Tag: culture

A Fine Unbalance

“The person we are talking about was born in Germany, in 1915. He took part in anti-Hitler protests in the early 1930’s, and had to flee to Paris as a seventeen year old to escape persecution back home. He later attended lectures by Lionel Robbins and Hayek while in London, and also participated in the Spanish Civil war. In the interim, he also helped thousands of Jewish refugees escape Nazi persecution in France – among them, Hannah Arendt, Marc Chagall and Marcel Duchamp. He managed to do all this at or before the age of twenty-five. He would go on to become one of the most famous development economists of the 20th century.
Who are we talking about?”

You might know the answer to this question if you are a very good quizzer, but you may not know the answer even if you are a very good economist. And that’s because of two reasons.

One, Albert O. Hirschman isn’t as celebrated as he should be. Consistently underrated, you might say.

And second, we in the economics teaching profession don’t like to tell stories about economists. We like to bore people to death with equations and models, but making the economist behind the theories come alive? Doesn’t happen nearly as often as it should, if you ask me.

Watch about a minute or so of this excellent interview from around the 30 minute mark. As always, please watch the whole thing, it’s a great interview – but for the purposes of today’s post, just for about a minute or so from the 30 minute mark.

And Alex is bang on when he says that knowing that the person is French will often tell you more than the fact that the person is an economist. I’d go a step beyond and say that it is not just the location, but also the time that matters. A French person born around 1930 will be a very different person from a French person born in 1980, for example. This isn’t about who is better or worse compared to the other, this is about understanding why those people created the things that they did. And part of this understanding comes from understanding the time and place of their birth. Not just knowing the time and place, mind you, but understanding it.

And to understand why Hirschman was the kind of economist he was, you need to understand where he came from, all of what he experienced in his formative years – and the cultural milieu that surrounded him when we was an economist.

And it is for this reason that reading this blogpost about Hirschman’s work, but also his biography is ever so illuminating. You don’t just get a sense of Hirschman’s central ideas, but you also get a sense of how events in his life formed his worldview, and possibly influenced some of his decisions later on.

He encourages us to see the inevitable pitfalls and stumbles of the growth process not as disappointments, but as opportunities, and gives us a conceptual language to identify them. For randomistas-in-training, steeped in the world of deworming and bed-nets and pre-analysis plans, Hirschman also reminds us that we need to step back from individual interventions more often and think more about development strategies–not just how different projects can complement each other, but also how each project might organically summon market and non-market forces to help growth along.
The Credibility Revolution has yielded, perhaps for the first time, robust evidence for individual program effects. The time is ripe, not to copy Hirschman’s ideas wholesale, but to borrow his clear-eyed approach and think carefully about how projects can be brought together, pressure point by pressure point, into programs for sustained development.

https://www.global-developments.org/p/the-real-development-was-the-friends

This is worth doing for everybody of note, of course, not just Albert O. Hirschman – but if you are a fan of studying the development of the field of development economics, this would be a great place to start.

Lots of homework in today’s post:

  1. Watch Transatlantic (it is available on Netflix)
  2. Read The Worldly Philosopher, by Jeremy Adelman
  3. Read The Strategy of Economic Development, by Hirschman

Markets Are Complicated: Foxconn in Tamil Nadu edition

I wrote this just yesterday, that what “worked in the 1970’s for a village in India will work very differently for a city in China in the 2020’s”.

And as if to do me a favor, RestofWorld.com came out with a lovely story about Foxconn’s struggle to make iPhones in India. As always, please read the whole thing, but if you’re looking for great examples of why getting markets to work across time and space is difficult, this is a great example.

Lots of great takeaways, beginning with this chart:

https://restofworld.org/2023/foxconn-india-iphone-factory/

But data and charts aside, this article is worth reading for fascinating little snippets on the intersection of culture and labor markets:

