Category Archives: International

Benjamin Powell – Out of Poverty: Sweatshops in the Global Economy

Benjamin Powell – Out of Poverty: Sweatshops in the Global Economy

Powell has the audacity to evaluate policies by their results, not their intentions. In this book, anti-sweatshop activists come off poorly. Most of their favored policies, despite good intentions, have lousy results. The concluding chapters contain a host of economically literate alternatives, from freeing trade and immigration restrictions to cultural openness and exchange. Integration, not segregation.

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Tomas Larsson – The Race to the Top: The Real Story of Globalization

Tomas Larsson – The Race to the Top: The Real Story of Globalization

Larsson is a Swedish-born journalist who lived in Thailand for ten years and studied in the U.S. In this quick-reading book, he shares real-world stories of people who globalization has enabled to become entrepreneurs, to move from bicycles to cars, from outdoor farms to air-conditioning, from word-of-mouth to the Internet, and more.

Since the book’s 2001 publication, many of the statistics he shares are now dated—they have almost all moved in a positive direction, which only makes his pro-trade and pro-openness arguments stronger.

Masaji Ishikawa – A River in Darkness: One Man’s Escape from North Korea

Masaji Ishikawa – A River in Darkness: One Man’s Escape from North Korea

Ishikawa was born in Japan in 1947 to a Korean father and Japanese mother. His family moved to north Korea when he was 13. This turned out to be a mistake, and it took him 36 years to escape. Ishikawa’s story is one of hunger, pain, loneliness, drudgery, heartbreak, and loss.

North Korea also has a rigid caste system. Anyone with Japanese lineage or family connections was essentially an untouchable, making Ishikawa’s life even harder. Fortunately, he at least managed to stay out of the north Korean gulag.

As most memoirs do, some parts seem a little exaggerated, especially his early years in Japan, which were dominated by an abusive and thuggish father—who made the fateful decision to move to north Korea rather than South Korea, where he was born. The move changed his father’s personality for the better almost overnight. But Ishikawa does not portray himself as a saint, regretting more than one instance where he inherited his father’s temper.

More to the point, Ishikawa tells stories from the inside of a nation-scale human rights tragedy. By bringing attention to the issue, he is helping to make things better one day. Even if he has not yet found happiness for himself after his escape–a common theme in other north Korean escapee memoirs I’ve read–Ishikawa has still done an immense amount of good for others. May he find some peace in knowing that.

Lee Alan Dugatkin and Lyudmila Trut – How to Tame a Fox (and Build a Dog): Visionary Scientists and a Siberian Tale of Jump-Started Evolution

Lee Alan Dugatkin and Lyudmila Trut – How to Tame a Fox (and Build a Dog): Visionary Scientists and a Siberian Tale of Jump-Started Evolution

Coauthored by one of the lead scientists on a still-in-progress 60-year fox domestication experiment in Russia. They tell a compelling story filled with ups and downs, joy and heartbreak, backroom politicking, and all manner of close calls. They also offer a trove of insights into genetics and the process of domestication they have learned from domesticating a new species.

The researchers bred wild foxes and selectively bred the tamest ones. Selecting for this single trait came with an entire package of other new traits in just a few generations. Besides increased docility, the descendants of tame foxes also developed different coats and markings, smaller brains and jaws, reduced stress hormones, and changed vocalizations. They also retained youthful traits longer, or even permanently–geneticists call this neotony. The process exactly mirrors what happened to dogs as they were domesticated from wolves.

Strangely enough, some humans also exhibit neotonous traits, such as retaining blue eyes or blonde hair into adulthood.

Non-tame foxes bred from the same parents were also kept for breeding as an experimental control. They developed none of these traits.

Another insight is that humans are a domesticated species—we did it to ourselves, and reap the benefits to this day. Domestication is arguably a two-way process, with other species such as wheat domesticating us at the same we domesticated it. The story of the great fox experiment also shows the love that people and animals can have for each other, which warmed this pet owner’s heart.

Ronald Coase and Ning Wang – How China Became Capitalist

Ronald Coase and Ning Wang – How China Became Capitalist

China’s post-Mao transformation has been incredible, but suffers from a lack of policy certainty. Fits and starts, stops, and reverses happen at seemingly random times and places, making long-term investments extremely risky. More importantly, China’s growth is ultimately limited by a lack of a viable marketplace of ideas, both in politics and in business. If China liberalizes, its future is bright. if not, then not.

Coase was 101 years old when this book was published. He was a fully contributing coauthor; his intellectual fingerprints are all over this book, from pointing out the limitations of blackboard economics to his love of Adam Smith’s Theory of Moral Sentiments. An incredible accomplishment, and a useful one for this analyst.

Best Books of 2018: Factfulness

Re-posted from cei.org.

Review of Factfulness: Ten Reasons We’re Wrong About the World-and Why Things Are Better Than You Think (Flatiron Books, 2018) by Hans Rosling with Ola Rosling and Anna Rosling Rönnlund.

Think Julian Simon, Matt Ridley, and Steven Pinker’s data-driven optimism, mixed with Michael Shermer and Bryan Caplan’s awareness of human cognitive biases, as told by a kindly, avuncular Norwegian. The book reads easily, is visually savvy, and has a friendly, non-polemic tone.

Rosling, who passed away of cancer while writing this book, wanted it to be his last, grand statement. He wants people to simultaneously believe two things: that the state of the world can be both bad and getting better. Hundreds of millions of people still live in absolute poverty. But for the first time in history, the global absolute poverty rate is now below 10 percent. Improvement is coming so fast that the number of people in poverty is going down even as population increases.

