New articles

1. Here’s Bloomberg:

Knee-jerk retaliation runs the risk of violating WTO rules and exposing G-7 members to charges of hypocrisy. While that may not faze US leaders, they should understand that they will have an easier time persuading other nations to unite behind a common effort if it’s aimed at preserving the rules-based system of global trade, not demonizing China. To fight bullying, there’s no need to become a bully.

I’m afraid it’s too late; both political parties now favor bullying smaller nations.

2. Words of wisdom (on China) from Warren Buffett and Charlie Munger.

3. The FT reports that unemployment is falling in Greece:

“The macroeconomic progress has been undoubtedly mad in the past four years in terms of growth, reduced unemployment and falling debt-to-GDP ratio,” said Dimitris Papadimitriou, professor of political science at the University of Manchester.

“The flip side is the cost of living . . . Greek average wages remain very low despite the fact that unemployment has come down, leading to the second-worse purchasing power in the EU, only better than Bulgaria,” he added.

The use of “despite” makes me smile. Sort of like when the NYT reported that prison populations were soaring despite a fall in crime.

4. Niall Ferguson has a Bloomberg piece entitled:

When You’re in a Cold War, Play for Time

A few weeks back, I wrote a post making a similar point:

Because of the way that we perceive time, when we are in the midst of a problem we don’t tend to perceive it as a blip in history, which will soon be replaced by another set of concerns. For this reason, there can be real benefit to foreign policies that “kick the can down the road,” if we are able to avoid outright war. Today, it seems as though places like Russia, China, Iran, North Korea, Cuba and Venezuela will never become free. But who knows what the world will look like in another 30 years.

5. New Hampshire used to grow faster than Massachusetts, for some pretty obvious reasons. It had no income tax, and is right in the path for suburban overflow development outside of the crowded Bay State. But in the 2010s, Massachusetts started growing faster than New Hampshire. That puzzled me, until I read this post by Matt Yglesias:

Okay, it’s New Hampshire. It’s not for us urbanists, and it doesn’t seem like there’s much demand for dense urbanism there. But how about “normal” detached single-family housing — a house and a yard that’s near another house with another yard? Well, it turns out that lots smaller than one acre are only allowed on 16% of the state’s buildable land.

So in this case it’s not smart, walkable urbanism that’s been banned across the majority of New Hampshire — it’s suburbanism.

6. Back in the days of Margaret Thatcher, I thought of the Tories as the pro-growth party and viewed Labour as anti-growth. Now things seem to have flip-flopped. Here’s The Economist:

Labour is posing as the party of Builders. Places that most support housing are in the places Labour needs either to hold or win back at the next general election, according to Mr Ansell’s study. Support for home-building is concentrated in London and smaller cities as well as in Scotland and the so-called Red Wall, a ribbon of northern constituencies that Labour lost in the 2019 election. Plenty of natural Labour supporters may balk at building. But this is a fight the party wants to have. For Labour, nimbyism is another abstract noun to be abolished, like crime or poverty.

The Conservatives have ended up as a party of Blockers.

When it comes to British growth prospects, housing is pretty much the only issue that matters.

7. I was directed to a tweet by Paul Krugman:

By this logic 2022 should have been a recession year. No, you cannot ascertain the stance of monetary policy by looking at interest rates, which would be “reasoning from a price change”. To be fair, the same applies to money supply growth, which was the key variable in Lucas’s 1972 business cycle model. Velocity is too unstable.

8. Here’s why I don’t believe the AI hype:

If people thought that the technology was going to make everyone richer tomorrow, rates would rise because there would be less need to save. Inflation-adjusted rates and subsequent GDP growth are strongly correlated, notes research by Basil Halperin of the Massachusetts Institute of Technology (MIT) and colleagues. Yet since the hype about AI began in November, long-term rates have fallen. They remain very low by historical standards. Financial markets, the researchers conclude, “are not expecting a high probability of…AI-induced growth acceleration…on at least a 30-to-50-year time horizon.”

That’s not to say AI won’t have some very important effects. But as with the internet, having important effects doesn’t equate to “radically affecting trend RGDP growth rates”.

9. The FT has a piece on how the US is losing ground to China in Latin America:

The US and EU, meanwhile, have been focusing on corruption, democracy, the environment, human rights and the risks of doing business with China. The EU’s Global Gateway initiative, envisioned as a response to the BRI, has pledged just $3.5bn to Latin America.

Among the US’s talking points with Latin America is an entreaty to avoid 5G phone networks built by China’s Huawei, which is sanctioned by Washington — but US and European alternatives to Huawei are often more expensive.

A Latin American foreign minister last year compared the American approach to the Catholic religion, telling the Financial Times that “you have to go to confession and you still may end up being damned”.

The Chinese, by contrast, were like the Mormons who “knock on your door, ask how you are feeling” and “want to help”.

Of course the US has been explicitly trying to sabotage Huawei, and in doing so is indirectly damaging the economies of Latin America. But at least they get to hear our sanctimonious lectures on human rights!

10. Another FT story warns that our war on China’s chip industry might backfire:

Speaking to the Financial Times, Jensen Huang said US export controls introduced by the Biden administration to slow Chinese semiconductor manufacturing had left the Silicon Valley group with “our hands tied behind our back” and unable to sell advanced chips in one of the company’s biggest markets.

At the same time, he added, Chinese companies were starting to build their own chips to rival Nvidia’s market-leading processors for gaming, graphics and artificial intelligence.

“If [China] can’t buy from . . . the United States, they’ll just build it themselves,” he said. “So the US has to be careful. China is a very important market for the technology industry.”



5 Responses to “New articles”

  1. Gravatar of David R Henderson David R Henderson
    24. May 2023 at 11:24

    Excellent post.

  2. Gravatar of Solon of the East Solon of the East
    24. May 2023 at 15:27

    I never understood why the US sales the 7th fleet, possibly bristling with nuclear weapons, up-and-down the coast of China.

    Imagine the reverse situation.

    But then, the CCP has put Hong Kong publisher Jimmy Lai in prison. Who knows? Maybe he will die there.

  3. Gravatar of Christian List Christian List
    25. May 2023 at 12:29

    A Latin American foreign minister last year compared the American approach to the Catholic religion, telling the Financial Times that “you have to go to confession and you still may end up being damned”.

    The Chinese, by contrast, were like the Mormons who “knock on your door, ask how you are feeling” and “want to help”.

    A rather ironic statement, considering that there is hardly a more Catholic region in the world than South America. I didn’t know that Mormonism is a popular religion in South America – and that Catholicism is not.

    Who had this enlightenment, from which political direction does the minister come? Atheist-neutral? Socalist-leftist? Evangelical-rightist?

    And who from this group would take a U.S. religious group as a positive example? And why doesn’t the journalist just say the name of the foreign minister? Basically, the journalist acts as if the minister told him this information in private.

    The longer one thinks about the statement, the more made-up it sounds. But at least it’s a creative, funny one-liner.

  4. Gravatar of ssumner ssumner
    25. May 2023 at 14:10

    Thanks David.

  5. Gravatar of TGGP TGGP
    25. May 2023 at 18:28

    You might like Karl Smith on kicking the can:
    Scroll down to the dividing line in the post.

Leave a Reply