Saturday, February 26, 2011

more dani

"Those who advocate greater global governance warn us that, without tighter international economic rules, a free-for-all will leave all countries worse off. "

" is a mistake to imagine the world economy as if it were like, say, global climate – with its health and stability ultimately depending on the pursuit of universal instead of parochial objectives."


dani at his habitual annoying middle path ism :

"If the government is too heavy-handed, it kills private entrepreneurship."

on the other hand

" If it is too standoffish, markets keep doing what they know how to do best,
confining the country to its specialisation in traditional, low-productivity products"

but the upshot of that other hand
 the stand offish hand
is keenly shaped

related finding
Here is a chart that provides a key insight on why Latin America has done worse than Asia since 1990. The chart decomposes labor productivity growth in the two regions into three components: (i) a “within” component that is the weighted average of labor productivity growth in each sector of the economy; (ii) a “between” component that captures economy-wide gains (or losses) from the reallocation of labor between sectors with differing levels of labor productivity; and (iii) a “cross” component that measures the gains (or losses) from the reallocation of labor to sectors with above-average (below-average) productivity growth.
(The countries identified by “HI” are the high-income countries.)
Note first that Latin America does better than Asia in terms of the “within” component (the blue bars). The representative Latin America country has experienced faster productivity growth in its individual economic sectors than the representative Asian economy. (China is not included in this data set.)
Why then did Latin America do so much worse overall? Because the reallocation terms have contributed negatively to overall economic growth. Note in particular the hugely negative “cross” term for Latin America (the green bar). In Latin America, labor has moved from sectors with high productivity growth to sectors with low (or negative) productivity growth, offsetting to a large extent the large “within” effect and the much smaller (but still positive) “between” effect.
Here is what’s behind the large and negative cross effect. The scatter plot below shows the correlation for Latin America between the change in a sector’s employment share and the sector’s labor productivity growth.
The main message of the scatter plot can be summarized easily. Labor has moved from tradable sectors (agriculture and manufacturing) where labor productivity growth has been rapid to non-tradables, especially wholesale and retail trade, where productivity growth has been negative.
Put differently, the mechanism through which tradables have achieved significant productivity growth in Latin America (remember the large “within” terms noted above) has been to lay off workers. Such “rationalization” is OK from a partial-equilibrium perspective, but doesn’t look great when the displaced labor moves to sectors with worse performance.
As the first chart shows, Asia (where manufacturing has expanded rather than shrunk) has largely avoided this problem, and has ended up with superior overall performance.
Want to help me write my paper? Provide some hypotheses as to why the structural change patterns in the two continents have been so different."

dani on development

"every country that has been successful has managed to leverage globalisation with a domestic strategy.

 It’s always been a combination of a solid domestic growth strategy alongside the forces of globalisation.

 It is a careful, managed kind of globalisation that has worked.

 The countries that have simply opened themselves up to world trade and finance without a complementary growth strategy at home haven’t done that well "

free range trans border corporations want free fire zones in emerging regions
romers neo hanseatic fantasy

so its eclectic social liberal/social democrat dani R
the  flying fleet of trans nats

a very uneven combat

and then dani
lets the PRC shine

"...without globalisation China wouldn’t have been able to grow as rapidly as it did.

But China is not a simple story of letting globalisation work its magic.

They, in fact, have opened up very gradually, very carefully and always after having established strengths in their domestic economy.

 It was on the basis of their domestic industrialisation that they progressively opened up to international trade and when they opened up to trade it was very partial too.
 It wasn’t ‘Let all the tariffs come down!’ It was through special economic zones, so only in parts of the country.

They protected their state-owned enterprises so there wouldn’t be large-scale unemployment.

They made sure foreign investors would transfer technology to their domestic counterparts.

They entered the WTO relatively late, only after they had already become a manufacturing powerhouse.

With respect to international finance, to this day they have capital controls, they prevent free inflow of capital and they’re intervening heavily to make sure that they have a very competitive currency – which effectively subsidises their exports and their manufacturing industry.

