Workshops in Vietnam

I’m in Viet­nam this week and next giv­ing work­shops for offi­cials of the cen­tral and provin­cial gov­ern­ments and some state-owned busi­ness­es on WTO. Viet­nam has decid­ed it wants to com­plete it’s acces­sion to WTO by 2005, so they are step­ping up the train­ing pro­grams. Hanoi ear­li­er this week, Da Nang for the next cou­ple of days and then Ho Chi Minh city. I always enjoy com­ing to Viet­nam. Despite the heavy lay­er of “Marx­ist-Lennin­ist thought” at one lev­el of pub­lic affairs, the towns and cities are a bus­tle of vig­or­ous mar­kets and entre­preur­ial com­merce. The entre­prenur­ial cul­ture is nowhere more appar­ent than on the roads: filled with a stream of small motor bikes that, from my hotel win­dow, looks like an army of smokey, noisy ants head­ed on aver­age in the same direc­tion on each side of the road. But the avear­age is a sum over a large num­ber of indi­vid­u­als any one of which may be head­ed in any direc­tion at one moment or anoth­er, avoid­ing pedes­tri­ans, oth­er bikes and cars whose horns are con­stant­ly blar­ing at them. Peo­ple here are pret­ty dili­gent, young—the aver­age age must be under 20 still—and if not yet wealthy at least very resourceful.Their efforts are being reward­ed with spec­tac­tu­lar growth. This coun­try is like­ly to reach Thai or Tai­wanese lev­els of wealth in record time: a decade or so if they get it right. Even more impor­tant, the food is great. Last night in balmy, qui­et evening we ate at a restau­rant on a large wood­en plat­form pro­ject­ing out onto the beach at Da Nang: the old ‘Chi­na beach’. Mounds of fresh­ly cooked shrimp, cock­les, crab and a local beer brewed by Fos­ters. . Unbe­liev­able val­ue. I’m enjoy­ing the work­shops, too. Teach­ing every now and then is an oppor­tu­ni­ty to renew my own acquain­tance with some of the basic ideas. It usu­al­ly pro­duces sur­pris­es for me. Yes­ter­day, for exam­ple, try­ing to explain why ‘peak’ tar­iff rates are impor­tant I remem­bered out-of-the-blue that the adverse eco­nom­ic impacts of a tar­iff increase as the square of the increase in the tar­iff itself. It’s one of those points that often has a great impact when peo­ple hear about it for the first time. A tar­iff that is twice as high as the aver­age lev­el cre­ates a dis­tor­tion in the domes­tic econ­o­my that is some­thing like four times (not twice) as big as the dis­tor­tion cre­at­ed by the aver­age lev­el of tar­iff.  I “leave it to the read­er” to fig­ure out why this square-rule applies, if you don’t already know (hint: it can be illus­trat­ed by a sim­ple, sim­i­lar tri­an­gles cal­cu­la­tion and the area on a sta­t­ic analy­sis dia­gram nor­mal­ly des­ig­nat­ed the ‘dead­weight loss&#8217).

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