Most people think in binaries—left and right, good and bad, and so on. Rosling encourages nuance. Rather than a simple binary of rich and poor countries, Rosling uses a four-level framework. Level one is absolute poverty—subsistence farming, little or no electricity, crude sanitation, high disease rates, and low life expectancy. Level four is where the rich countries are—the Anglosphere, most of Europe, and the Asian tigers. When people think of rich and poor countries, they tend to think of either level one or level four countries. As it turns out, most people in the world are middle class—they live in level two and level three countries. In varying degrees, these countries offer better health and sanitation than level one countries, along with some industrial development, education for children instead of labor, some degree of political and lifestyle freedom, and so on.

One thing I especially like about Rosling’s framework is that countries can level up. Prosperity is a process, not an on/off switch. And the number of levels is theoretically infinite. Rosling chose to use four levels, but a more granular analyst can use as many levels as they want. More importantly, it may well be that what Rosling describes as a level four country today will be startlingly poor a century from now. Most of the world will have leveled up to the equivalent of level five or higher.

Rosling also provides an important public service in teaching people how to look at data. The most important example is the lonely number fallacy:

Never believe that one number on its own can be meaningful. If you are offered one number, always ask for at least one more. Something to compare it with. Be especially careful about big numbers. (p. 130)

I used this advice in my review of Trump economic advisor Peter Navarro’s coauthored book with Greg Autry, Death by China. The data won’t allow Navarro and Autry to make the case they want, so they have to resort to trickery:

Navarro and Autry give just such a lonely number when they argue that, “On [President George W.] Bush’s watch alone, the United States surrendered millions of jobs to China.” (p. 10) Let’s give that large, lonely number some company. In January 2001, when Bush took office, the U.S. labor force was 143.8 million people. When his term expired in January 2009, it was 154.2 million people, despite the economy being in recession. The data are here.

So even if “the United States surrendered millions of jobs to China,” those losses were outweighed by gains elsewhere, most of which have nothing to do with trade policy.

Keep this in mind whenever you see a scary number in a news story—if it doesn’t come with company or context, it’s analytically useless at best.

Rosling’s book has been warmly received by a politically diverse audience, and rightfully so. Rosling’s optimism is based on widely available data, not his ideological priors. In areas where the world is not improving, he is quick to point to them as a reform priorities.

More importantly, the data show that the world’s arrows are almost all pointing up. Few people realize this—as Rosling humorously shows, most people perform worse than chimpanzees on a simple multiple choice quiz about human well-being. The errors are not random—they are overly pessimistic in participants across countries and in every demographic category.

Rosling was as effective as anyone in trying to correct pessimistic bias with facts, not least through his easy-to-understand bubble charts. Rosling’s son, Ola Rosling, and daughter-in-law, Anna Rosling Rönnlund, are carrying on his work with their group Gapminder—see, for example, their tour of Dollar Street that shows the various gradations between countries in levels one through four.

Things are bad in many places, but getting better. In fact, for most people in most places, living standards today are the best they’ve ever been. It is up to us to see that the process continues. To do that, we need to be aware of both the facts on the ground and our inborn cognitive biases that prevent us from seeing those facts clearly. From there, action. Use your head, not just your heart. You need both.

U.S.-China Trade Deal at G20 Small Move in Right Direction

Nobody knew what to expect going into the G20 summit in Argentina, especially from a planned meeting between Chinese President Xi Jinping and U.S. President Donald Trump. The headlines coming out of the meeting are largely positive. China is ending its 40 percent tariff on U.S.-made autos, while the U.S. will delay for 90 days a rise in tariffs on $200 billion of Chinese goods from 10 percent to 25 percent, previously scheduled for January 1.

During that 90-day period, the U.S. hopes to convince China to reform a number of its protectionist trade policies. But after that, anything goes.

President Xi is walking back a policy that was only just put in place as a direct retaliation to U.S. tariffs, and is leaving other retaliatory tariffs in place. On the U.S. side, the 10 percent Trump tariff that inspired the retaliations will remain in place.

The takeaway is much the same as from the July meeting between Trump and European Commission President Jean-Claude Juncker. As I noted then:

[N]either side is lowering any barriers. And neither side’s promises involve making things better. They have agreed to not make things worse. But in a bizarre, only-in-this-administration kind of way, nothing is better than nothing.

China aspires to become a global economic power. To become one, it must liberalize. The new U.S. tariffs have pushed China in the opposite direction. Its trade policies are now even more protectionist than before. This is not changing as a result of the meeting.

Moreover, after the 90-day ceasefire expires, China’s government will likely retain its intellectual property theft, forced technology transfer, and government ownership and control policies. On this point, I sincerely hope my prediction is wrong. For as long as they are in place, these policies will hinder poverty eradication in China, while causing difficulties not just with the U.S., but with China’s trading partners throughout the world.

On the U.S. side, President Trump’s trade policies will also remain unchanged. Admittedly, they are stimulating some sectors of the economy. Lobbyists who work on the Commerce Department have reported 879 clients so far this year, up 40 percent since the end of the Obama administration. But intended beneficiaries, such as General Motors and its employees, are finding the Trump tariffs less than helpful.

The G20 summit and the Trump-Xi meeting could have gone much worse. But the headlines should not be so congratulatory. Productive meetings and negotiations would yield not just a ceasefire, but actual disarmament. That remains the goal—for in a trade war, the weapons fire inward.