So China has had a combination of highly interventionist domestic policies to diversify and develop its industries alongside a policy of export-orientation and taking advantage of globalisation.

This combination has been key.

 Other countries that have tried to take advantage of globalisation simply by lowering their barriers to trade and letting their capital flow freely such as the Latin American countries since the 1990s have actually done relatively poorly. "

but dani
might not democracy ie bourgeois liberal systems of democracy
PREVENT the han strategy  ???

if trans nats can  lever in the  pluralistic open society state system
to "run and regulate"
   an emerging national markeyt system

 whither industrial policy  ??

whither  " credit/capital" management ???

wealth state vs welfare state when anachronisms collide

dani's 7
dani is the ever gay eclectic

"...pretty much everybody understands that there really is no alternative to market-based systems. But that still leaves huge room for argument about the type of market system. If you look at the national economies of different countries, they have very different kinds of market-based systems. The US economy is very different from the Swedish economy, which in turn is very different from the French economy, which in turn is very different from the Japanese one. And all of them are very different from the kind of market economy China is."

one wonders why he has so much faith in institutional  variations
without a theory of the limits to  institutional impact on  any market based  production  system

how much difference is a difference
at any rate... regadrez  :

" global markets are fundamentally hostile to heterogeneity on these questions, so what economic globalisation tends to do is push for uniformity, to push for similarity in standards and regulations. It is not entirely clear that this is desirable either politically or economically.... "

i think the  following requires proof as well

"... (uniformity ) certainly not inevitable in any way "
why ??
"’s up to governments and policy-makers to decide to what extent they want to go down that route "

ah... but can  national gubmints survive  long ...if they  defy global corporate dictates ???

is this pipe dreaming ???in that light dani's 7  "pipe dreams ".......

1. Markets must be deeply embedded in systems of governance. The idea that markets are self-regulating received a mortal blow in the recent financial crisis and should be buried once and for all. Markets require other social institutions to support them. They rely on courts, legal frameworks, and regulators to set and enforce rules. They depend on the stabilizing functions that central banks and countercyclical fiscal policy provide. They need the political buy-in that redistributive taxation, safety nets, and social insurance help generate. And all of this is true of global markets as well.

2. For the foreseeable future, democratic governance is likely to be organized largely within national political communities. The nation state lives, if not entirely well, and remains essen­tially the only game in town. The quest for global governance is a fool’s errand. National governments are unlikely to cede significant control to transnational institutions, and harmonizing rules would not benefit societies with diverse needs and preferences. The European Union may be the sole excep­tion to this axiom, though its current crisis tends to prove the point.
Too often we waste international cooperation on overly ambitious goals, ultimately producing weak results that are the lowest common denominator among major states. When international cooperation does “succeed,” it spawns rules that are either toothless or reflect the preferences of only the more powerful states. The Basle rules on capital requirements and the World Trade Organization’s rules on subsidies, intellectual property, and investment measures typify this kind of overreaching. We can enhance the efficiency and legitimacy of globalization by supporting rather than crippling democratic procedures at home.

3. Pluralist prosperity. Acknowledging that the core institutional infrastructure of the global economy must be built at the national level frees countries to develop the institutions that suit them best. The United States, Europe, and Japan have produced comparable amounts of wealth over the long term. Yet their labor markets, cor­porate governance, antitrust rules, social protection, and financial systems differ considerably, with a succession of these “models” – a different one each decade – anointed the great success to be emulated.
The most successful societies of the future will leave room for experimentation and allow for further evolution of institutions. A global economy that recognizes the need for and value of institutional diversity would foster rather than stifle such experimentation and evolution.

