RoW: Links for 13th December, 2019

  1. “The Belt and Road Initiative (BRI) is a global development strategy adopted by the Chinese government in 2013 involving infrastructure development and investments in 152 countries and international organizations in Asia, Europe, Africa, the Middle East, and the Americas”
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    Five articles about the Belt and Road Initiative, earlier known as the One Belt One Road Initiative. We begin with the Wikipedia article.
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  2. “The Belt and Road Initiative includes includes 1/3 of world trade and GDP and over 60% of the world’s population.”
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    That excerpt is just the caption to the first chart in this write-up from the WB, but it is the one that really opens ones eyes to how large the BRI is.
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  3. ““There are some extreme cases where China lends into very high risk environments, and it would seem that the motivation is something different. In these situations the leverage China has as lender is used for purposes unrelated to the original loan,” said Scott Morris, one of the authors of the Washington Centre for Global Development report.”
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    The Guardian in a write-up about the same topic.
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  4. “But the Crusades, as well as advances by the Mongols in Central Asia, dampened trade, and today Central Asian countries are economically isolated from each other, with intra-regional trade making up just 6.2 percent of all cross-border commerce. They are also heavily dependent on Russia, particularly for remittances—they make up one-third of the gross domestic product (GDP) of Kyrgyzstan and Tajikistan. By 2018, remittances had dipped from their 2013 highs due to Russia’s economic woes.”
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    The Council of Foreign Relations with their take.
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  5. “Throughout the text, Maçães prefers to use the term ‘Belt and Road’ over the more succinct — and increasingly popular — ‘BRI’. This has the effect of giving credibility to the author’s speculation that eventually, Belt and Road terminology will be used much like ‘the West’ is to refer to the contemporary order. This musing reveals Maçães’s central argument: that the Belt and Road has the capacity to blaze a path to an alternative world order that reflects new universal values. At some points in the text, this comes across as a utopian promise; at other points, an improbable claim. These perspectives are compared and contrasted over the course of five chapters.”
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    Read this review, but more importantly, read the book! A review of the book that Bruno Macaes has written on BRI.

Links for 5th June, 2019

  1. “But I think Guo is here engaging in a strategy that is common for those who want to nudge the Chinese system in a more market-oriented direction: they tend to describe things are being more competitive and market-driven than they actually are, so that marginal change in that direction seems unremarkable and logical. If you pound the table and call China’s state-owned enterprises a core interest of the nation, it becomes quite difficult to change them. If you say, China is mostly a market economy already, then gradually reducing the role of SOEs over time seems pretty unthreatening.”
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    Andrew Batson’s blog is entirely worth following (and for a variety of reasons!). In fact, the second link today will also be from his blog. But for the moment, let’s focus on how China might respond to America’s push against China’s State Owned Enterprises (SOE’s).
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  2. “Local governments discovered they could borrow basically without limit to fund infrastructure projects, and despite many predictions of doom, those debts have not yet collapsed. The lesson China has learned is that debt is free and that Western criticisms of excessive infrastructure investment are nonsense, so there is never any downside to borrowing to build more infrastructure. China’s infrastructure-building complex, facing diminishing returns domestically, is now applying that lesson to the whole world.”
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    Andrew Batson has a rather more optimistic take on the Belt and Road Initiative. Not as bad, as he mentions, as Brahma Chellaney makes it out to be. On the other hand, I still do think that Batson is far too optimistic about it – as usual, the truth lies somewhere in the middle!
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  3. “The strategy we have in mind would comprise three mutually reinforcing components: an increase in the skill level and productivity of existing jobs, by providing extension services to improve management or cooperative programs to advance technology; an increase in the number of good jobs by supporting the expansion of existing, local firms or attracting investment by outsiders; and active labor-market policies or workforce-development programs to help workers, especially from at-risk groups, master the skills required to obtain good jobs.”
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    Dani Rodrik writes about how to create “good jobs”, and lots of them. I don’t think what he suggests will likely work, especially in a country like India, for a variety of reasons – but the biggest is that the kind of top-down, bureaucratic approach he suggests simply hasn’t worked in the past.
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  4. “The overall trend was an incredible intensification of output. Splitters, one of the most skilled positions, provide a good example. The economist John Commons wrote that in 1884, “five splitters in a certain gang would get out 800 cattle in 10 hours, or 16 per hour for each man, the wages being 45 cents. In 1894 the speed had been increased so that four splitters got out 1,200 in 10 hours, or 30 per hour for each man – an increase of nearly 100% in 10 years.” Even as the pace increased, the process of de-skilling ensured that wages were constantly moving downward, forcing employees to work harder for less money.”
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    An extremely readable extract from a book called The Red Meat Republic, this article in the Guardian speaks to how America’s beef industry came to be what it is. A great read for students of Industrial Organization, labor economics, development, pricing, transport economics – and more besides.
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  5. “China has an industrial policy whose goal is to be competitive in these [branded goods] and other areas. Tariffs will limit profits for these companies and prevent Chinese products from achieving full economies of scale. So this preemptive tariff strike will hurt the Chinese economy in the future, even if it doesn’t yet show up in the numbers.”
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    Tyler Cowen often forces himself to write the viewpoint on the other side – or at least, that’s how I interpret this article. I’m sharing it partly because it is worth reading (that’s a given, right?), but more so because that trait is worth emulating: force yourself to argue from the other side’s viewpoint. Whether in writing, or just as a thought exercise.

