Category: Economic Growth

The Dynamism of Venturesome New Yorkers: “If You Want Country Living, Move to the Country”

(p. A18) One cannot live any closer to the terminals of La Guardia Airport than the residents of East Elmhurst, Queens. Some homes sit only a few hundred yards away from the control tower, on the opposite side of the Grand Central Parkway. The new $4 billion airport hub envisioned for the site, announced this week by Gov. Andrew M. Cuomo and Vice President Joseph R. Biden, would be even closer.
So it might be assumed that the promise of years of heavy-duty construction and the associated noise, traffic and dust would fill residents with dread.
Not quite.
“We live in New York City, honey,” said Michele Mongeluzo, 56, whose house sits on a rise just south of the parkway, offering an unobstructed view of the airport and the proposed construction site. “If you want country living, move to the country.”
In interviews this week along the blocks closest to the airport, residents almost universally said that they not only had no trepidation about the construction but that they also actually welcomed it. Improvements, they said, were long overdue.
Furthermore, they suggested, what was a little construction on top of the aural challenges — the roaring jet engines, the chop of helicopter rotors, the incessant highway traffic — that they had already contended with and apparently overcome?
“If it’s noisy, I’m used to it,” said Freddy Fuhrtz, 75, who retired as an employee in the cargo division of Pan Am and still lives in the two-story house on 92nd Street where he grew up and raised his children. “It’s progress.”

For the full story, see:
KIRK SEMPLE. “Construction Plans Don’t Faze Airport Neighbors.” The New York Times (Fri., JULY 31, 2015): A18 & A21.
(Note: the online version of the story has the date JULY 30, 2015, and has the title “Construction Plans for La Guardia Airport Don’t Faze Its Neighbors.”)

“The Countryside Was Romantic Only to People Who Didn’t Have to Live There”

(p. C4) Mr. Meyer’s motivation for writing his book is simple and straightforward. “Since 2000, a quarter of China’s villages had died out, victims of migration or the redrawing of municipal borders,” as the country urbanizes, he notes early on, adding: “Before it vanished I wanted to experience a life that tourists, foreign students, and journalists (I had been, in order, all three) only viewed in passing.”
“In Manchuria” shifts back and forth among various genres. It is part travelogue, part sociological study, part reportage and part memoir, but it is also a love offering to Mr. Meyer’s wife, Frances, who grew up in the unfortunately named Wasteland, the village that Mr. Meyer chooses as his base near the start of this decade, and to the unborn son she is carrying by the time “In Manchuria” ends.
. . .
After a year in Wasteland, Mr. Meyer was ready to move on, and he now divides his time between Singapore and Pittsburgh, where he teaches nonfiction writing. But his interlude in Manchuria clearly taught him many lessons, perhaps the most fundamental being this: “The countryside was romantic only to people who didn’t have to live there.”

For the full review, see:
LARRY ROHTER. “A Vanishing Way of Life for Peasants in China.” The New York Times Book Review (Mon., MARCH 8, 2015): C4.
(Note: ellipsis added.)
(Note: the online version of the review has the date MARCH 8, 2015, and has the title “Review: Michael Meyer’s ‘In Manchuria’ Documents a Changing Rural China.”)

The book under review, is:
Meyer, Michael. In Manchuria: A Village Called Wasteland and the Transformation of Rural China. New York: Bloomsbury Press, 2015.

Keeping Growth Rate High in China Achieved by More Misallocation of Capital

(p. A11) . . . , it is Beijing’s recent moves to ease fiscal policy that will ensure that this year’s growth target can be met. Unlike traditional Keynesian stimulus programs, which are typically conducted at the central-government level, in China fiscal easing primarily involves providing additional state-bank money to local governments.
This has a more immediate and powerful effect on GDP growth and job creation, but it comes at a high cost: overinvestment in local projects and the misallocation of capital. China’s landscape is littered with unused highways and airports, redundant steel and cement plants, unnecessary municipal office buildings and “ghost cities” filled with empty high-rises and deserted shopping malls.
From 2009-13, “ineffective investment” amounted to a stunning 41.8 trillion yuan ($6.8 trillion), according to research published in 2014 by Xu Ce of China’s National Development and Reform Commission and Wang Yuan of the Academy of Macroeconomic Research.
That China is heading down this path again can only mean that it has no other way to reach its growth target. It is also an indication of how little the economic system has changed despite the leadership’s much vaunted reform initiatives and efforts to tackle corruption at all levels of government.

For the full commentary, see:
MARK A. DEWEAVER. “Why China Will Still Reach Its Target Growth Rate; The stock market crash won’t stop Beijing from shoveling trillions into wasteful local projects.'” The Wall Street Journal (Fri., July 31, 2015): A11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date July 30, 2015.)