4. Countries have the right to protect their own regulations and institutions. The previous principles may seem innocuous. But they carry powerful implications that clash with the received wisdom of globalization’s advocates. One such impli­cation is the right of individual countries to safeguard their domestic institutional choices. Recognition of institutional diversity would be meaningless if countries did not have the instru­ments available to shape and maintain – in a word, “protect” – their own institutions.
We should therefore accept that countries may uphold national rules – tax policies, financial regulations, labor standards, or consumer health and safety rules – and may do so by raising barriers at the border if necessary, when trade demonstrably threat­ens domestic practices enjoying broad popular support. If globalization’s boosters are right, the clamor for protection will fail for lack of evidence or support. If wrong, there will be a safety valve in place to ensure that contending values – the benefits of open economies versus the gains from upholding domestic regulations – both receive a proper hearing in public debates.

5. Countries have no right to impose their institutions on others. Using restrictions on cross-border trade or finance to uphold values and regulations at home must be distinguished from using them to impose these values and regulations on other countries. Globalization’s rules should not force Americans or Europeans to consume goods that are produced in ways that most citizens in those countries find unacceptable. But nor should they allow the US or the EU to use trade sanctions or other pressure to alter foreign countries’ labor-market rules, environmen­tal policies, or financial regulations. Countries have a right to difference, not to imposed convergence.

6. International economic arrangements must establish rules for managing interaction among national institutions. Relying on nation states to provide the essential governance functions of the world economy does not mean that we should aban­don international rules. The Bretton Woods regime, after all, had clear rules, though they were limited in scope and depth. A completely decentralized free-for-all would benefit no one.
What we need are traffic rules for the global economy that help vehicles of varying size, shape, and speed navigate around each other, rather than imposing an identical car or a uniform speed limit. We should strive to attain maximum globalization consistent with the maintenance of space for diversity in national institu­tional arrangements.

7. Non-democratic countries cannot count on the same rights and privileges in the international economic order as democracies. What gives the previous principles their appeal and legitimacy is that they are based on democratic deliberation – where it really occurs, within national states. When states are not democratic, this scaffolding col­lapses. We can no longer presume that its institutional arrangements reflect its citizens’ preferences. So non-democracies need to play by different, less permissive rules.
These are the principles that the architects of the next global economic order must accept. Most importantly, they must comprehend the ultimate paradox that each of these principles highlights: globalization works best when it is not pushed too far.

Friday, February 25, 2011

macro trumps trade theory

everyone knows comparative statics is of no use in policy debates
and yet lots of spilt ink recently over gains from   new cross border trade
with or without a compensating  transfer system TS
but look at trade in independent pieces

new imports take market share  from pre existing domestic producers eh ??

the lost value  added  pnce earned by local producers 
is  only by assumption  off set by "equally  valued " exports

how can the TS  pareto ize the outcome ??

not even  the implicit market clearing mechanisms  can rig this exercise

 of course there's no reason to expect the shock of trade on relevent  local markets
to quickly diffuse through out the "bordered factor system "
before  a generation of non traders  in the bordered area have taken a beating
but put that aside

recall all trade is mediated by credit or credit money now
and  so any  balance becomes remote
ie the as if barter assumptions is a complete magic trick

the bordered areas aggregate advantage
 hardly comes into play if the macro effects lead to disemployment in the  borrdered area
rather then smooth distribution of impact  into winners and losers all still "employed "
as is implicit in the trade theory formulations

shared by all players
trade occurs across borders if the traders gain on both sides of the border
AND the non traders can't mount a stop order or rely on automatic TS actions
to maintain ex ante positions of non traders

clark world tricks

the factor payments in any n factor production system
might look crazy if one factor could operate as a monopoly
"take us or leave  us " while the rest of the factors remain  wide open to general "supply " conditions

just compensation becomes problematic far before that however
even if there is no residual because of euler-ization of the "system"

