Category: Econ & Business

The future of China (or, exactly what is realist?)

That Tom Barnett interview I mentioned is creating some dissension within our cousin blog Coming Anarchy.

The authors of CA (correction: two of them), as you might know, are fans of Barnett, but bigger fans of Robert Kaplan (hence the title). Barnett and Kaplan are divided on how the U.S. should deal with China, and their divide really represents two views that are fighting for prevalence in Washington.

Kaplan’s view, which is more in line with official Defense Department policy since the Cold War (and also gets lots of nods on the Japanese right), is that China is an emerging military threat that the U.S. has to contain with ships, airplanes, and missiles. Barnett’s view is that the U.S. has to become partners with China, as the economies of the two countries dictate, rather than let political concerns screw up the countries’ mostly-beneficial symbiosis.

Which view prevails will necessarily determine the future of U.S. policy toward Taiwan. A Kaplan view means that the U.S. has to defend Taiwanese sovereignty at all costs, as a roadblock to Chinese ambition in the Pacific. A Barnett view leads to the U.S. maintaining the status quo in Taiwan until the two countries can be united without force, either through incorporation in a democratic China or as part of a larger EU-style Asian community.

It hurts to admit this, because I’ve been a Taiwan supporter for some time now, but Barnett has a good point. Is it worth it to antagonize China when the U.S. is dependent on China and China is dependent on the U.S.? Wouldn’t it be easier if both countries could focus resources on their own problems, rather than needlessly breathe down each other’s throats? Do we really need to be bracing for World War III right now?

These are all tough questions that Bush and Rumsfeld should be asking themselves. Perhaps the best answer is to do as Barnett advises: maintain the status quo until China and Taiwan have evolved to the point where they can discuss their differences without threatening to lob bombs at each other. I think this is more likely to happen if and when we see closer business ties and more transparent democracy on both sides.

More controversy on Bernanke

Yesterady we posted an article from the Yomiuriabout some malcontented Japanese youth who vented their Greenspan-fatigue on homeless Alan look-a-likes.

bernanke

Now, the latest edition of the Onion‘s “What do you think?” has another example of the cosmic record-skip that Bernanke’s appointment is causing.

Francis Englund, area Programmer, had this to say:

Dork

“He’s irreplaceable. This Bernanke guy may be an anti-inflation fiscal conservative, but you just can’t run the Fed if you’ve never screwed Ayn Rand.”

Well said my friend. You took the words right out of my mouth.

Koizumi’s Fiscal Kabuki

Okay, okay. I was just kidding about the kabuki bit in the subject line.

But listen:

One of the news stories currently making the rounds is a proposal by the LDP Fiscal Reform Study Group to hike consumption taxes from the current 5 per cent level to somewhere between 10 to 15 per cent. Increased revenues would then be used to pay for governmental expenditures on welfare, specifically public pension and insurance programs.

Now, Koizumi has said on numerous occasions that he would not increase the consumption tax during his tenure (which ends next September), but following the announcement by the study group did acknowledge the necessity of doing so (after he leaves office, of course). So, here we have the Prime Minister and his party saying that a tax hike is unavoidable sometime in the near future, but they’re not gonna do it just yet.

Of course, we didn’t hear much talk about raising taxes from the LDP before September’s general election. In fact, if I recall correctly, about the only thing we did hear was Koizumi saying that he wouldn’t raise the consumption tax while he was in office. The DPJ, on the other hand, included in their Manifesto a proposal to raise the consumption tax to 8%. And what were they going to do with this windfall inflow? Why, pay for governmental expenditures on welfare, of course.

And what is the LDP reaction to this attempt to steal their thunder on even an unpopular issue such as tax hikes? Criticize them for not going far enough.

From the Japan Times:

“I am not sure that the DPJ plan is enough,” Koizumi said. “There will certainly be calls for tax revenues to cover not only pension programs but also medical and nursing programs.”

The man talks a great game: he speaks to the public about the necessity of making tough decisions, makes the DPJ look like the protectors of the status quo in the process, but refuses to take action himself. Meanwhile, the DPJ gets clock cleaned and its initiative stolen.

Asahi has an idea for letting the immigrants in

Bye guys! Don't come back now!

Page 11 of the Oct 21 Asahi Shimbun carried an editorial signed “H” in its “Keizai Kishodai” (Economic Observatory) Column..

The piece promotes a solution for the predicted work shortage in Japan: If putting women and the elderly to work isn’t enough, and Japan won’t accept foreign workers to take the good jobs, then they should push women into the work force and import CAREGIVERS and MAIDS to take care of the chores while they are away. Hong Kong and Singapore are already doing this apparently, so why not Japan?

Sounds like a plan! I don’t know why I haven’t seen this argument before. This seems like a very realistic proposition. I mean, caring for the elderly may be a pretty sensitive issue (it’s taboo even for a daughter-in-law to take care of her husband’s parents), but babysitters and housekeepers might be a different story.

The only coverage of this I could find on Literati (CORRECTION: TECHNOrati) was a Japanese-Chinese translation blog… Interesting if you’re studying both languages I suppose…

Japan’s own FedEx, continuing the airspace oligarchy

Japan Post is starting an international air cargo company with ANA. That this can happen at all is pretty cool. Pre-Koizumi Japan Post couldn’t enter business deals like this one. For that matter, pre-1980’s ANA basically couldn’t do anything without a government green light (back in the day, JAL had a monopoly on international air travel, JAL and ANA split big-city domestic routes, and ANA and JAS split small-city routes). Now, the two are collaborating to make an East Asian FedEx.