  1. “In India, Apple’s suppliers have to contend with local policymakers, landowners, and labor groups. The country lacks China’s vast network of material and equipment makers, who compete for Apple orders by cutting their own margins. “Apple has been spoiled in China,” a senior manager at an Apple supplier, who was recently deployed from China to India, told Rest of World. “Here, except labor, everything else is expensive.””
  2. Foxconn has hired women in Tamil Nadu for the most part, and this, it turns out, is how they started off in China as well. Women have, in China, moved now to “less arduous service sector jobs”.
  3. “Hiring a young, female workforce in India comes with its own requirements — which include reassuring doting parents about the safety of their daughters. The company offers workers free food, lodging, and buses to ensure a safe commute at all hours of the day. On days off, women who live in Foxconn hostels have a 6 p.m. curfew; permission is required to spend the night elsewhere. “[If] they go out and not return by a specific time, their parents would be informed,” a former Foxconn HR manager told Rest of World. “[That’s how] they offer trust to their parents.””
  4. “Foxconn also had to find a workaround for employing married women. The company typically requires workers to pass through metal detectors when entering and exiting its factories in order to prevent leaks about upcoming products, according to reports. But in India, married women wear a mangalsutra, a metal pendant; and a metti, a metal toe ring. These workers are searched manually and have their jewelry logged in a notebook.”
  5. “They recounted how a Chinese Foxconn worker became frustrated with a junior Indian technician who repeatedly failed to solve a technical glitch. The Chinese worker fixed it himself and walked away. “He did not teach me,” the translator recalled the Indian worker saying timidly. “How many times should I teach?” the Chinese worker replied.”
  6. The well documented opposition to the move to twelve hour shifts finds mention here, of course, but what I found particularly interesting was the fact that China has only eight hour shifts. Foxconn relies, the article says, on lax enforcement of the country’s labor law to get around this requirement.
  7. Indian workers are getting acquainted with the neijuan culture, and the Chinese workers aren’t sure if this is, all things considered, a good thing.
  8. I’ve met my share of Indians who don’t like to eat food from abroad while traveling, because it is too smelly/exotic/<insert adjective of choice here>. So when I read about Li, a Chinese worker in India being unable to stand the smell of Indian food, and it being “all yellow and mushy stuff”, I couldn’t help but chuckle.
  9. This is probably my favorite bit from the entire article:
    “Both groups have picked up phrases from the other’s language. Sometimes an Indian colleague will greet Li with the common Chinese greeting, “Have you eaten yet?” To which Li will reply in Tamil, “I already ate.””
  10. The article speaks about workers being able to convince their families to delay their marriages, because these workers are now the main bread-winners for their families… but on the other hand, the workers also mention in the same article their fears about being too old for the company to retain them. The age of the worker in question? 26.
  11. And finally this anecdote:
    …
    “During the first week of October, the national holiday celebrating Mahatma Gandhi’s birthday fell on a Monday and created a rare two-day weekend for Foxconn employees. Li planned to visit the Taj Mahal. He would spend a good deal of the weekend in buses and airplanes, but figured it would be worth it — he wanted to have seen it before his time in India was up. But a few days before he was due to leave, Li had to cancel. Management had announced that the factory needed to stay open to meet targets. Sunday would be a workday.”
    …
    reminded me of this one from Studwell’s How Asia Works:
    “After the first steel was poured on 9 June 1973, Park Chung Hee declared an annual National Steel Day to go with the annual National Export Day he had inaugurated in 1964. This being Korea, these were working holidays.”

H/T Mihir Mahajan

It’s Baaaack, But In China This Time

China’s Japanification, by Robin Wigglesworth in FT

What does Japanification mean? From the same article that came up with my favorite chart from 2023 (shown above):

“It can be described simply as a protracted period of deflation, economic sluggishness, property market declines and financial stress as households/companies/governments unsuccessfully try to deleverage after a debt binge.”

And is that where China finds itself today? Well, it is difficult to say, because data is hard to come by:

The statistics bureau stopped publishing a consumer-confidence index after April numbers fell to levels last seen during the depths of the pandemic. With youth unemployment climbing remorselessly, the same bureau stopped reporting that statistic this week, saying it is reviewing how to count jobless young.

https://www.economist.com/china/2023/08/17/chinas-slowing-economy-seen-from-ground-level

Data has, of course, been hard to come by for a while:

Bu you can suppress bad news for only so long, and to even the most casual of China watchers, it has been clear for a while that China is slowing down. And China slowing down is, in a sense, both inevitable and predictable. If you know anything about China’s demographics, it’s emphasis on capital-led growth and the Great Decoupling, China had to slow down.

But ah, the debt. That is where the problems become truly worrisome:

According to the BIS, China’s total non-financial credit/GDP ratio approached 297% of GDP by end-2022, similar to Japan in the 1990’s. Also similarly, debt is mainly domestic, and the domestic saving rate is high in both countries.