Monday, February 21, 2011

debt equity sunk costs

sunk costs oughta be immediately equitized
just as debt oughta be free to fall into a negative short term  rate of interest

sunk cost the universal labor  value wanna be
always operates at a deficit
in as much as it piles up as debt
a  pure incubus

society needs to swap the cost of sunk costs  for shares in the project/enterprise's residual stream
even if this involves cashing out some or even  all of  the compensation for the project/enterprise's sunk costs

the notion of a grant however seems too "liberal" a funding mechanism
 to be pre dominant in funding  r and d operations

the mechanism oughta be more complex  time lagged and contingent on results

Sunday, February 20, 2011

just keep your eye on export import prices

sure forex fiddles matter
but set your target path to balanced trade
and start fiddlin'
and watch for export import price responses
they are likely to be mighty sluggish

reversing  the trade balance effect
   of a long bout of unfavorable forex rates
  is obviously  a very protracted process
given firm price formation especially inter border pricing
why ought the forex induced distortion effect on trade balance
  take less time  going  out as coming on 

imagine the reconstruction of productive facilities  involved

how pockets of inelastic debt bubbles burden price elastic exchange intended product markets

simple really
burden is inversely related to price level movement

if you inflate the product price levels  you shrink the debt bubble to product  "value " ratio in the total
 production  system
and of course the nasty case of visa versa if you allow the product price levels to deflate  ....

yikes enter  irv fisher

rational or rationalization

does it matter what forms expectations or how these expectations inform "next moves ???

obviously "traders " operate with different "move - position"
choice systems
as well as data bases

my intuition as one
" adds in "
varieties of player/trader  choice  systems
the market behaviour "results" begin to approach each other
a vast if rough and ready cancellation of symetrical tails

and yet we have influenzas that shake the grip of these more or less "normal " shaped  systems
flus  generate among other  outcomes the interetsting
 rational ..if collectively self defeating ..cascade into stampedes
once the rationalists lack the credit lines to hold back the thundering panic herd

if one must either or these assumptions
i share joe stigs paradigm preference for rational agents
over modeling varieties of human trading behaviour
primarily becausing learning looks like convergence to ratex

but i don't think it "matters " in "simulating " the actual collective behaviours of
on going continuosly operating shock struck   markets
where conditions not only are under constant bombardment from "outside "
 but equally and in climactic moments far more so
 constantly generating their own  internal endogenous shocks
upshot :
uncertainty in the end overwhelms rational "method "
 inherent spontaneous chaotic variability triumphs ..
that is until the market "blows itself up " or is harnessed by a higher authority imposing rules and refs
now toss in ...using " other peoples money"
and you are  introducing
agent/ principal incentive contradictions not just inter player contradiction
which needless to add
brings on another set of dimensions entirely

fraud swindle puffery you name

the marketing of "ability " is a competition

with its entrained series of  deceptions fads etc

are markets self correcting along these dimensions ???
maybe if and only if
crashing into a wall is labeled
                           a braking system  

Tuesday, February 15, 2011

harmless assumption

the rationality of crowds ... is it's  mean value

is that about the assumption the new wave of ratexers/learners use ??

it really is a pure sim if you assume a mechanical reality
is the economy
ie the economy is  a model-able system
that can be discovered in the goodness of time
no matter how dynamical and fragile

i know saying a system is historical lacks sharp contours as a notion
but it seems harmless as an assumption

if we can interact with a system
 in performance improving ways
we can build a clinical science ???

sterling example
macro effective demand
management :

enhancing "remedies"
like larger fiscal deficits
for too  high unemployment

zipping up
a  sluggish phase state
of a market based..for profit
 corporate dominated
 credit driven economy

why require more  then...

"hey look this  Rx  works !!":

at least
till we reach some impasse
where said  Rx is  no longer performing well
or is producing unacceptable side effects

again take schlock keynesianism

okay if we push too long and too  hard
with the  fiscal deficit measures
---vide the notorious 70's --

we need to improve our handling of
certain  side effects like ....wage push inflation

the above is all posted  to this humble  purpose :

maybe we don't need any more then a successful critique of rat ex models

perhaps we are not required to build a better mouse trap

if we can use doc keynes patent elixir to "cure " the ill

i guess i'm too in love with late goodwin for my own goodwin

but isn't this the essence
historical materialism
a causal system too complex to simulate adequately

complexity of causation as a claim doesn't have to mean
hayekian quiessence

not  macro policy wise

we can see the record plainly enough now
K school  macro policy works
and about as expected ...lots of times least from a clearly defined class point of view
where more demand for labor is job one

what else  do we  need ??

