Month: March 2019

The first thing we do, let’s kill all the rich

I think envy drives more people to do bad stuff than ambition or greed ever did. And politicians regularly depend on envy to motivate the masses to elect them on the promise that the wealthy are evil and therefore deserving of the pain that they are sure to suffer. Naturally the crookedest of the politicians proclaim loudly that they are just common folks (aam aadmi, chowkidar, etc) who are just like the rest of us, and therefore need not be envied or feared.

I listen skeptically to people who speak evil of those whom they are going to plunder. I suspect that vices are invented or exaggerated when profit is expected from their punishment. An enemy is a bad witness; a robber is a worse.

— Edmund Burke, 1790

Continue reading “The first thing we do, let’s kill all the rich”

Margaret Thatcher’s Tribute to Friedrich von Hayek

To mark the 75th anniversary of the publication of Friedrich Hayek‘s The Road to Serfdom, several of Hayek’s personal items were auctioned at Sotheby’s in London on March 19th.

Hayek, together with Gunnar Myrdal (the economist from the opposing camp), was awarded the “Nobel Memorial Prize” (not really a Nobel prize) in 1974. At Sotheby’s auction, Hayek’s award citation and gold medal went for over $1.5 million.[1]

Although the Nobel prize[2] gave renewed vigor to the then 75-year old Hayek, he was absolutely clear that economists should not be honored with prestigious prizes. “Nobel Prize confers on an individual an authority which in economics no man ought to possess,” he said. Continue reading “Margaret Thatcher’s Tribute to Friedrich von Hayek”

What Explains China’s Rise? — Part 3

Samuel Johnson (1704 – 1789), the great lexicographer, noted that “knowledge is of two kinds. We know a subject ourselves, or we know where we can find information upon it.”[1] Although I know fancy little about China, I do know where that knowledge can be had. There are very credible experts on the subject of modern China’s growth. It is best to learn from their scholarship. Fortunately for us, all we need is an internet connection and time. Here I will list some of the resources I found interesting.

Fear of China

Seen from the broad perspective of human history in the context of material prosperity, the astonishing story of China post the Mao era (starting around 1978) is heartening. From a narrower perspective though — that of an American or an Indian or Japanese or European — the China story is likely to be a cause for alarm. The prospect of China replacing the US as the global hegemon is chilling: it threatens the liberal world order. Continue reading “What Explains China’s Rise? — Part 3”

What Explains China’s Rise? — Part 2

The most concise answer to the question, “What explains China’s rise?” is one word: luck. (On the left, the Chinese character for luck.) Actually luck has been a major factor in the rise of all nations that escaped the grip of poverty.

Economists, starting with the classical economists like David Ricardo and Adam Smith around the mid-18th century, have struggled with explaining the causes of the wealth of nations. All of the various causal factors they and their successors identified are relevant and the question is far from settled, as evidenced by the hundreds of papers and books published every year by serious scholars on the subject of economic development, growth and progress. But hardly anyone invokes lady luck.[1]

Just So Stories

Is there a secret to economic development? Actually, no. Only the ignorant or the seriously deluded are convinced that they know the secret. Each country follows a unique path that cannot be duplicated. Which is not to say that there are no general principles that affect development. Just as in the case of individuals, there are general principles that push toward success: intelligence, the ability to work hard, endowments, and external factors that are beyond one’s control. But let’s be clear about this: both nature as well as nurture are luck of the draw. You are born to wealth or poverty, and so also you are born with the genes that make you hard-working or lazy or intelligent or stupid. Continue reading “What Explains China’s Rise? — Part 2”