China’s Japanification, by Robin Wigglesworth in FT

Plus:

  1. China is ageing more rapidly than Japan was in the 1990’s
  2. China’s debt, when properly accounted for, is even more than Japan’s was.
  3. China has less wriggle room when it comes to monetary policy.
  4. China also seems to be less willing to use monetary policy as a tool.

And above all, culture. I wish I knew more about China, and I wish I could travel to China. Lots of reasons for me to say this (food included, and it is one of the top three reasons) – but in this blog post, I say I wish I could travel to China to make sense of this from The Economist.

It is difficult to excerpt from it, but here are the concluding paragraphs:

Does Mr Xi understand this? His thoughts on how to achieve national greatness have evolved, along with his message to young people. A few months after coming to power in 2012 he met a group of young entrepreneurs, volunteers and students, telling them to “dare to dream, to bravely chase their dreams and to strive to fulfil them”. Their ambitions will make China great, he said. One beaming participant, who had recently climbed Mount Everest, said it was a good time to be young.
Now, though, Mr Xi says the “Chinese Dream” of national rejuvenation is to be achieved by focusing on collective goals, rather than by encouraging individual aspirations. He admonishes the young to obey the party and toughen up—to “engrave the blood of their youth on the monuments of history, just as our fathers did.” That is a message that relatively few young people are taking to heart. Told to eat bitterness, they prefer to let it rot.

https://www.economist.com/briefing/2023/08/17/chinas-defeated-youth

Keep a close eye on China in the coming months, it is a story that is likely to be interesting and of immense relevance to everybody who lives on this planet.

By the way, did you get why today’s blogpost is titled the way it is? If you are a student of macro, you should have. You might think there’s a typo on my part, but hey, China deserves an extra “a”.

At least.

Do border regions have better food?

Do border regions have better food? What exactly counts as a border region? The parts of the United States near Canada? The best food in Italy is not obviously at the (rather skimpy) borders. China and India might be the best food countries in the world, but because they are so large most of their cuisine is not “border cuisine.” So I say no.

https://marginalrevolution.com/marginalrevolution/2022/11/requests-from-benedikt.html

As always, read the whole post – and in particular, the Wikipedia link to James Steuart (not a typo). But given my deep love of all things gastronomical, I wanted to expand on this point a bit.

  1. Tyler’s first question is worth thinking about (what exactly counts as a border region?), and the way I choose to define it more or less defines the direction in which this post is going to go. A border region, for the purposes of this post, is where a confluence of two or more cultures is observed. That is a ridiculously loose definition, I know, but this is a blogpost, so please let’s go with this for the moment.
  2. Does that definition necessarily mean better food? Well, that requires a definition of the phrase “better food”, but more variety and a greater degree of syncretism can reasonably be expected.
    • Think Massaman curry in Phuket, for example. Read this paragraph from that Wikipedia article to get a sense of what I’m trying to get at. This spice, frequently used in both Chinese cuisine and coastal Indian cuisine(s) is another good example.
    • Will the food in Chennai be necessarily better than in the interior parts of Tamil Nadu? Not necessarily, but it will be more varied in terms of influences, and especially as a tourist, that’s a good thing. It’s a good thing in general too, if you ask me!
  3. A confluence of culture is likely to be positively correlated with greater commerce, and that is likely to imply higher rent for real estate. Higher prices will imply a greater incentive to be better at making and selling food, so the quality will likely be higher (so long as you know where to look and how to choose). You could make the same point for costs of labour.
  4. More trade is also likely to imply fresher ingredients, and therefore better food.

What else am I missing?

So my answer would actually be yes, but it very much depends on how you define “border cuisine”.

Lessons from the eradication of smallpox

Vox has a nice and short read out on the battle against smallpox, and lessons we might learn today from how and where the battle was waged, at what costs, and with what effects.

