Theme: Productivity

http://www.stratfor.com/weekly/recognizing-end-chinese-economic-miracleTHE END OF THE CHINESE MIRACLE : AND A FEW POINTS ON THE PRIORITIES OF THE DIFFERENT SCHOOLS OF ECONOMIC THOUGHT

I despise macroeconomic positivism.

The way I look at economic data is ALWAYS in the context of A) DEMOGRAPHICS, B) GEOGRAPHY C) INSTITUTIONS AND NORMS D) TECHNOLOGY, and E) HISTORY. ONLY within that context does macroeconomic information represent ANYTHING other than NOISE as first BRITAIN’s and then the USA’s Military and Political machine, drive unnatural (meritocratic) behavior into the world economy.

One organization that consistently provides me with that macro information in which to interpret the macroeconomic noise, so that I can select rare SIGNAL, is STRATFOR. I read everything Friedman puts out. It’s priceless work. And STRATFOR is a valuable intellectual asset for the west if not for humanity.

Most of us who predicted the crash in 2008 (I was only off by about 90 days) and those of us who have been predicting the Chinese crash (I was off by three years) generally work not with the noise of macroeconomic data, but macroeconomic data tends to inform us about the progress of demographic and institutional change. In the end however, demographics, geography and institution determine economics with technology the disruptive factor that causes change. An organization like STRATFOR helps us interpret macroeconomic noise, pull the signal, and understand what MUST happen over the longer term.

Now, a gene pool and its culture is a long term investment strategy. And return on perishable commodity speculation is a short term strategy. And return on short term capital imbalances is yet another. Each of us focuses on some different portion of the time scale.

The different economic factions, from austrians at one end, to monetarists, to Keynesians, to modern monetary theorists at the other, all look at the world through different time frames, because their priorities are different. A modern monetarist tends to see us all as peak life consumers supported by natural and stable momentum, and an austrian as an extended family with shared norms, in a complex and fragile system. Like any other discipline, once you master it, you realize just how ignorant and stupid we all are – and are usually humbled by that experience. You realize that the masculine view of the world is to build a tribe that is better than others, and the female view of the world is to give her children the greatest opportunity to spread her genes. That these two strategies are in conflict is troublesome – but a wise step on evolution’s part. But this competition shows up everywhere in political and economic life. And we tend to see intellectual endeavors in politics and economics as a quest for a universal truth. But it isn’t. It’s a conflict – at best a balance – between the male and female reproductive strategies. And economics at one end or the other, austrian or modern monetary theorist is little more than another example of that conflict – not of truths, but of preferences.

Most countries do not communicate directly, but through professional communication organizations with personal relationships: think tanks. That most countries would rely on this network is pretty obvious from the differences in incentives between bureaucrats, politicians, and intellectuals. And countries communicate with the least distortion when their intellectuals communicate directly, and the politicians and bureaucrats can make use of the knowledge and relationships between intellectuals. For China and America this is doubly true.

I am not operating at the level where I have those politically influential connections. Partly because my time preference is very, very long. I’m a pretty ‘male’ male. I care about my tribe. And that’s the domain of politics, ethics, and political economy, not macro economics – which is, for a gene pool, just noise.

Curt