One thing that bugs me, though, is that Japan basically has just two airlines, plus a tiny third guy named Skymark. Almost every commercial airline flight in Japan is ticketed by JAL or ANA, except for a couple of propeller plane flights to minor islands. You’d think that Japan could support some more companies in this area, given that it has a ton of money (recession be damned) and a population that loves to travel.
Continue reading Japan’s own FedEx, continuing the airspace oligarchy

Frogstyle


I’ve had one of these hanging on my keychain for over three months now, but most of the green paint has been scratched off mine.

What is Frogstyle?
To people searching for happiness, to people feeling down, to people lacking something, frogs bearing a message for those sorts of people, that is FROG STYLE (furoggu sutairu). FROG STYLE has plenty of friends. When you see one on the street, please try getting a warm message from the frogs. Maybe, just maybe it will cheer you up!

Origin:
Once upon a time, the frog progenitor, the -ANCESTOR FROG- came from across the sea. (There are various stories, such as that he accidentally got stuck in ‘bottle mail’ and drifted across the waves.) Thereafter, FROG has been thriving all over the world. So far, 16 varieties have been identified. However, new types are continually being discovered. (From the book “Frog Life” by Frog researcher Kero Kaeruda)

Bandai’s Frogstyle screensaver is now the official screensaver of Mutantfrog.com.

Mac version here.

Numismania

We’ve known for years that North Korea has been printing counterfeit money, but the BBC reports that we finally have proof.

The United States has formally accused North Korea of forging millions of dollars of high-quality counterfeit US dollar notes, known as supernotes.

A US court indictment said seven men, including senior Irish republican Sean Garland, distributed the fakes, which all had a face value of $100.

There is still no word on whether or not North Korea has been accused of counterfeiting the new US ha’penny coin.

Professors fail remedial economics

UpdateI’d like to apologize for forgetting to link to the article yesterday.

The New York Times has an article exploring the issue of whether there may be more important things than a country’s economic development. A worthy topic, but sadly the article references what is possibly the worst academic survey every conducted.

[B]eyond a certain threshold of wealth people appear to redefine happiness, studies suggest, focusing on their relative position in society instead of their material status.

Nothing defines this shift better than a 1998 survey of 257 students, faculty and staff members at the Harvard School of Public Health.

In the study, the researchers, Sara J. Solnick and David Hemenway, gave the subjects a choice of earning $50,000 a year in a world where the average salary was $25,000 or $100,000 a year where the average was $200,000.

About 50 percent of the participants, the researchers found, chose the first option, preferring to be half as prosperous but richer than their neighbors.

I think that’s the stupidest thing I’ve ever heard. They seem to think that people choosing the $100,000 option are twice as wealthy in absolute terms than the people choosing $50,000, but that is utter bollocks.

If the average salary of the world increases by 8-fold and yours drops by half, than in absolute terms you have only 1/16 of the wealth that you had before. Money is not some kind of nano-gel with the ability to transform into an amount of physical material in proportion to the number of units you have, it’s an abstraction that represents the portion of the economy’s total wealth that one controls. The value of individual money units is a simple proportion based on the total amount of money units in existence, this is why we have things like inflation-a concept that seems to have escaped the Harvard School of Public Health.

If they had said ‘town’ or ‘community’ than it might make some sense, because your currency value is still based on the larger economy and in fact would represent a large share of the world’s wealth, but if you’re talking about the entire WORLD’S average income than people who chose the second scenario, much like the people who designed this survey, just don’t know the most basic of math skills.

Unless they were really were testing for basic logic skills, and the whole ‘values of wealth’ thing was just obfuscation.

Update:
Saru linked to a paper by the two Harvard professors in question, which contains a survey with various questions making the same test in both monetary and non-monetary terms. It contains one question identical to, and one almost identical to the one listed in the NYT article, except it is phrased exactly the way it should be. The raises the question, was this a mistake by the NYT writer or editor, or did the professors give the reporter a dumbed-down explanation that wasn’t as clear as their actual paper?

I see that Andrew Revkin, who wrote the NYT article, is one of their regular science writers, but even science journalists aren’t supposed to be experts, and aren’t even expected to fully understand the science themselves. He should have had the professors check his article before publication, and they should have caught that mistake.

First survey:
In the questions below, there are two states of the world (State A and State B). You are asked to pick which of the two you would prefer to live in. The questions are independent. For each question, circle either A or B, or if undecided, both A and B. “Others” is the average other person in society.
[…]
Note that prices are what they are currently and prices (the purchasing power of money) are the same in States A and B.
A: Your current yearly income is $50,000; others earn $25,000.
B: Your current yearly income is $100,000; others earn $200,000.

Second survey:
Note that prices are what they are currently and prices (the purchasing power of money) are the same in States A and B.

A: Your current yearly income is $200,000; others earn $100,000.
B: Your current yearly income is $400,000; others earn 800,000.

Cannibal beef

For those who were wondering why Japan has still not ended their ban on US beef, today’s NYT makes it quite clear.

The F.D.A. proposed banning from animal feed the brains and spinal cords of cows more than 30 months old. It also proposed banning the same parts of any animal not passed by inspectors as suitable for human food, any tallow that contained more than 0.15 percent protein and any meat contained in brain or spinal column that was separated from carcasses by machine.

The new proposal would still allow animals to be fed material that some scientists consider potentially infectious, including the brains and spinal cords of young animals; the eyes, tonsils, intestines and nerves of old animals; chicken food and chicken dung swept up from the floors of poultry farms; scrapings from restaurant plates; and calf milk made from cow blood and fat.

[…]

Michael K. Hansen, an expert on prion diseases at the Consumers Union, called the proposed regulations “completely inadequate,” noting that Britain “took many halfway steps in their efforts to eliminate mad cow disease and failed to stop it.” Only when it stopped feeding mammals to food animals did they cut the cases down to less than 10 a year, he said.