But for all that the world has lost in the last few years, the history of infectious disease has a grim message: It could have been even worse. That appalling death toll resulted even though the coronavirus kills only about 0.7 percent of the people it infects. Imagine instead that it killed 30 percent — and that it would take centuries, instead of months, to develop a vaccine against it. And imagine that instead of being deadliest in the elderly, it was deadliest for young children.
That’s smallpox.

https://www.vox.com/future-perfect/21493812/smallpox-eradication-vaccines-infectious-disease-covid-19

My notes after having read the article:

  1. Smallpox is estimated to have killed between 300 million to 500 million people in the 20th century alone
  2. We still do not have an effective treatment against smallpox
  3. There are two different viruses that cause smallpox: variola major and variola minor
  4. We no longer need to explain R0 to anybody, thanks to covid, but this point is staggering: it had an infectiousness of between 5 to 7, and a mortality rate of 30%.
  5. “In China, as early as the 15th century, healthy people deliberately breathed smallpox scabs through their noses and contracted a milder version of the disease. Between 0.5 percent and 2 percent died from such self-inoculation, but this represented a significant improvement on the 30 percent mortality rate of the disease itself.”
    What a horrible lottery to play. Would you play this lottery? This, by the way, is one of the many reasons why learning statistics and probability is worth your time.
  6. Learn more about Edward Jenner.
  7. We have better ways of shipping vaccines across the world these days, but what a story this is!
    “Spain especially struggled to reach its colonies in Central and South America, so in 1803, health officials in the country devised a radical new method for distributing the vaccine abroad: orphan boys.
    The plan involved putting two dozen Spanish orphans on a ship. Right before they left for the colonies, a doctor would give two of them cowpox. After nine or 10 days at sea, the sores on their arms would be nice and ripe. A team of doctors onboard would lance the sores, and scratch the fluid into the arms of two more boys. Nine or 10 days later, once those boys developed sores, a third pair would receive fluid, and so on. (The boys were infected in pairs as backup, just in case one’s sore broke too soon.) Overall, with good management and a bit of luck, the ship would arrive in the Americas when the last pair of orphans still had sores to lance. The doctors could then hop off the ship and start vaccinating people.”
  8. Institutions matter:
    “It was not until the 1950s that a truly global eradication effort began to appear within reach, thanks to new postwar international institutions. The World Health Organization (WHO), founded in 1948, led the charge and provided a framework for countries that were not always on friendly terms to collaborate on global health efforts.”
  9. Culture matters:
    “Efforts by the British Empire to conduct a smallpox vaccination program in India made less progress, due in large part to mistrust by the locals of the colonial government.”
  10. Science matters:
    ” “There was no shortage of people telling [the people involved in the eradication effort] that their effort was futile and they were hurting their career chances,” former CDC director William Foege wrote in his 2011 book House on Fire about the smallpox eradication effort.
    But other advances had brought it within reach. Needle technology had improved, with new bifurcated needles making it possible to use less vaccine. Overseas travel improved, which made it easier to ship vaccines and get public health workers where they were most needed, and provided impetus for worldwide eradication as it made it more likely that a smallpox outbreak anywhere in the world could spread.”

As always, read the whole article. I’ll quote here the concluding paragraph from the piece, and I’d urge you to reflect on it:

The devastation of Covid-19 has hopefully made us aware of the work public health experts and epidemiologists do, the crucial role of worldwide coordination and disease surveillance programs (which are still underfunded), and the horrors that diseases can wreak when we can’t control them.
We have to do better. The history of the fight against smallpox proves that we’re capable of it.

https://www.vox.com/future-perfect/21493812/smallpox-eradication-vaccines-infectious-disease-covid-19

On Xi Jinping’s Stubborn Attachment(s)

These are not good times for the credibility of China’s GDP growth targets. Just weeks after unveiling an ambitious target of 5.5% real GDP growth for 2022, the central government effectively ensured that target will not be met by requiring local governments to impose strict lockdowns to contain the spread of Covid-19. The restrictions cover most of China’s major cities, have had a clear negative impact on economic activity in March that will only worsen in April.

https://andrewbatson.com/2022/04/18/why-gdp-growth-targets-are-underrated/

So begins a thought provoking blog post on China’s growth prospects for this year, written by Andrew Batson. I’m a very (very!) amateur student of China, and follow a more or less random group of people on topics related to China – but Andrew Batson’s blog, I think, should definitely be on everybody’s list.

This one speaks about growth prospects in China this year, but so much else besides. Let’s learn a little bit about China by parsing through it.

The first point that he makes is that growth targets this year are all but likely to be missed. This, of course, is because of the lockdowns in Shanghai and other parts, and pretty much everybody knows that they’re not going well – and that’s putting it mildly. Targets were missed last year, and the year before – so why, one might be entitled to ask, should one have them at all in the first place?

There’s shades of Goodhart’s Law in the paragraphs that follow, and when I read the piece the first time, my blogging antennae were up. Aha, I thought to myself, one more post in an ever increasing canon. But the post then moves in (for me) an entirely unexpected direction, and in a way that makes it even more interesting.

