2-week iPad crisis-vs-rules comments diary

To my hundreds [titter, sic] of loyal readers I must apologize for the long gap. It’s just two-months-today since I started this blog, and I haven’t yet learned to combine blogging with absences away from my personal library and mainframe. Nevertheless, with trusty iPad in shoulder bag on trip to Spain I maintained internet presence in some discussion forums. Today I cannot settle down to thinking about a new post on Spain, capitalism, ideology, or indeed anything else until I’ve first written my *comments diary*:

The trip started well. In the lobby of a hotel somewhere near Heathrow airport I became tremendously excited and spilt my tea as I read a new op-ed on China by Francis Fukuyama. I had quarreled at length with Fukuyama in my book ‘Capitalism, Institutions, and Economic Development’. Despite being a great admirer of his scholarship, I argued strongly against his long-standing opinion that culture and informal norms matter more than formal institutions. Gradually he has adjusted his opinion, moving closer to mine. No one ever called me modest. 

Then on the evening before my flight I read the words I’ve been waiting for:

“The [purged Bo Xilai] incident has revealed a deep problem in China – the lack of formal institutions and of a real rule of law. The rules the Chinese leadership follows are neither embedded in the constitution, clearly articulated, nor enforced by a judicial system… [China needs] a genuine rule of law with all of the transparency and formal institutionalisation that entails… So in the end, informal rules observed by a small clique of insiders cannot really substitute for a formal rule of law… [China needs] formal procedures constraining power through law and elections put big roadblocks in the path of a really bad emperor”.

Like a dragon I roared my vindication in the comments below that article and on twitter, and clapped my hands in delight when Francis himself appeared at Marginal Revolution -- within less than an hour -- in response to my shouts. This is a delightfully *impersonal* friendship in the making… The internet is a wonderful thing, though on looking up from my iPad and spilt green tea I felt embarrassed about my commotion and victory yelps in the posh hotel lobby.

Inter alia I said about Fukuyama’s FT article:

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This is the most important thing written about China or development in three years… The concepts are beautifully handled and the whole thing is interesting and engaging. The message is absolutely fundamental.

Readers take note. This article, with its simple message, is the most important thing you will read on *development* or China this year. You may not realize that .... so I'm letting you know. Celebrate by deleting 'Why Nations Fail' from your Kindle.

Magnificent. Conceptually this article is superb, truly splendid. How long I have waited to read this? 3 years at least! [my book was published 3 years ago]

Once in Spain -- it was an eventful week in the world:

Words of wisdom, from men of wisdom @ MR (Tyler Cowen)
Michael G Heller May 16, 2012 at 2:00 pm:
"That was a good post from Arnold Kling. I’m still getting the best news about Spain from external sources but can tell you there was some panic on local radio and Internet newspapers when el eminente Paul Krugman was quoted as saying a “corralito” was imminent in Spain. The Minister of Interior announced in response to Krugman that no matter how bad the situation they would never contemplate a “corralito” and begged Krugman to be more “prudent” in his commentary. The day we arrived in Extremadura the Communist Party was holding a public meeting takeover of the main square that went on all afternoon and evening. Completely peaceful and jolly and humane and apparently not completely unpersuasive or bizarre; quite normal. One dreadfully boring and naive speech after another…. Time for tapa. On the spot, over and out."

[The background, by the way, was a panic and reported bank queues last week to withdraw cash after Paul Krugman “insinuated that there could be a corralito in Spain”]

Next at MR:

*China Airborne* @ Marginal Revolution (Tyler Cowen)
Michael G Heller May 18, 2012 at 9:41 am
"James Fallows really knows China and Asia generally, and tells wonderful aviation stories with the fervour and humour of a true enthusiast. He also gives excellent tips about computer software for common old non-nerds like me. I’ve been reading him for years on everything *except* American politics." [then James Fallows himself showed up…]

James Fallows May 18, 2012 at 3:02 pm
"I am showing up to say thanks to Tyler Cowen, for his generous comment, which means a lot to me; also Michael Heller…"

Now to FT (it is free to register and read these):

Philip Stephens @FT - The last chance to rescue the euro
Michael Heller | Project Syndicate | May 17 9:49pm 
"[Instead call it] *The last chance to rescue Keynesian central planning*.
I hope Cameron will not listen to this last-chance frantic shout from the Economic Left Wing. Indeed, sequencing matters. Creative markets and legal rule come first in theory and history. Bail outs and government stimulus have never (ever) before even figured in the capitalist sequence."

Martin Wolf @FT - Cameron is consigning the UK to stagnation
Michael Heller | Project Syndicate | May 17 9:41pm
"Mr Cameron, close your ears to the frantic Keynesian clamour. Debt is cheap. That is their message. How primitive."

FT report - Cameron changes tack on Hollande
Michael Heller | Project Syndicate | May 17 9:36pm 
"Obviously Cameron is a complete fool not to be forging a close alliance with Merkel. Who is this Hollande?"

FT report - Merkel faces G8 isolation on eurozone
Michael Heller | Project Syndicate | May 17 10:26pm
"Look back in history. The people with the right ideas were never popular, especially if their message disturbed the comfort zone. Europe has been a comfort zone for far too long. Follow the German idea or lose the Euro. Rest assured, neither spells the end of the world. What is most disturbing is the intolerance to cyclical discomfort."

Chris Caldwell @FT - One man stands between California and a bleak future
Michael Heller | Project Syndicate | May 18 9:52pm 
"Very interesting. There are several good recipes here for Europe. A 30-hour working week for state employees. Holland would jump at this familiar policy idea if the policy maker would only 'forget' to tell him the bit about the salary cut. California still showing the way as usual."

FT report - G8 splits over stimulus versus austerity
Michael Heller | Project Syndicate | May 19 7:52pm 
"And don't forget, Cameron is 'beureing' (buttering) up Hollande because French-English military alliance will help keep British defence costs down. Cameron plans to maintain the austerity drive at home yet (hypocritically) hopes Europe will stimulate spending and buy British exports. Politicians."
Michael Heller | Project Syndicate | May 19 7:42pm 
"The split has a simple explanation. Obama and Cameron want to free ride on European spending, though for opposite reasons (continued spending and austerity respectively). France has no money. Germany has money. Stay firm Chancellor Merkle. It's not your job to bail out the world. In fact, in Schumpeterian terms you would not be doing the world a favour if you did. The West needs the retrenchment."

Andreas Dombret and Paul Tucker @FT - Blueprint for resolving regulation
Michael Heller | Project Syndicate | May 20 10:58pm 
"Plus enforceable disclosure of information. With that I agree. That will need a sort of policing bureaucracy. Ask de Soto."
Michael Heller | Project Syndicate | May 20 10:55pm 
"Six principles? You only need one. *Let them fail*. Remember when economics was about incentives? Keep it simple. High capital requirements, plus the credible threat of extinction, plus competition."

Fortunately in Madrid and Caceres there was time enough to pause for contemplation in front of some wonderful paintings and prints, among which El Greco, Zurbaran, Velasquez, Murillo. Now, back in the UK, the more apt illustration for the times appears to be William Hogarth


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