the plague of idle-ness is past

the patients are back on their feet
producing widgets for mr plutonium

goodwin's great point

if the causation pattern in a model
   is complex enough
the output will pass all  tests for random-ness

that is history defined  

Saturday, February 12, 2011

bull shit talks

a nasty blog  boob-blob
tries to hanky pank the numbers on us
to prove
us manufacturing is lean and mean
 vis a vis other " mature industrial economies "
         errr except korea

 unit labor cost and rate of output recovery
in otherwords
 higher wage stag  here and no  work sharing program

and the bitter fruits of a legacy of relatively dead  manufacturing  output in the last recovery
setting a lower recovery target

that brushed aside
here's the up shot :

"My suspicion is that nearly all of the low-hanging fruit that could be gathered by shifting production from the US to low-cost countries like China has already been picked."

" Companies for which it made sense to shift production to other countries have already done so"

". Most of the manufacturing left in the US is, by and large, stuff that I think will probably stay in the US"

  well that's a relief ??

this side bar

as  the euro queens continue to stag on importation from yankee town
 chinese/mexican  imports of us exports  be way  up ...dramatically speaking

err but is this mainly industrial  mr krush ?? ....just askin'

grants versus loans

macro options simplified:

what is the core difference between a macro policy based on the credit system
   versus one that must dip deeper into the tax and transfer system ??

when loosening  household  loan availibility is simply not  enough ..err like now
you gotta go to uppin the grants flow ..give it away

trying to promote added household  spending now
                           that has to be paid back later
   is useless
                      when dah nuts already too big

obviously uncle can monetize the net grant addition
thesis :
when you gotta up the grant flow
monetizing will have near zero impact on product price level dynamics

Thursday, February 10, 2011

mooby out !!!!

lets be perfectly clear ...

commodity markets are rigged up

 a few big players steer  the price path

 that oughta be the thesis to be refuted ?

pk has simply assumed  adequate seller  competition
...... enough producer/sellers  pushing  price quickly
down to marginal cost of production all times
this amounts in reality
 to chronic over supply conditions
if elasticity is low enough how can that condition  ever last long
so long as adding supply has such a long " pipe line "

the oligs are behind the specs

the attempt to find a signature for commodity market manipulation
has bogged down over pk's "where's the hoard ?"

my own conflation of oligs who sell real oil wheat etc
with the paper bats flying around em
 ie the specs

doesn't help
and trying to claim the inelasticity is so great the hoard could be so small
you couldn't find it
like a soft ball sized h bomb
missed in the search for wmd's in iraq

the question that kills
if its so easy to [pop the price why wasn't it done yesterday
since profit max is the agent's mission
why wait till today ??? why not profit max everyday ??

recall these models always start with spot price equal to marginal cost of production....

but why would it ever be that if it could be higher ???

the deeper question is obviously
 how oligs form prices and price path strategy
given the ultra crucial and public sensitivity of  these  basic "products"

gouging max is out of the question
so is any blind " market will bare" strategy that neglects the strategic defeat of substitutions

a simple model won't cut it here
even if it shows an inter action between say contrat prices and futures prices
just extinguishing pk's stupid question as the holy grail here
fails to answer the question convincingly

the path of prices is a history a narrative
yes it can be simulated to generate its essentials
and of course serve as a warning about bubble potentials
but never predict the next bubble till its already rising

Monday, February 7, 2011

all markets can bubble till proven innocent

we need a model of immaculate speculation

a model
where spec markets
once evolved  sufficiently around real spot markets
can make spot  prices appear to
 levitate up
 gravitate down
without any change in stock positions or supply  flow rates or demand intensity

the correct formality has just  gotta be out there somewhere