But Sanchez also makes serious points about how power corrupts people, and the effect the Cuban Revolution has had on Cuba’s fortunes. He also gives insights into how the Cuban government works, what life is like for the elites versus commoners, how dissidents are treated, how the military is trained, and more. That is his real contribution, and it is a valuable one.

Frank Dikötter – The Cultural Revolution: A People’s History, 1962—1976

Frank Dikötter – The Cultural Revolution: A People’s History, 1962—1976

Part of Dikötter‘s trilogy on Maoist China, with the other volumes covering the Revolution and the Great Leap Forward. The Great Leap Forward (1958-1962) caused millions of deaths from starvation, and its attempt at industrialization failed. Rather than admit defeat, Mao decided to double down, and began the Cultural Revolution just four years after the Great Leap Forward ended. In some ways, Dikötter argues, the Cultural Revolution was a continuation rather than a distinct event.

It formally lasted for a decade until Mao’s 1976 death, though by then it had tapered off somewhat. This second push went only marginally better than the first. It also dismantled China’s higher education system, leaving an entire generation essentially with almost no college graduates—at least from domestic universities. China’s university system is still stunted, with professors afraid to do anything that might be considered politically our of line. This has had predictable effects on subsequent generations’ entrepreneurship, political diversity, and cultural output such as literature and film.

Elizabeth C. Economy – The Third Revolution: Xi Jinping and the New Chinese State

Elizabeth C. Economy – The Third Revolution: Xi Jinping and the New Chinese State

A very useful guide to China’s economy and political culture. It is especially credible because it lacks the exaggerated, hyper-emotional tone that many China analysts have taken in the Trump era. Economy’s general take is that China’s reach exceeds its grasp. After five years in office, President Xi Jinping has established that he is no liberalizer. He is re-centralizing economic and political power and undoing some, though not all, of the limited 1990s and 2000s-era reforms.

This is bad for China’s future. But it is no reason for other countries to be scared. Centrally run economies tend not to perform well, to put it mildly. Economy gives example after example of grand central plans for Chinese education, manufacturing, technology, and urban planning that sounded scary, but turned to be pretty crappy in practice. Such plans also consume billions of dollars of resources that could have been better used elsewhere, doubly foiling China’s geopolitical ambitions.

in short, as long as China remains illiberal, it will have limited growth prospects. It will fall further behind its more liberal neighbors and potential adversaries.

This is a shame because China’s 1.3 billion people have both human rights and enormous potential. Their government’s policies have left the country without a vibrant economic or political culture—there is a reason China has few homegrown international brands besides Alibaba and Lenovo. The Great Firewall around China’s internet and its political repression might make the current regime feel more secure, but they prevent the Chinese people from engaging with and profiting from the rest of the world.

The rest of the world needs to continue to put pressure on China’s government to reform its human rights abuses and act in economic good faith. The Trans-Pacific Partnership that Trump pulled out of is a natural venue. Eleven other countries are still party to it, and U.S. participation could only make it stronger. The WTO’s dispute resolution process, which Trump wants to pull out of is another option.

Some of Economy’s other policy recommendations, such as expanded use of the Export-Import Bank, are prone to the same problems as their Chinese analogues, and should be avoided. But overall, this is a smart and sober take in a political climate that badly needs it.

Martin Wolf – Why Globalization Works

Martin Wolf – Why Globalization Works

Of all the books in the early- and mid-2000s boomlet of popular-level books on trade and globalization, this is probably the one written at the highest level. Wolf is a longtime writer for the Financial Times, and before that was an academic and a think tanker. He offers some deep insights into the economics of trade, devastating critiques of anti-globalization activists, and a qualified defense of the current international trading system, which, as of this writing, is still governed by the WTO’s dispute resolution process and a number of bi- and multi-lateral trade agreements around the world. This system is imperfect and overly complicated, but it is a world better than what trade’s enemies had in mind back then and still do today.

Alexis de Tocqueville – Democracy in America

Alexis de Tocqueville – Democracy in America

Tocqueville, a Frenchman, visited America for a period of nine months around 1830 and published this two-volume work after returning home. Tocqueville is incredibly insightful, which is why his book is often cited and occasionally read today, nearly two centuries later. He has a mostly sunny disposition and a generally liberal outlook (in the correct, classical sense of the word), but this book is not quite the love letter to America many make it out to be.