Leading Clinton Economist Advocates a Schumpeterian “Dynamism”

Source of book image: http://www.amazon.com/gp/product/product-description/0743237536/104-0088216-5679944


Today’s review of the new Gene Sperling economic policy book in the New York Times Book Review, begins by emphasizing Sperling’s importance in the Clinton administration:

(p. 16) If you were inclined to identify Clintonism with a single person other than the big man himself, that person might well be Gene Sperling – a top campaign adviser in 1992; a tireless advocate of fiscal discipline during the first term; an inveterate policy wonk throughout all eight years of the administration.  So it’s little surprise that this book-length vision for a Democratic economic strategy can best be described as Clintonism 2.0.

NOAM SCHEIBER. “Clintonism 2.0.” The New York Times Book Review, Section 7 (Sun., January 22, 2006): 16.

Here is the opening paragraph of Sperling’s chapter one, which is entitled ” Growing Together in the Dynamism Economy.”

In the 1990s, a new economic era was created when a period of intense globalization collided with an information technology revolution.  Yet precisely defining a "new" economy is less important than understanding the nature of the change.  I believe a more descriptive label is the “dynamism” economy.  Of course, dynamic change in market economies is hardly new.  The mid-twentieth-century economist Joseph Schumpeter identified the process of “creative destruction,” positing that a healthy market economy is continually moving forward, replacing old capital, old industries — and existing jobs — with more productive alternatives.  Yet, what feels most “new” for average citizens is the breakneck speed at which the increased globalization, rapid technological advance, and the explosion of the Internet are putting fierce competitive pressures on the economy and accelerating change not only in products and services, but also in entire job categories and industries.

Part of the first chapter is viewable at Amazon.com. The book citation is: Sperling, Gene. The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity. Simon & Schuster, 2005.

“Dynamism” as a descriptor for the good society also appeals to libertarian economics columnist Virginia Postrel, author of The Future and Its Enemies and webmaster of dynamist.com.

Thomas Sowell on Ben Rogge as Teacher

The classic small liberal arts college is more than a pleasant place where other people know you, though that is not a small consideration for a student living away from home for the first time—especially a shy student.  Academically, the learning process can be far more manageable where professors are teachers first and foremost.  One of the best taught introductory economics classes I ever saw was taught by the late Ben Rogge at Wabash College in Indiana.  Few students at Harvard would ever get such a good foundation in the subject.  Ben, rest his soul, had obviously thought through all the pitfalls of the subject and led the student safely around them.

Source: online version of Thomas Sowell. Choosing a College: A Guide for Students & Parents. 1989.
http://www.amatecon.com/etext/cac/cac-ch03.html

Do-Nothing Leaders Are Not Always Wrong


The source of the above image is:&nbsp http://www.edwardtufte.com/tufte/posters

Edward Tufte says that the graph/map above is the best graphic ever drawn.   His criterion is how much information is communicated per unit of ink.  (Sort of a signal to noise ratio?)
The tan line that starts thick on the left, and gets thinner toward the right, represents Napoleon’s army as it enters and crosses Russia.  The width of the line is scaled to the remaining size of the army.   On the right hand side, the tan line ends in Moscow, where the army disastrously wintered.   The black line moving left shows the diminishing size of the army as Napoleon retreated.
When I was a student at Wabash College, I was a determined and vocal advocate of Ayn Rand’s Atlas Shrugged.   My economics professor Ben Rogge, was not so enthused.  He thought there were better Russian novels to read, and on several occasions, suggested:&nbsp ‘Diamond, you should read War and Peace.’
I often did not take Rogge’s advice quickly, but usually I took it eventually.&nbsp After leaving Wabash, I read War and Peace.   Parts of it, I found too much like a soap opera for my taste.  But I did find a part that resonated.
Part of Tolstoy’s story is about the Russian general facing Napoleon, who would not fight, but who continued to retreat into the heart of Russia.  He was widely castigated as a do-nothing leader.   But as a result of the Russian general doing nothing, Napoleon ordered his army further and further into Russia.
It is very hard for leaders in government to do nothing.  They will be castigated.  But sometimes nothing is exactly the right thing for them to do.

Edward Tufte’s wonderful book is:
Tufte, Edward R. &nbsp The Visual Display of Quantitative Information. 2nd ed. &nbsp Cheshire, CT: &nbsp Graphics Press, 2001.

