Jim Nichols

China’s recovery accelerated in the third quarter as a result of the government’s massive lending programme with the economy growing at 8.9 per cent compared with the same period last year.

 

The National Statistics Bureau on Thursday said that the increase in investment and retail sales had also accelerated in September, underlining the rapid rebound in the economy that has taken place in recent months.

 

The expansion in the third quarter compared with year-on-year growth of 7.9 per cent in the second quarter and 6.1 per cent in the first quarter, when the country’s export sector was hit hard by the global crisis. In the first nine months, the economy expanded 7.7 per cent, much faster than any other major economy.

Li Xiaochao, spokesman for the NBS, said the economy was at a “crucial stage”. “The basis of the economic recovery still needs to be consolidated, and the insufficient external demand is still severe,” he said.

The sharp rebound in the economy has prompted calls for the government to begin withdrawing some of the stimulus it has injected, including a massive increase in bank loans. Qin Xiao, chairman of China Merchants Bank, said in an article in Thursday’s Financial Times that China needed an “urgent” tightening monetary policy to prevent bubbles in stock and property prices.

The State Council indicated a shift in strategy on Wednesday when it said that China’s policy should focus both on controlling inflationary expectations and securing stable growth, the first time it had mentioned inflation since the crisis began. The statement has prompted speculation that the government could begin to restrict credit to banks or appreciate the currency in order to limit inflationary pressures.

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Greg Ransom has found a new book with an interview done with Hayek in 1979.  In it, Hayek says the following:

“I agree with Milton Friedman that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy.  I am not only against inflation but I am also against deflation.  So, once again, a badly programmed monetary policy prolonged the depression.”

Those Austrians who think deflation is always and everywhere a good phenomenon strongly overlap with those Austrians who wonder whether Hayek is really an Austrian (or a even a classical liberal) anyway, so I'm doubtful this will convince them of the claim that a concern with monetary deflation has been, and should be, a core part of Austrian monetary and macro theory.  However, it does, in fact, bolster the case for a monetary equilibrium reading of Hayek.

It is also useful to counter the claim that Hayek was a "liquidationist" in the sense often deployed by people like Brad DeLong, as well as the more general claim that Hayek thought we should do nothing during the depression.  By implication, if you think deflation is bad, you believe that the Fed (given its existence) should have behaved differently between 1930 and 33.  It could have done something to prevent the events that "prolonged the depression."

This also is some support for what I would call the Austrian-Monetarist-Interventionism explanation of why the Great Depression got started, got so deep so quickly, and lasted so long.  Each "school" (think Rothbard, F&S, and Higgs if you want authors) lines up with each element of the explanation in the order given.  Even Hayek agrees that traditional Austrian cycle theory alone can't explain the whole thing, even buttressed by Higgs or Cole & Ohanian.  If you want to explain why the Great Depression was both "great" and a "depression" not a recession, you need the Friedman and Schwartz story, and you'll have Hayek on your side.

Whether the same situation as we faced in 1930 was in place last fall remains a debatable question.  However, if velocity was falling in the way some folks believed, doing nothing would have invited a potential repeat of the early 30s, and now we can say with even more certainty that Hayek, at least, would have recommended that the Fed act to avoid it.  (Of course, nothing in this paragraph is an endorsement of the extreme to which the Fed went, nor the other really stupid things it did last fall and since.)

 

"Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'Press On' has solved and always will solve the problems of the human race."     ---Calvin Coolidge (1872 - 1933)

"I have come to the conclusion that politics are too serious a matter to be left to the politicians."    Charles De Gaulle (1890 - 1970)

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STEVEN LEVITT and Stephen Dubner have reprised their Freakonomics roles in "SuperFreakonomics", which is due out in just a few days. As it happens, some chapters from the book are already in circulation, including one on "global cooling" which has drawn quite a bit of criticism, including responses from respected climate scientists and environmental economists. Mssrs Dubner and Levitt have attempted to respond, but I find the criticism of their work to be quite compelling; it appears that the authors made a number of outright errors and generally opted to present their case in a manner aimed more at provoking controversy than informing, which is highly irresponsible given the subject matter. (You can follow links here, here, and here.)

One interesting point that a number of critics have made is that the Freakonomists' writing seems to be vastly different in quality when using research that Mr Levitt has himself produced (as was the case in the first book) than when addressing topics he has not previously discussed. This isn't all that difficult to understand; Mr Levitt no doubt chooses his research topics based on things like the quality of data available rather than the likelihood of a particular question being "hot button". And there are also very different publication standards for academic work than there are for popular publications.

