I read two really interesting books about economic development in China and other Asian countries:
How Asia Works, by Joe Studwell
Explains the successful developmental strategy that allowed Japan, South Korea, Taiwan, and most recently China to lift themselves out of poverty and become big players in the global economy. Contrasts this with Indonesia, Malaysia, Thailand, and the Philippines, which did not develop nearly as successfully.
Step 1: Perform land reform to give small plots to farmers, and move away from large-scale plantations or collective farms. Owning their land (as opposed to being tenant workers) motivates farmers to produce more food. They apply a high-labor "gardening" approach which leads to massive yield increases. This creates the initial food surplus and cash savings that enable everything below.
Step 2: Establish export-oriented manufacturing firms. This requires a long period of subsidies and protectionism, allowing these firms to catch up to the global technological state of the art. Export discipline means that these firms are forced to compete on the global market, and earn their subsidies only if they show the promise of becoming global leaders (as opposed to second-rate "import substitution" players on a protected home market).
Step 3: Keep central control over the financial system, and deploy its resources to support the goals above. This means capital controls, interest rate controls, and bank-based finance (stock and bond markets are harder to regulate). This enables the long-term investments needed to move a country to higher-value niches of the global economy. A more open financial system would focus on short-term gains instead (real estate, consumer lending) which will not help your country develop.
I was surprised by how much of this goes against Western economic "best practices." Land reform means expropriating large landowners, which violates basic private property rights. Protectionism is considered inefficient, and subsidies for exporters are considered cheating. Controlled interest rates are considered "financial repression" and deregulation of financial markets is considered enlightened. The author's depressing conclusion is that if you're a developing country, the IMF and World Bank are pretty much the worst places you could go for advice.
China's Economy, by Arthur R. Kroeber
Explains the various stages of reform that China went through, and its upcoming challenges. Some points that I found particularly intriguing:
- Can China innovate, beyond just catching up to the existing technological frontier? So far, China has not produced many global technology leaders like Toyota / Canon / Nikon / Sony in Japan or Hyundai / Samsung / LG in South Korea. Huawei is the major exception, and you can see how worried the US is about that.
- Will China's economy keep growing as fast as it has been? Possibly not, since they are approaching the limits of stage-1 growth (mobilizing labor and resources) and must transition to stage-2 growth (increasing efficiency while the working-age population declines), which is much harder.
- Does China "cheat" by stealing IP from other countries? Not any more than the US cheated in the 19th century. All countries steal IP until they reach a developmental stage where the benefits of protecting IP outweigh the costs.
- Why is the Chinese middle class not pushing for a more open political system? Among other things, because they are still only ~1/4 of the population. In a more representative system, they would lose out to the interests of the rural population, which is still almost 1/2 of the country.
- In the West, political legitimacy is given by winning elections. In China, the government derives its political legitimacy from good governance: running the economy well, and improving people's quality of life. We can expect the communist party to stay in power for as long as they keep running the country competently.
Various articles online
- Conrad Bastable writes about Germany's economy. An interesting parallel to the books above. Germany also has an export-driven economy, which would normally make its currency appreciate to the point where it starts to hurt their exports. But because they are in the Eurozone with other less successful countries, this isn't happening.
- Gwern writes about improvements in daily life since the 1990s. Remember floppy disks and dial-up? It's hard to notice when things get gradually better, like the boiling frog but in the opposite direction. It's good to know that someone's been paying attention.
- Financial Samurai writes about how children's unequal affection towards their parents feels from the point of view of the parents. I've never thought about this before.
- Pedestrian Observations: Why American Costs are So High when it comes to building infrastructure.
- Slate Star Codex: I Can Tolerate Anything Except the Outgroup. Tolerance is hard and if you think that you're criticizing your own tribe, you're probably wrong.
- Slate Star Codex: Staying Classy. Offers some ways to think about the very taboo topic of social classes in the US.
- The Atlantic: The More Gender Equality, the Fewer Women in STEM.
The Atlantic: The Blog Comment That Achieved an Internet Miracle.
Choice quote (originally from Scott Aaronson):
"There are no task forces devoted to it, no campus rallies in support of the sufferers, no therapists or activists to tell you that you're not alone. There are only therapists and activists to deliver the opposite message: that you are alone and it is your privileged, entitled, male fault."
Finally, a friend recommended the short story "Liking What You See", by Ted Chiang. In it, people develop a procedure to block their perception of beauty, so that they can judge one another purely based on other merits. What could possibly go wrong?