“The Great Fact” of “the Ice-Hockey Stick”

(p. 2) Economic history has looked like an ice-hockey stick lying on the ground. It had a long, long horizontal handle at $3 a day extending through the two-hundred-thousand-year history of Homo sapiens to 1800, with little bumps upward on the handle in ancient Rome and the early medieval Arab world and high medieval Europe, with regressions to $3 afterward–then a wholly unexpected blade, leaping up in the last two out of the two thousand centuries, to $30 a day and in many places well beyond.
. . .
(p. 48) The heart of the matter is sixteen. Real income per head nowadays exceeds that around 1700 or 1800 in, say, Britain and in other countries that have experienced modern economic growth by such a large factor as sixteen, at least. You, oh average participant in the British economy, go through at least sixteen times more food and clothing and housing and education in a day than an ancestor of yours did two or three centuries ago. Not sixteen percent more, but sixteen multiplied by the old standard of living. You in the American or the South Korean economy, compared to the wretchedness of former Smiths in 1653 or Kims in 1953, have done even better. And if such novelties as jet travel and vitamin pills and instant messaging are accounted at their proper value, the factor of material improvement climbs even higher than sixteen–to eighteen, or thirty, or far beyond. No previous episode of enrichment for the average person approaches it, not the China of the Song Dynasty or the Egypt of the New Kingdom, not the glory of Greece or the grandeur of Rome.
No competent economist, regardless of her politics, denies the Great Fact.

Source:
McCloskey, Deirdre N. Bourgeois Dignity: Why Economics Can’t Explain the Modern World. Chicago: University of Chicago Press, 2010.
(Note: ellipsis added.)

Sears Democratized the Washing Machine

(p. 301) The pieces of a new dream had finally been drawn in–big, diverse businesses that could combine as a sum greater than the proverbial parts. Now Sears could continue to “democratize” products that were previously too expensive or sophisticated for everyday people.
The automatic washing machine was an artifact owned only by the rich until Sears democratized the machine in 1942: $37.95–three bucks down and four more a month on time. The process was at the core of the entire industrial revolution-the humbling of products: buckles, buttons, and beer–and the efficient distribution of previously unattainable things to the huge pools of human desire called markets. Now the possibility stood before them of starting the cycle all over again.
Sears could spin a grand, gilded net for the people that included housing, mortgages, all manner of insurance, variations on banking sources, investment services, and, of course, consumer goods. People could get a house from Sears again. When the system was up and running, they could even get the money to buy the house; get the stuff that goes in the house; and the services that ensure the sustenance of the house if something unforeseen happens.

Source:
Katz, Donald R. The Big Store: Inside the Crisis and Revolution at Sears. New York: Viking Adult, 1987.

Voters Want Texas-Style Economic Dynamism

(p. A23) Surveys and interviews give us some sense of what’s going on. Voters have a lot of economic anxieties. But they also have a template in their heads for what economic dynamism looks like.
That template does not include a big role for government. Polls show that faith in government is near all-time lows. In a Gallup survey, voters listed dysfunctional government as the nation’s No. 1 problem. In fact, American voters’ traditional distrust has morphed and hardened. They used to think it was bloated and ineffective. Now they think it is bloated and ineffective and rigged to help those who need it least.
When many of these voters think of economic dynamism, they think of places like Texas, the top job producer in the nation over the past decade, and, especially, places like Houston, a low-regulation, low-cost-of-living place. In places like Wisconsin, voters in the middle class private sector support candidates who cut state pensions and pass right-to-work laws, so that economic governance can be more Texas-style.

For the full commentary, see:
David Brooks. “The Field Is Flat.” The New York Times (Fri., MARCH 27, 2015): A23.

Economic Growth Depends on the Talented Becoming Entrepreneurs Instead of Rent Seekers

(p. 6) In an influential paper, the economists Kevin M. Murphy and Robert W. Vishny, both at the University of Chicago Booth School of Business, and Andrei Shleifer at Harvard University argue that countries suffer when talented people become what we economists call “rent seekers.” Instead of creating wealth, rent seekers simply transfer it — from others to themselves.
Job titles don’t tell you whether someone is primarily a rent seeker. A lawyer who helps draft precise contracts may actually be helping the wheels of commerce turn, and so creating wealth. But trial lawyers in a country with poorly functioning tort systems may simply be extracting rents: They can make money by pursuing frivolous lawsuits.

For the full commentary, see:
SENDHIL MULLAINATHAN. “Economic View; Maximizing the Social Returns to a Career in Finance.” The New York Times, SundayBusiness Section (Sun., APRIL 12, 2015): 6.
(Note: the online version of the commentary has the date APRIL 10, 2015, and has the title “Economic View; Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance.”)

The paper praised and summarized above, is:
Murphy, Kevin M., Andrei Shleifer, and Robert W. Vishny. “The Allocation of Talent: Implications for Growth.” Quarterly Journal of Economics 106, no. 2 (May 1991): 503-30.

