Tag Archives: Economics

If the 20th Century was America’s Century the 21st looks like being China’s….

China-Century

The 21st century belongs to China: Why the new Silk Road threatens to end America’s economic dominance – Beijing is building a trans-Siberian railway system that rivals the Marshall Plan in its ambition and global reach

PEPE ESCOBAR, TOMDISPATCH.COM TUESDAY, FEB 24, 2015 10:15 AM +0000

BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.

“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.

Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.

Meanwhile, Moscow and Beijing are at work planning a new high-speed rail remix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it.

To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.

And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.

Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.

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Continue reading If the 20th Century was America’s Century the 21st looks like being China’s….

Article/book review sums up the impact of Bad Economics on our world rather nicely

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How Economists With Bad Ideas Wreck Your Life, America’s Economy, and the World – Author Jeff Madrick discusses what bad ideas cost us, and how to defeat them By Lynn Stuart Parramore October 13, 2014

Many of us have long known in our guts that something about mainstream economics doesn’t add up. As a new, must-read book proves, we were right. For decades, dubious, false and nonsensical ideas have dominated public discourse and decision-making, from the irrational belief in the efficiency of markets to a willful blindness about the inequalities of wealth and economic opportunity in a system that has been rigged for the benefit of the few. Author Jeff Madrick has just come out with his latest challenge to the pernicious ideas that have captured the minds and clouded the judgment of huge numbers of orthodox economists and the legions who follow their advice: . In this brisk and accessible volume, which should be on Econ 101 syllabi, Madrick outlines the wrong-headed propositions, fictitious models, shoddy research, and partisan agendas that have made a reexamination of the entire field long overdue, especially in the wake of the financial crisis of 2008. Madrick’s book is part of a healthy movement to set the record straight and chart a new direction for an economics that can serve the whole of society and lead to sustainable growth.

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Lynn Parramore: Why does the invisible hand (the metaphor used by 18th-century economist Adam Smith to explain what he saw as the benefits of individuals in pursuit of their own interests) get top billing in your list of bad economic ideas? What value judgments come with this model of how the economy works?

Jeff Madrick: Adam Smith’s invisible hand is really the hub of the wheel: the other ideas are all spokes. It argues that if we all follow our self-interest and the government stays out of the market—for instance, it should not regulate prices—then the interaction of buyers and sellers will result in the greatest prosperity for all.

The invisible hand suggests that all wages will be established at fair levels and that regulation of financial markets can be minimized because free markets will lead to the “right” price for securities or commodities or currencies. On and on. But this is only an idea, if a beautiful one. It tells us how a market may work, not how it actually does work. Long after Adam Smith wrote about the invisible hand, as the economics profession became increasingly ideologically conservative, economists came to accept it as a rule, not a hypothesis.

Continue reading Article/book review sums up the impact of Bad Economics on our world rather nicely