Monthly Archives: March 2009

Rodrik’s many recipes

Dani Rodrik's Sir Arthur Lewis LectureIDA's account of Vietnam's performance on poverty

Update:  Prof. Rodrik says that I’ve got his exam­ples exact­ly wrong (see his com­ment) and that he meant that the World Banks’ “glob­al­iz­ers” includ­ing Viet­nam have out­per­formed those high­er on the Her­itage Foundation’s index. Well… that cer­tain­ly makes more sense. My apolo­gies to him—and to you—for the mis­un­der­stand­ing. [2 April, 2009]

I am sym­pa­thet­ic to Dani Rodrik’s under­ly­ing the­sis in his ‘One Eco­nom­ics, Many Recipes’ pub­li­ca­tions because, like most who’ve wit­nessed devel­op­ment poli­cies go off-the-rails, I’ve blamed the fail­ure of sim­ple-mind­ed eco­nom­ic ‘ortho­doxy’ to account for the com­plex imper­fec­tions of real mar­kets.

But ‘sym­pa­thet­ic to’ doesn’t mean ‘agree with’. I think Rodrik fails to explain how a’ sol­id appli­ca­tion of sec­ond-best thinking’—by which he means, rough­ly, ‘non-lais­sez-faire’ intervention—can be dis­tin­guished from man­age­ri­al­ism (by tech­nocrats) and dirigism (by auto­crats). I’ve seen plen­ty of exam­ples of that kind of pol­i­cy derail­ment, too.

The Rodrik the­sis about the val­ue of plan­ning based on ‘sec­ond-best’, it seems to me, can be test­ed only by ref­er­ence to exam­ples. It’s an empir­i­cal, rather than the­o­ret­i­cal, ques­tion. But his exam­ples are often at best arguable and, in his most recent pre­sen­ta­tion of his case, bizarre.

Competitiveness of U.S. agriculture

USDA projection of exchange-rate impact

As usu­al, the export out­look depends more on the dol­lar exchange-rate than on the impact of reces­sion on under­ly­ing demand—at least, from 2010 onwards:

The main uncer­tain­ty for the long run con­cerns the val­ue of the U.S. dol­lar com­pared with cur­ren­cies of oth­er major trad­ing coun­tries. One pos­si­bil­i­ty is that the dol­lar will con­tin­ue to strength­en sub­stan­tial­ly, espe­cial­ly against the Chi­nese yuan and cur­ren­cies of oth­er major emerg­ing mar­kets. Anoth­er is that the dol­lar will weak­en, as it did doing dur­ing most of the 2000s before the 2008 cri­sis.

In the first sce­nario, U.S. farm­ers will face a stronger dol­lar, which will reduce the price com­pet­i­tive­ness of U.S. agri­cul­tur­al exports… U.S. net farm income will decline by almost 7 per­cent to $83 bil­lion and agri­cul­tur­al exports will drop by 27 per­cent to $85 bil­lion by 2013.

In the sec­ond sce­nario, the weak­er dol­lar rel­a­tive to the ref­er­ence case will strength­en U.S. farm­ers’ com­pet­i­tive­ness on world mar­kets… pro­ject­ed net farm income will increase by 19 per­cent to $106 bil­lion in 2013 and to $118 bil­lion in 2017, while agri­cul­tur­al exports will rise to $120 bil­lion in 2013 and $134 bil­lion in 2017.” Extract from “The 2008/09 World Eco­nom­ic Cri­sis: What it means for U.S. agri­cul­ture


Toshi­ba is buy­ing out Matsushita’s (‘Pana­son­ic’) share of their LCD busi­ness, snap­ping up Fujitsu’s disk-dri­ve busi­ness and extend­ing into lithi­um bat­ter­ies, while fac­ing a dete­ri­o­rat­ing bal­ance sheet.

Where’s the evidence?

[Spe­cial Min­is­ter of State] John Faulkn­er promised full dis­clo­sure. In fact, dis­clo­sure has been piti­ful­ly inad­e­quate. Access to the mod­el­ling under­pin­ning Fuel­Watch: refused. Access to the mod­el used to eval­u­ate the ETS: refused. Access to the cost-ben­e­fit stud­ies under­pin­ning the NBN: refused. Access to the Build­ing Aus­tralia Fund’s project appraisals: refused. Access to the Treasury’s assess­ment of alter­na­tive stim­u­lus pack­ages: refused.” Extract from Hen­ry Ergas in The Aus­tralian

Sunday excursion: image workflow


Geek-stuff. A recipe for ‘repur­pos­ing’ images for the web using ImageMag­ick. It took me a few hours to fig­ure this out from the terse documentation…so I’m hop­ing to save you the trou­ble.

Over the fold, an Apple­script to resize an image, sharp­en, expand the con­trast range, and cre­ate a thumb­nail. Even if you don’t run under OSX you can use the ImageMag­ick rou­tines embed­ded in this script with Win­dows or Lin­ux.

The Quiet Coup

If you can’t let the banks fail and won’t take over their assets, they own you.

[W]e face at least two major, inter­re­lat­ed prob­lems. The first is a des­per­ate­ly ill bank­ing sec­tor that threat­ens to choke off any incip­i­ent recov­ery that the fis­cal stim­u­lus might generate.The sec­ond is a polit­i­cal bal­ance of pow­er that gives the finan­cial sec­tor a veto over pub­lic pol­i­cy [owing to the Geit­ner plan’s reliance on banks’ coop­er­a­tion], even as that sec­tor los­es pop­u­lar sup­port.” Extract from Simon John­son, “The Qui­et Coup”, The Atlantic Online

Would an IMFlender of last resort’ program—usually reserved for emerg­ing mar­kets in crisis—help the Unit­ed States?

Credible rejection of Chinese mine bid?

Location of the Woomera Range in South AustraliaDetails of locations in and around the Woomera Range

It’s dif­fi­cult to call this, one way or the oth­er. The gen­er­al­ly xeno­pho­bic reac­tion to three recent, high-pro­file, Chi­nese resource bids (Rio, Ozmin­er­als and Fortes­cue) is a good rea­son to be alert to a ques­tion­able ‘nation­al inter­est’ claim.

Some peo­ple have smelled a rat in the Treasurer’s announce­ment that he won’t approve OzMet­als’ $2.6 bn sale to China’s Min­Metals, on nation­al secu­ri­ty grounds, if the deal includes the Promi­nent Hill prop­er­ty (it appears from his state­ment that he will approve a dif­fer­ent con­fig­u­ra­tion of the deal):

The loca­tion of Oz’s Promi­nent Hill mine – with­in South Australia’s vast Woomera Pro­hib­it­ed Area, which is the size of Eng­land – was cit­ed by Can­ber­ra as the prob­lem. But it was point­ed out that the ‘sen­si­tive’ weapons test­ing range that is said to make a valu­able con­tri­bu­tion to Australia’s nation­al defence was at least 150 kilo­me­tres away from the Promi­nent Hill site.” Extract from Finan­cial Times

Hmm… this sounds sus­pi­cious. My view is that only a cred­i­ble ‘nation­al secu­ri­ty’ claim could be suf­fi­cient to jus­ti­fy thresh­old (i.e. at the bor­der) bar­ri­ers to for­eign invest­ment. Do the facts on the ground jus­ti­fy a nation­al secu­ri­ty bar­ri­er in this case?