Hamilton Fostered the Preconditions for Capitalism

(p. 345) In a nation of self-made people, Hamilton became an emblematic figure because he believed that government ought to promote self-fulfillment, self-improvement, and self-reliance. His own life offered an extraordinary object lesson in social mobility, and his unstinting energy illustrated his devout belief in the salutary power of work to develop people’s minds and bodies. As treasury secretary, he wanted to make room for entrepreneurs, whom he regarded as the motive force of the economy. Like Franklin, he intuited America’s special genius for business: “As to whatever may depend on enterprise, we need not fear to be outdone by any people on earth. It may almost be said that enterprise is our element.”
Hamilton did not create America’s market economy so much as foster the cultural and legal setting in which it flourished. A capitalist society requires certain preconditions. Among other things, it must establish a rule of law through enforceable contracts; respect private property; create a trustworthy bureaucracy to arbitrate legal disputes; and offer patents and other protections to promote invention. The abysmal failure of the Articles of Confederation to provide such an atmosphere was one of Hamilton’s principal motives for promoting the Constitution. “It is known,” he wrote, “that the relaxed conduct of the state governments in regard to property and credit was one of the most serious diseases under which the body politic laboured prior to the adoption of our present constitution and was a material cause of that state of public opinion which led to its adoption.” He converted the new Constitution into a flexible instrument for creating the legal framework necessary for economic growth. He did this by activating three still amorphous clauses–the necessary-and-proper clause, the general-welfare clause, and the commerce clause–making them the basis for government activism in economics.

Source:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

Hamilton “Was the Clear-Eyed Apostle of America’s Economic Future”

(p. 344) The American Revolution and its aftermath coincided with two great transformations in the late eighteenth century. In the political sphere, there had been a repudiation of royal rule, fired by a new respect for individual freedom, majority rule, and limited government. If Hamilton made distinguished contributions in this sphere, so did Franklin, Adams, Jefferson, and Madison. In contrast, when it came to the parallel economic upheavals of the period–the industrial revolution, the expansion of global trade, the growth of banks and stock exchanges–Hamilton was an American prophet without peer. No other founding father straddled both of these revolutions–only Franklin even came close–and therein lay Hamilton’s novelty and greatness. He was the clear-eyed apostle of America’s economic future, setting forth a vision that many found enthralling, others unsettling, but that would ultimately prevail. He stood squarely on the modern side of a historical divide that seemed to separate him from other founders. Small wonder he aroused such fear and confusion.

Source:
Chernow, Ron. Alexander Hamilton. New York: The Penguin Press, 2004.

New Evidence on the Antikythera Mechanism

The Antikythera Mechanism was recovered in about 1901 and is believed to date from about 200 BC. Its complicated gear mechanism is believed to have been used to generate calendars or predict astronomical events. The technology never spread to benefit ordinary people. It was forgotten and mechanical gears had to be re-invented.
The Antikythera Mechanism raises a question: how is it that technologies with the potential to benefit humankind can fail to be adopted? This issue of the causes of technology adoption is an important issue for economic growth.

(p. D3) A riddle for the ages may be a small step closer to a solution: Who made the famed Antikythera Mechanism, the astronomical calculator that was raised from an ancient shipwreck near Crete in 1901?
. . .
. . . a new analysis of the dial used to predict eclipses, which is set on the back of the mechanism, provides . . . another clue to one of history’s most intriguing puzzles. Christián C. Carman, a science historian at the National University of Quilmes in Argentina, and James Evans, a physicist at the University of Puget Sound in Washington, suggest that the calendar of the mysterious device began in 205 B.C., just seven years after Archimedes died.
. . .
Starting with the ways the device’s eclipse patterns fit Babylonian eclipse records, the two scientists used a process of elimination to reach a conclusion that the “epoch date,” or starting point, of the Antikythera Mechanism’s calendar was 50 years to a century earlier than had been generally believed.
. . .
. . . Archimedes was killed by a Roman soldier in 212 B.C., while the commercial grain ship carrying the mechanism is believed to have sunk sometime between 85 and 60 B.C. The new finding suggests the device may have been old at the time of the shipwreck, but the connection to Archimedes now seems even less likely.
An inscription on a small dial used to date the Olympic Games refers to an athletic competition that was held in Rhodes, according to research by Paul Iversen, a Greek scholar at Case Western Reserve University.
“If we were all taking bets about where it was made, I think I would bet what most people would bet, in Rhodes,” said Alexander Jones, a specialist in the history of ancient mathematical sciences at New York University.

For the full story, see:
JOHN MARKOFF. “On the Trail of an Ancient Mystery.” The New York Times (Tues., NOV. 25, 2014): D3.
(Note: ellipses added.)
(Note: the online version of the story has the date NOV. 24, 2014.)