But that doesn't mean that there can't be reputational blowback from a disastrous popular publication. Given that, it's a shame that Mr Levitt opted to dedicate a chapter to a subject—climate change—on which he doesn't have subject-area expertise and on which topic he doesn't use his methodological expertise. Instead, he simply deploys his reputational "expertise". This may make him some money, but it won't come without real costs.

And it's not like he didn't have plenty of real academic work to use. Matt Yglesias directs readers to an interesting paper co-written by Mr Levitt on the use of minimax strategies in professional sports. And just today, this paper popped up at NBER (co-written by Steven Levitt and Roland Fryer):

We document and analyze the emergence of a substantial gender gap in mathematics in the early years of schooling using a large, recent, and nationally representative panel of children in the United States. There are no mean differences between boys and girls upon entry to school, but girls lose more than two-tenths of a standard deviation relative to boys over the first six years of school. The ground lost by girls relative to boys is roughly half as large as the black-white test score gap that appears over these same ages. We document the presence of this gender math gap across every strata of society. We explore a wide range of possible explanations in the U.S. data, including less investment by girls in math, low parental expectations, and biased tests, but find little support for any of these theories. Moving to cross-country comparisons, we find that earlier results linking the gender gap in math to measures of gender equality are sensitive to the inclusion of Muslim countries, where in spite of women’s low status, there is little or no gender gap in math. 

Very interesting stuff. With the reputation Mr Levitt built for himself through the first book and his New York Times blog, he could easily have made himself millions of dollars with a sequel focused on these kinds of questions. But instead he and Mr Dubner wrote a chapter that differs dramatically in style and method from what we've all come to understand as the Freakonomics way.

That is an thought-provoking phenomenon in and of itself. I suspect Mr Levitt could say something quite interesting about the incentives facing academics with popular brands, if he weren't quite so involved with a natural experiment of his own making just now.

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His early months in office have been "very disappointing."

Obama is "a frightened man," who won't take on corporate power.

Obama is "conflict averse" - and a "harmony ideology type," who's being taken advantage of by the sharks in Congress, of both parties.

He's "Bush-Cheney redux" when it comes to military and foreign policy, "albeit with better speeches" to the Muslim world. Given Obama's handling of the wars in Iraq and Afghanistan, Nader wonders in amazement: "And they gave him the [Nobel] Peace Prize?"

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Should the media be doing these kinds of things? 

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A series of court decisions expected this fall could put the nation on track to return to turn-of-the-century campaign finance laws.

This week, the U.S. Court of Appeals for the D.C. Circuit will hear arguments in a case that opponents say could pave the way for political parties to raise unlimited amounts of money from corporations, individuals, unions and anything else with a bank account.

Last week, the same court announced it will review Federal Election Commission rules aimed at reining in outside independent groups, after two of its three-judge panels offered differing judgments on them.

Next month, the 5th Circuit Court of Appeals in New Orleans will hear arguments in a case that would essentially wipe out the post-Watergate rules against coordination between parties and candidates.

And campaign finance foes and fans are awaiting a U.S. Supreme Court decision freeing corporations to use general treasury funds to finance movies attacking candidates, as well as a D.C. District Court ruling in another case that would permit the national party committees to once again collect “soft money” checks from businesses — a practice that was banned a century ago.

“There is no end in sight. There are a lot of other cases in the pipeline,” said Paul Ryan, an attorney with the Campaign Legal Center. 
 

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The sixth annual Emory Public Interest Committee (EPIC) conference, Expendable People?: A Human Rights Perspective on the Impact of Global Economic Migration on Georgia, will be held Saturday, Oct. 17, in Tull Auditorium at Emory Law.

The conference is free and open to the public. We ask that you register in advance. To register for the conference, click here. Practicing attorneys seeking CLE credit will be required to pay a fee. Please see below for more information.

The conference aims to examine the human rights issues that accompany global economic migration. It will focus on three aspects of economic migration: (1) human trafficking, (2) the guest worker program and (3) the undocumented workforce.

We seek to engage conference participants in an open discussion of each of these topics: their causes, incidences and effects—on those directly involved and on the greater Georgia community. The conference will serve as a space where individual, government and community responses to economic migration can be examined and even challenged. Specifically, we want to discuss the relationship between human rights and citizenship.

Read more about the conference's speakers and panelists.

See the conference schedule.

 

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