Links for 17th April, 2019

  1. “Nearly half a million people are incarcerated on any given day without having been convicted of a crime. Add it all up, and over 10 million people during a given year year are locked up without being convicted of anything. Roughly one-quarter of all inmates in state and local jails have not been convicted. ”
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    Timothy Taylor explains the pros and cons of eliminating monetary bail. The issue is a complex one, as one might expect, and is a useful way to learn about cost benefit analysis.
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  2. “It’s a reminder that “growth” in cities isn’t always what it seems and that architecture can be an awfully poor proxy for the social structures to which it seems so closely tied. Neighborhoods that appear to be magnets for new people and more apartments may, behind every historic façade, be losing both.”
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    Opportunity costs, population density, gentrification, urbanization and reducing family size – all there in this information dense article.
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  3. “A lot of what you learn when you work at a firm is its organizational culture. Moving within a firm means you learn new subject matter, but you are largely staying within the same culture. The psychologically more challenging move to a different organization gives you an opportunity to experience a different culture, sort of like spending time abroad.”
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    Arnold Kling on culture and the organization. On a related note, the recent somewhat viral article about AirBnB and its culture is also worth reading.
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  4. “There’s a lot going on when you speak. The whole assembly process of how you string words together and form sentences is complicated. If you could use a computer to analyze how an Alzheimer’s patient speaks over the years, you might be able to pick up on subtle changes—and then look for those same patterns in younger patients who show no other signs of the disease. If you’re able to identify those changes early enough, you might even be able to stop someone from getting Alzheimer’s in the first place (although we’d also need advances in Alzheimer’s prevention to do that).”
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    Might how you talk be able to predict if you will get Alzheimer’s in the future? A complicated topic, and one that is sketchy on the details – but very interesting nonetheless.
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  5. “Chinese government statements indicate that 50 state-owned firms have invested or participated in almost 1,700 projects in countries along Belt and Road’s path over the past three years, according to Baker McKenzie. The wider the road, the more drivers are bound to crowd in.”
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    International finance meets the Belt and Road Initiative. Who will win, and in what shape, is what the article speaks about.

Links for 12th April, 2019

  1. “Due to these challenges, the Belt and Road has provoked growing international resistance, most acutely in the Indo-Pacific. This rising backlash has not gone unnoticed in Beijing.3 Yet it is unlikely that China’s approach will fundamentally change in the years ahead. The sheer size of ongoing Belt and Road projects limits China’s ability to refocus on smaller and less controversial efforts. Moreover, the Belt and Road is ultimately a vehicle for China’s geopolitical ambitions. Liabilities for host countries – loss of control, opacity, debt, dual-use potential, and corruption – are often strategic assets for Beijing. ”
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    Worth reading in its entirety, both for how well they have framed it (10 issues, 7 challenges) and for understanding the scope, the scale of OBOR – as well as why China wants something like this to happen.
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  2. “Krugman’s assertion that capacity keeps on rising might be correct – but that probably depends on one of the following conditions:The recession is short enough not to significantly affect innovation and investment
    Growth depends on factors that are not (negatively) affected by recessions
    Underlying capacity growth will accelerate beyond trend as the recession endsThe first we can yet hope for, but it’s looking less likely every month.”
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    This was written ten years ago. It is a great way to understand the following: business cycles, trend stationarity, unit root hypothesis, innovation, capacity building, endogenous growth theory. It is simply written, engaging, understandable – and because it was written ten years ago, can be validated. Worth it!
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  3. “Whereas Liverpool’s pursuit of the league title has been characterised by anxiety, drama and late winners, since the turn of the year City have been gracefully efficient at tearing into opponents, getting an early goal and so being able to control a game. Gabriel Jesus’s header against Brighton in the FA Cup semi-final on Saturday was the sixth goal City have scored this season inside five minutes, the 12th before the 10th minute and the 26th before the 20th. That is clearly part of a policy: rip into opponents, prevent them settling and have the game won before any doubts can begin to creep in. It may be that in a two-leg tie there’s less impetus to do that – but then an away goal can make a huge difference.”
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    You might find this choice weird, especially if you don’t like football, but this resonated with me as a way to do more than just play football. Think about it!
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  4. “Mumbai is the engine of the prosperous western state of Maharashtra, India’s largest regional economy with a GDP somewhere between $350-400 billion; the city contributes well over half the total. For Maharashtra to become a $1 trillion economy, Mumbai would need to double or triple the size of its economy, on the back of its preeminent role in service industries, especially finance. That means competing with the likes of Singapore and Shanghai to attract global banks and other world-class financial institutions to the humid, traffic-choked city.”
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    Rueben Abraham and Shashi Verma in Bloomberg on how the port near Mumbai has the potential to change Mumbai into a truly global financial hub. The cynic in me wonders if it will be possible, but the nascent urbanization enthusiast hopes that this, at least, gets off the ground!
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  5. “Amsterdam transit commissioner Sharon Dijksma announced Thursday that starting this summer, the city plans to reduce the number of people permitted to park in the city core by around 1,500 per year. These people already require a permit to access a specific space (and the cost for that permit will also rise), and so by reducing these permits steadily in number, the city will also remove up to 11,200 parking spaces from its streets by the end of 2025.”
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    Speaking of urbanization done just right, here’s Amsterdam with a plan to reduce parking spaces in the city centre – and beyond.