Quotable (#223)

Mokyr:

The idea that European political fragmentation, despite its evident costs, also brought great benefits, enjoys a distinguished lineage. In the closing chapter of The History of the Decline and Fall of the Roman Empire (1789), Edward Gibbon wrote: ‘Europe is now divided into 12 powerful, though unequal, kingdoms.’ Three of them he called ‘respectable commonwealths’, the rest ‘a variety of smaller, though independent, states’. The ‘abuses of tyranny are restrained by the mutual influence of fear and shame’, Gibbon wrote, adding that ‘republics have acquired order and stability; monarchies have imbibed the principles of freedom, or, at least, of moderation; and some sense of honour and justice is introduced into the most defective constitutions by the general manners of the times.’ […] In other words, the rivalries between the states, and their examples to one another, also meliorated some of the worst possibilities of political authoritarianism. Gibbon added that ‘in peace, the progress of knowledge and industry is accelerated by the emulation of so many active rivals’. Other Enlightenment writers, David Hume and Immanuel Kant for example, saw it the same way. From the early 18th-century reforms of Russia’s Peter the Great, to the United States’ panicked technological mobilisation in response to the Soviet Union’s 1957 launch of Sputnik, interstate competition was a powerful economic mover. More important, perhaps, the ‘states system’ constrained the ability of political and religious authorities to control intellectual innovation. If conservative rulers clamped down on heretical and subversive (that is, original and creative) thought, their smartest citizens would just go elsewhere (as many of them, indeed, did).

Political disintegration combined with cultural-market integration was the key.

In 18th-century Europe, the interplay between pure science and the work of engineers and mechanics became progressively stronger. This interaction of propositional knowledge (knowledge of ‘what’) and prescriptive knowledge (knowledge of ‘how’) constituted a positive feedback or autocatalytic model. In such systems, once the process gets underway, it can become self-propelled. In that sense, knowledge-based growth is one of the most persistent of all historical phenomena – though the conditions of its persistence are complex and require above all a competitive and open market for ideas.

Quotable (#172)

Is technology now de-globalizing? The argument (at Stratfor):

Opportunities for producing and assembling products and their components have spread worldwide, making it is easier for countries to climb the production value ladder. States at the bottom, extracting raw materials, can gradually move up, first making low-value components and then progressing to higher-value ones or basic assembly. But just as technology spurred globalization and the shifts in international trade that followed, so, too, will it revolutionize how countries again do business with one another. Compounded by the economic and demographic changes taking place today, automation, advanced robotics and software-driven technologies are ushering in a new era — one of shorter supply chains that will provide fewer opportunities for the developing world. Regions once labeled “emerging economies” may instead stagnate, and the divide between the haves and have-nots within and among nations could widen further. …

End of an Era?

Tyler Cowan expects a phase-change in Chinese development (with video).

“Imagine about 10% a year growth for almost 35 years — that has transformed everything.” But the ‘low-hanging fruit’, he argues, is now gone. Deep and prolonged recession could be in prospect, but the medium-term prospect — based on massive (and durable) investment in human capital — remains unambiguously positive.

“Perhaps the greatest danger is capital flight …” which could easily go nonlinear.

Big Plans

Whatever else this might be, it’s big.

For decades, China’s government has tried to limit the size of Beijing, the capital, through draconian residency permits. Now, the government has embarked on an ambitious plan to make Beijing the center of a new supercity of 130 million people. […] The planned megalopolis, a metropolitan area that would be about six times the size of New York’s, is meant to revamp northern China’s economy and become a laboratory for modern urban growth. […] “The supercity is the vanguard of economic reform,” said Liu Gang, a professor at Nankai University in Tianjin who advises local governments on regional development. “It reflects the senior leadership’s views on the need for integration, innovation and environmental protection.” […] The new region will link the research facilities and creative culture of Beijing with the economic muscle of the port city of Tianjin and the hinterlands of Hebei Province, forcing areas that have never cooperated to work together.

The integrated ‘supercity’ would have a population larger than Japan’s (and larger than all but eight countries in the world, excluding China itself).

Mind the Gap

“‘China’s Ideological Spectrum’ has created a spurious impression of an ‘ideological gap’ among different regions in China,” says Global Times, responding to this paper.

The Global Times opinion isn’t very well argued, but insofar as it is criticizing the paper for its distinctively Westernized construction of the ideological spectrum, it has a point. While economic liberalism is positively correlated with economic growth, political liberalism is not. As a study by Lant Pritchett and Lawrence H. Summers concludes:

… nearly every country that experienced a large democratic transition after a period of above-average growth (more than the cross-country average of 2 percent) experienced a sharp deceleration in growth in the 10 years following the democratizing transition. Among 22 countries in which episodes of large democratic transition coincided with above-average growth, all but one (Korea in 1987 with an acceleration of only 0.22 percent) experienced a growth deceleration. The combination of high initial growth and democratic transition seems to make some deceleration all but inevitable. The magnitude of the decelerations was very large: The median deceleration across the 22 countries was 2.99 percent and the average deceleration was 3.53 percent.

(Yasheng Huang makes a spirited contrary case.)