Only 13% of Americans Want to Live in Dense Urban Places

(p. A8) Strict growth limits have driven population and job growth further out, in part by raising the price of land within the growth boundary, to communities across the Columbia River in Washington state and to distant places in Oregon. Suburbia has not been crushed, but simply pushed farther away. Portland’s dispersing trend appears to have intensified since 2000: The city’s population growth has slowed considerably, and 95% of regional population increase has taken place outside the city limits.
This experience may soon be repeated elsewhere as planners and self-proclaimed visionaries run up against people’s aspirations for a single-family home and low-to-moderate-density environment. Such desires may constitute, as late Robert Moses once noted, “details too intimate” to merit the attention of the university-trained. Even around cities like Paris, London, Toronto and Tokyo — all places with a strong tradition of central planning — growth continues to follow the preference of citizens to look for lower-density communities. High energy prices and convenient transit have not stopped most of these cities from continuing to lose population to their ever-expanding suburban rings.
But nowhere is this commitment to low-density living greater than in the U.S. Roughly 51% of Americans, according to recent polls, prefer to live in the suburbs, while only 13% opt for life in a dense urban place. A third would go for an even more low-density existence in the countryside. The preference for suburban-style living continues to be particularly strong among younger families. Market trends parallel these opinions. Despite widespread media exposure about a massive “return to the city,” demographic data suggest that the tide continues to go out toward suburbia, which now accounts for two-thirds of the population in our large metropolitan areas. Since 2000, suburbs have accounted for 85% of all growth in these areas. And much of the growth credited to “cities” has actually taken place in the totally suburb-like fringes of places like Phoenix, Orlando and Las Vegas.
. . .
It is time politicians recognized how their constituents actually want to live. If not, they will only hurt their communities, and force aspiring middle-class families to migrate ever further out to the periphery for the privacy, personal space and ownership that constitutes the basis of their common dreams.

For the full article, see:
JOEL KOTKIN. “The War Against Suburbia.” The Wall Street Journal (Sat., January 14, 2006): A8.
For more of Kotkin’s observations, it might be worth consulting his: The City: A Global History. Modern Library, 2005.

Ethiopian Comparative Advantage Squandered through Graft and Corruption: More on Why Africa is Poor

   The source for the image of the book is: http://nasw.org/users/markp/grounds.html

 

One theory of how countries acquire a comparative advantage in a commodity ties the comparative advantage to some natural resource, climate or other "endowment" advantage the country has. This partially ‘explains’ some comparative advantages, but leaves many others unexplained (like why Japan has a comparative advantage in cars).

But even on the endowment theory’s own terms, it would seem that an initial comparative advantage can be squandered. Consider Ethiopia, which is the country in which coffee beans were first discovered, many centuries ago.

(p. 153) . . . Ethiopia, the birthplace of coffee, now exported a negligible amount of the bean, largely due to graft and corruption extending from King Menelik down to the country’s customs agents, . . .

(King Menelek II ruled Ethiopia from 1889 until his death in 1911.)

 

The quotation is from:

Pendergrast, Mark. Uncommon Grounds: The History of Coffee and How It Transformed Our World. New York: Basic Books, 2000.

 

Freedom in Pulsating, Vibrant Hong Kong


Source of book image: http://www.holtzbrinckpublishers.com/stmartins/Search/SearchBookDisplayLarge.asp?BookKey=3008997
Here is an excerpt from a review of a posthumously published memoir, by a well-known British author, recounting three years of childhood in the Hong Kong of the early 1950s:

(p. B12) He has written an extraordinarily happy book, filled with hilarious set-pieces and pulsating with Hong Kong’s vibrant street life. Unlike monochrome Britain, with its dull diet and pinched economy, Hong Kong offered color, variety and adventure.
. . .
Most of Mr. Booth’s encounters were curious rather than dramatic, like the incident of the plink-plonk man, a street musician with a monkey outfitted like a mandarin from the Ming dynasty. One day, as Martin watched, the monkey managed to bite through his leather leash. In a flash, he was up a tree, where, ignoring his master’s pleading and cursing, he carefully disrobed and flung his costume to the street below. Then, in one magnificent act of repudiation, he sent a perfectly aimed stream of urine down on the man’s upturned face, to the delight of the crowd that had gathered. Where in England could you see that?

WILLIAM GRIMES. “Books of The Times: Hong Kong Is Fantasy Land for a Young Adventurer.” The New York Times (Weds., December 21, 2005): B12.
(Note: ellipsis added.)

Information on the book reviewed:
Martin Booth. Golden Boy: Memories of a Hong Kong Childhood. St. Martin’s Press, 2005. (342 pages. $25.95.)

Nebraska Congressman Opposed Government Supporting Agricultural Prices

 

(p. 85) ". . . in March 1911 Nebraskan Representative George W. Norris sponsored a congressional resolution asking the Attorney General to investigate "a monopoly in the coffee industry."  Wickersham replied that he indeed was conducting an ongoing investigation.

(p. 86) In April, Norris lambasted the coffee trust from the floor of the House, summarizing the valorization loan process.  He concluded that "this gigantic combination [has been able] to control the supply and the sale of coffee throughout the civilized world.  [They] sold only in such quantities as would not break the market."  Frustrated by Brazil’s involvement, he observed that when a conspiracy to monopolize a product involved a domestic corporation, it was termed a trust and could be broken.  "But if the combination has behind it the power and influence of a great nation, it is dignified with the new term ‘valorization.’  Reduced to common language, it is simply a hold-up of the people by a combination."

 

Source:

Mark Pendergrast. Uncommon Grounds: The History of Coffee and How It Transformed Our World. Basic Books, 2000. (ISBN: 0465054676)