‘I believe that capitalism is the system that produces the wholesome bread, and socialism is the system that produces the moldy bread,’ Ben Rogge used to tell us. ‘But,’ he would continue, ‘even if I was wrong, and if it was the other way around, and it was capitalism that produced the moldy bread, and socialism that produced the wholesome bread, I would still choose capitalism. I would choose it because capitalism is the system of free choice.’
But most of us are not like Ben Rogge. Most of us are more like Deng Xiaoping, whose most famous saying is ‘It does not matter whether a cat is black, or white, as long as it catches mice.’ Contra Rogge, he cared only about which economic system produces the goods.
Personally, I believe Rogge was right. But I also believe that if capitalism is to survive, it will only be by continuing to convince the far more numerous Deng Xiaopings of the world.
Category: Government
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.
Thanks to DDT Ban and Recycling: Bedbugs Are Back
Image source: http://www.suburbanchicagonews.com/heraldnews/top/4_1_JO02_BEDBUGS_S1.htm
(p. 1) . . . bedbugs, stealthy and fast-moving nocturnal creatures that were all but eradicated by DDT after World War II, have recently been found in hospital maternity wards, private schools and even a plastic surgeon’s waiting room.
Bedbugs are back and spreading through New York City like a swarm of locusts on a lush field of wheat.
. . .
In the bedbug resurgence, entomologists and exterminators blame increased immigration from the developing world, the advent of cheap international travel and the recent banning of powerful pesticides. Other culprits include the recycled mattress industry and those thrifty New Yorkers who revel in the discovery of a free sofa on the sidewalk.
For the full story, see:
ANDREW JACOBS . “Just Try to Sleep Tight. The Bedbugs Are Back.” The New York Times Section 1 (Sun., November 27, 2005): 1 & 31.
(Note: ellipses added.)
Free to Choose in Education
Here is the text of my brief letter-to-the-editor that was published several months ago. “OPS” stands for Omaha Public Schools.
Competing school districts within the Omaha area permit parents some freedom of choice in the education of their children.
If OPS succeeds in ending that freedom, the Legislature should restore freedom of choice by adopting Milton Friedman’s proposal to issue vouchers to parents, to be spent at the public or private school of their choice.
Art Diamond. “Try Vouchers.” Omaha World-Herald (Thurs., June 16, 2005): 6B.
Memories of Hope after a Landslide Loss
My sixth grade daughter’s teacher asked that the students have their parents write a paragraph about some memorable event that occurred during the year the parent was a sixth-grader. Here is what I wrote:
I was in sixth grade during the fall of 1964 and the spring of 1965. My main memory of that year was the election for president in 1964. My family strongly supported Barry Goldwater. We thought he spoke honestly and believed in freedom. My family became very discouraged as the polls showed that Goldwater was losing very badly. In the end, he lost 49 states and only won his home state of Arizona. I remember us all sitting in front of the TV a few days before the election, watching a short speech by a former actor, who said that freedom was worth fighting for, and that we should not give up hope. His name was Ronald Reagan.
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)
“Passengers Will Take Action”
. . ., much of the attention has been focused on relaxing the ban on relatively innocuous things like screwdrivers. But as frequent fliers have been saying since not long after 9/11, you’ll have to pity the next idiot who tries to hijack an airplane with nothing more than a sharp object. Mr. Hawley alluded to that attitude shift in his comments Friday, noting ”the high likelihood that in the event of terrorist activity on an aircraft without an air marshal, passengers will take action.”
JOE SHARKEY. ” ON THE ROAD; Get Ready, Frequent Fliers, For the ‘Random’ Pat-Down.” The New York Times (Tues., December 6, 2005): C8.
With Flat Tax, Estonia Has 11% Growth
“Prime Minister Andrus Ansip of Estonia in the cabinet room, which is equipped with a computer for each minister.” Source of caption and photo: online version of NYT article quoted and cited below.