Targeting GDP growth, Batson says, is not A Perfect Thing, but is, all things considered, Still A Good Thing Given The Alternatives.

https://andrewbatson.com/2022/04/18/why-gdp-growth-targets-are-underrated/

One way to understand Batson’s defense of GDP growth targets is by internalizing what I think is his key point: giving up on a GDP growth target doesn’t mean there will be no targets – it simply means there won’t be economic growth targets.

That is to say (and this is my understanding of his point), it’s not as if giving up on GDP growth targets will mean a very laissez faire approach to the economy. Instead, China will be set other, non-economic targets. Such as what, you ask?

…“regulatory storm” of 2021 with its multitude of highly interventionist policies aiming to reshape entire industries. Limiting the power of large private companies was even a fairly explicit goal: it’s probably not a coincidence that the main targets of last year’s political-regulatory campaigns were real estate and the internet, the two economic sectors that have created the biggest private-sector fortunes. All of this was certainly enabled by Xi’s dictum that there are more important things than GDP growth. The costs and economic downsides of the regulatory storm were put aside in favor of other goals.

https://andrewbatson.com/2022/04/18/why-gdp-growth-targets-are-underrated/

Regular listeners of Amit Varma’s excellent podcast, TSATU will no doubt be aware of the line “Politics is downstream from culture”. The quote is originally by Breitbart, of course, as Amit always points out. The reason I bring it up over here is because economic growth, if you ask me, is downstream of politics. In this framing, economic growth serves political needs, and those political needs are downstream of culture.

Rarely does one get to quote Brietbart in one paragraph and then follow it up with a supporting quote that references Lenin, but hey, welcome to 2022:

…China’s Leninist political system, which is organized around mobilizing officials to direct social transformation. As Ken Jowitt put it: “The definitional tendency of Leninist regimes [is] their attempts to control and specify the substantive dimensions of social developments, not merely the framework within which such developments occur.”

https://andrewbatson.com/2022/04/18/why-gdp-growth-targets-are-underrated/

As Andrew Batson goes on to argue in the following paragraphs, de-emphasizing growth targets in a liberal political framework is very different from de-emphasizing them in a Chinese set-up. The focus on growth for its own sake is very different from the focus on growth to serve other aims. Batson argues that Deng Xiaoping was optimizing for economic growth, and that Xi Jingping is optimizing for national greatness. National greatness includes, but never as a primary target, economic growth.

But that pursuit of national greatness, perhaps, has been taken too far in Chin’s case:

In December, when when Xi chaired the annual Central Economic Work Conference, the signal was clear: the priority is now the “stability” of the economy.
Since then, various political slogans and campaigns have been much less in evidence and the focus has been on more practical short-term measures. Senior officials have even promised not to introduce policies that “adversely affect market expectations”–effectively admitting that they had been doing just that in the recent past.

https://andrewbatson.com/2022/04/18/why-gdp-growth-targets-are-underrated/

I’ve said it before, and I’ll say it again, and this is applicable to individuals as much as it is to nations. Be very clear about the answer to that irritatingly simple question:

What are you optimizing for?

The Business of Beer

… happens to be the title of a lovely little essay on just this very topic.

A short read, it is worth your time if you happen to be a student of economics because of the following reasons:

  1. Learn how who gets to tax what and why is (and has always been) a political question rather than an economic one.
  2. Learn how what should be taxed is determined, and ask how this might have evolved over the ages.
  3. Imagine learning about macroeconomics while learning about beer. What better way to start, eh?
  4. Got nothing to do with economics, but I learnt about the etymology of the word spinster.
  5. The Insider Outsider model – heard of it? Read the Wiki article, and ask yourself whether this fits (and if not, why not?)
  6. Should alcohol be subsumed under the GST?
  7. Centralisation of anything isn’t something that proceeds in linear fashion over time. What lessons should we be learning from this today?
  8. The petty tyranny of local inspectors ain’t new. That’s not a new finding, to be clear, but it usually comes as a surprise to newbies in the field of econ history.
  9. Change is important when it comes to society, but the rapidity of this change is rarely welcomed. This is true for individuals, organizations, institutions and society. Trust me on this.
  10. The footnotes have some excellent books to add to your infinitely long reading list.

Bibek Debroy on loopholes in the CPC

That’s the Civil Procedure Code.

The average person will not have heard of Dipali Biswas or Nirmalendu Mukherjee and may not be aware of the case decided by the Supreme Court on October 5, 2021. The case was decided by a division bench, consisting of Hemant Gupta and V Ramasubramanian and the judgment was authored by Justice V Ramasubramanian. Justice Ramasubramanian observed (not part of the judgment), “Not to be put off by repeated failures, the appellants herein, like the tireless Vikramaditya, who made repeated attempts to capture Betal, started the present round and hopefully the final round.” Other than smiling about a case that took 50 years to be resolved and making wisecracks about “tareekh pe tareekh”, shouldn’t we be concerned about rules and procedures (all in the name of natural justice) that permit a travesty of justice?

https://indianexpress.com/article/opinion/columns/civil-procedure-code-loopholes-justice-delay-7617291/

I know (alas) next to nothing about the law, but there were two excerpts in this article that I wanted to highlight as a student of statistics and economics. We’ll go with statistics first.

Whenever I start to teach a new course, I always tell my students that there are two kinds of errors I can make. I can either make sure that I complete the syllabus, irrespective of whether everybody has understood it or not. Or I can make sure that everybody has understood whatever I have taught, irrespective of whether the syllabus is completed or not. Speed versus thoroughness, if you will – and both cannot be optimized for at the same time. If you’re wondering, I prefer to err on the side of making sure everybody has understood, even if it comes at the cost of an incomplete syllabus.

This is, of course, closely related to formulating the null hypothesis and asking which type of error one would rather avoid. And the reason I bring it up, is because of this exceprt:

Innumerable judgments have quoted the maxim, “justice hurried is justice buried”. By the same token, justice tarried is also justice buried and inordinate delays mean the legal system doesn’t provide adequate deterrence to mala fide action. In my view, for most civil cases, the moment issues are framed, one can predict the outcome within a range, with a reasonable degree of certainty. (Obviously, I don’t mean constitutional cases before the Supreme Court.) With no disrespect to the legal system, I think AI (artificial intelligence) is capable of delivering judgments in such cases, freeing court time for non-trivial cases.

https://indianexpress.com/article/opinion/columns/civil-procedure-code-loopholes-justice-delay-7617291/

“Justice hurried is justice buried” and “Justice tarried is justice buried” are both problems, and optimizing for one means not optimizing for the other. What Bibek Debroy is saying here is that what we have ended up choosing to optimize for the former. We make sure that every case has the opportunity to be heard at great length, and with sufficient maneuvering room for both parties.

And that’s great, but the opportunity cost is the fact that sometimes judgments can take over fifty years (and counting!).

And what is Bibek Debroy’s solution? When he suggests that AI is capable of delivering judgments in such cases, he is not saying that the AI will give a perfect judgment every time. He is not even saying that one should use AI (I think the point is rhetorical, although of course I could be wrong). He is saying that the gains in efficiency are worth the occasional case being incorrectly judged. In other words, he is optimizing for justice tarried is also justice buried – he would rather avoid the error of taking up too much time for each case, and would (presumably) be fine paying the price of having the occasional case being misjudged.

It is up to you to agree or disagree with him, or with me when it comes to how I conduct classes. But all of us should be cognizant of the opportunity costs when we decide which error we’d rather avoid!

And economics second:

Litigants and lawyers (at least on one side of a civil case) have no incentive to finish a case fast (Does the judiciary have it?).

https://indianexpress.com/article/opinion/columns/civil-procedure-code-loopholes-justice-delay-7617291/

This is more of a question (or rumination) on my part – what are the incentives of the judiciary? I can imagine scenarios in which those “on one side of a civil case” can use both official rules and underhanded stratagems to delay the eventual judgment. And since there is no incentivization in terms of speedier resolutions, are we just left with a system that is geared towards moving along ponderously forever more?

And if so, how might this be changed for the better? This is, and I’m not joking, (more than) a trillion dollar question.

And finally, as a bonus, culture:

My friend Murali Neelakantan makes the point here that isn’t really about incentive design at all, that the problem is more rooted in how we, the people of India, use and abuse the provisions of the CPC.

That takes me into even deeper and ever more unfamiliar waters, so I shall think more about this before trying to write about it!