(p. A4) TALLINN, Estonia – Estonia, one realizes after a few days in the abiding twilight of a Baltic winter, is not like other European countries.
The first tip-off is the government’s cabinet room, outfitted less like a ceremonial chamber than a control center. Each minister has a flat-screen computer to transmit votes during debates. Then there is Estonia’s idea of an intellectual hero: Steve Forbes, the American publishing scion, two-time candidate for the Republican presidential nomination and tireless evangelist for the flat tax.
Fired with a free-market fervor and hurtling into the high-tech future, Estonia feels more like a Baltic outpost of Silicon Valley than of Europe. Nineteen months after it achieved its cherished goal of joining the European Union, one might even characterize Estonia as the un-Europe.
“I must say Steve Forbes was a genius,” Prime Minister Andrus Ansip declared during an interview in his hilltop office. “I’m sure he still is,” he added hastily.
The subject was the flat tax, which Mr. Forbes never succeeded in selling in the United States. Here in the polar reaches of Europe it is an article of faith. Estonia became the first country to adopt it in 1994, as part of a broader strategy to transform itself from an obscure Soviet republic into a plugged-in member of the global information economy.
By all accounts, the plan is working. Estonia’s economic growth was nearly 11 percent in the last quarter – the second fastest in Europe, after Latvia, and an increase more reminiscent of China or India than Germany or France.
People call this place E-stonia, and the cyber-intoxication is palpable in Tallinn’s cafes and bars, which are universally equipped with wireless connections, and in local success stories like Skype, designed by Estonian developers and now offering free calls over the Internet to millions.
. . .
Germans showed how allergic they were to the idea when Angela Merkel chose a flat tax advocate as her economic adviser. Antipathy toward him was so intense that political analysts say it probably cost Chancellor Merkel’s party a clear majority in the German Parliament.
Yet the concept has caught on in this part of Europe. Latvia, Lithuania and Slovakia all have a flat tax, while the Czech Republic and Slovenia have considered one. Tax policy, not support for the American-led war in Iraq, is the bright line that separates the so-called old Europe from the new.
For the full article, see:
MARK LANDLER. “Letter From Estonia: A Land of Northern Lights, Cybercafes and the Flat Tax.” The New York Times (Weds., December 21, 2005): A4.
(Note: ellipsis added.)
Eugene McCarthy: A Person’s Importance Is Not Measured by a Gallup Poll
Eugene McCarthy passed away on December 10, 2005. I often disagreed with Eugene McCarthy’s substance, but I enjoyed his style. Eugene McCarthy, RIP.
. . . a Gallup poll reported that 58 percent of those sampled had never so much as heard of McCarthy. The senator refused to be discouraged. “Had they asked,” he said, “they would have found that fewer still have heard of St. Benedict of Nursia, but that detracts not one whit from his importance.”
ROGER KAHN. “The Quiet Man.” The New York Times (Mon., December 19, 2005): A33.
Using Supply-and-Demand Parking Pricing to Reduce Urban Congestion
In big cities, drivers often waste time searching for parking places. While they are searching, they are adding congestion, to already congested streets. Technology now permits reall-time pricing at parking meters, where the price depends on the availability of open parking spaces.
Should parking meters cost $17 an hour? Donald Shoup thinks that’s fine — if the rate drops when demand falls. The University of California at Los Angeles urban planning prof wants to end wasteful trolling for empty meters by charging market prices on smart meters. “It’s like Goldilocks,” he says. “The price is too low if there are no spaces open, and too high if there are a lot of spaces open.” Drivers should pay up at peak times and get a break when demand ebbs, he argues. Chicago, where an hour in a downtown lot can cost $17, is studying the idea. And in February, Redwood City, Calif., will adjust meter rates — every three months — to assure 15% vacancies.
Joseph Weber. ” STREET PRICES: Adjustable-Rate Meters.” BusinessWeek (NOVEMBER 21, 2005) 14.