A Glorious Mishmash…

… of art, sports, culture, movies, globalization. Via splainer.in

Germany: What Next? (And a fascinating read as a bonus)

I’ve thoroughly enjoyed learning more about Germany as a consequence of writing these articles. Alas, I am all too aware that the learning has been very superficial indeed, but that will hopefully only serve to whet my appetite further. I’ll attempt to summarize my key learnings in a post scheduled for later this week, and in March, we’ll learn more about France.

Onwards then, to the topic of today’s essay: where does Germany go from here?

For many years, Germany’s economic strength has been based on prudent
monetary policy, a highly skilled workforce and a renowned manufacturing
sector that has successfully built up export markets across the world. Germany
has enjoyed political stability and exhibited a contained approach towards
foreign policy, where Germany regularly played by the rules set by others in the
liberal international order.
However, these pillars of Germany’s strength and stability may not be the right
tools to manage the upcoming disruptive changes.

That is from the executive summary of a report titled “Is Germany ready for the future? The case for action in a climate changed world“. The report speaks about how increasing digitilization, rising social inequality (globally), the disruption to the rules based trading order that worked so well for Germany, rising nationalism (again, globally) and low/non-existent aggregate demand will challenge Germany’s current model. The infographic below gives their (the authors) recommendations to deal with these challenges. Also, the word for the day where I am concerned: mittelstand.

Figure 1 from the same report linked to above

“Germany isn’t exactly in a state of disrepair. It doesn’t feel as though it is, even though potholed streets aren’t a rarity, trains often don’t run on time and cellular reception is spotty outside cities. Nor, however, does it feel future-proofed enough, even after a decade and a half of Merkel’s generally successful rule. The WEF touts unshakable financial stability (the country got 100 points out of 100 for it in the competitiveness ranking) as one of Germany’s biggest advantages, but that stability has been achieved, in part, by shifting problems to the local level. “

That is from a short, but excellent, persuasive and full of surprises column in Bloomberg by Leonid Bershidsky. The report that he cites is, alas, in German, but his takeaways make for thought provoking reading. And speaking of surprises, from the same article:

The World Economic Forum ranks Germany as the world’s seventh-most-competitive economy this year, down from third in 2018. According to WEF, its greatest weakness is in information and communication technology adoption, where it’s ranked 36th in the world; only one German out of 100 has a fiber optic broadband subscription, compared with one out of 32 in South Korea.

In an embarrassing episode on Monday, a state TV broadcast about a special government session on improving mobile coverage was broken off because of a bad connection.

I traveled through parts of Germany last month, and while Internet speeds in both Airbnb’s that I stayed in were slower than in France, they were certainly good enough, and with no loss in connectivity. I’ll note that for about four hours in a town called Gottingen, I lost connectivity on my phone.

Does this report on population trends in Germany by the year 2050 hold a cultural clue that might help us think more about the excerpt above? Pure conjecture on my part, of course, but worth thinking about, perhaps.

As a result, there will be a clear shift in the age structure of working-age people.
At present, 50% of working-age people belong to the medium-age group, which includes people of 30 to 49 years, nearly 20% belong to the young age group of 20 to
29 years and 30% to the older age group of 50 to 64 years. In 2020, the medium-age
group will account for as little as 42%, the older one, however, will remain almost
unchanged at about 40%; the situation will be similar in 2050 (medium group: 43%,
older group: nearly 40%). The percentage of the 20 to under 30-year-olds will not
change very strongly. As a result, older people will clearly prevail among working-age population.

I’d never heard of Strategic Perspective 2040 until I started searching for phrases linked to the future of Germany. But the fact that it was written, leaked, and the responses to it – they’re all equally fascinating.

The assumption behind the UK’s repeated promise of security cooperation with Europe after Brexit is that the core democracies – Germany, France, Italy and Spain – will remain committed to Nato, democracy and the rule of law. And that a reformed and revitalised Europe will deliver enough jobs and growth to sap the energy of the nationalist and xenophobic right. But it would also be wise for politicians to begin admitting that these things are no longer certain. If we want order, we have to create it – through engagement, multilateralism, by accommodating what we can of the demands of rising powers and through the promotion of resilient democratic institutions. If we fail to achieve order, we must deal with disorder when the US is no longer a reliable ally, nor even a stable democracy.

And now for the bonus. I have read quite a few articles/PDF’s/essays about Germany, and given last week’s essay, about the Berlin Wall. None was as gripping as this one. It is titled “The Story of Tunnel 29“, and it is an absolute must read.

My thanks to Gandhar Joshi, a student of the BSc programme at Gokhale Institute, for sharing it with me.